Document:

exv10w8

 

EXHIBIT 10.8

Agreement

     This Agreement is made this 20th day of February, 2001 (the “Effective
Date”) by and between Sulzer Medica USA Holding Co., a Delaware corporation,
Sulzer Biologics Inc., a Delaware corporation, and Sulzer Orthopedics Ltd., a
corporation organized under the laws of Switzerland (jointly and severally
responsible and referred to herein as “Sulzer”), and ReGen Biologics, Inc., a
Delaware corporation.

  
     WITNESSETH:
  
     Whereas, Sulzer, pursuant to a Credit Agreement dated as of March 14, 2000
between Sulzer Medica USA Holding Co. and ReGen (the “Credit Agreement”), has
loaned ReGen a total of $3,650,000 out of a total available credit line of
$4,000,000;

     Whereas, ReGen has failed to satisfy all conditions precedent to Sulzer’s
obligation to fund an additional loan of $350,000 under the Credit Agreement;

     Whereas, ReGen has requested that Sulzer waive the conditions precedent to
Sulzer’s obligation to fund the loan of $350,000 under the Credit Agreement and
has requested that Sulzer extend ReGen an additional line of credit up to
$600,000; and

     Whereas, Sulzer is willing to fund the loan of $350,000 and to enter into
an agreement to extend an additional line of credit up to $600,000 on the terms
and conditions as set forth in this Agreement;

     Now, therefore, in consideration of the above premises and the terms and
conditions set forth below, the parties hereby agree as follows:

     1. As used in this Agreement, the following terms shall have the meanings
set forth below:

      a. “Bridge Loan” means a loan to ReGen by way of convertible
subordinated unsecured note, (the “Notes”) payable by ReGen on or before
24 months from the date of issue in the form of either cash or, in the
event of a Conversion Event and with the approval of the holder,
securities. The Notes shall bear Interest at the fixed rate of 7%
compounded annually.

      b. “Conversion Event” means (i) an equity offering by ReGen that
results in gross proceeds in an amount that exceeds the outstanding
balance on the Bridge Loan by at least $3 million, or (ii) a merger,
acquisition, or other event that results in a change of ownership of at
least 30% of the outstanding common stock of ReGen.

     2. Within three business days following the Effective Date, Sulzer shall
fund a loan to ReGen pursuant to the Credit Agreement in the amount of $350,000
(the “Loan”) by wire transfer according to ReGen’s written instructions,
provided that: (i) such Loan shall be due and payable by ReGen 24 months from
the date of funding; and (ii) interest shall accrue on the unpaid principal
balance at the rate of seven percent (7%) per annum.

 

 

     3. Sulzer, ReGen, and Geistlich Biomaterials (“Geistlich”) shall meet and
attempt in good faith to conclude an agreement (the “Bridge Loan Agreement”)
prior to March 2, 2001 having the following terms. In the event that Geistlich
is not a party to such Agreement, then ReGen agrees to attempt in good faith to
negotiate a separate agreement with Geistlich, prior to or contemporaneous with
the Bridge Loan Agreement, giving effect to such terms.

      a. Subject to a binding agreement by Geistlich to participate in the
Bridge Loan, Sulzer will agree to participate in the Bridge Loan up to a
total indebtedness, in addition to that extended in the Credit Agreement,
of $600,000.

      b. Other participants, including Geistlich, shall commit to fund a
total of at least $2.2 million of the Bridge Loan, in addition to
Sultzer’s commitment.

      c. The Bridge Loan shall be fully funded by all parties to the
Bridge Loan Agreement at its commencement through a deposit of the full
amount of such loan into an escrow account at a mutually acceptable
institution. Geistlich shall fully fund its share of the Bridge Loan
upon satisfaction of all contingencies therefor. ReGen will agree that
it shall draw on the Bridge Loan out of such escrow account no more
frequently than monthly in an amount not to exceed $400,000 per draw.
ReGen shall give Sulzer written notice of its intent to draw on the
Bridge Loan escrow account in a specified amount at least five business
days in advance of the draw. Each draw by ReGen from the Bridge Loan
escrow account shall represent a loan by each participant in the amount
of its pro rata share, that is, the percentage represented by the amount
of credit extended by the participant relative to the total amount of
credit extended by all current participants under the Bridge Loan.

