Master Restructuring Agreement

EXHIBIT 10.10


MASTER RESTRUCTURING AGREEMENT, dated as of October 15, 1998, between CREATIVE BIOMOLECULES, INC., a Delaware corporation ("CREATIVE"), and STRYKER CORPORATION, a Michigan corporation ("STRYKER"),


W I T N E S S E T H :


WHEREAS, Creative and Stryker are parties to a Second Amended and Restated Research, Development and Supply Agreement, dated as of May 17, 1991, as further amended to the date hereof (the "SECOND AMENDED AGREEMENT");


WHEREAS, Creative and Stryker have been engaged in a dispute concerning the ownership of certain patents and patent applications, which dispute is currently the subject of an arbitration proceeding before the Commercial Arbitration Tribunal of the American Arbitration Association (Case No. 13-133-00980-97, the "ARBITRATION");


WHEREAS, Creative and Stryker have agreed to restructure certain terms of their collaboration under the Second Amended Agreement and, in connection therewith, have agreed to settle the disputed matters subject to the Arbitration and have agreed that Creative will transfer Manufacturing Rights and certain related assets and technology to Stryker, all on the terms and subject to the conditions set forth herein and in the Related Agreements (as defined herein); and


WHEREAS, Creative and Stryker have agreed that this Agreement, together with the Related Agreements, shall supersede and replace the Second Amended Agreement in its entirety;


NOW, THEREFORE in consideration of the foregoing and the mutual covenants and agreements set forth herein and in the Related Agreements, the parties hereto hereby agree as follows:


ARTICLE I
DEFINITIONS


Section 1.1 DEFINITION OF CERTAIN TERMS. The terms defined in this SECTION 1.1, whenever used in this Agreement, shall have the respective meanings indicated below for all purposes of this Agreement. All references herein to a Section, Article, Exhibit or Schedule are to a Section, Article, Exhibit or Schedule of or to this Agreement, unless otherwise indicated.


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"AFFILIATE": of a specified Person means a Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person or a member of such specified Person's immediate family. "CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means the ownership of fifty-one percent (51%) or more of the voting common stock, partnership interests, joint venture interests or other equity, as the case may be, of a Person.


"AGREEMENT": means this Master Restructuring Agreement (including the Exhibits and the Schedules), as the same from time to time may be amended or supplemented.


"APPLICABLE LAW": means any and all applicable provisions of any and all (i) constitutions, treaties, statutes, laws (including the common law), rules, regulations, ordinances, codes or orders of any Governmental Authority, (ii) Governmental Approvals, and (iii) orders, decisions, injunctions, judgments, awards and decrees of or agreements with any Governmental Authority.


"ASSET PURCHASE AGREEMENT": means the agreement, dated as of the date hereof, between Creative and Stryker Sales Corporation relating to the transfer and sale of the Assets to Stryker Sales Corporation and the assumption of the Assumed Liabilities by Stryker Sales Corporation.


"ASSETS": has the meaning set forth in the Asset Purchase Agreement.


"ASSIGNED AGREEMENTS": has the meaning set forth in the Asset Purchase Agreement.


"ASSIGNED PATENT RIGHTS": means the patents and patent applications listed on Schedule 1 to the Creative License Agreement, and all worldwide counterparts and registrations, continuations, divisions, reissues, extensions or supplementary protection certificates, continuations-in-part or additions (but only to the extent such continuations-in-part or additions claim inventions disclosed as required by 35 U.S.C. ss.112 (CIPs) or the applicable laws (additions) in the parent application thereof as listed in said Schedule 1) with respect thereto, and all patents issuing therefrom.


"ASSUMED LIABILITIES": has the meaning set forth in the Asset Purchase Agreement.


"BIOLOGICAL MATERIALS": means any biological materials, assays, substances or reagents, including without limitation transformed or transfected cells (including any


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cell expressing an OP Product or an analog, mutation or heterodimer thereof conceived, made, developed or reduced to practice as part of the Research Project), cell lines, DNA sequences, vectors, host cells, proteins, antibodies and any fragments or subcellular components thereof.


"BONE DISEASE FIELD": means the prevention or treatment of Osteoporosis, Osteomalacia and Paget's Disease other than (i) by the local application of OP Products and OP Devices in an insoluble formulation directly on bone or joint tissue for local, as opposed to general or systemic, effect and (ii) the treatment of fractures regardless of whether they result from Osteoporosis, Osteomalacia and Paget's Disease.


