Exhibit 10.62





Exhibit 10.62




TISSUE RECOVERY AGREEMENT BETWEEN




OSTEOTECH, INC.




AND




COMMUNITY BLOOD CENTER d/b/a/ COMMUNITY TISSUE SERVICES



 


 









 





AGREEMENT




This Agreement is made as of October 30, 2009 (the “Effective Date”), by Community Blood
Center d/b/a Community Tissue Services, a nonprofit corporation organized under the laws of the
state of Ohio, with offices at 349 South Main Street, Dayton, Ohio 45402 (“CTS”), and Osteotech,
Inc., a Delaware corporation, with offices at 51 James Way, Eatontown, New Jersey 07724
(“Osteotech”), as follows:



WHEREAS, Osteotech engages in high-quality tissue processing (“Processing” or “Process(es)”)
and other related activities relating to human bone and other soft tissue for transplantation
(collectively, “Tissue”);



WHEREAS, Osteotech provides Tissue it Processes for distribution to hospitals, surgeons, and
other end-users (collectively, “End-Users”);




WHEREAS, CTS recovers Tissue for transplantation;



WHEREAS, CTS desires to provide certain of the Tissue it recovers to Osteotech for Processing
and distribution;



WHEREAS, Osteotech desires to Process and provide for distribution the Tissue provided to it
by CTS.




NOW, THEREFORE, the parties agree as follows:



1. DELIVERY AND PROCESSING OF TISSUE





1.1 CTS Commitment to Deliver Tissue to Osteotech




1.1.1. Osteotech Engagement of CTS



(a) Osteotech hereby engages CTS to provide to Osteotech, and CTS agrees to provide to
Osteotech, the types of Tissue specified on Exhibit A (“Specifications for Donor Tissue”) that are
recovered by, on behalf of, or under the supervision of CTS after January 1, 2008 (“CTS Recovered
Tissue”). The CTS Recovered Tissue provided by CTS to Osteotech shall be recovered, processed, and
cleaned, as applicable, by CTS in accordance with Osteotech’s eligibility criteria as originally
provided to CTS prior to the Effective Date of this Agreement and as amended pursuant to Section
1.1.2(d) (the “Recovery Standards”), provided that in no event will the CTS Recovered Tissue
provided to Osteotech have been treated with iodine, hydrogen peroxide, AllowashTM, or irradiation.
All sales of CTS Recovered Tissue shall be final and may not be returned by Osteotech to CTS except
as provided in Section 1.1.1(b) below. Eligibility for transplant shall be the responsibility of
CTS’s Medical Director. CTS shall not be required to provide Osteotech with a full chart regarding
eligibility for transplant. CTS will evaluate and certify compliance with the Recovery Standards
and the Specifications for Donor Tissue stated on Exhibit A.




	**	 	The appearance of a double asterisk denotes confidential information that has
been omitted from the exhibit and filed separately, accompanied by a confidential treatment request, with the Securities
and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.








 


 









 





(b) Osteotech shall have the right, within thirty (30) days of receipt of CTS Recovered
Tissue, to inspect and reject the CTS Recovered Tissue (i) in the event CTS fails
to perform or accurately document the processes set forth in subsection (a), (ii) in the event
of damage during shipping, or (iii) if the CTS Recovered Tissue fails to meet the specifications
stated on Exhibit A. In the event of rejection, the CTS Recovered Tissue shall not count as a
committed unit under Section 1.1.1(c), and Osteotech shall, at CTS’s choice and expense, destroy or
return such rejected Tissue to CTS. If additional information or clarification is required to
determine whether the CTS Recovered Tissue meets specifications, notification by Osteotech must
occur within the thirty (30) day period. Disposition of the tissue by Osteotech will occur within
ten (10) business days of receipt by Osteotech of the required information from CTS.



(c) Within thirty (30) days of the Effective Date, Osteotech shall inform CTS in writing of
the number of whole donors, cortical shafts, and fascia (which may be referred to herein as units
of Donor Tissue) requested to be provided by CTS between the Effective Date and December 31, 2009,
with a breakdown by the number of units of Donor Tissue to be provided in each month of 2009 by
CTS. Within fourteen (14) days of the receipt of such request, CTS will provide a commitment to
Osteotech of the number of units of Donor Tissue to be provided in each month of 2009 to Osteotech,
which may be less than or equal to the requested amount. Osteotech shall accept all of such units
of Donor Tissue that CTS commits to provide, subject to the provisions provided herein.



For the three year period beginning with the calendar year 2010, Osteotech shall inform CTS by
November 15, 2009, of the number of units of Donor Tissue requested to be delivered by CTS during
2010, 2011, and 2012, with a breakdown of the number of units of Donor Tissue requested to be
provided per calendar month, along with a non-binding annual forecast of the number of units of
Donor Tissue Osteotech expects to request for 2013. Within thirty (30) days of the receipt of
such request, CTS will provide a commitment to Osteotech of the number of units of Donor Tissue to
be provided to Osteotech per calendar month of 2010, 2011, and 2012, which may be less than or
equal to the requested amount. Osteotech shall accept all of such units of Donor Tissue that CTS
commits to provide, subject to the provisions provided herein.



Osteotech shall inform CTS by November 15, 2010, and by November 15th of each following year,
of the number of units of Donor Tissue requested to be delivered by CTS during each of the next
three calendar years, with a breakdown of the number of units of Donor Tissue to be provided per
calendar month in each of these years, along with a non-binding forecast of the annual number of
units of Donor Tissue Osteotech expects to need in the calendar year that follows the third
calendar year, as applicable. Within thirty (30) days of the receipt of each request, CTS will
provide a commitment to Osteotech of the number of units of Donor Tissue to be provided to
Osteotech each month in the third year of the requested period, which may be less than or equal to
the requested amount. Osteotech shall accept all of such units of Donor Tissue that CTS commits to
provide, subject to the provisions provided herein.


