<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2000
REGISTRATION NO. 333-35756
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
REGENERATION TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8731 59-3466543
(State or other jurisdiction (Primary Standard (I.R.S. Employer Number)
of Industrial Identification No.)
incorporation or organization) Classification Code)
</TABLE>
ONE INNOVATION DRIVE
ALACHUA, FLORIDA 32615
(904) 418-8888
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JAMES M. GROOMS
CHIEF EXECUTIVE OFFICER
REGENERATION TECHNOLOGIES, INC.
ONE INNOVATION DRIVE
ALACHUA, FLORIDA 32615
(904) 418-8888
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
WITH COPIES TO:
<TABLE>
<S> <C>
WARREN J. NIMETZ, ESQ. JOSEPH E. MULLANEY III, ESQ.
FULBRIGHT & JAWORSKI L.L.P. PETER T. BUTTERFIELD, ESQ.
666 FIFTH AVENUE MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
NEW YORK, NEW YORK 10103 ONE FINANCIAL CENTER
(212) 318-3000 BOSTON, MASSACHUSETTS 02111
(617) 542-6000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by Regeneration Technologies in
connection with the sale of the common stock being registered hereby. All the
amounts shown are estimated, except the SEC registration fee, the NASD filing
fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
SEC Registration Fee........................................ $22,770
NASD Filing Fee............................................. $ 9,125
Nasdaq National Market Listing Fee.......................... $ *
Printing Expenses........................................... $ *
Legal Fees and Expenses..................................... $ *
Accounting Fees and Expenses................................ $ *
Blue Sky Expenses and Counsel Fees.......................... $ *
Transfer Agent and Registrar Fees........................... $ *
Miscellaneous............................................... $ *
-------
Total................................................... $ *
=======
</TABLE>
- ------------------------
* To be provided by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the General Corporation Law of the State of Delaware
("DGCL") provides that a Delaware corporation may indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides that a Delaware corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he
acted in any of the capacities set forth above, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted under similar
standards, except that no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to
the corporation unless and only to the extent that the court in which such
action or suit was brought shall determine that despite the adjudication of
liability, such person is fairly and reasonably entitled to be indemnified for
such expenses which the court shall deem proper.
Section 145 of the DGCL further provides that to the extent a director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue or matter therein:
II-1
<PAGE>
- he shall be indemnified against expenses actually and reasonably incurred
by him in connection therewith;
- that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be
entitled;
- and that the corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities
under such Section 145.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director provided that such provision shall not eliminate
or limit the liability of a director:
- for any breach of the director's duty of loyalty to the corporation or its
stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the DGCL; or
- for any transaction from which the director derived an improper personal
benefit.
Article Ninth of Regeneration Technologies's Certificate of Incorporation
contains substantially the same provisions for indemnification as those
contained in Section 145 of the DGCL. Additionally, Article Ninth provides that
in any judicial proceeding in which a person seeks indemnification pursuant to
Article Ninth, the burden of proving that such person is not entitled to
indemnification shall be on Regeneration Technologies. Article Ninth further
provides that any person who successfully establishes a right to
indemnification, in whole or in part, under Article Ninth in any such proceeding
shall be indemnified by Regeneration Technologies against expenses incurred
(including attorneys' fees) in establishing such right to indemnification.
Finally, Article Ninth provides that in the event the DGCL is amended to expand
further the indemnification permitted to the persons covered by Article Ninth,
Regeneration Technologies shall indemnify such persons to the fullest extent
permitted by the DGCL, as so amended. Reference is made to the Regeneration
Technologies' Amended Certificate of Incorporation and By-Laws filed as Exhibits
3.1 and 3.2, respectively.
Article Tenth of Regeneration Technologies's Certificate of Incorporation,
states that to the fullest extent permitted by the DGCL, no director of
Regeneration Technologies shall be personally liable to Regeneration
Technologies, any of its stockholders or any other person or entity for monetary
damages for breach of fiduciary duty owed to Regeneration Technologies, its
stockholders or such other person or entity owing to such director's position as
a director of Regeneration Technologies.
Regeneration Technologies intends to enter into indemnification agreements
with its current directors and executive officers. Regeneration Technologies
intends to insure its directors and officers against losses arising from any
claim against them as such for wrongful acts or omission, subject to certain
limitations.
Under Section 8 of the Underwriting Agreement, the underwriters are
obligated, under certain circumstances, to indemnify officers, directors and
controlling persons of Regeneration Technologies against certain liabilities,
including liabilities under the Securities Act of 1933. Reference is made to the
form of Underwriting Agreement filed as Exhibit 1.1 hereto.
II-2
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since inception, Regeneration Technologies has sold unregistered securities
in the amounts, at the times, and for the aggregate amounts of consideration
listed as follows:
<TABLE>
<CAPTION>
DATE CLASS SHARES PURCHASER CONSIDERATION
- --------------------- -------------------- -------------------- -------------------- -------------
<S> <C> <C> <C> <C>
February 1998 Series A Preferred 600,000 UFTB $ (39,643)
Stock 600,000 UFRF
--------------------
577,348 James M. Grooms
February 1998 Series B Preferred 748,152 16 individuals and $ 6,580,000
Stock entities
February 1998 Common stock 770,752 124 individuals 0
October 1999 Series C Preferred 368,990 and warrants Stephens- $10,000,000
Stock Warrants to purchase 46,124 Regeneration LLC
shares of common Medtronic Asset
stock Management, Inc.
February 2000 Common stock 9,225 Charles $ 250,000
Garrison, M.D.
Inception through Common stock 271,010 347 individuals 0
12/31/99 underlying options
</TABLE>
No underwriters were engaged in connection with the foregoing offers and
sales of securities. Such offers and sales of common stock and preferred stock
were made in reliance upon the exemption from registration set forth in
Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of
Regulation D promulgated thereunder for transactions not involving a public
offering, and all purchasers were accredited investors as such term is defined
in Rule 501(a) of Regulation D. Issuances of options to Regeneration
Technologies's employees, directors and consultants were made pursuant to
Rule 701 promulgated under the Securities Act of 1933.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
NO. DESCRIPTION
- --------------------- -----------
<C> <S>
1.1 Underwriting Agreement*
3.1 Certificate of Incorporation of Regeneration Technologies,
Inc.*
3.2 Bylaws*
4.1 Amended and Restated Registration Rights Agreement dated as
of October 11, 1999, by and among Regeneration Technologies,
Inc. and the Stockholders listed on Exhibits A, B and C
thereto.**
4.2 Stockholder's Agreement dated as of October 11, 1999, by and
among Regeneration Technologies and the Stockholders listed
on exhibits A, B and C thereto.**
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding the
legality of the shares*
10.1 Program Transfer Agreement between Regeneration
Technologies, Inc. and the University of Florida Tissue
Bank, Inc. dated April 15, 1999.+
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.2 Tissue Recovery Agreement between Regeneration Technologies,
Inc. and the University of Florida Tissue Bank, Inc. dated
April 15, 1999.+
10.3 Exclusive Distributorship Agreement between Regeneration
Technologies, Inc. and C.R. Bard, Inc., dated June 6, 1998.+
10.4 Exclusive License Agreement between Regeneration
Technologies, Inc., as successor in interest to the
University of Florida Tissue Bank, Inc. and Exactech, Inc.,
dated April 22, 1997, as amended.+
10.5 Management Services Agreement between Regeneration
Technologies, Inc., as successor in interest to the
University of Florida Tissue Bank, Inc. and Sofamor Danek
Group, dated July 23, 1996.+
10.6 Management Services Agreement between Regeneration
Technologies, Inc., as successor in interest to the
University of Florida Tissue Bank, Inc., and Sofamor Danek
Group, dated May 11, 1998.+
10.7 Master Lease Agreement between Regeneration Technologies,
Inc., as successor in interest to the University of Florida
Tissue Bank, Inc., and American Equipment Leasing, dated
January 23, 1998.*
10.8 Purchase Contract between Regeneration Technologies, Inc.
and Echelon International Corp., dated January 31, 2000, as
amended.**
10.9 Lease between Echelon International Corp. and Regeneration
Technologies, Inc., dated February 4, 2000.**
10.10 Sublease between Regeneration Technologies, Inc. and the
University of Florida Tissue Bank, Inc., dated February 12,
1998.*
10.11 Lease between Regeneration Technologies, Inc. and First
Street Group L.C., dated June 14, 1999.**
10.12 Lease agreement between Georgia Tissue Bank Inc. and Charles
P. Garrison, dated November 1, 1999.**
10.13 Employment Agreements between Regeneration Technologies,
Inc. and James M. Grooms, dated February 9, 1998.**
10.14 Employment Agreements between Regeneration Technologies,
Inc. and Richard R. Allen, dated February 13, 1998.**
10.15 Employment Agreements between Regeneration Technologies,
Inc. and Frederick C. Preiss, dated November 25, 1998.**
10.16 Employment Agreements between Regeneration Technologies,
Inc. and Thomas Brewer, dated June 15, 1998.**
10.17 Employment Agreements between Regeneration Technologies,
Inc. and James P. Abraham, dated November 28, 1998.**
10.18 Employment Agreements between Regeneration Technologies,
Inc. and Nancy R. Holland, dated February 13, 1998.**
10.19 Omnibus Stock Option Plan.**
10.20 Year 2000 Compensation Plan.**
10.21 Form of indemnification agreement between Regeneration
Technologies, Inc. and its directors and executive
officers.*
10.22 Line of Credit Agreement, dated September 1999.*
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.23 Mortgage between Regeneration Technologies, Inc. and Bank of
America, N.A., dated March 30, 2000.*
10.24 Promissory Note between Regeneration Technologies, Inc. and
Bank of America, N.A., dated March 30, 2000.*
23.1 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
5.1)*
23.2 Consent of Deloitte & Touche LLP to the consolidated
financial statements and supplemental schedule of
Regeneration Technologies, Inc. and subsidiary.**
23.3 Consent of Deloitte & Touche LLP to the Statements of
Revenues and Direct Costs of the predecessor business of
Regeneration Technologies, Inc.**
24.1 Power of attorney**
27.1 Financial Data Schedule**
</TABLE>
- ------------------------
* To be filed by amendment
** Previously filed
+ Confidentiality requested, confidential portions have been omitted and filed
separately with the Commission, as required by Rule 406(b).
(b) Consolidated Financial Statement Schedule.
SCHEDULE II--VALUATIONS AND QUALIFYING ACCOUNTS
All other schedules are omitted because they are not required or are not
applicable or the information is included in the consolidated financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, as amended, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Alachua,
State of Florida, on May 12, 2000.
<TABLE>
<S> <C> <C>
REGENERATION TECHNOLOGIES, INC.
By: /s/ JAMES M. GROOMS
-----------------------------------------
James M. Grooms
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below and on the following page constitutes and appoints each of James M. Grooms
and Richard R. Allen as his true and lawful attorney-in-fact and agent, each
acting alone, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments including post-effective amendments, to this Registration Statement,
(or any other Registration Statement for the same offering that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933),
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and hereby ratifies and confirms all that any said attorney-in-fact and
agent, each acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES M. GROOMS Chairman of the Board (principal
------------------------------------------- executive officer) and Chief May 12, 2000
James M. Grooms Executive Officer
/s/ RICHARD R. ALLEN Chief Financial Officer
------------------------------------------- (principal financial and May 12, 2000
Richard R. Allen accounting officer)
* Director
------------------------------------------- May 12, 2000
Philip R. Chapman
* Director
------------------------------------------- May 12, 2000
Peter F. Gearen
* Director
------------------------------------------- May 12, 2000
Michael J. Odrich
* Director
------------------------------------------- May 12, 2000
Anthony C. Phillips
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Director
------------------------------------------- May 12, 2000
E. Ronald Pickard
* Director
------------------------------------------- May 12, 2000
Daniel L. Weber
</TABLE>
<TABLE>
<S> <C> <C>
*By: /s/ RICHARD R. ALLEN
---------------------------------------
Richard R. Allen
as Attorney-in-Fact
</TABLE>
II-7
<PAGE>
Exhibit 10.1
Confidential Treatment. The portions of this exhibit that have been replaced
with "[*****]" have been filed separately with the Securities and Exchange
Commission and are the subject of an application for confidential treatment.
PROGRAMS TRANSFER AGREEMENT
THIS PROGRAMS TRANSFER AGREEMENT (this "Agreement"), effective on this
15th day of April, 1999, is by and between Regeneration Technologies, Inc. a
Florida corporation having its principal place of business at 1 Innovation
Drive, Alachua, Florida ("RTI"), and the University of Florida Tissue Bank,
Inc., a Florida not-for-profit corporation also having its principal place of
business at 2 Innovation Drive, Alachua, Florida ("UFTB").
WITNESSETH
WHEREAS, RTI and UFTB are parties to the "Revised Agreement on
Intercompany Service Billing and Inventory Ownership" made and entered into the
11th of January, 1999, and the "Tissue Recovery, Processing and Distribution
Agreement" made and entered into by the parties on the 23rd of January, 1998
(the "Previous Agreements") attached hereto as Composite Exhibit "A"; and
WHEREAS, on the effective date of this Agreement the parties are also
entering into a "Tissue Recovery Agreement"; and
WHEREAS, the parties wish to replace the Previous Agreements with both
this Agreement and with the Tissue Recovery Agreement; and
WHEREAS, the parties wish to have all other written agreements between the
parties remain in full force and effect; and
WHEREAS, in the normal course of business, UFTB has become indebted to RTI
(the "Debt"), a current statement of which is attached hereto as Exhibit "B";
and
WHEREAS, UFTB desires to focus its efforts on human donor tissue recovery
in its Local Service Area (further defined below), and eliminate its
Distribution Services (further defined below); and
WHEREAS, RTI desires to assume both UFTB's human donor tissue recovery
activities outside the UFTB Local Service Area and UFTB's Distribution Services.
NOW, THEREFORE, in view of the representations made above and in
consideration of the terms and conditions set forth below, the parties agree as
follows:
[CONFIDENTIAL]
<PAGE>
ARTICLE I - Definitions
For the purposes of this Agreement the following definitions shall apply:
1.1 "Local Service Area" shall mean the states of Florida and Georgia.
1.2 "Distribution Services" shall mean the services associated directly
and indirectly with providing customers with processed human donor tissue
("allograft" tissue) for transplant or research, including but not limited to
those services set forth on "Distribution Services" -- Exhibit 1.2 attached
hereto.
1.3 "The Debt" shall mean the net amount ($4,963,865.31) of intercompany
charges and cash receipts owed to RTI by UFTB as of April 15, 1999 and set forth
on Exhibit B attached hereto.
ARTICLE II - Consideration
2.1 Upon the effective date of this Agreement, and the simultaneous
execution of the Tissue Recovery Agreement, the Previous Agreements shall
terminate.
2.2 As consideration for RTI entering into this Agreement, UFTB shall,
upon the effective date of this Agreement:
(a) Grant to RTI a security interest in all outstanding and future
"Accounts Receivable" - Exhibit 2.2(a), to secure the Debt (the "Security
Interest"); RTI's Security Interest shall be subordinate only to the security
interest of NationsBank, if any, in UFTB accounts receivables;
(b) Continue its collection efforts of such receivables, so long as
any balance of Debt remains outstanding, and shall transfer a minimum of one
hundred thousand dollars ($100,000) to RTI twice per month within ten (10)
business days from the fifteenth (15th) and thirtieth (30th) day of each
calendar month commencing with July 1, 1999 which amounts shall be reductions of
the Debt;
(c) Hereby convey to RTI all UFTB's right, title, and interest, free
and clear of all encumbrances, in the equipment and fixtures identified on the
"Schedule of Conveyed Equipment and Fixtures" -- Exhibit 2.2(c) attached hereto;
2
<PAGE>
(d) assign to RTI the contracts related to human donor recovery
activities identified in the "Schedule of Assigned Recovery Contracts"-- Exhibit
2.2(d)-1 attached hereto, and the contracts related to Distribution Services
identified in the "Schedule of Assigned Distribution Contracts" -- Exhibit
2.2(d)-2 attached hereto;
(e) assign and convey to RTI all of UFTB's rights and interest in
the allograft tissue inventory described in the "Allograft Inventory" -- Exhibit
2.2(e) attached hereto, (a credit to UFTB of $3,030,154 applied by RTI against
the Debt), and refrain from performing Distribution Services which compete with
RTI for the term of this Agreement and for a period of five (5) years beyond the
term of this Agreement in the Local Service Region;
(f) enter the Tissue Recovery Agreement; and
(g) provide RTI with a monthly UFTB balance sheet and income
statement within thirty (30) calendar days from the end of each business month.
(h) UFTB's obligations and RTI's rights under Article 2.2 (a),(b),
and (g) herein shall cease immediately upon the satisfaction of the Debt. If,
within six (6) months from the effective date of this Agreement, the Debt has
not been satisfied, UFTB shall pay any such remaining balance, in full, to RTI
within ninety (90) days from such sixth month date.
2.3 As consideration for UFTB entering this Agreement, RTI shall, upon the
effective date of this Agreement:
(a) reduce the Debt by the value assigned to Allograft Inventory,
which value is specified in Exhibit 2.2(e);
(b) reduce the Debt by the value of the Schedule of Conveyed
Equipment and Fixtures; and
(c) apply the credits referred to in 2.3(a) and (b) herein such that
after application, the balance of the Debt shall be the "Secured Debt" as set
forth in Exhibit 2.3(c) attached hereto;
3
<PAGE>
(d) apply, as a reduction to the Debt "Recovery Fees and
Intercompany Charges" set forth on Exhibit 2.3(d) attached hereto, net of a
one-time payment to UFTB of one hundred fifty thousand dollar ($150,000) which
shall be paid to UFTB upon the date of the last signatory to this Agreement.
(e) Within five (5) months from the effective date of this
Agreement, the parties shall make an adjustment to the debt, with respect to the
"Undetermined Equipment" -- Exhibit 2.3(e) attached hereto, as mutually agreed
to by the auditors of both parties.
ARTICLE III - Technical and Professional Assistance
3.1 UFTB agrees to provide RTI with written documentation of the details
regarding UFTB's distribution relationship with each and every party to which
UFTB distributes allograft tissue. Such documentation for each such relationship
shall include, but is not limited to:
(a) the name, address, telephone number, facsimile number, of all
contact persons for each and every party to the relationship;
(b) a description of the method and manner of distribution and the
chain of distribution for relationship;
(c) a statement of the historic distribution volume by year and type
of tissue distributed under the relationship; and
(d) a description of any issues material to any of the relationships
with each and every party to the relationship.
UFTB shall, in addition to the foregoing, provide RTI with
additional written information about any or all of the distribution
relationships within ten (10) days of such request by RTI.
3.2 UFTB additionally agrees to promptly forward to RTI all payments,
returned tissue, inquiries, and communication relating to such distribution
relationships and all other things that may be routed to UFTB, but which should
have been directed to RTI. Such UFTB duty shall survive the termination of this
Agreement.
4
<PAGE>
ARTICLE IV - Term and Termination
4.1 This Agreement shall terminate upon the satisfaction of the Debt
provided however the Tissue Recovery Agreement shall remain in full force and
effect.
4.2 This Agreement may be terminated early:
(a) by either party due to a material breach by the other party of
any of its obligations or covenants herein if the breaching party fails to
remedy said breach within thirty (30) calendar days of receiving written notice
from the non-breaching party of such breach; or
(b) by either party upon an adjudication of the other party as
bankrupt or insolvent, or the admission in writing by such 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 such receiver, trustee or similar officer for such other
party's assets without the application or consent of such party, if such
appointment shall continue undischarged for a period of ninety (90) days.
ARTICLE V - Warranty, Indemnity and Other Representations
5.1 Both parties represent and warrant that the rights granted herein do
not violate any rights previously granted by either party to any third party.
5.2 RTI warrants that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of Florida and has all corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(b) the execution, delivery and performance by RTI of this Agreement
and the consummation of the transactions contemplated hereby has been duly and
validly authorized by all requisite corporate action, and no other corporate act
or proceeding on the party of RTI is necessary to authorize the execution and
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby;
(c) it is not subject to nor obligated under its Articles of
Incorporation or bylaws, any applicable law, rule or regulation of any
governmental authority, or any agreement, instrument, license or permit or
subject to any order, writ, injunction or
5
<PAGE>
degree, which would be breached or violated by its execution, delivery or
performance of this agreement;
(d) its execution and delivery of this Agreement and the performance
of its obligations hereunder, including the obligations of any payments
hereunder, do not and will not conflict with, violate, or result in any default
under any agreement, instrument or other contract to which RTI is a party or by
which it is bound; and
(e) there are no claims, actions, suits or other proceedings
pending, or to the knowledge of RTI threatened which, if adversely determined,
would adversely affect the ability of RTI to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder.
5.3 UFTB warrants that:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of Florida and has all corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
(b) the execution, delivery and performance by UFTB of this
Agreement and the consummation of the transactions contemplated hereby has been
duly and validly authorized by all requisite corporate action, and no other
corporate act or proceeding on the party of UFTB is necessary to authorize the
execution and delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby;
(c) it is not subject to nor obligated under its Articles of
Incorporation or bylaws, any applicable law, rule or regulation of any
governmental authority, or any agreement,instrument, license or permit or
subject to any order, writ, injunction or degree, which would be breached or
violated by its execution, delivery or performance of this agreement;
(d) its execution and delivery of this Agreement and the performance
of its obligations hereunder, including the obligations of any payments
hereunder, do not and will not conflict with, violate, or result in any default
under any agreement, instrument or other contract to which UFTB is a party or by
which it is bound; and
6
<PAGE>
(e) there are no claims, actions, suits or other proceedings
pending, or to the knowledge of UFTB threatened which, if adversely determined,
would adversely affect the ability of UFTB to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder.
5.4 Apart from any warranty expressly made in this Agreement, neither
party hereto makes any representations and extends no warranties of any kind,
either express or implied. Nothing in this Agreement shall be construed as an
obligation to furnish any other information except as specifically provided
herein, or a warranty or representation by RTI that it will not procure any
tissues from other sources.
5.5 UFTB shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold RTI, RTI Affiliates (as hereinafter
defined), or any of its assigns, harmless against all claims and expenses,
including legal expenses and reasonable attorney fees, arising out of any other
claims, proceeding, demand, expense, loss, and liability of any kind whatsoever
including any breach of its obligations hereunder (collectively, "RTI Losses")
resulting from the activities of UFTB under this Agreement except where such RTI
Losses result solely from RTI's negligence or willful misconduct. As used in
this Agreement, "RTI Affiliates" shall mean RTI's directors, officers, agents
and employees. Notwithstanding the above, RTI at all times reserves the right to
retain counsel of its own, at its own expense, to defend RTI's interests. This
Article 5.5 shall survive the termination of this Agreement.
5.6 RTI shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold UFTB, UFTB Affiliates (as hereinafter
defined), or any of its assigns, harmless against all claims and expenses,
including legal expenses and reasonable attorney fees, arising out of any other
claims, proceeding, demand, expense, loss, and liability of any kind whatsoever
including any breach of its obligations hereunder (collectively, "UFTB Losses")
resulting from the activities of RTI under this Agreement except where such UFTB
Losses result from solely UFTB's negligence or willful misconduct. As used in
this Agreement, "UFTB Affiliates" shall mean UFTB's directors, officers, agents
and employees. Notwithstanding the above, UFTB at all times
7
<PAGE>
reserves the right to retain counsel of its own, at its own expense, to defend
UFTB's interests. This Article 5.6 shall survive the termination of this
Agreement
5.7 Each party warrants that it now maintains and will continue to
maintain liability insurance coverage in an amount of two million dollars
($2,000,000) for UFTB, and five million dollars ($5,000,000) for RTI, per
occurrence and that such insurance coverage lists each party as an additional
insured. Each party shall provide the other party with at least thirty (30) days
written notice of any change or cancellation of such insurance coverage.
ARTICLE VI- Assignment
6.1 (a) This Agreement may be assigned by either party with the express
prior written approval of the other party, whose approval shall not be
unreasonably withheld; and
(b) UFTB shall provide RTI with written notice of its intention to
approve or not approve any assignment by RTI within fifteen (15) business days
of UFTB's receipt of written request from RTI. In the event that RTI does not
receive such written notice of intention from UFTB within such fifteen (15) day
time period, UFTB shall be deemed to have consented to such assignment. In the
event that UFTB withholds consent to such assignment UFTB shall, in such fifteen
(15) day time period, provide RTI, in writing, with the reasonable reasons for
withholding of such consent.
ARTICLE VII- Miscellaneous
7.1 A waiver of any specific breach of any provision of this Agreement
shall not be construed as a continuing waiver of other breaches of the same or
other provisions of this Agreement.
7.2 The right of either party to terminate under the provisions of this
Agreement shall not be an exclusive remedy, and either party shall be entitled,
if the circumstances warrant, alternatively or cumulatively, to damages for
breach of this Agreement to an order requiring performance of the obligations of
this Agreement, or to any other available remedy.
8
<PAGE>
7.3 Nothing herein shall be deemed to create an agency, joint venture or
partnership relationship between the parties hereto.
7.4 This Agreement constitutes the entire agreement and understanding of
the parties with regard to the subject matter hereof, and supercedes the
Previous Agreements and all prior discussions, negotiations, understandings and
agreements between the parties concerning the subject matter hereof. Neither
party shall be bound by any definition, condition, warranty, right, duty or
covenant other than as expressly stated in this Agreement or as subsequently set
forth in a written document signed by both parties. Each party expressly waives
any implied right or obligation regarding the subject matter hereof. All other
written agreements between the parties shall remain in full force and effect
7.5 This Agreement shall be interpreted and construed in accordance with
the laws of the State of Florida and both parties agree that: (a) they are
subject to the jurisdiction of the state and Federal courts located within the
state of Florida; (b) the exclusive venue for actions related to this Agreement
shall be the Circuit Court for Alachua County, Florida or the United States
District Court having jurisdiction over Alachua County, Florida; and (c) in any
action brought to enforce or interpret the rights or obligations relating to
this Agreement the prevailing party in such action shall be entitled to an award
of it's reasonable attorneys' fees and costs, including pre-suit and appellate
attorneys' fees and costs, from the non-prevailing party.
7.6 This Agreement may be amended only by a written document signed by
authorized representatives of both parties.
7.7 Each party hereto agrees to execute, acknowledge and deliver all such
further instruments as may be necessary or appropriate to carry out the intent
and purposes of this Agreement. This Agreement shall be binding upon and inure
to the benefit of the respective parties hereto, their heirs, legal
representatives, successors and pennitted assigns.
7.8 The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
9
<PAGE>
7.9 Should any part or provision of this Agreement be held unenforceable
or in conflict with the law of any jurisdiction, the validity of the remaining
parts or provisions shall not be affected by such holding. In the event a part
or provision of this Agreement is held unenforceable or in conflict with the law
affecting consideration to either party, the parties agree to negotiate in good
faith amendment of such part or provision in a manner consistent with the
intention of the parties as expressed in this Agreement
7.10 Neither party shall be responsible or liable to the other party for
nonperformance or delay in performance of any terms or conditions of this
Agreement due to acts or occurrences beyond the control of the nonperforming or
delayed party including, but not limited to, acts of God, acts of government,
year 2000 related occurrences, wars, riots, strikes or other labor disputes,
shortages of labor or materials, fires and floods, provided the nonperforming or
delayed party provides to the other party written notice of the existence and
the reason for such nonperformance or delay. The nonperformance or delay by
either party in excess of one hundred eighty (180) days shall constitute cause
for termination of this Agreement with such notice given in writing by one party
to the other.
7.11 Any and all notices or other communications required or permitted by
this Agreement or by law to be served on or given to either party by the other
party shall be in writing and delivered or sent to:
RTI: Jamie M. Grooms, Chief Executive Officer
Regeneration Technologies, Inc.
One Innovation Drive
Alachua, FL 32615
UFTB: Nancy R. Holland, Chief Executive Officer
University of Florida Tissue Bank
One Innovation Drive
Alachua, Florida 32516
With a copy to: Susan Collingwood
General Counsel, University of Florida
10
<PAGE>
7.12 Each party may change its address for purposes of this Agreement by
written notice to the other party. All notices or other communications shall be
deemed duly served and given on the date when personally delivered to the party
to whom it is directed, when sent by FedEx or other reasonably similar courier,
or when deposited in the United States mail, first class, postage prepaid, and
addressed to the party at the address in ARTICLE 7.11 herein.
7.13 Absent express, prior written permission by the disclosing party to
the receiving party, the parties to this Agreement, their officers, directors,
employees and agents, shall strictly maintain the confidentiality of, and shall
not disclose to any third party, the personal data of donors, any processes,
patent applications, technical, financial and business information, general or
otherwise, and any other information normally treated as confidential by the
disclosing party. The parties to this Agreement shall use their best efforts to
assure that all of their employees and agents maintain such confidentiality.
This Article 7.13 shall survive the termination of this Agreement.
7.14 This Agreement shall be executed by each party in duplicate
originals, each of which shall be deemed an original, but both originals
together shall constitute only one and the same instrument.
(Signatures on the following page)
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
on the signature page hereof.
Regeneration Technologies, Inc.
By: /s/ James M. Grooms
-----------------------------------
Title: President and CEO
Date: 7/16/99
University of Florida Tissue Bank, Inc.
By: /s/ Nancy Holland
-----------------------------------
Title: President and CEO
Date: 7/13/99
Attachments:
- - Composite Exhibit A
- - "Debt" - Exhibit B
- - "Distribution Services" -- Exhibit 1.2
- - "Accounts Receivable" -- Exhibit 2.2(a)
- - "Schedule of Conveyed Equipment and Fixtures" -- Exhibit 2.2(c)
- - "Schedule of Assigned Recovery Contracts" -- Exhibit 2.2(d)-1
- - "Schedule of Assigned Distribution Contracts -- Exhibit 2.2(d)-2
- - "Allograft Inventory" -- Exhibit 2.2(c)
- - "Secured Debt" -- Exhibit 2.3(c)
- - "Recovery Fees and Intercompany Charges" -- Exhibit 2.3(d)
- - "Undetermined Equipment" -- Exhibit 2.3(e)
<PAGE>
"Distribution Services"--Exhibit 1.2
* Order Processing
* Returns processing
* Custom order requests
* Requests for x-rays
* Customer complaints
* Customer/sales rep support
* Back orders
* Billing (regular, consignments, and loaner)
* New customer set up
* Sales reports & analysis
* Commissions
* Quotas
* Forecasting
* Fee schedules
* Special pricing
* Consignments
* Loaners
<PAGE>
"Schedule of Assigned Recovery Contracts"
Exhibit 2.2(d)-1
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[CONFIDENTIAL]
<PAGE>
"Schedule of Assigned Distribution Contracts"
Exhibit 2.2(d)-2
[*****]
[*****]
[*****]
[*****]
[CONFIDENTIAL]
<PAGE>
"Secured Debt"- Exhibit 2.3(c)
Regeneration Technologies, Inc.
