Exhibit 10.1

 

CONFIDENTIAL

 

EXCLUSIVE SALES DISTRIBUTION AGREEMENT

 

THIS EXCLUSIVE SALES DISTRIBUTION AGREEMENT (“Agreement”) is made and entered
into as of the Effective Date (as defined in Article 1 hereof) by and between
Orthovita, Inc., a Pennsylvania corporation with principal offices at 45 Great
Valley Parkway, Malvern, Pennsylvania 19355 (“Orthovita”), and Cohesion
Technologies, Inc., a Delaware corporation with principal offices at 2500 Faber
Place, Palo Alto, California 94303 (“Cohesion”).

 

W I T N E S S E T H :

 

WHEREAS, Cohesion is engaged in the business of developing, manufacturing,
selling and distributing certain biopharmaceutical and biosurgical products and
is desirous of establishing a competent and exclusive distribution source for
sales of CoStasis Products in the Territory (as defined in Article 1 hereof);
and

 

WHEREAS, Orthovita desires to be Cohesion’s exclusive sales distributor for such
CoStasis Products in the Territory, is well introduced in the market, and is
willing and able to provide a competent distribution organization in the
Territory;

 

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

 

Article 1.

Definitions

 

As used in this Agreement, the following terms shall have the meanings specified
in this Article 1:

 

1.1 “AAA” is defined in Section 18.1.

 

1.2 “Accessory(ies)” shall mean any accessory item set forth in Exhibit B that
is sold for use with CoStasis Products.

 

1.3 “Acquiring Party” is defined in Section 8.4.

 

1.4 “Act” shall mean the United States Food, Drug and Cosmetic Act of 1938, as
it has been amended prior to the Effective Date and may be amended thereafter
during the term of this Agreement.

 

1.5 “Adverse Event” shall mean an event about which either Party or an Agent
receives or becomes aware of information from any source that reasonably
suggests that one of the marketed Products (a) may have caused or contributed to
a death or serious injury, or serious deterioration in the state of health of a
patient, or (b) may have malfunctioned in a manner that, if the malfunction were
to recur, the Product would be likely to cause or contribute to a death, serious
injury, or serious deterioration in the state of health of a patient consistent
with the Medical Device Reporting Requirements set forth in 21 C.F.R. Part 803.

 

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1.6 “Affiliate” of a Party shall mean any entity (a) which directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, that Party, but only for so long as the relationship
exists; or (b) wherein more than fifty percent (50%) of the voting capital stock
(or such lesser maximum percentage permitted by applicable law) is beneficially
owned or held by that Party or any of such Party’s subsidiaries or parents.

 

1.7 “Agents” shall mean sublicensees, subdistributors, agents or co-promoters of
Orthovita.

 

1.8 “Baseline Sales” is defined in Section 8.4.

 

1.9 “Calendar Year” shall mean the period starting on January 1 of a year and
ending on December 31 of that same year; provided that the first Calendar Year
of this Agreement, Calendar Year 2004, shall commence on the Effective Date and
end on December 31, 2004.

 

1.10 “CellPaker Price” shall mean the price of CellPaker Products as set forth
in Exhibit F, as it may be amended from time to time.

 

1.11 “CellPaker Product(s)” shall mean CellPaker® Plasma Collection System
products, as such products may be rebranded by the Parties pursuant to Section
5.2, manufactured by or for Cohesion, subject to Sections 6.15 and 6.16, for use
with CoStasis Products as further described in Exhibit A hereto.

 

1.12 “CoStasis Price” shall mean the price of CoStasis Products as set forth in
Exhibit F, as it may be amended from time to time.

 

1.13 “CoStasis Product(s)” shall mean CoStasis® Surgical Hemostat products, as
such products may be rebranded by the Parties pursuant to Section 5.2,
manufactured by or for Cohesion, subject to Sections 6.15 and 6.16, as further
described in Exhibit A hereto. The term “CoStasis Products” shall expressly
exclude drug-loaded formulations of CoStasis® Surgical Hemostat products.

 

1.14 “CFO” shall mean Chief Financial Officer.

 

1.15 “Co-Chair” is defined in Section 5.1.

 

1.16 “Competitive Product” shall mean a product, other than a CoStasis Products,
which has obtained Regulatory Approval for use as a Hemostat.

 

1.17 “Confidential Information” is defined in Section 10.1.

 

1.18 “Dollars” shall mean the lawful currency of the United States of America.

 

1.19 “Effective Date” shall mean July 1, 2004.

 

1.20 “European Union” shall mean (a) the member countries of the European Union
as of the Effective Date (i.e., Austria, Belgium, Cyprus, Czech Republic,
Denmark, Estonia,

 

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Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxemburg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain,
Sweden and the United Kingdom), and (b) those additional countries that
thereafter become members of the European Union.

 

1.21 “Field” shall mean, (a) with respect to CoStasis Products, human medical
uses of the CoStasis Products as a Hemostat for all indications, including
Future Indications, in all cases as approved for use as a Hemostat on the
CoStasis Products label by the appropriate Regulatory Authority, and (b) with
respect to CellPaker Products human medical uses of the CellPaker Products, as
approved for use on the CellPaker Products label by the appropriate Regulatory
Authority. The term “Field” shall expressly exclude (y) drug-loaded formulations
of the CoStasis Products even if such drug-loaded formulations are approved for
human use as a Hemostat, and (z) non-Hemostat and non-human uses of the CoStasis
Products.

 

1.22 “Force Majeure” is defined in Section 11.1.

 

1.23 “Future Indication” shall mean an indication for which a Product has not
obtained Regulatory Approval in a given country in North America as of the
Effective Date or in a given country in the European Union or the ROW as of the
date of exercise of the applicable Option pursuant to Section 2.5. For the sake
of clarity, and by way of example only, if a Product has obtained Regulatory
Approval for a certain indication in Canada, but not in the United States, as of
the Effective Date, then such indication is a Future Indication with respect to
the United States.

 

1.24 “Hemostat” shall mean a product whose primary purpose is to stop bleeding
through an activation of the coagulation cascade.

 

1.25 “Joint Clinical Development Committee” is defined in Section 5.1, and its
responsibilities are set forth in Section 5.3.

 

1.26 “Joint Commercial Operations Committee” is defined in Section 5.1, and its
responsibilities are set forth in Section 5.4.

 

1.27 “Joint Sales and Marketing Committee” is defined in Section 5.1, and its
responsibilities are set forth in Section 5.2.

 

1.28 “Indemnified Party” shall mean the Party entitled to be indemnified by the
other Party pursuant to Section 7.6, 7.7, 7.8 or 7.9.