 


2









 





If the Osteotech forecasts have been revised from the previous forecast for the first and/or
second years of the applicable period, CTS will use commercially reasonable efforts to provide a
new commitment to Osteotech that meets Osteotech’s revised forecasts of the number of units of
Donor Tissue requested by Osteotech. Such new commitment by CTS may or may not change from the
previous CTS commitment for the applicable period and may be less
than or equal to the new requested amount. If the revised forecast is lower than the original
forecast, CTS may require that Osteotech maintain the original forecast and CTS will maintain their
original commitment. If the revised forecast is greater than the original forecast, Osteotech
recognizes that CTS may not be able to commit to the incremental volumes, but in no event shall the
new commitment be less than the prior commitment. Osteotech shall accept all of such units of
Donor Tissue that CTS commits to provide, subject to the provisions provided herein.



(d) In any designated period under this Agreement, if CTS delivers fewer units of Donor Tissue
than are committed, the difference between the committed number of units and the actual number of
units delivered during that period shall be referred to as the “Shortfall.”



(e) Between the Effective Date and December 31, 2010 (the “First Period”), CTS must deliver to
Osteotech at least ** (**%) of the committed units of each category of Donor
Tissue provided in Section 1.1.1(c) above for the First Period. Should CTS fail to deliver at
least ** (**%) of the committed units of Donor Tissue during this First Period,
then CTS must make up that Shortfall in calendar year 2011. If CTS fails to make up the Shortfall
in 2011, then the Shortfall shall not constitute a material breach or otherwise be grounds for
terminating this Agreement; but instead, the Alternative Tissue Reimbursement Fee Schedule set
forth in Exhibit B for fees for recovering of tissue and performance of services associated with
this Agreement (the “Tissue Reimbursement Fees”) shall govern, until such time as CTS has made up
all Shortfalls and has brought its deliveries for the current year to a number commensurate with
its prorated commitments for that year, at which time the Standard Tissue Reimbursement Fee
Schedule set forth in Exhibit B shall again be applicable. CTS shall deliver one quarter (1/4) of
each category’s commitment of Donor Tissue in each calendar quarter of the applicable year; should
CTS fall behind in any given quarter, in the following quarter it must deliver an amount sufficient
to meet its obligations for that following quarter, and to make up for the deficiency in the prior
quarter. In each month in which CTS is to deliver Donor Tissue pursuant to Section 1.1.1(c), CTS
must provide at least ** (**%) of the committed units for each category of Donor
Tissue.




(f) In calendar year 2011 and in each calendar year thereafter, CTS must deliver at least
** (**%) of the committed units of each category of Donor Tissue, as provided in
Section 1.1.1(c) above. Should CTS fail to deliver at least ** (**%) of the
committed units of Donor Tissue in any of calendar years 2011 thereafter, CTS shall be required to
make up the entire Shortfall in the next calendar year. If CTS fails to make up the Shortfall in
that next year, then the Shortfall shall not constitute a material breach or otherwise be grounds
for terminating this Agreement; but instead, the Alternative Tissue Reimbursement Fee Schedule set
forth in Exhibit B shall govern, until such time as CTS has made up all Shortfalls and has brought
its deliveries for the current year to a number commensurate with its prorated commitments for that
year, at which time the Standard Tissue Reimbursement Fee Schedule set forth in Exhibit B shall
again be applicable. CTS shall deliver one quarter (1/4) of each category’s commitment of Donor
Tissue in each calendar quarter of the applicable year; should CTS fall behind in any given
quarter, in the following quarter it must deliver an amount sufficient to meet its obligations for
that following quarter, and to make up for the deficiency in the prior quarter. In each month in
which CTS is to deliver Donor Tissue pursuant to Section 1.1.1(c), CTS must provide at
least ** (**%) of the committed units for each category of Donor Tissue.


 


3









 





(g) As applied to Donors delivered by CTS to Osteotech under this Agreement, CTS will provide
to Osteotech in any calendar year the following percentages per age group and gender of whole
donors and cortical shafts as further set forth in Exhibit A (Specifications for Donor Tissue).
The average age within both the Group “A” Whole Donors and the Group “B” Whole Donors and the
average age of the Cortical Shafts delivered by CTS to Osteotech pursuant to these specifications
shall be within ** years of the average age of donors received by CTS at their Dayton, Ohio
facility over the previous ** calendar years. The ratio of male to female donors for both the
Group “A” Whole Donors and the Group “B” Whole Donors and the ratio of male to female donors for
the Cortical Shafts shall be substantially equivalent to the male to female ratio as the donors
received by CTS at their Dayton, Ohio facility over the previous ** calendar years. Compliance
with these targets will be discussed at the quarterly intercompany meeting, and upon written
request from Osteotech will be certified by CTS on an annual basis.




1.1.2. Costs of Recovery and Delivery; Services to be Provided by CTS



(a) Tissue Reimbursement Fees. Osteotech will reimburse CTS per unit of Donor Tissue
accepted in accordance with Section 1.1.1 and Exhibit B. **



(b) Osteotech shall pay CTS in equal monthly payments for the Tissue to be delivered in any
given calendar year. Osteotech shall inform CTS in writing by December 15th of each year of the
amount of the monthly payments for the subsequent year, which payments shall be calculated by
multiplying the year’s numbers of CTS committed units of Donor Tissue by the applicable Tissue
Reimbursement Fees, and dividing by twelve. The first payment for each calendar year shall be made
no later than February 15th and prior to the 15th of each subsequent month up
through January 15th of the following calendar year.



