Document:

EXHIBIT 10.23

 

ALPHA NATURAL RESOURCES, INC.

2010 LONG-TERM INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AWARD AGREEMENT FOR NON-EMPLOYEE DIRECTORS

 

This Restricted Stock Unit Award Agreement is dated as of the issue date (the “Issue Date”) set forth on Exhibit A attached hereto (this “Agreement”), and is between Alpha Natural Resources, Inc., a Delaware corporation (“Alpha”), and the individual named as Award Recipient on Exhibit A (the “Award Recipient”).

 

Alpha has established its 2010 Long-Term Incentive Plan (the “Plan”) to advance the interests of Alpha and its stockholders by providing incentives to certain eligible persons who contribute significantly to the strategic and long-term performance objectives and growth of Alpha and any parent, subsidiary or affiliate of Alpha. All capitalized terms not otherwise defined in this Agreement have the same meaning given such capitalized terms in the Plan.

 

Agreement

 

The parties agree as follows:

 

Section 1.  Issuance of Stock.

 

(a)                                  Subject and pursuant to all terms and conditions stated in this Agreement and in the Plan, on the Issue Date, Alpha hereby grants to Award Recipient the number of restricted stock units (the “Units”) for Alpha’s common stock, par value $0.01 per share (the “Common Stock”), set forth on Exhibit A. Each Unit represents the right to receive one share of Common Stock following the vesting date of that Unit. Except as otherwise provided herein, the Units shall vest on the six-month anniversary of the Award Recipient’s Separation from Service as provided on Exhibit A and the shares of Alpha Common Stock which vest under your Unit Award will be issued to you on such six-month anniversary date, or if the vesting date is not a business day, on the next following business day (or as soon as reasonably practicable but in no event later than the 15th day of the third month following such date), subject to your satisfaction of all applicable income and employment withholding taxes. For purposes of this Agreement, the “Shares” of Common Stock to be issued under this Award shall include all of the shares of Common Stock issued to Award Recipient pursuant to this Agreement plus any Shares issued with respect to such shares of Common Stock before the Shares are actually issued under this Award, including, but not limited to, shares of Alpha’s capital stock issued by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization.

 

(b)                                 Notwithstanding the foregoing or any provision of this Agreement or the Plan to the contrary, the delivery of any vested Shares shall be delayed until six (6) months after Award Recipient’s Separation from Service to the extent required by Section 409A(a)(2)(B)(i) as provided under the terms of the Plan.

 

Restricted Stock Unit Award Agreement

for Non-Employee Directors

 

 

Section 2.  Vesting; Restriction on Transfer and Forfeiture of Unvested Units.

 

(a)                                  None of the Units may be sold, transferred, pledged, hypothecated or otherwise encumbered or disposed of until they have vested and been settled in Shares in accordance with the terms of this Section 2 and Exhibit A. Except as set forth in this Section 2, if the Award Recipient breaches the confidentiality covenant as described in Section 9 hereof, any Units that are not vested or otherwise settled in Shares in accordance with this Section 2 shall be automatically forfeited to Alpha without any further obligation on the part of Alpha.

 

(b)                                 Except as provided herein, the Units will vest according to the vesting schedule set forth on Exhibit A. If: (i) a Change of Control (as defined below) occurs, any unvested Units shall vest, and the Shares subject to the Award shall be issued to the Award Recipient, immediately prior to the consummation of the Change of Control; (ii) Award Recipient experiences a Separation from Service as a result of Award Recipient’s Permanent Disability (as defined below) or death, any unvested Units shall become vested as of such Separation from Service; or (iii) Award Recipient experiences a Separation from Service as a result of the dissolution or liquidation of Alpha, any unvested Units shall vest.

 

(c)                                  For purposes of this Agreement, if any, the following terms shall have the following meanings:

 

(i)                                     the term “Change of Control” shall mean (A) any merger, consolidation or business combination in which the stockholders of Alpha immediately prior to the merger, consolidation or business combination do not own at least a majority of the outstanding equity interests of the surviving parent entity, (B) the sale of all or substantially all of the Company’s assets in a single transaction or a series of related transactions, (C) the acquisition of beneficial ownership or control of (including, without limitation, power to vote) a majority of the outstanding Common Shares by any person or entity (including a “group” as defined by or under Section 13(d)(3) of the Exchange Act), or (D) a contested election of directors, as a result of which or in connection with which the persons who were directors of Alpha before such election or their nominees cease to constitute a majority of the Board. Notwithstanding the foregoing or any provision of this Agreement or the Plan to the contrary, it is intended that the foregoing definition of Change of Control qualify as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, within the meaning of Treas. Reg. Section 1.409A-3(i)(5), and shall be interpreted and construed to effectuate such intent;

 

(ii)                                  the term “Permanent Disability” shall mean the Award Recipient is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; and

 

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(iii)                               the term “Separation from Service” shall mean the Award Recipient’s complete cessation of services for the Company (including all persons treated as a single employer under Sections 414(b) and 414(c)); provided the cessation of services constitutes a good-faith and complete termination of the service relationship and the expiration of all contractual relationships to provide services. For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Sections 414(b) and 414(c); provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place that it appears in Section 1563(a)(1), (2) and (3) and Treas. Reg. Section 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. Section 1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether an Award Recipient has experienced a Separation from Service will be determined based on all of the facts and circumstances in accordance with the guidance issued under Section 409A and, to the extent not inconsistent therewith, the terms of the Plan.

 

Section 3.  Dividend Equivalent Rights.