      d. Sulzer will agree (i) that the participation of Geistlich in the
Bridge Loan is contingent upon Sulzer’s concluding an agreement to
transfer European distribution of ReGen’s Collagen Meniscus Implant
(“CMI”) product to one or more partners mutually satisfactory to Sulzer
and ReGen, and (ii) that Geistlich’s obligation to fund its portion of
the Bridge Loan will be effective only when Sulzer concludes the
agreement to transfer European distribution of the CMI product; provided
that, at such tie as Geistlich’s obligation to fund its portion of the
Bridge Loan becomes effective, Geistlich will fully fund its share of the
Bridge Loan and any draws by ReGen from the Bridge Loan escrow account
thereafter shall represent loans by Geistlich to the extent needed to
balance its pro rata share of loans with the amounts previously loaned by
the other participants as of that time.

      e. The Bridge Loan Agreement shall terminate, and the right of ReGen
to draw any amounts of the Bridge Loan remaining in escrow shall end, if
Sulzer fails to secure one or more partners mutually satisfactory to
Sulzer and ReGen for distribution of the CMI product in Europe by May 31,
2001, despite reasonable and good faith efforts to do so.
Notwithstanding the foregoing, such May 31 deadline may be extended by
mutual agreement of Sulzer and ReGen for up to 60 days in order to allow
additional time to secure partners mutually satisfactory to both Sulzer
and ReGen. In the event that the Bridge Loan Agreement terminates as
provided in this section, Sulzer shall have the right to withdraw from
the Bridge Loan escrow account an amount that represents it pro rata
share of the remaining balance, if any.

Agreement — Page 2

 

 

      f. Sulzer will agree that it or its distribution partner(s) will fund
the first milestone payment under the CMI distribution agreement ($1
million) no later than the fourth quarter of 2001.

      g. ReGen will agree to issue Sulzer a warrant (the “Warrant”),
exercisable at any time within three years from the date of issue, for
the purchase of ReGen common stock in an amount determined by dividing
25% of the principal amount of the Note by the share price fixed at the
time of a Conversion Event. The exercise price shall be the share price
fixed by the Conversion Event. In the event that Sulzer exercises the
Warrant prior to the occurrence of a Conversion Event, then the number of shares subject to purchase under the Warrant shall be determined by
dividing 25% of the principal amount of the Notes by a share price equal
to the fair market value (determined in good faith by ReGen’s Board of
Directors) of ReGen’s common stock at that time, and the exercise price
shall be equal to the same fair market value per share.

      h. ReGen will agree that all Notes given by ReGen to participants in
the Bridge Loan will be subordinate to any current or future bank debt of
ReGen and to all of ReGen’s debt to Sulzer existing as of the Effective
Date.

     4. At such time as Sulzer concludes an agreement to transfer European
distribution rights to one or more partners, ReGen will commence a bona fide
effort to secure a source of financing (other than a merger with Geistlich) by
December 31, 2001.

     5. ReGen, including its legal representatives, successors, and assigns,
hereby fully, finally, and forever releases, discharges, and acquits Sulzer, in
any and all capacities, corporate or otherwise, and does hereby release,
discharge, and acquit all officers, directors, employees, shareholders,
attorneys, agents, successors, predecessor, assigns, and affiliate entities of
Sulzer, from any and all claims, controversies, demands, rights, disputes,
grievances, and causes of action, in law or in equity, whether the same or
whether the facts on which the same may be based are now known or unknown,
asserted or not asserted, accrued or not accrued, existing at the time of
execution and delivery of this Agreement, so that from and after the date of
execution and delivery hereof, Sulzer and all officers, directors, employees,
shareholders, attorneys, agents, successors, predecessors, assigns, and
affiliate entities of Sulzer shall stand fully and completely released,
discharged, and acquitted from any and all claims that ReGen and its legal
representatives, successors, and assigns may be entitled to have, own, or claim
at the time of execution and delivery of this Agreement.