"BOOKS AND RECORDS": has the meaning set forth in the Asset Purchase Agreement.


"CLOSING": has the meaning set forth in SECTION 5.1.


"CLOSING DATE": has the meaning set forth in SECTION 5.1.


"CONSENT": means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including any Governmental Authority.


"CREATIVE FIELD": means all uses and applications other than the Stryker Field. The Creative Field includes, without limitation, the Bone Disease Field.


"CREATIVE INDEMNITEES": has the meaning set forth in SECTION 8.2.


"CREATIVE LICENSE AGREEMENT": means the agreement, to be dated as of the Closing Date, in the form attached hereto as Exhibit 4.7.


"CREATIVE MANUFACTURING KNOW-HOW": means all inventions, know-how, Biological Materials, designs, trade secrets, copyrights, processes, formulas, techniques, discoveries, ideas and the like that, as of the Closing Date, are owned by Creative or as to which Creative has acquired rights which it has the right to license hereunder, that are necessary or useful in the manufacture of OP Products or OP Devices.


"CREATIVE ROYALTY BEARING OP PRODUCTS": means OP Products or devices formulated from OP Products that are within issued or pending claims of the Assigned Patent Rights as those claims exist on the Closing Date.


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"CREATIVE THRESHOLD AMOUNT": has the meaning set forth in SECTION 8.1.


"EXCLUDED ASSETS": has the meaning set forth in the Asset Purchase Agreement.


"EXCLUDED LIABILITIES": has the meaning set forth in the Asset Purchase Agreement.


"FDA": means the United States Food and Drug Administration or any successor thereto.


"GOVERNMENTAL APPROVAL": means any Consent of any Governmental Authority.


"GOVERNMENTAL AUTHORITY": means any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof), or any tribunal or arbitrator(s) of competent jurisdiction, or any self-regulatory organization.


"HOPKINTON FACILITY": has the meaning provided in SECTION 6.2(c).


"HSR ACT": means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.


"HUMAN RESOURCES AGREEMENT": means the agreement, to be dated as of the Closing Date, between Stryker Sales Corporation and Creative, in the form set forth in Exhibit 4.16 hereof.


"INCLUDE", "INCLUDES", "INCLUDED" and "INCLUDING": shall be construed as if followed by the phrase "without being limited to".


"INDEMNIFIED PARTY": has the meaning set forth in SECTION 8.3.


"INDEMNIFYING PARTY": has the meaning set forth in SECTION 8.3.


"KNOWLEDGE": an individual will be deemed to have "Knowledge" of a particular fact or other matter if such individual is actually aware of such fact or other matter. A Person (other than an individual) will be deemed to have "Knowledge" of a particular fact or other matter if any individual who is serving, or who has at any time served, as


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a director or officer (or in any similar capacity) of such Person or as a senior manager of such Person, and the plant manager and the individuals having primary responsibility for environmental and health and safety and employee relations matters at each facility, has, or at any time had, Knowledge of such fact or other matter; provided, however, that in the case of an individual who is not an officer or director, such individual's knowledge will only be attributed in his or her area of responsibility.


"LEASED REAL PROPERTY": has the meaning set forth in the Asset Purchase Agreement.


"LIENS" AND "PERMITTED LIENS": have the meanings set forth in the Asset Purchase Agreement.


"LOSSES": has the meaning set forth in SECTION 8.1.


"MANUFACTURING OPERATIONS": has the meaning set forth in the Asset Purchase Agreement.


"NOTICE": has the meaning set forth in SECTION 9.3.


"OP": means proteins (or the active sites thereof) or polypeptides or combinations of proteins and polypeptides which produce an osteogenic effect.


"OP DEVICES": means the combination of OP Products with suitably biocompatible and biodegradable carriers.


"OP PRODUCTS": means OP and polyclonal or monoclonal antibodies of OP and specific inhibitors or inhibitory activities of the osteogenic effect of OP, which inhibitors or inhibitory activities were found and identified as such in the course of the Research Project.


"PATENT ASSIGNMENT AGREEMENT": means the agreement, to be dated as of the Closing Date, in the form attached hereto as Exhibit 4.5, pursuant to which Creative assigns certain patent rights to Stryker.


"PATENT RIGHTS LICENSED TO STRYKER": has the meaning set forth in SECTION 4.6.


"PERSON": means any natural person, firm, partnership, association, corporation, company, limited liability company, trust, business trust, Governmental Authority or other entity.


