<PAGE>
EXHIBIT 10.25
[REGENERATION TECHNOLOGIES, INC. LETTERHEAD]
June 22, 1999
Robert Hoffman
Allograft Resources of Wisconsin, Inc.
3553 University Avenue
Madison, WI 53705
Dear Mr. Hoffman:
Initially this letter was mailed to Kurt Klitzke, as Executive Director of
Allograft Resources of Wisconsin, Inc. The letter was never signed or
returned by Kurt. In the interim, Scott Sabo signed a faxed copy for our
files. We respectfully request you sign this original and return the same to
our office. A copy of the fully executed Amendment will be returned for your
file.
This letter shall serve as the Second Amendment to the Management Services
Agreement effective June 15, 1998, and amended on July 8, 1998, by and among
Regeneration Technologies, Inc., the University of Florida Tissue Bank, Inc.,
and Allograft Resources of Wisconsin, Inc.
(1) Section 3.1(b) should read: "On a calendar quarterly basis, RTI shall
assess ARW's level of activity related to the Selected Tissue
requirements set forth on Exhibit 3.1(a) and RTI may adjust the Budget,
at its sole discretion, and such adjustment shall be presented to ARW
in a new Budget no less than thirty (30) days before the start of the
quarter in which such adjustments take place. In the event that ARW
exceeds the Selected Tissue Requirements it shall be entitled to a
"Bonus Pool" budget increase. The calculation basis for such Bonus Pool
budget increase is attached hereto as Exhibit 3.1(b).
(2) Exhibit 3.1(b), BUDGET INCREASES should read: "The Bonus Pool budget
increase is equal to $[*****] minus the actual cost per Donor, per calendar
quarter, multiplied times the number of Donors received by RTI in that
quarter. The calculation is as follows:
1. Total ARW calendar quarterly expenses divided by total ARW Donors
received by RTI within that quarter = cost/Donor = "A"
2. ($[*****] - A) X (donors received by RTI for that quarter) = the
amount paid to ARW for the Bonus Pool"
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Second Amendment to Management Services Agreement
June 22, 1999
Page 2 of 2
REGENERATION TECHNOLOGIES, INC.
/s/ Jamie Grooms
---------------------------------------
Jamie Grooms, CEO
UNIVERSITY OF FLORIDA TISSUE BANK, INC.
/s/ Nancy R. Holland
---------------------------------------
Nancy R. Holland, CEO
ALLOGRAFT RESOURCES OF WISCONSIN, INC.
/s/ Robert Hoffman
---------------------------------------
Bob Hoffman
Title:
<PAGE>
[REGENERATION TECHNOLOGIES, INC. LETTERHEAD]
RTI CONFIDENTIAL
CONTROLLED COPY
July 8, 1998
Kurt Klitzke
Executive Director
Allograft Resources of Wisconsin, Inc.
4860 Sheboygan Avenue
Madison, WI 53705-0905
Dear Mr. Klitzke:
This letter shall serve as an Amendment to the Management Services Agreement
effective June 15, 1998 by and among Regeneration Technologies, Inc., the
University of Florida Tissue Bank, Inc. and Allograft Resources of
Wisconsin, Inc.
Paragraph 6.6 should read, "RTI shall provide for ARW's liability insurance
coverage in the amount of $2,000,000 and such insurance coverage shall list
RTI as an additional insured."
REGENERATION TECHNOLOGIES, INC.
/s/ Jamie M. Grooms
-------------------------------
Jamie Grooms
CEO
UNIVERSITY OF FLORIDA TISSUE BANK,
INC.
/s/ Nancy R. Holland
-------------------------------
Nancy R. Holland
CEO
ALLOGRAFT RESOURCES OF WISCONSIN,
INC.
/s/ Kurt W. Klitzke
-------------------------------
Kurt W. Klitzke
Executive Director
<PAGE>
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (the "Agreement"), effective as of
this 15th day of June 1998 (the "Effective Date") is by and among
Regeneration Technologies, Inc., a Florida Corporation ("RTI"), the
University of Florida Tissue Bank, Inc., a Florida not-for-profit
corporation ("UFTB") and Allograft Resources of Wisconsin, Inc., a Wisconsin
corporation ("ARW").