RTI/UFTB Debt
2/12/98 - 4/15/99
- -----------------
Total Debt Through 4/15/99 4,963,865.31
Current Inventory Valuation (3,030,154.35)
Conveyed Equipment (89,842.28)
--------------
The Secured Debt 1,843,868.68
==============
Security Interest in Accounts Receivable 1,861,947.76
--------------
Balance Unsecured 0.00
==============
<PAGE>
Exhibit 2.3(d)
Recovery Fees and Intercompany Charges
Regeneration Technologies, Inc.
University of Florida Tissue Bank, Inc.
Post 4/15/99 through 6/30/99 Transactions
<TABLE>
<CAPTION>
AMOUNTS DUE TO UFTB FROM RTI
- ----------------------------
<S> <C>
Total Recovery Fee Billings (Net of Credits) 769,700.00
Total Administrative Expense Billings 60,708.33
Total Medical Records Billings 71,000.00
Total Referral Room Billings 14,832.00
Total NYTS Payroll Billings (Net of Payments) 47,577.47
----------
Total Amount due to UFTB from RTI at 6/30/99 963,817.80
==========
AMOUNTS DUE TO RTI FROM UFTB
- ----------------------------
Total Administrative Expense Billings (Net of Adjustments) 36,429.38
Total Lab Charges--(pending final verification) 16,248.00
Cash Collected by UFTB net of Payments & UFTB Cash 79,270.47
Other Reimbursements to RTI 25,322.62
----------
Total Amount due to RTI from UFTB at 6/30/99 157,270.47
==========
Net Amount due to UFTB at 6/30/99 806,547.33
==========
One Time Payment to UFTB at signing 150,000.00
----------
Net amount applied as reduction of Debt 656,547.33
==========
</TABLE>
REVIEWED AND APPROVED
- ---------------------
/s/ Kevin J. Westin /s/ Richard Zahn
- ------------------------ ------------------------
Kevin J. Westin Richard Zahn
RTI Controller UFTB Controller
<PAGE>
Exhibit 10.2
Confidential Treatment. The portions of this exhibit that have been replaced
with "[*****]" have been filed separately with the Securities and Exchange
Commission and are the subject of an application for confidential treatment.
TISSUE RECOVERY AGREEMENT
THIS TISSUE RECOVERY AGREEMENT (this "Agreement"), effective on this 15th
day of April, 1999, is by and between Regeneration Technologies, Inc., a Florida
corporation having its principal place of business at 1 Innovation Drive,
Alachua, Florida ("RTI"), and the University of Florida Tissue Bank, Inc., a
Florida not-for-profit corporation having its principal place of business at 2
Innovation Drive, Alachua, Florida ("UFTB").
WITNESSETH
WHEREAS, RTI and UFTB are parties to that certain agreement entitled, the
"Tissue Recovery, Processing and Distribution Agreement" made and entered into
by the parties on the 23rd of January, 1998, and the "Revised Agreement on
Intercompany Service Billing and Inventory Ownership" made and entered into the
11th of January, 1999 (the "Previous Agreements") attached hereto as Composite
Exhibit "A"; and
WHEREAS, on the effective date of this Agreement the parties are also
entering into the "Programs Transfer Agreement"; and
WHEREAS, the parties wish to replace the Previous Agreements with both
this Agreement and the Programs Transfer Agreement; and
WHEREAS, the parties wish to have all other written agreements between the
parties remain in full force and effect; and
WHEREAS, RTI recovers and processes human donor tissue and distributes the
resulting allograft tissue for implant surgeries throughout the world; and
WHEREAS, RTI owns valuable proprietary and intellectual property rights
and substantial technical expertise which it uses to produce allograft tissue;
and
WHEREAS, UFTB desires to recover and provide human tissue to RTI for
producing allograft tissue and for conducting research, and both parties desire
to cooperate to increase the amount of human tissue available for the production
and
[CONFIDENTIAL]
1
<PAGE>
distribution of allograft tissue by RTI internationally, nationally, and in
UFTB's service area of Florida and Georgia.
NOW, THEREFORE, in view of the representations made above and in
consideration of the terms and conditions set forth below, the parties agree as
follows:
ARTICLE I - General Obligations
1.1 Upon the effective date of this Agreement and upon the simultaneous
execution of the Programs Transfer Agreements, the Previous Agreements shall
terminate.
1.2 As consideration for RTI entering into this Agreement, for the term of
this Agreement UFTB shall:
a. supply the "Exclusive Tissues" set forth on Exhibit "B" attached
hereto, solely to RTI;
b. diligently endeavor to provide human donor tissues to RTI which
meet or exceed RTI's requirements for quality control, quality assurance, and
other specifications set forth in RTI's specifications schedule and standard
operating procedures (the SOPs) as are currently in effect; RTI may modify the
specifications schedule and SOPs only after ninety (90) days written notice to
UFTB;
c. supply the "Non-Exclusive Tissue" set forth on Exhibit B to RTI
upon the following terms:.
(1) RTI shall have a right of first refusal on all
Non-Exclusive Tissue.
(2) UFTB shall make such Non-Exclusive Tissue available to RTI
under the best fee and payment terms that UFTB would offer to any third party.
UFTB shall provide such terms and conditions in writing to RTI upon request by
RTI. In the event that RTI requests any Non-Exclusive Tissue, RTI shall have
fifteen (15) days from its receipt of such written fee and payment terms from
UFTB to accept or reject such fee and payment terms.
2
<PAGE>
(3) In the event that RTI rejects the offer of any tissue from
UFTB by giving notice of such rejection in writing to UFTB, UFTB shall have the
right to offer such tissue to a third party.
1.3 On or about the effective date herein, UFTB shall provide RTI with a
copy of UFTB's Donor related recovery and screening forms and the parties will
work together to make form related changes as required by RTI.
1.4 As consideration for UFTB entering into this Agreement with RTI, RTI
shall:
a. diligently endeavor to provide allograft tissue to hospitals in
Florida and Georgia at levels of service and tissue safety, reasonably the same
as that provided by UFTB as of the date of this Agreement. Such services shall
include the hiring of sales/distribution staff and local distributors;
b. not distribute or otherwise transfer any Exclusive Tissue
received from UFTB, to any third party whose sole purpose is to distribute such
transferred Exclusive Tissue or the allograft tissue resulting from such
transferred Exclusive Tissue, without UFTB's express prior written approval; and
c. for the ten (10) year term of this Agreement, accept and make
payment for all Exclusive Tissue provided by UFTB, under the terms and
conditions set forth hereunder.
d. For the ten (10) year term of this Agreement, as additional
consideration for UFTB's grant to RTI of a right of first refusal on all
Non-Exclusive Tissue, RTI agrees that any and all wholly-owned subsidiaries of
RTI, whether or not such subsidiary exists today or is to be formed or acquired
in the future, shall guarantee the payment obligations of RTI as set forth in
Article 1.4(c) herein, and RTI shall cause such subsidiaries to execute any and
all documents necessary to effect the intent of such agreement to guarantee such
payment obligation; provided however, such guarantee by such subsidiary shall
continue only during the time period that such subsidiary is wholly owned
directly or indirectly by RTI, and nothing in this Agreement shall require such
subsidiary to continue to provide such guarantee in the event that RTI no longer
owns a
3
<PAGE>
majority of the stock in such subsidiary, or if such subsidiary is sold, or if
the shares in such subsidiary are sold to the public through a public offering.
1.5 In the event that RTI desires to receive any tissues which are not an
Exclusive Tissue from UFTB, RTI shall use its best efforts to provide UFTB with
thirty (30) days advance notice of such tissue need. Absent other arrangements
made in advance by the parties, in the event that RTI desires to no longer
receive any tissue previously accepted by RTI (other than the Exclusive Tissue),
RTI shall provide UFTB with ninety (90) days advance written notice of RTI's
intention to no longer receive such tissue.
1.6 RTI shall assume custodianship from UFTB of the "Consignment
Allograft" -- Exhibit 1.6 attached hereto, on a consignment basis. Within
fifteen (15) days from the end of any calendar month in which any Consignment
Allograft was distributed by RTI, RTI shall provide UFTB with a written
accounting of such distributed Consignment Allograft indicating the amount
invoiced to the customer for such distributed Consignment Allograft and the
calculation for amount due to UFTB, along with a check for such amount due.
The amount due UFTB by RTI shall be equal to the dollar amount invoiced to
the customer by RTI, for the Consignment Allograft itself, less a [*****]
commission to be retained by RTI. In the event that UFTB distributes any of
the Consignment Allograft, as a commission to RTI, UFTB shall remit to RTI
[*****] of the dollar amount UFTB has invoiced to any customer, for the
Consignment Allograft itself. UFTB shall provide RTI with a written
accounting of such distributed Consignment Allograft indicating the amount
invoiced to the customer for such distributed Consignment Allograft and the
calculation for amount due to RTI, along with a check for such amount due,
within fifteen (15) days from the end of any calendar month in which any
Consignment Allograft was distributed by UFTB.
1.7 No later than ninety (90) days from the first anniversary of the
effective date of this Agreement, and every anniversary thereafter for the term
of this Agreement, the parties shall convene to discuss, in good faith,
adjustments to the "Reimbursement Schedule" set forth on Exhibit B.
[CONFIDENTIAL]
4
<PAGE>
ARTICLE II - Acceptance and Rejection of Tissues
2.1 RTI shall accept tissue from UFTB if such tissues meet or exceed the
requirements set forth on the specifications schedule and the SOPs, and in the
event that any tissues provided or expected to be provided to RTI by UFTB do not
meet such requirements, as determined by RTI, UFTB shall have the right to make
such tissues available to any third party.
2.2 Exclusive Tissues shall be regularly provided to RTI as recovered by
UFTB under this Agreement.
2.3 Within thirty (30) days of RTI's rejection of any tissue supplied by
UFTB due to a failure to meet the requirements set forth on the specifications
schedule or the SOPs, RTI shall notify UFTB in writing of such rejection(s), and
state the reason(s) for such rejection(s). RTI shall be responsible for the
proper storage, tracking, handling, and disposition of any rejected tissues and
the associated costs of such activities thereof
ARTICLE III - Fees and Payments
3.1 Payment by RTI to UFTB for amounts due under this Agreement for
recovery services shall be based upon the fees set forth in the Reimbursement
Schedule, and such payment shall be made in accordance with this Article 3.1.
a. For the period from April 16, l999 through July 3l, 1999, an
accounting shall be provided to UFTB by RTI of all donors and donor tissue
received from UFTB during the semi-monthly periods ending on the 15th day and
the 1st day of each month. Such accounting shall list the recovery fee due to
UFTB for the donors received (in total, the "Donor Fees"), computed as if all
donors and donor tissue received from UFTB during the period had passed medical
release. The accounting shall also list each donor or donor tissue which, during
the same semi-monthly period, was medically rejected and, for each such
medically rejected donor, the computed difference between the recovery fee for
that donor as if medically accepted and the fee as medically rejected (in total,
the "Rejection Credits"). Within ten (10) business days of the end of each of
5
<PAGE>
those semi-monthly periods, RTI shall pay UFTB the net amount of the Donor Fees
less the Rejection Credits.
b. For the period from August 1, 1999 through October 31, 1999, an
accounting shall be provided to UFTB by RTI of all donors and donor tissue
received from UFTB during the monthly periods ending on the last day of each
month. Such accounting shall list the recovery fee due to UFTB for the donors
received (in total, the "Donor Fees"), computed as if all donors and donor
tissue received from UFTB during the period had passed medical release. The
accounting shall also list each donor or donor tissue which, during the same
monthly period, was medically rejected and, for each such medically rejected
donor, the computed difference between the recovery fee for that donor as if
medically accepted and the fee as medically rejected (in total, the "Rejection
Credits"). By the 20th day following each of the three (3) monthly periods, RTI
shall pay UFTB the net amount of the Donor Fees less the Rejection Credits.
c. For each monthly period beginning November 1, 1999, an accounting
shall be provided to UFTB by RTI, by the l5th day of the following month, of all
donors and donor tissue received from UFTB during the preceding month, and of
all donors and donor tissue passing medical release during that preceding month.
Such accounting shall list the recovery fee due to UFTB for the donors medically
released during the month (in total, the "Donor Fees"). Such accounting shall
also list each donor or donor tissue which, during the monthly period, was
medically rejected and which had been received by RTI prior to November 1, 1999,
and for which RTI had already reimbursed a full recovery fee as if medically
released. For each of these pre-November 1 donors which were subsequently
medically rejected, the accounting shall list the computed difference between
the recovery fee for that donor as if medically accepted and the fee as
medically rejected (in total, the "Rejection Credits"). Within thirty (30) days
of the end of each monthly period, RTI shall pay UFTB the net amount of the
Donor Fees less the Rejection Credits.
d. UFTB shall be responsible for and shall pay all shipping casts
associated with providing donors or donor tissue to RTI under this Agreement.
6
<PAGE>
e. UFTB shall provide all documentation to RTI necessary to perform
the master donor chart review, medical director sign-off. Both RTI and UFTB
shall use their best efforts to obtain medical releases promptly.
f. Payments due to either party under this Article III which are
more than thirty (30) days past due shall bear interest at a rate equal to RTI's
then current commercial lending rate.
3.2. RTI shall pay a royalty to UFTB, for UFTB's remission to the
University of Florida Department of Orthopedics (UFDO), pursuant to the
agreement entitled, "Agreement Between University of Florida and University of
Florida Orthopedic Tissue Bank, Inc.", made effective by and between UFTB and
UFDO on the 22nd day of October 1996. RTI shall calculate such royalty payment
to UFTB by multiplying the "Royalty Rate" by the "Qualifying Revenue". The
Royalty Rate is derived from Table 3.2 below and the Qualifying Revenue is
defined as "A" divided by "B" multiplied by "C" where:
a. "A" equals the number of donors received by RTI from the
"Existing Agencies" - Exhibit 3.2(a)-1 attached hereto, which RTI utilizes to
produce the "Conventional Allograft" - Exhibit 3.2(a)-2 attached hereto;
b. "B" equals the number of all donors utilized by RTI to produce
Conventional Allograft;
c. "C" equals the revenue (net of returns, allowances, discounts,
shipping costs, and sales taxes) resulting from RTI's distribution of
Conventional Allograft derived from all RTI donors; and
d. the number of donors and the revenue amount used to calculate A,
B, and C are derived from the calendar month for which such royalty is due.
e. RTI shall keep for at least two years after the expiration or
termination of this Agreement full and accurate books of accounts and records
covering all distribution of the Conventional Allograft and the calculation of
royalties paid to UFTB. RTI also shall permit UFTB or its authorized
representative, upon reasonable notice during regular business hours, to conduct
reasonable audits of RTI's books, records and inventories to verify the accuracy
of royalties paid under this Article 3.2. If any such
7
<PAGE>
audit of RTI's books and records indicates a royalty underpayment to UFTB of at
least five percent (5%) and $5,000, when compared to payments made and reports
previously furnished to UFTB for the respective time period, RTI shall bear
UFTB's direct cost of such audit. RTI shall pay UFTB any such unpaid amounts due
UFTB, as disclosed by the audit, plus interest (at RTI's current commercial
lending rate) and, if applicable, such direct audit costs, within ten (10) days
of UFTB's written demand.
Table 3.2
Annual Qualifying Revenue Range* Royalty Rate
Up to $5,000,000 [*****]
$5,000,001-$6,000,000 [*****]
$6,000,001-$7,000,000 [*****]
$7,000,001 -$9,000,000 [*****]
Over $9,000,000 [*****]
* Each annual period being July 1 to June 30
e. No later than fifteen (15) business days from the end of each
calendar month for the term of this Agreement, RTI shall provide UFTB with an
accounting of such royalties including a breakdown of Qualifying Revenue by each
Existing Agency for such month along with a check for the appropriate dollar
amount made payable to UFTB, or upon written request from UFTB, RTI will remit
such royalty check and a copy of the accounting directly to the UFDO.
ARTICLE IV - Technical and Professional Assistance
4.1 The parties acknowledge that they each have certain technical
knowledge and expertise and each party agrees to offer the other party
reasonable technical and professional assistance which may be needed from time
to time to enhance the quality and increase the quantity of tissues made
available to RTI.
[CONFIDENTIAL]
8
<PAGE>
4.2 UFTB offers its staff for projects as requested by RTI on a
case-by-case basis, based on the hourly rate of the gross salary and benefits,
plus thirty (30%) percent, of the specific UFTB employee's wage assigned to the
project, plus reasonable non-salaried expenses.
4.3 In the event that an RTI "trainee" accompanies a UFTB employee, or
other UFTB appointed person, on an Exclusive Tissue recovery for the purpose of
Exclusive Tissue recovery training, RTI shall pay UFTB a fee of Two Hundred
Fifty Dollars ($250) for each such recovery training occurrence within thirty
(30) days of receipt of invoice from UFTB.
ARTICLE V - Term and Termination
5.1 The term of this Agreement shall be for a period of ten (10) years
commencing with the effective date set forth above.
5.2 This Agreement may be terminated early:
a. by either party due to a material breach by the other party of
any of its obligations or covenants herein, if the breaching party fails to
remedy said breach within thirty (30) calendar days of receiving written notice
from the non-breaching party of such breach; or
b. by either party upon an adjudication of the other party as
bankrupt or insolvent, or the admission in writing by such 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 such receiver, trustee or similar officer for such other
party's assets without the application or consent of such party, if such
appointment shall continue undischarged for a period of ninety (90) days.
9
<PAGE>
ARTICLE VI- Warranty. Indemnity and Other Representations
6.1 Both parties represent and warrant that the rights granted herein do
not violate any rights previously granted by either party to any third party.
6.2 RTI warrants that:
a. it is a corporation duly organized, validly existing and in good
standing under the laws of Florida and has all corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
b. the execution, delivery and performance by RTI of this Agreement
and the consummation of the transactions contemplated hereby has been duly and
validly authorized by all requisite corporate action, and no other corporate act
or proceeding on the part of RTI is necessary to authorize the execution and
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby;
c. it is not subject to nor obligated under its Articles of
Incorporation or bylaws, any applicable law, rule or regulation of any
governmental authority , or any agreement, instrument, license or permit or
subject to any order, writ, injunction or degree, which would be breached or
violated by its execution, delivery or performance of this agreement;
d. its execution and delivery of this Agreement and the performance
of its obligations hereunder, including the obligations of any payments
hereunder, do not and will not conflict with, violate, or result in any default
under any agreement, instrument or other contract to which RTI is a party or by
which it is bound; and
e. there are no claims, actions, suits or other proceedings pending,
or to the knowledge of RTI threatened which, if adversely determined, would
adversely affect the ability of RTI to consummate the transactions contemplated
by this Agreement or perform its obligations hereunder.
6.3 UFTB warrants that:
a. it is a corporation duly organized, validly existing and in good
standing under the laws of Florida and has all corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder;
10
<PAGE>
b. the execution, delivery and performance by UFTB of this Agreement
and the consummation of the transactions contemplated hereby has been duly and
validly authorized by all requisite corporate action, and no other corporate act
or proceeding on the part of UFTB is necessary to authorize the execution and
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby;
c. it is not subject to nor obligated under its Articles of
Incorporation or bylaws, any applicable law, rule or regulation of any
governmental authority, or any agreement, instrument, license or permit or
subject to any order, writ, injunction or degree, which would be breached or
violated by its execution, delivery or performance of this agreement;
d. its execution and delivery of this Agreement and the performance
of its obligations hereunder, including the obligations of any payments
hereunder, do not and will not conflict with, violate, or result in any default
under any agreement, instrument or other contract to which UFTB is a party or by
which it is bound; and
e. there are no claims, actions, suits or other proceedings pending,
or to the knowledge of UFTB threatened which, if adversely determined, would
adversely affect the ability of UFTB to consummate the transactions contemplated
by this Agreement or perform its obligations hereunder.
6.4 Apart from any warranty expressly made in this Agreement, neither
party hereto makes any representations and extends no warranties of any kind,
either express or implied. Nothing in this Agreement shall be construed as an
obligation to furnish any other information, except as specifically provided
herein, or a warranty or representation by RTI that it will not procure any
tissues from other sources.
6.5 UFTB warrants to RTI that all tissues are screened according to local,
state, federal regulations in force at the time of recovery.
6.6 UFTB shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold RTI, RTI Affiliates (as hereinafter
defined), or any of its assigns, harmless against all claims and expenses,
including legal expenses and reasonable attorney fees, arising out of any other
claims, proceeding, demand, expense,
11
<PAGE>
loss, and liability of any kind whatsoever including any breach of its
obligations hereunder (collectively, "RTI Losses") resulting from the activities
of UFTB under this Agreement, except where such RTI Losses result solely from
RTI's negligence or willful misconduct. As used in this Agreement, "RTI
Affiliates" shall mean RTI's directors, officers, agents and employees.
Notwithstanding the above, RTI, at all times, reserves the right to retain
counsel of its own, at its own expense, to defend RTI's interests. This Article
6.6 shall survive the termination of this Agreement.
6.7 RTI shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold UFTB, UFTB Affiliates (as hereinafter
defined), or any of its assigns, harmless against all claims and expenses,
including legal expenses and reasonable attorney fees, arising out of any other
claims, proceeding, demand, expense, loss, and liability of any kind whatsoever
including any breach of its obligations hereunder (collectively, "UFTB Losses")
resulting from the activities of RTI under this Agreement, except where such
UFTB Losses result from solely UFTB's negligence or willful misconduct. As used
in this Agreement, "UFTB Affiliates" shall mean UFTB's directors, officers,
agents and employees. Notwithstanding the above, UFTB at all times reserves the
right to retain counsel of its own, at its own expense, to defend UFTB's
interests. This Article 6.7 shall survive the termination of this Agreement.
6.8 Each party warrants that it now maintains and will continue to
maintain liability insurance coverage in an amount of two million dollars
($2,000,000) for UFTB, and five million dollars ($5,000,000) for RTI, per
occurrence and that such insurance coverage lists the other party as an
additional insured. Each party shall provide the other party with at least
thirty (30) days written notice of any change or cancellation of such insurance
coverage.
ARTICLE VII- Assignment
7.1 This Agreement has been entered into by RTI and UFTB in reliance upon
the particular qualifications of each party and is personal to each party.
12
<PAGE>
a. Neither this Agreement, nor any rights or obligations hereunder,
may be assigned, pledged or encumbered by UFTB or RTI without the express prior
written approval of the other party; provided however, RTI may assign this
Agreement, upon the prior written consent of UFTB, to a third party provided
that (i) such third party provides reasonably satisfactory evidence that the
third party is of equal or better financial condition than RTI and (ii) such
third party agrees to provide such assurances and agrees to execute such
agreements to meet the obligations of RTI under this Agreement. UFTB shall not
unreasonably withhold its consent to any such assignment.
b. In the event that RTI desires to assign this Agreement, UFTB
shall provide RTI with written notice of its intention to accept or reject such
assignment within fifteen (15) business days of UFTB's receipt from RTI of such
submitted evidence regarding the third party. In the event that RTI does not
receive such written notice of intention from UFTB within such fifteen (15) day
time period, UFTB shall be deemed to have consented to such assignment. In the
event that UFTB withholds consent to such assignment, UFTB shall within such
fifteen (15) day time period, provide RTI, in writing, with the reasonable
reasons for withholding of such consent.
c. For purposes of this Agreement any change in control of RTI shall
be deemed an assignment of this contract by RTI. Change in control shall mean
the change in ownership of a majority of the outstanding shares of common stock.
ARTICLE VIII - Miscellaneous
8.1 A waiver of any specific breach of any provision of this Agreement
shall not be construed as a continuing waiver of other breaches of the same or
other provisions of this Agreement.
8.2 The right of either party to terminate under the provisions of this
Agreement shall not be an exclusive remedy, and either party shall be entitled,
if the circumstances warrant, alternatively or cumulatively, to damages for
breach of this Agreement, to an order requiring performance of the obligations
of this Agreement.
13
<PAGE>
8.3 Nothing herein shall be deemed to create an agency, joint venture or
partnership relationship between the parties hereto.
8.4 This Agreement constitutes the entire agreement and understanding of
the parties with regard to the subject matter hereof, and supercedes the
Previous Agreements and all prior discussions, negotiations, understandings and
agreements between the parties concerning the subject matter hereof. Neither
party shall be bound by any definition, condition, warranty, right, duty or
covenant other than as expressly stated in this Agreement or as subsequently set
forth in a written document signed by both parties. Each party expressly waives
any implied right or obligation regarding the subject matter hereof. All other
written agreements between the parties shall remain in full force and effect.
8.5 This Agreement shall be interpreted and construed in accordance with
the laws of the State of Florida and the parties agree that: (a) they are
subject to the jurisdiction of the state and Federal courts located within the
state of Florida; (b) the exclusive venue for actions related to this Agreement
shall be the Circuit Court for Alachua County, Florida or the United States
District Court having jurisdiction over Alachua County, Florida; and (c) in any
action brought to enforce or interpret the rights or obligations relating to
this Agreement, the prevailing party in such action shall be entitled to an
award of it's reasonable attorneys' fees and costs, including pre-suit and
appellate attorneys' fees and costs, from the non-prevailing party.
8.6 This Agreement may be amended only by a written document signed by
authorized representatives of both parties.
8.7 Each party hereto agrees to execute, acknowledge and deliver all such
further instruments as may be necessary or appropriate to carry out the intent
and purposes of this Agreement. This Agreement shall be binding upon and inure
to the benefit of the respective parties hereto, their heirs, legal
representatives, successors and permitted assigns.
8.8 The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
14
<PAGE>
8.9 Should any part or provision of this Agreement be held unenforceable
or in conflict with the law of any jurisdiction, the validity of the remaining
parts or provisions shall not be affected by such holding. In the event a part
or provision of this Agreement is held unenforceable or in conflict with the law
affecting consideration to either party, the parties agree to negotiate in good
faith amendment of such part or provision in a manner consistent with the
intention of the parties as expressed in this Agreement.
8.10 Neither party shall be responsible or liable to the other party for
nonperformance or delay in performance of any terms or conditions of this
Agreement due to acts or occurrences beyond the control of the non-performing or
delayed party including, but not limited to, acts of God, acts of government,
year 2000 related occurrences, wars, riots, strikes or other labor disputes,
shortages of labor or materials, fires and floods, provided the non-performing
or delayed party provides to the other party written notice of the existence and
the reason for such nonperformance or delay. The nonperformance or delay by
either party in excess of one hundred eighty (180) days shall constitute cause
for termination of this Agreement with such notice given in writing by one party
to the other.
8.11 Any and all notices or other communications required or permitted by
this Agreement or by law to be served on or given to either party by the other
party shall be in writing and delivered or sent to:
RTI: Jamie M. Grooms, Chief Executive Officer
Regeneration Technologies, Inc.
1 Innovation Drive
Alachua, FL 32615
UFTB: Nancy R. Holland, Chief Executive Officer
University of Florida Tissue Bank, Inc.
1 Innovation Drive
Alachua, FL 32615
With copy to: Susan Collingwood
Office of General Counsel
University of Florida
15
<PAGE>
8.12 Each party may change its address for purposes of this Agreement
written notice to the other party. All notices or other communications shall
be deemed duly served and given on the date when personally delivered to the
party to whom it is directed, when sent by FedEx or other reasonably similar
courier, or when deposited in the United States mail, first class, postage
prepaid, and addressed to the party at the address in Article 8.11 herein.
8.13 Absent express, prior written permission by the disclosing party
to the receiving party, the parties to this Agreement, their officers,
directors, employees and agents, shall strictly maintain the confidentiality
of, and shall not disclose to any third party, the personal data of donors,
any processes, patent applications, technical, financial and business
information, general or otherwise, and any other information normally treated
as confidential by the disclosing party. The parties to this Agreement shall
use their best efforts to assure that all of their employees and agents
maintain such confidentiality. This Article 8.13 shall survive the
termination of this Agreement.
8.14 This Agreement shall be executed by each party in duplicate
originals, each of which shall be deemed an original, but both originals
together shall constitute only one and the same instrument.
(Signatures on the following page)
16
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
on the signature page hereof.
Regeneration Technologies, Inc.
By: /s/ James M. Grooms
--------------------------------
Title: President & CEO
-----------------------------
Date: 7/16/99
------------------------------
University of Florida Tissue Bank, Inc.
By: /s/ Nancy Holland
--------------------------------
Title: President and CEO
-----------------------------
Date: 7/13/99
------------------------------
Attachments:
o Composite Exhibit A
o "Exclusive Tissue", "Non-Exclusive Tissues", "Reimbursement Schedule"
--Exhibit B
o "Consignment Allograft" -- Exhibit 1.6
o "Existing Agencies"-- Exhibit 3.2(a)-1
o "Conventional Allograft"-- Exhibit 3.2(a)-2
17
<PAGE>
"Existing Agencies"- Exhibit 3.2(a)-1
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[*****]
[CONFIDENTIAL]
<PAGE>
EXHIBIT 10.3
Confidential Treatment. The portions of this exhibit that have been replaced
with "[*****]" have been filed separately with the Securities and Exchange
Commission and are the subject of an application for confidential treatment.
EXCLUSIVE DISTRIBUTORSHIP AGREEMENT
This Exclusive Distributorship Agreement ("Agreement"), made and effective
this 6th day of June, 1998, by and between Regeneration Technologies, Inc., One
Innovation Drive, Alachua, Florida ("RTI") and Bard Urological Division, C.R.
Bard, Inc., 8195 Industrial Boulevard, Covington, Georgia ("Distributor").
WHEREAS, RTI performs human tissue processing and distributes human
allograft tissue for use by physicians in implant procedures around the world;
and
WHEREAS, RTI processes and distributes a certain human allograft tissue
termed Fascia Lata; and
WHEREAS, Distributor is a manufacturer and distributor of medical devices
for use by physicians in the human genitourinary system; and
WHEREAS, RTI desires to appoint Distributor, and Distributor desires to
accept appointment, as an exclusive distributor of certain Fascia Lata products
within a defined area as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
1. Rights Granted. RTI hereby grants to Distributor the exclusive right, on
the terms and conditions contained herein, to distribute "RTI Products"
(as set forth below), and offer training and education related to such RTI
Products, throughout the world (the "Territory"). The rights granted
hereunder are limited to the following field of use (the "Field of Use"):
Treatment of Voiding Dysfunctions or Pelvic Tissue Defects in the Human
Genitourinary System.
The exclusive right granted hereunder is contingent upon Distributor
meeting the distribution quotas set forth in the "Distribution Quota
Schedule" attached hereto. Nothing herein shall prevent or prohibit RTI
from distributing any RTI Products to any customers outside the Field of
Use.
2. RTI Products. As used in this Agreement, the term "RTI Products" shall
mean the products processed or distributed by RTI as follows: Fascia Lata
(human allograft tissue with the specifications set forth in the "Fascia
Lata Specifications" attached hereto).
3. Terms of Distribution.
A. All distributions of RTI Products to Distributor's customers shall
be made
[CONFIDENTIAL]
1
<PAGE>
pursuant to this Agreement and except as otherwise expressly agreed
by RTI in advance, this Agreement shall control all aspects of the
dealings between RTI and Distributor with respect to the RTI
Products, and any additional or different terms in any Distributor
order are hereby rejected.