 

Should a regular cash dividend be declared on Alpha’s Common Stock at a time when unissued Shares of such Common Stock are subject to your Award, then the number of Shares at that time subject to your Award will automatically be increased by an amount determined in accordance with the following formula, rounded down to the nearest whole share:

 

	
 
    	
 
    	
X = (A x B)/C, where
    
	
 
    	
 
    	
 
    
	
X
    	
=
    	
the additional number of Shares which will   become subject to your Award by reason of the cash dividend;
    
	
 
    	
 
    	
 
    
	
A
    	
=
    	
the number of unissued Shares subject to   this Award as of the record date for such dividend;
    
	
 
    	
 
    	
 
    
	
B
    	
=
    	
the per Share amount of the cash dividend;   and
    
	
 
    	
 
    	
 
    
	
C
    	
=
    	
the closing selling price per Share of the   Company’s Common Stock on the New York Stock Exchange on the payment date of   such dividend.
    

 

The additional Shares resulting from such calculation will be subject to the same terms and conditions (including, without limitation, any applicable vesting requirements and forfeiture provisions) as the unissued Shares of Common Stock to which they relate under the Award.

 

Section 4.  Investment Representation. Award Recipient hereby acknowledges that the Units and Shares relating to the Units shall not be sold, transferred, assigned, pledged or hypothecated in the absence of an effective registration statement for such securities under the Securities Act of 1933, as amended (the “Securities Act”), and applicable state securities laws or an applicable exemption from the registration requirements of the Securities Act and any

 

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applicable state securities laws or as otherwise provided herein or in the Plan. Award Recipient also agrees that the Units and Shares which Award Recipient acquires pursuant to this Agreement will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable securities laws, whether federal or state.

 

Section 5.  Stockholder Rights. You will not have any stockholder rights, including voting rights and actual dividend rights, with respect to the shares subject to your Award until you become the record holder of those shares following their actual issuance to you and your satisfaction of the applicable withholding taxes.

 

Section 6.  Taxes. Award Recipient should generally recognize ordinary income for federal income tax purposes on the date the Shares which vest under the Award are actually issued to the Award Recipient, and Award Recipient will be solely responsible for any such income tax obligations and any other tax obligations that may arise with respect to such Shares (or Units).

 

Section 7.  No Right to Perform Continued Services. Neither the Plan nor this Agreement shall be deemed to give Award Recipient any right to continue to perform services for the Company, nor shall the Plan or the Agreement be deemed to limit in any way the Company’s right to terminate the performance of services by the Award Recipient at any time.

 

Section 8.  Further Assistance. Award Recipient will provide assistance reasonably requested by the Company in connection with actions taken by Award Recipient while providing services to the Company, including but not limited to assistance in connection with any lawsuits or other claims against the Company arising from events during the period in which Award Recipient was providing services to the Company.

 

Section 9.  Confidentiality. Award Recipient acknowledges that the business of the Company is highly competitive and that the Company’s strategies, methods, books, records, and documents, technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning former, present or prospective customers and business affiliates, all comprise confidential business information and trade secrets which are valuable, special, and unique assets which the Company uses in its business to obtain a competitive advantage over competitors. Award Recipient further acknowledges that protection of such confidential business information and trade secrets against unauthorized disclosure and use is of critical importance to the Company in maintaining its competitive position. Award Recipient acknowledges that by reason of Award Recipient’s duties to and association with the Company, Award Recipient has had and will have access to and has and will become informed of confidential business information which is a competitive asset of the Company. Award Recipient hereby agrees that Award Recipient will not, at any time, make any unauthorized disclosure of any confidential business information or trade secrets of the Company, or make any use thereof, except in the carrying out of employment responsibilities. Award Recipient shall take all necessary and appropriate steps to safeguard confidential business information and protect it against disclosure, misappropriation, misuse, loss and theft. Confidential business information shall not include information in the public domain (but only if the same becomes part of the

 

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public domain through a means other than a disclosure prohibited hereunder). The above notwithstanding, a disclosure shall not be unauthorized if (i) it is required by law or by a court of competent jurisdiction or (ii) it is in connection with any judicial, arbitration, dispute resolution or other legal proceeding in which Award Recipient’s legal rights and obligations as an employee or under this Agreement are at issue; provided, however, that Award Recipient shall, to the extent practicable and lawful in any such events, give prior notice to the Company of Award Recipient’s intent to disclose any such confidential business information in such context so as to allow the Company an opportunity (which Award Recipient will not oppose) to obtain such protective orders or similar relief with respect thereto as may be deemed appropriate. Any information not specifically related to the Company would not be considered confidential to the Company. In addition to any other remedy available at law or in equity, in the event of any breach by Award Recipient of the provisions of this Section 9 which is not waived in writing by the Company, all vesting of the Shares shall cease effective upon the occurrence of the actions or inactions by Award Recipient constituting a breach by Award Recipient of the provisions of this Section 9.

 

Section 10.  Binding Effect; No Third Party Beneficiaries. This Agreement shall be binding upon and inure to the benefit of the Company and Award Recipient and their respective heirs, representatives, successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any person other than the Company and the Award Recipient and their respective heirs, representatives, successors and permitted assigns. The parties agree that this Agreement shall survive the issuance of the Shares.

 

Section 11.  Agreement to Abide by Plan; Conflict between Plan and Agreement. The Plan is hereby incorporated by reference into this Agreement and the Plan is made a part hereof as though fully set forth in this Agreement. Award Recipient, by execution of this Agreement, (i) represents that he or she is familiar with the terms and provisions of the Plan, and (ii) agrees to abide by all of the terms and conditions of this Agreement, and the Plan. Award Recipient accepts as binding, conclusive and final all decisions or interpretations of the Committee (or its designee) of the Plan upon any question arising under the Plan, and this Agreement (including, without limitation, the date of Award Recipient’s Separation from Service). In the event of any conflict between the Plan and this Agreement, the Plan shall control and this Agreement shall be deemed to be modified accordingly, except to the extent that the Plan gives the Committee express authority to vary the terms of the Plan by means of this Agreement, in which case, this Agreement shall govern.

 

Section 12.  Entire Agreement. Except as otherwise provided herein, the Plan and this Agreement constitute the entire agreement between the parties and supersede any prior understandings, agreements, or representations by or between the parties, written or oral, to the extent they relate in any way to the subject matter of this Agreement.