W I T N E S S E T H
WHEREAS, RTI, in cooperation with UFTB, recovers, processes and
distributes human tissue for use by physicians in surgical implant procedures
around the world; and
WHEREAS, ARW desires to commence operation of a tissue bank in its
territory; and
WHEREAS, RTI in cooperation with UFTB, desires to support the start-up
of ARW and otherwise assist ARW in its tissue bank operations and ARW is
desirous of receiving such support and assistance; and
WHEREAS, RTI and ARW desire to enhance RTI's supply of human tissue
for use by physicians in surgical implant procedures around the world;
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, ARW, UFTB and RTI agree as
follows:
I - DEFINITIONS
When used in this Agreement, the following capitalized terms shall have
meanings set forth in this Article I:
1.1 "ARW" shall mean Allograft Resources of Wisconsin, Inc., a
Wisconsin corporation with offices at 3553 University Avenue, Madison,
Wisconsin.
1.2 "Selected Tissues" shall mean the bone and soft tissue, heart
valve, vein and skin tissue recovered in accordance with the terms of this
Agreement and applicable law.
1.3 "Tissues" shall mean Selected Tissues and all other tissues
customarily recovered from a human donor.
1.4 "Donor" shall mean a donor which has all of the following tissue
pairs recovered: ilium, femur, fibula, tibia, fascia, and achilles and
patellar tendons.
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II-CERTAIN COVENANTS OF RTI
2.1 Promptly upon receipt by RTI of reasonably satisfactory evidence
that the RTI Funding Conditions (as hereinafter defined) have been satisfied,
RTI shall provide ARW with funding in the amounts set forth on the "Budget"
attached hereto as EXHIBIT 2.1(a). As used herein, RTI Funding Conditions
shall mean:
(i) receipt by ARW of a determination letter from the Internal Revenue
Service that ARW has been qualified as a 501(c)(3) "community service
organization" under applicable internal revenue rules and regulations or RTI's
acceptance of proof of filing for such 501(c)(3); and
(ii) receipt by ARW of approval and all necessary permits from the
State of Wisconsin and any other governing authority that has jurisdiction
over ARW'S tissue recovery operations in Wisconsin, to begin its tissue
recovery operations as set forth herein; and
(iii) the execution and delivery by each of ARW and those individuals
listed on EXHIBIT 2.1(b) of Employment Agreements in substantially the form
attached hereto as EXHIBIT 2.1(c) (the "Employment Agreements"); and
(iv) configuration of the Board of Directors of ARW as set forth in
Section 2.4 hereof. ARW agrees that it shall use its best efforts to cause the
RTI Funding Conditions to be satisfied as soon as possible.
2.2 In accordance with the Budget, each of Kurt Klitzke, Scott Sabo,
Pam Wittenwyler, Lori Schinstine and Robert Hoffmann will receive salary
increases equal to [*****] of current salary upon execution of their Employment
Agreements. In addition, each of the foregoing employees who executes an
Employment Agreement and begins work with ARW on or before June 1, 1998 will
receive a signing bonus equal to [*****] payable promptly following
satisfaction of the RTI Funding Conditions.
2.3 RTI shall provide ARW with certain administrative support and
management services as set forth more fully on EXHIBIT 2.3 hereof ("Technical
Support").
2.4 The Charter and By-Laws of ARW shall provide that the Board of
Directors of ARW will consist of four persons, two directors designated by
management of ARW, one director designated by RTI and one director designated
by UFTB. Initially, the management designees shall be Robert Hoffmann and Dr.
Thomas Zdeblick. RTI shall have the right to review and reasonably approve the
Charter and By-Laws of ARW. Such Charter and By-Laws shall provide that all
meetings of the Board shall be called upon 60-days notice absent a waiver of
notice by all Board members.
2.5 Within ninety (90) days from the Effective Date herein, RTI shall
present a plan to ARW which shall provide for either ARW or those employees
set forth on EXHIBIT 2.1(b) to receive "stock options" for RTI common stock.
Such plan, when accepted by ARW, shall be attached hereto and by reference
herein, be made part of this Agreement.