(c) Additional
Cortical Shaft Recovery Fee. **



 


4









 





(d) Compliance with Recovery Standards. All CTS Recovered Tissue delivered to
Osteotech hereunder shall conform to the Recovery Standards. CTS will (i) audit all Tissue
recovery sites and ensure that they comply with AATB standards, and (ii) audit laboratory test
sites for compliance with all Recovery Standards. If an external audit is performed, CTS will
provide to Osteotech such external audit report if the result is unfavorable to CTS. Except as set
forth in Section 1.1.1(a), the Recovery Standards shall include applicable standards and
requirements relating to donor referral, informed consent, tissue recovery, pre-processing storage,
packaging and shipping of pre-processed Tissue and all records, activities, and standards related
to obtaining, testing, documenting and evaluating serological test results and microbiological
testing results; obtaining, documenting and evaluating medical history and lifestyle data; and
related organizational, management and quality assurance activities as are contained in: (i)
applicable laws, regulations, and guidelines of the United States Food and Drug Administration
(“FDA”); (ii) applicable standards and guidelines promulgated by the American Association of Tissue
Banks (“AATB”); (iii) applicable laws and regulations of other U.S. federal, state and local
government agencies with jurisdiction over the recovery and distribution of human musculoskeletal
tissue; (iv) applicable laws and regulations where such CTS Recovered Tissue delivered to Osteotech
hereunder is recovered by, or on behalf or under the supervision of, CTS; (v) CTS’s standard
operating procedures (“SOPs”), as they may be amended from time to time by CTS; and (vi)
Osteotech’s Recovery Standards to the extent applicable to CTS Recovered Tissue, as specified in
Osteotech’s SOPs, as such standards may be amended from time to time by Osteotech and as provided
to CTS within a reasonable amount of time in advance of their effectiveness (notwithstanding the
written consent requirement of Section 13, below). If interpretation of the Recovery Standards is
required or if there is a disagreement about the interpretation of the Recovery Standards, CTS and
Osteotech will attempt to negotiate a resolution in good faith in accordance with Section 18.



(e) Standard Operating Procedures. CTS and Osteotech shall each make available to the
other party for such party’s review a copy of its current SOPs relevant to responsibilities
performed in accordance with this Agreement upon reasonable prior notice of a request to review
such SOPs made by such other party, provided, however, that doing so will not require such party to
disclose any trade secrets, technical know-how, or unpublished scientific data, technical, or
business information. Osteotech and CTS will provide the other party with any changes to existing
relevant SOPs or new relevant SOPs within a reasonable period of time prior to the implementation
date of any such changes. Each party will assess requirements for training and will implement such
changes and conduct any necessary training within twenty eight (28) calendar days of receipt of
such changes, unless otherwise reasonably requested by the party making such changes.
Notwithstanding anything else in this Agreement to the contrary, Osteotech will review CTS’s SOPs
and inform CTS if the SOPs are deficient.



(f) Audit Rights. Once per calendar year, and upon reasonable prior written notice to
CTS, Osteotech, at its own expense, shall have the right to conduct a nonfinancial audit of CTS’s
facilities and records to ensure CTS’s compliance with the terms of this Agreement, as well as with
all applicable laws, regulations and standards enumerated in above. Such applicable books and
records may be redacted by CTS to remove any and all confidential information not required by
Osteotech to perform its audit. Any such audit shall be conducted by Osteotech so as to not
interfere in any way with the normal operations of CTS. CTS will consider all reasonable actions
recommended by Osteotech to correct any deficiencies,
other than a breach of this Agreement, identified in any of such audits that are agreed to by
CTS. If CTS decides not to implement any recommended actions, Osteotech’s sole remedy for CTS’s
decision not to implement such recommended actions shall be termination of this Agreement.


 


5









 





(g) Certificate of Donor Eligibility. Concurrent with or preceding each delivery to
Osteotech, CTS shall provide Osteotech with a copy of the serological test results, pre-processing
culture results, and a Certificate of Donor Eligibility with each unit of Whole Donor Tissue that
is delivered to Osteotech. Concurrent with or preceding each delivery to Osteotech of a unit of
Cortical Shafts or Fascia, CTS shall provide Osteotech with a copy of the serological test results,
pre-processing culture results, a Certificate of Donor Eligibility, and the microbiological results
from an in-process swab or tissue sample. Such Certificate of Donor Eligibility, in a form
acceptable to both CTS and Osteotech, shall be signed by CTS’s Medical Director. Osteotech shall
review the eligibility of each such donor for release to processing by Osteotech, utilizing the
serological test results and the Certificate of Donor Eligibility provided by CTS.




1.2 Processing Responsibilities and Distribution Rights of Osteotech



1.2.1. General Undertaking. Processing and packaging of CTS Recovered Tissue received
and accepted by Osteotech pursuant to this Agreement into then currently available finished units
of Tissue shall be conducted by Osteotech. Osteotech hereby agrees and acknowledges that the
Tissue provided by CTS will require further Processing by Osteotech prior to the Tissue being ready
for transplant, including, but not limited to, making smaller grafts from the Tissue provided.



(a) Osteotech shall promote and distribute all finished Tissue forms processed from Tissue
delivered to Osteotech by CTS hereunder to End-Users as determined solely by Osteotech. Osteotech
shall distribute such Tissue and related products and shall be entitled to charge End-Users fees
for Osteotech’s Tissue Processing, distribution and education services as determined by Osteotech
in accordance with all applicable laws and regulations.



(b) Osteotech shall be entitled to use Tissue provided to it by CTS for research and
development purposes if the informed consent signed at the time such Tissue was recovered allows
such Tissue to be used for medical research and development purposes.