     6. ReGen and Sulzer agree to amend the Amended and Restated Supply
Agreement dated June 1, 1996 between ReGen and Sulzer Biologics Inc., as
successor to Intermedics Orthopedics/Denver, Inc. to eliminate the requirement
that Sulzer purchase collagen exclusively from ReGen for the Fields of Use and
to eliminate the requirement that ReGen supply collagen exclusively to Sulzer
for the Fields of Use.

     7. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas, notwithstanding conflict of
laws principles that would cause the application of laws of any other
jurisdiction.

Agreement — Page 3

 

 

     8. If any claim or controversy arises out of or related to this Agreement or
any breach hereof, then, following written notice by the party bringing the
claim, the presidents of ReGen and Sulzer shall attempt to resolve such claim
or controversy by good faith negotiation. If such claim or controversy is not
resolved within 60 days of such written notice, either party may submit the
claim or controversy to binding arbitration before a single arbitrator by the
Center for Public Resources, New York, New York, according to the CPR’s Rules
for Non-Administered Arbitration of Business Disputes, and the parties hereby
agree to such binding arbitration.

     In Witness Whereof, the parties have each caused this Agreement to be
signed and delivered in duplicate, each of which shall be considered for all
purposes an original, by their duly authorized representatives as of the date
first written above.

	 	 	 	 	 	 	 
	ReGen Biologics Inc.
	 	Sulzer Medica USA Holding Co.
	 

	 	 	 	 	 	 
	By:

	 	/s/ Gerald E. Bisbee, Jr., Ph.D.
	 	By:
	 	/s/ David S. Wise
	

	 	

	 	 	 	

	

	 	Gerald E. Bisbee, Jr., Ph.D.
	 	 	 	David S. Wise
	

	 	President and CEO
	 	 	 	Secretary

	 	 	 	 	 
	 	Sulzer Orthopedics Ltd.

 	 
	 	By:  	/s/ Richard
Fritschi
	 
	 	 	Richard Fritschi 	 
	 	 	General Manager 	 
	 

	 	 	 	 	 
	 	Sulzer Biologics, Inc.

 	 
	 	By:  	/s/ Jerry L.
Marlar

	 
	 	 	Jerry L. Marlar 	 
	 	 	President 	 
	 

Agreement — Page 4exv10w9

 

EXHIBIT 10.9

ASSIGNMENT AND ROYALTY AGREEMENT

     This ASSIGNMENT AND ROYALTY AGREEMENT (the “Agreement”) is made and
entered into this 9th day of April, 1997 (the “Effective Date”), by and between
REGEN BIOLOGICS, INC., a Delaware corporation (“ReGen”), having an office at
545 Penobscot, Redwood City, California 94063, MODIFIED POLYMER COMPONENTS,
INC., a California corporation (“MPC”), having offices at 1030 East Duane
Avenue, Suite D, Sunnyvale, California 94086, and DR. J. RICHARD STEADMAN, an
individual (“Dr. Steadman”) residing at 1299 Spraddle Creek Road, Vail,
Colorado 81657.