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<PAGE>
III-SELECTED TISSUE MATTERS
3.1 a. ARW shall diligently endeavor to meet the Selected
Tissue requirements of RTI as set forth on Exhibit 3.1(a) attached hereto,
under the terms and conditions set forth herein and shall provide such
Selected Tissue exclusively to RTI. In the event that ARW makes any
particular Tissue available to RTI and RTI, at its sole discretion, elects
not to receive such Tissues from ARW, ARW shall then have the right to
distribute such Tissues to others. All Tissues supplied by ARW to RTI
shall meet or exceed RTI's quality control, quality assurance, sizes
and other requirements as set forth in the specifications provided
from time to time by RTI.
b. On a quarterly basis, RTI shall assess ARW's level of
activity related to the Selected Tissue requirements set forth on Exhibit
3.1(a) and RTI may adjust the Budget, at its sole discretion, and such
adjustment shall be presented to ARW in a new Budget no less than
thirty (30) days before the start of the quarter in which such adjustments
take place. In the event that ARW exceeds the Selected Tissue
Requirements it shall be entitled to a "Bonus Pool" budget increase. The
calculation basis for such Bonus Pool budget increase is attached hereto as
EXHIBIT 3.1(b).
3.2 RTI will provide processing and distribution services for all
Selected Tissues recovered by ARW. ARW will be kept reasonably informed as
to the extent of Selected Tissue distribution in its operations area.
Marketing representatives of RTI or any distribution partner of RTI may
establish contacts with ARW for information purposes including the
indications and use of various Selected Tissue products in the ARW
operations area. RTI will provide marketing staff as needed to educate and
inform local Selected Tissue users of the availability and aspects of RTI
processed Selected Tissues.
IV-TERM AND TERMINATION
The term of this Agreement shall be for a period of ten (10)
years commencing with the effective date herein (the "Initial Term")
and may be renewed upon the written agreement of the parties hereto for two
additional five year terms (each, a "Renewal Term"). This Agreement may be
terminated prior to the end of the Initial Term or any Renewal Term: (a)
by either party due to a material breach by the other party of any of its
obligations or covenants herein upon thirty (30) calendar days written notice
to the breaching party, but only if such breaching party fails to remedy
said breach within thirty (30) calendar days of such written notice; or (b)
by either party promptly upon the insolvency or filing for receivership or
bankruptcy by the other party.
V-OWNERSHIP OF COPYRIGHTS AND INTELLECTUAL
PROPERTY RIGHTS
5.1 In connection with the performance of this Agreement, ARW will
have access to RTI's confidential and proprietary processes, methods, trade
secrets, know-how, techniques, data, training materials and other
intellectual properties developed, used or owned by RTI (the "RTI
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<PAGE>
Intellectual Property"). ARW agrees that all RTI Intellectual Property
will remain the exclusive property of RTI and any improvements,
modifications, advancements to, and any invention, product, or process
based upon or derived from the RTI Intellectual Property or any other RTI
proprietary information disclosed to ARW shall be the sole and exclusive
property of RTI, and ARW expressly disclaims any right, title and interest
in same. Any dispute regarding whether any invention, product, or process
developed by ARW is an improvement, modification or an advancement to, or
is based upon or derived from the RTI Intellectual Property shall be fully
and finally resolved by the written legal opinion of a licensed patent
attorney, who shall be selected by RTI, at its sole discretion.
5.2 ARW agrees to promptly disclose any and all improvements,
modifications or advancements to any invention, product, or process based
upon or derived from the RTI Intellectual Property, or other RTI proprietary
information disclosed to ARW, which ARW may develop, have disclosed to it,
or shall otherwise become aware of. ARW further agrees to promptly assign
any of its rights to the same to RTI.
5.3 Except as consented to in writing by RTI, ARW will not reveal,
divulge or make known to any person or entity or use for its or his or her own
account or for the account of any person, any RTI Intellectual Property
or any other confidential or proprietary information including any
information related to this Agreement, or regarding RTI and RTI
Affiliates, whether or not obtained with the knowledge and permission of
RTI. ARW also agrees upon termination of this Agreement to deliver to RTI
all written copies of RTI Intellectual Property in its possession.
5.4 ARW agrees during the Restricted Period (as defined below), that
it will not, directly or indirectly, engage in or be financially interested
in any business activities (except for ownership of one percent or less of
any entity whose securities are listed on a national securities exchange
or the Nasdaq National Market) which are competitive with RTI. As used
herein, "Restricted Period" means the period commencing on the effective
date of this Agreement and ending on the first anniversary of the date of
termination of this Agreement. For the purposes of this covenant,
competitive activities are defined as any activities related to the
business of RTI. This definition shall be modified or interpreted from time
to time without further action by ARW in such a way as necessary to
reflect the core business of RTI.