"RELATED AGREEMENTS": means the Asset Purchase Agreement, the Creative License Agreement, the Patent


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Assignment Agreement, the Stryker License Agreement, the Human Resources Agreement, the Releases and the Assumption Agreement.


"RELEASES": has the meaning set forth in SECTION 4.4.


"RESEARCH PROJECT": means the Research Project as defined in the Second Amended Agreement.


"ROYALTY PERIOD": means the period commencing with the Closing Date and ending on the date on which there are no longer any issued or pending claims in the Assigned Patent Rights; PROVIDED, HOWEVER, that the voluntary abandonment of issued claims or pending claims (other than following rejection thereof by the applicable patent office and the failure of reasonable efforts to overcome such rejection) by either party without the prior written consent of the other shall be disregarded for purposes of determining whether issued or pending claims remain in the Assigned Patent Rights.


"STRYKER FIELD": means the field of (i) treatment, repair or replacement of bone and joint tissue, including, without limitation, meniscus and articular cartilage and ligaments and tendons, but excluding the Bone Disease Field, and (ii) treatment, repair or replacement of the tooth, dentin, alveolar bone, cementum, enamel, gingiva (to the extent, but only to the extent, the gingiva functions as part of the apparatus holding the tooth to the jaw) and/or periodontal ligament, but excluding the treatment of Oral Ulcerations (as defined below) or any other disease or disorder of the tissues of the mouth not involving the tooth, dentin, bone (including alveolar bone), cementum, enamel, gingiva (to the extent, but only to the extent, the gingiva functions as part of the apparatus holding the tooth to the jaw), ligament (including the periodontal ligament), tendon and/or cartilage.


As used herein, "ORAL ULCERATIONS" means the formation of lesions on the surface of skin lining the oral cavity caused by loss of tissue but does not include Periodontal Disease (as defined below) or any other disease or disorder involving the tooth, dentin, bone (including alveolar bone), cementum, enamel, gingiva (to the extent, but only to the extent, the gingiva functions as part of the apparatus holding the tooth to the jaw), ligament (including the periodontal ligament), tendon and/or cartilage.


As used herein, "PERIODONTAL DISEASE" means degeneration of the apparatus holding the tooth to the jaw involving damage to any or all of the gingiva (to the extent, but only to the extent, the gingiva functions as


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part of the apparatus holding the tooth to the jaw), alveolar bone, cementum, enamel and periodontal ligament.


"STRYKER INDEMNITEES": has the meaning set forth in SECTION 8.1.


"STRYKER LICENSE AGREEMENT": means the agreement, to be dated as of the Closing Date, in the form attached hereto as Exhibit 4.6.


"STRYKER MANUFACTURING KNOW-HOW": means all inventions, know-how, Biological Materials, designs, trade secrets, copyrights, processes, formulas, techniques, discoveries, ideas and the like that, as of the Closing Date, are owned by Stryker or as to which Stryker has acquired rights which it has the right to license hereunder, that are necessary or useful in the manufacture of OP Products or OP Devices.


"STRYKER ROYALTY BEARING OP PRODUCTS": means OP Products or OP Devices that are within issued or pending claims of the Assigned Patent Rights or the Patent Rights Licensed to Stryker as those claims exist on the Closing Date, after amendment of certain claims in the Patent Rights Licensed to Stryker pursuant to SECTION 4.9 hereof.


"STRYKER THRESHOLD AMOUNT": has the meaning set forth in SECTION 8.2.


ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CREATIVE


Creative represents and warrants to Stryker as follows:


Section 2.1 CORPORATE STATUS. (a) Creative is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Creative has full corporate power and authority to carry on the Manufacturing Operations and to own or lease and to operate the properties and assets of the Manufacturing Operations as and in the places where the Manufacturing Operations are conducted and such properties and assets are owned, leased or operated.


(b) Creative is duly qualified or licensed to do business and is in good standing in the Commonwealth of Massachusetts and the State of New Hampshire.


Section 2.2 AUTHORIZATION, ETC. Creative has the full legal right, power and authority (i) to execute and deliver this Agreement and the Related Agreements, and (ii) subject to obtaining the required Consents identified in


7 8 SCHEDULE 2.5 to this Agreement and in the Related Agreements, to perform fully its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. This Agreement and the Related Agreements, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all requisite corporate (including board of directors and shareholder) action of Creative. Creative has duly executed and delivered this Agreement and the Related Agreements. Each of this Agreement and the Related Agreements has been duly executed and delivered by Creative and is a legal, valid and binding obligation of Creative, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy and other similar laws and general principles of equity.


