Exhibit 10.16

 

CONFIDENTIAL TREATMENT REQUESTED

 

ASSET PURCHASE AGREEMENT***

 

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of
December 13, 2003, by and among Medicis Ventures Management GmbH  (as defined
herein, “Medicis”), a German corporation, and MacroPore Biosurgery, Inc. (as
defined herein, “MacroPore”), a Delaware corporation.

 

WITNESSETH:

 

WHEREAS, MacroPore has developed, manufactures and sells Bioabsorbable Film
Implants; and

 

WHEREAS, the parties hereto desire that MacroPore sell, transfer and assign to
Medicis, and Medicis purchase from MacroPore, the Specified Assets relating to
the Field of Use Business (as such terms are defined herein) on the terms and
for the consideration hereinafter provided; and

 

WHEREAS, as a condition to MacroPore’s sale of the Specified Assets, Medicis
will grant MacroPore a perpetual (subject to the conditions of the License
Agreement), worldwide exclusive royalty-free sub-licensable license to certain
intangible assets relating to the SurgiWrap Business for the Spinal Field, and a
perpetual worldwide non-exclusive royalty-free sub-licensable license to certain
intangible assets relating to the SurgiWrap Business for the Field of
Regenerative Medicine both licenses pursuant to a License Agreement in the form
attached hereto as Exhibit A (the “License Agreement”); and

 

NOW, THEREFORE, in consideration of the respective representations, warranties,
covenants and agreements contained herein, and subject to the terms and
conditions set forth herein, the parties hereto agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1)          Specific Definitions.  As used in this Agreement, the following
terms shall have the meanings set forth or referenced below:

 

“Affiliate” of a specified person (natural or juridical) means a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified.  “Control”
shall mean ownership of more than 50% of the shares of stock entitled to vote
for the election of directors in the case of a corporation, and more than 50% of
the voting or policy making power or of the equity in the case of a business
entity other than a corporation.

 

“Assignment and Assumption Agreement” means the agreement in the form attached
hereto as Exhibit D between MacroPore and Medicis under which MacroPore shall
assign to Medicis, and Medicis shall assume from MacroPore, all of MacroPore’s
rights and obligations, to the extent such rights and obligations arise
following the Closing, under the Contracts.

 

“Associate Investors” means the named investors as specified on Exhibit C

 

“Assumed Liabilities” means the liabilities described in Section 2.6.

 

“Bill of Sale”  means the document delivered by MacroPore to Medicis under which
MacroPore shall convey to Medicis unencumbered title to the Specified Assets, in
the form attached hereto as Exhibit E (Bill of Sale).

 

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***                           Certain confidential portions of this Exhibit were
omitted by means of blackout of the text (the "Mark").  This Exhibit has been
filed separately with the Secretary of the Commission without the Mark pursuant
to the Company's Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

“Bioabsorbable Film Implants” means bioabsorbable and/or bioresorbable Thin
Polymeric Films and similar products, including current Thin Polymeric Films in
development, for use as surgical implants in the following medical
applications:  soft tissue support, anti-scarring, anti-adhesion, minimizing the
attachment of soft tissues, and hernia repair.

 

“Business” means any and all of MacroPore’s business activities related to the
Bioabsorbable Film Implants, as conducted to the date of Closing.

 

“Business Development Agreement” means the agreement attached hereto as Exhibit
G.

 

“Closing” and “Closing Date” have the meanings set forth in Section 8.1.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Confidential Information” means information disclosed by or on behalf of one of
the parties (the “disclosing party”) to the other party (the “receiving party”),
generated under this Agreement, or otherwise learned by the receiving party from
the disclosing party, excluding information which:

 

(a)           was already in the possession of the receiving party before its
original receipt from the disclosing party (provided that the receiving party is
able to provide the disclosing party with written proof thereof and, if received
from a third party, that such information was acquired without any party’s
breach of a confidentiality or non-disclosure obligation to the disclosing party
related to such information);

 

(b)           is or becomes part of the public domain by reason of acts not
attributable to the receiving party;

 

(c)           is or becomes available to the receiving party from a source other
than the disclosing party which source has rightfully obtained such information
and has no direct or indirect obligation of non-disclosure or confidentiality to
the disclosing party with respect thereto; or

 

(d)           has been independently developed by or for the receiving party
without breach of this Agreement or use of any Confidential Information of the
other party (provided that the receiving party is able to provide the disclosing
party with written proof thereof).

 

Notwithstanding the forgoing exceptions, all information learned by Medicis
personnel during the time they were MacroPore personnel shall be Confidential
Information and shall continue to be governed by their agreements with
MacroPore.

 

“Contract(s)” means those contracts, purchase or sale orders, leases, licenses,
commitments and other agreements listed on the Letter of Assets attached hereto
as Exhibit F.

 

 “Disclosure Letter” means the disclosure letter dated December 13, 2003
delivered by MacroPore to Medicis before the execution of this Agreement.

 

“Environmental Laws” means and includes any one or more of the following:  (a)
the Comprehensive Environmental Response Compensation and Liability Act
(“CERCLA”), as amended by the Superfund Amendments and Reauthorization Act of
1986 (“SARA”), 42 U.S.C. § 9601 et seq.; the Federal Resource Conservation and
Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6921 et seq.; the Clean Water Act, 33
U.S.C. § 1321 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. § 300f et seq.; the Occupational Safety and Health
Act of 1976, 29 U.S.C. § 651, all as they may be amended from time to time; any
other federal, state, county, municipal, local or other statute, law, ordinance
or regulation that relates to or deals with Hazardous Substances, human health
or the environment, all as they may be amended from time to time; and all
regulations promulgated by a regulatory body pursuant to any of the foregoing
statutes, laws, regulations, or ordinances; and (b) to the extent that they
apply specifically to MacroPore, judgments, orders, decrees, injunctions,
permits, concessions, grants, franchises, licenses or agreements, to the extent
that either (a) or (b) relate to safety, human health, the environment or
emissions, discharges, or releases of Hazardous Substances into the environment
including ambient air, surface water, ground water, facilities, structures, or

 

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CONFIDENTIAL TREATMENT REQUESTED

 

land, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, Hazardous Substances, or wastes or the investigation, clean-up, or
other remediation thereof.

 

“Facilities” means specialized clean rooms, storage, and/or packaging facilities
which specifically are not being provided to Medicis herein.

 

“FDA” means the United States Food and Drug Administration.

 

“Field of Regenerative Medicine” means application or delivery of drugs, growth
factors, cells or genes to repair or regenerate the human body. Nevertheless,
the Field of Regenerative Medicine shall not include any of the above for the
sole purpose of, or intended use in soft tissue support, anti-adhesion,
anti-scarring or minimization of the attachment of soft tissues or hernia
repair.

 

“Field of Use” means any applications of Bioabsorbable Film Implants throughout
the human body for one or more of the following: soft tissue support,
anti-adhesion, anti-scarring, minimizing the attachment of (soft) tissues, or
hernia repair.  The Field of Use specifically does not include any applications
in the Spinal Field (as defined herein) or the Field of Regenerative Medicine.

 

“Field of Use Bioabsorbable Implants” means Bioabsorbable Film Implants that are
designed, developed, manufactured, marketed or sold for use in the Field of Use
by MacroPore as of the Closing Date.

 

“Field of Use Business” means MacroPore’s activities in connection with the
development, manufacturing, marketing and sale of Field of Use Bioabsorbable
Implants, as conducted by MacroPore to the date of Closing.

 

“Financial Statements” means the balance sheet, statement of operations, and
statement of cash flow of Medicis prepared under U.S. generally accepted
accounting principals.

 

“Hazardous Substance” means asbestos, urea formaldehyde, polychlorinated
biphenyls, nuclear fuel or materials, chemical waste, radioactive materials,
explosives, known carcinogens, petroleum products, pesticides, fertilizers, or
any other substance that is dangerous, toxic, or hazardous, or that is a
pollutant, contaminant, chemical, material or substance defined as hazardous or
as a pollutant or contaminant in, or the use, transportation, storage, release
or disposal of which is regulated by, any Environmental Laws.

 

“Intellectual Property” means (a) patents and all divisions, continuations,
continuations-in-part, revisions, reissues and re-examinations relative thereto;
(b) copyrights and all works of authorship including all translations,
adaptations, combinations, compilations and derivations of each of the
foregoing; (c) trademarks, trade names, brand names, service marks, service
names, trade dress, logos and corporate names including all translations,
adaptations, combinations and derivations thereof, together with all common law
rights and all goodwill associated with each of the foregoing; (d)
technology, know-how, methods, processes, systems, trade secrets, inventions
(whether or not patentable, copyrightable or susceptible to any other form of
legal protection and whether or not reduced to practice), proprietary data,
formulae, research and development data, and confidential information (including
conceptions, ideas, innovations, manufacturing, development and production
techniques, drawings, specifications, designs, proposals, financial and
accounting data, business and marketing plans, customer and supplier lists and
related information and documentation), in each case irrespective of whether in
human or machine readable form; (e) computer software and all related program
listings and data, systems, user and other documentation; (f) mask works;
(g) all other forms of right by which one may effectively exclude another from
using or otherwise enjoying any and each of the foregoing; and (h) all
applications for any and each of the foregoing including applications for patent
or registration, together with all registrations, renewals and extensions for
any and each of the foregoing.

 

“Inventory” or “Inventories” means finished goods, raw materials and
ingredients, work-in-process, consignment goods, wares and merchandise. The list
of inventory items is attached hereto as Exhibit I.

 

“International Distributorship Agreement(s)” means the distribution agreements
related to each of the international distributors identified in Schedule 5.13.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

“Knowledge” of a party means actual knowledge of the party’s officers,
directors, or management or the knowledge that any of such persons would
reasonably be expected to have assuming reasonable inquiry of any facts or
circumstances actually known to and recognized by such person to create
significant doubt concerning the accuracy of any representation, warranty, or
statement without regard to such “knowledge” qualifier.

 

“Letter of Assets” means the listing of assets attached hereto as Exhibit F.

 

“Letter of Intent” means that specific document signed dated August 27, 2003 and
attached hereto as Exhibit B.

 

“Liens” means liens, mortgages, charges, security interests, pledges,
encumbrances, assessments, restrictions or other third-party claims of any
nature.

 

“License Agreement” has the meaning set forth in the recitals.

 

“MacroPore” means MacroPore Biosurgery, Inc. and its Affiliates.

 

“MacroPore Intellectual Property” means all right, title and interest in and to
all Intellectual Property owned by MacroPore that is necessary to the conduct of
the Field of Use Business.

 

“MacroPore Product Information” means all records, reports (internal and
external), submissions (internal and external), data, files, marketing
materials, specifications, manufacturing documentation and quality assurance
information associated with any products or concepts, or development or
manufacturing thereof, that have been created, initiated and/or conducted by
MacroPore relating primarily to the Specified Assets and/or the Field of Use
Bioabsorbable Implants, including but not limited to all of MacroPore’s
currently embodied (in written, electronic or magnetical form) information and
trade secrets, research materials, inventions, test data, product efficacy,
safety data as well as so currently embodied technical information (including
application technical information) relating primarily to or necessary for use
with the respective Field of Use Bioabsorbable Implants in the Field of Use
Business, it being specified that the know-how shall include all documentation
on research and development but shall not include whole or part of any
information, trade secrets, data etc. owned or controlled by MacroPore which are
related exclusively to the Spinal Field and the Field of Regenerative Medicine
or information otherwise primarily for use outside the Field of Use Business.

 

“MacroPore Regulatory Information” means all authorizations, permits, licenses,
records, reports (internal and external), submissions (internal and external),
data and files associated with regulatory requirements and communications
between MacroPore and outside regulatory bodies worldwide, including without
limitation the FDA, notified bodies, and other governmental agencies, relating
to the Specified Assets and/or the Field of Use Bioabsorbable Implants.

 

“Manufacturing Cost” of MacroPore with respect to a product means MacroPore’s
per unit average material, labor and manufacturing overhead costs for such
product as specified on Schedule 5.6 (“Cost Statements”).

 

“Material Adverse Effect” means an effect (other than an effect caused by
changes to the economy in general) that, individually or in the aggregate with
other related effects, is or could reasonably be expected to be materially
adverse to the business, prospects, results of operation or condition (financial
or otherwise) of the Specified Assets or the Field of Use Business, considered
as a whole, or is or could reasonably be expected to be materially adverse to
the ability of Medicis to conduct following the Closing the manufacture and/or
sale of Field of Use Bioabsorbable Implants as presently conducted or
contemplated to be conducted by MacroPore; provided, however, that any of the
following, individually or in the aggregate, shall not constitute a “Material
Adverse Effect” on or with respect to MacroPore:  (a) any changes, events or
effects including without limitation, any acts of terrorism, affecting the
United States economy or world economy as a whole or affecting generally the
industry in which MacroPore operates (and not specially affecting MacroPore);
(b) any adverse changes, events or effects that are demonstrated to be caused by
the announcement or pendency of the transactions contemplated in this Agreement;
(c) the lack of success of MacroPore in retaining existing employees or of
Medicis in hiring MacroPore employees or other employees who are material to
Medicis’s ability to operate the Field of Use Business or MacroPore’s ability to
fulfill its obligations under this Agreement; or (d) any changes resulting from
compliance by MacroPore with the terms of, or the taking of any action expressly
contemplated, permitted or required by, this Agreement.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

“Medicis” means Medicis Ventures Management GmbH and its Associate Investors and
its and their Affiliates.

 

 “Product Liability” means any liability, claim or expense related to the Field
of Use Business, including but not limited to reasonable attorneys’ fees and
medical expenses, arising in whole or in part out of a breach of any express or
implied product warranty, strict liability in tort, negligent manufacture of
product, negligent provision of services, product recall, or any other
allegation of liability arising from the design, testing, manufacture,
packaging, labeling (including instructions for use), marketing, distribution or
sale of products (whether for clinical trial purposes, commercial use or
otherwise).

 

“Purchase Price” has the meaning set forth in Section 2.4.

 

“Retained Liabilities” has the meaning set forth in Section 2.8.

 

 “Specified Assets” means all of the assets set forth on the Letter of Assets,
together with all MacroPore Product Information and MacroPore Regulatory
Information; provided, however, that copies of certain MacroPore Product
Information and MacroPore Regulatory Information necessary for the continuing
operation of MacroPore’s remaining business, as reasonably agreed to by the
parties, may be retained by MacroPore.  Expressly excluded from the Specified
Assets is any and all Inventory of MacroPore to the extent needed to cover open
orders as of the Closing Date.

 

“Spinal Field” means all applications (including but not limited to:
anti-adhesion, anti-scarring, minimizing the attachment of soft tissues, or soft
tissue support) related to the anatomy of the spine including, but not limited
to, applications in the following: spinal fixation, stabilization and/or fusion,
spinal cord coverings, exiting nerve root coverings, cauda equina coverings,
lamina coverings and vertebral column-cervical, thoracic, lumbar and sacral. 
The spinal field does not include distal peripheral nerve and other structures
extrinsic and distal to the spine.

 

 “Transfer, Sales and Value Added (VAT) Taxes” means all sales tax, use taxes,
stamp taxes, conveyance taxes, transfer taxes, filing fees, recording fees,
prepayment fees or penalties, reporting fees and other similar duties, taxes and
fees, if any, imposed upon, or resulting from, the transfer of the Specified
Assets or the Assumed Liabilities hereunder and the filing of any instruments
relating to such transfer.

 

1.2)          Other Terms.  Other terms may be defined elsewhere in the text of
this Agreement and shall have the meaning indicated throughout this Agreement.

 

ARTICLE 2

PURCHASE, SALE AND TRANSFER OF SPECIFIED ASSETS

 

2.1)          Purchased Assets.  Upon the terms and subject to the conditions
set forth in this Agreement, effective as of the Closing, MacroPore agrees to
sell, transfer, assign and convey to Medicis, and Medicis agrees to purchase,
the Specified Assets, which assets MacroPore represents and warrants includes
all assets, contracts and rights necessary to the conduct of the Field of Use
Business, other than the Excluded Assets specified in Exhibit H. .

 

2.2)          Excluded Assets.  MacroPore shall retain all of its respective
right, title and interest in and to all open orders as attached in Schedule 2.2
(“Open Orders”) and as subsequently received through the Closing Date, and
including any Inventory necessary to meet such Open Orders, and any receivables
or other payments accruing prior to the Closing Date, Facilities, and all other
assets specified on Exhibit H (the “Excluded Assets”).

