Exhibit 10.3
Osteotech Letterhead
September      , 2009
Name of Non-Employee Director
Address
Re:     Compensation Arrangements
Dear           :
The purpose of this letter agreement is to clarify the status of the
compensation to which you are entitled as a non-employee director of Osteotech,
Inc. (the “Company”).
As a non-employee director of the Company you are entitled to receive an annual
cash retainer of $15,000, payable quarterly in advance, plus $1,000 for each
Board meeting attended in excess of five meetings per year. In addition, the
Chair of the Board receives $20,000 per year, the Chair of the Audit Committee
receives $10,000 per year, the Chair of each of our other Board committees
receives $5,000 per year, and the non-Chair members of each of our Board
committees receive $2,500 per year for each committee on which they serve, all
of which fees are also payable quarterly in advance during the year. Finally,
each of our non-employee directors receives an equity award on the date of our
annual stockholder meeting upon re-election to the Board of 5,000 restricted
stock units (“RSUs”) or a stock option representing 15,000 shares of common
stock of the Company that vest on the first anniversary of the date of grant.
The Compensation Committee or the Board of Directors may, from time-to-time,
change the annual cash retainers and/or the nature and amount of the annual
equity awards.
In addition to the above compensation, the Compensation Committee, upon your
assumption of additional responsibilities, may provide additional short-term or
long-term compensation in the form of cash retainers or equity awards or both.

 

 

--------------------------------------------------------------------------------

 

The agreements representing equity awards made to you under the Company’s 2000
Stock Plan and 2007 Stock Incentive Plan (the “Plans”) provide that, in the
event of a merger or consolidation of the Company or a “change in control” of
the Company as such terms are used or defined in the Plans, the impact of such
transaction on the award will be determined by the definitive agreement
governing the transaction. In addition, the agreements relating to your stock
options granted under the Plans or under the Company’s 1991 Independent
Directors’ Stock Option Plan provide that the exercise price of such options may
be paid by delivery of shares having a fair market value equal to the exercise
price of such options (a “Net Exercise”). In recognition of your past service to
the Company as a director and in consideration for your continued service on the
Board of Directors of the Company, the Board has determined to exercise its
authority under the Plans to do the following:

  •  
upon a merger or consolidation of the Company or a change of control in the
Company as such terms are used or defined in the Plans, all equity awards held
by the non-employee directors of the Company, whether or not vested, shall vest
immediately prior to the effective date of such merger, consolidation or change
in control (and the non-employee directors will be provided a reasonable
opportunity, if required, to exercise such equity awards prior to the effective
date) notwithstanding anything to the contrary contained in the agreements
covering the equity awards; and

  •  
any and all retainers or other fees paid or payable to any non-employee director
prior to the effective date of any such merger, consolidation or change in
control of the Company shall be deemed earned by such non-employee director as
of such effective date notwithstanding the fact that all or any part of such
retainer or other fee has been paid to such non-employee director in advance of
some period of service to the Company; and

  •  
to the extent that consent is required to allow you to effect a Net Exercise of
any stock option awarded to you, if any, the Board hereby grants consent for
such Net Exercise and you agree that, if and when you determine to exercise any
of the options held by you, you will exercise your stock options on a Net
Exercise basis.

If you are in agreement with the foregoing, please sign the enclosed copy of
this letter in the space indicated below and return the executed letter
agreement to Mark Burroughs at the Company in the enclosed envelope.

            Very truly yours,

OSTEOTECH, INC.
      By:           Sam Owusu-Akyaw, President and CEO   

Acknowledged and agreed to as of
the date of this letter agreement:

         
Signed:
       
 
 
 
   

 

-2-