 

1.29 “Indemnifying Party” shall mean the Party obligated to indemnify the
Indemnified Party.

 

1.30 “Know-how” shall mean secret and substantial technical and scientific
information regarding the Products, which may be necessary, useful or advisable
to enable Orthovita to promote, market, distribute and sell the Products in the
Field in the Territory, and as is or will be specified in Cohesion’s sole
discretion in the documentation which Cohesion has delivered or will deliver to
Orthovita as of the Effective Date or thereafter during the term of this
Agreement.

 

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1.31 “Loss” is defined in Section 7.6.

 

1.32 “Measuring Period” is defined in Section 8.4.

 

1.33 “Minimum Sales” are set forth in Exhibit C, as it may be amended from time
to time.

 

1.34 “Net Sales” shall mean, for a given period, the gross amount invoiced for
the sale of the CoStasis Products anywhere in the Territory during such period
that are attributable to sales of CoStasis Products by Orthovita or by an
Affiliate, subdistributor or other agent (appointed in accordance with Section
2.2) on behalf of Orthovita, less the sum of the following items:

 

  (a) discounts (including cash discounts and quantity discounts), cash and
non-cash coupons, refunds, rebates, credits, chargebacks, vouchers, retroactive
price adjustments and any other allowances, including amounts written off by
reason of uncollectible debt, that effectively reduce the net selling price, in
each case, as may be extended in the ordinary course of business consistent with
past practice or as customary in the industry, including those granted or given
to managed health care organizations, wholesalers and other distributors, buying
groups, health care insurance carriers, or to federal, state and local
governments, their agencies;

 

  (b) actual CoStasis Products credits, returns and allowances;

 

  (c) any tax imposed on the sale, delivery or use of the CoStasis Products,
including without limitation, sales, use, excise or value added taxes, provided
in each such case that such tax is included in the gross amount invoiced; and

 

  (d) allowances for reasonable and customary shipping expenses, provided that
such allowance is included in the gross amount invoiced.

 

For purposes of this Agreement in North America, the sale or transfer of
CoStasis Products between Orthovita (or an Affiliate of Orthovita) and an
Affiliate, subdistributor or other agent (appointed in accordance with Section
2.2) of Orthovita for resale by the receiving entity shall not be deemed a sale
for the purpose of this provision, but the resale by such receiving entity to a
third party shall be a sale for such purposes. For the European Union or the
ROW, upon exercise of an Option by Orthovita pursuant to Section 2.5, the Joint
Sales and Marketing Committee shall consider any revision of this definition in
accordance with Section 6.6.

 

1.35 “North America” shall mean the United States, Canada and Mexico, along with
their respective territories or possessions.

 

1.36 “Option(s)” is defined in Section 2.5.

 

1.37 “Parties” shall mean both Cohesion and Orthovita, and “Party” shall mean
either of them as the context indicates.

 

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1.38 “Price” shall mean the CellPaker Price and the CoStasis Price, collectively
or individually as the context requires.

 

1.39 “Products” shall mean CoStasis Products and CellPaker Products,
collectively or individually as the context requires.

 

1.40 “Program Director” is defined in Section 5.1.

 

1.41 “Purchase Order” is defined in Section 6.8.

 

1.42 “Regulatory Approval” shall mean all authorizations by the appropriate
governmental entity or entities necessary for commercial sale of a Product in a
country in the Territory, including, without limitation and where applicable,
approval of labeling, price, reimbursement and manufacturing.

 

1.43 “Regulatory Authority” shall mean, with respect to any particular country,
territory or union, the governmental authority, body, commission, agency or
other instrumentality of such country, territory or union with the primary
responsibility for the evaluation or approval of medical products before such
medical product can be tested, marketed, promoted, distributed or sold in such
country, including such governmental bodies that have jurisdiction over the
pricing of such medical product. The term “Regulatory Authority” includes, but
is not limited to, the United States Food and Drug Administration, the European
Agency for the Evaluation of Medicinal Product and European Member State
Competent Authorities.

 

1.44 “Regulatory Filing” shall mean all activities relating to the filing for
and procurement of Regulatory Approval for the marketing and sale of a Product
from the relevant Regulatory Authorities.

 

1.45 “ROW” shall mean those territories and countries outside North America and
the European Union.

 

1.46 “Samples” is defined in Section 6.14.

 

1.47 “********” is defined in Section 6.7.

 

1.48 “********” is defined in Section 6.7.

 

1.49 “Support Period” is defined in Section 4.1.

 

1.50 “Term” is defined in Section 8.1.

 

1.51 “Territory” shall mean North America. Upon Orthovita’s exercise of either
or both of its Options pursuant to Section 2.5, the term “Territory” shall
include the entire European Union and the entire ROW, as applicable, subject to
exclusion of certain countries from such Territory as set forth in Section 2.5.

 

1.52 “Trademarks” shall mean all trademarks, trade names, service marks, logos
and derivatives thereof relating to the Products and the Accessories.

 

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Article 2.

Appointment

 

2.1 Subject to the terms and conditions of this Agreement, Cohesion hereby
appoints Orthovita as Cohesion’s (a) exclusive sales distributor for the sale of
CoStasis Products in the Field in the Territory, and (b) non-exclusive sales
distributor for the sale of CellPaker Products in the Field in the Territory,
and, in each case, Orthovita hereby accepts such appointment. As sales
distributor in the Territory, Orthovita shall, subject to the terms and
conditions of this Agreement, have the exclusive right to promote, market,
distribute and sell CoStasis Products in the Field in the Territory and the
non-exclusive right to promote, market distribute and sell CellPaker Products in
the Field in the Territory, but shall have no right to take any such action
outside the Territory or outside of the Field. In the Territory, Orthovita shall
use commercially reasonable efforts to (x) provide and maintain a competent
organization for the promotion, marketing, distribution and sale of Products;
(y) assure competent and prompt handling of inquiries, orders, shipments,
billings and collections with respect to the Products, and (z) devote careful
attention to customers’ requirements for all Products. For the avoidance of
doubt, Cohesion shall have no right or obligation to promote or market CoStasis
Products in the Field in the Territory and shall have no obligation to promote
or market CellPaker Products in the Field in the Territory.