 

2.3)          Contracts and International Distributorship Agreements. A sale of
contract(s) is subject to the consent of the respective third-party to the
assignment of the contract(s) to Medicis. MacroPore shall use its reasonable
efforts to obtain the respective third-party’s consents and Medicis shall
cooperate respectively. If and to the extent the consent of the relevant third
parties to the assignment of the Contracts/International Distributorship
Agreements has not been obtained until Closing, such Contracts/International
Distributorship Agreements will be retained by MacroPore and the following shall
apply with respect to the individual Contracts/International Distributorship
Agreements for which such consent has not been obtained:

 

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CONFIDENTIAL TREATMENT REQUESTED

 

If with respect to any of the Contracts/International Distributorship Agreements
the contracting party does not consent (where such consent is necessary) to an
assignment to Medicis, MacroPore performs such Contracts/Distributorship
Agreements on account and on behalf of Medicis and in accordance with the
instruction of Medicis, provided, however, that (i) Medicis shall provide all
support reasonably to be expected to perform such Contracts/International
Distributorship Agreements, and (ii) Medicis shall indemnify and hold harmless
MacroPore from any liability resulting out of or in connection with such
Contracts/International Distributorship Agreements and the performance therefore
after the Closing Date unless MacroPore negligently or willfully breached its
duties, and, further provided, that MacroPore shall not be obliged to incur any
out-of-pocket expenses or to otherwise accept any contractual liability in order
to perform such Contracts/International Distributorship Agreements unless (i)
such out-of-pocket expenses are fully paid by Medicis, or (ii) such contractual
liabilities are fully performed by Medicis. Within the first [12] months after
the Closing MacroPore shall not exercise any termination rights under such
Contracts/International Distributorship Agreements and shall not reject any
extension of such Contracts/ International Distributorship Agreements, without
prior written consent of Medicis. Thereafter, MacroPore may exercise ordinary
termination rights in respect of such Contracts/International Distributorship
Agreements at its sole discretion.

 

If the consent of the relevant third parties as in the first sentence of this
subparagraph 2.3 is refused or otherwise not obtained on existing terms to
Medicis within 120 days of the Closing Date, Medicis shall be entitled at its
sole discretion to require MacroPore to serve proper notice to terminate the
Contract/International Distributorship Agreements in accordance with the terms
and conditions of that Contract/International Distributorship Agreements.

 

2.4)          Purchase Price.  The total cash consideration from Medicis for the
Specified Assets (the “Purchase Price”) shall be Twelve Million Dollars
($12,000,000).

 

2.5)          Payment of Purchase Price.  The Purchase Price shall be paid as
follows:

 

(a)           on the Closing Date, Medicis shall wire transfer to a bank account
designated in writing by MacroPore the sum of Seven Million Dollars
($7,000,000).

 

(b)           on the day after MacroPore notifies Medicis of MacroPore’s receipt
of any 510K clearance from the U.S. FDA for the hernia wrap product, Medicis
shall wire transfer MacroPore the sum of Two Hundred Thousand Dollars
($200,000).

 

(c)           on or before December 1, 2004, Medicis shall wire transfer to a
bank account designated by MacroPore the sum of Five Million Dollars
($5,000,000).

 

2.6.          Assumed Liabilities.  Subject to Section 2.8, at the Closing,
Medicis shall assume and agree to pay, perform and discharge in due course only
those liabilities and obligations (the “Assumed Liabilities”) that accrue for
periods subsequent to the Closing and which (i) are listed in Exhibit J
(“Express Liabilities”);  (ii) result from those contracts listed on the Letter
of Assets (Exhibit F); (iii) are international distributor agreements for
distributors identified on the International Distributor List (Schedule 5.13),
and (iv) any other contracts that Medicis may, upon agreement with MacroPore,
elect in writing at or following the Closing to assume (it being understood that
Medicis shall not assume any liabilities or obligations, or portions thereof,
with respect to such contracts under (i), (ii) or (iii), including any breaches,
defaults or other events or actions thereunder, that arise or are accrued or
that should have been accrued as of or for periods prior to the Closing).
Liabilities arising from Medicis’ operation of the Field of Use Business (or
disposition of assets acquired hereunder) after the Closing are to be borne by
Medicis

 

If a claim by a third party is made against MacroPore with regard to any of the
Assumed Liabilities, Medicis shall indemnify and hold harmless MacroPore from
any obligation or liability qualified as Assumed Liabilities in this Section
2.6.

 

2.7)          Business Development Agreement.

Prior to closing the parties Shall execute the Business Development Agreement
attached hereto as Exhibit G with respect to any partnership, distribution or
licensing agreement for the Territory of Japan.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

2.8)          Retained Liabilities.  The parties agree that Medicis is not, nor
shall be considered, the successor to MacroPore, and that Medicis does not
hereby agree to assume or become liable to pay, perform or discharge any
obligation or liability whatsoever of MacroPore or relating to the Specified
Assets prior to the Closing Date or any former or present employees of
MacroPore, including those that may be hired by Medicis, except as expressly
provided for in Section  2.6).  Section 2.6 and the Letter of Assets
notwithstanding, and without limitation of the foregoing provisions of this
Section 2.8, it is expressly agreed and understood that Medicis shall not assume
any of the following obligations or liabilities of MacroPore:

 

(a)           any obligation, commitment or liability of or claim against
MacroPore that relates to or arises from events occurring before Closing
resulting in any lawsuit, action or proceeding against MacroPore, including any
obligation or liability of MacroPore under any Environmental Laws or
Regulations.

 

(b)           any Product Liability claim relating to (i) any product sold, or
service performed, by MacroPore accruing before the Closing Date, or (ii) any
finished goods manufactured before the Closing Date so long as such products are
not repackaged, resterilized or otherwise physically modified by Medicis; or

 

(c)           any other liability, obligation or undertaking of MacroPore
accruing prior to the Closing Date of any kind or nature whatsoever, whether
known or unknown, fixed or contingent, determined or determinable, due or not
yet due, or otherwise, that is not expressly assumed by Medicis under
Section 2.6 or disclosed in the Disclosure Letter.

 

If a claim by a third party is made against Medicis with regard to any of the
Retained Liabilities, MacroPore shall indemnify and hold harmless Medicis from
any obligation or liability qualified as Retained Liabilities in this section
2.8).

 

2.9)          Allocation of Purchase Price.  Set forth in a letter to be
delivered by Medicis to MacroPore concurrently with the execution and delivery
of this Agreement is an allocation of the Purchase Price for tax purposes among
the Specified Assets.  The allocation has been agreed to by MacroPore and
Medicis after arm’s-length negotiations and in accordance with Section 1060 of
the Code and other applicable laws.  MacroPore and Medicis will, to the extent
permitted by applicable law, adopt and utilize the amounts allocated to each
asset or class of assets, as such allocations may be adjusted pursuant to this
Agreement, for purposes of all federal, state, local and other tax returns or
reports, in any claim for refund, or otherwise with respect to such tax returns
or reports.  Each party agrees to timely file an IRS Form 8594 reflecting the
allocation of the Purchase Price and the Assumed Liabilities among the Specified
Assets for the taxable year that includes the Closing and to timely file any
comparable or similar forms required by applicable state, local, and foreign tax
laws.  In the event of any adjustments to the Purchase Price, the parties shall
prepare and timely file a supplemental asset acquisition statement on IRS Form
8594 in accordance with the rules under Section 1060 of the Code and the
Treasury regulations issued thereunder and shall prepare and timely file any
comparable or similar form required by applicable state, local, and foreign tax
laws.

 

2.10)        Transfer and Sales Taxes.  Medicis shall promptly pay all Transfer,
Sales and VAT Taxes.

 

2.11)        Transfer of Specified Assets.  MacroPore shall on a date to be
mutually agreed to by both parties, deliver the Specified Assets to Medicis, FOB
the shipping dock of the MacroPore’s San Diego facility.

 

2.12)        Security of Payment for Intellectual Property Assets.  In order to
secure the payment obligations of Medicis in Section 2.5 herein (“Obligations”),
Medicis does by this Agreement collaterally assign and grant to MacroPore a lien
and security interest in all of Medicis’ right, title, and interest in and to
the MacroPore Intellectual Property, including all patents, patent applications,
trademarks and/or trademark applications set forth on Exhibits A and B to the
License Agreement, and any future patents, royalties or other fees paid or
payment or payments made or to be made to Medicis in respect thereto (referred
to collectively in this Agreement as the “Patent Collateral”). The security
interest provisions of this Section 2.12 shall be null and void (without
prejudice to any other rights or remedies of MacroPore under this agreement)
after Medicis has paid MacroPore the Purchase Price obligations in Section 2.5
(a) for  $7,000,000 and Section 2.5 (c) for $5,000,000, whether or not any such
payment occurs prior to the time specified in this Agreement.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Medicis further covenants that:

 

(a)  until all of the Obligations have been satisfied in full, it will (i) not
enter into any agreement, including without limitation, license agreements,
which are inconsistent with Medicis’s undertakings and covenants under this
Agreement or which restrict or impair MacroPore’s rights under this Agreement,
and (ii) maintain the Patent Collateral in full force and effect.

 

(b)  so long as this security interest is in effect and so long as Medicis has
not received notice from MacroPore that an event of default has occurred under
the Agreement with respect to the Obligations, Medicis shall continue to have
the exclusive right (subject to the License Agreement) to use the Patent
Collateral and grant licenses with respect to them as anticipated in this
Agreement.

 

(c)  Medicis agrees not to sell, assign, or further encumber its rights and
interests in the Patent Collateral without prior written consent of MacroPore.

 

(d)  if Medicis fails to meet it’s Obligations at the time specified in this
Agreement, MacroPore, as the holder of a security interest under the U.S.
Uniform Commercial Code as in effect now or in the future in any applicable U.S.
jurisdiction, may take such action as is permitted by law or equity, in its sole
discretion, to foreclose upon or otherwise realize upon the Patent Collateral
covered by this Agreement. For those purposes, Medicis hereby authorizes and
empowers MacroPore to make, constitute, and appoint any officer or agent of
MacroPore as MacroPore may select in its sole discretion, as Medicis’s true and
lawful attorney-in-fact with the power to endorse Medicis’s name on, and/or file
of record, all assignments, applications, documents, papers, and instruments,
whether signed by Medicis or by MacroPore on Medicis’ behalf, necessary for
MacroPore or its transferee, successors, or assigns, to obtain title to and the
right to use the Patent Collateral or to grant or issue any exclusive or
nonexclusive license under the Patent Collateral to any other person, or to
assign, pledge, convey, or otherwise transfer title in or dispose of all or any
part of the Patent Collateral to any other person. Medicis here ratifies all
that that attorney shall lawfully do or cause to be done by virtue of this
Agreement. This power of attorney shall be irrevocable for the life of this
Agreement or until all Obligations under this Agreement are satisfied.

 

(e)  Medicis shall at its own expense, to the extent Medicis deems it necessary,
diligently file and prosecute all patent applications relating to the inventions
described and claimed in the Patent Collateral in the United States Patent and
Trademark Office, and shall pay or cause to be paid in their customary fashion
all connected fees and disbursements, and shall not abandon any such application
before the exhaustion of all administrative and judicial remedies or disclaim or
dedicate any Patent Collateral without the prior written consent of MacroPore.
Medicis shall not abandon any Patent Collateral without the prior written
consent of MacroPore, that consent not to be unreasonably withheld. Any and all
fees, costs, and expenses, including reasonable attorneys’ fees and expenses
incurred by MacroPore in connection with the preparation, modification,
enforcement, or termination of this lien and security interest, including the
filing and recording of any documents in public offices, any taxes, counsel
fees, maintenance fees, encumbrances, or costs otherwise incurred in defending
or prosecuting any actions or proceedings arising out of or related to the
Patent Collateral, shall be paid by Medicis on demand by MacroPore and, until
paid, shall be added to the Obligations.

 

(f)  Medicis shall have the right, with the prior written consent of MacroPore,
which consent will not be unreasonably withheld, to bring suit in its own name
to enforce the Patent Collateral, in which case MacroPore may, at MacroPore’s
option, be joined as a nominal party to this suit if MacroPore shall be
satisfied that that joinder is necessary and that MacroPore is not incurring any
risk of liability by that joinder. Medicis shall promptly, upon demand,
reimburse and indemnify, defend, and hold harmless MacroPore for all damages,
costs, and expenses, including reasonable attorneys’ fees, incurred by MacroPore
pursuant to this Section 2.12.

 

(g)  upon full and unconditional satisfaction of all Medicis’ Obligations to
MacroPore herein, MacroPore shall execute and deliver to Medicis all documents
reasonably necessary to terminate MacroPore’s interests in the Patent
Collateral.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

(h)  Medicis here acknowledges and agrees that this Agreement will be recorded
in the United States Patent and Trademark Office, and that the obligations of
this Section 2.12 shall be binding upon Medicis, its successors, and assigns,
and shall inure to the benefit of MacroPore, its successors, and assigns.

 

2.13)        Employees.  Any claims of or liabilities to those MacroPore
employees which Medicis hires for unused vacations, ratifications, bonus
payments and similar arrangements shall be born by MacroPore if and to the
extent such claims and liabilities relate to the period prior to the Closing
Date even if they do not become due until on or after the Closing Date. 
MacroPore shall not interfere in any material or significant way with the
ability of Medicis to hire or retain the employees identified in Section 3.11
(b) of the Disclosure Letter. For example, MacroPore shall not make any counter
offers to such employees, or offer them any raises or bonuses beyond the
ordinary course of business.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF MACROPORE

 

MacroPore represents and warrants by way of an independent guarantee to Medicis
except as set forth in the Disclosure Letter that the following statements are
true and complete on the date of signing this Agreement and on the Closing Date
(except where expressly stated otherwise thereafter):

 

3.1)          Organization; Directors and Officers.  MacroPore is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.  MacroPore has all necessary power and authority to own its
properties and assets and conduct the business presently being conducted by it.

 

3.2)          Authority.  MacroPore has full power and authority to enter into
this Agreement and to perform its obligations hereunder.  This Agreement has
been duly authorized, executed, and delivered by MacroPore, and constitutes a
legal, valid and binding agreement of MacroPore, enforceable against it in
accordance with its terms, subject to (a) bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles and
(b) laws relating to the availability of specific performance, injunctive relief
or other equitable remedies.  No further proceeding on the part of MacroPore is
necessary to authorize this Agreement and the transactions contemplated hereby. 
Neither the execution and delivery of this Agreement nor compliance by MacroPore
with its terms and provisions will violate (i) any provision of the certificate
of incorporation, bylaws or other governing instruments of MacroPore, (ii) any
contract, permit or license of MacroPore, or (iii) any law, statute, regulation,
injunction, order or decree of any government agency or authority or court to
which MacroPore or any of the Specified Assets is subject, except for violations
which, individually or in the aggregate, would not have a Material Adverse
Effect.

 

3.3)          Absence of Undisclosed Liabilities.  MacroPore has not incurred
any undisclosed liabilities, claims against or obligations, and there is no
reasonable legal basis therefor, that may adversely affect MacroPore’s ability
to perform its obligations hereunder or may adversely affect the ownership of
the Specified Assets or the use thereof by Medicis in the same manner currently
used by MacroPore. Except as provided in this Agreement, MacroPore has no claims
or rights with respect to, nor has MacroPore created any Liens on, the Specified
Assets.

 

3.4)          Absence of Certain Changes and Events.  Since January 1, 2003,
there has not been any (i) Material Adverse Effect; or (ii) to MacroPore’s
knowledge, any occurrence or event that could reasonably be expected to have a
Material Adverse Effect.

 

3.5)          Litigation and Claims.  There are no actions, suits, claims, or
proceedings pending or, to MacroPore’s knowledge, threatened against or by
MacroPore relating to the Specified Assets, the Assumed Liabilities or the
subject matter of this Agreement, at law, in equity or otherwise, in, before, or
by, any court, arbitrator, or governmental agency or authority.  There are no
unsatisfied judgments or outstanding orders, injunctions, decrees, stipulations
or awards (whether rendered by a court or administrative agency or by
arbitration) against or affecting MacroPore relating to any of the Specified
Assets or Assumed Liabilities.  MacroPore has never incurred any uninsured or
insured Product Liability, or received a claim based upon alleged Product
Liability, and, to MacroPore’s knowledge, no basis for any such claim exists.
Section 3.5 of the

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Disclosure Letter also sets forth a true, correct and complete list of all
complaint, warranty claim and defective product claims related to the Field of
Use Business in the two (2) years prior to the date hereof.

 

3.6)          Compliance with Law.  In conducting the Field of Use Business,
MacroPore has not violated and is not in violation of any applicable law,
ordinance or regulation of any governmental entity.  To MacroPore’s knowledge,
all governmental approvals, registrations, notifications, permits, licenses and
other permissions or authorizations (collectively, “Authorizations”) required in
connection with the conduct of the Field of Use Business are in full force and
effect and are being complied with.  MacroPore has not received any written
notification of any asserted past or present violation in connection with the
conduct of the Field of Use Business of any applicable law, ordinance or
regulation, or any written complaint, inquiry or request for information from
any governmental entity relating thereto, with the exception of one pre-warning
letter from FDA alleging off-label promotion that has been addressed and
resolved.  Neither MacroPore nor the Field of Use Business nor any of the
Specified Assets is the subject of any federal, state or local enforcement
action or, to the knowledge of MacroPore, other investigation, including but not
limited to those relating to Environmental Laws.  All documentation,
correspondence, reports, data, analysis and certifications relating to or
regarding any medical devices of the Field of Use Business, filed or delivered
(or, if amended, as of the date for which such amendment speaks) by MacroPore on
behalf of the Field of Use Business to any governmental authority, agency or
body were true and accurate in all material respects when so filed or delivered
and remain true and accurate in all material respects. Any failure or omission
with respect to a representation or warranty in this section 3.6 which does not
amount (either individually or in the aggregate) to a Material Adverse Effect
shall not constitute a violation of this section.