 

Section 13.  Choice of Law. To the extent not superseded by federal law, the laws of the state of Delaware (without regard to the conflicts laws of Delaware) shall control in all matters relating to this Agreement and any action relating to this Agreement must be brought in State and Federal Courts located in the Commonwealth of Virginia.

 

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Section 14.  Notice. All notices, requests, demands, claims, and other communications under this Agreement shall be in writing. Any notice, request, demand, claim, or other communication under this Agreement shall be deemed duly given if it is sent by registered or certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient at the address set forth in Section 18 herein or Exhibit A. Either party to this Agreement may send any notice, request, demand, claim, or other communication under this Agreement to the intended recipient at such address using any other means (including personal delivery, expedited courier, messenger service, telecopy, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Either party to this Agreement may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other party notice in the manner set forth in this Section.

 

Section 15.  Amendments. This Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto, or as otherwise provided under the Plan. Notwithstanding, Alpha may, in its sole discretion and without the Award Recipient’s consent, modify or amend the terms of this Agreement, impose conditions on the timing and effectiveness of the issuance of the Shares, or take any other action it deems necessary or advisable, to comply with Section 409A (or, if applicable, to cause this Award to be excepted from Section 409A).

 

Section 16.  Section 409A. This Award is intended to comply with Section 409A (or an exception thereto) and the regulations promulgated thereunder and shall be construed accordingly. Notwithstanding, Award Recipient recognizes and acknowledges that Section 409A may impose upon Award Recipient certain taxes or interest charges for which Award Recipient is and shall remain solely responsible.

 

Section 17.  Legends. The Company may at any time place legends referencing the provisions of this Agreement, and any applicable federal or state securities law restrictions on all certificates, if any, representing the Shares relating to this Award.

 

Section 18.  Acknowledgments.

 

(a)                                  By accepting the Units, the Award Recipient acknowledges receipt of a copy of the Plan and the prospectus relating to the Units, and agrees to be bound by the terms and conditions set forth in the Plan and this Agreement, as in effect and/or amended from time to time.

 

(b)                                 The Plan and related documents, which may include but do not necessarily include the Plan prospectus, this Agreement and financial reports of the Company, may be delivered to you electronically. Such means of delivery may include but do not necessarily include the delivery of a link to a Company intranet site or the internet site of a third party involved in administering the Plan, the delivery of the documents via e-mail or CD-ROM or such other delivery determined at the Committee’s or its designee’s discretion. Both Internet Email and the World Wide Web are required in order to access documents electronically.

 

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(c)                                  Award Recipient acknowledges that, by receipt of this Award, Award Recipient has read this Section 18 and consents to the electronic delivery of the Plan and related documents, as described in this Section 18. Award Recipient acknowledges that Award Recipient may receive from the Company a paper copy of any documents delivered electronically at no cost if Award Recipient contacts the Director-Compensation Systems of the Company by telephone at (276) 619-4410 or by mail to One Alpha Place, P.O. Box 16429, Bristol, VA 24209. Award Recipient further acknowledges that Award Recipient will be provided with a paper copy of any documents delivered electronically if electronic delivery fails.

 

[Remainder of this Page Intentionally Left Blank]

 

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EXHIBIT A

 

	
Name   of Award Recipient:
    	
 
    
	
 
    	
 
    
	
Address   of Award Recipient:
    	
 
    
	
 
    	
 
    
	
Issue   Date:
    	
 
    
	
 
    	
 
    
	
Number   of Shares Subject to Award: 
    	
                 shares of Alpha’s common stock
    
	
 
    	
 
    
	
Vesting   Period/Schedule:
    	
Except as otherwise provided in the   Agreement, this Award shall vest upon the six-month anniversary of the Award   Recipient’s Separation from Service with the Company.
    
	
 
    	
 
    
	
Issuance   Schedule of Shares:
    	
Except as otherwise provided in the   Agreement, the Shares subject to the Award will be issued on the six-month   anniversary date of the Award Recipient’s Separation from Service (or as soon   as reasonably practicable but in no event later than the 15th day of the   third month following such date).
    

 

8Exhibit 10.5

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS DOCUMENT.  THE CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY AN ASTERIK IN BRACKETS [*].  THE CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

AMENDMENT NO. 2 TO
 MATRIX COMMERCIALIZATION COLLABORATION
 AGREEMENT

 

THIS AMENDMENT NO. 2 TO MATRIX COMMERCIALIZATION COLLABORATION AGREEMENT (this “Amendment No. 2”) is dated as of January 9, 2012 (the “Amendment No. 2 Effective Date”) by and between Musculoskeletal Transplant Foundation, Inc., a non-profit corporation formed under the laws of the District of Columbia, and having a principal place of business at 125 May Street, Suite 300, Edison, New Jersey 08837 (“MTF”), and Orthofix Holdings, Inc., a corporation organized under the laws of the State of Delaware, and having a principal place of business at 3451 Plano Parkway, Lewisville, Texas 75056 (“Orthofix”) (each individually a “Party” and collectively the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, the Parties have entered into that certain Matrix Commercialization Collaboration Agreement dated as of July 28, 2008, as amended by that certain Amendment No. 1 to Matrix Commercialization Collaboration Agreement dated as of December 15, 2010 (collectively the “Original Agreement”), pursuant to which the Parties have collaborated on the commercialization of the Matrix I (as defined in this Amendment No. 2; capitalized terms utilized in this Amendment No. 2 and not otherwise defined in this Amendment No. 2 shall have the respective meaning assigned and ascribed to such terms under the Original Agreement);

 

WHEREAS, the Parties desire further to collaborate with respect to the development and commercialization of an additional allogenic cancellous bone matrix containing viable mesenchymal stem cells and/or osteoprogenitor cells (hereinafter identified as the Matrix II) and conforming to the Matrix II Specifications (as defined herein);

 

WHEREAS, neither Party currently makes the Matrix II commercially available and the Parties believe that they can develop and commercialize the Matrix II more effectively and efficiently together than on their own;

 