B. RTI shall ship all RTI products directly to Distributor's customers
as instructed by Distributor and RTI shall promptly invoice
Distributor for: (1) the greater of forty percent (40%) of the Net
Invoice Amount of all such shipments or the amount set forth in the
Facsia Lata Fee Schedule; and (2) the respective freight charges for
each such shipment to Distributor's customers. "Net Invoice Amount"
as used in this Section 3(B) shall mean the total amount of RTI
Product fees billed to such customers per shipment, net of freight,
and returns approved by RTI. All orders are subject to acceptance by
RTI and RTI shall diligently endeavor to fill all Distributor orders
within the limitations set forth in Section 6 (A) herein.
C. Unless otherwise mutually approved in writing by the parties, the
Fascia Lata Fee Schedule may be changed no more than once per twelve
month period and such percentage of change shall not exceed the
"Consumer Price Index" for the period since the last price change.
RTI agrees to properly pack all items for shipment. Risk of loss due
to damage or destruction of RTI Products shall be borne by
Distributor's customer. The shipper will be selected by RTI unless
Distributor requests a reasonable alternative. RTI covenants that
the fees shall at all times be less than or equal to the fees
charged by RTI to any third party for products supplied directly or
indirectly by RTI which have or may have utility in the Field of Use
("MFN Fees") and that, if the MFN Fees are charged, then this
Agreement shall be deemed automatically amended, without any further
action of the parties, to provide that the fees billed to all of the
Distributor's customers, for the period in which such third party is
charged the MFN Fees, shall be equal to the MFN Fees; provided,
however, that the MFN Fees may be increased in accordance with the
terms of this Section 9(C), but only if the resultant increased fees
are less than or equal to the MFN Fees."
D. RTI shall notify Distributor within three (3) days of RTI's receipt
of: (i) any complaint from Distributor's customers which are related
to RTI Products; or (ii) the return of any RTI Product and its
proper documentation as set forth in the "Return Instructions"
attached hereto. The intention of such provision as set forth in
Section 3(D) herein is to allow Distributor, at its option, to
respond directly to such customer.
4. Payment. RTI shall invoice Distributor for all RTI Products shipped in the
current month promptly after the close of that month's business. Included
with such invoice will be a statement itemizing the shipments as to
product type and quantities shipped by customer. Distributor shall pay all
such invoices within thirty (30) days from receipt of invoice. RTI may
impose a late payment charge of one percent (1%) per month on overdue
amounts. Failure to pay such overdue amounts within thirty (30) days
written notice from
2
<PAGE>
RTI shall, at RTI's option, be considered a material breach of this
Agreement and RTI may suspend deliveries of RTI Products or seek other
remedies available to it at law or equity.
5. Supporting Policies. Distributor shall diligently endeavor to train and
educate its customers about the RTI Products through all channels of
distribution prevailing in the Territory, in conformity with RTI's
established training and education policies and programs. Distributor will
use commercially reasonable efforts to procure orders for RTI Products
from responsible customers whom Distributor reasonably believes are
capable of properly utilizing such RTI Products.
6. RTI's General Duties.
A. RTI shall use its best efforts to supply the quantities of RTI
Products as set forth on the "Distribution Quota Schedule" attached
hereto.
B. RTI shall cause all RTI Products provided to Distributor's customers
hereunder to be irradiated within the 1.5 to 2.5 MRAD range.
C. RTI shall adhere to all state, federal and country specific laws and
regulations and RTI specifications pertaining to the donor recovery
and processing for RTI Products.
7. Distributor's General Duties.
A. Distributor's personnel and representatives shall be adequately
trained by Distributor regarding the RTI Products. Distributor shall
use commercially reasonable efforts to employ sufficient numbers of
such personnel and representatives to properly train and educate
Distributor's customers concerning the RTI Products in the
Territory.
B. Within thirty (30) days of the effective date of this Agreement,
Distributor shall provide RTI with a written, non-binding, annual
distribution forecast, broken down by quarter. Ensuing quarterly
distribution forecasts shall be provided every ninety (90) days
thereafter, for the term of this Agreement, it being the intent of
the parties to have at all times distribution forecasts for the
current quarter and three following quarters. Distributor may amend
its distribution forecasts provided such amendment is submitted to
RTI, in writing, at least one quarter m advance.
8. Distributor's Exclusivity. Distributor's exclusive rights hereunder are
contingent upon Distributor's achieving the level of distribution set
forth on the Distribution Quota Schedule provided, however, that RTI has
supplied sufficient quantities of RTI Products as set forth on the
Distribution Quota Schedule. Otherwise, in the event Distributor fails to
fulfill the distribution requirements set forth on the Distribution Quota
Schedule, RTI
3
<PAGE>
shall notify Distributor in writing of such failure within forty five (45)
days after the end of the applicable Distribution Quota period.
Distributor shall then have forty five (45) days within receipt of such
notice to rectify the shortfall by paying RTI the respective shortfall
amount or otherwise issuing a purchase order for RTI Products in the
amount of such shortfall. In the event that distributor fails to pay such
shortfall or issue such purchase order, RTI's sole and exclusive remedy
shall be to promptly render this Agreement non-exclusive or terminate it
in accordance with Section 17(i) herein. The delivery date(s) of any such
purchase order as set forth in this Section 8 shall be mutually agreed
upon in good faith between Distributor and RTI. Any make-up of the
shortfall amount shall not be applicable to any other period's
distribution quotas.
9. Training and Education Policies. RTI will cooperate with Distributor in
providing for effective training and education of RTI Products throughout
the Territory and RTI's participation in such training and education shall
be on a schedule mutually agreed to by the parties hereto. Distributor
shall promptly compensate RTI for all travel related expenses for RTI
employees, officers, or agents who participate in such training and
education. All training, education, and related materials shall be at
Distributor's expense; however, plans for such training and education and
related materials shall first be submitted to RTI for its approval.
10. Product Warranty Policies. In the event that any RTI Products are proven,
to RTI's satisfaction, to have been defective at the time of distribution,
RTI will make an appropriate adjustment in the original distribution fee
charged for such product or, at RTI's election, replace the defective
product.
11. Indemnification.
A. RTI warrants that all RTI Products supplied to Distributor's
customers hereunder shall be recovered from donors and processed in
accordance with all state, federal and country specific laws and
regulations and RTI specifications. RTI agrees to indemnify
Distributor and hold Distributor harmless from any loss or claim
arising out of defects in any of RTI Products existing at the time
such Product is distributed by RTI to Distributor's customer(s),
provided that Distributor gives RTI immediate notice of any such
loss or claim and cooperates fully with RTI in the handling thereof.
B. Distributor and RTI each agree to indemnify and hold the other
harmless from any loss or claim arising out of its negligence, the
negligence of its agents, employees or representatives, in the
processing, distribution, representation, warranty, use or other
disposition of RTI Products and from breach of any purchase order
arising hereunder or any obligation, representation, warranty and
covenant herein.
C. Each party hereby covenants to maintain, for the term herein, a
comprehensive general liability insurance policy in a minimum amount
of three million dollars ($3,000,000) per occurrence and in the
aggregate. Each party shall provide not
4
<PAGE>
less than thirty (30) days prior written notice to the other in the
event of a change in coverage or policy cancellation. Upon the
request of either party, the other party shall deliver to the
requesting party a certificate evidencing such coverage.
12. Order Processing and Rejection of RTI Products.
A. RTI will employ its best efforts to fill Distributor's orders
promptly on acceptance, subject to availability of RTI Products.
B. Subject to the Return Instructions, Distributor or Distributor's
customers shall notify RTI in writing if such customer chooses to
reject all or any part of such shipment of RTI Product or, falling
such notification, unless such RTI Product has a latent defect, the
customer shall be deemed to have accepted such shipment for all
purposes. With respect to latent defects, Distributor or
Distributor's customers shall promptly notify RTI after such
customer's discovery thereof, and such customer shall have the right
to reject such RTI Product.
13. Use of RTI Name. Distributor will not use, authorize or permit the use of,
the name "Regeneration Technologies, Inc.," "RTI" or any other trademark
or trade name owned by RTI or its corporate or business name in any way
without the prior written approval of RTI. Distributor shall not contest
the right of RTI to exclusive use of any trademark or trade name used or
claimed by RTI.
15. Use of University of Florida Name. The tradename "University of Florida
Tissue Bank, Inc." shall be included on the packaging of all RTI Products.
Distributor shall not use the name University of Florida or the University
of Florida Tissue Bank, in any way or form, on any promotion for the
distribution of Tissue, advertising, or any other form of publicity,
without the prior written consent of RTI.
16. Relationship of the Parties. The relationship between RTI and Distributor
is that of vendor and vendee. Distributor, its agents and employees shall,
under no circumstances, be deemed employees, agents or representatives of
RTI. Distributor will not modify any of RTI Products without written
permission from RTI. Neither Distributor nor RTI shall have any right to
enter into any contract or commitment in the name of, or on behalf of the
other, or to bind the other in any respect whatsoever.
17. Term and Termination. This term of this Agreement shall be for a period
often ten (10) years commencing with the effective date herein and upon
the end of such term the Agreement shall continue until terminated by
either party with at least thirty (30) days prior written notice to the
other party. This Agreement may be terminated early:
(i) by either party due to a material breach by the other party of any
of its obligations or covenants herein upon sixty (60) calendar days
written notice to the breaching party, but only if such breaching
party fails to remedy said breach within sixty (60) calendar days of
such written notice;
5
<PAGE>
(ii) by either party promptly upon the insolvency or filing for
receivership or bankruptcy by the other party.
18. Obligations on Termination. On termination of this Agreement, Distributor
shall cease to be an authorized distributor of RTI and:
A. All amounts owed by Distributor to RTI shall, without exception,
become immediately due and payable;
B. All unshipped orders may be cancelled without liability of either
party to the other;
C. Neither party shall be liable to the other because of such
termination for compensation, reimbursement or damages on account of
the loss of prospective profits or anticipated distributions, or on
account of expenditures, investments, leases or commitments in
connection with the business or goodwill of RTI or Distributor or
for any other reason whatsoever growing out of such termination.
19. Use of Name Prohibited. On termination of this Agreement, Distributor will
remove and not thereafter use any sign containing any trade name, logo or
trademark of RTI including, but not limited to, "Regeneration
Technologies, Inc.," or "RTI" and will immediately destroy all stationery,
advertising matter and other printed matter in its possession or under its
control containing such name, or any of RTI trademarks, trade names or
logos. Distributor will not at any time after such termination use or
permit any such trademark, trade name or logo to be used in any manner in
connection with any business conducted by it or in which it may have an
interest, or otherwise whatsoever as descriptive of or referring to
anything other than merchandise or products of RTI. Regardless of the
cause of termination, Distributor will immediately take all appropriate
steps to remove and cancel its listings in telephone books, and other
directories, and public records, or elsewhere that contain the RTI name,
logo or trademark. If Distributor fails to obtain such removals or
cancellations promptly, RTI may make application for such removals or
cancellations on behalf of Distributor and in Distributor's name and in
such event Distributor will render every assistance.
20. Acknowledgments. Each party acknowledges that no other representation,
statement, understanding or agreement, has been made, or exists between
the parties, except for the Confidential Information Agreement executed
between the parties on February 2, 1998, and that neither party has relied
on anything done or said or on any presumption in fact or in law, (1) with
respect to this Agreement, or to the duration, termination or renewal of
this Agreement, or with respect to the relationship between the parties,
other than as expressly set forth in this Agreement; or (2) that in any
way tends to change or modify the terms, or any of them, of this Agreement
or to prevent this Agreement becoming effective; or (3) that in any way
affects or relates to the subject matter hereof. Distributor also
acknowledges that the terms and conditions of this Agreement, and each of
them, are reasonable, fair and equitable.
6
<PAGE>
21. Right of First Negotiation. In the event RTI develops any new technology,
invention, process, or application within the Field of Use (the "New
Technology"), RTI grants to Distributor the exclusive right to negotiate
an agreement for distribution or licensing of the New Technology. Such
exclusive right shall be limited in duration to ninety (90) days from the
date RTI advises Distributor of the existence of the New Technology. If
the parties hereto fail to conclude an agreement with respect to the New
Technology within ninety (90) days following such notice, RTI will be free
to negotiate an agreement with any other party concerning the New
Technology.
22. Final Agreement. This Agreement may be modified only by a further writing
that is duly executed by both parties.
23. Assignment. Neither this Agreement nor any interest in this Agreement may
be assigned by either party without the prior written approval of the
other party and such consent shall not be unreasonably withheld.
24. No Implied Waivers. Except as expressly provided in this Agreement, waiver
by either party, or failure by either party to claim a default, of any
provision of this Agreement shall not be a waiver of any default or
subsequent default.
25. Notices. Any notice required by this Agreement or given in connection with
it, shall be in writing and shall be given to the appropriate party by
personal delivery or by certified mail, postage prepaid, or recognized
overnight delivery services.
If to RTI: Regeneration Technologies, Inc.
One Innovation Drive
Alachua, Florida 32615
If to Distributor: Bard Urological Division, C.R. Bard, Inc.
8195 Industrial Boulevard
Covington, Georgia 30014
With copy to: CR Bard, Inc.
730 Central Avenue
Murray Hill, NJ 07974
Att: Office of General Counsel
26. Governing Law and Venue. This Agreement shall be construed and enforced in
accordance with the laws of the state of Florida. Venue for any legal
proceeding or action at law arising out of or construing this Agreement
shall lie in the state courts of Alachua County, Florida, or the United
States District Court for the Northern District of Florida, Gainesville
Division.
27. Severability. If any term of this Agreement is held by a court of
competent jurisdiction to be invalid or unenforceable, then this
Agreement, including all of the remaining terms, will remain in full force
and effect as if such invalid or unenforceable term had never been
included.
7
<PAGE>
28. Headings. Headings used in this Agreement are provided for convenience
only and shall not be used to construe meaning or intent.
29. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed an original, and all of which shall constitute
but one and the same instrument.
30. License.
A. RTI hereby acknowledges that a reliable and continuous source of
supply of the RTI Product is imperative to Distributor's successful
distribution efforts. Therefore, as a material inducement to the
execution of this Agreement by Distributor, RTI hereby grants
Distributor an exclusive license under RTI's proprietary rights
limited to the RTI Products, and existing as of the effective date
herein, to process, have processed, use and distribute an analogue
of the RTI Product in the Territory and Field Use. Upon request from
Distributor, RTI shall assist Distributor in locating a suitable
processor for such licensed analogues. Distributor agrees, however,
to withhold the exercise of its rights under such license until the
occurrence of, and only for the duration of, the following:
(i) RTI's insolvency, or general assignment for the benefit of its
creditors; a filing for bankruptcy; a filing against it of a
petition in bankruptcy which is not dismissed before an order for
relief is entered; a petition filing in any state or federal
proceeding seeking relief from creditors; but only if any such
actions set forth in Section 30 (i) herein prevent RTI from meeting
processing and shipping obligations hereunder; or
(ii) RTI's breach of any of its duties or responsibilities hereunder
if such breach is not cured within sixty (60) days of RTI's receipt
of notice of such breach, or upon RTI's inability to supply the
quantity of RTI Products set forth in the Distribution Quota
Schedule if such inability is not cured within ninety (90) days of
written notice from Distributor.
B. In the event Distributor elects to utilize the exclusive license
granted herein, it shall notify RTI in writing within thirty (30)
days of Distributor's knowledge of an occurrence as set forth in
Section 30(A)(i) and (ii) herein. Distributor shall pay Ri] a
royalty of two percent (2%) of the net distribution fee of any
product distributed under such license. "Net distribution fee" as
used in this Section 30(B) shall mean the gross amount indicated on
invoices for such distributed products less trade and quantity
discounts; returns; and freight charges. Royalties, if any, shall be
paid to RTI in U.S. Dollars, with an accounting of how such
royalties were determined, within forty five (45) days following the
end of each calendar quarter in which Distributor utilizes such
license.
(SIGNATURES ON NEXT PAGE)
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Witnesses Regeneration Technologies, Inc.
/s/ James M. Grooms
- ------------------------------- -----------------------------------------
By: James M. Grooms
Title: President & CEO
- -------------------------------
Bard Urological Division, C.R. Bard, Inc.
/s/ Burt Gersley
- ------------------------------- -----------------------------------------
By: Burt Gersley
Title: President
- -------------------------------
9
<PAGE>
"RETURN INSTRUCTIONS"
1. Custom processed tissues will not be accepted for return by RTI.
2. Freeze Dried Tissue will be accepted for return within the first thirty
days of purchase on the following basis:
a. Upon request from customer RTI will fax customer a "Return
Authorization" form. Such form must be completed by customer and
included with return shipment.
b. Tissue must be in the same condition as when it left RTI.
c. Purchaser will pay freight from and back to RTI.
d. Purchaser will pay a twenty percent (20%) restocking fee for the
tissue(s) being returned.
3. Freeze Dried Tissue will be accepted for return after thirty days on the
following basis:
a. Tissue must be in the same condition as when it left RTI, and must
have a minimum of twelve (12) months before expiration.
b. The purchaser will pay freight from and back to RTI.
c. The purchaser will pay a forty percent (40%) restocking fee.
<PAGE>
"TRANSFER QUOTA SCHEDULE"
1. Period I - first eighteen (18) months commencing with the effective date
of Agreement: [*****]
2. Period II - twelve (12) months commencing with the end of Period I:
[*****]
3. Period III - twelve (12) months commencing with the end of Period II:
[*****]
4. Period IV - remainder of Agreement term commencing with the end of Period
III: [*****]
[CONFIDENTIAL]
<PAGE>
Fascia Lata Fee Schedule
Reorder# Size Fee
- -------- ---- ---
483042 4cm x 2cm [*****]
483047 7cm x 4cm [*****]
483212 l2cm x 2cm [*****]
483412 l2cm x 4cm [*****]
483812 l2cm x 8cm [*****]
[CONFIDENTIAL]
<PAGE>
EXHIBIT 10.4
Confidential Treatment. The portions of this exhibit that have been replaced
with "[*****]" have been filed separately with the Securities and Exchange
Commission and are the subject of an application for confidential treatment.
EXCLUSIVE LICENSE AGREEMENT
This Agreement is made effective the 22nd day of April, 1997, by and
between the University of Florida Tissue Bank, Inc. (hereinafter called "UFTB"),
a nonstock, nonprofit Florida corporation, and Exactech, Inc. (hereinafter
called Exactech) a corporation organized and existing under the laws of the
State of Florida;
WHEREAS, UFTB owns certain inventions that are described in the "Licensed
Technology" defined below, and UFTB and Exactech have jointly developed new uses
for these inventions, UFTB is willing to grant a license to Exactech on the
Licensed Technology and Exactech desires such a license;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the parties covenant and agree as follows:
Section 1. Definitions.
A. "Licensed Technology" shall refer to a moldable substance
containing demineralized bone and cortical cancellous chips as described in U.S.
Patent Application S/N 08/816,079, dated March 13, 1997, attached as Exhibit A,
including any continuation of this patent, or continuation in part, or
divisional applications thereof as well as foreign counterparts thereof and
patents issuing thereon.
B. "Developed Products" shall refer to and mean those products which
are referenced in Exhibit B, as well as any similar shapes, sizes and
Improvements, which items are processed out of UFTB's Licensed Technology.
"Improvements" shall mean any modification of a Developed Product which
encompasses one or more of the elements of the Licensed Technology.
C. "Established Distribution Fee and Minimum Distribution Fee" shall
initially mean, respectively, the list Distribution Fee and minimum Distribution
Fee specified in Exhibit C of this Agreement for each of the Developed Products.
The Established Distribution Fee shall include separate fees for U.S. and for
non-U.S. sales of Developed Products, which Distribution Fees may or may not be
the same. The Established Distribution Fee and Minimum Distribution Fee for any
Developed Product may be changed from time to time, effective for the beginning
of the calendar month following the date of the change, by written mutual
agreement of UFTB and Exactech.
D. "Licensed Field" shall be the limited field of general human
orthopedic use, exclusive of any specific or general usages which involve the
human spine.
E. "Licensed Territory" shall be the United States and any of the
rest of the world where distribution of the Developed Products is not unlawful.
Section 2. Grant.
A. License.
UFTB hereby grants to Exactech an exclusive license, limited to the
Licensed Field and the Licensed Territory, under the Licensed Technology to
distribute Developed Products.
[CONFIDENTIAL]
1
<PAGE>
B. License to Improvements.
UFTB hereby grants to Exactech an exclusive license, limited to the
Licensed Field and the Licensed Territory, under the Licensed Technology, to
distribute Improvements to the Developed Products, subject to approval in
writing by UFTB of the Improvement. Such Improvements are to be treated as
Developed Products and as such are bound by all the terms of this Agreement. In
the event that Exactech develops an Improvement independently of UFTB, Exactech
shall provide UFTB with a written disclosure of each such
independently-developed Improvement, unambiguously identifying it as an
Improvement governed by this paragraph, within forty five (45) days of the first
attempt at its development.
C. License of UFTB Marks.
During the term of this Agreement, UFTB grants to Exactech a
royalty-free, non-transferable license to use the mark "University of Florida
Tissue Bank" (the "UFTB Mark") in connection with the distribution of the
Developed Products, subject to the written approval of UFTB of the manner in
which the UFTB Mark is used. Exactech shall not use UFTB's name, or the name of
the University of Florida, in distribution promotion, advertising, or any other
form of publicity or external communication without the prior written approval
of UFTB.
D. Developed Products Completion and Design
As Developed Products are not currently ready for clinical use, UFTB
and Exactech agree to utilize their best efforts to jointly complete Developed
Products as soon as possible. UFTB hereby agrees that a Developed Product will
be completed for clinical use no later than September 1, 1997. In the event UFTB
is unable to meet such deadline, the parties may extend the date by written
mutual agreement. Acceptability of Developed Product design shall be subject to
mutual agreement between UFTB and Exactech.
E. Product Supply.
Exactech agrees to provide UFTB with an estimated quarterly
requirement for Developed Products at least ninety (90) days in advance of the
first day of each calendar year quarter. UFTB agrees to supply Developed
Products in sufficient quantities to meet the estimated requirement.
Section 3. Consideration.
A. Development.
Exactech agrees to and warrants that; i) it has, or will obtain, the
expertise necessary to independently evaluate the Licensed Technology and
Developed Products; and ii) it will exercise due diligence to effect the
introduction of Developed Product into the commercial market as soon as
practical. Developed Product design shall be subject to mutual agreement between
UFTB and Exactech.
B. License Fee.
Exactech shall pay to UFTB, as consideration for entering into this
Agreement, which sum is non refundable and will not be considered as an advance
payment on Transfer Distribution Fees due hereunder, a license fee of [*****]
dollars payable as follows:
(i) [*****] dollars upon execution of this Agreement by both
parties.
[CONFIDENTIAL]
2
<PAGE>
(ii) [*****] dollars upon production by UFTB of a clinically
ready Developed Product, which is mutually acceptable to
both parties.
C. Transfer Distribution Fee.
In addition to the Section 3B License Fee, Exactech agrees to pay to
UFTB a Transfer Distribution Fee for all Developed Products shipped by UFTB to
Exactech or shipped to any third party at the directive of Exactech. Developed
Product so shipped by UFTB shall be f.o.b. at UFTB's Alachua, Florida offices.
The Transfer Distribution Fee paid for Developed Products shall be [*****] of
the actual invoiced Distribution Fee for each Developed Product distributed,
but at no time shall the Transfer Distribution Fee paid be less than [*****]
of the Minimum Distribution Fee.
D. Minimum Aggregate Annual Performance.
In the event that, for the later of 1999 or the third twelve month
period following the availability of the Developed Product from UFTB, the annual
total paid to UFTB under this Agreement, including aggregate annual Transfer
Distribution Fee or any other amounts paid to UFTB, is less than [*****], or
for any calendar year thereafter is less than [*****], UFTB may, at its sole
discretion, upon written notice to Exactech, terminate this Agreement.
Exactech shall have the right within forty five (45) days from the receipt of
such notice from UFTB to pay such additional sums as may be necessary to
bring payment for such year to the specified minimum. In the event that UFTB
delays or fails to deliver Developed Product or Federal regulatory actions
delay Developed Product delivery, such events shall not be considered reason
for termination.
E. Accounting Payments.
(i) Amounts owing to UFTB under Section 3C shall be paid on a net
30-day basis. Any amounts which remain unpaid after forty-five (45) days from
the end of the month in which they were earned shall accrue interest until paid
at the rate of one and one-half percent (1.5%) per month. However, in no event
shall this interest provision be construed as a grant of permission for any
payment delays.
(ii) Except as otherwise directed, all amounts owing to UFTB under
this Agreement shall be paid in U.S. dollars to UFTB at the address provided in
Section 15A. All amounts owing with respect to Distribution Fees stated in
currencies other than U.S. dollars shall be converted at the rate shown in the
Federal Reserve Noon Valuation - Value of Foreign Currencies on the day
preceding the payment.
(iii) A full accounting of monthly distributions of Developed
Products by Exactech shall be submitted to UFTB each month by the 25th day of
the following month. Such accounting shall be on a per-country and Developed
Product basis and shall be summarized on the form shown in Exhibit D of this
Agreement. In the event no payment is owed to UFTB, a statement setting forth
that fact shall be supplied to UFTB.
Section 4. Certain Warranties of UFTB.
A. UFTB warrants that it is the owner of the Licensed Technology or
otherwise has the right to grant the licenses granted to Exactech in this
Agreement.
B. UFTB warrants to the best of its knowledge and belief that the
Licensed Technology does not infringe upon any patent which has been issued to,
or any intellectual property right of, any third party.
C. UFTB warrants to the best of its knowledge and belief the
Licensed Technology is free
[CONFIDENTIAL]
3
<PAGE>
of any liens, encumbrances, pledges, or claims of any third party.
D. UFTB warrants that the rights granted herein do not violate any
rights previously granted by UFTB to any third party.
E. UFTB warrants that it has not received any written notice from or
written claim of any third party that the Licensed Technology is invalid,
unenforceable or infringes the rights of any third party.
F. UFTB has no obligation to furnish any know-how not provided in
Licensed Technology or any services other than those specified in this
Agreement.
G. UFTB makes no warrant or representation that it will not grant
licenses to others to make, use or distribute products not covered by the claims
of the Licensed Technology.
Section 5. Record keeping.
A. Exactech shall keep books and records sufficient to verify the
accuracy and completeness of Exactech's accounting referred to above, including
without limitation inventory, purchase and invoice records relating to the
Developed Products and their distribution. Such books and records shall be
preserved for a period not less than five years after they are created during
and after the term of this Agreement.
B. Exactech shall take all steps necessary so that UFTB may within
thirty days of its request review and copy all the books and records at a single
U.S. location to verify the accuracy of Exactech's accounting. Such review may
be performed by any employee of UFTB as well as by any attorney or public
accountant designated by UFTB, upon reasonable notice and during regular
business hours.
C. If a payment deficiency is determined, Exactech shall pay the
deficiency outstanding within thirty (30) days of receiving written notice
thereof, plus interest on outstanding amounts as described in Section 3E(i).
D. If a payment deficiency for a calendar year exceeds five percent
(5%) of the amount paid for that year, then Exactech shall be responsible for
paying UFTB's out-of-pocket expenses incurred with respect to the review
referred to in Section 5B herein.
Section 6. Term and Termination.
A. The term of this license shall begin on the effective date of
this Agreement and continue until the earlier of the date that the payment of
Transfer Distribution Fees amounts under Section 3C, once begun, have ceased for
more than six (6) calendar months, or the date of termination due to the
provisions of the Minimum Aggregate Annual Performance of Section 3D, or the
date of termination for any other reason in this Section. In the event that UFTB
delays or fails to deliver Developed Product or Federal regulatory actions delay
Developed Product delivery, such events shall not be considered reason for
termination.
B. Exactech may terminate this Agreement at any time by giving at
least one hundred twenty (120) days written notice of such termination to UFTB.
Such a notice shall be accompanied by a statement of the reasons for
termination.
C. If Exactech at any time defaults in the timely payment of any
monies due to UFTB or the timely submission to UFTB of any reports, or commits
any breach of any other covenant herein contained, and Exactech fails to remedy
any such breach or default within thirty days after written notice thereof by
UFTB, UFTB may, at its option,
4
<PAGE>
terminate this Agreement by giving notice of termination to Exactech.
D. Upon the termination of this Agreement, Exactech shall remain
obligated to provide an accounting for and to pay amounts earned by UFTB up to
the date of the termination.
Section 7. Assignability.
This Agreement may not be transferred or assigned by Exactech except
with the prior written consent of UFTB. UFTB may transfer or assign its rights,
interest, and/or ownership in this Agreement to any entity in which UFTB has an
ownership interest at the time of transfer or assignment.
Section 8. Contest of Validity.
In the event Exactech contests the validity of this Agreement or the
Licensed Technology, Exactech shall continue to pay Transfer Distribution Fee
amounts with respect to Developed Products as if such contest were not underway,
until this Agreement or the Licensed Technology is adjudicated invalid or
unenforceable in the following manner:
A. All disputes over the meaning and interpretation of this
Agreement shall be resolved by conciliation and mediation and if mediation is
unsuccessful then disputes shall be finally settled by an Arbitrator selected by
UFTB and Exactech. If UFTB and Exactech cannot agree on an Arbitrator, then
disputes shall be resolved by an Arbitration Panel comprising one arbitrator
appointed by UFTB, one arbitrator appointed by Exactech, and a Chairman of the
Arbitration Panel appointed by the first two arbitrators. Any such arbitration
proceeding shall be conducted in accordance with generally accepted arbitration
rules; shall be held in the state of Florida, unless otherwise agreed by the
parties; and judgment upon the arbitration award may be entered in any court
having jurisdiction.
B. In order to initiate procedures for dispute resolution by
conciliation, mediation and arbitration either party shall give written notice
to the other of intention to resolve a dispute, and absent satisfactory
resolution, then to arbitrate. Such notice shall contain a statement setting
forth the nature of the dispute and the resolution sought. If, within sixty (60)
days of such notice a resolution by conciliation between the parties themselves
or by mediation has not been achieved to the satisfaction of both parties, the
dispute must be arbitrated.
C. UFTB reserves the right and power to proceed with direct judicial
remedies against Exactech without conciliation, mediation or arbitration for
breach of the Transfer Distribution Fee payment and distributions reporting
provisions of this Agreement after giving written notice of such breach to
Exactech followed by an opportunity period of thirty (30) days in which to cure
such breach. In collecting overdue Transfer Distribution Fee payments and
securing compliance with reporting obligations, UFTB may use all judicial
remedies available.
Section 9. Foreign Patents and Payment of Costs.