(c) Osteotech represents and warrants that it will comply with all (i) applicable laws,
regulations, and guidelines of the FDA; (ii) applicable standards and guidelines promulgated by the
AATB; (iii) applicable laws and regulations of other U.S. federal, state and local government
agencies with jurisdiction over the recovery and distribution of human musculoskeletal tissue; (iv)
applicable laws and regulations where such CTS Recovered Tissue delivered to Osteotech hereunder is
Processed by Osteotech;; and (v) Osteotech’s standards for Recovered Tissue, to the extent
applicable to CTS Recovered Tissue, as specified in Osteotech’s SOPs, as such standards may be
amended from time to time by Osteotech and as provided to CTS within a reasonable amount of time in
advance of their effectiveness (notwithstanding the written consent requirement of Section 13,
below).


 


6









 





2. STORAGE, SHIPPING, REGULATORY COMPLIANCE AND LABELING





2.1 Possession and Storage of Tissue



(a) CTS Recovered Tissue delivered by CTS to Osteotech for Processing and any finished units
or other byproducts derived from such Tissue shall be held by Osteotech in the public trust at all
times until distributed by Osteotech. Neither CTS nor Osteotech shall have any ownership or other
property right in any such Tissue, finished units or other by-products and shall not allow any
third party to obtain any such right (whether in the nature of a lien, security interest,
encumbrance, or otherwise). Neither CTS nor Osteotech shall sell, trade, or otherwise dispose of
or imply that it is selling, trading or otherwise disposing of, banked human tissue, provided, that
this shall not prohibit Osteotech from: (i) distributing Processed or unprocessed Tissue or
marketing its Processing techniques and other services; (ii) utilizing Tissue for medical research
and development purposes; and (iii) properly disposing of Tissue that does not meet quality
assurance standards or regulatory requirements, in compliance with applicable laws.



(b) Specifications for all Tissue products to be Processed and distributed by Osteotech, from
CTS Recovered Tissue, will be developed by Osteotech.



(c) CTS, at its sole expense, will provide storage for all Tissue donors recovered for
Osteotech, pending shipment to Osteotech.



(d) Osteotech shall pay all shipping costs associated with delivery by CTS to Osteotech from
any of the CTS locations. CTS shall pay all shipping costs associated with Tissue rejected in
accordance with Section 1.1.1(b) or 1.1.2(g). Each party will designate the carrier for shipments
originating from their respective locations and will ship in validated, temperature-controlled
shipping containers. Risk of loss of the Recovered Tissue shall pass to Osteotech upon receipt of
shipment from CTS’s facility(s) and risk of loss of the Recovered Tissue that is being returned by
Osteotech to CTS shall pass to CTS upon receipt of shipments from Osteotech’s facility(s).




2.2 Certain Joint Compliance Responsibilities



(a) CTS shall comply with applicable laws, regulations and guidelines as required under
Section 1. Osteotech shall comply with applicable laws regulations and guidelines as required
under Section 1. Where the parties’ compliance responsibilities overlap, or where otherwise
necessary and appropriate, each party shall use commercially reasonable efforts to cooperate with
and assist the other party in such other party’s regulatory compliance activities.



(b) If either party becomes aware of anything that materially affects the eligibility
assessment of a donor, compliance with Recovery Standards, or problems with Processing, it shall
promptly notify the other party thereof in writing.



(c) In the event the FDA, any other applicable regulatory agency, or the AATB implements new
or additional regulations applicable to Tissue, Osteotech and CTS shall each implement such changes
to its SOPs as are necessary to comply with such regulations. In the event that either party has
failed to or is unable to implement such changes in respect of
Tissue by the effective date of such changes, the other party shall have the remedy set forth
in Section 6.


 


7









 






2.3 Regulatory Issues



(a) Osteotech will handle all complaints with respect to any Tissue distributed to End-Users
hereunder. Any issues arising under such complaints relevant to initial processing or eligibility
will be forwarded to CTS for response, with both parties cooperating in an attempt to resolve any
such complaints in a timely manner.



(b) Osteotech will address all recalls, deviations, adverse reactions, and the like, with the
costs of recall or any corrective action to be borne by the party responsible for the error or
failure causing such recall.



(c) Osteotech, at its sole expense, will address all regulatory requirements regarding
processed Tissue, with CTS providing reasonable assistance or information necessary for Osteotech
to do so effectively and in a timely manner.



(d) CTS will promptly provide Osteotech with a list of all testing laboratories used for
serological and microbiological testing, copies of applicable tissue bank registrations and
certifications, and a list of any tissue recovery organizations utilized by it other than CTS
itself or its staff, and will notify Osteotech promptly of any changes thereto.




2.4 Labeling



(a) Individual packages of finished units of CTS Recovered Tissue Processed by Osteotech will
bear a standard Osteotech bone product label that contains the product name and identity code,
donor number, and expiration date, and to the extent required by applicable laws or regulations, a
statement that such Tissue was recovered by CTS. The label shall also indicate that such Tissue
was Processed and distributed by Osteotech.




2.5 Indemnification



(a) Osteotech agrees to defend, hold harmless, and indemnify CTS against any damages,
litigation costs (including, without limitation, reasonable attorney fees and costs), losses,
obligations, liabilities, claims, actions or causes of action sustained or suffered by CTS arising
from: (i) a breach of Osteotech’s obligations hereunder; or (ii) a defect in any finished unit of
CTS Recovered Tissue processed by Osteotech to the extent such defect results from an error or
omission by Osteotech (including any employee or agent of Osteotech or other person to whom
Osteotech has delegated any Processing or Processing related activities hereunder), or from a
failure of workmanship by Osteotech.