Section 2.3 NO CONFLICTS, ETC. The execution, delivery and performance by Creative of this Agreement and the Related Agreements, and the consummation of the transactions contemplated hereby and thereby, upon the obtaining of the required Consents do not and will not conflict with or result in a violation of or a default under (with or without the giving of notice or the lapse of time or both), or result in the acceleration of or give rise to any right of any other party to terminate, modify or cancel, or result in the loss of any rights, privileges, options or alternatives of Creative under, or result in the creation of any Lien on any of the properties or assets of Creative (including the Assets) under (i) the Restated Certificate of Incorporation, as amended, or Restated By-Laws of Creative, (ii) any Applicable Law applicable to Creative or any of its properties or assets (including the Assets), or (iii) any Contract or other agreement or instrument applicable to Creative or any of its properties or assets (including the Assets).


Section 2.4 LITIGATION. There is no action, claim, suit or proceeding pending, or to Creative's Knowledge threatened, by or against or affecting Creative in connection with or relating to the transactions contemplated by this Agreement and the Related Agreements or any action taken or to be taken in connection herewith or the consummation of the transactions contemplated hereby and thereby or that, if decided adversely, would impair Stryker's ability to use the Assets.


Section 2.5 CONSENTS. Except as referred to on SCHEDULE 2.5, no Consent of any Governmental Authority having jurisdiction over Creative is required to be obtained by Creative in order to authorize the execution and delivery by Creative of this Agreement or any Related Agreement or the performance by Creative of the terms hereof or thereof and the consummation of the transactions contemplated hereby


8 9 or thereby except for filings and consents required pursuant to the HSR Act.


Section 2.6 DISCLOSURE. No representation or warranty of Creative in this Agreement or in any Related Agreement or in any certificate or instrument delivered by Creative in accordance with the terms hereof or thereof contains any untrue statement of a material fact or omits any statement of a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading.


ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STRYKER


Stryker represents and warrants to Creative as follows:


Section 3.1 CORPORATE STATUS. Stryker is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan. Stryker has full corporate power and authority to carry on the Manufacturing Operations and to own or lease and to operate the properties and assets of the Manufacturing Operations as and in the places where the Manufacturing Operations are conducted and such properties and assets are owned, leased or operated.


(b) Stryker Sales Corporation is duly qualified or licensed to do business and is in good standing in the Commonwealth of Massachusetts and the State of New Hampshire.


Section 3.2 AUTHORIZATION, ETC. Stryker has the corporate power and authority to execute and deliver this Agreement and the Related Agreements, to perform fully its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Stryker of this Agreement and the Related Agreements, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all requisite corporate action of Stryker. Stryker has duly executed and delivered this Agreement and the Related Agreements. This Agreement and the Related Agreements are legal, valid and binding obligations of Stryker, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy and other similar laws and general principles of equity.


Section 3.3 NO CONFLICTS, ETC. The execution, delivery and performance by Stryker of this Agreement and the Related Agreements, and the consummation of the transactions contemplated hereby and thereby, do not and


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will not conflict with or result in a violation of or a default under (with or without the giving of notice or the lapse of time or both), or result in the acceleration of or give rise to any right of any other party to terminate, modify or cancel, or result in the loss of any rights, privileges, options or alternatives of Stryker under, or result in the creation of any Lien on any of the properties or assets of Stryker under (i) the Restated Certificate of Incorporation or By-Laws of Stryker, (ii) any Applicable Law applicable to Stryker or any of its properties or assets, or (iii) any contract, agreement or other instrument applicable to Stryker or any of its properties or assets.


Section 3.4 LITIGATION. There is no action, claim, suit or proceeding pending, or to Stryker's Knowledge threatened, by or against or affecting Stryker in connection with or relating to the transactions contemplated by this Agreement and the Related Agreements or any action taken or to be taken in connection herewith or therewith or the consummation of the transactions contemplated hereby and thereby.


Section 3.5 CONSENTS. No Consent of any Governmental Authority having jurisdiction over Stryker is required to be obtained by Stryker in order to authorize the execution and delivery by Stryker of this Agreement or any Related Agreement or the performance by Stryker of the terms hereof and thereof and the consummation of the transactions contemplated hereby or thereby except for filings and consents required pursuant to the HSR Act.