Exactech agrees to pay UFTB within sixty (60) days of submission to
Exactech of a statement and request for payment, an amount equivalent to fifty
percent (50%) of all expenses incurred in the preparation, filing, prosecution,
renewal, and continuation of patents in foreign countries related to the
protection or improvement of the Developed Products for those countries,
including all taxes, official fees and attorneys fees. However, Exactech may
elect in writing to be released from its license to distribute Developed
Products in any foreign country at any time by giving written notice to UFTB
within thirty (30) days of receipt of the statement, request for payment or
other such written notice from UFTB, notifying UFTB that it does not wish to pay
its fifty percent of the patent-related expenses for that country, in which
event Exactech shall thereafter have no obligation to reimburse UFTB for any
expenses relating to such patents or patent applications for that foreign
country. At no time shall Exactech be required to pay a higher percentage than
UFTB
5
<PAGE>
of the expenses described in this paragraph.
Section 10. Payment of U.S. Renewal Fees and Continuing Prosecution Costs.
A. When renewal fees or continuing prosecution costs are due for the
"Bone Paste" described in the U. S. Patent Application attached as Exhibit A
herein, UFTB may elect to pay all said costs and in the event UFTB elects not to
pay said renewal fees, Exactech may, at Exactech's discretion, pay for said
renewal.
B. In the event that UFTB decides to file for additional U.S.
Patent(s) on the Developed Products distributed or to be distributed by
Exactech, Exactech agrees to pay fifty percent (50%) of all reasonable legal
costs related to acquiring such patent(s), including any continuations,
continuations in part, or divisional applications thereof. At no time shall
Exactech be required to pay a higher percentage than UFTB of the expenses
described in this paragraph.
Section 11. Infringement of Licensed Patent Rights by Third Parties.
A. In the event that any infringement of a Patent on the Licensed
Technology or Developed Products shall come to the attention of UFTB or
Exactech, then UFTB and Exactech shall duly inform each other. UFTB shall, in
its sole discretion, determine whether or not to prosecute a patent infringement
action. If UFTB conducts and pays the costs of the litigation, then any amount
recovered belongs to UFTB. Exactech shall have the right to pay a portion of the
litigation costs up to 50% of the total incurred and will have the right to the
same proportion of recovery.
B. If UFTB determines and elects not to prosecute a patent
infringement action as described in Section 11A, then Exactech may bring or
cause legal proceedings against the alleged infringing party at its own initial
expense, with partial reimbursement by UFTB as defined herein, so long as
Exactech shows that (i) there is substantial likelihood of infringement, (ii)
there is substantial competition by the infringer, and (iii) unless mutually
agreed to in writing by UFTB and Exactech, no other action for infringement is
pending at the time so that only one such lawsuit is pending at any time.
Exactech may defray up to fifty percent (50%) of the direct, out-of-pocket
expenses of any such lawsuit by withholding from payments to UFTB, upon written
notification to UFTB twenty percent (20%) of the Transfer Distribution Fee due
to UFTB per Section 3C herein. At no time shall the aggregate sum of the amounts
withheld from UFTB `s Transfer Distribution Fee payments exceed fifty percent
(50%) of the total amount of actual, out-of-pocket expenses paid by Exactech for
expenses directly related to the lawsuit. Out of any damages or awards recovered
by Exactech in such action conducted by Exactech, Exactech will first recover
any direct out-of-pocket expenses for conducting said litigation which are in
excess of the costs defrayed by UFTB's withheld Transfer Distribution Fees. UFTB
will then recover any Transfer Distribution Fees withheld by Exactech and any
direct, out-of-pocket expenses which it incurred on behalf of the litigation.
Any amount remaining shall belong to Exactech except that UFTB shall receive an
amount equivalent to its Transfer Distribution Fee percentage on such amount
remaining.
C. In any proceedings, UFTB shall be entitled to employ counsel and
control the course of litigation, at its own expense, if, in UFTB's sole
discretion, Exactech's defense of patent rights is insufficient, or if Exactech
fails to carry on vigorous prosecution of said patent rights.
D. In the event Exactech seeks, with justifiable cause, to prosecute
more than one lawsuit at a time, UFTB will not unreasonably withhold permission
where such actions are conducted entirely at Exactech's expense, including
reimbursement of UFTB's expenses incurred on behalf of such action.
E. In any action brought by Exactech, Exactech shall indemnify and
hold UFTB harmless from any damages, costs or expenses incurred by reason of
such litigation.
Section 12. Patent Marking.
6
<PAGE>
Exactech shall insure that it applies patent markings, when notified
by UFTB of applicability, that meet all requirements of U.S. law, 35 U.S.C. 287,
with respect to all Developed Products subject to this Agreement.
Section 13. Product Liability; Conduct of Business.
A. Subject to UFTB's indemnification obligations pursuant to Section
13(B) hereof, Exactech shall indemnify and hold UFTB harmless from any and all
loss, damages, liabilities, costs and expenses, including, without limitation,
reasonable attorneys fees and court costs, that may result from any demand,
claim, or litigation relating to, resulting from or arising out of the marketing
or distribution by Exactech of the Developed Products.
B. UFTB shall indemnify and hold Exactech harmless from any and all
loss, damages, liabilities, costs and expenses, including, without limitation,
reasonable attorneys fees and court costs, that may result from any demand,
claim or litigation resulting from any action or inaction which is solely the
fault of UFTB.
C. Exactech warrants that it now maintains and will continue to
maintain liability insurance coverage appropriate to the risk involved in
marketing the products subject to this Agreement. Within sixty (60) days after
the execution of this Agreement and thereafter annually between January 1 and
January 31 of each year, Exactech will present evidence to UFTB that the
coverage is being maintained. In addition, Exactech shall provide UFTB with at
least 30 days prior written notice of any change in or cancellation of the
insurance coverage.
D. UFTB warrants that it now maintains and will continue to maintain
liability insurance coverage appropriate to the risk involved in marketing the
products subject to this Agreement. Within sixty (60) days after the execution
of this Agreement and thereafter annually between January 1 and January 31 of
each year, UFTB will present evidence to Exactech that the coverage is being
maintained. In addition, UFTB shall provide Exactech with at least 30 days prior
written notice of any change in or cancellation of the insurance coverage.
Section 14. Miscellaneous.
This Agreement shall be construed in accordance with the internal
laws of the State of Florida. If any provisions of this Agreement are or shall
come into conflict with the laws or regulations of any jurisdiction or any
governmental entity having jurisdiction over the parties or this Agreement,
those provisions shall be deemed automatically deleted, if such deletion is
allowed by relevant law, and the remaining terms and conditions of this
Agreement shall remain in full force and effect. If such a decision is not so
allowed or if such a deletion leaves terms thereby made clearly illogical or
inappropriate in effect, the parties agree to substitute new terms as similar in
effect to the present terms of this Agreement as may be allowed under the
applicable laws and regulations. The parties hereto are independent contractors
and not joint venturers or partners.
Section 15. Notices.
Any notice required to be given pursuant to the provisions of this
Agreement shall be in writing and shall be deemed to have been given at the
earlier of the time when actually received as a consequence of any effective
method of delivery, including but not limited to hand delivery, transmission by
telecopier, or address to the party for whom intended at the address below or at
such changed address as the party shall have specified by written notice,
provided that any notice of change of address shall be effective only upon
actual receipt.
(a) University of Florida Tissue Bank, Inc. (b) Exactech: Exactech, Inc.
Attn: Jamie Grooms Attn: Timothy Seese
One Innovation Drive 4613 NW 6th Street
Alachua, FL 32615 Gainesville, FL 32609
7
<PAGE>
Section 16. Integration.
This Agreement, together with the Exhibits hereto, constitutes the
entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes any prior expression of intent or agreement of the parties with
respect thereto. The Agreement cannot be modified, altered, or amended except by
an agreement in writing signed by the duly authorized representatives of each of
the parties hereto.
Section 17. Contract Formation and Authority.
A. No agreement between the parties shall exist unless the duly
authorized representative of Exactech and the managing director of UFTB have
signed this document within thirty (30) days of the effective date written on
the first page of this Agreement.
B. The persons signing on behalf of UFTB and Exactech hereby warrant
and represent that they have authority to execute this Agreement on behalf of
the party for whom they have signed.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
on the dates indicated below.
UNIVERSITY OF FLORIDA TISSUE BANK, INC.
By: /s/ Jamie M. Grooms Date: 4/22, 1997
----------------------- -----------------
Name and Title: Jamie M. Grooms, President & CEO
----------------------------------
Exactech: EXACTECH, INC.
By: /s/ Timothy J. Seese Date: April 22, 1997
----------------------- -----------------
Name and Title: /s/ TIMOTHY J. SEESE, PRESIDENT
----------------------------------
8
<PAGE>
[Coverletter of Regeneration Technologies, Inc.(TM)]
10 March 1998
Dr. William Petty, Chairman & CEO
Exactech, Inc.
4613 NW 6th Street
Gainesville, FL 32609
Dear Dr. Petty:
Please allow this letter to serve as an amendment to the Exclusive License
Agreement, effective on April 22, 1991, between Exactech, Inc. and the
University of Florida Tissue Bank, Inc.
"Section E Product Supply" should be amended to read as follows:
UFTB shall supply Exactech with a projected production yield for Developed
Products and Exactech shall use such projected production yield to develop a
Developed Product requirement forecast. Such requirement forecast shall indicate
how RTI is to allocate such production yield to the Developed Products. Exactech
shall provide such requirement forecast within thirty (30) days of receipt or
such projected production yield. In the event that the projected production
yield is in excess of such requirement forecast, UFTB shall use such excess for
other purposes at it sole discretion, but in no event shall UFTB require
Exactech to accept Developed Products in excess of the quantity ordered by
Exactech.
If this amendment is acceptable to you, please sign both originals enclosed and
return one to us.
Sincerely,
/s/ Jamie M. Grooms
Jamie M. Grooms
President and CEO
AGREED TO AND ACCEPTED:
Exactech, Inc.
/s/ William Petty
- ------------------------
William Petty,
Chairman & CEO
<PAGE>
ASSIGNMENT AND ASSUMPTION OF
EXCLUSIVE LICENSE AGREEMENT
AND OF JOINT RESEARCH AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF EXCLUSIVE LICENSE AGREEMENT AND OF
JOINT RESEARCH AGREEMENT (the "Assignment") is made and entered into this
23rd day of January, 1998, by and between UNIVERSITY OF FLORIDA ORTHOPAEDIC
TISSUE BANK, INC., d/b/a UNIVERSITY OF FLORIDA TISSUE BANK, INC., a Florida
not-for-profit corporation ("Assignor"), and REGENERATION TECHNOLOGIES, INC.,
a Florida for-profit corporation ("Assignee").
W I T N E S S E T H:
--------------------
WHEREAS, Assignor and Assignee are parties to that certain Patent
License Agreement, dated January 23, 1998 (the "License Agreement"), pursuant
to which Assignor has agreed to license to Assignee the patents or pending
patents listed in EXHIBIT "A" attached hereto and made a part hereof on the
condition that Assignee meets certain financing goals; and
WHEREAS, pursuant to the License Agreement, Assignor has agreed to
assign to Assignee all of Assignor's right, title and interest in, and all of
its obligations under, that certain Exclusive License Agreement, by and
between Assignor and Exactech, Inc. ("Exactech"), dated effective April 22,
1997, a copy of which is attached as EXHIBIT "B" (the "Exactech License
Agreement"); and
WHEREAS, pursuant to the License Agreement, Assignor has agreed to
assign to Assignee all of Assignor's right, title and interest in, and all of
its obligations under that certain Joint Research Agreement, by and between
Assignor and Exactech, dated April 22, 1997, a copy of which is attached as
EXHIBIT "C" (the "Exactech Research Agreement"); and
<PAGE>
WHEREAS, pursuant to the License Agreement, Assignee has agreed to
accept such assignment and to assume all of the obligations of the Assignor
under the Exactech License Agreement and the Exactech Research Agreement upon
the terms and conditions set forth herein; and
WHEREAS, Assignor is willing to assign the Exactech License Agreement
and the Exactech Research Agreement and Assignee is willing to accept such
assignment of the Exactech License agreement and the Exactech Research
Agreement and to assume all obligations of Assignor under the Exactech
License Agreement and the Exactech Research Agreement upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. RECITALS. The recitals set forth above are true and correct in all
respects and are incorporated herein as fully as if set forth herein verbatim.
2. ASSIGNMENT AND ASSUMPTION OF EXACTECH LICENSE AGREEMENT AND EXACTECH
RESEARCH AGREEMENT. Assignor hereby sells, transfers, conveys, assigns and
delivers to Assignee all of Assignor's right, title and interest in, to and
under the Exactech License Agreement and the Exactech Research Agreement,
effective on the date described in Paragraph 3 below. Assignee hereby assumes
all of the obligations, terms and covenants set forth in the Exactech License
Agreement and the Exactech Research Agreement to be observed and performed by
Assignor and agrees to be bound by the terms, conditions and covenants of the
Exactech License Agreement and the Exactech Research Agreement arising from
and after the effective date of this Assignment as described in Paragraph 3
below.
-2-
<PAGE>
3. EFFECTIVE DATE. The assignment and assumption described in this
Assignment shall be effective on the effective date of the license granted
pursuant to the License Agreement. In the event that the license granted
pursuant to the License Agreement does not become effective, then the
assignment hereunder shall not become effective.
4. INDEMNIFICATION. Assignor hereby agrees to indemnify and hold
Assignee harmless from any and all claims, demands, damages, costs, losses,
expenses, liabilities and obligations of any kind or nature whatsoever
(including reasonable attorneys' fees incurred by Assignee) incurred by
Assignee as a result of any breach by Assignor of any warranty,
representation, covenant or agreement of Assignor contained in this
Assignment or the failure of Assignor to fulfill its obligations pursuant to
the Exactech License Agreement and The Exactech Research Agreement prior to
the effective date hereof. Assignee agrees to indemnify and hold Assignor
harmless from any and all claims, demands, damages, costs, losses, expenses,
liabilities and obligations of any kind or nature whatsoever including
reasonable attorneys fees incurred by Assignor) incurred by Assignor as a
result of the breach by Assignee of any covenant or agreement of Assignee
contained in this Assignment or the failure of Assignee to fulfill its
obligations pursuant to the Exactech License Agreement and The Exactech
Research Agreement arising from and after the effective date hereof.
5. ATTORNEYS' FEES. Should either party to this Assignment bring suit
for the breach of a promise, covenant, warranty or representation hereunder,
it is agreed that the successful party in such suit shall be entitled, in
addition to recovering any damages sustained thereby to recover such party's
expenses, including court costs and reasonable attorneys' fees as part of the
judgment or other settlement. Expenses and attorneys' fees include those
incurred
-3-
<PAGE>
prior to the initiation of suit and those incurred in connection with
proceedings in courts of original jurisdiction and courts of appeal.
6. BINDING EFFECT. This Assignment shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors
and assigns.
7. GOVERNING LAW AND VENUE. This Assignment shall be governed by, and
construed in accordance with, the laws of the State of Florida, and venue for
any legal proceeding or action at law arising out of or construing this
Assignment shall lie in the state courts of Alachua County, Florida, or the
United States District Court for the Northern District of Florida,
Gainesville Division.
IN WITNESS WHEREOF, the parties hereby have caused this Assignment to be
executed as of the date and year first above written.
Signed, sealed and delivered
in the presence of: "Assignor"
UNIVERSITY OF FLORIDA ORTHOPAEDIC
TISSUE BANK, INC., d/b/a UNIVERSITY OF
FLORIDA TISSUE BANK, INC., a Florida
not-for-profit corporation
/s/ Kathleen Davis By: /s/ Frank P. Glowczewskie, Jr.
- ---------------------------- -----------------------------------
Frank P. Glowczewskie, Jr.,
Chairman of the Board
/s/ John D. Callahan
- ----------------------------
-4-
<PAGE>
"Assignee"
REGENERATION TECHNOLOGIES, INC. a
Florida for-profit corporation
/s/ James S. Gantler By: /s/ Peter F. Gearen
- ---------------------------- -----------------------------------
Peter F. Gearen, President
/s/ Kay B. Lopez
- ----------------------------
-5-
<PAGE>
EXHIBIT "A"
1. "Diaphysial Cortical Dowel," invented by Nicholas E. Grivas and James M.
Grooms, Docket No. TB-100, U.S. Patent Application S/N 08/587,070, dated
January 16, 1996, subject to that certain Management Services Agreement
by and between UFTB and Sofamor Danke Group, Inc., dated effective July
23, 1996, as amended April 21, 1997 (the"SDG Contract"), and subject to
that certain Processing License Agreement by and between UFTB and
AlloSource, Inc., dated January 1, 1997;
2. "Bone Paste," invented by John F. Wironen and James M. Grooms, Docket No.
TB-101, U.S. Patent Application S/N 08/816,079, dated March 13, 1997,
subject to that certain Agreement by and between UFTB and Exactech, Inc.,
dated effective April 22, 1997, which is also owned by the University of
Florida (the "University");
3. "Cortical Bone Interference Screw," invented by James M. Grooms, Kevin
Carter and David H. Dulebohn, Docket No. TB-102, U.S. Patent Application
S/N 08/687,018, dated July 16, 1996, subject to the SDG Contract;
4. "Open Intervertebral Space," invented by John R. Bianchi, Kevin C.
Carter, Bradley T. Estes, Larry Boyd and John A. Pafford, Docket No.
TB-103, U.S. Patent Application S/N not available, dated June 3, 1997,
subject to that certain Joint Ownership Agreement, between UFTB and Danek
Medical, Inc., dated June 12, 1997, and the SDG Contract;
5. "Cortical Bone Cervical Smith-Robinson Fusion Implant," invented by James
M. Grooms, Kevin C. Carter, David H. Dulebohn and Tom Sander, Docket No.
TB-104, U.S. Patent Application S/N 08/920,630, dated August 27, 1997,
subject to the SDG Contract;
6. "Segmentally Demineralized Bone Implant," invented by James M. Grooms,
Kevin C. Carter and Thomas W. Sander, Docket No. TB-105, U.S. Patent
Application S/N 08/958,364, filed October 27, 1997;
7. "Cervical Tapered Dowel," Docket No. TB-106, subject to the SDG Contract;
8. "Bone Grafting Units," U.S. Patent No. 4950296, issued August 21, 1990 to
Jonathan L. McIntyre, and assigned to UFTB on September 27, 1997.
<PAGE>
EXHIBIT "B"
Exclusive License Agreement, by and between
University of Florida Orthopaedic Tissue Bank, Inc.
d/b/a University of Florida Tissue Bank, Inc.
and Exactech, Inc.
(Copy Attached)
<PAGE>
EXHIBIT "C"
Joint Research Agreement, by and between
University of Florida Orthopaedic Tissue Bank, Inc.
d/b/a University of Florida Tissue Bank, Inc.
and Exactech, Inc.
(Copy Attached)
<PAGE>
JOINT RESEARCH AGREEMENT
------------------------
THIS AGREEMENT entered into this 22nd day of April, 1997 by and between
Exactech, Inc., a corporation organized and existing under the laws of the
State of Florida (hereinafter referred to as "Exactech") and the University
of Florida Tissue Bank, a nonstock, nonprofit Florida corporation
(hereinafter referred to as "UFTB").
W I T N E S S E T H:
--------------------
WHEREAS, UFTB desires the research assistance of Exactech and its
technically qualified persons;
WHEREAS, Exactech desired the research assistance of UFTB, its
technically qualified persons, facilities and equipment;
WHEREAS, Exactech desired to cooperate with the funding of a Research
Plan for Joint Research Products, and desires to furnish such personnel as
may be required for the Research Plan;
WHEREAS, UFTB is willing to cooperate with and assist Exactech with
funding such Research Plan, and is willing to furnish such personnel,
facilities and equipment as may be required for the Research Plan;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
I. DEFINITIONS;
---------------
As used herein, the following terms shall have the following meanings:
1.1 "Joint Research Products" shall mean those intramedullary plugs,
including a cement restrictor not using UFTB's bone paste; a cryongenically
preserved articular plug; any meniscal or intervertebral disc; and any other
cartilaginous or osteoarticular product which is included in the Research
Plan. Any product or technology developed as a direct result of this Research
Agreement shall be included in the Research Plan, subject to mutual agreement
between the parties.
1.2 "Joint Research Technology" shall mean and include any proprietary
processes, trade secrets, trademarks, patents, patentable concepts, ideas or
methods, or intellectual property which is the basis for a Joint Research
Product and which was developed during and under the Research Plan.
1.3 "Research Plan" shall mean the mutually acceptable plan, including
budgets, for research, formulated by the parties within ninety (90) days from
the Effective Date and reduced to writing, including any mutually acceptable
written revisions of the Research Plan in the future.
1.4 "Net Distribution Fees" shall mean the distribution fee, including
product distribution fees, licensing fees, royalties, and transfer fees, net
of returns or discounts, of Joint Research Products or Joint Research
Technology.
1
<PAGE>
1.5 "Effective Date" shall mean April 21, 1997.
1.6 "Joint Patents" shall mean collectively and individually any and
all United States and foreign patent applications and any and all issued
United States Patents and foreign patents owned by or assigned to either of
the parties which pertain to Joint Research Products or Joint Research
Technology derived under and during the Research Plan under this Agreement.
II. RESEARCH AND DEVELOPMENT
----------------------------
2.1 The parties shall jointly collaborate in the research and
development of Joint Research Products and Joint Research Technology.
2.2 Within ninety (90) days after the Effective Date, the parties will
produce a mutually-acceptable Research Plan for development of the Joint
Research Technology and Joint Research Products, which Research Plan shall,
upon its completion and attachment hereto, by reference herein, be made part
of Agreement, together with any future written revisions of the Research Plan
made by mutual agreement of the parties.
III. FUNDING
------------
3.1 Exactech shall submit to UFTB the amount of two hundred fifty
thousand ($250,000) dollars within ten (10) days after the Effective Date.
3.2 UFTB shall, upon receipt of the two hundred fifty thousand
($250,000) dollars from Exactech, establish a separate corporate bank account
in UFTB's name and deposit Exactech's $250,000 into the account, maintaining
the account to fund the Research Plan.
3.3 UFTB shall use the funds in the separate bank account described in
section 3.2 to pay for equipment, NIH research, and other capital assets
related to the Research Plan.
3.4 UFTB will provide internal UFTB staff, overhead and facilities in
furtherance of the Research Plan.
3.5 The reasonable cost of UFTB's staff, overhead and facilities
directly related to the activities of the Research Plan shall, subject to
approval by Exactech, be allowed as UFTB contributions to the joint project,
adding to the cumulative total of UFTB's contributions to the Research Plan
expenses.
3.6 When the two hundred fifty thousand ($250,000) dollars described in
section 3.2 is exhausted, UFTB shall pay all additional expenses related to
the Research Plan until the cumulative total of UFTB's contributions to the
Research Plan expenses has reached $250,000, after which time all
expenditures shall be shared 50% by Exactech and 50% by UFTB. Exactech's
share will first be applied to equipment and other capital assets.
3.7 Should this Agreement be subject to termination pursuant to Section
IX hereof,
2
<PAGE>
UFTB shall pay to Exactech the balance of the $250,000 remaining in the
account established in section 3.2
3.8 Subject to a mutual agreement by the parties, ten percent (10%) of
the Net Distribution Fees received by either party at any time during this
Agreement shall be reinvested for the funding of the Research Plan.
IV. REPORTS AND CONFERENCES
---------------------------
4.1 As necessary, during the term of this Agreement, representatives of
UFTB will meet with representatives of Exactech at times and places mutually
agreed upon to discuss the progress and results, as well as ongoing plans, or
changes therein, of the Research Plan to be performed hereunder.
4.2 UFTB shall provide written reports to Exactech monthly, by the 15th
of the following month, giving an accounting of the expenditure of funds from
the bank account established in section 3.2, and the amount of UFTB expenses
as described in section 3.5.
V. PUBLICITY
------------
5.1 Exactech will not use the name of UFTB, nor any member of the UFTB
technical staff, in any publicity, advertising or news release without the
prior written approval of an authorized representative of UFTB. UFTB will not
use the name of Exactech, nor any employee of Exactech, in any publicity
without the prior written approval of Exactech.
VI. INVENTIONS, IMPROVEMENTS AND DISCOVERIES
--------------------------------------------
6.1 Both parties will promptly notify the other of any Joint Research
Products or Joint Research Technology conceived and/or made during and under
the Research Plan.
6.2 All rights and title to any Joint Research Products or Joint
Research Technology conceived and/or made during and under the Research Plan
shall be owned jointly by both parties, subject to the terms and conditions
of this Agreement.
VII. PATENTS AND PATENT APPLICATIONS
------------------------------------
7.1 On behalf of both parties, UFTB shall promptly prepare, file and
prosecute a patent application or applications, and/or any pertinent
continuation, continuation-in-part and/or reissue applications thereof in the
United States on any inventions as described in Section 6.1. The parties
shall cooperate with each other to assure that such application or
applications, and any such continuation, continuation-in-art and/or reissue
applications thereof will cover, to the best of each party's knowledge, all
items of commercial interest and importance. UFTB shall keep Exactech advised
as to all developments with respect to such application or applications,
and/or advised as to all developments with respect to such application or
applications, and/or continuations, continuations-in-part and reissue
applications and shall promptly supply to Exactech copies of all papers
received and filed in connection with the prosecution thereof in sufficient
time
3
<PAGE>
for Exactech to comment thereon. Both parties shall fully advise and
cooperate with the other in such prosecution, and all final decisions with
respect to prosecution of said applications, and said continuations,
continuations-in-part and reissue applications, and selection of patent
counsel, shall be subject to mutual agreement between the parties.
VIII. OPTION TO DISTRIBUTE JOINT RESEARCH PRODUCTS AND TECHNOLOGY
-----------------------------------------------------------------
8.1 Exactech shall be granted a first option to negotiate for an
exclusive license to distribute any Joint Research Products and/or Joint
Research Technology arising under the Research Plan. This option shall extend
to thirty (30) days from the date of delivery to Exactech of a viable,
workable prototype of any Joint Research Product or Joint Research
Technology. Within this thirty (30) day period, Exactech shall exercise its
option to negotiate by providing to UFTB written notice of such exercise,
after which the parties shall commence the negotiation, in good faith, of the
terms of such exclusive license, including, but not limited to, transfer
distribution fees, royalty and license fees. The parties shall use all
reasonable effort to reach agreement relative to said terms within sixty (60)
days of commencement of said negotiation. The time allotted for negotiation
may be extended upon mutual agreement of the parties hereto. Upon reaching
agreement, the parties shall promptly draft and execute a license agreement
memorializing said terms and conditions.
8.2 In the event that the parties do not enter into a license
agreement, within the time limits referred to in section 8.1, providing for
Exactech to distribute Joint Research Product an/or Joint Research
Technology, then UFTB shall be granted an option for thirty (30) days,
commencing on the expiration of Exactech's option, to negotiate with Exactech
for an exclusive license granting UFTB the right to make, distribute and sell
the Joint Research Product and/or Joint Research Technology, with a mutually
agreed upon royalty payable to Exactech. Within this thirty (30) day period,
the parties shall negotiate, in good faith, the terms of such exclusive
license, including, but not limited to, transfer fees, royalty and license
fees. The parties shall use all reasonable effort to reach agreement relative
to said terms within the thirty (30) days the options is in effect. The time
allotted for negotiation may be extended upon mutual agreement of the parties
hereto.
8.3 In the event that no licensing agreement is negotiated between the
parties pursuant to sections 8.1 or 8.2 within one hundred eighty (180) days
from the date of delivery to Exactech of the viable, workable prototype
referred to in section 8.1, then the parties shall make every effort to find
a third party to make and/or market the Joint Research Product and/or Joint
Research Technology, and any proceeds, distribution fees, income and/or
license fees derived from agreement with that third party shall be divided
equally between UFTB and Exactech.
8.4 In the further event that no agreement is reached under 8.3, then
neither party shall have the right to market the Joint Research Products
and/or Joint Research Technology without the written approval of the other
party.
4
<PAGE>
IX. TERM AND TERMINATION
------------------------
9.1 This Agreement shall become effective upon the date first herein
above written and shall continue in effect for the full duration of the
Contract Period unless sooner terminated in accordance with the provisions of
this Section IX. The parties hereto may, however, extend the term of this
Agreement for additional periods as desired under mutually agreeable terms
and conditions which the parties reduce to writing and sign.
9.2 In the event that either party hereto shall commit any breach of or
default in any of the terms or conditions of this Agreement, and shall fail
to remedy such default or breach within sixty (60) days after receipt of
written notice thereof from the other party hereto, the party giving notice
may, at its option and in addition to any other remedies which it may have at
law or in equity, terminate this Agreement by sending notice of termination
in writing to the other party to such effect, and such termination shall be
effective as of the date of the receipt of such notice.
9.3 Termination of this Agreement by either party for any reason shall
not release UFTB from its obligations under section 3.7, or release either
party from their obligations under section 3.8, or release either party from
payment of earned transfer prices and/or earned royalties due under any
section of this Agreement.
X. MISCELLANEOUS
----------------
10.1 UFTB shall comply with all governmental laws and regulations which
are applicable to UFTB and its performance of the Research Plan hereunder.
10.2 Neither party is authorized or empowered to act as agent for the
other for any purpose and shall not on behalf of the other enter into any
contract, warranty or other representation. Neither party shall be bound by
the acts or conduct of the other.
10.3 Each party hereby assumes any and all risks of personal-injury and
property damage attributable to the negligent acts or omissions of that party
and the officers, employees and agents thereof.
10.4 The parties further agree that nothing contained herein shall be
construed or interpreted as denying to either party any remedy or defense
available to such party under the laws of the State of Florida.
XI. GOVERNING LAW
-----------------
11.1 This Agreement shall be governed and interpreted in accordance with
the laws of the State of Florida.
XII. ASSIGNMENT
---------------
12.1 This Agreement may not be transferred or assigned by Exactech
except with the prior written consent of UFTB. This Agreement may not be
transferred or assigned by UFTB
5
<PAGE>
except with the prior written consent of Exactech, except that UFTB may
transfer or assign its rights, interest, and/or ownership in this Agreement
to an entity in which UFTB has a majority ownership interest at the time of
transfer or assignment.
XIII. AGREEMENT MODIFICATION
----------------------------
13.1 Any agreement changing the terms of this Agreement in any way shall
be valid only if the change is made in writing and approved by authorized
representatives of the parties hereto.
XIV. NOTICES
------------
14.1 Notices, invoices, communications and payments hereunder shall be
deemed made if given by registered or certified envelope, postage prepaid,
and addressed to the party to receive such notice, invoice or communication
at the address given below, or such other address as may hereafter be
designated by notice in writing:
If to Exactech:
Exactech, Inc.
Attn: Timothy Seese
4613 NW 6th Street
Gainesville, FL 32609
If to UFTB:
Jamie Grooms, President/CEO
with a copy to: Susan Collingwood, University of Florida Attorney
One Progress Blvd.