 

2.2 If Orthovita intends to enter into a sublicense, subdistributor, agency or
co-promotion agreement with respect to the Products anywhere in the Territory,
then (a) Orthovita shall not be required to obtain Cohesion’s written consent
prior to executing the agreement if (i) Orthovita has obtained Cohesion’s
written consent to the form of the agreement prior to executing such agreement,
which consent shall not be unreasonably withheld or delayed, and (ii) the
executed sublicense, subdistributor, agency or co-promotion agreement shall be
substantially and materially the same as the form of the agreement previously
provided to Cohesion; and (b) Orthovita shall provide to Cohesion a copy of the
applicable executed sublicense, subdistributor, agency or co-promotion agreement
at the next meeting of the Joint Sales and Marketing Committee. Notwithstanding
the foregoing, if the nature of the proposed sublicensee, subdistributor, agent
or co-promoter is not consistent with Orthovita’s past business practices, then
Cohesion shall have the right to approve the identity of the proposed
sublicensee, subdistributor, agent or co-promoter prior to Orthovita’s execution
of any agreement with respect to the Products with such sublicensee,
subdistributor, agent or co-promoter.

 

2.3 In a manner reasonably satisfactory to Orthovita, Cohesion agrees to make
all declarations and filings necessary to maintain any present Regulatory
Approvals that are required to be maintained in connection with the promotion,
marketing, sale or distribution of the Products in the Field in the Territory.
All costs for maintaining present Regulatory Approvals for indications approved
in the applicable country of the Territory as of the Effective Date shall be
borne solely by Cohesion. All costs and responsibilities associated with Future
Indications, including costs associated with obtaining and maintaining
Regulatory Approvals for Future Indications, shall be shared as set forth in
Section 5.7.

 

2.4 During the Term, Orthovita shall be considered an independent contractor and
shall not be considered a partner, employee, agent or servant of Cohesion or its
Affiliates. As such, Orthovita and its Agents have no authority of any nature
whatsoever to bind Cohesion or

 

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its Affiliates, or to incur any liability for or on behalf of Cohesion or its
Affiliates, or to represent itself and themselves as anything other than the
independent sales distributor of Products in the Field in the Territory.
Orthovita agrees to make clear in all dealings with customers or prospective
customers that it is acting as the distributor of the Products in the Field in
the Territory, and not as an agent of Cohesion or its Affiliates.

 

2.5 Subject to the terms and conditions of this Agreement, Cohesion hereby
grants to Orthovita options (“Options”) to add (a) the entire European Union
and/or (b) the entire ROW, to the Territory; provided that the Option with
respect to the European Union shall not be exercisable prior to November 1,
2004. Either or both of these Options may be exercised by Orthovita by (y)
providing Cohesion written notice of Orthovita’s desire to exercise such Option,
and (z) paying to Cohesion an Option exercise payment, as applicable, of (i)
******** for exercise of the Option for the European Union, and (ii) ********
for exercise of the Option for the ROW. As of thirty (30) days after the date on
which Cohesion is in receipt of this written notice and corresponding Option
exercise payment, the definition of Territory shall be deemed to include the
European Union and/or the ROW, as applicable, as well as North America, and
Orthovita shall have the exclusive right to promote, market, distribute and sell
CoStasis Products, and the non-exclusive right to promote, market, distribute
and sell CellPaker Products, in the European Union and/or the ROW, as
applicable, in the Field as set forth in this Agreement. If Orthovita exercises
its Option to add the European Union or the ROW to the Territory, then the
Parties will negotiate in good faith to extend the remaining Term of this
Agreement. If, prior to Orthovita’s exercise of the applicable Option, Cohesion
desires to ********, Cohesion shall first notify Orthovita in writing of its
intention to ********. Orthovita shall have ******** from the date Cohesion
notifies Orthovita of its intention to ******** to notify Cohesion of
Orthovita’s desire to ********, as applicable. If after such ******** period,
Orthovita has not ********, Cohesion shall ********, and thereafter,
notwithstanding anything herein to the contrary, such ******** shall not be
available to be added to the ********.

 

2.6 Orthovita shall, and shall ensure that its Agents shall, promptly inform
Cohesion of any misappropriation of the Know-how which comes to its attention.
After discussing any such situation with Orthovita, Cohesion shall have the sole
right, in its discretion, to take such action as it deems appropriate, and
Orthovita, at Cohesion’s written request and expense, shall assist Cohesion in
taking legal action, if deemed appropriate by Cohesion, to stop such
misappropriation.

 

2.7 Nothing in this Agreement shall be construed as giving Orthovita or its
Affiliates or Agents any right to use or otherwise deal with the Know-how for
purposes other than those expressly provided for in this Agreement. Orthovita
acknowledges and agrees that any improvements or inventions, whether patentable
or not, relating to the Products shall be owned solely by Cohesion.

 

2.8 Except as expressly set forth herein, all costs and expenses connected with
Orthovita’s activities or performance under this Agreement are to be borne
solely by Orthovita.

 

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Article 3.

Certain Performance Requirements

 

3.1 Orthovita agrees to use commercially reasonable efforts to promote, market,
sell and distribute the Products only to customers and potential customers
within the Territory for ultimate use in the Field within the Territory.
Orthovita will not knowingly, under any circumstances, either directly or
indirectly through third parties, promote, market, sell, or distribute Products
(a) within or to, or for ultimate use within, any place outside the Territory,
or (b) for use outside the Field.

 

3.2 In order to assure Cohesion that Orthovita is in compliance with Section
3.1, Orthovita agrees that Cohesion may mark for identification all Products
sold by Cohesion to Orthovita hereunder, as approved by the Joint Commercial
Operations Committee.

 

3.3 Orthovita shall promptly provide Cohesion with any information which
Cohesion may reasonably request in order to be updated on the Product-related
market conditions in the Territory. Orthovita shall, and shall ensure that its
Agents shall, also promptly notify Cohesion if Orthovita becomes aware of any
products marketed or sold in the Territory that appear to be equivalent to any
of the Products.

 

3.4 Provided that Cohesion has supplied Products to Orthovita in accordance with
the terms of this Agreement, Orthovita shall maintain a sufficient inventory of
Products to assure an adequate supply of Products to serve all its market
segments. Orthovita shall maintain all of its inventory of Products in a manner
that is clearly segregated and that meets all storage and other standards
required by applicable governmental authorities and as reasonably required by
Cohesion. Cohesion shall provide Orthovita with any such requirements, and any
amendments thereto, in advance in writing. Those portions of Orthovita’s
facilities where Products are stored shall be subject to inspection by Cohesion
or its agents upon seventy-two (72) hours prior written notice, but no more than
once per Calendar Year; provided that if such an inspection reveals that
Orthovita is not in compliance with this Section 3.4, then Cohesion shall be
entitled to inspect Orthovita’s facilities at reasonable intervals until such
time as Orthovita is in compliance with this Section 3.4 for an entire Calendar
Year. For all Cohesion inspection requests under this Section 3.4, Orthovita
shall promptly respond to Cohesion’s requests for inspection and the Parties
shall agree on the time, scope and manner of the inspection.