 

3.7)          Title to and Condition of Specified Assets.  MacroPore has full
right, title and interest to the intangible Specified Assets and good and valid
title to the tangible Specified Assets, free and clear of all Liens. MacroPore
is entitled to fully transfer or dispose of the Specified Assets (other than the
Contracts) without requiring the further consent of any third party and without
such disposal infringing any rights of a third party. The Specified Assets
include all assets, rights, interests, contracts, know how, approvals,
permissions and claims necessary for the conduct of the Field of Use Business,
other than the Excluded Assets.  The Specified Assets identified in Sections 2
(“Manufacturing Fixed Assets”) and Section 3 (“General and Administrative Fixed
Assets”) of Exhibit F are suitable for the uses for which they are presently
used by MacroPore, in normal operating condition and free from any significant
defects, ordinary wear and tear excepted, and have been properly serviced and
maintained by MacroPore.  All of the Specified Assets are located at MacroPore’s
corporate headquarters at 6740 Top Gun Street, San Diego, CA 92121, or 6749 Top
Gun Street, San Diego, CA 92121 or 61462 Königstein, Ölmühlweg 33, Germany.

 

3.8)          Intellectual Property.  All right, title and interest in and to
the MacroPore Intellectual Property is owned by MacroPore for use in connection
with the Specified Assets and Field of Use Bioabsorbable Implants and, in some
instances, also for other uses, without royalties or fees , and free and clear
of any Liens.  To MacroPore’s knowledge, neither the use of the MacroPore
Intellectual Property in the Field of Use Business, nor any of the assets
included in the Specified Assets, infringe or will infringe, misuse, or
misappropriate the rights, including Intellectual Property rights or contract
rights, of others in the Field of Use Business.  The MacroPore Intellectual
Property has not been challenged in any judicial or administrative proceeding. 
Neither any shareholder nor any employee or consultant of MacroPore (or the
employer of any such consultant) has any rights in or to any of the MacroPore
Intellectual Property.  All patent applications listed in the Specified Assets
are still pending in good standing and have not been abandoned, and all fees
necessary to maintain such MacroPore Intellectual Property in full force and
effect have been and as of the Closing will have been paid.  To MacroPore’s
knowledge, no person nor such person’s business nor any of its products has
infringed, misused, or misappropriated the MacroPore Intellectual Property or
currently is infringing, misusing, misappropriating or conflicting with such
rights.  MacroPore has valid confidentiality, assignment of invention and/or
non-competition agreements with each person to whom confidential or trade secret
information relating to the Field of Use Business has been disclosed.

 

3.9)          Relations with Suppliers .  No material supplier of MacroPore has
cancelled any contract or order for provision of, and there has been no threat
by any such supplier not to provide, raw materials, products, supplies, or
services to the Field of Use Business when owned by MacroPore or when owned by
Medicis.

 

3.10)        Environmental Matters.    Except for any violation or
non-compliance which, individually or the aggregate, would not have a Material
Adverse Effect, (a) MacroPore has obtained, and is in compliance

 

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CONFIDENTIAL TREATMENT REQUESTED

 

with, all permits, licenses or other approvals necessary under the Environmental
Laws with respect to the Field of Use Business and the Specified Assets, and is
in compliance with all Environmental Laws; (b) no capital or other expenditures
are necessary so that the Field of Use Business and Specified Assets comply
fully with any Environmental Law; (c) neither MacroPore nor the Field of Use
Business or Specified Assets have been or are subject to any actual or, to
MacroPore’s knowledge, threatened investigations, administrative proceedings,
litigation, regulatory hearings, or other action threatened, proposed or pending
that alleges (i) actual or threatened violation of or noncompliance with any
Environmental Law, or (ii) actual or threatened personal injury or property
damage or contamination of any kind resulting from a release or threatened
release of a Hazardous Substance with respect to the Field of Use Business and
Specified Assets; (d) MacroPore has not taken or failed to take any action with
respect to the Field of Use Business, the Specified Assets or the real property
presently or formerly used in connection therewith that could reasonably be
expected to result in (i) actual or threatened violation of or noncompliance
with any Environmental Law, or (ii) actual or threatened personal injury or
property damage or contamination resulting from a release of a Hazardous
Substance that requires remediation or other similar corrective action under any
applicable Environmental Laws; and (e) no Hazardous Substances have been used,
manufactured, generated, transported, released or disposed of in violation of
any Environmental Law by MacroPore.  MacroPore has delivered to Medicis true and
complete copies of all reports, studies or tests in the possession of or
initiated by MacroPore that pertain to Hazardous Substances or other
environmental concerns regarding the Field of Use Business, the Specified Assets
or any real property used in connection with the Field of Use Business or
Specified Assets.  With respect to the real property presently or formerly used
in connection with MacroPore’s business and assets, to MacroPore’s knowledge,
(i) no above-ground or underground storage tanks for Hazardous Substances are or
were present on such real property or any improvements or structures thereon,
(ii) such real property is not listed on any published federal, state or local
list of hazardous waste sites, (iii) no Lien in favor of any governmental
authority in response to a release or threatened release of any Hazardous
Substance has been filed or attached to such real property, (iv) no person other
than MacroPore has used or is using any portion of such real property for the
handling, processing, storage or disposal of Hazardous Substances except in
compliance with applicable Environmental Laws, (v) in the course of any
activities conducted by MacroPore, no Hazardous Substances have been generated
or are being used on such real property except in compliance with applicable
Environmental Laws, (vi) neither MacroPore nor any other person has caused or is
causing any releases or threatened releases of Hazardous Substances near, on,
to, from or under such real property, and (vii) any Hazardous Substances that
have been generated by MacroPore on any of such real property have been
transported offsite and have been treated or disposed of in compliance with
applicable Environmental Laws.

 

3.11)        Employees.

 

(a)           No employee of MacroPore providing services for the Field of Use
Business is subject to or otherwise restricted by any employment or
noncompetition agreement between such employee and a former employer of such
employee that would restrict such employee from being employed by, or such
employee’s employment with, MacroPore or (following the Closing) Medicis in
their capacity of providing services for the Field of Use Business.

 

(b)           Set forth in Section 3.11(b) of the Disclosure Letter is a true
and complete list of all current MacroPore employees with duties related
primarily to the Field of Use Business and, with respect to each such employee
thereon, the title, years of service, position, and salary or wages of such
employee.  No MacroPore employee listed in Section 3.11(b) is on short-term or
long-term disability or other authorized leave of absence as of the date of such
Disclosure Letter.

 

3.12)        Contracts and International Distributorship Agreements.  Each
Contract and International Distributorship Agreement is valid and subsisting and
is in full force and effect in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles, Schedule 5.13 specifies all international distributors with
whom MacroPore has Distributorship agreements in the Field of Use Business and
being in full force and effect and there have been no amendments, creditors
modifications, or supplements to any such Contracts except as disclosed.  Prior
to the date of this Agreement, MacroPore has delivered or made available to
Medicis true and complete copies of all such Contracts. No written or oral
amendments or changes of these Contracts and International Distributorship
Agreements exist. There is no material default by MacroPore or claim of material
default by MacroPore, or any other party thereto, under any such Contract and
International Distributorship Agreement and to MacroPore’s knowledge, no event
has occurred that, with the

 

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CONFIDENTIAL TREATMENT REQUESTED

 

passage of time or the giving of notice or both, could reasonably be expected to
constitute a material default by MacroPore or any other party thereto under any
such Contract and International Distributorship Agreement, or could reasonably
be expected to permit modification, acceleration, or termination of any such
Contract and International Distributorship Agreement, or result in the creation
of any Lien on any of the Specified Assets. MacroPore has not entered into other
agreements or obligations relating to these Contracts and International
Distributorship Agreements that would, or is likely to, result in a Material
Adverse Change thereto.

 

3.13)        Customer List

 

The Customer List attached as Schedule 3.13 shows all hospitals to which
MacroPore has sold Field of Use Bioabsorbable Implants from January 1, 2003
until October 1, 2003.

 

3.14)        Know-How

 

a)  All know-how which is part of the Specified Assets is adequately documented
and has been kept confidential. There is no agreement or other arrangement under
which any third party can require disclosure of any part of it. Where such
know-how has been made available to a third party this has been done under a
signed confidentiality undertaking.  Access to the all such confidentiality
undertakings has been made available to Medicis through the Data Room and will
be made further available upon request.

 

b)  None of the know-how which is part of the Specified Assets is information
from another person received by MacroPore subject to any obligation of
confidence.

 

3.15)        Miscellaneous

 

a)  The MacroPore Product Information and the MacroPore Regulatory Information
are true and complete. All facts which known to MacroPore to be relevant for
purposes of assessing the Specified Assets have been disclosed by MacroPore to
Medicis.

 

b)  To MacroPore’s Knowledge, no representation of warranty by MacroPore in this
Agreement contains any untrue statement of a material fact or fails to contain
any material fact necessary in order to make the statement therein not
misleading.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF MEDICIS

 

Medicis represents and warrants to MacroPore as follows:

 

4.1)          Organization of Medicis.  Medicis is a corporation duly organized,
validly existing and in good standing under the laws of Germany.  Medicis has
all necessary power and authority to own its properties and assets and conduct
the business presently being conducted by it.

 

4.2)          Authority.  Medicis has full power and authority to enter into
this Agreement and to perform its obligations hereunder.  This Agreement has
been duly authorized, executed, and delivered by Medicis, and constitutes a
legal, valid and binding agreement of Medicis, enforceable against Medicis in
accordance with its terms, subject to (a) bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles and
(b) laws relating to the availability of specific performance, injunctive relief
or other equitable remedies.  No further proceeding on the part of Medicis is
necessary to authorize this Agreement and the transactions contemplated hereby. 
Neither the execution and delivery of this Agreement nor compliance by Medicis
with its terms and provisions will violate (i) any provision of the articles of
incorporation or bylaws of Medicis, (ii) any contract, permit or license of
Medicis, or (iii) any law, statute, regulation, injunction, order or decree of
any government agency or authority or court to which Medicis or any of Medicis’s
assets are subject.

 

4.3)          No Finders.  No act of Medicis has given or will give rise to any
claim against any of the parties hereto for a brokerage commission, finder’s fee
or other like payment in connection with the transactions contemplated by this
Agreement

 

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CONFIDENTIAL TREATMENT REQUESTED

 

4.4)          Litigation and Claims  There are no actions, suits, claims, or
proceedings pending or, to Medicis’s knowledge, threatened against or by Medicis
relating to the Specified Assets or the subject matter of this Agreement, at
law, in equity or otherwise, in, before, or by, any court, arbitrator, or
governmental agency or authority that would prevent Medicis from performing its
obligations hereunder.  There are no unsatisfied judgments or outstanding
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration) against or affecting Medicis
that would prevent Medicis from performing its obligations hereunder.

 

ARTICLE 5

CERTAIN COVENANTS AND AGREEMENTS

 

5.1)          Approvals and Consents.  MacroPore will obtain, at its cost and
expense, all approvals and Consents of all third parties necessary for the sale
and transfer of the Specified Assets as contemplated herein.

 

5.2)          Preserve Accuracy of Representations and Warranties.  MacroPore
shall refrain from taking any action or inaction, except with the prior written
consent of Medicis, which would render any representation, warranty, covenant,
or agreement of MacroPore in this Agreement inaccurate or breached in any
material respect as of the Closing.  Between the date hereof and the Closing,
MacroPore will use all reasonable efforts to continue to operate the Field of
Use Business according to its ordinary and usual course of business consistent
with past practice.

 

5.3)          Pre-Closing Access to Information and Records.  Subject to Section
12.13, prior to the Closing, MacroPore shall permit Medicis and such persons as
it may designate, at Medicis’s expense, to visit and inspect any of the
properties of MacroPore relating to the Specified Assets and to examine the
MacroPore Product Information and MacroPore Regulatory Information and take
copies and extracts there from, all at reasonable times and upon reasonable
notice.

 

5.4)          Further Assurances.  At such times and from time to time on and
after the Closing Date, upon reasonable request by Medicis, MacroPore will
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, and assurances that may reasonably
be required for the better conveying, transferring, assigning, delivering and
confirming ownership to, or reducing to the possession of, Medicis or its
respective successors and assigns all of the Specified Assets and to otherwise
carry out the purposes of this Agreement.

 

5.5)          Training.  MacroPore shall make available to Medicis, at
MacroPore’s facility and during regular business hours, knowledgeable MacroPore
employees for the purpose of training Medicis employees in all aspects of the
manufacturing processes of the Field of Use Business.  Such training is not to
exceed 300 (three hundred) hours in aggregate, or if so shall be billed at an
hour rate that is competitive with the then going rate for such services, but in
any case, shall not exceed a rate of $250 per hour, per employee. The training
period shall not exceed one year from the date of Closing.

 

5.6)          Back-Up Supply.  For a period from the closing date up to and
including December 1, 2004 MacroPore shall act as a back-up supplier to Medicis
supplying its requirements (not otherwise provided for or self-manufactured) for
Field of Use Bioabsorbable Implants (“Products”) as manufactured by MacroPore in
the Field of Use Business as follows:

 

5.6.1)   Purchase Price.  The purchase price per unit of Product to Medicis
under this Section 5.6 shall be as follows:

 

(a) for duration of the back-up supply period, the transfer price to be paid to
MacroPore per unit (except as specified in section (b) below) shall be
MacroPore’s

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Manufacturing Cost as specified for each product on the attached Schedule 5.6
(“Cost Statements”)  plus a *** handling fee; and

 

(b) Medicis agrees to purchase from MacroPore the first  ***  units of TiMesh /
SurgiWrap product (“Combination Product”) ordered by or for  *** from Medicis,
and MacroPore agrees to sell the same to Medicis at a price of ***   per Unit.
This arrangement lasts for a period of twelve months after Closing. After the
first *** units are purchased from MacroPore, any additional Combination Product
requirements of Medicis during the initial 12 months shall be supplied to on the
terms specified in Section 5.6.1 (a) above.

 

(c) the minimum acceptable order for any specific Product shall be 100 units.

 

5.6.2)  Purchase Order Payments. Unless otherwise specified in this agreement,
all payments to be made by Medicis pursuant to this Agreement shall be due and
payable in full within 30 days after the date of invoice by MacroPore.  Any
payments due hereunder which are not paid on the date such payments are due
shall bear interest at the lesser of one and one-half percent (1-1/2%) per month
or the maximum rate permitted by law, calculated on the number of days such
payment is delinquent.  This Section 5.6 shall in no way limit any other
remedies available to MacroPore.

 

5.6.3)  Purchase Orders.  Medicis shall submit purchase orders for Products to
MacroPore in writing, whether by mail, telecopier, or otherwise.  Each purchase
order shall, at a minimum, set forth the product numbers, quantities, delivery
dates, and shipping instructions and shipping addresses for all Products
ordered.  Each purchase order shall be subject to and governed by the terms of
this Agreement.  Purchase orders shall be binding upon MacroPore to the extent
submitted at least 60 days in advance of the earliest scheduled delivery date
for such order.  The terms and conditions of this Agreement shall so govern and
supersede any additional or contrary terms set forth in Medicis’s purchase order
or any MacroPore or Medicis acceptance, confirmation, invoice or other document.
For certain products it may be necessary to temporarily transfer certain molds
or other Specified Assets, including tooling, to MacroPore’s facility to
complete manufacturing.  Medicis agrees to cooperate and bear the entire cost
and risk of such transfer if and when such transfers are required, subject to
MacroPore’s obligation to use reasonable care to protect and maintain such
assets.

 

5.6.4)  Modification of Orders.  Medicis may cancel or reschedule purchase
orders for Products only with MacroPore’s prior written approval. 
Notwithstanding the foregoing, any purchase order may be cancelled by Medicis as
to any Products that are not delivered within 60 days after the delivery date
requested by Medicis pursuant to a purchase order, and any such cancellation
shall not limit or affect any contract remedies available to Medicis with
respect thereto.  Any such cancellation by Medicis must be by written notice to
MacroPore given within 10 business days after such 60th day.

 

5.6.5)  Delivery Terms.  All deliveries of Products shall be F.O.B. MacroPore’s
facility in California. MacroPore shall have no further responsibility for risk
of damage to or loss or delay of Products after their delivery at the aforesaid
F.O.B point.  All Product deliveries shall be made by a common carrier specified
by Medicis or, in the event that no carrier shall have been specified by Medicis
on or before the date 15 days before the requested shipment date, a reputable
common carrier selected by MacroPore.

 

5.6.6)  Product Changes.  MacroPore shall not, without Medicis’s prior written
consent, modify the Specifications for a Product in a manner that materially
affects the performance or regulatory approval status of the Product or
materially increases Medicis’s costs or expenses.

 

5.6.7)  Manufacture and Supply of Products.  MacroPore shall manufacture
Products in accordance with the Field of Use Business and ship such Products to
Medicis in the quantities ordered by Medicis as contemplated by this Section
5.6.  MacroPore shall be responsible for packaging in accordance with packaging
specifications to be mutually agreed upon by Medicis and MacroPore, and

 

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*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

for any necessary sterilization of Products purchased under this Agreement in
accordance with the conduct of the Field of Use Business.