PO Box 31, S. Wing
Alachua, FL 32615
14.2 Payments shall be made to the parties in United States dollars at
the addresses indicated above. the date of giving any notice, invoice or
other communication, and the date of making any such payment, provided that
such payment is received, shall be the date on which such envelope is
deposited with the appropriate U.S. Post Office. The postal service receipt
showing the date of such deposit shall be prima facie evidence of date.
XV. ENTIRE AGREEMENT
--------------------
15.1 This Agreement represents the entire understanding between the
parties, and supersedes and merges all understanding between the parties, and
supersedes and merges all other agreements, express or implied, discussions
or understanding between the parties with respect to the subject matter
hereof.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused these present to be executed
in duplicate as of the day and year first above written.
Exactech, Inc. University of Florida, Tissue Bank, Inc.
By: /s/ Timothy Seese By: /s/ James M. Grooms
------------------------------ ------------------------------
Title: PRESIDENT Title: PRESIDENT & CEO
--------------------------- ---------------------------
Date: 4/22/97 Date: 4/22/97
---------------------------- ----------------------------
<PAGE>
Exhibit 10.5
Confidential Treatment. The portions of this exhibit that have been replaced
with "[*****]" have been filed separately with the Securities and Exchange
Commission and are the subject of a request for confidential treatment.
================================================================================
MANAGEMENT SERVICES AGREEMENT
BETWEEN
UNIVERSITY OF FLORIDA TISSUE BANK, INC. AND
SOFAMOR DANEK GROUP, INC.
================================================================================
[CONFIDENTIAL]
<PAGE>
MANAGEMENT SERVICES AGREEMENT
TABLE OF CONTENTS
ARTICLE I COMMITMENTS AND LICENSES ........................................ -2-
Section 1.1 Exclusive Commitments .................................. -2-
Section 1.2 License of UFTB Marks .................................. -2-
ARTICLE II UFTB PRODUCTS .................................................. -3-
Section 2.1 UFTB Product Specifications ............................ -3-
Section 2.2 UFTB Products Warranties ............................... -4-
Section 2.3 Processing Capacity .................................... -5-
ARTICLE III MANAGEMENT SERVICES IN CONNECTION WITH UFTB PRODUCTS .......... -5-
Section 3.1 Danek's Management Services on Behalf of UFTB .......... -5-
Section 3.2 Ordering and Shipping Procedures ....................... -9-
Section 3.3 Initial Exclusivity Fees Paid by Danek ................. -13-
Section 3.4 Management Services Fees to be Paid by UFTB ............ -13-
Section 3.5 Packaging Specifications ............................... -17-
Section 3.6 Delivery; Right to Use ................................. -18-
Section 3.7 Rejected Product ....................................... -18-
Section 3.8 Taxes .................................................. -20-
ARTICLE IV CERTAIN AGREEMENTS OF UFTB AND DANEK ........................... -21-
Section 4.1 Inspections ............................................ -21-
Section 4.2 Regulatory Filings ..................................... -21-
Section 4.3 Ownership of Intellectual Property Rights .............. -21-
Section 4.4 Rights of First Refusal ................................ -22-
ARTICLE V TERM AND TERMINATION ............................................ -22-
Section 5.1 Term ................................................... -22-
Section 5.2 Early Termination ...................................... -22-
Section 5.3 Accrued Obligations .................................... -23-
(i)
<PAGE>
ARTICLE VI INDEMNIFICATION ................................................ -23-
Section 6.1 Indemnification by Danek ............................... -23-
Section 6.2 Indemnification By UFTB ................................ -23-
Section 6.3 Survival of Obligations ................................ -24-
ARTICLE VII MISCELLANEOUS ................................................. -24-
Section 7.1 Entire Agreement ....................................... -24-
Section 7.2 Amendments ............................................. -24-
Section 7.3 Governing Law; Jurisdiction ............................ -24-
Section 7.4 Force Majeure .......................................... -24-
Section 7.5 Severability ........................................... -25-
Section 7.6 Waiver ................................................. -25-
Section 7.7 No Third Party Beneficiaries ........................... -26-
Section 7.8 Notices ................................................ -26-
Section 7.9 Assignment ............................................. -27-
Section 7.10 Headings .............................................. -27-
Section 7.11 Counterparts .......................................... -27-
Schedule A CURRENT PRODUCTS
Schedule 2.1 SPECIFICATIONS FOR UFTB PRODUCTS
Schedule 2.3 PROCESSING CAPACITY
Schedule 3.4(d) FULL PROCESSING COSTS
(ii)
<PAGE>
MANAGEMENT SERVICES AGREEMENT
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") effective July 23,
1996, by and between THE UNIVERSITY OF FLORIDA TISSUE BANK, INC. ("UFTB"), a
Florida non-profit corporation, and SOFAMOR DANEK GROUP, INC., an Indiana
corporation ("Danek").
W I T N E S S E T H:
WHEREAS, UFTB is a Direct Support Organization of The University Of
Florida.
WHEREAS, UFTB's role as a Direct Support Organization of The University of
Florida will be significantly enhanced through the relationship with Danek as
agreed herein.
WHEREAS, UFTB and Danek each acknowledge that the processing and use of
human tissue for human transplantation purposes is in the public interest and in
the interest of medicine generally and that the entering into of this Agreement
will enhance these interests through facilitating the availability of processed
allograft bone and/or tissue for use in spinal and cranial medical procedures
and thereby advancing the medical and scientific application thereof.
WHEREAS, UFTB and Danek each desire that UFTB (i) process allograft bone
and/or tissue for use in spinal and cranial medical procedures (the "Current
Products") and future line extensions of the Current Products (together, the
"CFTB Products") and (ii) distribute such UFTB Products in conjunction with
exclusive worldwide management services provided by Danek, all in accordance
with the terms and subject to the conditions contained herein. A list of all
Current Products is set forth on the attached Schedule A.
WHEREAS, UFTB and Danek each desire that all UFTB Products processed for
distribution throughout the world (the "Territory") shall be subject to Danek's
management services.
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, Danek and UFTB hereby agree as follows:
ARTICLE I
COMMITMENTS AND LICENSE
Section 1.1 Exclusive Commitments. UFTB hereby agrees to exclusively
permit Danek to perform Management Services (as defined in Section 3.1 hereof)
in connection with all UFTB Products processed and distributed by UFTB in the
Territory, and Danek hereby agrees to perform Management Services in connection
with all UFTB Products processed and distributed by UFTB in the Territory,
subject to the terms and conditions of this Agreement.
Section 1.2 License of UFTB Marks. During the term of this Agreement, UFTB
grants to Danek a royalty-free, non-transferable license to use the mark
"University of Florida Tissue Bank" (the "UFTB Mark") in the Territory in
connection with Danek's provision of Management Services.
-2-
<PAGE>
ARTICLE II
UFTB PRODUCTS
Section 2.1 UFTB Product Specifications. All Current Products to be
distributed by UFTB using Danek's Management Services (as defined in Section 3.1
hereof) shall conform to and otherwise comply with the specifications set forth
in Schedule 2.1 hereto, as such Schedule 2.1 may be amended from time to time by
mutual written agreement of the parties (the "UFTB Product Specifications"). If
any UFTB Product that is not a Current Product is distributed by UFTB pursuant
to this Agreement, the parties hereto shall negotiate in good faith to amend
Schedule 2.1 as provided in the preceding sentence to set forth the
specifications for such UFTB Product, and such UFTB Product shall conform to and
otherwise comply with the UFTB Product Specifications. If regulatory approval is
found to be required for any part or all of the UFTB Product Specifications in
any country located in the Territory and should such regulatory approval be
refused, modified or withdrawn by the applicable regulatory authorities in the
Territory, UFTB shall promptly notify Danek of such refusal, modification or
withdrawal and the parties shall negotiate in good faith to amend appropriately
the UFTB Product Specifications; provided, however, that in the event of any
such refusal, modification or withdrawal, UFTB may refuse to process or
distribute the affected UFTB Product, and/or Danek may refuse to provide
Management Services in connection with such UFTB Product, pending the resolution
of such regulatory matter. In the event of any such refusal, modification or
withdrawal, UFTB shall use its best efforts to favorably and promptly resolve
such regulatory matter, which best efforts shall include, but not be limited to,
full communication to Danek of all information and correspondence, except for
materials subject to the attorney-client
-3-
<PAGE>
privilege, relating to any issues raised by such refusal, modification or
withdrawal and full participation with Danek in connection with the resolution
of such regulatory matter.
Section 2.2 UFTB Products Warranties.
(a) Compliance With Laws and Specifications. UFTB warrants that the UFTB
Products will be processed, packaged, stored and shipped (i) biomechanically
suitable for use in cranial and spinal medical procedures in which human tissue
is needed to replace human tissue and (ii) in conformity in all respects with
all applicable federal, state and local laws, rules and regulations relating
thereto, including particularly the Federal Food, Drug and Cosmetic Act and the
National Organ Transplant Act, the Guidelines of the American Association of
Tissue Banks (the "Guidelines") and the UFTB Product Specifications pursuant to
Section 2.1 hereof UFTB warrants that the packaging of UFTB Products will be in
conformity in all respects with the Packaging Specifications described in
Section 3.5 hereof.
(b) Authority; Licenses. UFTB further warrants that it is fully authorized
to enter into and perform this Agreement, that the UFTB Products and any manuals
prepared by UFTB in connection with the UFTB Products and made available to
recipients of the UFTB Products (the "UFTB Customers") will not violate or
infringe upon any common law or statutory rights of any third party, and that
UFTB is the owner of all rights in and to the UFTB Mark. To the extent that UFTB
has proprietary rights in any form of intellectual property that may relate to
the performance of the Management Services by Danek, UFTB grants a non-exclusive
license with respect to such rights so as to permit all such activity. This
express license grant shall not be construed to limit implied licenses otherwise
granted to Danek or UFTB's customers under applicable law.
-4-
<PAGE>
(c) Incorporated Materials. UFTB warrants that it has full right and
authority to incorporate all materials (e.g., human tissue) into the UFTB
Products and that such raw materials shall be in full compliance with all
applicable federal, state and local laws, rules and regulations, the Guidelines
and with the UFTB Product Specifications.
Section 2.3 Processing Capacity.
(a) UFTB Current Products. Schedule 2.3 sets forth UFTB's current as well
as projected processing capacity for each of the Current Products by UFTB, in
terms of the number of units that may be processed, packaged and delivered by
UFTB per month. The projected processing capacity shows UFTB's anticipated
expanded process capacity after upgrading its processing systems upon receipt of
the Initial Exclusivity Fee pursuant to Section 3.3 hereof.
(b) Other UFTB Products. If any UFTB Product that is not a Current Product
is processed pursuant to this Agreement, the parties hereto shall amend Schedule
2.3 by mutual agreement to set forth the information required by Section 2.3(a)
with respect to such product, and using, to the extent reasonably practicable
and appropriate, the capacity information with respect to the Current Product as
to which such product is an extension.
ARTICLE III
MANAGEMENT SERVICES IN CONNECTION WITH UFTB PRODUCTS
Section 3.1 Danek's Management Services on Behalf of UFTB.
(a) Danek's Rights and Responsibilities. Danek shall have the exclusive
responsibility to facilitate the distribution of the UFTB Products to UFTB
Customers in accordance with this Agreement (the "Management Services"). The
Management Services shall be comprised of (i) the
-5-
<PAGE>
installation of computer hardware and Danek's proprietary software at UFTB's
Alachua, Florida facility (the "UFTB Facility") that will facilitate the
transfer of information concerning the UFTB Products between the parties (the
"UFTB Product System"), which UFTB Product System shall be subject to Danek's
standard license agreement, (ii) the provision, either through employees, or
agents of Danek of customer service to UFTB Customers (e.g., responding to
questions UFTB customers may have concerning how the UFTB Products were
processed and the various surgical applications for which they are designed),
(iii) the facilitation of the shipment of UFTB Products to UFTB Customers in
accordance with Sections 3.1(c) and 3.2 hereof and (iv) the marketing of the
aforementioned Management Services, which marketing may be combined with
marketing for separate Danek product lines and services; provided, however, that
the UFTB Products will be distributed by UFTB separately from any Danek
distributed products. Upon mutual agreement of the parties and subject to
separate written agreements, Danek may also provide UFTB Product design,
professional management information system and computer programming and
installation Support services. Danek reserves the right to develop, at its sole
discretion, non-exclusive management arrangements for the UFTB Products with
selected third parties which third parties will provide Management Services
subject to all of the covenants made by Danek hereunder.
(b) Market Opportunity Estimates.
(i) Quarterly Forecast Dates. Each September 15, December 15, March
15 and June 15 shall be a "Quarterly Forecast Date."
(ii) Forecasts. To assist UFTB in estimating market opportunities
for UFTB Products, Danek will on each Quarterly Forecast Date, beginning with
[June 15, 1996], provide to
-6-
<PAGE>
UFTB a forecast of its estimate of the number of units of UFTB Products that
will be obtained by UFTB Customers in the Territory including the following
information:
(A) a monthly forecast for each month of the three-month period
(months one, two and three) beginning with the month following
the month in which the forecast is delivered (the "First Three
Months Forecast") setting forth Danek's estimate of the
quantity of units of each UFTB Product for which a market
opportunity exists in each month covered by the forecast;
(B) a quarterly forecast for the three-month period (months four,
five and six) following the months covered in the First Three
Months Forecast (the "Second Quarter Forecast") setting forth
Danek's estimate of the quantity of units of each UFTB Product
for which a market opportunity exists in the quarter covered
by the forecast;
(C) a quarterly forecast for the three-month period (months seven,
eight and nine) following the quarter covered in the Second
Quarter Forecast (the "Third Quarter Forecast") setting forth
Danek's estimate of the quantity of units of each UFTB Product
for which a market opportunity exists in the quarter covered
by the forecast; and
(D) a quarterly forecast for the three-month period (months ten,
eleven and twelve) following the quarter covered in the Third
Quarter Forecast (the "Fourth Quarter Forecast") setting forth
Danek's estimate of the quantity of units of each UFTB Product
for which a market opportunity exists in the quarter covered
by the forecast.
UFTB shall be required to provide to UFTB Customers 100% of the quantity
of the requirements of each UFTB Product forecasted for each month of the First
Three Months Forecast. The quantity of UFTB Products set forth in the Second
Quarter Forecast, the Third Quarter Forecast and the Fourth Quarter Forecast,
shall be for informational purposes only and shall not bind the parties in any
way; provided, that UFTB shall use its best efforts to supply quantities of UFTB
Product required by UFTB Customers in excess of quantities set forth in the
forecasts.
(iii) UFTB's Non-Compliance with Forecast. UFTB shall notify Danek
within five (5) days of discovery that it will be unable to supply the number of
units of UFTB Products that
-7-
<PAGE>
Danek forecasted under any First Three Months Forecast. In such case, UFTB will
assist Danek to develop or find an alternate source of the affected UFTB Product
for the time period during which UFTB is unable to supply the affected UFTB
Product.
(c) Procedures for Receiving UFTB Customer Instructions. Danek shall be
responsible for receiving UFTB Customers' shipping instructions containing
shipping requirements for the UFTB Products sought to be obtained by such UFTB
Customers (the "UFTB Customer Instructions") throughout the Territory in
accordance with Section 3.2 hereof UFTB will maintain records of its transfers
of the UFTB Products in accordance with generally accepted accounting
principles.
(d) Distribution of UFTB Products. Danek will use its best efforts to
actively support the distribution and use of the UFTB Product consistent with
Danek's standards. Danek shall offer commission rates to Danek's agents and
independent representatives with respect to the UFTB Products distributed to
UFTB Customers as the result of Danek's Management Services hereunder equal to
or greater than the commission rates offered to such agents and independent
representatives on any product that Danek may then be marketing that is deemed
by Danek to be a device that competes with the UFTB Products, it being
understood that any device that is listed in Danek's current catalogue is not a
device that competes with the UFTB Products.
(e) No Warranties. In connection with its provision of Management
Services, Danek agrees that it will give no warranties or representations as to
the UFTB Products on behalf of UFTB, including without limitation, as to
quality, durability, merchantability, fitness for a particular use or purpose or
any other features of the UFTB Products being distributed by UFTB pursuant to
UFTB Customer Instructions. To ensure Danek's compliance with this Section
3.1(e), Danek shall, prior to publication, deliver, for UFTB's review,
advertising or other materials associated with the
-8-
<PAGE>
distribution of the UFTB Products or the use of the UFTB Mark or the
relationship between Danek and UFTB or The University of Florida and Danek and
not previously published by Danek. If UFTB responds within forty eight (48)
hours (excluding weekends and holidays) of UFTB's receipt of such proposed
materials with reasonable requests for amending the materials to ensure Danek's
compliance with this Section 3.1(e) or with an appropriate description of
Danek's relationship between UFTB or The University of Florida, Danek shall
endeavor to incorporate those changes. If UFTB either approves the materials or
fails to respond within forty-eight (48) hours of receipt of the materials
sought to be approved, Danek will be free to use the materials as originally
provided to UFTB.
(f) Forfeiture of Exclusivity. If during the Contract Year (as defined in
Section 3.3(b) hereof) ending June 30, 1999, or any Contract Year ending after
that date, the total quantity of UFTB Products subject to Instructions is less
than [*****], Danek would forfeit its exclusivity to provide Management
Services for the following Contract Year. All other rights, terms and conditions
of this Agreement would continue in force. However, if Danek's exclusivity to
provide Management Services is forfeited under this paragraph for two
consecutive years, UFTB shall have, as its remedy, the fight to terminate the
Agreement upon one hundred eighty (180) calendar days written notice.
Section 3.2 Ordering and Shipping Procedures.
(a) Submission of UFTB Customer Instructions with Danek. UFTB Customers
shall submit UFTB Customer Instructions for UFTB Products with Danek in Danek's
role as exclusive Management Services provider. To the extent that an UFTB
Customer requests information concerning the purchase, sale or service of UFTB
Products from UFTB directly, UFTB will direct
[CONFIDENTIAL]
-9-
<PAGE>
such inquiry to Danek's customer service telephone number, which number shall be
answered by a Danek customer service representative at Danek's headquarters in
Memphis Tennessee. If Danek's customer service representative determines that
the inquiry involves a service question that may be handled more expeditiously
by one of Danek's independent agents rather than through Danek's headquarters
office, (i.e., because of geographic proximity, expertise, etc.) that inquiry
will be directed to that agent. In the case of a customer seeking to receive
UFTB Products, the representative will verify, via the UFTB Product System (as
defined in Section 3.1 (a)(i) above), inventory availability, pricing and
shipment details for the UFTB Products ordered by the UFTB Customer.
(b) Receipt and Resubmission of UFTB Customer Instructions by Danek. Upon
receipt of UFTB Customer Instructions, Danek shall cause, via the UFTB Product
System, such UFTB Customer Instructions to print at the UFTB Facility, which
UFTB shall accept; provided however, that UFTB may refuse acceptance of the UFTB
Customer Instructions, (i) if UFTB has experienced an event of force majeure
pursuant to Section 7.4 hereof, but only to the extent the event of force
majeure results in the inability of UFTB to supply UFTB Products, or (ii) to the
extent the UFTB Customer Instructions require quantities in excess of quantities
that UFTB is obligated to provide pursuant to Section 3.1(b) under the then
prevailing forecasts provided by Danek pursuant to Section 3.1(b) hereof,
provided, however that in the event of a refusal of acceptance of UFTB Customer
Instructions under this clause (ii), such refusal shall be limited to the extent
of such excess and UFTB shall, in accordance with provisions of Section 3.1(b)
hereof, use its best efforts to provide the products and quantities so ordered.
-10-
<PAGE>
(c) Contents and Priority of UFTB Customer Instructions. The UFTB
Customers Instructions submitted by Danek to UFTB in accordance with Section
3.2(b) shall set forth the quantity of units of each UFTB Product required to be
shipped by UFTB to UFTB Customers, and the date (or dates) by which such
deliveries are requested by the UFTB Customer to be made. Such UFTB Customer
Instructions may be submitted by UFTB Customers only in accordance with Section
3.2(a) hereof Danek agrees that UFTB Customer Instructions relating to Current
Products that are submitted by physicians practicing in hospitals affiliated
with the University of Florida shall be granted priority over other UFTB
Customers if shortages of such Current Products exist; provided, however, that
UFTB shall be required to first fulfill any preexisting commitments as the
result of UFTB Customer Instructions submitted by other UFTB Customers before
granting such priority.
(d) Effect of UFTB Customer Instructions. In no event shall the use of any
form of UFTB Customer Instructions, invoice, shipping document, confirmation or
waybill be effective to vary, alter, modify or substitute for the terms and
conditions of this Agreement. All UFTB Customer Instructions shall be subject
to, and shall be deemed to incorporate, all terms and conditions of this
Agreement, which may be amended or waived only in accordance with Sections 7.2
and 7.6 hereof, respectively.
(e) Acknowledgment of UFTB Customer Instructions. All UFTB Customer
Instructions placed by Danek pursuant to this Agreement shall be accepted by
UFTB within ten calendar days, except to the extent acceptance of any UFTB
Customer Instructions is refused pursuant to Section 3.2(b) hereof. In such
acceptance, or by other advance communication, which shall be communicated via
the UFTB Product System, UFTB shall notify Danek of (i) the anticipated date
-11-
<PAGE>
of release for shipment of the UFTB Products related to the particular UFTB
Customer Instructions, and (ii) the date of shipment of the UFTB Products
related to the particular UFTB Customer Instructions. Upon the Shipment of UFTB
Products subject to UFTB Customer Instructions, UFTB shall provide Danek with a
copy of the invoice sent to the UFTB Customer, which invoice shall set forth (i)
the amount invoiced for each UFTB Product subject to the UFTB Customer
Instructions, (ii) the quantity of each UFTB Product subject to the UFTB
Customer Instructions and (iii) a reference to the fact that Danek is acting on
behalf of UFTB as a Management Service Provider and as such any questions
regarding the UFTB Products subject to UFTB Customer Instructions should be
directed to Danek. Danek shall guarantee the payment of all invoices sent to
UFTB Customers (other than physicians practicing in hospitals affiliated with
the University of Florida) for UFTB Products subject to UFTB Customer
Instructions. If Danek is unable to collect payment from UFTB Customers for such
invoices within one (1) year of the date of shipment of applicable UFTB Products
subject to UFTB Customer Instructions, Danek shall remit payment of such invoice
to UFTB, less the appropriate Management Services fees owed to Danek.
(g) Failure to Meet Shipping Schedule. If UFTB discovers that it will be
unable to meet the required shipping schedule as set forth in any UFTB Customer
Instructions for any UFTB Product, UFTB shall promptly notify Danek. If UFTB
reasonably believes that such inability will result in a failure to deliver such
UFTB Product within 30 days of the required shipping date (as set forth in such
UFTB Customer Instructions), UFTB will assist Danek to develop or find an
alternate source of such UFTB Product for the time period during which UFTB is
unable to supply the UFTB Product.
-12-
<PAGE>
Section 3.3 Initial Exclusivity Fee Paid by Danek. For the Management
Services exclusivity and other rights granted hereby to Danek by UFTB, Danek
paid UFTB the one-time sum of [*****] on July 23, 1996, which fee has been
and shall be used only for purposes of fulfilling UFTB's obligations under
this Agreement and for no other purpose.
Section 3.4 Management Services Fees to be Paid by UFTB.
(a) Amount of Management Services Fees. The management fees to be paid to
Danek by UFTB for the Management Services provided hereunder (the "Management
Services Fees") shall be payable with respect to all UFTB Customer Instructions
submitted by Danek to UFTB according to the following:
(i) For Contract Years beginning on the date of this Agreement and
ending prior to July 1, 1992, the Management Services Fee
shall be eighty percent (80%) of the actual net invoiced
amount (as determined in accordance with Section 3.4(c)) from
UFTB to UFTB Customers for the particular UFTB Products
subject to UFTB Customer Instructions submitted by Danek to
UFTB during such Contract Years;
(ii) For Contract Years commencing after June 30, 1998, the
Management Services Fee shall be seventy percent (70%) of the
actual net invoiced amount from UFTB to UFTB Customers for the
particular UFTB Products subject to UFTB Customer Instructions
submitted by Danek to UFTB during such Contract Years. For
each Contract Year commencing after June 30, 1998, Danek will
guarantee UFTB that the actual net invoiced amount from
[CONFIDENTIAL]
-13-
<PAGE>
to UFTB Customers for UFTB Products subject to UFTB Customer
Instructions submitted by Danek to Danek during such Contract
Year less the Management Services Fee payable in connection
with such UFTB Products will equal [*****] of such UFTB
Products or Danek will refund the difference to UFTB from
the Management Services Fees.
(b) Contract Year. For purposes of this Agreement, "Contract Year" shall
mean each consecutive twelve-month period beginning on July 1 and ending June 30
during the term of this Agreement.
(c) Net Invoiced Amount. As the Exclusive Management Services provide to
UFTB, Danek will maintain a unique relationship with the market place for UFTB
Products and is therefore obligated to consult with UFTB on establishing and
publishing the net invoiced amount for Current Products to be paid by UFTB
Customers. Likewise any new UFTB Product that is not a Current Product will have
its net invoiced amount established by UFTB after consultation with Danek.
Changes in net invoiced amounts for any UFTB Product may be modified during the
term of this Agreement upon the mutual agreement of the parties.
(d) Full Processing Costs. "Full Processing Costs" for each unit of the
Current Products are set forth on Schedule 3.4(d) hereto. Full Processing Cost
is defined as the sum of direct processing costs, plus an appropriate share of
applicable indirect processing cost. Full Processing Cost is the cost at which
completed Current Product should be carried in inventory by UFTB. It is also the
cost that should be recorded as cost of transfer when Current Products are
distributed by UFTB to UFTB Customers.
[CONFIDENTIAL]
-14-
<PAGE>
Direct processing cost includes direct labor and direct material costs.
Direct labor cost is defined as all labor directly associated with transforming
or adding value to the Current Products. Such labor includes fabrication,
processing, process or machine tending, assembly, packaging, and on line
inspection labor. Direct material cost is defined as direct material that
becomes a physical part of the cost object and those materials that are consumed
during processing that can be specifically identified with that cost object.
Material cost should include packing supplies necessary to deliver goods to
customers.
Indirect processing cost are costs which cannot be specifically identified
with a single cost object in an economically feasible manner. Indirect
processing cost includes such costs as indirect labor, repairs and maintenance,
indirect materials and supplies, depreciation, insurance, and property taxes.
Indirect processing cost also may be referred to as processing overhead.
Costs incurred by UFTB from affiliates of UFTB shall only be included
within the Full Processing Costs to the extent of actual direct cost of such
affiliate notwithstanding any other pricing arrangement between UFTB and such
affiliate. If any UFTB Product that is not a Current Product is processed
pursuant to this Agreement, the parties hereto shall negotiate in good faith to
amend Schedule 3.4(d) by mutual agreement to set forth the Full Processing Costs
for each unit of such product and using, to the extent reasonably practicable
and if such UFTB Product is an extension of a Current Product, the Full
Processing Cost information with respect to the Current Product as to which such
UFTB product is an extension.
On or before May 15, 1998 and on or before May IS in each subsequent
Contract Year, UFTB shall provide in writing to Danek a copy of such Schedule
3.4(d) amended to reflect any increases or reductions in the Full Processing
Cost (calculated in the same manner that Schedule
-15-
<PAGE>
3.4(d) was originally calculated) for the next Contract Year, and shall provide
Danek with detailed cost analysis, including supporting schedules, together with
justifiable assumptions relating to increases or decreases in costs which would
support changes in the costs set forth on such Schedule for the then current
Contract Year. Each party expects, and UFTB will use its best efforts to ensure,
that the average percentage increase in such direct costs will not exceed the
percentage increase of the Index (as defined below) in the corresponding period
of time. The "Index" shall mean the Department of Labor, Bureau of Statistics,
Producer Price Index, Pharmaceutical Preparations, Proprietary
(Over-the-Counter) -- 0636 Commodity Code.
In the event that either Danek or UFTB discovers or develops a more
efficient manner of processing an UFTB Product, and such manner of processing
would or is reasonably likely to result in a reduction of Direct Processing Cost
associated with such product, each party will notify the other of such manner of
processing, and at the request of Danek, UFTB will use its best efforts to
utilize such manner of processing. Reductions in the cost of processing such
UFTB Product will be directly reflected in reductions in Full Processing Costs.
(e) Danek's Audit Rights. UFTB shall keep complete and accurate books and
records in connection with the calculation of Full Processing Costs for the UFTB
Products as well as for verifying the amounts invoiced by UFTB to UFTB Customers
for UFTB Products. Danek shall be permitted access to such books and records
during normal business hours and upon reasonable business hours during the term
of this Agreement in order to verify UFTB's compliance with the terms of the
Agreement and to permit Danek to satisfy its obligations under this Agreement,
including, but not limited to, determining the identities of any UFTB Customer
that fails to pay payment of invoices so that Danek can guarantee UFTB Customer
payments to UFTB in accordance
-16-
<PAGE>
with Section 3.2(e) hereof Danek shall have the right (no more often than once
yearly and in any event within three years after the close of the month to which
the audit relates) to have an audit performed during normal business hours and
upon reasonable notice to UFTB of such books and records by an independent
certified public accounting firm mutually acceptable to the parties for the sole
purpose of verifying the correct and accurate payment of Management Service Fees
which shall be the sole matter reported by such accounting firm to Danek. The
fees and expenses of the accounting firm performing such verification shall be
borne by Danek, except in the event that Full Processing Costs are overstated by
more than $100,000 for such year or in the event that the actual net invoiced
amounts are understated by more than $100,000 for such year, whereupon such fees
and expenses shall be borne by UFTB. UFTB shall within 60 days of the results of
such audit provide for payment of amounts which are overpaid, unless a bona fide
dispute exists as to the results of such audit.
(f) Payments in U.S. Dollars. All payments required by this Agreement
shall be made in United States Dollars.
(g) UFTB Customer Payments. Payment terms related to shipments of UFTB
Products to UFTB Customers shall be net 30 days from the later of the date of
invoice or the date of shipment.
(h) Management Services Fee Payments. Payment to Danek by UFTB of
Management Service Fees shall be made within ten (10) days from UFTB's receipt
of payment of an invoice during the term of this Agreement with respect to UFTB
Customers Instructions submitted by Danek.
Section 3.5 Packaging Specifications. UFTB shall supply all packaging and
labeling information and designs, including without limitation all artwork and
pharmacological information, usage instructions and warnings to be applied to
each UFTB Product (the "Packaging
-17-
<PAGE>
Specifications"). Specifically, the Packaging Specifications shall include the
requirement that each UFTB Product be hermetically sealed or vacuum sealed with
bottle and stopper after processing. Once a UFTB Product is supplied and
initially packaged by UFTB, Danek will not, without UFTB's concurrence, remove,
alter or modify any Packaging Specifications of such UFTB Product except in the
case of Danek's own internal use.
Section 3.6 Delivery; Right to Use.
(a) Shipping. Danek shall issue customer shipping instructions to UFTB for
the UFTB Product in accordance with the UFTB Customer Instructions, using
Danek's or the UFTB Customer's choice of carriers FOB at the plant at which the
UFTB Product is processed.