VI-OTHER
6.1 The rights and obligations of ARW hereunder may not be sublicensed
or assigned or transferred by operation of law or otherwise without the
written consent of RTI. RTI may assign this Agreement or its rights
thereunder.
6.2 This Agreement is governed by and shall be construed and enforced
in accordance with the internal laws of the State of Florida, without
regard to conflict of laws rules. Venue for any legal proceeding or action
at law arising out of or construing this Agreement shall lie in the
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<PAGE>
state courts of Alachua County, Florida, or the United States District Court
for the Northern District of Florida, Gainesville Division.
6.3 Nothing in this Agreement shall be construed as (i) a warranty
or representation by RTI as to the validity, enforceability or scope of
any RTI patent; (ii) a warranty or representation that anything made,
used, sold, or otherwise disposed of pursuant to this Agreement is or
will be free from infringement of patents or other intangible rights of
third parties; (iii) a requirement that RTI shall file any patent
application, secure any patent, or maintain any patent in force; (iv) an
obligation on RTI to bring or prosecute actions or suits against third
parties for infringement of RTI patents; (v) an obligation to furnish any
manufacturing or technical information except as specifically provided
herein; (vi) a granting by implication, estoppel, or otherwise, any
license or rights under patents, trade secrets, know-how, copyrights,
or other intangible rights of RTI other than those specifically set forth
herein; (vii) a warranty or representation by RTI that it shall not grant
the right to others to make, use or sell products not covered by the claims
of RTI patents which may be similar or compete with ARW Tissue products.
6.4 OTHER THAN ANY WARRANTY EXPRESSLY MADE IN THIS AGREEMENT, RTI MAKES
NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE. RTI ASSUMES NO
RESPONSIBILITY WITH RESPECT TO THE MANUFACTURE, USE, SALE, OR OTHER
DISPOSITION OF ANY HUMAN TISSUE PRODUCT DISTRIBUTED, MADE OR USED BY ARW.
6.5 ARW shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold UFTB, 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 (collectively, "Losses") resulting
from the activities of ARW under this Agreement, except where such
Losses result from RTI's gross negligence or willful misconduct. As used
in this Agreement, "RTI Affiliates" shall mean RTI's and UFTB's trustees,
directors, officers, agents and employees. Notwithstanding the above, RTI
at all times reserves the right to retain counsel of its own to defend RTI's
interests.
6.6 RTI shall provide for ARW's liability insurance coverage in the
amount of $5,000,000 and such insurance coverage shall list RTI as an
additional insured.
6.7 ARW represents that it shall conduct its business in a
manner consistent with the highest standards of industry business
practices, that it shall comply with all applicable laws and regulations,
and that it shall not represent any relationship with RTI or any entity
affiliated with RTI other than as set forth herein.
-5-
<PAGE>
6.8 The right of either party to terminate under 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, or to an order or injunction
requiring performance of the obligations of this Agreement or to
any other remedy available at law or equity.
6.9 This Agreement, together with its exhibits and attachments,
constitutes the entire agreement and understanding of the parties with
regard to the subject matter hereof and supersedes all prior
discussions, negotiations, understandings and agreements between the
parties concerning the subject matter hereof. This Agreement may be
amended only by written agreement of the parties hereto. 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.
6.10 Each party to this Agreement hereby 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.
6.11 The headings contained in this Agreement are for reference
purposes only and shall not affect in anyway the meaning or
interpretation of this Agreement.
6.12 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, except for those relative to the protection
of proprietary rights, due to circumstances beyond the control of the
nonperforming or delayed party including, but not limited to, acts of
God, acts of government, 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.
Notwithstanding the foregoing, the nonperformance or delay by any party
in excess of 180 days shall constitute cause for termination of this
Agreement with such notice given in writing by one party to the other.
6.13 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, sent by courier,
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 RTI:
Regeneration Technologies, Inc.
Attn: Jamie Grooms, President and C.E.O.
One Innovation Drive
Alachua, FL 32615
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If to ARW:
Allograft Resources of Wisconsin, Inc.