 

5.6.8)  Good Manufacturing Practices/Quality Systems Regulations.  MacroPore
shall be responsible for compliance with present and future applicable statutes,
laws, ordinances and regulations of national, federal, state and local
governments now or hereafter in effect relating to the manufacture and/or
quality of Products.  Without limitation of the foregoing, MacroPore represents
and warrants to Medicis that all Products sold and delivered to Medicis under
this Section 5.6 will have been manufactured and labeled in accordance with all
applicable requirements and fully comply with the contractual requirements and
Specifications.  MacroPore shall cause Medicis’s regulatory personnel to be
provided with reasonable access from time to time to the facilities and records
of MacroPore for the purpose of confirming MacroPore’s compliance with this
Section 5.6.8.

 

5.6.9)  Inspection of Product.  Medicis shall inspect all Products promptly upon
receipt thereof, and in the event of any shortage, damage or discrepancy in or
to a shipment of Products or in the event any of the Products fail to comply
with the then current Specifications for the Products (except for latent defects
not readily observable by Medicis), Medicis shall report the same to MacroPore
within 15 days after delivery thereof to Medicis and furnish such written
evidence or other documentation as MacroPore reasonably may deem appropriate. 
If the substantiating evidence delivered by Medicis reasonably demonstrates that
such shortage, damage or discrepancy or nonconformity with Specifications
existed at the time of delivery of the Products, Medicis may return the Products
to MacroPore, at MacroPore’s expense, and, at Medicis’s request, MacroPore shall
use all reasonable efforts to deliver promptly replacement Products to Medicis
in accordance with the delivery procedures set forth herein.

 

5.6.10)  Warranty of Product. MacroPore represents and warrants to Medicis that
all Products sold under this Section 5.6 will have been manufactured, labeled,
packaged and sold to Medicis in accordance with all applicable laws and
regulations, including (as applicable) FDA GMP requirements, European Medical
Device Directive requirements and ISO 9001 certification or successor
requirements.  Upon prior written notice, MacroPore shall cause Medicis’s
regulatory personnel to be provided with reasonable access from time to time to
the facilities and records of MacroPore for the purpose of confirming
MacroPore’s and the Product’s compliance with the applicable laws and
regulations. MacroPore warrants to that Products shall, when delivered to
Medicis, meet the Specifications and, for a period of one (1) year be free from
defects in materials and workmanship.  MacroPore will repair or replace any
Product that it reasonably determines was defective at the time of shipment to
Medicis or that does not conform to the express warranties herein; provided,
however, that MacroPore shall have no obligation under this warranty to repair
or make replacements necessitated in whole or in part by accidents; failure to
maintain in accordance with any transportation, storage, handling, or
maintenance, instructions supplied by MacroPore; damage by acts of nature,
vandalism, burglary, neglect or misuse; or other fault or negligence of Medicis
or (except for any strict liability of MacroPore) the customer or user.  Before
returning any Product alleged to be defective, Medicis shall notify MacroPore in
writing of the claimed defect and shall include the model and lot/serial number
of such Product, as well as the number and date of the invoice therefor.  No
Product shall be returned without first obtaining a returned goods authorization
from MacroPore, which authorization shall not be unreasonably withheld.

 

Limited Warranty for Back-Up Supply Product.  THE EXPRESS WARRANTIES SET FORTH
ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY
SPECIFICALLY DISCLAIMED, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE.  IN NO EVENT SHALL
MACROPORE’S LIABILITY FOR PRODUCT WARRANTY INCLUDE ANY INDIRECT, SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES.

 

5.7)          Supply of Raw Materials.  Until the earlier of 12 months from the
Closing Date; or (ii) the date when a supplier reasonably acceptable to Medicis
commences delivery to Medicis of its requirements of such raw material related
to the Field of Use Business pursuant to an agreement reasonably acceptable to
Medicis, MacroPore shall, or shall cause its suppliers to, provide Medicis with
such raw material at MacroPore’s cost, including shipping and handling costs
actually incurred; provided that Medicis shall provide MacroPore

 

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CONFIDENTIAL TREATMENT REQUESTED

 

non-cancelable purchase orders recognizing that lead times may be as much as
four months, or, as otherwise required by MacroPore’s supplier(s).  MacroPore
further agrees that it shall use commercially reasonable efforts to keep in
effect all supply agreements between MacroPore and its suppliers, both before
and during the period in which MacroPore is required to supply Medicis with its
raw material requirements hereunder. MacroPore provides no warranty for the raw
materials supplied hereunder, except for and only to the extent of that specific
warranty, if any, actually provided to MacroPore by MacroPore’s supplier.
Payment terms shall be those specified in section 5.6.2.

 

5.8)          Post-Closing Access to Information and Records.  From and after
the Closing, Medicis shall permit MacroPore and such persons as it may
designate, at MacroPore’s expense, access to the MacroPore Product Information
and MacroPore Regulatory Information and to take copies and extracts there from,
as and to the extent required for MacroPore to fulfill its obligations under
Section 5.6 hereof and for any other legitimate purpose, all at reasonable times
and upon reasonable notice.

 

5.9)          Employee Solicitation / Sales Force Transition.  Medicis shall be
allowed, but is not obligated, to solicit the Field of Use Business employees as
set forth in 3.11 (b) of the Disclosure Letter for a period of 30 days following
the Closing. MacroPore and Medicis agree that MacroPore shall continue operate
and support the U.S. SurgiWrap sales force for up to a period of 30 days after
Closing on behalf of Medicis, and Medicis agrees to pay any and all costs and
expenses of MacroPore attributable to such activities during this period,
however, only in so far as those costs do not exceed $100,000 USD. At the
conclusion of the 30 day period MacroPore shall pass all operations of the sales
force to Medicis and MacroPore is free to transfer or terminate any employee of
the sales force that Medicis has been entitled to solicit pursuant to this
Agreement. Payment terms shall be those specified in section 5.6.2.

 

5.10)        No Solicitation of Other Offers.  Prior to the Closing and after
signing the Letter of Intent, neither MacroPore nor any of its Affiliates shall
directly or indirectly discuss or negotiate with any person (other than Medicis
and its agents), encourage the submission of inquiries, proposals or offers from
any person (other than Medicis), or otherwise provide information to any other
person, with respect to the sale of the Specified Assets or the sale, licensing,
distribution or other disposition of any of the Specified Assets.

 

5.11)        Maintenance of Specified Assets.  Until MacroPore shall have
effected the transfer of the Specified Assets, MacroPore shall maintain the
condition of the Specified Assets so that such Specified Assets continue to be
suitable for the uses for which they are used by MacroPore in the Field of Use
Business, and are in normal operating condition and free from any significant
defects, ordinary wear and tear excepted, including the usual and customary
service and maintenance of such Specified Assets.

 

5.12)        Enforcement of Agreement(s).  If (i) the employment or engagement
of any MacroPore employee or consultant is terminated and, following such
termination, MacroPore obtains knowledge that such employee or consultant has
used or disclosed the confidential information of MacroPore with respect to the
Field of Use Business in violation of the terms of any agreement between such
employee or consultant and MacroPore, or (ii) any other individual or entity has
used or disclosed the confidential information of MacroPore with respect to the
Field of Use Business in violation of the terms of any agreement between such
individual or entity and MacroPore, then MacroPore shall immediately notify
Medicis in writing of such violation.  If Medicis determines in good faith that
such violation will result in material harm to Medicis’s manufacture and/or sale
of Field of Use Bioabsorbable Implants, then MacroPore will at Medicis’s
expense, to the extent enforceable under California law, use its reasonable
efforts to enforce any rights of MacroPore, its successors or assigns available
under such agreements to prevent further violation by such party.

 

5.13)        International Sales. Medicis agrees to assume all rights and
obligations relating to each international distribution agreement identified in
Schedule 5.13 (“International Distributor List”), as well as any distribution
agreement for the territory of Japan entered into prior to the Closing with
Medicis prior written consent. Medicis also agrees to assume all rights and
obligations of the manufacturing and distribution agreement (if any) for
Combination Product Field of Use Bioabsorbable Implants with  ***  as attached
hereto in Schedule 5.13 b (if any). In the event that (after the Section 5.6
back-up supply period) Medicis or any successor

 

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Confidential Treatment and filed separately with the Commission.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

of Medicis fails to supply the contractual requirements for the Japanese
distribution partner (as contemplated by the Business Development Agreement),
and fails to cure such deficiency within 60 days after delivery of written
notice of such failure from the Japanese distributor or MacroPore, MacroPore
shall have the right and be granted a limited exclusive license to manufacture
and sell Field of Use Bioabsorbable Implants to the Japanese Distributor in
amounts sufficient to meet the distributors requirements for the remainder of
the initial Japanese distribution agreement or until Medicis proves to the
reasonable satisfaction of the distributor that they are able to supply the
product required by the distributor as provided in the distribution agreement.
During any such exercise of the limited license Medicis shall be paid a royalty
equal to 10% of the gross revenues (after deduction of Manufacturing Costs) from
such sales.

 

ARTICLE 6

CONDITIONS TO MEDICIS’S OBLIGATIONS

 

The obligations of Medicis under this Agreement shall, at its option, be subject
to the satisfaction, on or prior to the Closing Date, of all of the following
conditions:

 

6.1)          Representations, Warranties and Covenants.  The representations
and warranties of MacroPore herein shall be true in all material respects on the
Closing Date with the same effect as though made at such time.  MacroPore shall
in all material respects have performed all of its obligations and complied with
all of its covenants herein prior to or as of the Closing Date.  MacroPore shall
have delivered to Medicis a certificate in form and substance satisfactory to
Medicis dated as of the Closing Date and executed by its chief executive officer
to all such effects.

 

6.2)          Approvals; Consents.  All permissions, releases, Consents or
approvals, governmental or otherwise, necessary on the part of MacroPore and
Medicis to consummate the transactions contemplated hereunder shall have been
obtained.

 

6.3)          Litigation Affecting Closing.  No suit, action or other proceeding
shall be pending or, to MacroPore’s knowledge, threatened by any third party or
by or before any court or governmental agency in which it is sought to restrain
or prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated by this
Agreement, and no governmental investigation that might result in any such suit,
action or other proceeding shall be pending or threatened.

 

6.4)          Transfer Documents.  Medicis shall have received from MacroPore
such instruments of transfer, assignment, conveyance and other instruments
sufficient to convey, transfer and assign to Medicis all right, title and
interest in the Specified Assets, free and clear of all Liens, all in form and
substance reasonably satisfactory to Medicis and its counsel, including but not
limited to the Assignment and Assumption Agreement and the Bill of Sale.

 

6.5)          Transaction Documents.  MacroPore shall have executed and
delivered the License Agreement, the Bill of Sale, and the Assignment and
Assumption Agreement.

 

ARTICLE 7

CONDITIONS TO MACROPORE’S OBLIGATIONS

 

The obligations of MacroPore under this Agreement shall, at its option, be
subject to the satisfaction, on or prior to the Closing Date, of all of the
following conditions:

 

7.1)          Representations, Warranties and Covenants.  The representations
and warranties of Medicis herein, shall be true in all material respects on the
Closing Date with the same effect as though made at such time.  Medicis shall in
all material respects have performed all of its obligations and complied with
all of its covenants herein prior to or as of the Closing Date.

 

7.2)          Approvals; Consents.  All permissions, releases, Consents or
approvals, governmental or otherwise, necessary on the part of MacroPore and
Medicis to consummate the transactions contemplated hereunder shall have been
obtained.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

7.3)          Litigation Affecting Closing.  No suit, action or other proceeding
shall be pending or to Medicis knowledge, threatened by any third party or by or
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated by this Agreement, and no
governmental investigation that might result in any such suit, action or other
proceeding shall be pending or threatened

 

7.4)          Transaction Documents.  Medicis shall have executed and delivered
the Assignment and Assumption Agreement, the License Agreement, and the letter
required by Section 2.9 hereof (allocation of purchase price), and the Business
Development Agreement.

 

ARTICLE 8

CLOSING

 

8.1)          Closing Date.  The consummation of the transactions provided for
herein (the “Closing”) shall take place at 9:00 a.m. (California time) on or
before Wednesday, January 21, 2004, (the “Closing Date”).  The Closing shall
take place at such place or in such other manner (e.g., by telecopy exchange of
signature pages with originals to follow by overnight delivery) as the parties
hereto may agree.  Each party agrees to use its reasonable best efforts to
ensure that all closing conditions to the other party’s obligations are
satisfied at or prior to the Closing.

 

8.2)          Proceedings.  All proceedings taken and all documents executed and
delivered by the parties hereto at the Closing shall be deemed to have been
taken and executed simultaneously and no proceedings shall be deemed taken nor
any documents executed or delivered until all have been taken, executed and
delivered.

 

ARTICLE 9

INDEMNIFICATION

 

9.1)          Indemnification of Medicis.  MacroPore shall indemnify, defend and
hold harmless Medicis and each of its subsidiaries, divisions, officers,
directors, employees, and shareholders from and against and in respect of any
and all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, interest and penalties, costs and expenses (including,
without limitation, reasonable legal fees and disbursements incurred in
connection therewith and in seeking indemnification therefore, and any amounts
or expenses required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgment) whether or not
involving a third-party claim (collectively “Indemnifiable Losses”), directly or
indirectly resulting from, arising out of, or imposed upon or incurred by any
person to be indemnified hereunder by reason of any one or more of the
following:

 

(a)           Any breach of any representation, warranty, covenant, obligation
or agreement of MacroPore contained in this Agreement or any agreement,
certificate or document executed and delivered by MacroPore pursuant hereto or
in connection with any of the transactions contemplated by this Agreement; or

 

(b)           Any liability or claimed liability of MacroPore not expressly
assumed by Medicis pursuant to this Agreement or any other agreement.

 

9.2)          Indemnification of MacroPore.  Medicis shall indemnify, defend and
hold harmless MacroPore and each of its subsidiaries, divisions, officers,
directors, employees and shareholders from and against and in respect of any and
all Indemnifiable Losses resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified hereunder by reason of the following:

 

(a)           Any breach of any representation, warranty, covenant, obligation
or agreement of Medicis contained in this Agreement or any agreement,
certificate or document executed and delivered by Medicis pursuant hereto or in
connection with the transactions contemplated by this Agreement; or

 

(b)           Any liability of MacroPore expressly assumed by or required to be
borne by Medicis pursuant to this Agreement or any other agreement; or

 

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CONFIDENTIAL TREATMENT REQUESTED

 

(c)           Any liability of MacroPore for personal injury to Medicis
employees while receiving training at MacroPore’s facility pursuant to the terms
of this Agreement, unless due to the gross negligence or willful misconduct of
MacroPore or its employees concerned.

 

(d)           Any liability arising from the operation of the Business or use of
the Specified Assets, accruing after the Closing.

 

9.3)          Third-Party Claims and Other Claims.

 

(a)           If a claim by a third party is made against any indemnified party,
and if the indemnified party intends to seek indemnity with respect thereto
under this Article 9, such indemnified party shall promptly notify the
indemnifying party of such claim; provided, however, that failure to give timely
notice shall not affect the rights of the indemnified party so long as the
failure to give timely notice does not adversely affect the indemnifying party’s
ability to defend such claim against a third party.  If the indemnifying party
acknowledges that the indemnified party is entitled to indemnification hereunder
for such claim, the indemnifying party shall be entitled to settle or assume the
defense of such claim, including the employment of counsel reasonably
satisfactory to the indemnified party.  If the indemnifying party elects to
settle or defend such claim, the indemnifying party shall notify the indemnified
party within thirty (30) days (but in no event less than twenty (20) days before
any pleading, filing or response on behalf of the indemnified party is due) of
the indemnifying party’s intent to do so.  If the indemnifying party elects not
to settle or defend such claim or fails to notify the indemnified party of the
election within thirty (30) days (or such shorter period provided above) after
receipt of the indemnified party’s notice of a claim of indemnity hereunder, the
indemnified party shall have the right to contest, settle or compromise the
claim without prejudice to any rights to indemnification hereunder.  Regardless
of which party is controlling the settlement or defense of any claim, (i) both
the indemnified party and indemnifying party shall act in good faith, (ii) the
indemnifying party shall not thereby permit to exist any lien, encumbrance or
other adverse charge upon any asset of any indemnified party or of its
subsidiaries, (iii) the indemnifying party shall permit the indemnified party to
participate in such settlement or defense through counsel chosen by the
indemnified party, with all fees, costs and expenses of such counsel borne by
the indemnified party, unless the indemnifying party and indemnified party have
available inconsistent defenses to such third-party claim, in which case such
fees, costs and expenses shall be borne by the indemnifying party, (iv) no entry
of judgment or settlement of a claim may be agreed to without the written
consent of the indemnified party, which consent shall not be unreasonably
withheld, and (v) the indemnifying party shall promptly reimburse the
indemnified party for the Indemnified Amount as incurred by the indemnified
party pursuant to this Article 9.  So long as the indemnifying party is
reasonably contesting any such third party claim in good faith as permitted
herein, the indemnified party shall not pay or settle any such claim (or, if it
does, it shall not be indemnified for such settlement amount).  The controlling
party shall upon request deliver, or cause to be delivered, to the other party
copies of all correspondence, pleadings, motions, briefs, appeals or other
written statements relating to or submitted in connection with the settlement or
defense of any such claim, and timely notices of any hearing or other court
proceeding relating to such claim.