 

3.5 Orthovita shall be responsible for and shall collect all governmental and
regulatory sales and other taxes, charges, duties and fees that may be due and
owing upon sales of Products by Orthovita. Upon written request from Orthovita,
Cohesion shall provide Orthovita with such certificates or other documents as
may be reasonably required to establish any applicable exemptions from the
collection of such taxes, charges, duties and fees.

 

3.6 Except during the time in which Orthovita has assumed oversight and
management of Product manufacturing, all Products shall be packaged and labeled
for sale and delivered by or on behalf of Cohesion to Orthovita subject to and
in accordance with all local rules and regulations, and in conformance with the
mutually agreed upon instructions of the Joint Sales and Marketing Committee.
Neither Party shall use any label, advertisement or marketing material on, or
with respect to or relating to the promotion, marketing, distribution and sale
of,

 

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Product in the Field in the Territory unless such label, advertisement or
marketing material has first been submitted to and approved in writing by the
Joint Sales and Marketing Committee.

 

3.7 Neither Party shall make any alterations or knowingly permit any alterations
to be made to the Products in the Field in the Territory without the other
Party’s prior written consent.

 

3.8 Orthovita agrees not to make, or permit any of its employees, agents or
representatives to make, any claims or representations relating to any Product,
unless such claims or representations have received prior written approval from
Cohesion and from the applicable Regulatory Authorities.

 

3.9 Orthovita will use commercially reasonable efforts to actively promote,
develop demand for and maximize the sale of the Products to all customers and
potential customers within the Territory for use in the Field; provided that all
Products shall be advertised, marketed, sold and distributed by Orthovita, and
Product inventory shall be maintained by Orthovita, in compliance with the rules
and regulations, as amended from time to time, of (a) all applicable Regulatory
Authorities within the Territory in which the Products are marketed, and (b) all
other applicable laws, rules and regulations. Orthovita shall promote a Product
within the Field only for indications covered by the labeling and literature
that accompany the Product and that have been approved, cleared or otherwise
allowed by the applicable Regulatory Authorities in the country in which such
promotion occurs.

 

3.10 If either Party becomes aware of any Adverse Events, it shall promptly
notify the other Party and provide reasonable assistance in evaluating and
investigating and, when necessary, Cohesion shall report such Adverse Event to
the applicable Regulatory Authority. The Parties shall comply with any necessary
corrective action and with all applicable reporting laws, rules and regulations
governing Adverse Events.

 

Article 4.

Cohesion Support

 

4.1 For six (6) months after the Effective Date (the “Support Period”), and upon
Orthovita’s written request, Cohesion shall make personnel selected by Cohesion
reasonably available to cooperate with and reasonably support sales orientation
and training of Orthovita’s personnel, as well as reasonably support Orthovita’s
product launches, marketing, and promotion relating to the Products, up to a
maximum of ******** total Cohesion personnel work hours. During the Support
Period, if Orthovita requests such personnel support, Orthovita shall ********,
for any personnel work hours of assistance requested by Orthovita and agreed to
be provided by Cohesion. Cohesion will provide appropriate supporting
documentation for ******** upon request by Orthovita. If Orthovita requests
continued personnel support in excess of such maximum number of Cohesion
personnel work hours or beyond the Support Period, Cohesion shall propose to
Orthovita in writing the personnel to be assigned, the number of work hours such
personnel will be available, and the ******** by Orthovita. Orthovita then may
agree to continue use of such personnel based upon such ********, or Orthovita
may decide to decline continued personnel support from Cohesion. All ******** to
Cohesion under this Article 4 shall be ******** by Orthovita within ********
days after receipt of ******** from Cohesion.

 

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Article 5.

Joint Committees

 

5.1 Within thirty (30) days after the Effective Date, Cohesion and Orthovita
shall form three (3) committees – the “Joint Sales and Marketing Committee,” the
“Joint Clinical Development Committee,” and the “Joint Commercial Operations
Committee” – and each Party shall designate its program director on each
committee (“Program Director”). Each committee shall consist of up to two (2)
representatives from each Party, one of which shall be each Party’s Program
Director for that committee, for a total of up to four (4) members per
committee. Cohesion and Orthovita shall each retain the right to change its
representative(s) to each committee, including its Program Director, from time
to time, upon written notice to the other Party, or to appoint one or more
substitutes to serve in the place of an absent member(s). The Program Directors
shall serve as co-chairs of their respective committees (each a “Co-Chair”). The
committee representatives of Cohesion and Orthovita shall be employees that
agree to be bound by the terms of confidentiality and other pertinent provisions
of this Agreement. Each committee member, including the Program Directors, shall
have expertise in a relevant discipline, such as business development, research
and development, clinical and/or regulatory affairs, sales or marketing.

 

5.2 The Joint Sales and Marketing Committee’s responsibilities shall include the
following functions:

 

  (a) within ninety (90) days before the end of each Calendar Year (beginning
with Calendar Year 2004) during the Term, prepare an annual budget and Product
sales targets and forecasts for the next Calendar Year;

 

  (b) each calendar quarter, provide a non-binding, twelve (12)-month rolling
Product purchase forecast to Cohesion in accordance with Section 6.10;

 

  (c) review and set (if necessary) Minimum Sales amounts, royalty rates and/or
royalty percentage break points pursuant to Section 6.6;

 

  (d) determine adjustments (if appropriate) to Sample amounts and costs in
accordance with Section 6.14;

 

  (e) determine and approve any additional Product marketing activities;

 

  (f) review and approve all Product and Accessories packaging, Product and
Accessories positioning and Product and Accessories branding or rebranding
(including Trademark usage in accordance with Section 9.2);

 

  (g) determine and approve any relaunch of CoStasis Products in a different
dosage form or different dosage size in accordance with Section 6.5; and

 

  (h) determine if the definition of Net Sales should be revised in accordance
with Section 6.6.

 

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5.3 The Joint Clinical Development Committee’s responsibilities shall include
the following functions:

 

  (a) provide timely notice to the other Party’s representatives of any
scheduled meetings or discussions with clinical specialists regarding
then-current Product and Accessories and market development opportunities and
future Product and Accessories development opportunities including Future
Indications, so that the other Party shall have an opportunity to participate in
such meetings or discussions;

 

  (b) review, design and approve additional animal or clinical trials of
Products and Accessories in selected Future Indications to obtain Regulatory
Approval for such Future Indications, and develop and implement the related
budgets and financial responsibilities of the Parties;

 

  (c) govern the conduct of any animal or clinical trials of Products and
Accessories that are approved in accordance with subsection (b) above, including
reporting of results to the Parties;

 

  (d) review and approve any Regulatory Filings necessary to obtain Regulatory
Approval for Future Indications approved in accordance with subsection (b)
above.