(b) CTS agrees to defend, hold harmless, and indemnify Osteotech against any damages,
litigation costs (including, without limitation, reasonable attorney fees and costs), losses,
obligations, liabilities, claims, actions or causes of action sustained or suffered by Osteotech
arising from (i) a breach of CTS’s obligations hereunder; (ii) a defect in any finished unit of CTS
Recovered Tissue processed by Osteotech to the extent such defect results from an error or omission
by CTS (including any employee or agent of CTS or other person to whom
CTS has delegated any Tissue Recovery related activities hereunder), in connection with CTS’s
Tissue recovery activities, including without limitation any testing performed by or at the
direction of CTS; or (iii) any donor eligibility determination made by CTS (including any employee
or agent of CTS or other person to whom CTS has delegated any donor eligibility determination
responsibility).


 


8









 





(c) For purposes of Section 2.5(a) above, Osteotech shall be the “indemnifying party” and CTS
shall be the “indemnified party,” and for the purposes of Section 2.5(b) above CTS shall be the
“indemnifying party” and Osteotech shall be the “indemnified party”. The obligations and
liabilities of the indemnifying party hereunder with respect to claims resulting from the assertion
of liability by third parties shall be subject to the following terms and conditions:




(i) The indemnified party shall give written notice to the indemnifying party of any
assertion of liability by a third party which might give rise to a claim by the indemnified
party against the indemnifying party based on the indemnity contained in Section 2.5(a)
hereof, or Section 2.5(b) hereof, as the case may be, stating the nature and basis of said
assertion and the amount thereof, to the extent known, within ten (10) business days after
an officer of the indemnified party learns of the claim or receives notice thereof. Failure
to give such notice within ten (10) business days may, at the indemnifying party’s option,
result in a reduction in any subsequent indemnification payment by an amount equivalent to
the expenses and/or losses demonstrated to have been caused by such delay in notification.




(ii) In the event any action, suit or proceeding is brought against the indemnified
party, with respect to which the indemnifying party may have liability under the indemnity
agreement contained in Section 2.5(a) or 2.5(b) hereof, as the case may be, the action, suit
or proceeding shall, upon the written agreement of the indemnifying party that it is
obligated to indemnify under the indemnity agreement contained in Section 2.5(a) or 2.5(b)
hereof, as the case may be, be defended (including all proceedings on appeal or for review
which counsel for the defendant shall deem appropriate) by the indemnifying party. The
indemnified party shall have the right to be represented by advisory counsel and
accountants, at its own expense, and shall be kept fully informed of such action, suit or
proceeding at all stages thereof, whether or not it is so represented. The indemnifying
party shall make available to the indemnified party and its attorneys and accountants all
books and records of the indemnifying party relating to such proceedings or litigation. The
parties will render to each other such assistance as they may reasonably require in order to
ensure the proper and adequate defense of any such action, suit or proceeding.




(iii) Settlements by Indemnifying Party. The indemnifying party shall not make
any settlement of any claims without the written consent of the indemnified party, which
consent shall not be unreasonably withheld or delayed.


 


9









 






(iv) Settlements by Indemnified Party. The indemnified party shall not make
any settlement of any claims without the written consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed.



(d) The provisions of this Section 2.5 shall survive termination of this Agreement.



3. RECORDS AND REPORTS




(a) CTS will obtain and maintain complete and accurate records as required of CTS by the
Recovery Standards (including without limitation donor medical and behavioral history, donor life
style information, and, if applicable, serology and microbiological testing). CTS will retain such
records for the time periods required by the Recovery Standards. Such records shall be available
to Osteotech, only to the extent required by the Recovery Standards, during normal business hours
upon reasonable advance notice at Osteotech’s expense.



(b) Each of Osteotech and CTS shall maintain an SOP which will set forth procedures pursuant
to which it will provide information to regulatory authorities as may be required by applicable
laws and regulations. Such SOP will specify the contact person at each of Osteotech and CTS who
will be responsible for providing such information and interacting with such regulatory
authorities.



(c) Osteotech shall maintain complete and accurate records concerning CTS Recovered Tissue
received by Osteotech. Osteotech shall retain such records for the time periods required by the
Recovery Standards. Such records shall be available to CTS, only to the extent required by the
Recovery Standards, during normal business hours upon reasonable advance notice at CTS’s expense.



(d) Osteotech shall ensure that all information pertaining to CTS will be disclosed only to
those Osteotech personnel with a need-to-know who have signed Osteotech’s standard confidentiality
agreement.



(e) Osteotech shall notify CTS prior to the release of any CTS donor identifying information,
such as the donor identifying number, where such release is legally required by a regulatory or
governmental agency or court or administrative order or subpoena. The provisions of this Section
3(e) shall survive termination of this Agreement.



(f) Osteotech will arrange with CTS to hold quarterly meetings to discuss issues related to
this Agreement. At these meetings the following information with respect to CTS Recovered Tissue
will be discussed, along with any other relevant information: Recovery Standards, compliance with
the Tissue Specifications and performance by both parties required pursuant to Section 1.


 


10









 





4.  CONFIDENTIALITY AND CERTAIN OTHER COVENANTS




4.1 Non-Disclosure of Confidential Information



(a) For purposes of this Agreement, “Confidential Information” means all general and specific
knowledge, experience and information that is confidential and of value to CTS or to Osteotech,
including without limitation formulations, designs, products, processes, supplies, methods of
manufacture or processing, SOPs, cost data, master files, the nature of research and/or development
projects, as well as data relating thereto, marketing or business plans, donor data, profiles, or
information, and financial data. It shall also mean any information disclosed to either party by
any third party which either CTS or Osteotech is obligated to treat as confidential or proprietary.



