Option Agreement for the Distribution and Supply of Sygnal™

 

This Option Agreement for the Distribution and Supply of Sygnal™ (the
“Agreement”) is made the 24th day of February, 2016 (the “Effective Date”) by
and between The Musculoskeletal Transplant Foundation, Inc., a District of
Columbia not-for-profit corporation located at 125 May Street, Edison, New
Jersey 08837 (“MTF”) and Bone Biologics Corporation, a Delaware corporation
located at 321 Columbus Avenue, Boston, MA 02116 (“BBC”).

 

Whereas, MTF is the sole owner of all intellectual property and other tangible
and intangible rights of Sygnal™ demineralized bone matrix, U.S. Patent Number
9,138,509 (“Sygnal”) and

 

Whereas, BBC has expertise in the field of regenerative medicine orthobiologics,
including without limitation the application and uses of demineralized bone
matrix in patients; and

 

Whereas, MTF desires to grant BBC the option to commercialize and distribute
Sygnal and BBC desires to accept such Option on the terms and conditions
contained herein (the “Option”).

 

Now Therefore, for mutual benefit, the parties agree as follows:

 

I. Option Grant.

 

  (a) MTF hereby grants to BBC, during the Term of this Agreement, the exclusive
right and option to distribute Sygnal upon the Critical Terms set forth below
(the “Option Rights”). BBC shall exercise the Option, if at all, by providing
written notice to MTF of its intent to do so. During the Term, MTF agrees not to
enter into any agreements with any third parties which include the transfer by
MTF of the Option Rights.         (b) Upon the exercising of the Option, BBC
shall grant to MTF 700,000 shares of restricted common stock in BBC.         (c)
Within 30 days of exercising the Option, MTF shall provide BBC with a written
proposal of a Definitive Agreement that includes, inter alia, the Critical Terms
and those other commercially reasonable terms as agreed upon by the parties. The
parties shall fully negotiate in good faith all of the terms of the Definitive
Agreement, and any ancillary agreements thereto consistent with the Critical
Terms.         (d) In the event BBC does not exercise the Option within the Term
of this Option Agreement, MTF shall be free to enter into any other agreements
relating to the Option Rights as it deems appropriate without liability to BBC.

 

II. Critical Terms. The parties agree that the Definitive Agreement executed by
the parties subsequent to the exercising of the Option shall contain the
following terms:

 

  (a) BBC shall be the exclusive, worldwide distributor of Sygnal.         (b)
BBC shall take legal possession of Sygnal prior to distribution and all legal
risk and obligation attendant to possession of human tissue shall be with BBC
and not MTF.

 

 

 

 

  (c) BBC shall take possession of Sygnal from MTF in its current development
state. BBC shall be solely responsible for all development costs of Sygnal,
including stability and packaging testing, prior to distribution of Sygnal. BBC
shall meet all legal, regulatory and AATB requirements as a distributor of
Sygnal.         (d) The parties shall negotiate the Transfer Price of Sygnal
from MTF to BBC in good faith. The parties understand and agree that the
Transfer Price shall be consistent with MTF’s obligations as a not-for-profit
corporation and the parties intend that any transfer of Sygnal hereunder shall
be in accordance with then-current market conditions and the proscription
against private inurement as set forth under the non-profit laws and regulations
at a Federal and State level.         (e) MTF shall be the exclusive supplier of
Sygnal to BBC. BBC may not distribute any Sygnal competitive tissue form without
the prior written consent of MTF, which consent shall not be unreasonably
withheld.         (f) The parties shall provide customary indemnifications for
each party’s respective conduct, including breach of contract, representations
and warranties.

 

III. Assignment of Rights. BBC may not assign this Agreement, in whole or in
part, nor any of its rights or obligations hereunder without the prior written
consent of MTF and any such impermissible assignment shall be void.
Notwithstanding the foregoing, the parties agree as follows:

 

  (a) Without the necessity of further approval, BBC may assign this Agreement
to Hankey Capital, LLC (“HC”) in order to secure a loan from HC for $2M to fund
BBC’s Nell-1 research project, and for no other reason (the “Loan”). Should this
Agreement be used to collateralize the Loan, or any part of the Loan, BBC agrees
that it will make best efforts to substitute alternative collateral for the Loan
as soon as satisfactory substitute collateral, in HC’s sole discretion, is
available. BBC must notify MTF in advance and in writing prior to any assignment
to HC.

 

  a. In the event of an assignment of this Agreement, or of the Definitive
Agreement, to HC due to BBC’s default under the Loan, MTF agrees as follows:    
        i. MTF shall use commercially reasonable efforts work directly with HC
for the distribution or other commercialization of Sygnal. As used herein,
commercially reasonable efforts shall include actions to evaluate, select,
contract and launch Sygnal into the orthopedic marketplace and may which include
entering into a strategic relationship for the distribution, sale or licensing
of Sygnal.             ii. Any proceeds from the distribution or
commercialization of Sygnal will be applied first to pay off the then-existing
Loan amount to HC, with the understanding that proceeds is calculated as sale
price less Transfer Price paid to MTF.

 

 

 

 

    iii. Upon the satisfaction of the Loan amount, MTF may (y) continue
distribution of Sygnal to its sole benefit without further payment or liability
to HC or (z) cease distribution of Sygnal, in its sole and absolute discretion.
            iv. HC and MTF will work in good faith to their mutual benefit for
the distribution of Sygnal.

 

  (b) HC may, in turn, assign this Agreement to an unrelated third party, but
only with the advance, written consent of MTF, which consent shall not be
unreasonably withheld. In the event HC is compensated for such assignment,
whether in cash or in kind and whether at the time of assignment or other, at
greater than the then-current Loan balance, MTF shall receive such amount in
excess of the Loan balance. If HC or its third party permitted assignee shall
exercise the Option Rights hereunder, the assigned obligation of BBC share
transfer set forth at I(b) hereof shall be waived.

 

IV. Term and Termination.

 

  (a) The Term of this Agreement shall be 36 months from the Effective Date,
unless terminated earlier in accordance with the terms hereof. The Term may be
modified by written agreement of the parties.         (b) If BBC shall assign
this Agreement as collateral for a loan with HC, as detailed in section III
hereof, this Agreement shall terminate upon (i) the repayment of the Loan by
BBC; (ii) the substitution of collateral by BBC for this Agreement; or (iii)
satisfaction of the Loan amount in accordance with III(a)a ii hereof.

 

V. Miscellaneous. The Option Agreement shall be governed by the laws of the
State of New Jersey and all disputes related hereto shall be determined in the
courts of Middlesex County, New Jersey. This Agreement may only be modified by
written consent of the parties. This Agreement contains the entire agreement
between the two parties. No oral agreements or conversation with any officer or
employee of either party shall affect or modify any of the terms and conditions
of this Agreement. This Agreement may be executed in one or more counterparts,
each of which shall be enforceable as an original, but all of which together
shall constitute one and the same instrument.

 

Musculoskeletal Transplant Foundation, Inc.   Bone Biologics Corporation

 

By:  /s/ Michael Kawas   By:  /s/ Stephen R. LaNeve Name:  Michael Kawas   Name:
 Stephen R. LaNeve Title:  EVP/CFO   Title:  CEO Date:  February 24, 2016  
Date:  February 24, 2016