 

5.4 The Joint Commercial Operations Committee’s responsibilities shall include
the following functions:

 

  (a) address issues related to Product shelf life, information for use,
labeling and marking, packaging procedures and Regulatory Authority clearance
letters;

 

  (b) review quality and regulatory information and documentation;

 

  (c) review and address issues related to technical specifications of the
Product;

 

  (d) oversee transfer of responsibilities, specifications and purchasing
information for securing any third-party supply of Accessories in accordance
with Section 6.4;

 

  (e) approve a proposed third party manufacturer, oversee transfer of
third-party manufacturing and any oversight and management responsibilities for
the manufacture of Product, in accordance with Section 6.15 or 6.16, or as may
be required pursuant to Section 8.6;

 

  (f) develop and implement a customer service transfer plan and related
timelines; and

 

  (g) address inventory transfer and storage issues.

 

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5.5 Each committee shall hold meetings at such times as it elects to do so, but
in no event shall such meetings be held less frequently than once every six (6)
months. Meetings of a committee may be held in person at such locations as the
Parties may agree, by teleconference or by videoconference. Other employees of
each Party involved in the development or commercialization of a Product may
attend meetings as nonvoting participants, and, with the consent of each Party,
consultants, representatives, or advisors involved in the development or
commercialization of a Product may attend meetings as nonvoting observers;
provided that such third party representatives are under obligations of
confidentiality and non-use applicable to the Confidential Information of each
Party and that are at least as stringent as those set forth in this Agreement.
Each Party shall be responsible for all of its own expenses of participating in
a committee.

 

5.6 All decisions of each committee shall be made by a consensus of the members
of the committee. However, in the event that the members of a committee are
unable to reach consensus on a particular issue, then the Co-Chairs shall
attempt to decide such issue. If the Co-Chairs are unable to reach consensus,
then prior to submitting the dispute to arbitration pursuant to Article 18, the
matter shall be referred to Cohesion’s CFO and to Orthovita’s CFO. The CFOs to
whom any dispute is submitted shall attempt to resolve the dispute through good
faith negotiations over a reasonable period, not to exceed fifteen (15) business
days in the aggregate unless otherwise agreed upon by the CFOs. Such fifteen
(15) business day period shall be deemed to commence on the date the dispute was
submitted to the CFOs. All negotiations pursuant to this Section 5.6 shall be
confidential and shall be treated as compromise and settlement negotiations for
purposes of applicable rules of evidence.

 

5.7 ********

 

5.8 If Cohesion, either itself or with an Affiliate or third party, desires to
promote, market, sell and/or distribute a Competitive Product in the Territory,
Cohesion shall notify Orthovita in writing of its intention to promote, market,
sell and/or distribute such Competitive Product. Orthovita shall have ********
days from the date Cohesion notifies Orthovita of such intention to notify
Cohesion of Orthovita’s desire to market, sell and/or distribute such
Competitive Product and to negotiate in good faith an agreement relating to the
marketing, selling and distributing of such Competitive Product. If after such
******** day period, the Parties have not executed such an agreement, Cohesion
shall ********.

 

Article 6.

Supply of Products by Cohesion

 

6.1 Subject to the terms and conditions of this Agreement, Cohesion shall sell
to Orthovita (a) the CoStasis Products as set forth in Exhibit F at the CoStasis
Price and (b) the CellPaker Products as set forth in Exhibit F at the CellPaker
Price. Unless otherwise expressly stated herein, all payments to Cohesion
pursuant to this Article 6 shall be made within thirty (30) days after the date
of Orthovita’s receipt of an invoice from Cohesion or its designee.

 

6.2 In addition to the CoStasis Price, Orthovita shall pay to Cohesion royalties
as a percentage of total Net Sales for each Calendar Year on a quarterly basis
in each of North America, the European Union and the ROW (as applicable), as set
forth in Exhibit E. All such

 

12

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royalty payments shall be made within thirty (30) days following the end of the
calendar quarter for which such royalty payment is due and shall be accompanied
by the report set forth in Section 6.3. Net Sales shall be determined for each
Calendar Year of the Term and for each of North America, the European Union and
the ROW (as applicable), and Net Sales made in one Calendar Year shall not count
toward Net Sales in any other Calendar Year. If the Joint Sales and Marketing
Committee approves a relaunch of CoStasis Products such that the average sales
price per unit is lower than ********, these royalty rates may be adjusted
pursuant to the procedure set forth in Section 6.6.

 

6.3 Orthovita shall send to Cohesion quarterly sales reports which set forth the
number of units and sizes of each CoStasis Product and CellPaker Product sold,
the Net Sales in each of North America, the European Union and the ROW (as
applicable), the number of units of Samples distributed and remaining inventory
of CoStasis Products and CellPaker Products. Cohesion shall have the right upon
reasonable advance written notice to have Orthovita’s books, records and
accounts examined during normal business hours, at Cohesion’s expense, by a
qualified independent certified public accountant nominated by Cohesion and
reasonably acceptable to Orthovita for the sole purpose of verifying the
accuracy of Orthovita’s accounting reports and payments made or to be made
pursuant to this Agreement. Such audits may not be performed by Cohesion more
than once per Calendar Year, and Cohesion shall not be permitted to audit the
same period of time more than once; provided, however, that if such an audit
reveals that Orthovita is not in compliance with this Section 6.3, then Cohesion
shall be entitled to audit Orthovita’s books, records and accounts at reasonable
intervals until such time as Orthovita is in compliance with this Section 6.3
for an entire Calendar Year, including re-audit of books, records and accounts
for the same period of time for which an audit was previously conducted by
Cohesion. Such accountant shall be instructed not to reveal to Cohesion the
details of its review, except for (a) such information as is required to be
disclosed under this Agreement and (b) such information presented in a summary
fashion as is necessary to report the accountant’s conclusions to Cohesion, and
all such information shall be deemed Confidential Information of Orthovita. If
the accountant makes a determination of underpayment by Orthovita, Orthovita
shall remit to Cohesion, within thirty (30) days of receiving notice from
Cohesion, any underreported percentage of Net Sales amounts or other amounts due
to Cohesion, together with interest from the original due date for payment, as
provided in Section 6.19. ********.