RECITALS

     WHEREAS, Dr Steadman and MPC have developed a device for incrementally
advancing a needle or tissue anchor to repair tears in the meniscus of the
knee;

     WHEREAS, Dr. Steadman and MPC have filed a patent application, entitled
“Device and Method for Driving a Needle and Meniscal Repair,” with the United
States Patent and Trademark Office covering the device and naming Dr. Steadman,
William Dubrul, James Taylor and Christine Ventura as inventors;

     WHEREAS, ReGcn desires to obtain all rights relating to the device in
order to develop and commercialize it; and

     WHEREAS, Dr. Steadman and MPC hold such rights and are willing to assign
such rights to ReGen in accordance with the terms and conditions contained
herein;

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

DEFINITIONS

     “The Device Application” shall mean the U.S. patent application entitled
“Device and Method for Driving a Needle and Meniscal Repair,” naming Dr. J.
Richard Steadman, William Dubrul, James Taylor and Christine Ventura as
inventors, filed with the United States Patent and Trademark Office prior to
the Effective Date.

     “Device” shall mean the device developed by Dr. Steadman and MPC for
incrementally advancing a needle or tissue anchor to repair tears in the
meniscus of the knee, as described in detail in The Device Application.

     “Device Rights” shall mean all legal rights to the Device, including the
Patent Rights, trade secret rights, copyrights and all rights to data, test
results and any other information regarding the Device.

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     “Improvements” shall mean all improvements or variations on the Device
which are made by Dr. Steadman or MPC after the Effective Date and which, if
made, used or sold, would infringe any Valid Claim.

     “Net Sales” shall mean the gross receipts actually received by ReGen or
any assignee, licensee or other transferee of the Device Rights from the sale
of Products to an independent third party, less the following: reasonable
charges for transportation, postage and insurance charges, discounts actually
allowed, credits allowed for defective or returned goods, and other allowances
(actually paid or allowed, including but not limited to, prompt payment and
volume discounts, charge backs from wholesalers and other allowances granted to
the end commercial customer of the products, whether in cash or trade), and
sales and other taxes and duties based on sales prices when included in gross
sales, but not including taxes assessed on income derived from such sales.

     In the event that a Product is sold in combination with any sutures,
meniscal arrows or other materials or products which are delivered by means of
the Device but are not Products as defined herein (a “Packaged Product”), Net
Sales for such Packaged Product will be calculated by multiplying actual Net
Sales of such Packaged Product by the fraction A/(A+B) where A is the invoice
price of the Product if sold separately by the seller of the Packaged Product
and B is the total invoice price of the one or more other materials or products
in the Packaged Product, if sold separately by same seller, in each case on a
country-by-country basis. If A and B are not sold separately by such seller in
such country, the parties shall mutually agree on an appropriate mechanism for
calculating Net Sales of Products based on actual sales of the Packaged
Products.

     “Patent Rights” shall mean The Device Application, and all divisions,
continuations and continuations-in-part of such application(s), all patents
issuing on such application(s), all extensions, reexaminations, reissues,
renewals, registrations, substitutions, confirmations and the like based on
such patents, and all foreign counterparts of the foregoing applications and
patents.

     “Product” shall mean any form of the Device sold by ReGen or any assignee,
licensee or other transferee of the Device Rights, including but not limited to
any product the manufacture, use or sale of which is covered by a Valid Claim.
For purposes of this Agreement the “Product” shall not include any sutures,
meniscal arrows or other materials or products which are delivered by means of
the Device.

     “Valid Claim” shall mean a claim of a pending patent application or an
issued, unexpired patent, in each case included in the Patent Rights, which
claim has not lapsed, been canceled, or become abandoned and which claim has
not been declared invalid by a court of competent jurisdiction, and which has
not been admitted to be invalid or unenforceable through reissue or disclaimer.

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1. ASSIGNMENT OF RIGHTS

     1.1 Assignment of Device Rights. Dr. Steadman and MPC each hereby assign,
transfer and convey to ReGen, in accordance with the terms and conditions
hereof, all right, title and interest in the Device and the Device Rights. Dr.
Steadman and MPC each agree promptly to transfer to ReGen all tangible
embodiments of the Device Rights, such as drawings, computer files and
experimental data, that each may have in their possession as of the Effective
Date. Dr. Steadman and MPC shall also provide ReGen with at least one unit of
the Device in its most current form as of the Effective Date. The parties
agree that ReGen shall be free to carry out any research, development,
manufacturing or commercialization activities relating to the Device and the
Device Rights, including but not limited to developing improved versions of the
Device and additional applications for the Device, subject only to the
obligations to Dr. Steadman and MPC set forth in this Agreement.