(b) Both parties agree that they will not, at any time, without the express written agreement
of the other party, or except as expressly permitted by this Agreement, disclose to any other
person or use any Confidential Information of the other party, except for the purposes of
performing this Agreement or any successor agreement or as may be required by law, governmental
regulation, or court order. Information shall not be considered to be Confidential Information of
a party if it can be established that: (i) such information was in the possession of the other
party prior to disclosure to such other party by the party claiming that it is Confidential
Information and such information is not otherwise subject to a confidentiality agreement, (ii) such
information is then part of the public domain and became so without the breach of this or any other
confidentiality agreement by such other party or any of its affiliates, or (iii) such information
is developed independently by such other party or becomes known to or acquired by such other party
by means other than as a result of a breach of a confidentiality agreement with or any fiduciary
obligation to the other party.



(c) CTS and Osteotech will hold in confidence, and each agree to take commercially reasonable
steps to cause its employees, consultants or others granted access to such Confidential Information
to hold in confidence, all information identified as Confidential Information consistent with the
obligations of CTS and Osteotech under this Section 4.1.



(d) CTS and Osteotech each recognize that violation in any material respect of any provision
of this Section 4.1 may cause irreparable injuries to Osteotech or CTS and agree that CTS or
Osteotech shall be entitled to preliminary and final injunctive relief against such violation.
Such injunctive relief shall be in addition to, and in no way in limitation of, any and all
remedies or rights which CTS or Osteotech shall have at law or in equity for the enforcement of the
provisions of this Section 4.1. In addition, CTS and Osteotech agree that the party responsible
for the breach of confidentiality shall be responsible for all legal fees and other costs and
expenses incurred in the successful enforcement of the non-breaching party’s rights and remedies
under this Section 4.1. The provision of this Section 4.1 shall survive the termination of this
Agreement in accordance with its terms.




4.2 Certain Representations and Warranties.



(a) Each of Osteotech and CTS represents and warrants to the other that (i) its execution of
this Agreement and the performance of its obligations hereunder will not conflict with or result in
the breach of or default under any other agreement to which it is subject or by which it is bound,
(ii) it will, in the performance of its obligations hereunder, comply with all applicable laws,
rules, and regulations, (iii) its performance of its obligations hereunder will not violate or
infringe the intellectual property rights of any third party, and (iv) it has all the
rights and licenses necessary to perform its obligations hereunder without violating or
infringing such rights.


 


11









 






4.3 AATB Accreditation.



(a) CTS and Osteotech will maintain (a) AATB accreditation as tissue banks and (b) FDA tissue
bank registration.



5. TERM OF AGREEMENT




This Agreement shall become effective as of its Effective Date, and its initial term shall
continue until December 31, 2019, unless terminated earlier in accordance with the provisions
hereof. This Agreement shall automatically renew for an additional five (5) year term on January
1, 2020, unless either party provides the other with written notice of its intention not to renew
this Agreement by July 1, 2019. Thereafter, this Agreement shall automatically renew for
successive two (2) year renewal terms, unless either party notifies the other party in writing of
its intention not to renew the Agreement no later than one hundred and eighty (180) days prior to
the end of the then current renewal term.



6. TERMINATION




This Agreement may be terminated only as provided in Section 2.2(c), this Section 6, or
Section 7(c). Pursuant to this Section 6, either party may terminate this Agreement at any time
upon:



(a) The material breach by the other party of any of its material obligations under this
Agreement, if such material breach is not cured within thirty (30) days after written notice
thereof is given by the non-breaching party to the breaching party; or



(b) An adjudication of the other party as bankrupt or insolvent; or the admission in writing
by such other 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 a
receiver, trustee or similar officer for such other party’s assets without the application or
consent of such other party, if such appointment shall continue undischarged for a period of ninety
(90) days; or such other party instituting (by petition, application, answer, consent or otherwise)
any bankruptcy, insolvency arrangement or similar proceeding relating to it under the laws of any
jurisdiction; or the institution of any bankruptcy, insolvency arrangement or similar proceeding
relating to such other party, if such proceeding shall remain undismissed for a period of ninety
(90) days; or the issuance or levy of any judgment, writ, warrant of attachment or execution or
similar process against a substantial part of the property or assets of such other party, if such
judgment, writ, warrant of attachment or execution or similar process shall not be released,
vacated or fully bonded within ninety (90) days after its issue or levy.



(c) CTS may terminate this Agreement at any time upon thirty (30) days’ prior written notice
to Osteotech if the FDA or any applicable regulatory agency has made the final determination
described in Section 2.2(c) to the extent such provisions are applicable to Osteotech. Osteotech
may terminate this Agreement at any time upon thirty (30) days’ prior
written notice to CTS if the FDA or any applicable regulatory agency has made the final
determination described in Section 2.2(c) to the extent such provisions are applicable to CTS.


 


12









 





7. INSURANCE 




(a) Osteotech shall obtain and maintain in force during the term of this Agreement product
liability insurance coverage, under a policy or policies with minimum limits of $2,500,000 and no
more than a $500,000 deductible per claim, on a claims made or occurrence basis. Osteotech shall
immediately notify CTS if coverage is cancelled. Upon execution of this Agreement, Osteotech shall
provide CTS with a certificate or certificates of insurance suitable to CTS which state(s) that the
above required coverage is in full force and effect and that the insurance carrier will provide not
less than thirty (30) days prior written notice of cancellation or material changes to the policy
or policies to both the insured party and the party to whom such certificate is issued.
Maintenance of such insurance shall not relieve Osteotech of any liability under this Agreement.