 

6.4 Within thirty (30) days after the Effective Date, and subject to
satisfactory inspection by Orthovita representatives, which shall not be
unreasonably withheld, Orthovita shall pay to Cohesion ******** to purchase
Cohesion’s existing inventory of Accessories, as listed in Exhibit B. Within
ninety (90) days after receipt of such payment, Cohesion shall deliver to
Orthovita such Accessories in accordance with instructions provided by Orthovita
and with Sections 6.11 and 6.12. With regard to any additional supply of
Accessories needed by Orthovita, Cohesion shall provide Orthovita with Accessory
specifications and contact information for third party Accessory suppliers
and/or manufacturers previously used by Cohesion to obtain Accessories, as
listed in Exhibit B. Orthovita shall be responsible for negotiating with such
suppliers and/or manufacturers, or other suppliers or manufacturers of
Orthovita’s choosing, to obtain Accessories. Upon Orthovita’s written request,
Cohesion shall provide reasonable assistance to Orthovita in securing an ongoing
supply of Accessories, including making introductions to Accessory suppliers
and/or manufacturers previously used by Cohesion and providing specifications
for the Accessories.

 

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6.5 During Calendar Year 2004, the CoStasis ******** and the CellPaker ********
shall not be adjusted. Thereafter during the Term, if Cohesion desires to
********, Cohesion shall send written notice to Orthovita of Cohesion’s proposal
for ********. Within ten (10) days after Orthovita’s receipt of such notice, the
CFO of Cohesion shall provide to the CFO of Orthovita documentation of the
change ******** of the applicable Product in support of such proposal. Within
thirty (30) days after Orthovita’s receipt of such notice, the Parties’ CFOs
shall meet to discuss in good faith Cohesion’s proposal and shall finally
determine the ******** of the applicable Product that is deemed appropriate by
the CFOs. Proposals ******** may also be made by the Joint Sales and Marketing
Committee, if such committee determines that a Product ********, in which case
each Party shall promptly notify its CFO of such determination and provide
relevant supporting documentation. The CFOs shall meet within forty-five (45)
days following such determination to discuss in good faith the ******** and
shall finally determine the ******** of the applicable Product that is deemed
appropriate by the CFOs. All adjustments to Price made pursuant to this Section
6.5 shall be made with an objective ********. Notwithstanding anything herein to
the contrary, if the CFOs are unable to reach agreement as to an appropriate
adjustment, then the Parties shall submit the dispute to arbitration pursuant to
Article 18.

 

6.6 If the European Union or the ROW is added to the Territory pursuant to
Section 2.5, ******** for such addition to the Territory shall be reviewed and
set by the Joint Sales and Marketing Committee no later than ******** after
addition of the European Union or the ROW (as applicable) is added to the
Territory. For the avoidance of doubt, North America, the European Union and the
ROW shall ********. Any setting of the ******** shall consider ******** and such
other factors as the Joint Sales and Marketing Committee may deem relevant. The
Joint Sales and Marketing Committee shall also consider whether the definition
of Net Sales with respect to the European Union or the ROW should be revised,
such that the sale or transfer of Products between Orthovita (or an Affiliate of
Orthovita) and an Affiliate, independent subdistributor or other agent of
Orthovita for resale by the receiving entity in the European Union or ROW, as
applicable, should be considered a sale for the purpose of calculating Net
Sales, with the resale by such receiving entity to a third party not considered
a sale for such purpose. If the Joint Sales and Marketing Committee is unable to
reach agreement on a setting or adjustment of the ********, or on a revision to
the definition of ********, then the dispute shall be referred to the CFOs in
accordance with Section 5.6. Any adjustment to the ******** approved by the
Joint Sales and Marketing Committee or the CFOs shall be attached to ******** as
an addendum. ********. Any revision of the definition of ******** shall be set
forth in an amendment to this Agreement.

 

6.7 As consideration for its appointment as an exclusive sales distributor of
CoStasis Products, Orthovita agrees to achieve Minimum Sales, during each
Calendar Year of the Term, commencing with Calendar Year ********. If Orthovita
fails to meet the Minimum Sales requirement in Calendar Year ******** or any
subsequent Calendar Year during the Term (including any extensions to the Term),
then Cohesion, within ******** after the end of the applicable Calendar Year,
may ********.

 

6.8 Orthovita shall order Products by submitting a written purchase order to
Cohesion describing the type and quantity of the Products to be purchased
(“Purchase Order”). All Purchase Orders are subject to acceptance by Cohesion
within five (5) business days of receipt of

 

14

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the Purchase Order by Cohesion from Orthovita. If Cohesion accepts the Purchase
Order, Cohesion will invoice Orthovita upon shipment of the Products. Unless
otherwise agreed, Orthovita shall pay all invoices in full within thirty (30)
days after the date of receipt of the invoice which date shall not be earlier
than the date on which Orthovita receives shipment of Product. All sales and
payments shall be made, and all orders shall be accepted, in the State of
California.

 

6.9 Cohesion shall not be obligated to ship Products to Orthovita at any time
when payment of an amount owed by Orthovita is overdue or when Orthovita is
otherwise in breach of this Agreement.

 

6.10 All shipments shall be initiated by an accepted Purchase Order. Product
shipment dates will be specified in the Purchase Order. These dates shall not be
scheduled prior to ninety (90) days after the date the Purchase Order is
received, without the mutual consent of the Parties. Purchase Orders will be
non-cancellable. The Joint Sales and Marketing Committee will determine, on a
quarterly basis, a non-binding, twelve (12) month rolling Product purchase
forecast so that Cohesion may incorporate said forecasts into its planning
system. The triggering document for production activities is, however, an
accepted Purchase Order, as stated above. Variations in ordered Product
quantities of ******** above the last quarterly rolling forecast shall be
discussed between the Parties, and Cohesion will use its commercially reasonable
efforts to maintain delivery dates requested by Orthovita.

 

6.11 All shipments of Products and Accessories to Orthovita will be packaged in
accordance with Cohesion’s standard packaging materials and packaging
procedures, or in accordance with such packaging materials as determined by the
Joint Sales and Marketing Committee and packaging procedures as determined by
the Joint Commercial Operations Committee, which conform to Product
specifications and regulatory requirements, and shipped per Cohesion’s
then-current distribution practices together with Cohesion’s certificate of
compliance. All Prices are F.O.B., ******** the applicable Product on Cohesion’s
behalf. Ownership of and title to Products and Accessories and all risks of loss
with respect thereto shall pass to Orthovita upon delivery of such Products and
Accessories by Cohesion to ******** the designated delivery point. All freight,
insurance and other shipping expenses, as well as any special packaging expense,
shall be paid by ********. ******** shall also bear all applicable taxes, duties
and similar charges that may be assessed against the Product or the Accessories
upon delivery. Deliveries of Products shall be made by Cohesion under normal
trade conditions in the usual and customary manner being utilized by Cohesion at
the time and location of the particular delivery.