     1.2 Perfection and Protection of the Patent Rights. Dr. Steadman and MPC
each agree to assist ReGen in every proper way to obtain and enforce United
States and foreign patent and other proprietary rights relating to the Device.
To that end, each agrees to execute, verify and deliver such documents and
perform such other acts (including appearing as a witness) as ReGen may
reasonably request in connection with ReGen’s efforts to apply for, obtain,
perfect, maintain and enforce such patent and other proprietary rights and the
assignment thereof under this Agreement. ReGen shall compensate each for their
documented out-of-pocket costs incurred providing such assistance at ReGen’s
request.

     In the event ReGen is unable for any reason, after reasonable effort, to
secure the signature of the applicable party on any document needed in
connection with the actions specified in this Section 1.2, such party hereby
irrevocably designates and appoints ReGen and its duly authorized officers and
agents as its agent and attorney in fact, which appointment is coupled with an
interest, to act for and in its behalf to execute, verify and file any such
documents and to do all other lawfully permitted acts to further the purposes
of this Section 1.2 with the same legal force and effect as if executed by such
party.

     1.3 Improvements. Dr. Steadman and MPC each agree to promptly notify
ReGen in writing if either of them develops or learns of any Improvements,
referencing this section of this Agreement. ReGen shall have an option to take
an assignment of any Improvement on the same terms applicable to the Device.
ReGen shall notify both Dr. Steadman and MPC within 90 days after receiving
written notice of an Improvement whether or not ReGen elects to incorporate
such Improvement into this Agreement. Neither Dr. Steadman nor MPC shall
disclose any Improvement to any third party prior to or during such 90 day
period, but they shall have no obligation to ReGen regarding such

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Improvement if ReGen elects in writing not to incorporate the Improvement into
this Agreement.

     Dr. Steadman and MPC also each agree to promptly notify ReGen in writing
if either of them develops or learns of any improvement to the Device or other
development relating to the Device that does not qualify as an Improvement as
defined above, however ReGen shall have no option or other preferential right
to acquire rights to any such improvement or development.

2. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

     2.1 Dr. Steadman’s Representations and Warranties. Dr. Steadman hereby
represents and warrants that (i) he is an inventor of the Device and, to the
best of his knowledge, the only other persons or entities who participated in
any significant manner in the conception or reduction to practice of the Device
are William Dubrul, James Taylor and Christine Ventura, (ii) he has not granted
any license with respect to any Device Rights or made any assignment of Device
Rights and is under no obligation to grant any such license or to make any such
assignment, other than as set forth herein, and (iii) the execution, delivery
and performance of this Agreement does not conflict with, constitute a breach
of, or in any way violate any arrangement, understanding or agreement to which
he is a party or by which he is bound, including but not limited to any
arrangement between Dr. Steadman and any medical group or association with
which he is affiliated and any arrangement between Dr. Steadman or such a group
and Linvatech or Bristol Myers Squibb.

     2.2 MPC’s Representations and Warranties. MPC hereby represents and
warrants that (i) each of William Dubrul, James Taylor and Christine Ventura is
an inventor of the Device and has executed a valid and binding assignment of
all rights in the Device and The Device Application to MPC in connection with
their employment by MPC, (ii) to the best of the knowledge of each such
individual and MPC, the only other person or entity who participated in any
significant manner in the conception or reduction to practice of the Device is
Dr. Steadman, (iii) neither MPC nor any of the individuals named above has
granted any license with respect to any Device Rights or made any assignment of
Device Rights or is under any obligation to grant any such license or to make
any such assignment, other than as set forth herein, and (iii) the execution,
delivery and performance of this Agreement does not conflict with, constitute a
breach of, or in any way violate any arrangement, understanding or agreement to
which MPC or any of the above-listed individuals is a party or by which any of
them is bound.