(b) Certificate of Analysis. At the time of shipment by UFTB of any UFTB
Product processed by UFTB pursuant to UFTB Customer Instructions, a Certificate
of Analysis (as defined herein) shall be delivered to Danek at the address set
forth in Section 7.8 hereof and to the UFTB Customer along with the invoice
delivered in connection with such shipment of UFTB Product. A "Certificate of
Analysis" is a certificate, signed on behalf of UFTB, certifying that the
shipped UFTB Product conforms to the UFTB Product Specifications and the UFTB
Product Warranties set forth in Section 2.2 hereof, and providing the results of
the tests that demonstrate that such product so conforms.
(c) Right to Use. All right to use and risk of loss to any UFTB Product
shall pass to the UFTB Customer upon a common carrier accepting possession or
control of such UFTB Product.
Section 3.7 Rejected Product.
(a) Procedure for Rejection. Within thirty (30) days after a UFTB
Customer's receipt of any shipment of UFTB Product, Danek shall notify UFTB in
writing if a UFTB Customer chooses
-18-
<PAGE>
to reject all or any part of such shipment of UFTB Product or, failing such
notification, unless such product has a latent defect, the UFTB Customer shall
be deemed to have accepted such shipment for purposes of payment for it. With
respect to latent defects, Danek shall promptly notify UFTB after a UFTB
Customer's discovery thereof, and such UFTB Customer shall have the right to
reject such product. Any notification of rejection should be for valid technical
or packaging reasons and shall state the basis for the rejection. A replacement
shipment of such product so required by a UFTB Customer shall be made by UFTB as
soon as practicable using reasonable efforts (but no later than thirty (30) days
after UFTB receives such notification), or as soon thereafter as the raw
materials are available to UFTB for the processing of such replacement product.
Such replacement product shall be invoiced by UFTB and paid for by the UFTB
Customer at the same fee as was the rejected shipment.
(b) Effect of Rejection. The UFTB Customer shall not be obligated to pay
and Danek shall not be obligated to guarantee payment for any rejected shipment
of UFTB Product shipped to UFTB Customers which fails to meet the UFTB Product
Specifications or the Packaging Specifications or otherwise breaches the UFTB
Product Warranties set forth in Section 2.2 hereof. The UFTB Customer shall not
be obligated to pay in full and Danek shall not be obligated to guarantee
payment for any shipment of the UFTB Product rejected by a UFTB Customer. UFTB
shall have fifteen (15) days within which to notify Danek and the UFTB Customer
in writing of UFTB's objection to such rejection, and the parties shall
thereafter promptly submit the issue to an independent laboratory in accordance
with subparagraph (c) below.
(c) Testing to Resolve Conflicting Test Results. If there is a conflict
between the test results of UFTB and the test results of Danek or a UFTB
Customer with respect to any UFTB
-19-
<PAGE>
Product, an adequate sample of same shall be submitted by the party having
possession thereof to an independent laboratory acceptable to both parties for
testing against the UFTB Product Specifications under procedures employed in the
UFTB Product Specifications. The test results obtained by such laboratory shall
be final with respect to the obligations of the UFTB Customer to pay and of
Danek to guarantee payment for such UFTB Product. The fees and expenses of such
laboratory testing shall be borne entirely by the party against whom such
laboratory's findings are made. If the laboratory's findings are in favor of
UFTB, the UFTB Customer shall pay UFTB for the rejected UFTB Products under the
terms listed in Section 3.4 hereto.
(d) Return or Disposal of Rejected UFTB Products. UFTB shall make
arrangement with Danek for the return or disposal, at UFTB's option, of any
shipment of any rejected UFTB Product. The return shipping charges or disposal
costs for such rejected shipment of Product shall be paid by UFTB and, in the
event of agreement of the parties or a laboratory determination hereunder that
such rejected shipment does meet the UFTB Product Specifications, or in the
event of agreement of the parties that such rejected shipment does meet the
Packaging Specifications, the UFTB Customer shall promptly reimburse UFTB for
such shipping charges or disposal costs.
(e) No Waiver. No acceptance or rejection of product or determination of
compliance for purposes of this Section 3.7 shall serve to waive any rights
under Article VI.
Section 3.8 Taxes. Taxes and any and all other tariffs and duties or
excise, sales or use, value added or other taxes or levies imposed upon UFTB in
connection with the process and distribution of the UFTB Products shall be paid
by UFTB.
-20-
<PAGE>
ARTICLE IV
CERTAIN AGREEMENTS OF UFTB AND DANEK
Section 4.1 Inspections. UFTB shall permit a representative of Danek to
inspect, at reasonable times and at a reasonable frequency, those processing
facilities and methods and operations used by UFTB in connection with the UFTB
Products as considered necessary or desirable by Danek for the purpose of
observing compliance with the undertakings set forth in Article II hereof. No
such observation shall serve to waive any rights of Danek hereunder.
Section 4.2 Regulatory Filings. UFTB shall fulfill all reporting and other
requirements of applicable regulatory agencies with respect to the UFTB
Products. Danek shall cooperate in preparing any such filings to the extent
reasonably requested by UFTB.
Section 4.3 Ownership of Intellectual Property Rights.
(a) Intellectual Property Rights. For purposes of this Agreement,
"Intellectual Property Rights" means all works, including literary works,
pictorial, graphic and sculptural works, architectural works, works of visual
art, and any other work that may be the subject matter of copyright protection;
advertising and marketing concepts; trademarks; information; data, formulas;
designs; models; drawings; computer programs; including all documentation,
related listings, design specifications and flowcharts, trade secrets and any
inventions including all processes, machines, manufactures and compositions of
matter and any other invention that may be the subject matter of patent
protection; and all statutory protection obtained or obtainable thereon.
(b) Ownership of Intellectual Property Rights. All Intellectual Property
Rights relating to the UFTB Products shall be owned or obtained under license by
UFTB (subject to grants of licenses referred to herein); provided, however, that
nothing in this Section 4.3 shall be construed
-21-
<PAGE>
or interpreted as granting in any manner or way any rights to UFTB in any
Intellectual Property Rights of Danek, including, but not limited to any
Intellectual Property rights to the UFTB Product System installed by Danek at
UFTB's Alachua, Florida facility in accordance with Section 3.1 hereof.
Section 4.4 Rights of First Refusal. UFTB agrees that if UFTB makes
available for distribution any product, or develops any technology, relating to
spinal or cranial medical procedures (other than the UFTB Products which are
subject to this Agreement), then Danek shall be promptly notified by UFTB with
sufficient details relating thereto to enable Danek to evaluate such products or
technology. Thereafter, Danek shall have a right of first refusal to obtain such
product or license such technology on the best terms and conditions offered by
UFTB. Danek shall have a period of sixty (60) days within which to accept such
offer to obtain such product or license such rights.
ARTICLE V
TERM AND TERMINATION
Section 5.1 Term. The term of this Agreement shall commence as of the date
hereof and shall continue until the twenty-fifth anniversary of the date hereof
unless terminated earlier in accordance with Section 5.2.
Section 5.2 Early Termination. Either party hereto may terminate this
Agreement (a) due to a material breach by the other party of any of its
obligations or covenants hereunder upon 30 calendar days' notice to the
breaching party if such breaching party fails to remedy such breach within such
30 calendar days, or if such breach cannot be remedied within such 30 calendar
days, only if such breaching party has not undertaken good faith efforts to
remedy such breach or (b) the insolvency or filing for bankruptcy by the other
party. This Agreement may not be terminated
-22-
<PAGE>
without cause except as specifically provided herein or by the mutual written
agreement of the parties.
Section 5.3 Accrued Obligations. In the event that this Agreement is
terminated due to the breach of either party pursuant to Section 5.2 hereof, the
duties and obligations of the breaching party which have accrued prior to
termination, including without limitation, the obligation to process and deliver
quantities of the UFTB Products for which Instructions have been validly issued
prior to notice of termination and the correlative obligation to pay for such
quantities, shall not be released or discharged by such termination.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification by Danek. Subject to UFTB's indemnification
obligations pursuant to Section 6.2 hereof, Danek shall indemnify and hold UFTB
harmless from any and all losses, damages, liabilities, costs and expenses,
including, without limitation, reasonable attorneys fees and court costs, that
may result from any demand, claim or litigation relating to, resulting from or
out of the provision of Management Services by Danek.
Section 6.2 Indemnification By UFTB. UFTB shall indemnify and hold Danek
harmless from any and all losses, damages, liabilities, costs and expenses,
including, without limitation, reasonable attorneys fees and court costs, that
may result from any demand, claim or litigation relating to, resulting from or
arising out of (i) the failure of any UFTB Product to comply with the UFTB
Product Specifications, (ii) a breach by UFTB of any warranty, representation or
covenant made by UFTB, including a breach by UFTB of the UFTB Products
warranties set forth in Section
-23-
<PAGE>
2.2 hereof; (iii) the failure of the packaging related to any UFTB Product to
comply with the Packaging Specifications; or (iv) the distribution by UFTB of
the UFTB Products.
Section 6.3 Survival of Obligations. The respective obligations of the
parties hereto pursuant to Article VI shall survive the termination of this
Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement, together with the exhibits
and schedules hereto constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede any prior expression of
intent or agreement of the parties with respect thereto.
Section 7.2 Amendments. This Agreement shall not be modified, altered, or
amended except by an agreement in writing signed by duly authorized
representatives of each of the parties hereto.
Section 7.3 Governing Law; Jurisdiction. This Agreement shall be governed
by the laws of the State of Florida (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies. The parties agree to submit to personal jurisdiction
and to waive any objection as to venue and forum non convenes in the federal or
state courts of the State of Florida.
Section 7.4 Force Majeure. Neither party shall be liable for
nonperformance or delay in performance due to and to the extent resulting from
an event of force majeure, including without limitation: any act of god;
regulation or law of any government; war, riot, or civil commotion; destruction
of production facilities or materials by fire, earthquake or storm; strike or
other labor
-24-
<PAGE>
disturbances; epidemic; failure of public utilities or common carriers; or any
limitation, requirement or prohibition imposed or required by the United States
Food and Drug Administration or any other governmental agency asserting
jurisdiction with regard to the UFTB Products. In case any of the foregoing
occurrences should in any manner hinder either party hereto from fulfillment of
its obligations specified in this Agreement, said party shall promptly give
written notice to the other party. In the event that UFTB has experienced an
event of force majeure, and as a result hereof is unable to supply Danek with
any UFTB Product, Danek may procure that UFTB Product from another manufacturer.
Section 7.5 Severability. In the event that any part of this Agreement
shall for any reason be finally adjudged by a court of competent jurisdiction or
determined by a governmental body to be invalid or unenforceable, then, unless
such part is deemed material by either or both parties, this Agreement shall
continue in effect and such part shall be excised herefrom. If either party
determines that such part hereof found to be invalid or unenforceable is
material to the operation or performance of this Agreement, then such party may,
by written notice to the other party, request that the parties attempt to
renegotiate this Agreement to alleviate or eliminate any difficulty caused to
such party by such invalidity or unenforceability.
Section 7.6 Waiver. No failure or delay on the part of either party to
enforce any provision of this Agreement or to exercise any right granted hereby
shall operate as a waiver thereof unless or until the right to enforce any such
provision or to exercise any such right has been waived in writing by such
party. Any waiver of any provision hereof or right hereunder shall be effective
only in accordance with its terms and may be restricted in any way. No waiver of
any provision
-25-
<PAGE>
hereof or any right hereunder shall constitute a waiver of a continuance or
reoccurrence of the failure to perform, except as provided in such waiver.
Section 7.7 No Third Party Beneficiaries. This Agreement shall be
construed to be for the benefit of the parties hereto only and shall confer no
right or benefit upon any other Person.
Section 7.8 Notices. Any notice, report or consent required or permitted
by this Agreement to be given or delivered shall be in writing and shall be
deemed given or delivered if delivered in person, or sent by registered or
certified mail, postage prepaid, return receipt requested, or sent by telecopy
(if confirmed), as follows:
If to Danek:
Sofamor Danek Group, Inc.
1800 Pyramid Place
Memphis, Tennessee 38132
Attention: President and Chief Operating Officer
Telecopy: 901-344-1570
with a copy to:
Vice President and General Counsel
Sofamor Danek Group, Inc.
1800 Pyramid Place
Memphis, Tennessee 38132
Telecopy: 901-344-1576
If to UFTB:
University of Florida Tissue Bank, Inc.
1 Progress Boulevard
Box 31
Alachua, Florida 32615
Attention: President and Chief Operating Officer
Telecopy: 904-462-5131
-26-
<PAGE>
with a copy to:
Ms. Susan Collingwood
Associate General Counsel
University of Florida College of Medicine
P.O. Box 100215
Gainesville, Florida 32610
Telecopy: 352-392-6482
Any such notice, report or consent shall be effective upon delivery if given or
delivered in person, or upon receipt if sent by telecopy which is confirmed, or
on the third business day following mailing if mailed. Either party hereto may
change its address for purposes hereof by giving the other party written notice
of such change as above provided.
Section 7.9 Assignment. Neither party may assign its rights and
obligations hereunder without the prior written consent of the other party. No
permitted assignment hereunder shall be deemed effective until the assignee
shall have executed and delivered an instrument in writing reasonably
satisfactory in form and substance to the other party pursuant to which the
assignee assumes all of the obligations of the assigning party hereunder. The
parties acknowledge, however, that UFTB is currently considering the formation
of a subsidiary for-profit corporation to conduct the business, legal and
financial affairs contemplated by this Agreement, to which for-profit
corporation UFTB could or may assign intellectual property rights and all other
rights and properties necessary to fulfill the obligations to Danek and to
which, subject to Danek's approval, this Agreement could or may be assigned.
Section 7.10 Headings. The table of contents and the headings of the
various articles and sections hereof are for convenience of reference only,
shall not be deemed to be a part hereof, and shall not affect the meaning or
construction of any provision hereof.
-27-
<PAGE>
Section 7.11 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when signed by each of the parties hereto.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives on this __ day of
November, 1996 and effective July 23, 1996.
UNIVERSITY OF FLORIDA TISSUE BANK, INC.
By: /s/ James M. Grooms
-----------------------------------
Name:__________________________________
Title:_________________________________
Date:__________________________________
SOFAMOR DANEK GROUP, INC.
By: /s/ James J. Gallogly
-----------------------------------
Name: James J. Gallogly
Title: President
Date:__________________________________
-29-
<PAGE>
SCHEDULE A
CURRENT PRODUCTS
Cancellous Cortical Strips
ACE Fibula Shafts(1)
Femoral Cortical Shafts
Tibia Cortical Shafts
Fibula Cortical Shafts(1)
Humeral Cortical Shafts Cortical Bone Screws
Smith-Robinson Cortical Blocks
Cervical Cortical Tapered Screw
MD Series (MD-I, MD-II, MD-III) of threaded and
non-threaded tissue dowels
- ----------
(1) The exclusive rights to these UFTB Products are subject to exclusive
distribution rights granted to third parties, which distribution rights
shall be disclosed by UFTB to Danek within ten (10) days of the date of
this Agreement.
-30-
<PAGE>
SCHEDULE 2.1
SPECIFICATIONS FOR UFTB PRODUCTS
The Specifications for certain of the UFTB Products are set forth on the
attached Exhibit A to this Schedule 2.1. If specifications are not provided for
any particular Current Product, UFTB shall provide such specification within
ninety (90) days of the date of this Agreement. [Was Exhibit A ever attached?
Were additional specifications provided?]
-31-
<PAGE>
SCHEDULE 2.3
PROCESSING CAPACITY
UFTB shall provide its current and projected processing capacity for each
of the Current Products within ninety (90) days of the date of this Agreement.
[Has UFTB provided Danek information concerning this capacity?]
-32-
<PAGE>
SCHEDULE 3.4(d)
FULL PROCESSING COSTS
UFTB shall identify the Full Processing Costs within ninety (90) days of
the date of this Agreement [Has UFTB provided Danek with the Full Processing
Costs?]
-33-
<PAGE>
[Letterhead of SOFAMOR DANEK]
JIM GALLOGLY
President and
Chief Operating Officer
January 2, 1998
Mr. Jamie Grooms
President & Chief Executive Officer
University of Florida Tissue Bank, Inc.
One Innovation Drive
Alachua, FL 32615
RE: Management Services Agreement
Dear Mr. Grooms:
Please allow this letter to serve as an amendment to the 1996 Management
Services Agreement, as amended on April 21, 1997 ("Agreement") between Sofamor
Danek Group, Inc. ("Sofamor Danek") and the University of Florida Tissue Bank,
Inc. ("UFTB").
Section 3.4(h) of the Agreement is amended to read as follows:
Management Services Fee Payments. Payment to Sofamor Danek by UFTB of
Management Services Fees shall be made on the sixteenth (16th) day of the
second month following the month during which UFTB received payment of an
invoice with respect to UFTB Customer's Instructions submitted by Sofamor
Danek pursuant to this Agreement. Notwithstanding the previous sentence of
this Section 3.4(h), if the amount of Management Services Fees due to
Sofamor Danek in any given month during the term of this Agreement exceeds
the total accounts receivable due and payable to UFTB from UFTB Customers
("UFTB Customer Accounts Receivable"), then the amount of the payment
<PAGE>
Mr. Jamie Grooms
January 2, 1998
Page 2
required pursuant to this Section 3.4(h) shall be no greater than the UFTB
Customer Accounts Receivable; provided, however, if at the end of any
month during the term of the Agreement, UFTB has on hand cash and
unencumbered cash equivalents greater than One Million Dollars
($1,000,000), then the payment by UFTB to Sofamor Danek of Management
Services Fees on the 16th day of the next calendar month shall be
increased by the amount that such cash and unencumbered cash equivalents
exceeds One Million Dollars ($1,000,000); provided, however, that during
the term of this Agreement UFTB shall not be obligated to pay Sofamor
Danek an amount greater than all of the Management Services Fees owed to
Sofamor Danek plus interest as specified below, plus any amount required
to be paid to Sofamor Danek pursuant to Section 3.4(i). In the event that
on the 16th day of any month during the term of this Agreement UFTB does
not pay to Sofamor Danek all Management Services Fees due and payable to
Sofamor Danek, then the unpaid amount of said Management Services Fees
shall accrue interest on a daily basis at the rate of twelve percent (12%)
per annum.
On the 16th day of each month during the term of this Agreement, UFTB
shall provide the following reports to Sofamor Danek (i) all Management
Services Fees being paid to Sofamor Danek, together with a listing of all
UFTB invoice numbers applicable to those Management Services Fees; (ii)
all unpaid Management Services Fees due to Sofamor Danek from UFTB; (iii)
all UFTB Customer Accounts Receivable due to UFTB from customers of UFTB
products; (iv) all cash and unencumbered cash equivalents held by UFTB at
the end of the previous calendar month; and (v) those required by Section
3.4(i).
<PAGE>
Mr. Jamie Grooms
January 2, 1998
Page 3
The Agreement is hereby amended to add a new Section 3.4(i):
3.4(i). Monthly SR Inventory Service Fee. Each month during the term of
this Agreement that UFTB completes a SR set forecasted by SDG, Sofamor
Danek will pay to UFTB an amount equal to twenty percent (20%) of the
retail selling price of each such SR set ("Service Fee"). Upon the sale of
any such SR set or sets, the amount of the Service Fee applicable to such
SR set or sets shall be refunded to Sofamor Danek by UFTB.
On the sixteenth (16th) day of any month during the term of this
Agreement, UFTB shall submit to Sofamor Danek a report that lists (i) all
SR sets completed during the immediately preceding calendar month, (ii)
all SR sets sold during the immediately preceding calendar month, (iii)
the retail selling price of each SR set completed and each SR set sold
during the immediately preceding calendar month and (iv) the amount of the
Service Fee to be paid to UFTB and to be refunded to Sofamor Danek for the
immediately preceding calendar month. If the amount of the Service Fee to
be paid to UFTB exceeds the amount of the Service Fee to be refunded to
Sofamor Danek, then the amount of that excess shall reduce the amount of
the Management Services Fees payable to Sofamor Danek pursuant to Section
3.4 (h). If the amount of the Service Fee to be refunded to Sofamor Danek
exceeds the amount of the Service Fee to be paid to UFTB, than the amount
of that excess shall be added to Management Services Fees payable to
Sofamor Danek pursuant to Section 3.4(h).
<PAGE>
Mr. Jamie Grooms
January 2, 1998
Page 4
If these amendments are agreeable to you, please sign both of these
originals and return one.
Very truly yours,
/s/ James J. Gallogly
James J. Gallogly
JJG/dg
AGREED TO AND ACCEPTED:
UNIVERSITY OF FLORIDA TISSUE BANK, INC.
/s/ Jamie M. Grooms
- -----------------------------------
Jamie M. Grooms
President & Chief Executive Officer
<PAGE>
[Letterhead of SOFAMOR DANEK]
JIM GALLOGLY
President and
Chief Operating Officer
April 21, 1997
Mr. Jamie M. Grooms
President & Chief Executive Officer
University of Florida Tissue Bank, Inc.
1 Progress Boulevard
Alachua, Florida 32615
Re: Management Services Agreement
Dear Mr. Grooms:
Please allow this letter to serve as an amendment to the Management
Services Agreement between Sofamor Danek Group and UFTB ("Agreement"). The
purpose of this amendment will be to recognize UFTB's right to reimbursement for
the following items:
1. UFTB's actual cost for product liability and general liability
insurance that is attributable to the Management Services Fees
portion of UFTB revenues.
2. The State of Florida tissue bank fee/tax of .005 that is
attributable to the Management Services Fees portion of UFTB
revenues.
3. Effective December 1, 1996, the cost that UFTB incurs to hire an
accounts receivable employee who will be responsible for accounts
receivable related to UFTB revenues generated from the UFTB Products
covered by the Agreement. Additionally, the cost that UFTB will
incur to hire an additional accounts receivable employee who will be
responsible for accounts receivable, which employee will be hired
during the calendar quarter that UFTB revenues related to this
Agreement reaches an annualized level of $50,000,000.
<PAGE>
Mr. Jamie M. Grooms
April 21, 1997
Page Two
4. The second sentence of Section 3.4(a)(ii) of the Agreement is hereby
deleted from the Agreement.
UFTB will be paid its actual costs for those items listed above by showing
the specific cost thereof and deducting it from the amounts payable to Sofamor
Danek under the terms of the Agreement.
If these amendments are agreeable to you, please sign both of these
originals and return one to me for our files.
Very truly yours,
/s/ James J. Gallogly
James J. Gallogly
JJG:mb
AGREED TO AND ACCEPTED:
UNIVERSITY OF FLORIDA TISSUE BANK, INC.
/s/ Jamie M. Grooms
- -----------------------------------
Jamie M. Grooms
President & Chief Executive Officer
<PAGE>
ASSIGNMENT AND ASSUMPTION OF
MANAGEMENT SERVICES AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION OF MANAGEMENT SERVICES AGREEMENT (the
"Assignment") is made and entered into this 23rd day of January, 1998, by and
between UNIVERSITY OF FLORIDA ORTHOPAEDIC TISSUE BANK, INC., d/b/a UNIVERSITY
OF FLORIDA TISSUE BANK, INC., a Florida not-for-profit corporation
("Assignor"), and REGENERATION TECHNOLOGIES, INC., a Florida for-profit
corporation ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor and Assignee are parties to that certain Patent
License Agreement, dated January 23, 1998 (the "License Agreement"), pursuant
to which Assignor has agreed to license to Assignee the patents or pending
patents listed in Exhibit "A" attached hereto and made a part hereof on the
condition that Assignee meets certain financing goals; and
WHEREAS, pursuant to the License Agreement, Assignor has agreed to
assign to Assignee all of Assignor's right, title and interest in, and all of
its obligations under, that certain Management Services Agreement, by and
between Assignor and Sofamor Danek Group, Inc. ("SDG"), a copy of which is
attached as Exhibit "B" (the "SDG Contract") (with certain exceptions) upon
the terms and conditions set forth herein; and
WHEREAS, pursuant to the License Agreement, Assignee has agreed to
accept such assignment and to assume all of the obligations of Assignor under
the SDG Contract (with certain exceptions) upon the terms and conditions set
forth herein; and
<PAGE>
WHEREAS, Assignor is willing to assign the SDG Contract and Assignee is
willing to accept such assignment of the SDG Contract and to assume all
obligations of Assignor under the SDG Contract upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. RECITALS. The recitals set forth above are true and correct in all
respects and are incorporated herein as fully as if set forth herein verbatim.
2. ASSIGNMENT AND ASSUMPTION OF SDG CONTRACTS. Assignor hereby assigns,
transfers, conveys and delivers to Assignee all of Assignor's right, title
and interest in, to and under the SDG Contract, effective on the Effective
Date of this Assignment described in Paragraph 4 below, except as otherwise
provided in Paragraph 3 below. Assignee hereby assumes all of the
obligations, terms and covenants set forth in the SDG Contract to be
observed and performed by Assignor and agrees to be bound by the terms,
conditions and covenants of the SDG Contract arising from and after the
Effective Date, except as otherwise provided in Paragraph 3 below.
3. EXCEPTIONS FROM ASSIGNMENT. Assignor shall retain and shall not
assign hereunder the following rights and obligations under the SDG Contract
(terms defined in the SDG Contract have the same meanings in this Paragraph
3), as set forth in the following Sections of the SDG Contract:
(a) SECTION 1.2. Assignor shall retain the obligation to grant a
license to Danek to use the UFTB Mark.
-2-
<PAGE>
(b) SECTION 2.1. Assignor shall retain the right to approve any
amendments to Schedule 2.1.
(c) SECTION 2.2(b). Assignor shall remain the owner of all rights
in and to the UFTB Mark.
(d) SECTION 2.3(b). Assignor shall retain the right to approve any
amendments to Schedule 2.3.
(e) SECTION 3.1(e). Assignor shall retain the right to review and
respond to Danek regarding any advertising using the UFTB Mark or the
relationship between Danek and Assignor or Danek and the University of
Florida.
(f) SECTION 3.1(f). Assignor shall retain the right to terminate the
SDG Contract in accordance with Section 3.1(f) of the SDG Contract.
(g) SECTION 3.4(d). Assignor shall retain the right to approve any
amendments to Schedule 3.4(d).
(h) SECTION 3.5. Assignor shall retain the right to approve any
changes to the Packaging Specifications.
(i) SECTION 4.2. Assignor shall retain the right to approve any
reporting or other requirements with respect to the UFTB Products.
(j) SECTION 4.3(b). Assignor shall retain ownership of all
Intellectual Property Rights relating to the UFTB Products.
4. EFFECTIVE DATE. The assignment and assumption described in this
Assignment shall be effective on the effective date of the license granted
pursuant to the License
-3-
<PAGE>
Agreement (the "Effective Date"). In the event that the license granted
pursuant to the License Agreement does not become effective, then the
assignment hereunder shall not become effective.
5. TERMINATION AND BREACH. Any termination of the License Agreement shall
cause a simultaneous termination of this Assignment, without any further
action by Assignor or Assignee. Assignee acknowledges that Assignor may
terminate the License Agreement (which shall also cause a termination of this
Assignment) upon any material breach of this Assignment by Assignee. A breach
by Assignee of any of the obligations under the SDG Contract assumed by
Assignee hereunder shall be a material breach of this Assignment. During the
term of this Assignment, Assignor shall have the right at any reasonable time
to review Assignee's records to determine whether Assignee is complying with
all obligations of the SDG Contract assigned hereunder, and to confirm with
SDG representatives Assignee's compliance with the terms of the SDG Contract
assigned hereunder.
6. ASSIGNMENT AND ASSUMPTION UPON TERMINATION. Upon any termination of
this Assignment, the parties agree that such termination shall have the
following effect, without any other action required by Assignor or Assignee:
(a) Assignee shall assign, transfer, convey and deliver to Assignor
the rights of Assignor under the SDG Contract that are assigned to Assignee
hereunder, effective on the date of termination of this Assignment; and
(b) Assignor shall assume and shall be bound by all of the
obligations, terms and covenants set forth in the SDG Contract to be
observed and performed by Assignor and that were assumed by Assignee
hereunder, effective on the termination of this Assignment.
-4-
<PAGE>
7. INDEMNIFICATION. Assignor hereby agrees to indemnify and hold
Assignee harmless from any and all claims, demands, damages, costs, losses,
expenses, liabilities and obligations of any kind or nature whatsoever
(including reasonable attorney's fees incurred by Assignee) incurred by
Assignee as a result of any breach by Assignor of any warranty,
representation, covenant or agreement of Assignor contained in this
Assignment or the failure of Assignor to fulfill its obligations pursuant to
the SDG Contract prior to the Effective Date. Assignee agrees to indemnify
and hold Assignor harmless from any and all claims, demands, damages, costs,
losses, expenses, liabilities and obligations of any kind or nature
whatsoever including reasonable attorneys fees incurred by Assignor) incurred
by Assignor as a result of the breach by Assignee of any covenant or agreement
of Assignee contained in this Assignment or the failure of Assignee to
fulfill its obligations pursuant to the SDG Contract arising from and after
the Effective Date.
8. ATTORNEYS' FEES. Should either party to this Assignment bring suit
for the breach of a promise, covenant, warranty or representation hereunder,
it is agreed that the successful party in such suit shall be entitled, in
addition to recovering any damages sustained thereby, to recover such party's
expenses, including court costs and reasonable attorneys' fees as part of the
judgment or other settlement. Expenses and attorneys' fees include those
incurred prior to the initiation of suit and those incurred in connection
with proceedings in courts of original jurisdiction and courts of appeal.
9. BINDING EFFECT. This Assignment shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors
and assigns.
-5-
<PAGE>
10. GOVERNING LAW AND VENUE. This Assignment shall be governed by, and
construed in accordance with, the laws of the State of Florida, and venue for
any legal proceeding or action at law arising out of or construing this
Assignment shall lie in the state courts of Alachua County, Florida, or the
United States District Court for the Northern District of Florida,
Gainesville Division.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
executed as of the date and year first above written.
<TABLE>
<S> <C>
Signed, sealed and delivered
in the presence of: "Assignor"
UNIVERSITY OF FLORIDA ORTHOPAEDIC
TISSUE BANK, INC., d/b/a UNIVERSITY OF
FLORIDA TISSUE BANK, INC., a Florida not-for-
profit corporation
/s/ Kathleen Davis By: /s/ F. P. Glowczewskie, Jr.
- ------------------------- -------------------------------------------
Frank P. Glowczewskie, Jr., Chairman of the
Board
/s/ John D. Callahan
- -------------------------
"Assignee"
REGENERATION TECHNOLOGIES, INC., a
Florida for-profit corporation
/s/ Kay B. Lopez By: /s/ Peter F. Gearen
- ------------------------- -------------------------------------------
Peter F. Gearen, President
/s/ James S. Gantler
- -------------------------
</TABLE>
-6-
<PAGE>
CONSENT TO ASSIGNMENT
The undersigned hereby consents to the assignment in the above
ASSIGNMENT AND ASSUMPTION OF MANAGEMENT SERVICES AGREEMENT, as required by
Section 7.9 of the Management Services Agreement.