 

(b)           A claim for indemnification for any matter not involving a
third-party claim may be asserted by notice to the party from whom
indemnification is sought.  Such notice shall state the amount of Indemnifiable
Losses, if known, the method of computation thereof, and contain a reference to
the provisions of the Agreement in respect to which such right of
indemnification is claimed or arises.  If the party from whom indemnification is
sought disputes such claim, then the parties shall then follow the dispute
resolution mechanism set forth in Section 12.7.

 

9.4)          Indemnification Limitations.  MacroPore shall have no liability
(for indemnification or otherwise) with respect to claims under Section 9.1
until the total of all Indemnifiable Losses with respect to such matters, when
added to the amount of all claims of Medicis to indemnification under this
Agreement and the License Agreement exceeds Four Hundred Thousand Dollars
($400,000) (the “Threshold Amount”) and then only for the amount by which such
Indemnifiable Losses exceed the Threshold Amount.  Notwithstanding anything to
the contrary in the Agreement, the total amount of Indemnifiable Losses that
MacroPore shall be obligated to pay to Medicis in the aggregate shall not
exceed  50 % of the total Purchase Price actually paid. The total amount of
Indemnifiable Losses that Medicis shall be obligated to pay to MacroPore in the
aggregate shall not exceed 50% of the Purchase Price. The Threshhold Amount
under this section 9.4, does also apply for any liability of Medicis. For
purposes of these Section 9.4 limitations, contractual obligations of Medicis to
pay

 

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specific or calculable amounts of money to MacroPore shall not be so limited to
enable Medicis to avoid any purchase payment or product payment obligations to
MacroPore.

 

9.5)          Cooperation as to Indemnified Liability.  Each party hereto shall
cooperate fully with the other parties with respect to access to books, records,
or other documentation within such party’s control, if deemed reasonably
necessary or appropriate by any party in the defense of any claim that may give
rise to indemnification hereunder.

 

9.6)          Tax Treatment.  The parties shall report any indemnification
payment made pursuant to this Article 9 as a purchase price adjustment unless
otherwise required by law.

 

ARTICLE 10

TERMINATION

 

10.1)        Termination Prior to Closing.  Notwithstanding any contrary
provisions of this Agreement, the respective obligations of the parties hereto
to consummate the Closing may be terminated and abandoned at any time at or
before the Closing only as follows:

 

(a)           By and at the option of Medicis if the Closing shall not have
occurred by January 21, 2004; provided that Medicis shall not have breached in
any material respect its obligations under this Agreement in any manner that
shall have been the proximate cause of, or resulted in, the failure to
consummate the Closing.

 

(b)           By and at the option of MacroPore if the Closing shall not have
occurred by January 21, 2004; provided that MacroPore shall not have breached in
any material respect its obligations under this Agreement in any manner that
shall have been the proximate cause of, or resulted in, the failure to
consummate the Closing.

 

(c)           At any time, without liability of any party to the others, upon
the mutual written consent of MacroPore and Medicis.

 

10.2)        Medicis Termination.  If at any time at or before the Closing Date:

 

(a)           MacroPore fails to comply with all or any of its obligations
contained in this Agreement whether to be performed on or before the Closing
Date; or

 

(b)           Medicis becomes aware of any fact or event (not being effect or
event provided for by the Agreement) which in its reasonable opinion:

 

(i)            is a material breach of or in any way materially inconsistent
with any of the representations or warranties contained in Section 3 or would be
a material breach of or in any way materially inconsistent with any of the
representations or warranties contained in Section 3 when repeated at the
Closing Date; or

 

(ii)           is evidence that any of the representations or warranties is
misleading in any respect material to Medicis or that any obligation of
MacroPore has not been or will not be complied with within the period required
by this Agreement; or

 

(iii)          would affect the willingness of a prudent purchaser for value of
the Field of Use Business to complete its purchase or the price which such
purchaser would be prepared to pay for the Field of Use Business or the terms of
such purchase; or

 

(iv)          would be likely to prevent or hinder Medicis from having effective
use and possession of or from disposing of any of the Specified Assets or from
carrying on the Field of Use Business following the Closing Date in
substantially the same manner as it is now carried on; or

 

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CONFIDENTIAL TREATMENT REQUESTED

 

(c)           any of the Specified Assets are effected by loss or damage on
account of fire, flat, explosion, death, strike or any other course (whether
similar or not) which in the reasonable opinion of Medicis materially and
adversely affects the value of the Specified Assets or the Field of Use Business
or the manner in which it can continue to be carried on; or

 

(d)           circumstances occur with respect to the Field of Use Business
which would have a material adverse effect on the Field of Use Business and/or
if, between the date of signing this Agreement and the Closing Date, there is
any material adverse change, either individually or in the aggregate, in the
assets, financial situation or operational results of the Field of Use Business.

 

then Medicis may elect to withdraw from this Agreement without prejudice to its
remedies against MacroPore.

 

10.3) No Waiver.  Nothing contained in this Article 10 shall be construed as a
release or waiver by any party hereto of any of its rights against any other
party arising out of any breach of this Agreement by the other party.

 

ARTICLE 11

COMPETITION RESTRAINT

 

11.1)  For a period of [2] years after the Closing Date MacroPore shall not
(except in connection with its Development and Supply arrangements with
Medtronic for the Spinal Field, and products of MacroPore for use in the Field
of Regenerative Medicine):

 

(a)           develop, manufacture or distribute Bioabsorbable Film Implants
(hereinafter referred to as “Competitive Products”) except as provided for in
this Agreement;

 

(b)           establish an enterprise which develops, manufactures or
distributes Competitive Products, acquire such enterprise, participate – in any
manner whatsoever – in such enterprise and support such enterprise in any other
manner;

 

(c)           compete directly or indirectly in any other manner in the business
of developing, manufacturing or distributing Competitive Products or support
such competition by third parties, e.g. by contacting customers of the Field of
Use Business.

 

11.2         This competition restraint shall not apply to the acquisition of
shares, which are quoted on the stock exchange in competitive companies, for the
purpose of a mere capital investment with a maximum participation of 10 %.

 

11.3         The competition restrained pursuant to section 11.1 shall apply to
all countries in which MacroPore presently conducts and solicits all or part of
its Field of Use Business or has conducted or solicited any Field of Use
Business during the last five years prior to the Closing Date, including, but
not limited to the countries which are listed in Schedule 5.13.

 

ARTICLE 12

MISCELLANEOUS

 

12.1)        Cooperation. The Parties shall, also after the Closing Date,
execute such documents and do such other things and acts as may still be
necessary or desirable to perform and fully carry out the terms and purposes of
this Agreement.

 

12.2  Complete Agreement.  The Schedules and Exhibits to this Agreement shall be
construed as an integral part of this Agreement to the same extent as if they
had been set forth verbatim herein.  This Agreement and the Schedules and
Exhibits hereto constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements whether
written or oral relating hereto.

 

12.3)        Survival of Representations and Warranties.  The representations
and warranties contained in this Agreement shall survive and remain in full
force and effect for one year after the Closing Date.

 

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12.4)        Waiver, Discharge, Amendment, Etc.  The failure of any party hereto
to enforce at any time any of the provisions of this Agreement, shall in no way
be construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision.  No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent breach. 
Any amendment to this Agreement shall be in writing and signed by the parties
hereto.

 

12.5)        Notices.  All notices hereunder shall be deemed given if in writing
and delivered personally or sent by telecopy (with confirmation of transmission)
or certified mail (return receipt requested) or reputable courier service to the
parties at the following addresses (or at such other addresses as shall be
specified by like notice):

 

if to Medicis, to:

 

Managing Director

Medicis Ventures Management GmbH

Poschingerstr. 9

D-81679 München, Germany

Fax

 

and if to MacroPore, to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

Attention: Christopher J. Calhoun

FAX (858) 458-0995

 

with separate copies thereof addressed to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

Attention: In-House Counsel

FAX (858) 458-0994

 

Any party may change the above specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed.  All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally, by telecopy or by reputable courier service) or on the
date that is three days after the date shown on the return receipt (if delivered
by mail).

 

12.6)        Expenses.  Except as otherwise expressly provided herein, Medicis
and MacroPore shall each pay their own expenses (including, but not limited to,
all compensation and expenses of counsel, financial advisors, consultants,
actuaries and independent accountants) incident to this Agreement and the
preparation for, and consummation of, the transactions provided for herein.

 

12.7)        Governing Law and Arbitration.  This Agreement shall be governed by
and interpreted in accordance with the laws of the State of California,
including all matters of construction, validity, performance and enforcement,
without giving effect to principles of conflict of laws and without application
of the United Nations Convention for the International Sale of Goods.  Any
dispute arising out of or relating to this Agreement (including the formation,
interpretation or alleged breach thereof) shall be settled by final and binding
alternative dispute resolution conducted under the auspices of, and in
accordance with, the Commercial Arbitration Rules of the American Arbitration
Association, in San Francisco, California.  The results of such arbitration
proceedings shall be binding upon the parties hereto, and judgment may be
entered upon the arbitration award in any court having jurisdiction thereof. 
Notwithstanding the foregoing, either party may seek interim injunctive relief
from any court of competent jurisdiction.  Any legal actions or proceedings
relating to the Agreement or the enforcement of any provision of the Agreement
shall be brought or otherwise commenced

 

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CONFIDENTIAL TREATMENT REQUESTED

 

in California (and if in court, in any state or federal court located in the
California).  Each of the parties hereto expressly and irrevocably consents and
submits to the jurisdiction of each state and federal court located in
California in connection with any such legal proceedings.

 

12.8)        Public Announcement.  In the event any party proposes to issue any
press release or public announcement concerning any provisions of this Agreement
or the transactions contemplated hereby, such party shall so advise the other
parties hereto, and the parties shall thereafter use their best efforts to cause
a mutually agreeable release or announcement to be issued.  Neither party will
publicly disclose or divulge any provisions of this Agreement or the
transactions contemplated hereby without the other party’s written consent,
except as may be required by applicable law or stock exchange regulation, and
except for communications to such party’s employees or customers or investors or
prospective investors (subject to appropriate confidentiality obligations);
provided that, prior to disclosure of any provision of this Agreement that
either party considers particularly sensitive or confidential to any
governmental agency or stock exchange, the parties shall cooperate to seek
confidential treatment or other applicable limitations on the public
availability of such information.

 

12.9)        Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of the
parties hereto; provided that the rights and obligations of MacroPore herein may
not be assigned except that all such rights and obligations of MacroPore may be
assigned to an entity that will succeed to substantially all of the
polylactic-acid-related business of MacroPore, and the rights of Medicis may be
assigned only to an Affiliate of Medicis or to such business organization that
shall succeed to substantially all of the Field of Use Business of Medicis or of
such subsidiary to which this Agreement relates.

 

12.10)      Titles and Headings; Construction.  The titles and headings to
Sections herein and Exhibits and Schedules hereto are inserted for the
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.  This Agreement shall be
construed without regard to any presumption or other rule requiring construction
hereof against the party causing this Agreement to be drafted.  Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective permitted successors or assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.

 

12.11)      Severability.  If any provision of this Agreement is held invalid,
unenforceable or void by a court of competent jurisdiction, the remaining
provisions shall nonetheless be enforceable according to their terms.  In such
case, the parties agree to negotiate in good faith to create an enforceable
contractual provision to achieve the purpose of the invalid provision.  Further,
if any provision is held to be overbroad as written, such provision shall be
deemed amended to narrow its application to the extent necessary to make the
provision enforceable according to applicable law and shall be enforced as
amended.

 

12.12)      Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.

 

12.13)  Confidentiality.  Each party will (i) keep confidential, and not
disclose to others, all Confidential Information of the other party, and (ii)
not use any of the other party’s Confidential Information for its own direct or
indirect benefit, or the direct or indirect benefit of any third party, except
that a party may use the other party’s Confidential Information to the extent
necessary to perform its duties and obligations, or to enforce such party’s
rights, under this Agreement, or to exercise such party’s rights under the
License Agreement.  The foregoing shall not prohibit disclosures: (x) made to
the receiving party’s sub-distributors, employees or agents who have a “need to
know” the other party’s Confidential Information to the extent such disclosure
is necessary to perform such party’s duties and obligations, or to enforce such
party’s rights, under this Agreement or the License Agreement, provided that
such sub-distributors, employees or agents agree in writing or are otherwise
actually compelled to comply with the obligations of this Section 12.13, and the
receiving party remains directly responsible to the disclosing party for their
compliance; or (y) compelled to be made by any requirement of law or pursuant to
any legal, regulatory or investigative proceeding before any court, or
governmental or regulatory authority, agency or commission so long as the party
so compelled to make disclosure of Confidential Information of the other party
provides prior written notice to such other party so that the other party may
seek a protective order or other remedy to protect the confidentiality of the
Confidential Information and/or waive the compelled party’s compliance with this
Section 12.13, provided that all such information so disclosed (other than in a
way which makes it generally available to the public) shall remain Confidential
Information for all

 

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other purposes.  If such protective order, other remedy or waiver is not
obtained by the time the compelled party is required to comply, the compelled
party may furnish only that portion of the Confidential Information of the other
party that it is legally compelled, in the opinion of counsel, to disclose and
shall request, at the other party’s expense, that such Confidential Information
be accorded confidential treatment (if such procedure is available), including
redaction of any payment terms specified herein.  Each party further agrees to
take appropriate measures to prevent any such prohibited disclosure of
Confidential Information by its present and future employees, officers, agents,
subsidiaries, or consultants.  This Section shall survive indefinitely with
respect to manufacturing information and, with respect to all other Confidential
Information, for a period of three years from and after the Closing or any
termination of this Agreement.

 

(Remainder of page intentionally blank; signatures follow on next page)

 

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IN WITNESS WHEREOF, each of the parties has caused this Asset Purchase Agreement
to be executed in the manner appropriate for each, as of the date first above
written.

 

 

MEDICIS Ventures Management GmbH

 

 

 

 

 

 

By

/s/ Kai Deusch .

 

 

Its

Managing Director .

 

 

 

 

MACROPORE BIOSURGERY, INC.

 

 

 

 

 

 

 

By

/s/ Christopher J. Calhoun

 

 

Its

Chief Executive Officer

 

SCHEDULES:

 

2.2

–

Open Orders

3.13

–

Customer List

5.6

–

Cost Statements

5.13

–

International Distributor List

 

EXHIBITS:

 

A

–

License Agreement

B

–

Letter of Intent

C

–

Associate Investors List

D

–

Assignment and Assumption Agreement

E

–

Bill of Sale

F

–

Letter of Assets

G

–

Business Development Agreement

H

–

Excluded Assets

I

–

Inventory

J

–

Express Liabilities

 

pdf

 

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EXHIBIT A

LICENSE AGREEMENT

 

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CONFIDENTIAL TREATMENT REQUESTED

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (the “Agreement”) is made and entered into as of December
13, 2003, (the “Effective Date”) between Medicis Ventures Management GmbH,
(“Medicis”), a German corporation, and MacroPore Biosurgery, Inc., a Delaware
corporation (“MacroPore”).

 

WITNESSETH:

 

WHEREAS, MacroPore and Medicis have entered into an Asset Purchase Agreement
dated December 13, 2003 pursuant to which MacroPore is selling Medicis certain
assets (the “Purchase Agreement”); and

 

WHEREAS, as part of the transaction between the parties relating to the Purchase
Agreement, Medicis will license to MacroPore certain rights to intellectual
property in accordance with the terms of the Agreement and the Purchase
Agreement; and

 

WHEREAS, the execution and delivery of this Agreement is a condition precedent
to the consummation of the Purchase Agreement.

 

AGREEMENTS:

 

NOW THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained herein, and in the Purchase Agreement and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties mutually agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1           Specific Definitions.  As used in this Agreement, the following
definitions and terms shall have the designated meanings:

 

“Affiliate” has the meaning set forth in the Purchase Agreement.

 

“Agreement” means this Agreement and all Exhibits hereto.

 

“Bioabsorbable Film Implants” has the meaning set forth in the Purchase
Agreement..

 

“Confidential Information” means Intellectual Property (as defined below)
disclosed (whether before or during the term of this Agreement) by or on behalf
of one of the parties (the “disclosing party”) to the other party (the
“receiving party”), generated under this Agreement, or otherwise learned by the
receiving party from the disclosing party, excluding information which:

 

(a)           was already in the possession of the receiving party before its
original receipt from the disclosing party (provided that the receiving party is
able to provide the disclosing party with written proof thereof and, if received
from a third party, that such information was acquired without any party’s
breach of a confidentiality or non-disclosure obligation to the disclosing party
related to such information);

 

(b)           is or becomes part of the public domain by reason of acts not
attributable to the receiving party;

 

(c)           shall have been disclosed to the receiving party from a source
other than the disclosing party which source has rightfully obtained such
information and has no direct or indirect obligation of non-disclosure or
confidentiality to the disclosing party with respect thereto; or

 

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CONFIDENTIAL TREATMENT REQUESTED

 

(d)           has been independently developed by or for the receiving party
without breach of this Agreement or use of any Confidential Information of the
other party (provided that the receiving party is able to provide the disclosing
party with written proof thereof).