     2.3 ReGen Representations and Warranties. ReGen hereby represents and
warrants that its management is persuaded that there is a market for the
Product and that ReGen possesses the organizational capability, financial
wherewithal and technical

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expertise to market the device. ReGen further represents and warrants that it
has or will have within a reasonable time a plan for the marketing of the
device and that it will implement the said marketing plan within a reasonable
time.

     2.4 Indemnity.

          2.4.1 Drs. Steadman and MPC each hereby agree to indemnify and hold ReGen
harmless from any costs or liabilities which ReGen may be required to pay to
third parties arising out of or in connection with any breach of the
representations and warranties made by such party in this Article 2.

          2.4.2 ReGen agrees to indemnify and hold harmless Dr. Steadman and MPC
from any and all third party claims, actions, costs or losses that might arise
from the negligent or improper use of the Product by health care professionals.
Dr. Steadman and MPC shall notify ReGen of any such claim immediately and give
ReGen the opportunity to control the defense and/or settlement of any such
claim or action.

3. CONSIDERATION

     3.1 Up-Front Cash Payments. In consideration for the rights granted to
ReGen, ReGen agrees to pay an up-front fee of $100,000 within 5 days of the
execution of this Agreement by all three parties. Of this $100,000, $80,000
will be paid to Dr. Steadman and $20,000 will be paid to MPC.

     3.2 Royalties. In consideration for the rights granted to ReGen and
performance of the obligation owing to ReGen pursuant to this Agreement, ReGen
agrees to pay royalties under either paragraph 3.2.1 or 3.2.2 below, with the
applicable royalty rates determined on a country-by-country basis:

          3.2.1 For ten (10) years after the date upon which ReGen first publicly
announces the national launch of the Product in the United States:

               (a) Dr. Steadman. ReGen shall pay to Dr. Steadman a royalty equal to four
and eight tenths percent (4.8%) on Net Sales of Products in such country; and

               (b) MPC. ReGen shall pay to MPC a royalty equal to one and two tenths
percent (1.2%) on Net Sales of Products in such country;

provided in each case that (i) the Product is covered by a Valid Claim of an
issued patent or published patent application included in the Patent Rights in
the country of sale and (ii) no third party is marketing a competing product
that is substantially similar to such Product but which does not infringe an
issued or published Valid Claim in such country.

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          3.2.2 In the event that royalties are not due under paragraph 3.2.1 with respect
to any Product in any country at any time prior to the tenth (10th) anniversary
of the national launch of a Product in the United States:

               (a) Dr. Steadman. ReGen shall pay to Dr. Steadman a royalty equal to two
and four tenths percent (2.4%) on Net Sales of Products in such country; and

               (b) MPC. ReGen shall pay to MPC a royalty equal to six tenths of one
percent (0.6%) on Net Sales of Products in such country.

          3.2.3 In no event will royalties be due simultaneously from ReGen under
both paragraphs 3.2.1 and 3.2.2 on any given Product in any given country.
Moreover, only one royalty shall apply on each Product in each country,
irrespective of the number of Valid Claims covering such Product. No further
royalties shall be due to Dr. Steadman or MPC on Net Sales made after the tenth
(10th) anniversary of the national launch of a Product in the United States.

     3.3 Third Party Royalties. If ReGen or any assignee, licensee or other
transferee of the Device Rights is required to pay royalties to one or more
third parties with respect to sales of any Product, then the royalties due to
Dr. Steadman and MPC on such sales may be reduced by fifty percent (50%) of the
amount of the royalty payments made to such third parties; provided, however,
in no event shall the royalties otherwise due to Dr. Steadman or MPC in any
quarter be reduced by more than fifty percent (50%) by reason of such credit.
Any royalty credits not taken in a quarter due to such proviso shall be carried
forward to subsequent quarters.