 

6.12 Orthovita shall be required to inspect all Products and Accessories within
ten (10) business days of delivery of Product and its respective certificate of
compliance. Any Product or Accessory not properly rejected within ten (10)
business days of delivery shall be deemed accepted; provided, however, in the
case of Product with defects not readily discoverable within the time period
specified in this Section 6.12, Orthovita shall notify Cohesion of any such
defects discovered by Orthovita promptly following discovery thereof. Credits to
Orthovita for Products and Accessories that do not conform to the applicable
Product or Accessory specification as of the time of transfer of ownership to
Orthovita and that are rejected within the ten (10) day time period (or such
later time for not readily discoverable defects) shall include importation and

 

15

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shipment expenses and will be calculated by Cohesion based on the original Price
of the Product returned or, with respect to Accessories that were obtained by
Orthovita from Cohesion pursuant to Section 6.4, a pro rata amount of the
payment made for such Accessories under Section 6.4, whether identified by lot
number or another method. Orthovita may, at its option, request a ******** to
obtain replacement Products or Accessories. Orthovita’s obligations with respect
to such defective Products and Accessories and their return to Cohesion shall be
in accordance with the Uniform Commercial Code, Article 2. After Products or
Accessories are accepted or are deemed accepted, they shall not be returned
without the written consent of Cohesion.

 

6.13 Under no circumstances will either Party knowingly make any false or
misleading statements concerning a Product or Accessory, or knowingly adulterate
or misbrand a Product or Accessory for sale or distribution.

 

6.14 As set forth in Exhibit D, Cohesion shall provide to Orthovita Product
samples (“Samples”) at a ********. Any additional annual requirements for
Samples by Orthovita must be determined and approved by the Joint Sales and
Marketing Committee. These units of Product shall be labeled “Sample” by
Orthovita and may not be sold. All Samples will be used for sales force
demonstrations, trade shows, training and other activities in support of
Orthovita’s promotion and marketing of the Products. Orthovita shall submit to
Cohesion a Purchase Order for any such Samples.

 

6.15 The Parties contemplate that during the Term, Cohesion will transfer
manufacturing of one or more CoStasis Products to one or more third party
manufacturers as set forth in this Section 6.15.

 

  (a) Cohesion may elect, in its sole discretion, to transfer manufacturing of
one or more CoStasis Products to one or more third party manufacturers prior to
December 31, 2006. If Cohesion elects to so transfer CoStasis Product(s)
manufacturing, Cohesion shall provide notice to Orthovita of such election and
the identity of the proposed third party manufacturer(s), which proposed third
party manufacturer(s) shall be reasonably acceptable to the Joint Commercial
Operations Committee. Orthovita and Cohesion shall ******** associated with such
transfer of manufacturing. Within thirty (30) days after transfer of CoStasis
Product(s) manufacturing is completed, Cohesion shall provide Orthovita with
notice of such completion. Thereafter, the Parties shall periodically discuss
whether Orthovita will assume oversight and management of such third party
manufacturer(s); provided, however, that the Parties contemplate that Orthovita
shall assume such oversight no later than January 1, 2007. If the Parties
mutually determine that Orthovita shall assume oversight and management of such
third party manufacturer(s) prior to January 1, 2007, transfer of oversight and
management shall be completed within one hundred twenty (120) days after such
determination;

 

  (b)

If Orthovita has not assumed oversight and manufacturing of CoStasis Products as
of January 1, 2007, the Joint Commercial Operations Committee shall promptly
meet and develop a plan to promptly transition

 

16

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oversight and management of CoStasis Product manufacturing to Orthovita. If
Cohesion has not transferred CoStasis Product manufacturing to one or more third
party manufacturers pursuant to Section 6.15(a), then Cohesion shall provide
Orthovita with the identity of the proposed third party manufacturer(s), which
proposed third party manufacturer(s) shall be reasonably acceptable to the Joint
Commercial Operations Committee. Orthovita and Cohesion shall ********
associated with such transfer of manufacturing.

 

  (c) With regard to the period of time in which Orthovita is responsible for
oversight and management of CoStasis Product manufacturing pursuant to Sections
6.15(a), 6.15(b) or 6.16, (i) Orthovita’s obligation to pay Cohesion the
CoStasis Price shall be suspended during such period of time that Orthovita is
responsible for oversight and management of such third party manufacturer(s);
(ii) the Parties acknowledge and agree that the ******** to be determined by
mutual agreement of the CFOs with an objective of maintaining the ******** and
taking into account such ******** and the additional ******** by Orthovita in
connection with oversight and management of the third party manufacturer(s); and
(iii) the Parties shall make all efforts to also transfer to Orthovita oversight
and management of the then-current third party CellPaker Products manufacturer,
********. Any agreement with respect to CellPaker Products pursuant to Section
6.15(iii) shall be set forth in an amendment to this Agreement.

 

6.16 During the Term, and provided that Orthovita has not assumed oversight and
management of third-party manufacturing pursuant to Section 6.15, if Cohesion is
unable to provide Orthovita with Product, then Cohesion shall promptly provide
written notice to Orthovita of its inability to provide such Product. In such
event, Orthovita shall have the right to engage a back-up supplier to
manufacture and supply the applicable Product for use in the Field in the
Territory and to terminate any Purchase Order, in whole or in part, that
Cohesion was unable to fill without liability or charge. Such right shall
continue for a period of ********, as provided herein. In such event, this
Agreement shall be extended for a period of time equal to the length of time
that Cohesion is unable to deliver the applicable Product. In the event that any
such inability to deliver a Product continues for ********, the Parties shall
meet and discuss in good faith any and all ******** alternatives, if any,
including assumption of oversight and management of manufacturing by Orthovita
(subject to Section 6.15(c)), that would permit the Parties to obtain the
benefits of this Agreement. If no such alternatives are identified, then this
Agreement shall terminate, without penalty, upon the date that Orthovita sells
the last item of Products in its inventory.