(b) CTS shall obtain and maintain in force during the term of this Agreement professional
liability insurance coverage, under a policy or policies with minimum limits of $2,500,000 and no
more than a $500,000 deductible per claim, on a claims made or occurrence basis. CTS shall
immediately notify Osteotech if coverage is cancelled. Upon execution of this Agreement, CTS shall
provide Osteotech with a certificate or certificates of insurance suitable to Osteotech which
state(s) that the above required coverage is in full force and effect and that the insurance
carrier will provide not less than thirty (30) days prior written notice of cancellation or
material changes to the policy or policies to both the insured party and the party to whom such
certificate is issued. Maintenance of such insurance shall not relieve CTS of any liability under
this Agreement.



(c) The parties acknowledge the difficulty in providing in this Agreement for all possible
future developments relating to the availability and cost of the required insurance policies.
Should a party discover during the term of this Agreement that meeting the insurance requirements
of this Section 7, including but not limited to the minimum limits or maximum deductibles, is in
its estimation commercially prohibitive, it shall give written notice to the other party. Key
executives from each party shall arrange to meet within 30 days of receipt of the notice to
determine if different insurance coverage is acceptable. The party not requesting a change in
insurance coverage shall have the right to give notice to terminate this Agreement immediately upon
the latter to occur of (i) the expiration of the aforementioned thirty (30) day period if the
notifying party had participated in negotiations in good faith and still the parties have failed to
come to a mutually agreeable resolution, and (ii) the date upon which the party receiving the
notice of termination actually fails to satisfy all of the applicable insurance requirements set
forth in this Agreement.



8. FORCE MAJEURE




Neither party shall be responsible to the other for nonperformance or delayed performance of
the terms and conditions hereof due to acts of God, acts of government, wars, riots, accidents and
transportation, fuel or material shortages, or other causes (except strikes), in the nature of
force majeure.


 


13









 





9. BINDING AGREEMENT; ASSIGNMENT




This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and assigns, in whatever form they may take. Specifically, upon the sale of all or substantially
all of a party’s assets, the purchaser of such assets shall be bound by this Agreement.
Notwithstanding the prior two sentences, however, in the event
Osteotech ** during the term of this Agreement, or during any renewal period, CTS shall have the
immediate right to terminate its obligation under this Agreement to supply: (i) Whole Donors and/or
(ii) Cortical Shafts and Fascia (see Exhibit A); provided, however, that if CTS does not exercise
its right in such event to terminate its obligation under this Agreement to supply Whole Donors and
Cortical Shafts and Fascia, then all of CTS’s other obligations under this Agreement shall remain
in full force and effect. Osteotech and CTS and their respective subsidiaries, as applicable,
shall be subject to and bound by the terms and conditions of this Agreement to the extent they are
engaged in the recovery and distribution or Processing of Tissue, as the case may be. Other than
as provided in this Section 9, this Agreement shall not be assigned or transferred in whole or in
part by either party without the written consent of the other party and any purported assignment
without the express written consent of the other party is void.



10. NAME, EMBLEM, PACKAGING, TECHNOLOGY AND TRADEMARK




(a) Except to the extent Osteotech indicates in any literature, including without limitation
promotional materials, that CTS recovers Tissue Processed by Osteotech, that CTS has provided
particular Tissue to Osteotech and that CTS has determined its medical eligibility, without the
prior written consent of CTS, Osteotech shall have no right to use the name, trademark or emblem of
CTS in connection with its Processing or distribution activities or to use the name, trademark or
emblem of CTS for any other purposes; provided, however, Osteotech may disclose CTS’s name as may
be required by law, government regulation, or court order.



(b) CTS shall not have the right to use any trademark or emblem of Osteotech, including the
name Osteotech, without the prior written consent of Osteotech; provided, however, CTS may disclose
Osteotech’s name as may be required by law, government regulation, or court order.



(c) Nothing in this Agreement shall be interpreted to convey to CTS any trademark, patent, or
proprietary technology owned by Osteotech, and nothing in this Agreement shall be interpreted to
convey to Osteotech any trademark, patent, or proprietary technology owned by CTS.




 


14









 





11. NOTICES




All notices and other communications provided for hereunder shall be in writing and shall be
mailed by certified mail, return receipt requested, telecopied, with a copy sent promptly
thereafter by U.S. mail, or delivered by hand or overnight delivery, as follows.




	 	 	 	 	 
	 

	 	If to CTS:
	 	Chief Executive Officer
	 

	 	 	 	COMMUNITY BLOOD CENTER d/b/a/

 COMMUNITY
TISSUE SERVICES

349 South Main Street

Dayton, Ohio 45402-2715
	 
	 	 	 	 
	 

	 	 	 	Telecopy No. (937) 461-9217
	 
	 	 	 	 
	 

	 	If to Osteotech:
	 	Chief Executive Officer
	 

	 	 	 	Osteotech, Inc. 

51 James Way


Eatontown, New Jersey 07724


Telecopy No. (732) 935-0626






or such other person or address as either party may designate by written notice to the other party
complying as to delivery with the terms of this Section 11. All such notices and other
communications shall be effective (i) if mailed by certified or registered mail, when received as
indicated by the return receipt, (ii) if telecopied, when transmitted, as indicated by the
facsimile transmission report, provided same is on a business day in the U.S. (excludes weekends
and federal holidays) and, if not, on the next business day, or (iii) if delivered, upon delivery,
provided same is on a business day and, if not, on the next business day.