[*]  Certain confidential information contained in this document, marked with an asterisk in brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

 

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WHEREAS, to effectuate that collaboration, the Parties wish, subject to the terms and conditions of the Original Agreement, as amended hereby, to (a) give responsibility to (i) MTF to develop and improve the Matrix II and (ii) Orthofix to develop application tools and instruments in connection with the Matrix II and to provide specified funding to MTF for MTF’s development and improvement of the Matrix II, and (b) share responsibility for contributing scientific or medical personnel, technical expertise and other resources to the development and improvement of the Matrix II, communicating findings and discoveries to one another with respect to the Matrix II and exchanging information related to such collaboration and (c) give exclusive responsibility, following the Matrix II Commercialization Date (as defined herein), to (i) MTF to Process quantities of the Matrix II using human tissue procured by MTF and fulfill orders for the Matrix II (x) submitted to MTF by any Third Party that places one or more orders for the Matrix II directly with MTF or (y) solicited by Orthofix and (ii) Orthofix to market the Matrix II; and

 

WHEREAS, the parties acknowledge that, although the Development Agreement has expired by its terms, the references to the Development Agreement herein and in the Original Agreement are nevertheless intentional;

 

NOW, THEREFORE, in consideration of the foregoing premises and mutual covenants contained herein, the Parties agree as follows:

 

ARTICLE I

 

amendments

 

1.1          Recitals.  The Original Agreement is hereby amended by: (x) deleting each reference to “Matrix” contained in the recitals therein and inserting in lieu thereof “Matrix I”; (y) deleting each reference to “Specifications” contained in the recitals therein and inserting in lieu thereof “Matrix I Specifications”; and (z) deleting each reference to “herein” contained in the fourth recital to the Original Agreement and inserting in lieu thereof “therein”.

 

1.2          Initial Matrix II Forecast.  Section 2.2 of the Original Agreement is hereby amended by inserting the following at the end thereof:

 

“Orthofix shall have submitted to MTF, not later than the Amendment No. 2 Effective Date, a Forecast setting forth the orders that Orthofix reasonably believes will be solicited by Orthofix during (a) the calendar quarter in which the last of the Matrix II Development Milestones is achieved, which will be presented in two (2) individual, consecutive forty-five (45) day periods and (b) the three calendar quarters immediately succeeding (the “Initial Matrix II Forecast”).  The Initial Matrix II Forecast will be deemed incorporated into each Forecast as aforesaid pertaining to the same calendar quarters.”

 

 

1.3          Minimum Service Fee.  Section 4.1(a) of the Original Agreement is hereby amended by deleting the phrase “$[*] per cc of the Matrix (the “Minimum Service Fee”)” contained in the second sentence thereof and inserting in lieu thereof the phrase “the Minimum Service Fee”.

 

1.4          Monthly Statements.  Section 4.1(b) of the Original Agreement is hereby amended by deleting the phrase “fifteen (15) days” contained therein and inserting in lieu thereof the phrase “forty-five (45) days”.

 

1.5          Marketing Fee.  Section 5.2 of the Original Agreement is hereby amended by deleting the first sentence thereof in its entirety and inserting the following in lieu thereof:

 

“As compensation for services performed hereunder, Orthofix will be entitled to receive a monthly fee (a “Marketing Fee”) equal to [*] of the total amount of Services Fees received by MTF during the second previous calendar month pursuant to Authorized Orders, subject in each case to MTF’s right to receive the Minimum Service Fee; [*]

 

1.6          Matrix II Collaboration.  The Original Agreement is hereby amended by inserting the following new Article VI-A immediately following Article VI thereof:

 

“ARTICLE vi-A

 

matrix II DEVELOPMENT COLLABORATION

 

6A.1       General.  MTF and Orthofix will engage in the Matrix II Development Collaboration upon the terms and conditions set forth in this Agreement.  In furtherance of the foregoing, this Agreement will from time to time be deemed amended as hereinafter set forth to attach, respectively, the Matrix II Specifications, the Matrix II Release Criteria and the Matrix II Development Plan if and to the extent determined pursuant to the provisions hereof and subject to revision if and to the extent applicable.

 

6A.2       MTF Obligations.  Subject to the terms and conditions of this Agreement, MTF will, during the Matrix II Development Term, use Reasonable Commercial Efforts to develop the Matrix II in a good scientific manner in accordance with applicable Law and the Matrix II Development Plan so as to meet the Matrix II Development Milestones, including, without limitation, so that the Matrix II meets the Matrix II Specifications and conforms to and complies with applicable Law.  In addition, MTF will, during the Matrix II Development Term, provide consulting, medical and/or other expertise within the capability of MTF, as reasonably necessary and appropriate, in support of Orthofix’s obligations under this ARTICLE VI-A.

 

 

6A.3       Orthofix Obligations.  During the Matrix II Development Term, Orthofix will timely disclose to MTF and provide information in Orthofix’s possession or within its control, as reasonably necessary or appropriate, for MTF to perform MTF’s obligations under this ARTICLE VI-A and will also provide consulting, medical and/or other expertise within the capability of Orthofix, as reasonably necessary and appropriate, in support of MTF’s performance of such obligations.  Orthofix will use Reasonable Commercial Efforts to develop application tools and instruments in connection with the Matrix II, including such application tools and instruments as may be proposed by MTF and reasonably acceptable to Orthofix, and MTF will, during the Matrix II Development Term, provide consulting, medical and/or other expertise, in each case within the capability of MTF, as reasonably necessary or appropriate, in support of such activities.  Orthofix will be entitled to have a representative present from time to time during normal business hours upon reasonable prior notice during the performance at any Facility of MTF of MTF’s development activities under this ARTICLE VI-A to monitor the performance of such activities, subject in all respects to all safety and security procedures reasonably adopted by MTF and communicated to Orthofix.