Section 3.6 DISCLOSURE. No representation or warranty of Stryker in this Agreement or in any Related Agreement or in any certificate or instrument delivered by Stryker in accordance with the terms hereof or thereof contains any untrue statement of a material fact or omits any statement of a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they were made, not misleading.


ARTICLE IV
TERMS


Section 4.1 TERMINATION OF SECOND AMENDED AGREEMENT. Creative and Stryker agree that the Second Amended Agreement shall be terminated effective as of the Closing Date and that the provisions thereof shall cease to have any effect as of the Closing Date, except that the assignment by Creative to Stryker of the Present Patents and Applications and certain patents and applications listed in Schedule I to the Amendment Agreement dated October 31, 1996 between Creative and Stryker, which were prosecuted in Stryker's name during the period from May 17, 1991 to


10 11 October 31, 1996 as described in Section 1.4 B of the Second Amended Agreement, and the license by Stryker to Creative of the inventions claimed in all of such patents and applications, pursuant to the Irrevocable License Agreement, dated May 17, 1991, as superseded by the Creative License Agreement executed pursuant to this Agreement, are hereby confirmed in all respects.


Section 4.2 COMPLETION OF CURRENT SCOPE OF WORK AND WIND-DOWN OF RESEARCH PROJECT. Creative and Stryker agree that the Current Scope[s] of Work (as defined in the Second Amended Agreement), as most recently extended by an amendment agreement dated April 30, 1998, shall be extended through, and terminate as of, the close of business on the day immediately preceding the date hereof, and Stryker shall continue to pay Creative for Creative's continued performance of those certain Current Scope[s] of Work and certain other services through the Closing Date, pursuant to the payment terms set forth in the extended Current Scope[s] of Work approved by the parties by letter agreement dated as of the date hereof. Creative shall deliver to Stryker within 30 days after the Closing Date a final written report describing in reasonable detail the results of the Research Project subsequent to the results reported under date of September 25, 1998. Any inventions and improvements conceived, made, developed or reduced to practice as part of the Current Scope[s] of Work will be governed by the provisions of the Second Amended Agreement and any patent applications and patents issuing therefrom disclosing such inventions and improvements and all worldwide counterparts and registrations, continuations, divisions, reissues, extensions or supplementary protection certificates, continuations-in-part or additions (but only to the extent such continuations-in-part or additions claim inventions disclosed as required by 35 U.S.C. ss.112 (CIPs) or the applicable laws (additions) in the parent application thereof shall be deemed to be Assigned Patent Rights.


Section 4.3 ADDITIONAL CREATIVE SERVICES. Creative and Stryker acknowledge that they may enter into future agreements with respect to additional services to be provided by Creative to Stryker after the Closing Date. With respect to Stryker's PMA filing, Creative agrees that it shall provide additional consulting services to Stryker, as may reasonably be requested from time to time, at a rate of compensation consistent with industry standards to be determined at the time such services are rendered; provided, however, that Creative shall only be required to provide such services to the extent that the same can be provided by persons employed by Creative at the time such services are to be rendered. In addition, for the period from the Closing Date until thirty (30) days after the Closing Date Creative shall reasonably make available to Stryker employees remaining in Creative's process development group


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12 to discuss with Stryker the Creative Manufacturing Know-How, on reasonable notice and at times that do not materially interfere with the performance of their normal duties.


Section 4.4 TERMINATION OF ARBITRATION. Creative and Stryker agree that the Arbitration shall be terminated as of the Closing Date, each party to bear its own costs and expenses, and that immediately following the Closing Date they shall jointly notify the American Arbitration Association and the arbitrator, the Hon. James F. Davis, of such fact. In connection therewith, Creative and Stryker each agree to execute a release in favor of the other in the form of Exhibits 4.4A and 4.4B attached hereto, respectively (the "RELEASES").


Section 4.5 ASSIGNMENT OF PATENT RIGHTS TO STRYKER. Creative agrees to execute and deliver to Stryker on the Closing Date the Patent Assignment Agreement in the form of Exhibit 4.5 attached hereto in order to effectuate the assignment to Stryker of Creative's entire right, title and interest in and to the inventions and improvements claimed in the U.S., foreign and PCT applications and patents issuing therefrom that are listed in Schedule A to the Patent Assignment Agreement and all worldwide counterparts and registrations, continuations, divisions, reissues, extensions or supplement ...