 

Notwithstanding the foregoing exceptions, all information learned by Medicis
personnel during the time they were MacroPore personnel shall be Confidential
Information of MacroPore and shall continue to be governed by their agreements
with MacroPore.

 

“Expiration” or “Expired” means, with respect to a particular patent, the
patent’s expiration, abandonment, cancellation, disclaimer, award to another
party other than Medicis or MacroPore in an interference proceeding, or
declaration of invalidity or unenforceability by a court or other authority of
competent jurisdiction (including final rejection in a re-examination or
re-issue proceeding).

 

“Field of Regenerative Medicine” has the meaning set forth in the Purchase
Agreement.

 

 “Intellectual Property” means U.S. and foreign patents and patent applications,
trademarks, service marks and registrations thereof and applications therefor,
copyrights and copyright registrations and applications, mask works and
registrations thereof, know-how, trade secrets, inventions, discoveries, works
of authorship, ideas, technology, data, information, methods, processes,
drawings, designs, licenses, computer programs and software, and technical
information including but not limited to information embodied in material
specifications, processing instructions, equipment specifications, product
specifications, confidential data, electronic files, research notebooks,
invention disclosures, research and development reports and the like related
thereto, and all amendments, modifications, and improvements to any of the
foregoing.

 

“Invention” means any invention, discovery, works of authorship, know-how, trade
secret, data, information, technology, process or concept, whether or not
patented or patentable, and whether or not memorialized in writing.

 

“Knowledge” shall have the meaning set forth in the Purchase Agreement.

 

“Licensed Product(s)” means Bioabsorbable Film Implants covered by MacroPore
Intellectual Property (as sold to Medicis pursuant the Purchase Agreement) and
any related products.

 

“MacroPore Intellectual Property” means all Intellectual Property sold to
Medicis pursuant to the Purchase Agreement, including, without limitation, the
Patents and the Trademarks.

 

“Medicis” means Medicis Ventures Management GmbH and its Associate Investors and
its and their Affiliates and successors.

 

“Patents” means: (a) the patents and patent applications, together with any
patents that may issue based thereon, set forth on Exhibit A; (b) all
continuation, divisional, re-issue, re-examination and substitution applications
that may be filed by or for the benefit of Medicis based on the foregoing
referenced patents or patent application, together with any patents that may
issue based thereon; and (c) all foreign applications that may be filed by or
for the benefit of Medicis based on the foregoing referenced patents and patent
applications, together with all patents which may issue based thereon.

 

“Specified Assets” has the meaning set forth in the Purchase Agreement.

 

“Spinal Field” means all applications (including but not limited to:
anti-adhesion, anti-scarring, minimizing the attachment of soft tissues, or soft
or hard tissue support) related to the anatomy of the spine including, but not
limited to, applications in the following: spinal fixation, stabilization and/or
fusion, spinal cord coverings, exiting nerve root coverings, cauda equina
coverings, lamina coverings and vertebral column-cervical, thoracic, lumbar and
sacral.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

“Trademarks” means any trademark and trademark applications, together with any
registrations that may issue based thereon, set forth on Exhibit B.

 

1.2           Other Terms.  Other terms may be defined elsewhere in the text of
this Agreement and shall have the meaning indicated throughout this Agreement.

 

1.3           Definitional Provisions.

 

THE WORDS “HEREOF,” “HEREIN,” AND “HEREUNDER” AND WORDS OF SIMILAR IMPORT, WHEN
USED IN THIS AGREEMENT, SHALL REFER TO THIS AGREEMENT AS A WHOLE AND NOT TO ANY
PARTICULAR PROVISIONS OF THIS AGREEMENT.

 

THE TERMS DEFINED IN THE SINGULAR SHALL HAVE A COMPARABLE MEANING WHEN USED IN
THE PLURAL, AND VICE VERSA.

 

REFERENCES TO AN “EXHIBIT” ARE, UNLESS OTHERWISE SPECIFIED, TO ONE OF THE
EXHIBITS ATTACHED TO OR REFERENCED IN THIS AGREEMENT, AND REFERENCES TO AN
“ARTICLE” OR A “SECTION” ARE, UNLESS OTHERWISE SPECIFIED, TO ONE OF THE ARTICLES
OR SECTIONS OF THIS AGREEMENT.

 

THE TERM “PERSON” INCLUDES ANY INDIVIDUAL, PARTNERSHIP, JOINT VENTURE,
CORPORATION, LIMITED LIABILITY COMPANY, TRUST, UNINCORPORATED ORGANIZATION OR
GOVERNMENT OR ANY DEPARTMENT OR AGENCY THEREOF.

 

ARTICLE 2

LICENSE TO MACROPORE

 

2.1           Grant of License for the Spinal Field. Subject to the terms and
conditions of this Agreement, Medicis hereby grants to MacroPore and its
Affiliates a worldwide, sublicensable (subject to the limitations set forth in
Section 2.3 and 2.4 below), exclusive, royalty-free license to the MacroPore
Intellectual Property to make, have made, use, import, offer to sell, sell and
distribute Licensed Products in the Spinal Field and otherwise to commercialize
and exploit the MacroPore Intellectual Property in the Spinal Field for a term
equal to and determined by the length of the Spinal Development and Supply
Agreement (including any extensions thereof) between MacroPore (including any of
its affiliates, subsidiaries and assigns) and Medtronic, Inc. (including any of
its affiliates, subsidiaries and assigns).

 

2.2           Grant of License for the Field of Regenerative Medicine. Subject
to the terms and conditions of this Agreement, Medicis hereby grants to
MacroPore and its Affiliates a perpetual, worldwide, sublicensable (subject to
the limitations set forth in Section 2.3 below), non-exclusive, royalty-free
license to the MacroPore Intellectual Property to make, have made, use, import,
offer to sell, sell and distribute Licensed Products in the Field of
Regenerative Medicine and otherwise to commercialize and exploit the MacroPore
Intellectual Property in the Field of Regenerative Medicine and to perform
MacroPore’s back-up supply obligations as specified in the Purchase Agreement.

 

2.3           Restriction on Sublicense.  MacroPore’s right to sublicense its
rights hereunder shall be limited as follows:  (a) MacroPore shall be
responsible for and indemnify Medicis for actions or omissions of sublicensees
and any breach by the sublicensee (whether by action, omission or otherwise)
shall be deemed a breach by MacroPore; (b) all sublicense agreements shall
contain terms at least as protective of the MacroPore Intellectual Property as
the terms in this Agreement; and (c) all sublicense agreements shall expressly
state that Medicis retains all right, title, and interest in and to all
MacroPore Intellectual Property, other than those rights herein licensed to
MacroPore and its Affiliates, and there shall be no license or rights granted by
implication.

 

2.4           Efforts to Terminate License for the Spinal Field.  No more than
one year prior and no less than six months prior to the termination of the
current term of the MacroPore-Medtronic Development & Supply Agreement (On or
about July 7, 2011), MacroPore shall give notice to Medtronic that the rights to
the Spinal Field are to be terminated at

 

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CONFIDENTIAL TREATMENT REQUESTED

 

the end of the term in the event that Medtronic is not selling the Hydrosorb
Bioabsorbable Film Implants for use in the spine.

 

ARTICLE 3

ADDITIONAL OBLIGATIONS

 

3.1           Maintain Intellectual Property in Force.   Medicis agrees to
maintain in full force and effect (including, without limitation, preventing
disclosures which would defeat trade secret status) all MacroPore Intellectual
Property covering applications within the Spinal Field and/or the Field of
Regenerative Medicine, or if Medicis wishes to abandon any such MacroPore
Intellectual Property, it shall notify MacroPore in writing at least ninety days
before any abandonment of such MacroPore Intellectual Property and MacroPore
shall have the right, but not the obligation, to maintain such MacroPore
Intellectual Property in full force and effect at its own expense. In the event
that MacroPore elects to assume the prosecution or maintenance of any MacroPore
Intellectual Property abandoned by Medicis, Medicis agrees to assign all right,
title and interest to the abandoned property to MacroPore.  Medicis also agrees
that it shall not transfer any of its rights, title or interest in the MacroPore
Intellectual Property to any third party without first notifying such third
party of MacroPore’s rights under this Agreement and obtaining such third
party’s express agreement to assume Medicis’s obligations under this Agreement.

 

ARTICLE 4

INTELLECTUAL PROPERTY

 

4.1           Confidentiality.  Each party will, for the term of this Agreement
and thereafter, (i) keep confidential and not disclose to others, all
Confidential Information of the other party, and (ii) not use any of the other
party’s Confidential Information for its own direct or indirect benefit, or the
direct or indirect benefit of any third party, except that a party may use the
other party’s Confidential Information to the extent necessary to perform its
duties and obligations, or to enforce such party’s rights, under this Agreement;
and if the Confidential Information is part of the MacroPore Intellectual
Property, MacroPore and its Affiliates may use it within the scope of the
licenses granted in Sections 2.1 and 2.2 herein. The foregoing shall not
prohibit disclosures: (x) made to the receiving party’s distributors, employees
or agents who have a “need to know” the other party’s Confidential Information
to the extent such disclosure is necessary to perform such party’s duties and
obligations, or to enforce such party’s rights, under this Agreement, provided
that such distributors, employees or agents agree in writing or are otherwise
actually compelled to comply with the obligations of this Section 4.1, and the
receiving party remains directly responsible to the disclosing party for their
compliance; or (y) compelled to be made by any requirement of law or pursuant to
any legal, regulatory or investigative proceeding before any court, or
governmental or regulatory authority, agency or commission so long as the party
so compelled to make disclosure of Confidential Information of the other party
provides prior written notice to such other party so that the other party may
seek a protective order or other remedy to protect the confidentiality of the
Confidential Information and/or waive the compelled party’s compliance with this
Section 4.1, provided that all such information so disclosed (other than in a
way which makes it generally available to the public) shall remain Confidential
Information for all other purposes.  If such protective order, other remedy or
waiver is not obtained by the time the compelled party is required to comply,
the compelled party may furnish only that portion of the Confidential
Information of the other party that it is legally compelled, in the opinion of
counsel, to disclose and shall request, at the other party’s expense, that such
Confidential Information be accorded confidential treatment (if such procedure
is available), including redaction of any payment terms specified.  Each party
further agrees to take appropriate measures to prevent any such prohibited
disclosure of Confidential Information by its present and future employees,
officers, agents, subsidiaries, or consultants.

 

4.2           Prosecution of Infringement of MacroPore Intellectual Property. 
Each of MacroPore and Medicis shall promptly notify the other if it knows or has
reason to believe that rights to the MacroPore Intellectual Property in the
Spinal Field or Field of Regenerative Medicine are being infringed or
misappropriated by a third party or that such infringement or misappropriation
is threatened.  MacroPore shall have the first right to prosecute such alleged
infringement or misappropriation for MacroPore’s own account.  In the event
MacroPore elects to prosecute such alleged infringement or misappropriation for
its own account, MacroPore shall be solely responsible for payment of all of its
own costs of prosecution and of negotiating settlement, and shall retain all
proceeds from such prosecution.

 

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MacroPore’s prosecution of such infringement shall be by counsel reasonably
acceptable to Medicis.  MacroPore shall have the right to join Medicis as a
party plaintiff to any such proceeding if MacroPore believes it is necessary to
successfully prosecute such infringement or misappropriation. Medicis shall
cooperate in connection with the initiation and prosecution by MacroPore of such
suit.  Notwithstanding the foregoing, Medicis shall have the right to initiate
or join in any prosecution concerning the MacroPore Intellectual Property.  In
the event Medicis initiates or joins as a plaintiff in any such action involving
the MacroPore Intellectual Property, MacroPore and Medicis shall attempt to
agree on a sharing ratio which shall apply to the expenses of prosecution and to
the proceeds of prosecution.  If MacroPore and Medicis cannot agree, the ratio
shall be that of the gross revenues for each party (for the preceding 12 months)
attributable to the use of the MacroPore Intellectual Property to the extent
that such gross revenues are consistent with the terms of this Agreement.  In
any case where MacroPore exercises its first right to prosecute, MacroPore shall
control the handling of the case; provided, that if the alleged infringer
challenges the validity of a claim of a Patent which has primary applicability
outside the Spinal Field or the Field of Regenerative Medicine, Medicis shall
control the handling of that portion of the case.  If MacroPore elects not to
prosecute any infringement involving the MacroPore Intellectual Property, then
Medicis shall be entitled to prosecute it without any participation by MacroPore
and to keep all proceeds from such prosecution.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

 

5.1           Representations of Medicis.  Medicis represents, warrants and
covenants to MacroPore that:

 

(a)           Medicis is a corporation duly organized, validly existing, and in
good standing under the laws of Germany and has full corporate power to conduct
the business in which it is presently engaged and to enter into and perform its
obligations under this Agreement.

 

(b)           Medicis has taken all necessary corporate action under the laws of
the place of its incorporation and its governing documents to authorize the
execution and consummation of this Agreement and this Agreement constitutes the
valid and legally binding agreement of Medicis enforceable against Medicis in
accordance with the terms hereof, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.

 

(c)           Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein will violate any provision
of the governing documents of Medicis or any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order of any court
or governmental agency or instrumentality, domestic or foreign, or conflict with
or result in any breach of any of the terms of or constitute a default under or
result in termination of or the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of any
nature pursuant to the terms of any contract or agreement to which Medicis is a
party or by which Medicis or any of its assets is bound.

 

5.2           Representations of MacroPore.  MacroPore represents, warrants and
covenants to Medicis that:

 

(a)           MacroPore is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware and has full corporate
power to conduct the business in which it is presently engaged and to enter into
and perform its obligations under this Agreement.

 

(b)           MacroPore has taken all necessary corporate action under the laws
of the state of its incorporation and its certificate of incorporation and
bylaws to authorize the execution and consummation of this Agreement and this
Agreement constitutes the valid and legally binding agreement of MacroPore
enforceable against MacroPore in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.

 

(c)           Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated herein will violate any provision
of the certificate and bylaws of MacroPore or any law, rule, regulation,

 

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CONFIDENTIAL TREATMENT REQUESTED

 

writ, judgment, injunction, decree, determination, award or other order of any
court or governmental agency or instrumentality, domestic or foreign, or
conflict with or result in any breach of any of the terms of or constitute a
default under or result in termination of or the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature pursuant to the terms of any contract or agreement to
which MacroPore is a party or by which MacroPore or any of its assets is bound.

 

5.3           Warranties.           Unless otherwise expressly provided herein,
the MacroPore Intellectual Property is provided “as is” without any warranty
whatsoever. Medicis disclaims all warranties, conditions, representations,
indemnities and guarantees, whether express, implied or statutory, as to any
matter whatsoever, including all implied warranties of merchantability, fitness
for a particular purpose and non-infringement of third party rights. Especially,
this applies to any infringement, alleged or otherwise, of patent, utility
model, design, trade mark, copyright or any other Intellectual Property Rights
in connection with the MacroPore Intellectual Property. Medicis disclaims any
warranty or representation to any person other than MacroPore with respect to
the MacroPore Intellectual Property.

 

ARTICLE 6

INDEMNIFICATION

 

6.1           Indemnification by Medicis.  Medicis shall indemnify, defend and
hold harmless MacroPore and each of its subsidiaries, officers, directors,
shareholders, employees, agents and affiliates (collectively, all such
indemnitees are referred to in this Section as “MacroPore”) against and in
respect of any and all claims, demands, losses, obligations, liabilities,
damages, penalties, deficiencies, actions, settlements, judgments, costs and
expenses which MacroPore may incur or suffer or with which it may be faced
(including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor), (referred to as “Costs”) arising out of or based upon
the breach by Medicis of any of its representations, warranties, covenants or
agreements contained or incorporated in this Agreement or any agreement,
certificate or document executed and delivered to MacroPore by Medicis in
connection with the transactions hereunder.  An amount for which MacroPore is
entitled to indemnification pursuant hereto is referred to as an “Indemnified
Amount.”

 

6.2           Indemnification by MacroPore.  MacroPore shall indemnify, defend
and hold harmless Medicis and each of its subsidiaries, officers, directors,
shareholders, employees, agents and affiliates (collectively, all such
indemnitees are referred to in this Section as “Medicis”) against and in respect
of any and all claims, demands, losses, obligations, liabilities, damages,
penalties, deficiencies, actions, settlements, judgments, costs and expenses
which Medicis may incur or suffer or with which it may be faced (including
reasonable costs and legal fees incident thereto or in seeking indemnification
therefor), (referred to as “Costs”) arising out of or based upon the breach by
MacroPore of any of its representations, warranties, covenants or agreements
contained or incorporated in this Agreement.  An amount for which Medicis is
entitled to indemnification pursuant hereto is referred to as an “Indemnified
Amount.”