 

6A.4       Change Management Procedure.  Either Party may request a change to the Matrix II Development Plan, the Matrix II Specifications (including line extensions) or the Matrix II Release Criteria at any time by giving a written request to the other Party.  Any change requested by MTF will describe the requested change and explain the anticipated impact of such change on MTF’s performance of its obligation to develop the Matrix II in accordance with this Agreement, including the Matrix II Development Milestones; and in response to any change requested by MTF, Orthofix will advise MTF, as promptly as practicable, of the anticipated impact of such change on Orthofix’s performance of its obligations hereunder.  Any change requested by Orthofix will describe the requested change and explain the anticipated impact of such change on Orthofix’s performance of its obligations in accordance with this Agreement; and in response to any change requested by Orthofix, MTF will advise Orthofix, as promptly as practicable, of the anticipated impact of such change on MTF’s performance of its obligation to develop the Matrix II in accordance with this Agreement, including the Matrix II Development Milestones.  No change to the Matrix II Specifications, the Matrix II Development Plan or the Matrix II Release Criteria will become effective unless and until approved by the Steering Committee.

 

6A.5       Research Funding.  Subject to Orthofix’s obligations hereunder to make payments in respect of MTF’s achievement of the Matrix II Development Milestones, each Party will pay its own costs and expenses associated with the

 

 

technical expertise, scientific personnel, facilities, equipment, materials and other resources it provides in performing its obligations under this ARTICLE VI-A.

 

6A.6       Project Managers; Progress Reports; Steering Committee.  Each Party will appoint and maintain during the Matrix II Development Term a project manager who will be primarily responsible to the other Party for all communications relating to the performance of the appointing Party’s obligations under this ARTICLE VI-A (“Matrix II Project Manager”).  At each meeting of the Steering Committee during the Matrix II Development Term, each Party will provide the other Party a report on the performance of its obligations under this ARTICLE VI-A so as to enable the Steering Committee to evaluate the progress of the Matrix II Collaboration and the work performed in relation to the Matrix II Development Plan.  Each Party will provide to the Steering Committee such other information as may be reasonably requested by the Steering Committee relating to the progress of the Matrix II Collaboration in accordance with the Matrix II Development Plan.  In addition to its authority set forth under Section 3.3 hereof, the Steering Committee is authorized to take the following action: (i) review and evaluate data and progress of the activities under the Matrix II Development Plan; (ii) subject to the terms and provisions of this Agreement, resolve any issues and questions that may arise with respect to the Matrix II Development Plan or the Matrix II Collaboration; (iii) ensure open communication between the Parties as related to the Matrix II Collaboration and as provided under this Agreement; (iv) determine the initial Matrix II Specifications (based on MTF’s proposal with respect thereto) and approve any changes thereto (including any line extensions), and determine the initial Matrix II Development Plan and the initial Matrix II Release Criteria, and approve any changes thereto, in accordance with the change management procedures set forth in Section 6A.4 of this Agreement; and (v) manage and supervise the activities of the Parties under the Matrix II Development Plan and the Matrix II Collaboration.

 

6A.7       Milestone Payments.  Orthofix will make the following one-time, non-refundable payments to MTF upon the completion of the applicable milestones described below (each a “Matrix II Development Milestone” and, collectively the “Matrix II Development Milestones”) as confirmed by Orthofix pursuant to the procedures set forth in Section 6A.8.  The payment amount for each Matrix II Development Milestone is paid only once.

 

Development Milestones

 

	
No.
    	
 
    	
Description
    	
 
    	
Payment 
   Amount
    	
 
    
	
1
    	
 
    	
Execution   of Amendment No. 2 by MTF and Orthofix
    	
 
    	
$
    	
1,000,000
    	
 
    
							

 

 

Development Milestones

 

	
No.
    	
 
    	
Description
    	
 
    	
Payment 
   Amount
    	
 
    
	
2
    	
 
    	
Delivery of the Matrix II Opinion and determination of the initial   Matrix II Specifications by the Steering Committee or otherwise pursuant to ARTICLE XIX.
    	
 
    	
$
    	
1,000,000
    	
 
    
	
3
    	
 
    	
Delivery of the Pre-Clinical Data Package that reasonably indicates   that the Matrix II meets the Matrix II Specifications.
    	
 
    	
$
    	
1,000,000
    	
 
    
	
4
    	
 
    	
Creation   by MTF of an inventory of a commercially-saleable quantity of the Matrix II   that is sufficient to satisfy fifty percent (50%) of Orthofix’s requirements   for the Matrix II as set forth in the initial forty-five (45) day forecast   reflected in the Initial Matrix II Forecast, as may be amended pursuant to   the terms of this Agreement; and MTF’s demonstration that its work in process   supports the ongoing release by MTF, on a daily basis, of sufficient   commercially-saleable quantities of the Matrix II to satisfy Orthofix’s daily   requirements of the remaining fifty percent (50%) of Orthofix’s requirements   for the Matrix II as set forth in the initial forty-five (45) day forecast   reflected in the Initial Matrix II Forecast, as may be amended pursuant to   the terms of this Agreement; and MTF’s completion of expanded Processing   capability substantially in accordance with the proposed demolition plan and   any one of the three proposed floor configurations set forth in Schedule 6A.7   that enables yields of no less than [*] of commercially-salable quantities of   the Matrix I and the Matrix II in a ratio to be proposed by Orthofix for   approval by the Steering Committee or otherwise pursuant to ARTICLE XIX.
    	
 
    	
$
    	
2,000,000
    	
 
    

 

6A.8       Matrix II Milestone Determination Procedures.