SOFAMOR DANEK GROUP, INC.
By: /s/ Mark D. LoGuidice
- ----------------------------- -------------------------------------
Name: Mark D. LoGuidice
Title: Executive Vice President
- -----------------------------
- ----------
APPROVED
AS TO /s/ [ILLEGIBLE]
LEGAL FORM
- ----------
- ----------
<PAGE>
EXHIBIT "A"
1. "Diaphysial Cortical Dowel," invented by Nicholas E. Grivas and James M.
Grooms, Docket No. TB-100, U.S. Patent Application S/N 08/587,070, dated
January 16, 1996, subject to that certain Management Services Agreement
by and between UFTB and Sofamor Danek Group, Inc., dated effective July
23, 1996, as amended April 21, 1997 (the "SDG Contract"), and subject to
that certain Processing License Agreement by and between UFTB and
AlloSource, Inc., dated January 1, 1997;
2. "Bone Paste", invented by John F. Wironen and James M. Grooms, Docket No.
TB-101, U.S. Patent Application S/N 08/816,079, dated March 13, 1997,
subject to that certain Agreement by and between UFTB and Exactech, Inc.
dated effective April 22, 1997, which is also owned by the University of
Florida (the "University");
3. "Cortical Bone Interference Screw," invented by James M. Grooms, Kevin
Carter and David H. Dulebohn, Docket No. TB-102, U.S. Patent Application
S/N 08/687,018, dated July 16, 1996, subject to the SDG Contract;
4. "Open Intervertebral Spacer," invented by John R. Bianchi, Kevin C.
Carter, Bradley T. Estes, Larry Boyd and John A. Pafford, Docket No.
TB-103, U.S. Patent Application S/N not available, dated June 3, 1997,
subject to that certain Joint Ownership Agreement, between UFTB and Danek
Medical, Inc., dated June 12, 1997, and the SDG Contract;
5. "Cortical Bone Cervical Smith-Robinson Fusion Implant," invented by James
M. Grooms, Kevin C. Carter, David H. Dulebohn and Tom Sander, Docket No.
TB-104, U.S. Patent Application S/N 08/920,630, dated August 27, 1997,
subject to the SDG Contract;
6. "Segmentally Demineralized Bone Implant," invented by James M. Grooms,
Kevin C. Carter and Thomas W. Sander, Docket No. TB-105, U.S. Patent
Application S/N 08/958,364 filed October 27, 1997;
7. "Cervical Tapered Dowel," Docket No. TB-106, subject to the SDG Contract;
8. "Bone Grafting Units," U.S. Patent No. 4950296, issued August 21, 1990 to
Jonathan L. McIntyre, and assigned to UFTB on September 27, 1997.
<PAGE>
Exhibit 10.6
Confidential Treatment. The portions of this exhibit that have been replaced
with "[*****]" have been filed separately with the Securities and Exchange
Commission and are the subject of a request for confidential treatment.
MANAGEMENT SERVICES AGREEMENT
-BONE PASTE -
THIS MANAGEMENT SERVICES AGREEMENT (this "Agreement") effective on this 11
day of May,1998, by and between THE UNIVERSITY OF FLORIDA TISSUE BANK, INC.
("UFTB"), a Florida non-profit corporation, and SOFAMOR DANEK GROUP, INC., an
Indiana corporation ("SDG").
WITNESSETH:
WHEREAS, UFTB is a Direct Support Organization of The University Of
Florida.
WHEREAS, UFTB's role as a Direct Support Organization of The University of
Florida will be significantly enhanced through the relationship with SDG as
agreed herein.
WHEREAS, UFTB and SDG each acknowledge that the processing and use of
human tissue for human transplantation purposes is in the public interest and in
the interest of medicine generally and that the entering into of this Agreement
will enhance these interests through facilitating the availability of processed
tissue for use in spinal and cranial medical procedures (the "Field of Use") and
thereby advance the medical and scientific application thereof.
WHEREAS, UFTB and SDG each desire that UFTB (i) process Bone Paste,
described in U.S. Patent Application S/N 08/816,079, dated March 13, 1997, for
use in spinal and cranial medical procedures (the "Bone Paste") and future line
extensions of the Bone Paste (jointly and severally herein, the "UFTB Paste
Product") and (ii) distribute such UFTB Paste Product in conjunction with
exclusive worldwide management services provided by SDG, all in accordance with
the terms and subject to the conditions contained herein. A description of the
Bone Paste is
[CONFIDENTIAL]
1 4/28/98
<PAGE>
set forth on the attached Schedule A.
WHEREAS, UFTB and SDG each desire that UFTB Paste Product be processed for
distribution throughout the world, except for the country of Italy (the
"Territory") in the Field of Use, subject to SDG's management services.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, SDG and UFTB hereby agree as follows:
ARTICLE I
COMMITMENTS AND LICENSE
Section 1.1 Exclusive Commitments. UFTB hereby agrees to exclusively
permit SDG to perform Management Services (as defined in Section 3.1 hereof), in
the Territory and in the Field of Use, in connection with UFTB Paste Product
processed and distributed by UFTB, and SDG hereby agrees to perform Management
Services in connection with UFTB Paste Product processed and distributed by UFTB
in the Territory, subject to the terms and conditions of this Agreement. UFTB
further agrees to not license either directly or indirectly to other parties or
to distribute or utilize the management services of any third party in
connection with the distribution of the UFTB Paste Product or other products
comprised primarily from a UFTB Paste Product, which may have spinal and cranial
applications, without first demonstrating to SDG's reasonable satisfaction that
such products differ significantly from UFTB Paste Product and would, therefore,
have no adverse economic impact on SDG and/or otherwise, in any way, hinder
SDG's efforts to perform Management Services under this Agreement. If the
division president or equivalent of SDG either approves of the release of such
product or fails to respond
2 4/28/98
<PAGE>
to UFTB's demonstration and written request for approval of such product within
thirty (30) days of receipt of such proposed product information, UFTB will be
free to license to other parties, distribute, or utilize the management services
of any third party in connection with the distribution of such demonstrated
product and, in such event, UFTB shall first supply all SDG's demand according
to the Distribution Forecast as stated in Section 3.1(b) before supplying any
other party with such product.
If even after UFTB's distribution or license of such product, SDG
demonstrates to UFTB that the distribution or license of such product has or is
likely to have an adverse economic impact on SDG or that such product is being
used in the Field of Use, then UFTB shall immediately take action to alleviate
said adverse economic impact or prevent such product's use in the Field of Use.
If such UFTB action fails to alleviate said adverse economic impact or prevent
such product's use in the Field of Use within six (6) months from the date of
SDG's written notification to UFTB of such adverse economic, UFTB shall
immediately terminate distribution or license of such product. Section 3.1(g)
shall have no applicability for the Contract Year or Contract Years in which
UFTB undertakes such action.
Section 1.2 License of UFTB Marks. During the term of this Agreement, UFTB
grants to SDG a royalty-free, non-transferable license to use the mark
"University of Florida Tissue Bank" (the "UFTB Mark") in the Territory and in
the Field of Use in connection with SDG's provision of Management Services.
3 4/28/98
<PAGE>
ARTICLE II
UFTB PASTE PRODUCT
Section 2.1 UFTB Paste Product Specifications. All Bone Paste to be
distributed by UFTB using SDG's Management Services (as defined in Section 3.1
hereof) shall conform to and otherwise comply with the specifications set forth
in Schedule 2.1 hereto, and such Schedule 2.1 may be amended from time to time
by mutual written agreement of the parties (the "UFTB Paste Product
Specifications"). If any UFTB Paste Product that is not a current product is
distributed by UFTB pursuant to this Agreement, the parties hereto shall amend
Schedule 2.1 to set forth the specifications for such UFTB Paste Product, and
such UFTB Paste Product shall conform to and otherwise comply with the UFTB
Paste Product Specifications. If regulatory approval is required for any part or
all of the UFTB Paste Product in any country located in the Territory and if
such regulatory approval be refused, modified or withdrawn by the applicable
regulatory authorities of a country in the Territory, UFTB shall promptly notify
SDG of such refusal, modification or withdrawal and the parties shall negotiate
in good faith to amend appropriately the UFTB Paste Product Specifications;
provided, however, that in the event of any such refusal, modification or
withdrawal, UFTB may refuse to process or distribute that specific UFTB Paste
Product, and/or SDG may refuse to provide Management Services in connection with
such UFTB Paste Product, pending the resolution of such regulatory matter. In
the event of any such refusal, modification or withdrawal, UFTB shall use its
best efforts to favorably and promptly resolve such regulatory matter, which
best efforts shall include, but not be limited to, full communication to SDG of
all information and correspondence, except for materials subject to the
4 4/28/98
<PAGE>
attorney-client privilege, relating to any issues raised by such refusal,
modification or withdrawal and full participation with SDG in connection with
the resolution of such regulatory matter.
Section 2.2 UFTB Paste Product Warranties.
(a) Compliance With Laws and Specifications. UFTB warrants that the UFTB
Paste Product will be processed, packaged, stored and shipped (i) suitable for
use in the treatment of osseous defects as prescribed by a physician for cranial
and spinal medical procedures in which human tissue is needed or used to replace
human tissue and (ii) in conformity in all respects with all applicable federal,
state and local laws, rules and regulations relating thereto, including
particularly the Federal Food, Drug and Cosmetic Act and the National Organ
Transplant Act, and the UFTB Paste Product Specifications pursuant to Section
2.1 hereof warrants that UFTB the packaging of UFTB Paste Product will be in
conformity in all respects with the Packaging Specifications described in
Section 3.5 hereof
(b) Authority; Licenses. UFTB further warrants that it is fully authorized
to enter into and perform this Agreement, that the UFTB Paste Product and any
manuals prepared by UFTB in connection with the UFTB Paste Product and made
available to recipients of the UFTB Paste Product (the "UFTB Customers") will
not violate or infringe upon any common law or statutory rights of any third
party, and that UFTB is the owner of all rights in and to the UFTB Mark.
(c) Incorporated Materials. UFTB warrants that it has full right and
authority to incorporate all materials (e.g., human tissue) into the UFTB Paste
Product and that such raw materials shall be in full compliance with all
applicable federal, state and local laws, rules and
5 4/28/98
<PAGE>
regulations and with the UFTB Paste Product Specifications.
Section 2.3 Processing Capacity.
(a) UFTB Paste Product. Schedule 2.3 sets forth UFTB's current as well as
projected processing capacity for the UFTB Paste Product by UFTB, in terms of
the number of units that may be processed, packaged and delivered by UFTB per
month.
(b) Other UFTB Paste Product. If any UFTB Paste Product that is not a
current product is processed pursuant to this Agreement, the parties hereto
shall amend Schedule 2.3 by mutual agreement to set forth the information
required by Section 2.3(a) with respect to such product.
ARTICLE III
MANAGEMENT SERVICES IN CONNECTION WITH UFTB PASTE PRODUCT
Section 3.1 SDG's Management Services on Behalf of UFTB.
(a) SDG's Rights and Responsibilities. SDG shall have the exclusive
responsibility to diligently facilitate the distribution of the UFTB Paste
Product, in the Territory and in the Field of Use, to UFTB Customers in
accordance with this Agreement (the "Management Services"). The Management
Services shall be comprised of(i) education, training, and marketing the UFTB
Paste Product, which Management Services may be combined with the marketing of
other SDG products and services; provided, however, that the UFTB Paste Product
will be distributed by UFTB separately from any SDG distributed products; (ii)
providing, either through employees or independent representatives of SDG,
customer service to UFTB Customers (e.g., responding to questions UFTB customers
may have concerning how the UFTB Paste
6 4/28/98
<PAGE>
Product were processed and the various surgical applications for which they are
designed), (iii) the facilitation of the shipment of UFTB Paste Product to UFTB
Customers in accordance with Sections 3.1(c) and 3.2 hereof Upon mutual
agreement of SDG and UFTB and subject to separate written agreements, SDG may
also provide UFTB with product design, professional management information
system and computer programming and installation support services. SDG reserves
the right to develop, at its sole discretion, non-exclusive management
arrangements for the UFTB Paste Product with selected third parties which third
parties will provide Management Services subject to all of the covenants,
agreements, obligations and commitments made by SDG hereunder, but in no case
shall such action require UFTB to incur any additional cost or expense and/or
increase the Management Service Fees as set forth in Section 3.4 under this
Agreement.
(b) Distribution Forecast. To assist UFTB in planning, SDG shall
supply UFTB with month-by-month distribution forecasts ("Distribution
Forecast") in advance of each quarter. Distribution Forecasts for Contract
Years one, two, three, and four shall be based upon the distributions shown
in Section 3.3 (b) herein, which equate to quantities of [*****] in Contract
Year one; [*****] in Contract Year two; [*****] in Contact Year three; and
[*****] in Contract Year four. In the event that SDG changes or expects to
change any such Distribution Forecast, SDG shall promptly notify UFTB of the
extent of such change and UFTB shall have one hundred twenty (120) days from
such notification to adjust its production capacity in order to meet the
production requirements under
[CONFIDENTIAL]
7 4/28/98
<PAGE>
the terms of this Agreement.
(c) UFTB's Non-Compliance with Distribution Forecast.
(i) UFTB shall endeavor to meet the Distribution Forecast. In the
event that UFTB is unable to supply the number of units of UFTB Paste Product
that SDG forecasted in any ninety (90) day period under the Distribution
Forecast, it shall designate no less than [*****] of its human tissue raw
materials allotted for all Bone Paste, and Bone Paste-type products produced
under U.S. Patent Application S/N 08/816,079, dated March 13, 1997, to the
Bone Paste.
(ii) SDG may elect to assist UFTB in developing or finding an
additional donor base or to solve other such limiting factors for the
affected UFTB Paste Product for the time period during which UFTB is unable
to supply such affected UFTB Paste Product. If such time period exceeds
ninety (90) days, until such time that UFTB is again able to supply the
affected UFTB Paste Product as otherwise set forth in this Agreement, SDG
shall have the right to procure Bone Paste raw materials from sources other
than those customarily used by UFTB. SDG shall then provide all such procured
Bone Paste raw materials to UFTB and UFTB shall endeavor to produce the
affected UFTB Paste Product from such procured raw materials. UFTB shall pay
SDG a Management Service Fee equal to [*****] for UFTB Paste Products made
from such SDG procured raw materials, less all direct expenses related to
manufacturing same, including "Fully Loaded Manufacturing Costs". Fully
Loaded Manufacturing Costs shall mean all direct costs related to the
manufacturing and testing-laboratory process, including labor, matching
payroll taxes and employee benefits, materials and
[CONFIDENTIAL]
8 4/28/98
<PAGE>
supplies, and all manufacturing and testing-laboratory overhead costs including
apportioned manufacturing and testing-laboratory facilities space cost,
manufacturing and testing-laboratory equipment depreciation, and related
apportioned utilities and other overhead, exclusive of administrative and
marketing overhead items.
(d) Procedures for Receiving UFTB Customer Instructions. SDG shall be
responsible for receiving UFTB Customers' orders which shall include shipping
requirements for the UFTB Paste Product sought to be obtained by such UFTB
Customers (the "UFTB Customer Instructions") in accordance with Section 3.2
hereof UFTB will maintain records of its distribution and shipment of the UFTB
Paste Product in accordance with generally accepted accounting principles.
(e) Distribution of UFTB Paste Product. SDG will use its best efforts to
actively support the distribution and use of UFTB Paste Product consistent with
SDG's standards. SDG shall offer commission rates to SDG's sales personnel and
independent representatives with respect to The UFTB Paste Product distributed
to UFTB Customers, as the result of SDG's Management Services hereunder, equal
to or greater than the commission rates offered to such sales personnel and
independent representatives on any product that is the same or is substantially
similar in use to any product that SDG may then be marketing.
(f) No Warranties. In connection with its provision of Management
Services, SDG agrees that it will give no warranties or representations as to
the UFTB Paste Product on behalf of UFTB, including without limitation, as to
quality, durability, merchantability, fitness for a particular use or purpose or
any other features of the UFTB Paste Product distributed by UFTB
9 4/28/98
<PAGE>
pursuant to this Agreement. To ensure SDG's compliance with this Section 3.1
(f), SDG shall, prior to publication, deliver for UFTB's review, all printed
materials (the "Materials") associated or used in connection with the
distribution of the UFTB Paste Product, the use of the UFTB Mark, the
relationship between SDG and UFTB or The University of Florida and SDG and not
previously published by SDG. If UFTB responds within fifteen (15) working days
(excluding weekends and holidays) of UFTB's receipt of the Materials with its
written requests to amend the Materials to ensure SDG's compliance with this
Section 3.1(f), SDG shall diligently endeavor to incorporate those changes. If
UFTB either approves the Materials in writing or fails to respond within fifteen
(15) working days (excluding weekends and holidays) of receipt of the materials
sought to be approved, SDG will be free to use the Materials as originally
provided to UFTB.
(g) Rights Becoming non-exclusive. If at the end of the first Contract
Year, as defined in Section 3.4 (1) herein, or any Contract Year ending after
that date, the total quantity of UFTB Paste Product distributed pursuant to
this Agreement is less than [*****] for that Contract Year, (a "Shortfall
Contact Year"), UFTB may terminate the exclusive rights portion of this
Agreement with thirty (30) days written notice to SDG, thereby rendering the
Agreement a nonexclusive services agreement and eliminating all restrictions
on UFTB's ability to further license or otherwise distribute the UFTB Paste
Product to any other party, provided that: (i) UFTB has processed quantities
of UFTB Paste Product in accordance with the Distribution Forecast for such
Shortfall Contract Year and its preceding Contract Year; and (ii) that within
thirty (30) days of written notification from UFTB that such Shortfall
exists, SDG elects not to pay UFTB a "make-up" dollar amount (such make-up
dollar amount is the
[CONFIDENTIAL]
10 4/28/98
<PAGE>
product of A times B, wherein "A" is the difference between [*****] and the
actual Shortfall Contract Year distributions, and "B" is the difference
between [*****] and the Management Service Fee percentage in effect at the
time).
(h) UFTB's Rights Under A Change to Non-Exclusivity In the event that
SDG's rights become non-exclusive as set forth in Section 3.1(g) herein: (i)
UFTB's obligation to supply all of SDG's demand according to the Distribution
Forecast before supplying any other party, as set forth in Section 1.1 herein,
shall promptly terminate; (ii) the provisions of Section 3.1(c) herein shall
promptly terminate and UFTB shall then determine the amount of UFTB Paste
Product available for SDG; and (iii) the management service fees set forth in
Section 3.4(a) herein may be recalculated by UFTB upon sixty (60) days written
notice to SDG from UFTB.
Section 3.2 Ordering and Shipping Procedures.
(a) Submission of UFTB Customer Instructions with SDG. UFTB Customers
shall submit UFTB Customer Instructions, for UFTB Paste Product, with SDG, in
SDG's role as exclusive Management Services provider. To the extent that a UFTB
Customer requests information concerning the purchase, sale or service of UFTB
Paste Product from UFTB directly, UFTB will direct such inquiry to SDG's
customer service telephone number, which number shall be answered by a SDG
customer service representative at SDG's offices in Memphis Tennessee. If SDG's
customer service representative determines that the inquiry involves a service
question that may be handled more expeditiously by one of SDG's independent
representatives rather than through SDG's offices, (i.e., because of geographic
proximity, expertise, etc.) that inquiry will be directed to that independent
representative. In the
[CONFIDENTIAL]
11 4/28/98
<PAGE>
case of a UFTB Customer seeking to receive UFTB Paste Product, the SDG customer
service representative will verify the inventory availability, pricing and
shipment details for the UFTB Paste Product ordered by the UFTB Customer.
(b) Receipt and Resubmission of UFTB Customer Instructions by SDG~. Upon
receipt of UFTB Customer Instructions, SDG shall cause such UFTB Customer
Instructions to print at the UFTB Facility. UFTB may refuse acceptance of the
UFTB Customer Instructions, but only if UFTB has experienced an event of force
majeure pursuant to Section 7.4 hereof but only to the extent the event of force
majeure results in the inability of UFTB to supply UFTB Paste Product.
(c) Contents and Priority of UFTB Customer Instructions. The UFTB Customer
Instructions submitted by SDG to UFTB in accordance with Section 3.2(b) shall
set forth the quantity of units of each UFTB Paste Product required to be
shipped by UFTB to each UFTB Customer, and the delivery date (or dates)
requested by the UFTB Customer. Such UFTB Customer Instructions may be submitted
by UFTB Customers only in accordance with Section 3.2(a) hereof. SDG agrees that
UFTB Customer Instructions relating to UFTB Paste Products that are submitted by
physicians practicing in hospitals affiliated with the University of Florida
shall be granted priority over other UFTB Customers if shortages of such UFTB
Paste Products exist; provided, however, that UFTB shall be required to first
fulfill any preexisting commitments to UFTB Customer Instructions before
granting such priority to hospitals affiliated with the University of Florida
(d) Effect of UFTB Customer Instructions. In no event shall the use of any
form of
12 4/28/98
<PAGE>
UFTB Customer Instructions, invoice, shipping document, confirmation or waybill
be effective to vary, alter, modify or substitute for the terms and conditions
of this Agreement. All UFTB Customer Instructions shall be subject to, and shall
be deemed to incorporate, all terms and conditions of this Agreement, which may
be amended or waived only in accordance with Sections 7.2 and 7.6 hereof
(e) Acknowledgement of UFTB Customer Instructions. All UFTB Customer
Instructions received by SDG and transmitted to UFTB shall be accepted by UFTB
within ten (10) calendar days, except to the extent acceptance of any UFTB
Customer Instructions is refused pursuant to Section 3.2(b) hereof UFTB shall
notify SDG of(i) the anticipated date for shipment of the UFTB Paste Product
related to each particular UFTB Customer Instructions, and (ii) the date of
shipment of the UFTB Paste Product related to each particular UFTB Customer
Instructions. Upon the shipment of UFTB Paste Product to each UFTB Customer,
UFTB shall provide SDG with a copy of the invoice sent to the UFTB Customer,
which invoice shall set forth (i) the amount invoiced for each UFTB Paste
Product, (ii) the quantity of each UFTB Paste Product, (iii) the fact that SDG
is acting on behalf of UFTB as a Management Service Provider, and (iv) that any
questions regarding the particular shipment of UFTB Paste Product subject to
UFTB Customer Instructions should be directed to SDG. SDG shall guarantee the
payment of all invoices sent to UFTB Customers (other than physicians practicing
in hospitals affiliated with the University of Florida) for UFTB Paste Product.
If SDG is unable to collect payment from UFTB Customers for such invoices
within one (1) year of the date of shipment of applicable UFTB Paste Product,
SDG shall remit payment of such invoice to UFTB, less the appropriate
13 4/28/98
<PAGE>
Management Services fees owed to SDG.
Section 3.3 Consideration Paid by SDG for the Execution of this Agreement
(a) As consideration for the rights granted to SDG hereunder by UFTB,
SDG shall first pay UFTB the initial sum of [*****] as follows:
(i) [*****] shall be paid upon the execution of this Agreement;
and
(ii) [*****] shall be paid upon UFTB's attainment of a [*****]
inventory of Bone Paste. Such inventoried Bone Paste shall be subject to
efficacy standards mutually agreed upon in advance, and in writing, by the
parties. Any other provision of this Agreement notwithstanding, UFTB shall
have the right to withhold shipments of Bone Paste to customers, until such
[*****] inventory is attained, and such action shall not be considered a
default or breach by UFTB of any other provision set forth herein;
(iii) in the event that such [*****] inventory is not attained by
September 1, 1998 UFTB shall then have the right to terminate this Agreement
with thirty (30) days written notice to SDG.
(b) The balance of the consideration due shall be determined and paid as
described herein: the balance due shall be defined as "X" wherein the value of
"X" will be proportional to the actual dollar value of UFTB Paste Product
distributed as measured against the dollar value of the Distribution Forecast
established herein, said Distribution Forecast being:
(i) [*****] in Contract Year one;
(ii) [*****] in Contract Year two;
[CONFIDENTIAL]
14 4/28/98
<PAGE>
(iii) [*****] in Contract Year three; and
(iv) [*****] in Contract Year four. Each Contract Year that a
Distribution Forecast is met the value of "X" shall be [*****] and the [*****]
will be used as the base in computations herein; in each of Contract Years
one, two, three, and four, UFTB shall earn, and be promptly paid within
thirty (30) days from the end of that Contract Year, an amount equal to
[*****] multiplied times the proportional factor, the proportional factor
being equal to the actual UFTB Paste Product distributed divided by the
Distribution Forecast for that Contract Year {e.g. if, in Contract Year two,
the actual UFTB Paste Product distributed was [*****] the proportional factor
for Contract Year two would be [*****] multiplied times the annual factor of
[*****] base, or [*****]; as a further example, if in Contract Year three,
the actual UFTB Paste Product distributed was only [*****], the factor for
Contract Year three would be [*****] multiplied times the annual factor of
[*****] base, or [*****]}. The minimum dollar value of UFTB Paste Product
distributed in any Contract Year must be no less than [*****] to qualify for
any value of "X" being computed in that Contract Year.
Section 3.4 Management Services Fees to be Paid by UFTB.
(a) Amount of Management Services Fees. The management fees to be paid to
SDG by UFTB for the Management Services provided hereunder (the "Management
Services Fees") shall be payable with respect to all UFTB Customer Instructions
submitted by SDG to UFTB
[CONFIDENTIAL]
15 4/28/98
<PAGE>
according to the following:
(i) beginning on the effective date of this Agreement and lasting
for five (5) consecutive Contract Years the Management Services Fee shall be
[*****] of the actual net invoiced amount (as determined in accordance with
Section 3.4(c)) from UFTB to UFTB Customers pursuant to this Agreement;
however, in the event that the weight-to-weight conversion of demineralized
bone matrix into gel produces average Bone Paste yields of less than [*****],
which method of calculation is set forth on and attached hereto as the "Yield
Study Calculation", then, in lieu of such [*****] Management Service Fee, SDG
shall earn a Management Service Fee equal to the difference between [*****]
and the actual net invoiced amount total per Production Batch (a Production
Batch is defined as a production quantity of Bone Paste greater than [*****]
but less than [*****]); in the event that Bone Paste yields are less than
[*****], SDG shall earn a Management Service Fee according to a formula
wherein A is divided by B and then multiplied by [*****], wherein "A" is
equal to the actual quantity of Bone Paste produced and "B" is equal to
[*****] {e.g. if the actual quantity produced equals [*****], then [*****]
and [*****]}; and such Management Service Fee is then equal to the difference
between [*****] and the actual net invoiced amount total per such reduced
yield Bone Paste batch.
(ii) commencing on the first day of the sixth (6th) Contract Year
and for the remainder of the term of this Agreement, the Management Services
Fee shall be [*****] of the actual net invoiced amount (as determined in
accordance with Section 3.4 (c)) from UFTB to UFTB Customers pursuant to this
Agreement.
[CONFIDENTIAL]
16 4/28/98
<PAGE>
(b) Contract Year. For the purposes of this Agreement, "Contract Year"
shall refer to the individual consecutive twelve-month periods of this
Agreement, the first of which commences on the effective date herein.
(c) Net Invoiced Amount. As part of the Management Services provided to
UFTB, SDG will maintain a unique relationship within the market place for UFTB
Paste Product and is therefore obligated to consult with UFTB in order to assist
UFTB in establishing and publishing the net invoiced amount for UFTB Paste
Products to be paid by UFTB Customers, Likewise any new UFTB Paste Product that
is not a current product will have its net invoiced amount established by UFTB
after consultation with SDG. Changes in net invoiced amounts for any UFTB Paste
Product may be modified during the term of this Agreement upon the mutual
agreement of the parties.
(d) SD&s Audit Rights. UFTB shall keep complete and accurate books and
records which allow verification of the amounts invoiced by UFTB to UFTB
Customers for UFTB Paste Product. SDG shall be permitted access to such books
and records during normal business hours and upon reasonable business hours
during the term of this Agreement in order to verify UFTB's compliance with the
terms of the Agreement and to permit SDG to satisfy its obligations under this
Agreement, including, but not limited to, determining the identifies of any
UFTB Customer that falls to pay payment of invoices so that SDG can guarantee
UFTB Customer payments to UFTB in accordance with Section 3.2(e) hereof SDG
shall have the right (no more often than once yearly and in any event within
three years after the close of the month to which the audit relates) to have an
audit performed during normal business hours and upon reasonable notice to
17 4/28/98
<PAGE>
UFTB of such books and records by an independent certified public accounting
firm mutually acceptable to the parties for the sole purpose of verifying the
correct and accurate payment of Management Service Fees which shall be the sole
matter reported by such accounting firm to SDG. The fees and expenses of the
accounting firm performing such verification shall be borne by SDG, except in
the event that the actual net invoiced amounts are understated by more than
$100,000 for such year, whereupon such fees and expenses shall be borne by UFTB.
UFTB shall within sixty (60) days of the results of such audit provide for
payment of amounts which are overpaid, unless a bona fide dispute exists as to
the results of such audit.
(e) Payments in U.S. Dollars. All payments required by this Agreement
shall be made in United States Dollars.
(f) UFTB Customer Payments. Payment terms related to shipments of UFTB
Paste Product to UFTB Customers shall be net 30 days from the later of the date
of invoice or the date of shipment.
(g) Management Services Fee Payments. Payment to SDG by UFTB of
Management Service Fees shall be made within ten (10) days from the last day of
the month of UFTB's receipt of payment of an invoice with respect to UFTB
Customers Instructions submitted by SDG.
Section 3.5 Packaging Specifications.
UFTB shall supply all packaging and labeling information and designs,
including without limitation all art-work and pharmacological information, usage
instructions and warnings to be applied to each UFTB Paste Product (the
"Packaging Specifications"). Once a UFTB Paste Product is supplied and initially
packaged by UFTB, SDG will not, without UFTB's concurrence,
18 4/28/98
<PAGE>
remove, alter or modify any Packaging Specifications of such UFTB Paste Product
except in the case of SDG's own internal use.
Section 3.6 Shipment, Right to Use and Risk of Loss.
(a) Shipping. SDG shall issue customer shipping instructions to UFTB for
the IJFTE Paste Product in accordance with the UFTB Customer Instructions, using
SDG's or the UFTB Customer's choice of carriers FOB at the plant from which the
LIFTE Paste Product is shipped.
(b) Right to Use and Risk of Loss. All right to use and risk of loss to
any UFTB Paste Product shall pass to the UFTB Customer upon a common carrier
accepting possession or control of such UFTB Paste Product
Section 3.7 Rejected Product.
