SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 1, 1997
OSTEOTECH, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19278 13-3357370
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
51 James Way, Eatontown, New Jersey 07724
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 542-2800
(Former name or former address, if changed since last report)
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Item 5. Other Events
Relationship With Musculoskeletal Transplant Foundation
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On April 1, 1997, the Registrant entered into an Agreement
(the "MTF Agreement") with Musculoskeletal Transplant Foundation ("MTF"),
whereby the Registrant is to serve as the exclusive processor of human bone and
related connective soft tissue for transplantation (collectively, "Tissue")
received from donors and procured by MTF for a five year period, with an option
to renew for an additional five year period. The MTF Agreement provides that MTF
is entitled to retain a limited number of the donors it procures for research
and development purposes. Moreover, the MTF Agreement generally provides for the
Registrant to follow certain processing standards and MTF to follow certain
guidelines for accepting donors.
The MTF Agreement contains a number of specific termination
provisions as follows: (A) either party may terminate the MTF Agreement upon (i)
a material breach by the other party not cured within ninety days, (ii) an
adjudication of the other party as bankrupt or insolvent or similar proceedings
in bankruptcy, or the general inability of a party to pay its debts as they
mature; (B) MTF may terminate the MTF Agreement at any time upon ninety days
written notice to the Registrant if MTF makes a determination to end its program
of procuring and distributing Tissue, provided that if MTF resumes such program
at any time during the term of the MTF Agreement, it shall provide prompt
written notice of such resumption to the Registrant and the MTF Agreement shall
then become effective in accordance with its terms as soon as practicable but in
no event less than ninety days after such notice is received by the Registrant;
(C) MTF may also terminate the Agreement if: (i) a panel of experts (as defined
in the MTF Agreement), determines that a commercially feasible processing
technology not available at the time of the MTF Agreement which is developed by
a third party (x) represents a significant scientific advance in transplantation
or (y) is comparable to forms of Tissue processed by the Registrant and
represents at least a 10% reduction in costs and (ii) the Registrant refuses or
is unable to achieve comparable scientific or economic results within six months
of such determination; (D) in the event that MTF enters into an agreement or
arrangement with a third party whereby finished units of Tissue processed by the
Registrant for MTF are used as part of such third party's technology or product,
MTF shall promptly inform the Registrant of its intent to enter into such
agreement or arrangement and the Registrant shall have the right to terminate
the MTF Agreement upon prior written notice to MTF (subject to certain
limitations) or to renegotiate the terms of the MTF Agreement; (E) (i) MTF may
terminate the Agreement at any time upon thirty days prior written notice to the
Registrant if the Registrant is unwilling or unable to comply with new
regulations of the Food and Drug Administration or any applicable regulatory
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agency or the American Association of Tissue Banks to the extent such
regulations are applicable to the Registrant and (ii) the Registrant may
terminate the Agreement should MTF be unable or unwilling to comply with any
such new regulations applicable to MTF; (F) in the event that MTF develops a
non-proprietary Tissue form, modifies an existing form or changes its
presentation of a Tissue form, requests that the Registrant process such Tissue
form and agrees to reimburse any processing costs for such new Tissue form and
the Registrant fails to accept such proposal, MTF may terminate the Agreement
only insofar as it applies to such new nonproprietary Tissue form; (G) if the
Registrant develops or acquires a substitute for the Tissue-based products
distributed by MTF, which materially compete in the United States with such
Tissue distributed by MTF, then MTF shall have the right to terminate the MTF
Agreement upon sufficient notice provided the Registrant fails to cease such
competitive activity; and (H) MTF shall have the right to terminate the
Agreement should the Registrant (i) attempt to solicit any organ procurement
organization or other recovery agencies which provide donors to MTF to divert
donors from MTF to the Registrant or to other processing clients of the
Registrant and (ii) engage in sales or promotional activities directed to
end-users which favors any of the Registrant's other Tissue processing clients
over MTF.
Settlement of Biosystems Case
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In a separate matter, the Registrant obtained a consent
injunction in its suit against Biosystems of New England, Inc. ("Biosystems").
The Registrant had sued Biosystems, a former sales agent for the Company's
Grafton(R) Demineralized Bone Matrix allograft tissue form, for breaching the
non-compete and other provisions of the sales agency Agreement (the "Sales
Agreement") between the Registrant and Biosystems. Pursuant to the Sales
Agreement, Biosystems served as the Registrant's contract agency for the New
England region for marketing and education to the medical community regarding
allograft tissue and related services, until such contract relationship was
terminated by Biosystems in July 1996. As part of the injunction, Biosystems has
agreed to fully comply with the terms and conditions of the non-compete clause
of the Sales Agreement, and the Registrant has agreed to allow Biosystems to
market one form of allograft tissue, a threaded cortical dowel processed by
another tissue bank, in exchange for extending Biosystems' non-compete
obligation with the Registrant to December 31, 1997. The non-compete portion of
the Sales Agreement would otherwise have expired in July 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: April 11, 1997
OSTEOTECH, INC.
(Registrant)
By:/s/MICHAEL J. JEFFRIES
Michael J. Jeffries
Executive Vice President, Chief
Operating Officer and Chief
Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
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