 

(a)           Payment Obligations.  MTF will, in each case, provide to Orthofix written notice (the “Notice of Achievement”) in the event it has achieved a Matrix II Development Milestone (other than the first Matrix II Development Milestone, which shall be deemed achieved upon execution and delivery of Amendment No. 2 by both Parties; and it being acknowledged and agreed that the Notice of Achievement with respect to each of the second Matrix II Development Milestone and the third Matrix II Development Milestone may be provided without reference to the achievement or non-achievement of any other Matrix II Development Milestone).  As soon as reasonably practicable following the date of the Notice of Achievement of each Matrix II Development Milestone and in any

 

 

event within ten (10) business days after the date of the Notice of Achievement of any such Matrix II Development Milestone, Orthofix will pay to MTF the applicable payment amount for such Matrix II Development Milestone set forth in Section 6A.7; provided, however, that each such payment shall be subject to Orthofix’s confirmation, as hereinafter set forth, that the Matrix II Development Milestone covered by such Notice of Achievement has been achieved and in no event will Orthofix be liable for, and MTF will not be entitled to, the applicable payment amount for any Matrix II Development Milestone that is not achieved.

 

(b)           Standards for Confirmation.  Orthofix shall have the right to withhold payment due in respect of a Notice of Achievement covering the second Matrix II Development Milestone solely in the event that (i) MTF has not provided a Notice of Achievement with respect thereto or (ii) the initial Matrix II Specifications have not been determined by the Steering Committee or otherwise pursuant to ARTICLE XIX.  Orthofix shall have the right to withhold payment due in respect of a Notice of Achievement covering the third Matrix II Development Milestone solely in the event that the data contained in the Pre-Clinical Data Package fails reasonably to indicate that the Matrix II meets the Matrix II Specifications.  Orthofix shall have the right to withhold payment due in respect of a Notice of Achievement covering the fourth Matrix II Development Milestone solely in the event that MTF has not completed its expanded Processing capability substantially in accordance with the proposed demolition plan and one of the three proposed floor configurations set forth in Schedule 6A.7 and/or the results of a physical inventory of the Matrix II and inspection of MTF’s books and records related to the production of the Matrix II fail reasonably to demonstrate the existence of the required amount of inventory and the capacity to support ongoing release of the Matrix II and inspection of MTF’s books and records related to the production of Matrix I and Matrix II fails reasonably to demonstrate the existence of the required capacity to support yields of Matrix I and Matrix II prescribed under Section 6A.7 hereof.

 

(c)           Dispute Resolution.  If Orthofix disagrees with MTF’s claim regarding the achievement of a Matrix II Development Milestone as set forth in a Notice of Achievement, then Orthofix will refer the dispute to the Steering Committee as promptly as practicable and, in any event, prior to the date on which payment relating thereto is due, and will provide the Steering Committee with an explanation of the basis for Orthofix’s determination that the applicable Matrix II Development Milestone was not achieved on the date claimed by MTF.  The Steering Committee will meet as promptly as practicable to resolve the dispute.  If the Steering Committee has not resolved the dispute within ten (10) business days after referral of the dispute by Orthofix, the dispute will be resolved in accordance with ARTICLE XIX.  In the event of any determination by the

 

 

Steering Committee or pursuant to ARTICLE XIX that a Matrix II Development Milestone has not been achieved as set forth in a Notice of Achievement, MTF shall thereafter deliver to Orthofix a new Notice of Achievement in the event it has achieved such Development Milestone.”

 

1.7          Enforcement of Developed Technology.  Clause (D) of Section 7.5(d)(i) of the Original Agreement is hereby deleted in its entirety and the following is inserted in lieu thereof:

 

“(D) then, a percent of any remaining amount equal to the same percent at which the Marketing Fee is then calculated and the remaining amount to MTF.”

 

1.8          Representations and Warranties of MTF.  The first paragraph of Article VIII of the Original Agreement is hereby deleted in its entirety, and the following is inserted in lieu thereof:

 

“Except for the representations and warranties in Section 8.7(a), Section 8.7(b), Section 8.7(c) and Section 8.8, each of which will be given for the entire Term, MTF hereby represents and warrants to Orthofix as of the Effective Date, and again as of the Amendment No. 2 Effective Date, as follows:”

 

1.9          Representations and Warranties of Orthofix.  The first paragraph of Article IX of the Original Agreement is hereby deleted in its entirety, and the following is inserted in lieu thereof:

 

“Orthofix hereby represents and warrants to MTF as of the Effective Date, and again as of the Amendment No. 2 Effective Date, as follows:”

 

1.10        Specifications.  Section 10.1 of the Original Agreement is hereby amended by deleting the second sentence thereof in its entirety and inserting the following in lieu thereof:

 

“Set forth in Exhibits C and D attached hereto and incorporated herein by reference are, respectively, the Matrix I Specifications and the Matrix I Release Criteria, and the Matrix II Specifications and the Matrix II Release Criteria shall be added to Exhibits C and D, respectively, upon approval by the Steering Committee, and each of the foregoing may be subsequently amended in accordance with Section 6A.4 (in the case of the Matrix II Specifications, if prior to the Matrix II Commercialization Date) or in accordance with Section 10.4 (in all other cases)”

 

1.11        Term.  Section 13.1 of the Original Agreement is hereby amended by deleting the first sentence thereof in its entirety and inserting the following in lieu thereof:

 

 

“Unless sooner terminated pursuant to the terms herein, this Agreement will commence on the Effective Date and will continue until the later of (x) the expiration or earlier termination of the NuVasive License or (y) the fifteenth (15th) anniversary of the Effective Date (the “Initial Term”).