     3.4 Tax Withholding. In the event that ReGen Is required to withhold
taxes imposed upon Dr. Steadman and MPC based on any royalties due to them
under this Agreement by virtue of the statutes, laws, codes or governmental
regulations of a country in which Products are sold, then such taxes will be
paid by ReGen on behalf of Dr. Steadman and MPC by deducting them from the
payment due Dr. Steadman and MPC and remitting such taxes to the proper
authorities on a timely basis; and the payments provided under this Agreement
will be adjusted appropriately. ReGen shall supply Dr. Steadman and MPC with
any official documentation and/or tax receipts received by ReGen in connection
with such withholdings and agrees to take any other reasonable action requested
by either of them to assist them in taking advantage of any double taxation
treaties or other means for minimizing the burden of such taxes.

4. PAYMENT; RECORDS; AUDIT

     4.1 Payments. All amounts payable to Dr. Steadman and MPC under this
Agreement shall be paid in U.S. dollars, in the case of foreign sales according
to the official rate of exchange of the currency of the country from which
royalties are payable

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as quoted by The Wall Street Journal, New York edition, for the last day of the
calendar quarter for which the royalty payment is made. Royalty obligations
under Section 3.2 shall accrue at the time of sale of the Products to an
independent third party. Royalty obligations that accrue during a particular
calendar quarter shall be paid within sixty (60) days after the end of such
quarter. Each payment of royalties due to Dr. Steadman and MPC under Section
3.2 shall be accompanied by a statement of the amount of Net Sales during such
period on a Product-by-Product and country-by-country basis, together with
reasonable supporting information regarding the calculation of such payments.

     4.2 Record Retention. ReGen will keep complete and accurate records
pertaining to the sale of Products subject to royalties under Section 3.2 in
reasonably sufficient detail to permit Dr. Steadman and MPC to confirm the
accuracy of calculations of all payments hereunder. Such records will be
maintained for a three (3) year period following the year in which any such
payments were made hereunder.

     4.3 Audit Request. No more frequently than once a year, Dr. Steadman and
MPC will have the right to engage an independent, certified public accountant
approved by ReGen (such approval not to be unreasonably withheld) to examine
ReGen’s records from time to time as may be necessary to determine, with
respect to any calendar year, the correctness of any report or payment made
under this Agreement. Any such audit will be conducted under reasonable
confidentiality restrictions. Dr. Steadman and MPC shall act jointly in any
such request and bear the expense thereof in proportion to their respective
shares of royalties under Section 3.2, unless they mutually agree on another
allocation of such expenses. Notwithstanding the foregoing, in the event that
any such examination reveals that the payments made by ReGen to Dr. Steadman
and MPC are incorrect by more than five percent (5%) in any audit period, ReGen
shall reimburse Dr. Steadman and MPC for the cost of such audit borne by such
party in addition to promptly remitting the amount of any underpayment.,
together with interest on the underpayment from the due date of such payment
until the date on which payment is actually made. The interest rate shall be
three percent (3%) above the prime rate in effect on the date such payment was
first due, as reported in the Wall Street Journal, New York edition.

     4.4 Survival. This Article 4 will survive any termination of this
Agreement for a period of three (3) years.

5. TERM OF THIS AGREEMENT

     5.1 Term. The assignments made under Article 1 hereof are irrevocable and
shall not be invalidated, rescinded or terminated except by another written
agreement executed by the parties to each such assignment. The rest of this
Agreement, including but not limited to the payment obligations under Section
3.2, will expire on the tenth (10th) anniversary of the first commercial sale
of a Product.

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     5.2 Termination. This Agreement may not be terminated except by mutual
written agreement of all the parties.