Attn: Robert Hoffman
3553 University Ave.
Madison, Wisconsin 53705
6.14 The relationship between ARW and RTI shall not be deemed to be
an employee, agent or representatives of RTI. ARW shall not have any
right to enter into any contract or commitment in the name of, or on
behalf of the other, or to bind RTI in any respect whatsoever.
6.15 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.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed in duplicate as of the day and year first above written.
ATTEST: REGENERATION TECHNOLOGIES, INC.
/s/ Kathleen M. Davis By: /s/ Jamie M. Grooms
----------------------------------- ----------------------------------
Name: Jamie M. Grooms
Title: CEO
ATTEST: UNIVERSITY OF FLORIDA TISSUE BANK, INC.
/s/ Kathleen M. Davis By: /s/ Nancy R. Holland
----------------------------------- ----------------------------------
Name: Nancy R. Holland
Title: CEO
ATTEST: ALLOGRAFT RESOURCES OF WISCONSIN, INC.
/s/ illegible By: /s/ Kurt W.S. Klitzke
----------------------------------- ----------------------------------
Notary Public--Dane Co., WIS Name: Kurt W. Sesemann-Klitzke
Commission Expires 9/3/2000 Title: Executive Director
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<PAGE>
Management Services Agreement
Amendment #1
Allograft Resources of Wisconsin, Inc. and Regeneration Technologies, Inc.
The Management Services Agreement between Allograft Resources of Wisconsin,
Inc. (ARW), and Regeneration Technologies, Inc. (RTI), dated June 15, 1998,
will hereby be updated to include the following covenant.
Herewith and hereafter, freight/shipping/transportation of the contractual
definition of a donor, will be the responsibility of Allograft Resources of
Wisconsin, Inc. The allowance will be made based on 1999 freight/shipping/
transportation costs to transport donor to RTI.
Using said 1999 figures, a total was accumulated of 87,727.00 for 465 donors.
This per donor cost for transportation is $188.66.
RTI will then ADD the 188.66 to the 1998 contractual commitment cost base of
[*****] per donor, making the total cost base [*****].
This effectively changes exhibit 3.1(b), to reflect the change in the
reimbursed cost per donor.
Executed this day 15, February, 2000.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed in
duplicate as of the day and year above written.
ATTEST: REGENERATION TECHNOLOGIES, INC.
/s/ Sharon Leach By: /s/ Nancy Holland
----------------- --------------------------------
Nancy Holland, VP Donor Services
ATTEST: ALLOGRAFT RESOURCES OF WISCONSIN,
INC.
/s/ Gus S. Elliott By: /s/ Robert Hoffmann
------------------ --------------------------------
Gus S. Elliott Robert Hoffman, Board Member
<PAGE>
Management Services Agreement
Amendment #2
Allograft Resources of Wisconsin, Inc. and Regeneration Technologies, Inc.
The Management Services Agreement between Allograft Resources of Wisconsin,
Inc. (ARW), and Regeneration Technologies, Inc. (RTI), dated June 15, 1998,
will hereby be updated to include the following covenant.
Herewith and hereafter, there will be a 50/50 split with reimbursement of
soft tissue for the negotiated rates by RTI and 50% of ARW's reimbursement
will be offset the total gross expenses in the bonus pool calculation.
This effectively changes exhibit 3.1(b), to reflect the change in the
reimbursed cost per donor.
Executed this day 15, February, 2000.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed in
duplicate as of the day and year above written.
ATTEST: REGENERATION TECHNOLOGIES, INC.
/s/ Sharon Leach By: /s/ Nancy Holland
----------------------- --------------------------------
Nancy Holland, VP Donor Services
ATTEST: ALLOGRAFT RESOURCES OF WISCONSIN, INC.
/s/ Gus S. Elliott By: /s/ Robert Hoffmann
------------------------ ---------------------------------
Gus S. Elliott Robert Hoffmann, Board Member
<PAGE>
EXHIBIT 3.1(a)
RTI TISSUE REQUIREMENTS
RTI Tissue Requirements will be established jointly between RTI and ARW
and reviewed quarterly with by ARW and RTI. It is anticipated that in the
first year of operations, ARW will recover approximately [*****] bone donors,
[*****] heart valve, [*****] vascular donors, [*****] skin donors, and [*****]
dura and pericardium donors.