 

1.12        Infringement Claims.  (i) Section 14.1 of the Original Agreement is hereby amended by re-designating Sub-paragraphs (i) and (ii) thereunder as, respectively, Sub-paragraphs (ii) and (iii) and inserting the following immediately prior to re-designated Sub-paragraph (ii):

 

“(i)          the provisions of clause (d) immediately preceding shall not extend to, and Orthofix shall have no obligations to MTF under clause (d) immediately preceding with respect to, any Matrix II Infringement Claim; and”

 

(ii)           Section 14.2 of the Original Agreement is hereby amended by deleting “and” immediately before clause (c) and inserting the following at the end thereof immediately prior to the period:

 

“and (d) subject to delivery of the Matrix II Opinion, any Matrix II Infringement Claim; provided, however, that (i) in the event of a Matrix II Infringement Claim or a reasonable determination by MTF that a Matrix II Infringement Claim is likely to be initiated, MTF will have the right to direct Orthofix, by written notice, to cease marketing the Matrix II during the period beginning upon Orthofix’s receipt of such notice and continuing until Orthofix’s receipt of written notice from MTF that the Matrix II Infringement Claim has been satisfactorily resolved in MTF’s reasonable determination or is no longer expected to be initiated (the “Matrix II Cessation Period”), and MTF will have no obligation to indemnify or hold harmless Orthofix or any other Person otherwise indemnified hereunder from or against any Damages attributable to any development or marketing of the Matrix II during the Matrix II Cessation Period”

 

1.13        Notices.  The addresses for notices to Orthofix are hereby deleted from Section 20.8 of the Original Agreement in their entirety, and the following is inserted in lieu thereof:

 

“If to Orthofix:

 

Orthofix Holdings, Inc. (c/o Orthofix International N.V.)

3451 Plano Parkway

Lewisville, TX 75056

Attention:  Chief Executive Officer and General Counsel

Facsimile No.:  (440) 445-0504

 

 

Hogan Lovells US LLP

7930 Jones Branch Drive

Ninth Floor

McLean, VA 22102

Attention:  Philip D. Porter

Facsimile No.: (703) 610-6200”

 

1.14        Intellectual Property Liens.  Schedule 9.7 is hereby deleted from the Original Agreement in its entirety, and Schedule 9.7 attached hereto is inserted in lieu thereof.

 

1.15        Definitions.  (a)  Addendum 1 of the Original Agreement is hereby amended by inserting the following definitions in appropriate alphabetical sequence, respectively:

 

“Amendment No. 2” means that certain Amendment No. 2 to Matrix Commercialization Collaboration Agreement dated January 9, 2012 entered into by the Parties.

 

“Amendment No. 2 Effective Date” has the meaning set forth in Amendment  No. 2.

 

“First Phase Developed Technology” means all Technology, Inventions and Know-How arising between the Effective Date and the beginning of the Matrix II Development Term under or in connection with the activities of the Parties pursuant to the Development Agreement, and all Improvements prior to the beginning of the Matrix II Development Term with respect thereto, including, without limitation, all Patents relating to the foregoing.

 

“Initial Matrix II Forecast” has the meaning set forth in Section 2.2.

 

“Matrix I Release Criteria” means the procedures established pursuant to the Development Agreement for verifications that each Lot of the Matrix I complies with the Matrix I Specifications, as subsequently amended in accordance with the terms of the Development Agreement and the terms hereof.

 

“Matrix II” means the allogeneic cancellous bone matrix containing mesenchymal stem cells and/or osteoprogenitor cells and conforming to the Matrix II Specifications.

 

“Matrix II Cessation Period” has the meaning set forth in Section 14.2.

 

“Matrix II Commercialization Date” means the date of completion of the last Matrix II Development Milestone pursuant to the Matrix II Development Plan.

 

“Matrix II Development Collaboration” means the development of the Matrix II undertaken by the Parties pursuant to the terms and conditions of ARTICLE VI-A of this Agreement.

 

 

“Matrix II Development Milestones” has the meaning set forth in Section 6A.7.

 

“Matrix II Development Plan” means the plan for development of the Matrix II initially determined by the Steering Committee, as subsequently amended from time to time in accordance with the procedures set forth in this Agreement.

 

“Matrix II Development Term” means the period commencing on January 1, 2011 and continuing until the completion of the last Matrix II Development Milestone.

 

“Matrix II Infringement Claim” means any Third Party claim that the exploitation of the Matrix II Subject Intellectual Property in the development, Processing, supply or distribution under this Agreement and for purposes of the Collaboration of the Matrix II in accordance with the Matrix II Specifications violates the intellectual property rights of a Third Party and/or infringes the valid claim of an existing Patent of a Third Party; it being understood that a Third Party Claim regarding the development, Processing, supply or distribution of the Matrix II independent of the Collaboration shall not be within the definition of Matrix II Infringement Claim.

 

“Matrix II Opinion” means an opinion, in form and substance satisfactory to MTF, of patent counsel selected by MTF, that the exploitation of the Matrix II Subject Intellectual Property in the development, Processing, supply and/or distribution under this Agreement and for purposes of the Collaboration of the Matrix II in accordance with the Matrix II Specifications does not violate the intellectual property rights of a Third Party and/or infringe the valid claim of an existing Patent of a Third Party.

 

“Matrix II Project Manager” has the meaning set forth in Section 6A.6.

 

“Matrix II Release Criteria” means the procedures and release criteria for verification that each Lot of the Matrix II complies with the Matrix II Specifications to be determined initially by the Steering Committee and set forth in Exhibit D attached hereto, as subsequently amended from time to time in accordance with the procedures set forth in this Agreement.

 

“Matrix II Specifications” means the specifications for the Matrix II to be initially determined by the Steering Committee (based on MTF’s proposal with respect thereto) and set forth in Exhibit C attached hereto,, as subsequently amended from time to time in accordance with the procedures set forth in this Agreement.

 

“Matrix II Subject Intellectual Property” means any intellectual property exploited, in any manner, directly or indirectly, in whole or in part, in connection with the  Matrix II and not also exploited in any manner, directly or indirectly, in whole or in part, in connection with the Matrix I.

 

“Notice of Achievement” has the meaning set forth in Section 6A.8(a).

 

 

“Pre-Clinical Data Package” means the following data, to be obtained in accordance with criteria determined by the Steering Committee consistent with this Agreement, of completed Matrix II after thawing as it would be used in clinical practice:

 

[*]

 

“Second Phase Developed Technology” means (a) all Technology, Inventions and Know-How arising during the Matrix II Development Term under or in connection with the activities of the Parties pursuant to the Matrix II Development Plan under ARTICLE VI-A hereof, and all Improvements after the beginning of the Matrix II Development Term and during the remainder of the Term with respect thereto, including, without limitation, all Patents relating to the foregoing, and (b) and all Improvements to the First Phase Developed Technology made after the beginning of the Matrix II Development Term and during the remainder of the Term, including, without limitation, all Patents relating to the foregoing.