6. MISCELLANEOUS

     6.1 Assignment. Except as otherwise provided herein, neither this
Agreement nor any interest hereunder will be assignable in part or in whole by
any party without the prior written consent of the other parties; provided,
however, that ReGen may assign this Agreement to any of its affiliates or to
any successor, by merger, sale or other transaction, to substantially all of
its business unit to which this Agreement relates. This Agreement will be
binding upon the successors and permitted assigns of the parties.

     6.2 Confidentiality. Dr. Steadman and MPC each agree not to disclose any
information regarding the Device, Patent Rights or sales information provided
under Article 4 (“Confidential Information”) to any third party or to use any
Confidential information for any purpose other than as provided in this
Agreement, except with the prior written consent of ReGen, which will not be
unreasonably withheld. In particular, Dr. Steadman and MPC each agree not to
publish or present any Confidential Information regarding the Device except
with the prior written consent of ReGen.

     6.3 Amendment. No amendment or modification hereof shall be valid or
binding upon the parties unless made in writing and signed by an authorized
representative of each party.

     6.4 Notices. All notices and other communications hereunder will be in
writing and will be deemed given if mailed by certified or registered mail,
properly addressed, delivered personally or by facsimile transmission (receipt
verified), telexed, or sent by express courier service, to the parties at the
following addresses (or at such other address for a party as will be specified
by like notice; provided, however, that notices of a change of address will be
effective only upon receipt thereof):

	 	 	 
	If to Dr. Steadman:

	 	Dr. J. Richard Steadman

1299 Spraddle Creek Road

Vail, CO 81657
	 
	If to MPC:

	 	Modified Polymer Components, Inc.

1030 East Duane Avenue

Suite D

Sunnyvale, CA 94086

8

 

	 	 	 
	If to ReGen:

	 	ReGen Biologics, Inc.

545 Penobscot Drive

Redwood City, CA 94063

     6.5 Severability. If any term, condition or provision of this Agreement
is held to be unenforceable for any reason, it shall, if possible, be
interpreted rather than voided, in order to achieve the intent of the parties
to this Agreement to the extent possible. In any event, all other terms,
conditions and provisions of this Agreement shall be deemed valid and
enforceable to the full extent.

     6.6 Survival. In the event of expiration or termination of this
Agreement, Articles 1, 2 and 4 and Section 6.2 shall survive.

     6.7 Waiver. No provisions of this Agreement will be waived by any act,
omission or knowledge of a party or its agents or employees except by an
instrument m writing expressly waiving such provision and signed by a duly
authorized officer of the waiving party.

     6.8 Applicable Law; Attorneys’ Fees. This Agreement shall be construed,
interpreted, and applied in accordance with the laws of the State of California
as applied to contracts entered into and performed entirely within California,
without regard to conflicts of laws rules. In the event of any dispute under
this Agreement, the prevailing party(ies) shall be entitled to reimbursement
from the non-prevailing party(ies) of reasonable attorneys’ fees and costs
incurred in connection with such dispute.

     6.9 Entire Agreement. This Agreement will constitute and contain the
complete, final and exclusive understanding and agreement of the parties and
cancels and supersedes any and all prior negotiations, correspondence,
understandings and agreements, whether oral or written, between the parties
respecting the subject matter thereof.

9

 

     6.10 Counterparts. This Agreement may be executed in one or more counterparts,
all of which together shall constitute one instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

REGEN BIOLOGICS, INC.

    	 	 	 
	By: 
	 	/s/ James T. McKinley
	 
	 	

           
	Title:
          
	 	President & CEO
	 
	 	

           
	 
	
          

          

          J. RICHARD STEADMAN

	 
	 
	 	/s/ J. Richard Steadman
	 
	 	

           

MODIFIED POLYMER COMPONENTS, INC.

	 	 	 
	By:

	 	/s/ James M. Taylor
	

	 	

           
	Title:

	 	President
	

	 	

           

10

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