 

6.3           Third Party Claims.  If a claim by a third party is made against
any indemnified party, and if the indemnified party intends to seek indemnity
with respect thereto under this Article 6, such indemnified party shall promptly
notify the indemnifying party of such claim; provided, however, that failure to
give timely notice shall not affect the rights of the indemnified party so long
as the failure to give timely notice does not adversely affect the indemnifying
party’s ability to defend such claim against a third party.  If the indemnifying
party acknowledges that the indemnified party is entitled to indemnification
hereunder for such claim, the indemnifying party shall be entitled to settle or
assume the defense of such claim, including the employment of counsel reasonably
satisfactory to the indemnified party.  If the indemnifying party elects to
settle or defend such claim, the indemnifying party shall notify the indemnified
party within thirty (30) days (but in no event less than twenty (20) days before
any pleading, filing or response on behalf of the indemnified party is due) of
the indemnifying party’s intent to do so.  If the indemnifying party elects not
to settle or defend such claim or fails to notify the indemnified party of the
election within thirty (30) days (or such shorter period provided above) after
receipt of the indemnified party’s notice of a claim of indemnity hereunder, the
indemnified party shall have the right to contest, settle or compromise the
claim without prejudice to any rights to indemnification hereunder.  Regardless
of which party is controlling the settlement of defense of any claim, (a) both
the indemnified party and indemnifying party shall act in good faith, (b) the
indemnifying party shall not thereby permit to exist any lien, encumbrance or
other adverse charge upon any asset of any indemnified party or of its
subsidiaries, (c) the

 

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CONFIDENTIAL TREATMENT REQUESTED

 

indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by the indemnified party, with all
fees, costs and expenses of such counsel borne by the indemnified party, unless
the indemnifying party and indemnified party have available inconsistent
defenses to such third-party claim, in which case such fees, costs and expenses
shall be borne by the indemnifying party, (d) no entry of judgment or settlement
of a claim may be agreed to without the written consent of the indemnified
party, which consent shall not be unreasonably withheld, and (e) the
indemnifying party shall promptly reimburse the indemnified party for the
Indemnified Amount as incurred by the indemnified party pursuant to this Article
6.  So long as the indemnifying party is reasonably contesting any such third
party claim in good faith and the foregoing clause (b) is being complied with,
the indemnified party shall not pay or settle any such claim (or, if it does, it
shall not be indemnified for such settlement amount).  The controlling party
shall upon request deliver, or cause to be delivered, to the other party copies
of all correspondence, pleadings, motions, briefs, appeals or other written
statements relating to or submitted in connection with the settlement or defense
of any such claim, and timely notices of any hearing or other court proceeding
relating to such claim.

 

6.4           Non-Third Party Claims.  A claim for indemnification for any
matter not involving a third-party claim may be asserted by notice to the party
from whom indemnification is sought.  Such notice shall state the amount of the
Indemnified Amount, if known, the method of computation thereof, and contain a
reference to the provisions of this Agreement in respect to which such right of
indemnification is claimed or arises.  If the party from whom indemnification is
sought disputes such claim then the parties shall then follow the dispute
resolution mechanism set forth in Section 9.15 of this Agreement.

 

6.5)          Indemnification Limitations.               MacroPore shall have no
liability (for indemnification or otherwise) with respect to claims under
Article 6 until the total of all Indemnifiable Losses with respect to such
matters, when added to the amount of all claims of Medicis to indemnification
under the Purchase Agreement exceeds Five Hundred Thousand Dollars ($500,000)
(the “Threshold Amount”) and then only for the amount by which such
Indemnifiable Losses exceed the Threshold Amount.  Notwithstanding anything to
the contrary in the Agreement, the total amount of Indemnifiable Losses that
MacroPore shall be obligated to pay to Medicis in the aggregate shall not exceed
the lesser of fifty percent (50%) of the total Purchase Price (as defined in the
Purchase Agreement) or the portion of the Purchase Price actually paid to and
received by MacroPore pursuant to the terms of the Purchase Agreement (i.e., if
the total amount of Indemnified Amounts exceeds the portion of the Purchase
Price actually paid to MacroPore prior to such time but is less than 50% of the
total Purchase Price, then Medicis shall only offset such amounts against future
installments of the Purchase Price up to the maximum of 50% of the total
Purchase Price).

 

6.6)          Cooperation as to Indemnified Liability.  Each party hereto shall
cooperate fully with the other parties with respect to access to books, records,
or other documentation within such party’s control, if deemed reasonably
necessary or appropriate by any party in the defense of any claim that may give
rise to indemnification hereunder.

 

ARTICLE 7

TERM AND TERMINATION

 

7.1           Term.  Unless otherwise terminated under provisions of Section
7.2, this Agreement shall continue as to each respective item of MacroPore
Intellectual Property until such item has Expired or is otherwise no longer
legally-protectable Intellectual Property.  Termination of this Agreement for
any reason will not affect Section 4.1 or the license rights granted to
MacroPore in Sections 2.1 and 2.2, or either party’s pre-termination rights and
remedies, which shall survive termination of this Agreement.

 

7.2           Termination.  MacroPore may terminate this Agreement, at its
option and without prejudice to any of its other legal and equitable rights and
remedies, by giving Medicis notice in writing at least thirty (30) days in
advance of the effective date of such termination.

 

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ARTICLE 8

FORCE MAJEURE

 

8.1           Force Majeure.  Neither party shall be in default because of any
failure to perform such party’s obligations under this Agreement to the extent
such failure is due to causes beyond the control of such party (“the first
party”) and without the fault or negligence of such first party, including
without limitation, Acts of God or of the public enemy, acts of terrorism, acts
of the Government in either its sovereign or contractual capacity, fires,
floods, earthquakes, epidemics, quarantine restrictions, strikes, or freight
embargoes (each a “Force Majeure Event”).  In each instance, the failure to
perform must be beyond the reasonable control and without the fault or
negligence of the first party.  Once performance is again possible, performance
must be given.

 

8.2           Notice.  If it appears that performance under of obligations may
be delayed by a Force Majeure Event, the first party will immediately notify the
other party as soon as practicable in writing at the address specified in this
Agreement.  During the period that the performance by one of the parties of its
obligations has been suspended by reason of a Force Majeure Event, the other
party may likewise suspend the performance of all or part of its obligations
hereunder to the extent that such suspension is commercially reasonable.

 

ARTICLE 9

MISCELLANEOUS

 

9.1           Assignment.  Neither party shall have the right to assign or
otherwise transfer its rights and obligations under this Agreement (whether by
merger, share exchange, combination or consolidation of any type, operation of
law, purchase or otherwise) except with the prior written consent of the other
party, which consent will not be unreasonably withheld, provided that either
MacroPore or Medicis may, without a need for consent, assign its respective
rights and obligations pursuant to this Agreement to any person who, by merger,
share exchange, combination or consolidation of any type, purchase, operation of
law, asset purchase or otherwise, acquires substantially all of the business of
the assigning party to which this Agreement relates. MacroPore may assign the
license for the Spinal Field granted in Section 2.1 to the purchasing party
without the need for a consent in the event that MacroPore sells all or
substantially all of the assets of its spinal implant business. Any prohibited
assignment shall be null and void.

 

9.2           Complete Agreement.  This Agreement, the Purchase Agreement and
the Exhibits of each constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and supersede all prior or
contemporaneous agreements whether written or oral relating hereto.

 

9.3           Governing Law.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California, including
all matters of construction, validity, performance and enforcement, without
giving effect to principles of conflict of laws and without application of the
United Nations Convention on Contracts for the International Sale of Goods.

 

9.4           Waiver, Discharge, Amendment, Etc.  The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall not,
absent an express written waiver signed by the party making such waiver
specifying the provision being waived, be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or any part
thereof or the right of the party thereafter to enforce each and every such
provision.  No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.  Any amendment to this Agreement shall
be in writing and signed by the parties hereto or else it shall be of no effect.

 

9.5           Notices.  All notices hereunder shall be deemed given if in
writing and delivered personally or sent by telecopy (with confirmation of
transmission) or certified mail (return receipt requested) or reputable courier
service to the parties at the following addresses (or at such other addresses as
shall be specified by like notice):

 

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if to MacroPore, to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

USA

Attention: Christopher J. Calhoun

FAX: (858) 458-0995

 

with duplicate copy thereof addressed to

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA  92121

USA

Attention: In-House Counsel

FAX: (858) 458-0994

 

and if to Medicis, to:

 

Medicis Ventures Management GmbH

Poschingerstr. 9

D-81679 München, Germany

Attention: Managing Director

FAX:

 

with duplicate copy thereof addressed to:

 

 

 

Any party may change the above specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed.  All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally, by telecopy or by reputable courier service) or three
business days after the date sent (if delivered by mail).

 

9.6           Expenses.  Except as expressly provided herein, Medicis and
MacroPore shall each pay their own expenses incident to this Agreement and the
preparation for, and consummation of, the transactions provided for herein.

 

9.7           Titles and Headings; Construction.  The titles and headings to
Sections and Articles herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.  This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.

 

9.8           Severability.  If any provision of this Agreement is held invalid,
illegal or unenforceable, such provision shall be deemed replaced with a
provision which enables the enforcement, to the maximum extent possible, of the
parties’ original intent, and the remaining provisions shall nonetheless be
enforceable according to their terms.

 

9.9           Relationship.  This Agreement does not make either party the
employee, partner, agent or legal representative of the other for any purpose
whatsoever.  Neither party is granted any right or authority to assume or to
create any obligation or responsibility, express or implied, on behalf of or in
the name of the other party, and each

 

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CONFIDENTIAL TREATMENT REQUESTED

 

party agrees not to purport to do so. In fulfilling its obligations pursuant to
this Agreement, each party shall be acting as an independent contractor.

 

9.10         Benefit.  Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties to this Agreement or
their respective successors or permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.

 

9.11         Survival.  All of the representations, warranties, and covenants
made in this Agreement, and all terms and provisions hereof intended to be
observed and performed by the parties after the termination hereof, shall
survive such termination and continue thereafter in full force and effect,
subject to any applicable statutes of limitations.

 

9.12         Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.

 

9.13         Execution of Further Documents.  Each party agrees to execute and
deliver without further consideration any further applications, licenses,
assignments or other documents, and to perform such other lawful acts as the
other party may reasonably request to fully secure and/or evidence the rights or
interests herein.

 

9.14         Public Announcement.  In the event either party proposes to issue
any press release or public announcement concerning any provisions of this
Agreement or the transactions contemplated hereby, such party shall so advise
the other party hereto, and the parties shall thereafter use their best efforts
to cause a mutually agreeable release or announcement to be issued.  Neither
party will publicly disclose or divulge any provisions of this Agreement or the
transactions contemplated hereby without the other party’s written consent,
except as may be required by applicable law or stock exchange regulation, and
except for communications to such party’s employees or customers or investors or
prospective investors (subject to appropriate confidentiality obligations).

 

9.15         Dispute Resolution.             Any dispute arising out of or
relating to this Agreement (including the formation, interpretation or alleged
breach thereof) shall be settled by final and binding arbitration conducted
under the auspices of, and in accordance with, the Commercial Arbitration Rules
of the American Arbitration Association, in San Francisco, California.  The
results of such arbitration proceedings shall be binding upon the parties
hereto, and judgment may be entered upon the arbitration award in any court
having jurisdiction thereof. Notwithstanding the foregoing, a party may seek
interim injunctive relief from any court of competent jurisdiction.

 

(Remainder of page intentionally blank; signatures follow on next page)

 

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CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS WHEREOF, each of the parties has caused this License Agreement to be
executed in the manner appropriate to each, as of the date first written above.

 

 

MEDICIS VENTURES MANAGEMENT GmbH

 

 

 

 

 

By:

 

 

 

 

 

Its:

 

 

 

 

 

 

 

MACROPORE BIOSURGERY, INC.

 

 

 

 

 

By:

 

 

 

 

 

Its:

 

 

 

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EXHIBIT D

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of January 21, 2004, by and
among Medicis Ventures Management GmbH., a German corporation (“Buyer”) and
MacroPore Biosurgery, Inc., a Delaware corporation (“Seller”).

 

WHEREAS, Buyer and Seller are parties to that certain Asset Purchase Agreement
dated December 13, 2003 (the “Purchase Agreement”) pursuant to which Buyer will
purchase certain businesses and assets of the Seller effective as of the close
of business on the date hereof (the “Effective Date”); and

 

WHEREAS, as part of the transfer of the businesses and assets of Seller, Seller
desires to assign and delegate to Buyer, and Buyer desires to accept an
assignment of and assume Seller’s obligations pursuant to, the “Assumed
Liabilities” (as defined in the Purchase Agreement).

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

 

1.             Assignment and Delegation.  Seller hereby sells, assigns,
delegates, and transfers to Buyer all of Seller’s duties and, Agreement
obligations under and to the Assumed Liabilities, effective as of the Effective
Date.

 

2.             Assumption.  Buyer hereby assumes and agrees to perform all of
the duties and Agreement obligations of Seller under the Assumed Liabilities
from and after the Effective Date.

 

3.             Binding Upon Assigns.  This Assignment and Assumption Agreement
shall bind and inure to the benefit of Sellers and Buyer and their respective
successors and assigns.

 

4.             Miscellaneous.  All representations, warranties and covenants of
Seller and of Buyer with respect to the Assumed Liabilities contained in the
Purchase Agreement, subject to the limitations therein contained, are
incorporated herein by reference.  This Agreement shall be construed and
enforced in accordance with and governed by the laws of California, without
regard to principles of conflicts of laws.  This Assignment and Assumption may
be executed in any number of counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.

 

IN WITNESS WHEREOF, this Assignment and Assumption Agreement has been duly
executed and delivered on behalf of the parties as of the date first above
written.

 

 

MACROPORE BIOSURGERY, INC.

 

 

 

 

 

By:

 

 

 

Its:

 

 

 

 

 

 

 

MEDICIS VENTURES MANAGEMENT GmbH

 

 

 

 

 

By:

 

 

 

Its:

 

 

 

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CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT E

BILL OF SALE

 

THIS BILL OF SALE is made, executed and delivered as of January 21, 2004 (“Bill
of Sale”) by MacroPore Biosurgery, Inc., a Delaware corporation (“Seller”) to
Medicis Ventures Management GmbH, a German corporation (“Medicis”).

 

WITNESSETH:

 

WHEREAS, Buyer and Seller have entered into an Asset Purchase Agreement, dated
as of December 13, 2003 (the “Purchase Agreement”), pursuant to which Seller
agreed, among other things, to sell, convey, assign, transfer and deliver to
Buyer the Specified Assets (such term and all other capitalized terms used but
not defined herein having the same meanings ascribed to such terms in the
Purchase Agreement) all as more fully described in the Purchase Agreement, for
consideration in the amount and on the terms and conditions provided in the
Purchase Agreement; and

 

WHEREAS, Seller and Buyer now desire to carry out the intent and purpose of the
Purchase Agreement by Seller’s execution and delivery to Buyer of this
instrument evidencing the sale, conveyance, assignment, transfer and delivery to
Buyer of the Specified Assets;

 

NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration to Seller, the receipt and adequacy of which are
hereby acknowledged, Seller, as of the close of business on the date hereof, is
selling, conveying, assigning, transferring and delivering, and by this Bill of
Sale does, effective as of the close of business on the date hereof, sell,
convey, assign, transfer and deliver unto Buyer, its successors and assigns in
accordance with the terms and provisions of the Purchase Agreement:

 

TO HAVE AND TO HOLD all of Seller’s right, title and interest in and to the
Specified Assets unto Buyer, and Buyer’s successors and assigns, all in
accordance with the terms of the Purchase Agreement FOREVER.

 

2.             Seller further covenants and agrees that the covenants herein
contained shall inure to the benefit of the successors and assigns of Buyer.

 

3.             All representations, warranties and covenants of the Seller with
respect to the Specified Assets contained in the Purchase Agreement, subject to
the limitations therein contained, are incorporated hereby by reference.

 

4.             This Bill of Sale shall be construed and enforced in accordance
with and governed by the laws of the State of California, without giving effect
to principles of conflicts of laws.

 

5.             Seller shall do such acts and shall execute such further
documents, conveyances, deeds, assignments, transfers and the like, and will
cause the doing of such acts and will cause the execution of such further
documents as are within its power as Buyer may in writing at any time and from
time to time reasonably request be done or executed, in order to give full
effect to the provisions of this Bill of Sale.

 

IN WITNESS WHEREOF, this Bill of Sale has been duly executed and delivered on
behalf of Seller as of the date first above written.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

 

MACROPORE BIOSURGERY, INC.

 

 

 

By:

 

 

Its:

 

 

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EXHIBIT G

BUSINESS DEVELOPMENT AGREEMENT

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Business Development Agreement***

 

This Business Development Agreement (“Development Agreement”) is made and
entered into as of January         , 2004, by and among Medicis Ventures
Management GmbH  (as defined herein, “Medicis”), a German corporation, and
MacroPore Biosurgery, Inc. (as defined herein, “MacroPore”), a Delaware
corporation.

 

WITNESSETH:

 

MacroPore has sold Medicis certain assets pursuant to the Asset Purchase
Agreement (“Asset Agreement”) and the License Agreement of even date. This
Development Agreement is the one contemplated by the Asset Agreement.
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Asset Agreement.