12. ENTIRE AGREEMENT




Except as provided below in this Section 12, this Agreement and the Exhibits thereto set forth
the entire Agreement between the parties; and any prior agreements, promises, negotiations, or
representations, either oral or written, relating to the subject matter of this Agreement not
expressly set forth in this Agreement are of no force or effect. This Agreement supersedes and
replaces the parties’ March 1, 2006, Tissue Recovery Agreement, as modified by the February 14,
2007, First Amendment, the March 14, 2007, Second and Third Amendments, the June 1, 2007, Fourth
Amendment, and the April 23, 2008, Fifth Amendment, each of which is hereby terminated.
NOTWITHSTANDING the above, the parties’ January 16, 2009, Sixth Amendment, and only those
provisions of the parties’ March 1, 2006, Tissue Recovery Agreement as are necessary to give
meaning and effect to the terms of the Sixth Amendment, will continue in full force and effect, as
set forth in that Sixth Amendment. This Agreement may be executed in counterparts, both of which
together shall constitute a single agreement.



13. MODIFICATION




This Agreement, or any part or section of it, may not be amended or modified except by the
written consent of both parties to the Agreement.



14. APPLICABLE LAW




This Agreement shall be construed in accordance with the laws of the State of Delaware,
without giving effect to any conflict of laws principles.


 


15









 





15. WAIVER




Waiver or breach of any provision of this Agreement shall not be deemed a waiver of any other
breach of the same or a different provision of this Agreement.



16. INDEPENDENT CONTRACTORS




CTS is providing its services hereunder as an independent contractor. Nothing herein shall
create any affiliation, partnership or joint venture between the parties hereto, or any
employer/employee relationship.



17. SEVERABILITY




The provisions of this Agreement shall be severable, and if a court of competent jurisdiction
holds any provisions of this Agreement to be in violation of any applicable law, the remaining
provisions shall nevertheless remain in full force and effect.



18. DISPUTE RESOLUTION




Osteotech and CTS will arrange, as mutually agreed, to hold regular meetings to discuss issues
that may arise under this Agreement. If a dispute arises between the parties under this Agreement,
CTS and Osteotech will first attempt to negotiate a resolution within thirty (30) days of notice of
such dispute. If the parties do not resolve their difference, then any action brought by either
party hereto shall be brought only in the appropriate court in the State of Delaware.



IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers as of the date first written above.



	 	 	 	 	 
	 	COMMUNITY BLOOD CENTER d/b/a/ COMMUNITY TISSUE SERVICES

 	 
	 	By:  	/s/ Diane Wilson
 	 
	 	 	Print Name:  	 Diane Wilson 	 
	 	 	Title:  	COO 	 
	 
	 	OSTEOTECH, INC.

 	 
	 	By:  	/s/ Sam Owusu-Akyaw
 	 
	 	 	Print Name:  	 Sam Owusu-Akyaw 	 
	 	 	Title:  	President/CEO 	 
	 



 


16









 





Exhibit A




Specifications for Donor Tissue




Minimum Tissues per Whole Donor




Each donor, in any calendar month, shall include the following:




**


Additional Tissue desired by Osteotech, if procured by, and available from, CTS:



**


CTS shall supply these Additional Tissues to Osteotech in quantities that are generally equal to
the average number of these same tissues as are recovered from donors and retained by CTS during
the term of this Agreement.



Tissue packaging must include three intact layers, with donor and tissue identified on outer and
inner layer of packaging, and packaging configuration must be acceptable to both CTS and Osteotech.


 


17









 





Group “A” Donors Gender and Age




**


Group “B” Donors Gender and Age




**


Specifications for Cortical Shafts


**



Cortical Bone Tissue




**


Additional tissues if procured and available:



**



Any other cortical shafts




CTS shall supply these Additional Tissues to Osteotech in quantities that are generally equal to
the average number of these same tissues as are recovered from donors and retained by CTS during
the term of this Agreement.


 


18









 





Tissues should be supplied in a clean and debrided manner. Tissue color shall range from shades of
tan to shades of pink. The microbiological results from a swab of the surface of the tissue or
tissue sample should be supplied as representative of the final processing at CTS. Any processing
or cleaning of tissue must not involve treatment of tissue with iodine, hydrogen peroxide,
AllowashTM, or irradiation. Processing or cleaning must only be done with sterile water.



Tissue packaging must include three intact layers, with donor and tissue identified on outer and
inner layer of packaging, and packaging configuration must be acceptable to both CTS and Osteotech.



Specifications for Fascia




Tensor fascia lata, covering left and right femur, as rectangular shaped as possible.



Tissues should be supplied in a clean manner with extraneous fat and muscle removed. Tissue color
shall range from shades of tan to shades of pink. The microbiological results from a swab of the
surface of the tissue or tissue sample should be supplied as representative of the final processing
at CTS. Any processing or cleaning of tissue must not involve treatment of tissue with iodine,
hydrogen peroxide, AllowashTM, or irradiation. Processing or cleaning must only be done with
sterile water.



Tissue packaging must include three intact layers, with donor and tissue identified on outer and
inner layer of packaging, and packaging configuration must be acceptable to both CTS and Osteotech.
Fascia should be individually rolled and must be packaged separately from cortical shaft tissue.




 


19









 







Exhibit B




Standard Tissue Reimbursement Fee Schedule




I. Whole Donors




Group “A”: ** per Donor




Group “B”: ** per Donor




II. Cortical Shafts




**




III. Fascia




**




Pricing on above is inclusive of all costs to procure, qualify, and store the Donor Tissue prior to
transport to Osteotech.



Alternative Tissue Reimbursement Fee Schedule




I. Whole Donors




Group “A”: ** per Donor




Group “B”: ** per Donor




II. Cortical Shafts




**




III. Fascia




**




Pricing on above is inclusive of all costs to procure, qualify, and store the Donor Tissue prior to
transport to Osteotech.




 


20