 

(a)           Addendum 1 of the Original Agreement is further amended by deleting the definitions of “Collaboration”, “Developed Technology”, “Existing MTF Technology”, “Existing Orthofix Technology”, “Matrix” and “Minimum Service Fee” and inserting the following in lieu thereof, respectively:

 

“Collaboration” means the Processing and Commercialization of the Matrix pursuant to the terms and conditions of this Agreement, and except for purposes of Section 2.7, the Matrix II Development Collaboration.

 

“Developed Technology” means the First Phase Developed Technology and the Second Phase Developed Technology.

 

“Existing MTF Technology” means (a) for all purposes of this Agreement other than Section 7.1(a)(ii), such Technology, Inventions and Know-How Controlled by MTF (x) in existence as of the date of this Agreement (including, without limitation, all Patents), in each case solely insofar as necessary or useful for making, using, selling, offering to sell and importing the Matrix and (y) in existence as of the beginning of the Matrix II Development Term (including, without limitation, all Patents, but excluding First Phase Developed Technology), in each case solely insofar as necessary or useful for making, using, selling, offering to sell and importing the Matrix, and (b) solely for purposes of Section 7.1(a)(ii), such Technology, Inventions and Know-How Controlled by MTF (x) in existence as of the Effective Date (including, without limitation, all Patents), in each case solely insofar as necessary for making, using, selling, offering to sell and importing the Matrix and (y) in existence as of the beginning of the Matrix II Development Term (including, without limitation, all Patents, but excluding First Phase Developed Technology), in each case solely insofar as necessary for making, using, selling, offering to sell and importing the Matrix.

 

 

“Existing Orthofix Technology” means (a) for all purposes of this Agreement other than Section 7.1(b)(ii), such Technology, Inventions and Know-How Controlled by Orthofix (x) in existence as of the date of this Agreement (including, without limitation, all Patents), in each case solely insofar as necessary or useful for making, using, selling, offering to sell and importing the Matrix and (y) in existence as of the beginning of the Matrix II Development Term (including, without limitation, all Patents, but excluding First Phase Developed Technology), in each case solely insofar as necessary or useful for making, using, selling, offering to sell and importing the Matrix, and (b) solely for purposes of Section 7.1(b)(ii), such Technology, Inventions and Know-How Controlled by Orthofix (x) in existence as of the Effective Date (including, without limitation, all Patents), in each case solely insofar as necessary for making, using, selling, offering to sell and importing the Matrix and (y) in existence as of the beginning of the Matrix II Development Term (including, without limitation, all Patents, but excluding First Phase Developed Technology), in each case solely insofar as necessary for making, using, selling, offering to sell and importing the Matrix.

 

“Matrix” means the Matrix I and the Matrix II, and each of them; provided, however, that, prior to the Matrix II Commercialization Date, each reference to “Matrix” under ARTICLES II (except for Section 2.9), IV, V, X and XII, and under Section 7.3, the proviso under Section 17.1 and under Section 17.3 means the Matrix I.

 

“Minimum Service Fee” means [*].

 

“Release Criteria” means the Matrix I Release Criteria and the Matrix II Release Criteria, as the case may be; provided, however, that, prior to the Matrix II Commercialization Date, each reference to “Release Criteria” under ARTICLE X means the Matrix I Release Criteria.

 

“Specifications” means the Matrix I Specifications and the Matrix II Specifications, as the case may be; provided, however, that, prior to the Matrix II Commercialization Date, each reference to “Specifications” under ARTICLE X means Matrix I Specifications.

 

(b)           Addendum 1 of the Original Agreement is further amended by adding the phrase “development of the Matrix II and the” immediately prior to the phrase “Processing or Commercialization of the Matrix” contained under the definition of “Reasonable Commercial Efforts”.

 

1.16        Exhibits.  Each of Exhibit C and Exhibit D of the Original Agreement is hereby amended by deleting each reference (other than in the heading) to “Matrix” contained therein and inserting in lieu thereof a reference to “Matrix I”.

 

 

ARTICLE II

 

MISCELLANEOUS

 

2.1          The Parties each hereby acknowledge and agree that, by entering into this Amendment No. 2, they have satisfied any obligations under Section 6.2 of the Original Agreement with respect to the Matrix II as a Product Concept thereunder.  In addition, and without limiting any provision of Article IX of the Original Agreement, as amended hereby, Orthofix hereby represents, warrants and confirms to MTF that it has complied with the provisions of the NuVasive License (as defined in the Original Agreement), including, without limitation, Section 3.2 thereof, with respect to this Amendment.

 

2.2          Except as amended hereby, the Original Agreement shall remain in full force and effect.

 

2.3          This Amendment may be executed in counterparts, each of which shall be deemed to be an original, and all of which taken together will constitute one and the same instrument.

 

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the date first written above.

 

	
MUSCULOSKELETAL TRANSPLANT   FOUNDATION, INC.
    	
 
    	
ORTHOFIX HOLDINGS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
/s/   [signature illegible]
    	
 
    	
By
    	
/s/   Bryan McMillan
    
					

 

 

Schedule 6A.7 — Processing Capability Expansion Plans

 

[attached]

 

 

[*]

 

 

Schedule 9.7 — Intellectual Property

 

The Existing Orthofix Technology is subject to certain liens pursuant to the Credit Agreement, dated as of August 30, 2010 and subsequently amended and restated on May 4, 2011, among Orthofix Holdings, Inc., Orthofix International N.V., those Domestic Subsidiaries of the Company identified as a “Guarantor” and such other Domestic Subsidiaries of the Company as may from time to time become a party thereto, the several banks and other financial institutions parties thereto (collectively, the “Lenders”; and individually, a “Lender”), and JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Administrative Agent”), and including the Security Documents, as defined in the Credit Agreement.

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