 

WHEREAS, Medicis desires to establish a partnership, distribution or licensing
arrangement (“Business Arrangement”) between Medicis and a Japanese company
(“Partner” the identity of which is not yet determined) for marketing
Bioabsorbable Film Implants (“Implants”) in and for use in Japan (“Territory”);
and

 

WHEREAS, MacroPore has contacts, relationships and abilities to assist Medicis
in establishing a Business Arrangement with a Partner, and relevant regulatory
experience related to the marketing of the Implants;

 

NOW, THEREFORE, in consideration of the agreements contained herein, and subject
to the terms and conditions set forth herein, the parties hereto agree as
follows:

 

ARTICLE 1

DEVELOPMENT ACTIVITES OF MACROPORE

 

1.1)          General Development Assistance.  MacroPore shall exercise all
commercially reasonable efforts until December 1, 2004 to: (i) jointly establish
(on behalf of and subject to advice and consent of Medicis), a Business
Arrangement with a Partner related to the sale of Implants in the Territory;
and, (ii) assist Medicis in obtaining the required regulatory clearances to
market the Implants in the Territory.

 

1.2)          Regulatory Clearances in Japan.  Subject to Section 1.1, MacroPore
will provide Medicis and the Partner strategic, documentary and technical
support to assist them in obtaining regulatory clearance for the Implants in the
Territory.

 

ARTICLE 2

DEVELOPMENT ACTIVITES OF MEDICIS

 

2.1)          General Development Assistance.  Medicis shall exercise all
commercially reasonable efforts and work with MacroPore to: (i) establish a
business relationship with a Partner to the sell Implants in the Territory and
(ii) cooperate with the Partner in the Territory to obtain the required
regulatory clearances to market the Implants in the Territory.

 

ARTICLE 3

OBLIGATIONS, COSTS AND EXPENSES

 

3.1)          Authority.  This Development Agreement does not create any
relationship of partnership, agency or joint venture. Neither party has
authority for and on behalf of the other. Neither party may incur any debt,
obligation, expense, or liability of any kind which is binding against the other
without the other’s express written approval.

 

3.2)          Costs.     Except as otherwise provided in this agreement, each
party shall be responsible for their own costs and expenses in fulfilling their
obligations hereunder.

 

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***                           Certain confidential portions of this Exhibit were
omitted by means of blackout of the text (the "Mark").  This Exhibit has been
filed separately with the Secretary of the Commission without the Mark pursuant
to the Company's Application Requesting Confidential Treatment under Rule 24b-2
under the 1934 Act.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

3.3)          Clinical/Pre-Clinical Trials.  In the event that it is necessary
to conduct clinical trials to commercially market Implants in the Territory, all
costs and expenses related to the clinical trial shall be borne by Medicis.
MacroPore shall be immediately reimbursed for any reasonable costs and expenses
incurred with Medicis’ prior written consent (which consent shall not be
unreasonable withheld) in supporting such activities.  In the event that any
additional pre-clinical work is required to obtain regulatory approval in the
Territory, MacroPore and Medicis shall divide these costs as far as incurred
with Medicis’ prior written consent (which consent shall not be unreasonable
withheld) equally between the parties with the costs to MacroPore not to exceed
$50,000. MacroPore shall be immediately reimbursed for any such reasonable costs
and expenses that exceed $50,000 in supporting such pre-clinical activities.

 

ARTICLE 4

COMPENSATION

 

4.1)          Agreement Fee / Up-Front Payments.  Within 10 days of Medicis
having received any payment relating to any Business Arrangement with a Partner
in the Territory, Medicis shall pay MacroPore *** of any *** fee or *** payable
to Medicis by way of such agreement.  Medicis agrees not to *** as are currently
contemplated in negotiations with any potential partner, in such a way as to
transfer economic value away from the *** and toward another manner of
transferring economic benefit, and effectively to reduce the amount payable to
MacroPore.  If such *** fails to provide for *** to Medicis at the execution of
the agreement, then MacroPore shall be entitled to ***  payment of *** of any
deferred payment for a *** (including any easily-achievable *** payment, even if
not expressly identified as a ***, etc.). In the event that the *** contains any
type of regulatory milestone payments, *** of any such payments received by
Medicis shall be *** paid to MacroPore by Medicis (net of any pre-clinical or
clinical trial costs referenced in section 3.3). Any other milestone payment
that may be agreed upon between the parties shall be shared equally by MacroPore
and Medicis.

 

4.2)          Regulatory Approval Fee.  For a period of *** years from the first
lawful commercial launch of Qualified Implants into the Territory, MacroPore
shall receive quarterly payments from Medicis equal to *** of the excess of (a)
the *** of Medicis from sales (whether or not to Partner) of all Implants in the
Territory, over (b) the actual *** incurred by Medicis (if any) for the goods
sold. In no event shall the cost subtracted ***  or specified by MacroPore in
the Asset Agreement.  This fee is payable whether or not any clinical or
pre-clinical trials are required by authorities in the Territory prior to
commercial launch. The fee shall be paid for all products sold during such ***
year period even though actual payments for such products are not received by
Medicis until a later date. “Qualified Implants” include any Implant with
Japanese regulatory approval at least as favorable as the 510 K clearance
received by MacroPore on September 22, 2003 for the minimization of attachment
of soft tissue (“MAST”) in the U.S. In addition, in the event and to the extent
that the Business Arrangement is structured in such a way that the Medicis is to
receive *** for products sold in the Territory, then MacroPore shall be entitled
to ***  of any such *** received from the first lawful commercial launch of
Qualified Implants into the Territory for a period of *** years thereafter.

 

4.3)          MacroPore Liability Waiver By Medicis / Japanese Partner.  Medicis
agrees that any definitive written agreements between Medicis and any Partner
for distribution or licensing of Implants in the Territory shall include
provisions providing a full and complete waiver by both parties of liability of
MacroPore in regards to such agreement. MacroPore shall by no means be held
liable for any breach of contract or warranty whether express or implied
resulting from such agreement except in so far as it shall be established
according to U.S. law that MacroPore acted with gross negligence or clear intent
to defraud the either party to such contract.

 

ARTICLE 5

REPORTS AND RECORDS

 

5.1)          Quarterly Revenue Reports.  Beginning at the first commercial
launch of Qualified Implants into the Territory as provided in Section 4.2
above, Medicis will make quarterly fee reports to MacroPore on or before each
January 21 (for the quarter ending December 31), April 21 (for the quarter
ending March 31), July 21 (for the quarter ending June 30) and October 21 (for
the quarter ending September 30) of each year.  Each fee report will cover
Medicis’s most recently completed calendar quarter and will, at a minimum, show:

 

5.1.1)       the gross invoice prices for all Implants sold in the Territory and
actual manufacturing costs (incurred by Medicis) for those goods sold;

 

5.1.2)       the Section 4.2 fees due, in United States dollars, payable to
MacroPore for the quarter being reported;

 

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*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

 

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5.1.3)       the amount of the cash and the amount of the cash equivalent of the
non-cash consideration including the method used to calculate the non-cash
consideration;

 

5.1.4)       any other information reasonably necessary to confirm Medicis’s
calculation of its fee obligations *** hereunder;

 

5.2)          Quarterly Fee Payments.  All fees payable to MacroPore as
identified in Section 4.2 shall be paid simultaneously with the delivery of the
quarterly report with which they correspond. Conversion into US dollars shall be
at the mean average daily closing conversion rate over the quarter in question,
based on rates as reported in the Wall Street Journal.

 

5.3)          Document Retention.  Medicis will keep accurate books and records
showing all Implants sold in or for the Territory sufficient to verify the
quarterly reports required in Section 5.1. Such books and records will be
preserved for at least three (3) years after the date of the payment to which
they pertain.

 

5.4)          Document Inspection.  The books and records required to be
maintained in Section 5.3 will be open to inspection by experts appointed by
MacroPore and bound by their obligation to professional secrecy at reasonable
times to determine their accuracy and assess Medicis’s compliance with the terms
of this Agreement.  MacroPore shall bear the fees and expenses of such
examination.  If, however, an error in fees of more than five percent (5%) of
the total fees due for any year is discovered in any examination, then Medicis
shall bear the fees and expenses related to such examination.

 

5.5)          Provision of Financial Statements.  Medicis (or their successor in
interest) shall provide MacroPore financial statements for every calendar
quarter within 30 calendar days of the quarter most recently ended. The
statements must contain the balance sheet, statement of operations, and
statement of cash flow of Medicis. The obligation to provide financial
statements terminates after the last payment required to be made under this
agreement has been paid to MacroPore.

 

ARTICLE 6

INDEMNIFICATION

 

6.1)          Indemnification by Medicis.  Each Party shall indemnify, defend
and hold harmless the other and each of its subsidiaries, officers, directors,
shareholders, employees, agents and affiliates (collectively, all such
indemnitees are referred to in this Section as “Indemnified Party”) against and
in respect of any and all claims, demands, losses, obligations, liabilities,
damages, penalties, deficiencies, actions, settlements, judgments, costs and
expenses which Indemnified Party may incur or suffer or with which it may be
faced (including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor), (referred to as “Costs”) arising out of or primarily
based upon activities of the other party (“Indemnitor”) in performing under the
terms of this agreement. An amount for which the Indemnified Party is entitled
to indemnification pursuant hereto is referred to as an “Indemnified Amount.”

 

6.2)          Third Party Claims.  If a claim by a third party is made against
any Indemnified Party, and if the Indemnified Party intends to seek indemnity
with respect thereto under this Article 6, such Indemnified Party shall promptly
notify the Indemnitor of such claim; provided, however, that failure to give
timely notice shall not affect the rights of the Indemnified Party so long as
the failure to give timely notice does not adversely affect the Indemnitor’
ability to defend such claim against a third party.  If Indemnitor acknowledges
that the Indemnified Party is entitled to indemnification hereunder for such
claim, Indemnitor shall be entitled to settle or assume the defense of such
claim, including the employment of counsel reasonably satisfactory to the
Indemnified Party.  If Indemnitor elects to settle or defend such claim,
Indemnitor shall notify the Indemnified Party within thirty (30) days (but in no
event less than twenty (20) days before any pleading, filing or response on
behalf of the Indemnified Party is due) of Indemnitor’ intent to do so.  If
Indemnitor elects not to settle or defend such claim or fails to notify the
Indemnified Party of the election within thirty (30) days (or such shorter
period provided above) after receipt of the Indemnified Party’s notice of a
claim of indemnity hereunder, the Indemnified Party shall have the right to
contest, settle or compromise the claim without prejudice to any rights to
indemnification hereunder.  Regardless of which party is controlling the
settlement or defense of any claim, (a) both the Indemnified Party and
Indemnitor shall act in good faith, (b) Indemnitor shall not thereby permit to
exist any lien, encumbrance or other adverse charge upon any asset of any
Indemnified Party or of its subsidiaries, (c) Indemnitor shall permit the
Indemnified Party to participate in such settlement or defense through counsel
chosen by the Indemnified Party, with all fees, costs and expenses of such
counsel borne by the Indemnified Party, unless Indemnitor and Indemnified Party
have available inconsistent defenses to such third-party claim, in which case
such fees, costs and expenses shall be borne by Indemnitor, (d) no entry of
judgment or settlement of a claim may be agreed to without the written consent
of the Indemnified Party, which consent shall not be unreasonably withheld, and
(e) Indemnitor shall promptly reimburse the Indemnified Party for the
Indemnified Amount as incurred by the Indemnified Party pursuant to this Article
6.  So long as Indemnitor is reasonably contesting any such third party claim in
good faith and the foregoing clause (b) is being complied with, the Indemnified
Party shall not pay or settle any such claim (or, if it does, it shall not be
indemnified for such settlement amount).  The controlling party shall upon
request deliver, or cause to be delivered, to the other party

 

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copies of all correspondence, pleadings, motions, briefs, appeals or other
written statements relating to or submitted in connection with the settlement or
defense of any such claim, and timely notices of any hearing or other court
proceeding relating to such claim.

 

6.3)          Non-Third Party Claims.  A claim for indemnification for any
matter not involving a third-party claim may be asserted by notice to
Indemnitor.  Such notice shall state the amount of the Indemnified Amount, if
known, the method of computation thereof, and contain a reference to the
provisions of this Agreement in respect to which such right of indemnification
is claimed or arises.  If Indemnitor disputes such claim then the parties shall
then follow the dispute resolution mechanism set forth in Section 8.10 of this
Development Agreement.

 

ARTICLE 7

CONFIDENTIALITY

 

7.1)          Confidential Information. The parties shall keep in confidence and
trust all Confidential Information disclosed under this Agreement.  The party
which receives such Confidential Information from the other is called the
“Recipient”. Each party agrees not to use or disclose any Confidential
Information or anything relating to it without the written consent of the other.
As used in this Agreement, Confidential Information means information related to
the subject matter of this Agreement provided by MacroPore or Medicis, and
designated at time of such disclosure as proprietary or Confidential
Information.  Any oral or other non-written disclosures of Confidential
Information will be reduced to writing within thirty (30) days of disclosure.
Notwithstanding the foregoing, the parties shall regard all advice, counsel,
information and strategies of MacroPore relating to potential Partners and
regulatory strategies provided hereunder as Confidential Information whether or
not any specific designation or reduction to writing is provided. Confidential
Information does not include information which (1) is now public knowledge or
subsequently becomes such through no breach of this Agreement; (2) is rightfully
in Recipient’s possession prior to the other parties disclosure to Recipient as
shown by written records, (3) is rightfully disclosed to Recipient by a third
party; (4) is independently developed by or for Recipient without reliance upon
confidential information received from the other party. In addition, to the
extent Confidential Information is required to be disclosed by law, it may be
disclosed as required. This Article 7 shall survive any expiration or
termination of this Development Agreement.

 

ARTICLE 8

MISCELLANEOUS

 

8.1)          Complete Agreement.  This Agreement (together with the Asset
Agreement and the other agreements contemplated by the Asset Agreement)
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior or contemporaneous discussions or
agreements whether written or oral relating hereto.

 

8.2)          Governing Law.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware, including all
matters of construction, validity, performance and enforcement, without giving
effect to principles of conflict of laws and without application of the United
Nations Convention on Contracts for the International Sale of Goods.

 

8.3)          Waiver, Discharge, Amendment, Etc.  The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall not,
absent an express written waiver signed by the party making such waiver
specifying the provision being waived, be construed to be a waiver of any such
provision, nor in any way to affect the validity of this Agreement or any part
thereof or the right of the party thereafter to enforce each and every such
provision.  No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach.  Any amendment to this Agreement shall
be in writing and signed by the parties hereto or else it shall be of no effect.

 

8.4)          Notices.  All notices hereunder shall be deemed given if in
writing and delivered personally or sent by telecopy (with confirmation of
transmission) or certified mail (return receipt requested) or reputable courier
service to the parties at the following addresses (or at such other addresses as
shall be specified by like notice):

 

if to MacroPore, to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

USA

Attention: Christopher J. Calhoun

FAX: (858) 458-0995

 

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CONFIDENTIAL TREATMENT REQUESTED

 

with duplicate copy thereof addressed to

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA  92121

USA

Attention: In-House Counsel

FAX: (858) 458-0994

 

and if to Medicis, to:

 

Medicis Ventures Management GmbH

Poschingerstr. 9

D-81679 München, Germany

Attention: Managing Director

FAX:

 

with duplicate copy thereof addressed to:

 

Any party may change the above specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed.  All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally, by telecopy or by reputable courier service) or three
business days after the date sent (if delivered by mail).

 

8.5)          Titles and Headings; Construction.  The titles and headings to
Sections and Articles herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.  This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.

 

8.6)          Severability.  If any provision of this Agreement is held invalid,
illegal or unenforceable, such provision shall be deemed replaced with a
provision which enables the enforcement, to the maximum extent possible, of the
parties’ original intent, and the remaining provisions shall nonetheless be
enforceable according to their terms.

 

8.7)          Relationship.  This Agreement does not make either party the
employee, partner, agent or legal representative of the other for any purpose
whatsoever.  Neither party is granted any right or authority to assume or to
create any obligation or responsibility, express or implied, on behalf of or in
the name of the other party, and each party agrees not to purport to do so. In
fulfilling its obligations pursuant to this Agreement, each party shall be
acting as an independent contractor.

 

8.8)          Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.

 

8.9)          Execution of Further Documents.  Each party agrees to execute and
deliver without further consideration any further applications, licenses,
assignments or other documents, and to perform such other lawful acts as the
other party may reasonably request to fully secure and/or evidence the rights or
interests herein.

 

8.10)        Dispute Resolution.            Any dispute arising out of or
relating to this Agreement (including the formation, interpretation or alleged
breach thereof) shall be settled by final and binding arbitration conducted
under the auspices of, and in accordance with, the Commercial Arbitration Rules
of the American Arbitration Association, in San Francisco, California.  The
results of such arbitration proceedings shall be binding upon the parties
hereto, and judgment may be entered upon the arbitration award in any court
having jurisdiction thereof. Notwithstanding the foregoing, a party may seek
interim injunctive relief from any court of competent jurisdiction.

 

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CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS WHEREOF, each of the parties has caused this Business Development
Agreement to be executed in the manner appropriate to each, as of the date first
written above.

 

 

MEDICIS VENTURES MANAGEMENT GmbH

 

 

 

 

 

By:

 

 

 

 

 

Its:

 

 

 

 

 

 

 

MACROPORE BIOSURGERY, INC.

 

 

 

 

 

By:

 

 

 

 

 

Its:

 

 

 

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