(a) Procedure for Rejection. Within thirty (30) days after a UFTB
Customer's receipt of any shipment of UFTB Paste Product, SDG shall notify UFTB
in writing if a UFTB Customer chooses to reject all or any part of such shipment
of LIFTE Paste Product or, falling such notification, unless such UFTB Paste
Product has a latent defect, the UFTB Customer shall be deemed to have accepted
such shipment for all purposes. With respect to latent defects, SDG shall
promptly notify UFTB after a UFTB Customer's discovery thereof and such UFTB
Customer shall have the right to reject such UFTB Paste Product. Any
notification of rejection should be for valid technical or packaging reasons and
shall state the basis for the rejection. A replacement shipment of such UFTB
Paste Product so required by a UFTB Customer shall be made by UFTB as soon as
practicable using reasonable efforts (but no later than thirty (30) days after
UFTB receives such notification), or as soon thereafter as the raw materials are
available to
19 4/28/98
<PAGE>
UFTB for the processing of such replacement product. Such replacement UFTB Paste
Product shall be invoiced by UFTB and paid for by the LIFTE Customer at the same
fee as was the rejected shipment.
(b) Effect of Rejection. The UFTB Customer shall not be obligated to pay
and SDG shall not be obligated to guarantee payment for any rejected shipment of
UFTB Paste Product shipped to UFTB Customers which falls to meet the UFTB Paste
Product Specifications or the Packaging Specifications or otherwise breaches the
UFTB Paste Product Warranties set forth in Section 2.2 hereof. The UFTB Customer
shall not be obligated to pay in full and SDG shall not be obligated to
guarantee payment for any shipment of the UFTB Paste Product rejected by a UFTB
Customer. UFTB shall have fifteen (15) days within which to notify SDG and the
UFTB Customer in writing of TJFTE's objection to such rejection, and the parties
shall thereafter promptly submit the issue to an independent laboratory in
accordance with subparagraph (c) below.
(c) Testing to Resolve Conflicting Test Results. If there is a conflict
between the test results of UFTB and the test results of SDG or a UFTB Customer
with respect to any UFTB Paste Product, an adequate sample of same shall be
submitted by the party having possession thereof to an independent laboratory
acceptable to both parties for testing against the UFTB Paste Product
Specifications under procedures set out in the UFTB Paste Product
Specifications. The test results obtained by such laboratory shall be final with
respect to the obligations of the LTTB Customer to pay and of SDQ to guarantee
payment for such UFTB Paste Product. The fees and expenses of such laboratory
testing shall be bone entirely by The party against whom such
20 4/28/98
<PAGE>
laboratory's findings are made. If the laboratory's findings are in favor of
UFTB, the UFTB Customer shall pay UFTB for the rejected UFTB Paste Product under
the terms listed in Section 3.4 hereto.
(d) Return or Disposal of Rejected UFTB Paste Product. UFTB shall make
arrangement with SDG for the return or disposal, at UFTB's option, of any
shipment of any rejected UFTB Paste Product. The return shipping charges or
disposal costs for such rejected shipment of Product shall be paid by UFTB and,
in the event of agreement of the parties or a laboratory determination hereunder
that such rejected shipment does meet the UFTB Paste Product Specifications, the
UFTB Customer shall promptly reimburse UFTB for such shipping charges or
disposal costs.
(e) No Waiver. No acceptance or rejection of product or determination of
compliance for purposes of this Section 3.7 shall serve to waive any rights
under Article VI.
Section 3.8 Taxes. Taxes and any and all other tariffs and duties or
excise, sales or use, value added or other taxes or levies imposed upon UFTB in
connection with the process and distribution of the UFTB Paste Product shall be
paid by UFTB.
ARTICLE IV
CERTAIN AGREEMENTS OF UFTB AND SDG
Section 4.1 Deceptions. UFTB shall permit a representative of SDG to
inspect at reasonable times and as a reasonable frequency, those processing
facilities and methods and operations used by UFTB in connection with the UFTB
Paste Product as considered necessary or desirable by SDG for the purpose of
observing compliance with UFTB's undertakings set forth
21 4/28/98
<PAGE>
herein. No such observation shall serve to waive any rights of SDG or UFTB
hereunder.
Section 4.2 Regulatorv Filings. UFTB shall fulfill all applicable
reporting and other requirements of regulatory agencies, self-regulatory
organizations or governmental entities that have jurisdiction with respect to
UFTB and the UFTB Paste Product. SDG shall cooperate in preparing any such
filings to the extent reasonably requested by UFTB.
Section 4.3 Ownership of Intellectual Property Rights.
(a) Intellectual Properly Rights. For purposes of this Agreement,
"Intellectual Property Rights" means all works, including literary works,
pictorial, graphic and sculptural works, architectural works, works of visual
art, and any other work that may be the subject matter of copyright protection;
advertising and marketing concepts; trademarks; information; data; formulas;
designs; models; drawings; computer programs; including all documentation,
related listings, design specifications and flow charts, trade secrets and any
inventions including all processes, machines, manufactures and compositions of
matter and any other invention that may be the subject matter of any pending
patent or patent; and all statutory protection obtained or obtainable thereon.
(b) Ownership of Intellectual Property Rights. All Intellectual Property
Rights relating to the UFTB Paste Product shall be owned or obtained under
license by UFTB (subject to grants of licenses referred to herein) unless
jointly developed with SDG, in which case such intellectual property shall be
jointly owned by UFTB and SDG provided, however, that nothing in this Section
4.3 shall be construed or interpreted as granting in any manner or way any
rights to UFTB in any Intellectual Property Rights of SDG.
22 4/2S/98
<PAGE>
ARTICLE V
TERM AND TERMINATION
Section 5.1 Term. Unless terminated earlier in accordance with Section 5.2
herein, the term of this Agreement shall commence with the effective date herein
and shall continue until the latter of: (i) the expiration date of the U.S.
Patent that issues from U.S. Patent Application S/N 08/8 16,079, dated March 13,
1997, or any continuation, continuation-in-part, or divisional of such U.S.
Patent; or (ii) twenty (20) years from the effective date of this Agreement.
Section 5.2 Early Termination. Either party hereto may terminate this
Agreement (a) due to a material breach by the other party of any of its
obligations or covenants hereunder upon 30 calendar days' notice to the
breaching party if such breaching party fails to remedy such breach within such
30 calendar days, or if such breach cannot be remedied within such 30 calendar
days, only if such breaching party has not undertaken good faith efforts to
remedy such breach or (b) upon the insolvency or filing for bankruptcy by the
other party. This Agreement may not be terminated without cause except as
specifically provided herein or by the mutual written agreement of the parties.
Section 5.3 Accrued Obligations. In the event that this Agreement is
terminated pursuant to Section 5.2 hereof, the duties and obligations of the
breaching party which have accrued prior to termination, including without
limitation, the obligation to process and deliver quantities of the UFTB Paste
Product for which Customer Instructions have been validly issued prior to the
effective date of termination and the correlative obligation to pay for such
quantities, shall not be released or discharged by such termination.
23 4/28/98
<PAGE>
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification by SDG. Subject to UFTB's indemnification
obligations pursuant to Section 6.2 hereof, SDG shall indemnify and hold UFTB
harmless from any and all losses, damages, liabilities, costs and expenses,
including, without limitation, reasonable attorneys fees and court costs, that
may result from any demand, claim or litigation relating to or resulting from
the Management Services provided by SDG.
Section 6,2 Indemnification By UFTB.
UFTB shall indemnify and hold SDG harmless from any and all losses,
damages, liabilities, costs and expenses, including, without limitation,
reasonable attorneys fees and court costs, that may result from any demand,
claim or litigation relating to, resulting from or arising out of(i) the failure
of any UFTB Paste Product to comply with the UFTB Paste Product Specifications,
(ii) a breach by UFTB of any warranty, representation or covenant made by UFTB,
including a breach by UFTB of the UFTB Paste Product warranties set forth in
Section 2.2 hereof or; (iii) the failure of the packaging related to any UFTB
Paste Product to comply with the Packaging Specifications.
Section 6.3 Survival of Obligations. The respective obligations of the
parties hereto pursuant to Article VI shall survive the termination of this
Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Entire Agreement. This Agreement, together with the exhibits
and
24 4/28/98
<PAGE>
schedules hereto constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede any prior expression of
intent or agreement of the parties with respect thereof.
Section 7.2 Amendments. This Agreement shall not be modified, altered, or
amended except by an agreement in writing signed by duly authorized
representatives of each of the parties hereto.
Section 7.3 Governing Law: Jurisdiction. This Agreement shall be governed
by the laws of the State of Florida (regardless of the laws that might otherwise
govern under applicable principles of conflicts of law) as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies. The parties agree to submit to personal jurisdiction
and to waive any objection as to venue and forum non convenes in the federal or
state courts of the State of Florida.
Section 7.4 Force Majeure. Neither party shall be liable for
nonperformance or delay in performance due to and to the extent resulting from
an event of force majeure, including without limitation: any act of God;
regulation or law of any government; war, riot, or civil commotion; destruction
of production facilities or materials by fire, earthquake or storm; strike or
other labor disturbances; epidemic; failure of public utilities or common
carriers; or any limitation, requirement or prohibition imposed or required by
the United States Food and Drug Administration or any other governmental agency
asserting jurisdiction with regard to the UFTB Paste Product. In case any of the
foregoing occurrences should in any manner hinder either party hereto from
fulfillment of its obligations specified in this Agreement, said party shall
promptly
25 4/28/98
<PAGE>
give written notice to the other party. In the event that UFTB has experienced
an event of force majeure, and as a result hereof is unable to supply SDG with
any UFTB Paste Product, SDG may assist UFTB in the procurement of similar
product from another manufacturer.
Section 7.5 Severability. In the event that any part of this Agreement
shall for any reason be finally adjudged by a court of competent jurisdiction or
determined by a governmental body to be invalid or unenforceable, then, unless
such part is deemed material by either or both parties, this Agreement shall
continue in effect and such part shall be excised hereof If either party
determines that such part hereof found to be invalid or unenforceable is
material to the operation or performance of this Agreement, then such party may,
by written notice to the other party, request that the parties attempt to
renegotiate this Agreement to alleviate or eliminate any difficulty caused to
such party by such invalidity or unenforceability.
Section 7.6 Waiver. No failure or delay on the part of either party to
enforce any provision of this Agreement or to exercise any right granted hereby
shall operate as a waiver thereof unless or until the right to enforce any such
provision or to exercise any such right has been waived in writing by such
party. Any waiver of any provision hereof or right hereunder shall be effective
only in accordance with its terms and may be restricted in any way. No waiver of
any provision hereof or any right hereunder shall constitute a waiver of a
continuance or reoccurrence of the failure to perform, except as provided in
such waiver.
Section 7.7 No Third Party Beneficiaries. This Agreement shall be
construed to be for the benefit of the parties hereto only and shall confer no
right or benefit upon any other person.
26 4/28/98
<PAGE>
Section 7.8 Notices. Any notice, report or consent required or permitted
by this Agreement to be given or delivered shall be in writing and shall be
deemed given or delivered if delivered in person, or sent by courier or
expedited delivery service, or sent by registered or certified mail, postage
prepaid, return receipt requested, or sent by telecopy (if confirmed), as
follows:
If to SDG:
Sofamor Danek Group, Inc.
1800 Pyramid Place
Memphis, Tennessee 38132
Attention: President and Chief Operating Officer
Telecopy: 901-344-1570
with a copy to:
Vice President and General Counsel
Sofamor Danek Group, Inc.
1800 Pyramid Place
Memphis, Tennessee 38132
Telecopy:901-344-1576
If to UFTB:
University of Florida Tissue Bank, Inc.
1 Progress Boulevard
Box 31
27 4/28/98
<PAGE>
Alachua, Florida 32615
Attention: President and Chief Executive Officer
Telecopy:904-462-5131
with a copy to:
Ms. Susan Collingwood
Associate General Counsel
University of Florida College of Medicine
P.O. Box 100215
Gainesville, Florida 32610
Telecopy: 352-392-6482
Any such notice, report or consent shall be effective upon delivery if
given or delivered in person, or sent by courier or expedited delivery service,
or upon receipt if sent by telecopy which is confirmed, or on the third business
day following mailing if mailed. Either party hereto may change its address for
purposes hereof by giving the other party written notice of such change as above
provided.
Section 7.9 Assignment. Neither party may assign its rights and
obligations hereunder without the prior written consent of the other party and
such consent shall not be unreasonably withheld. No permitted assignment
hereunder shall be deemed effective until the assignee shall have executed and
delivered an instrument in writing reasonably satisfactory in form and substance
to the other party pursuant to which the assignee assumes all of the obligations
of the assigning party hereunder. Notwithstanding anything to the contrary in
this
28 4/28/98
<PAGE>
Section 7.9, either party may assign this Agreement or any of its rights or
obligations hereunder to a company which is a wholly owned subsidiary of the
assigning party.
Section 7.10 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives as of the date
first written above.
UNIVERSITY OF FLORIDA TISSUE BANK, INC.
By: /s/NANCY R. HOLLAND
----------------------------
Name: NANCY R. HOLLAND
--------------------------
Title: CEO
-------------------------
SOFAMOR DANEK GROUP, INC.
By: /s/ MARK LoGUIDICE
----------------------------
Name: MARK LoGUIDICE
--------------------------
Title: EXECUTIVE VICE PRESIDENT
-------------------------
29 4/28/98
<PAGE>
FIRST AMENDMENT TO
MANAGEMENT SERVICES AGREEMENT
-- BONE PASTE -
THIS IS AN AMENDMENT to the Management Services Agreement dated May 11.
1998 ("the Agreement") by and between Regeneration Technologies, Inc., a Florida
for-profit corporation ("RTI"), as assignee of The University of Florida Tissue
Bank, Inc. ("UFTB"), and Sofamor Danek Group, Inc. ("SDG"), in which the parties
agree as follows:
1. After reconsideration of the terms and conditions of the Agreement, RTI
and SDG agree to amend the Agreement, effective as of the date of
signature of the parties to this Amendment ("Amended Effective Date"), as
follows:
a. Add the following two sentences to Section 1 .2:
During the term of this Agreement, RTl grants to SDG a royalty-free,
non-transferable license to use the mark "Osteofil" (the "RTI Mark")
in the Territory and in the Field of Use in connection with SDG's
provision of Management Services. Upon termination of this Agreement
the use of the RTI Mark shall revert to RTI.
b. Add the following new Sections 2.2(d) and 2.2(e):
(d) Paste Product Effectiveness. RTI represents and warrants that
to the best of its knowledge, the product is effective, i.e.
will form bone. RTl further represents and warrants that it
has no knowledge of any information that suggests the Paste
Product is not effective. RTI hereby agrees to disclose
promptly to SDG all information in RTI's possession or control
at any tune during the term of the Agreement that concerns the
use or effectiveness of UFTB Paste Products.
(e) Continuing Information. RTI further warrants that it will
promptly provide to SDG all pertinent information concerning
clinical or biological materials that exists as of the Amended
Effective Date of the Agreement and that comes into the
possession or control of RTI during the term of the Agreement.
Such information shall include information regarding next
generation products.
c. In Section 3.1f), line 8, change "Mark" to --Marks--.
d. In Section 3.3(a), line 2, change [*****].
e. In Section 3.3(a)(i), line 1, change "shall be" to --were-- ; and
line 2, after "Agreement" insert --, receipt of which is hereby
acknowledged by RTI--.
[CONFIDENTIAL]
1
<PAGE>
f In Section 3.3(a)(ii), line 1, change [*****] shall be paid on
the later of the Amended Effective Date or the date that RTI
attains--.
g. Delete Section 3.3(a)(iii).
h. Delete existing Section 3.3(b) and substitute therefor the
following:
(b) Development. Clinical and Marketing Costs. RTI shall bear all
costs associated with development of Paste Product which are
initiated or directed by, or approved in writing by, RTI,
including laboratory and bench top testing. SDG shall bear the
costs of legitimate marketing and clinical activities that are
initiated by SDG.
i. Change Sections 3.4(a)(i) and (ii) to read as follows:
(i) From the Amended Effective Date until the earlier of ninety
(90) days after RTI incorporates pooling of donors for
demineralized bones ("DBM") into the processing of UFTB Paste
Product, or the second anniversary of the Amended Effective
Date, the Management Services Fee shall be sixty percent (60%)
of the actual net invoiced amount (as determined in accordance
with section 3.4(c)) from RTI to RTI Customers pursuant to
this Agreement.
(ii) Commencing on the earlier of ninety (90) days after RTI
incorporates pooling of donors for demineralized bone ("DBM")
into the processing of UFTB Paste Product, or the second
anniversary of the Amended Effective Date, the Management
Services Fee shall be sixty-five percent (65%) of the actual
net invoiced amount (as determined in accordance with section
3.4(c)) from RTI to RTI Customers pursuant to this Agreement.
j. Add new Sections 3.4(iii) as follows:
(iii) The costs associated with the purchase or manufacture of a
Product warmer (thermos) shall be shared by parties in
accordance with the percentages set forth in subparagraphs (i)
and (ii) of this Section 3.4(a), e.g., RH shall pay [*****] of
such costs until the earlier of ninety (90) days after RTI
incorporates pooling of donors for demineralized bone ("DBM")
into the processing of UFTB Paste Product, or the second
anniversary of the Amended Effective Date, and thereafter
[*****] of such costs. This Section 3.4(iii) shall be subject
to RTI approval in advance of the number and costs of the
Product warmers (thermos) planned by SDG, and payment of RTIs
share shall be upon or after the date costs are incurred by
SDG.
[CONFIDENTIAL]
2
<PAGE>
1. Add the following to the end of Section 3.4(c):
SDG represents that it will exercise reasonable efforts to
obtain the maximum net invoiced amount for RTI Paste Products
consistent with its normal practice. SDG agrees to consult
with RTI and receive mutual consent of RTI and SDG, which
consent shall not be unreasonably withheld, before reducing
the net invoiced amount below [*****] of Paste Product.
In considering changes in the net invoiced amount for Paste
Product, the parties shall take into consideration changes in
relevant technology and nuances of the market.
m. Add new Section 4.3(c) as follows:
(c) RTI shall have no right to use any information disclosed to it
by SDG pursuant to this Agreement for any purpose other than
performance under this Agreement In the event RTI, for its own
purposes, desires to use some of SDG's information, RTI shall
submit to SDG a written request identifying the information
and the intended purpose, and upon receiving written authority
from SDG, which will not be unreasonably withheld, RTI may use
the identified information in accordance with the conditions,
if any, in the written authority.
n. All references in the Agreement to the "effective date" shall be
amended to "Amended Effective Date".
o. In Section 7.8, add to the addresses for notice to RTI:
Regeneration Technologies, Inc.
One Innovation Drive
Alachua, Florida 32615
Attn:President and Chief Executive Officer
Telecopy: 904-418-0342
p. In Section 7.9, last line, after "party" insert --or to a company
that acquires by consolidation, merger, stock purchase or asset
purchase substantially all of the assets or of the business of the
assigning party associated with performance under this Agreement--.
q. Add new Section 7.11 as follows:
7.11 Dispute Resolution. In the event of any dispute or controversy
between the parties regarding performance under this Agreement or
construction of the terms of this Agreement, the parties agree to
first enter into discussions with each other with the good faith
intention of resolving the dispute or controversy in an amicable,
business-like manner. If, after ninety (90) days of such
discussions, a resolution is not reached, the Chief Executive
Officer of each party will
[CONFIDENTIAL]
3
<PAGE>
physically meet at a mutually convenient location to negotiate in
good faith a resolution of the dispute or controversy.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized representatives.
Regeneration Technologies,Inc. Sofamor Danek Group Inc.
By /s/ Richard R. Allen By /s/ Robert A. Compton
--------------------------- ---------------------------
Name Richard R. Allen Name Robert A. Compton
------------------------- -------------------------
Title Sec/Treasurer/CFO Title President & COO
------------------------ ------------------------
Date 11/16/98 Date 11/13/98
- ----------------------------- -----------------------------
4
<PAGE>
ASSIGNMENT AND ASSUMPTION OF
MANAGEMENT SERVICES AGREEMENT - BONE PASTE
This ASSIGNMENT AND ASSUMPTION OF MANAGEMENT SERVICES AGREEMENT - BONE
PASTE (the "Assignment") is made and entered into this 11th day of' May, 1998,
by and between UNIVERSITY OF FLORIDA ORTHOPAEDIC TISSUE BANK, INC., d/b/a
UNIVERSITY OF FLORIDA TISSUE BANK, INC., a Florida not-for-profit corporation
("Assignor"), and REGENERATION TECHNOLOGIES, INC., a Florida for-profit
corporation ("Assignee").
WITNESSETH:
WHEREAS, Assignor and Assignee are parties to that certain Patent License
Agreement, dated January 23, 1998 (the "License Agreement"), pursuant to which
Assignor has agreed to license to Assignee the patents or pending patents listed
in Exhibit "A" attached hereto and made a part hereof on the condition that
Assignee meets certain financing goals; and
WHEREAS, pursuant to the License Agreement, Assignor has agreed to assign
to Assignee all of Assignor's right, title and interest in, and all of its
obligations under, that certain Management Services Agreement - Bone Paste, by
and between Assignor and Sofamor Danek Group, Inc. ("SDG"), dated May 11, 1998,
a copy of which is attached as Exhibit B (the "SDG Bone Paste Contact") (with
certain exceptions) upon the terms and conditions set forth herein; and
WHEREAS, pursuant to the License Agreement, Assignee has agreed to accept
such assignment and to assume all of the obligations of Assignor under the SDG
Bone Pasta Contact (with certain exceptions) upon the terms and conditions set
forth herein; and
<PAGE>
WHEREAS, Assignor is willing to assign the SDG Bone Paste Contract
and Assignee is willing to accept such assignment of the SDG Bone Paste Contract
and to assume all obligations of Assignor under the SDG Bone Paste Contract upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereto agree as follows:
1. Recitals. The recitals set forth above are true and correct in all
respects and are incorporated herein as filly as if set forth herein verbatim,
2. Assignment and Assumption of SDG Bone Paste Contracts. Assignor hereby
assigns, transfers, conveys and delivers to Assignee all of Assignor's right,
title and interest in, to and under the SDG Bone Paste Contract, effective on
the Effective Date of this Assignment described in Paragraph 4 below, except as
otherwise provided in Paragraph 3 below. Assignee hereby assumes all of the
obligations, terms and covenants set forth in the SDG Bone Paste Contract to be
observed and performed by Assignor and agrees to be bound by the terms,
conditions and covenants of the SDG Bone Paste Contract arising from and after
the Effective Date, except as otherwise provided in Paragraph 3 below.
3. Exceptions from Assignment Assignor shall retain and shall not assign
hereunder the following rights and obligations under the SDG Bone Paste Contract
(terms defined in the SDG Bone Paste Contract have the same meanings in this
Paragraph 3), as set forth in the following Sections of the SDG Bone Paste
Contract:
(a) Section 1.2. Assignor shall retain the obligation to grant
a license to Danek to use the UFTB Mark.
-2-
<PAGE>
(b) Section 2.1 Assignor shall retain the right to approve any
amendments to Schedule 2.1.
(c) Section 2.2(b). Assignor shall remain the owner of all rights in
and to the UFTB Mark.
(d) Section 2.3(b). Assignor shall retain the right to approve any
amendments to Schedule 2.3.
(e) Section 3.1(f) Assignor shall retain the right to review and
respond to Danek regarding any advertising using the UFTB Mark or the
relationship between Denek and Assignor or Denek and the University of
Florida.
(f) Section 3.1(g). Assignor shall retain the right to terminate
the SDG Bone Paste Contract in accordance with Section 3.1(g) of the SDG
Bane Paste Contract.
(g) Section 3.5. Assignor shall retain the right to approve any
changes to the Packaging Specifications.
(h) Section 4.2. Assignor shall retain the right to approve any
reporting or other requirements with respect to the UFTB Products.
(i) Section 4.3(b) Assignor shall retain ownership of all
Intellectual Property Rights relating to the UFTB Products.
4. Effective Date. The assignment and assumption described in this
Assignment shall be effective (the "Effective Date") on the later of (a) the
effective date of the license granted pursuant to the License Agreement, or (b)
the date of this Assignment. In the
-3-
<PAGE>
event that the license granted pursuant to the License Agreement does not become
effective, then the assignment hereunder shall not become effective.
5. Termination and Breach. Any termination of the License Agreement shall
cause a simultaneous termination of this Assignment, without any further action
by Assignor or Assignee. Assignee acknowledges that Assignor may terminate the
License Agreement (which shall also cause a termination of this Assignment) upon
any material breach of this Assignment by Assignee. A breach by Assignee of any
of the obligations under the SDG Bone Paste Contract assumed by Assignee
hereunder shall be a material breach of this Assignment. During the term of this
Assignment, Assignor shall have the right at any reasonable time to review
Assignee's records to determine whether Assignee is complying with all
obligations of SDG. Bone Paste Contact assigned hereunder, and to confirm
with SDG representatives Assignee's compliance with the terms of' the SDG Bone
Paste Contract assigned hereunder.
6. Assignment and Assumption Upon Termination. Upon any termination of
this Assignment the parties agree that such termination shall have the following
effect, without any other action required by Assignor or Assignee:
(a) Assignee shall assign, transfer, convey and deliver to Assignor
the rights of Assignor under the SDG Bone Paste Contract that are assigned to
Assignee hereunder, effective on the date of termination of this Assignment; and
(b) Assignor shall assume and shall be bound by all of the
obligations, terms and covenants set forth in the SDG Bone Paste Contract to be
observed and performed by Assignor and that were assumed by Assignee hereunder,
effective on the termination of this Assignment.
-4-
<PAGE>
7. Indemnification. Assignor hereby agrees to indemnify and hold Assignee
harmless from any and all claims, demands, damages, cost, losses, expenses,
liabilities and obligations of any kind or nature whatsoever (including
reasonable attorneys' fees incurred by Assignee) incurred by Assignee as a
result of any breach by Assignor of any warranty, representation, covenant or
agreement of Assignor contained in this Assignment or the failure of Assignor to
fulfill its obligations pursuant to the SDG Bone Paste Contract prior to the
Effective Date. Assignee agrees to indemnify and hold Assignor harmless from any
and all claims, demands, damages, costs, losses, expenses, liabilities and
obligations of any kind or nature whatsoever including reasonable attorneys fees
incurred by Assignor) incurred by Assignor as a result of the breach by
Assignee of any covenant or agreement of Assignee contained in this Assignment
or the failure of Assignee to fulfill its obligations pursuant to the SDG Bone
Paste Contract arising from and after the Effective Date.
8. Attorneys' Fees. Should either party to this Assignment bring suit for
the breach of a promise, covenant, warranty or representation hereunder, it is
agreed that the successful party in such suit shall be entitled, in addition to
recovering any damages sustained thereby, to recover such party's expenses,
including court costs and reasonable attorneys' fees as part of the judgment or
other settlement. Expenses and attorneys' fees include those incurred prior to
the initiation of suit and those incurred in connection with proceedings in
courts of original jurisdiction and courts of appeal.
9. Binding Effect This Assignment shall be binding upon and shall inure
to the benefit of, the parties hereto and their respective successors and
assigns.
-5-
<PAGE>
10. Governing Law and Venue. This Assignment shall be governed by, at
construed in accordance with, the laws of the State of Florida, and venue for
any legal proceeding or action at Law arising out of or construing this
Assignment shall lie in the state courts of Alachua County, Florida, or the
United States District Court forte Northern District of Florida, Gainesville
Division.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
executed as of the date and year first above written.
Signed, sealed and delivered
in the presence of "Assignor"
UNIVERSITY OF FLORIDA ORTHOPAEDIC
TISSUE BANK, INC., d/b/a UNIVERSITY OF
FLORIDA TISSUE BANK, INC., a Florida not-for-
profit corporation
By: Frank P.Glowczewski Jr.
- -------------------------- --------------------------
Frank P.Glowczewski Jr., Chairman of the
Board
- -------------------------
"Assignee"
REGENERATION TECHNOLOGIES, INC., a
Florida for-profit corporation
By: /s/James M. Grooms
- -------------------------- --------------------------
James M. Grooms, President
- --------------------------
-6-
<PAGE>
CONSENT TO ASSlGNMENT
The undersigned hereby consents to the assignment in the above ASSIGNMENT
MANAGEMENT SERVICES AGREEMENT - BONE PASTE, as required by Section 7.9 of the
Management Services Agreement.
SOFAMOR DANEK GROUP, INC.
By: /s/ Mark LoGuidice
- ----------------------- --------------------------------
Name: Mark LoGuidice
- ----------------------- ---------------------------
Title: Executive Vice President
---------------------------
7-
<PAGE>
Exhibit "A"
1. "Diaphysial Cortical Dowel," invented by Nicholas E. Grivas and James M.
Grooms, Docket No. TB-100, U.S. Patent Application S/N 08/587,070, dated
January 16,1996, subject to that certain Management Services Agreement by
and between UFTB and Sofamor Danek Group, Inc., dated effective July 23,
1996, as amended April 21, 1997 (the "SDG Spinal Contract"), and subject
to that certain Processing License Agreement by and between UFTB and
AlloSource, Inc., dated January 1, 1997;
2. "Bone Paste," invented by John F. Wironen and James M. Grooms, Docket No.
TB-101, U.S. Patent Application S/N 08/816,079. dated March 13, 1997,
subject to that certain Agreement by and between UTB and Exatech, Inc.,
dated effective April 22, 1997, which is also owned by the University of
Florida (the "University");
3. "Cortical Bone Interference Screw," invented by lames M. Grooms, Kevin
Carter and David H. Dulebobn, Docket No. TB-102, U.S. Patent Application
S/N 08/687,01 28, dated July 16, 1996, subject tote SDG Spinal Contract;
4. "Open Intervertebral Spacer," invented by John R. Bianchi, Kevin C.
Carter, Bradley T. Estes, Larry Boyd and John A. Pafford, Docket No.
TB-103, U.S. Patent Application S/N not available, dated June 3, 1997,
subject to that certain Joint Ownership Agreement, between UFTB and Danek
Medical, Inc., dated June 12, 1997, and the SDG Spinal Contract;
5. "Cortical Bone Cervical Smith-Robinson Fusion Implant," invented by James
M. Grooms, Kevin C. Carter, David H. Dulebohn and Torn Sander, Docket No.
TB-104, U.S. Patent Application S/N 08/920,630, dated August 27, 1997,
subject to the SDG Spinal Contract;
6. "Segmentally Demineralized Bone Implant," invented by James M. Grooms,
Kevin C. Carter and Thomas W. Sander, Docket No. TB-lO5, U.S. Patent
Application S/N 08/958,364, filed October 27, 1997;
7. "Cervical Tapered Dowel," Docket No. TB-106, subject to the SDG Spinal
Contract;
8. "Bane Grafting Units," U.S. Patent No. 4950296, issued August 21, 1990 to
Jonathan L. Mcintyre, and assigned to (UFTB on September 27, 1997.
<PAGE>
Exhibit "B"
Management Services Agreement - Bone Paste, by and between
University of Florida Orthopaedic Tissue Bank, Inc.,
d/b/a University of Florida Tissue Bank, Inc.
and Sofamor Danek Group, Inc.
(Copy Attached)