 

6.17 This Section 6.17 shall govern recalls, field alerts, withdrawals and field
corrective actions for a Product arising during the time that Cohesion has
responsibility for oversight and management of manufacturing of such Product,
whether or not such Product is manufactured by a third party manufacturer. In
the event that Cohesion believes a recall, field alert, Product withdrawal, or
field corrective action may be necessary with regard to any Product provided to
Orthovita under this Agreement, Cohesion shall immediately notify Orthovita in

 

17

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writing. In the event that Orthovita or its Agents believe a recall, field
alert, Product withdrawal, or field corrective action may be necessary with
regard to any Product provided by Cohesion under this Agreement, Orthovita shall
immediately notify Cohesion in writing. Orthovita shall, and shall ensure that
its Agents shall, provide reasonable cooperation and assistance to Cohesion.
When necessary, Cohesion shall report such recall, field alert, Product
withdrawal, or field corrective action to the applicable Regulatory Authority.
The cost of any such recall, field alert, Product withdrawal, or field
corrective action shall be borne by Cohesion, unless such recall, field alert,
Product withdrawal, or field corrective action is caused in material part by
Orthovita’s breach of its obligations under this Agreement (including
obligations regarding advertising, distribution and storage of the Products) or
applicable laws, or by its willful misconduct; then such cost shall be borne by
Orthovita to the extent such recall, field alert, Product withdrawal, or field
corrective action was due to such causes. For purposes of this Section 6.17, the
Party bearing the cost of any recall, field alert, Product withdrawal, or field
corrective action shall only be required to reimburse the other Party for
reasonable, actual and documented out-of-pocket costs incurred by such other
Party for such recall, field alert, Product withdrawal, or field corrective
action (including costs of retrieving Product already delivered to customers,
costs and expenses such other Party is required to pay for notification,
shipping and handling charges, and all other costs reasonably related to such
recall, field alert, Product withdrawal, or field corrective action), and the
cost to replace, or the actual replacement of, the Product.

 

6.18 This Section 6.18 shall govern recalls, field alerts, withdrawals and field
corrective actions for a Product arising during the time that Orthovita has
responsibility for oversight and management of manufacturing of such Product,
whether or not such Product is manufactured by a third party manufacturer. In
the event that Cohesion believes a recall, field alert, Product withdrawal, or
field corrective action may be necessary with regard to any Product manufactured
by or for Orthovita under this Agreement, Cohesion shall immediately notify
Orthovita in writing. In the event that Orthovita or its Agents believe a
recall, field alert, Product withdrawal, or field corrective action may be
necessary with regard to any Product manufactured by or for Orthovita under this
Agreement, Orthovita shall immediately notify Cohesion in writing. Orthovita
shall, and shall ensure that its Agents shall, provide reasonable cooperation
and assistance to Cohesion. When necessary, Cohesion shall report such recall,
field alert, Product withdrawal, or field corrective action to the applicable
Regulatory Authority. The cost of any such recall, field alert, Product
withdrawal or field corrective action shall be borne by Orthovita, unless such
recall, field alert Product withdrawal, or field corrective action is caused in
material part by Cohesion’s breach of its obligations under this Agreement or
applicable laws, or by its willful misconduct; then such cost shall be borne by
Cohesion to the extent such recall, field alert, Product withdrawal, or field
corrective action was due to such causes. Notwithstanding the preceding
sentence, if such recall, field alert, Product withdrawal, or field corrective
action is triggered by the attributes of such Product, including but not limited
to the ********. For purposes of this Section 6.18, the Party bearing the cost
of any recall, field alert, Product withdrawal, or field corrective action shall
only be required to reimburse the other Party for reasonable, actual and
documented out-of-pocket costs incurred by such other Party for such recall,
field alert, Product withdrawal, or field corrective action (including costs of
retrieving Product already delivered to customers, costs and expenses such other
Party is required to pay for notification, shipping and handling charges, and
all other costs reasonably related to such recall, field alert, Product
withdrawal, or field corrective action), and the cost to replace, or the actual
replacement of, the Product.

 

18

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6.19 In case of any delay in payment by Orthovita to Cohesion or its designee
not occasioned by Force Majeure, interest on the overdue payment shall accrue at
an annual interest rate equal to the lesser of: (a) the prime rate as reported
in the Money Rates set forth in The Wall Street Journal, ********, as determined
for each month on the last business day of the previous month, or (b) the
maximum amount permitted by law, in either instance assessed from the date that
payment was initially due. The foregoing interest shall be due from Orthovita
without any special notice, and shall be in addition to any other remedies that
Cohesion may have pursuant to this Agreement.

 

Article 7.

Representations, Warranties and Indemnification

 

7.1 Each Party represents, warrants and covenants that:

 

  (a) this Agreement has been duly executed and delivered by such Party and
constitutes a valid and binding obligation of such Party, enforceable against
such Party in accordance with its terms, except as enforceability may be limited
by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors’ rights generally and by general
equitable principles;

 

  (b) as of the Effective Date, the execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on the part of such
Party, its officers and directors and does not conflict with any agreement,
instrument or understanding, oral or written, to which such Party is a party or
by which it may be bound, and, to the best of its knowledge, does not violate
any material law or regulation of any court, governmental body or administrative
or other agency having authority over it;

 

  (c) such Party has full power and authority to perform the obligations set
forth herein, and that such Party is not subject to any order, decree or
injunction by a court of competent jurisdiction which may prevent or materially
delay the consummation of the transactions contemplated by this Agreement;

 

  (d) such Party is duly organized, validly existing and in good standing under
the laws of the jurisdiction where it is organized; and

 

  (e) such Party is and will remain in material compliance with all applicable
federal, state and local laws, regulations and orders as they may apply to this
Agreement.

 

  (f)

during the time that such Party has responsibility for oversight and management
of manufacturing of a Product, such Product will be packaged and shipped in
accordance with the agreed upon labeling instructions and regulatory
requirements, will be free from defects in materials and workmanship, will not
be adulterated or misbranded within

 

19

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the meaning of the Act, is not an article which may not, under the Act, be
introduced into interstate commerce, and will be free and clear of all liens and
encumbrances.

 

7.2 Orthovita represents, warrants and covenants that its books, records and
accounts pertaining to all its operations under this Agreement are complete and
accurate in all material respects, and have been maintained in accordance with
sound and generally accepted accounting principles.

 

7.3 Orthovita shall not make any representation or warranty to a third party
with respect to the Products that is more extensive than, or inconsistent with,
the limited warranty set forth in this Article 7 or that is inconsistent with
the policies or publications of Cohesion relating to the Products.

 

7.4 Except for Cohesion’s obligation to indemnify Orthovita pursuant to this
Article 7, Orthovita’s sole and exclusive remedy under this Agreement for (a)
any non-conforming Products or Accessories provided to Orthovita by Cohesion
shall be receipt of credits for such non-conforming Products or Accessories
according to Section 6.12; and (b) any shortage of delivery of Product or
inability of Cohesion to deliver Product shall be as set forth in Section 6.16.

 

7.5 THE LIMITED WARRANTIES CONTAINED IN THIS ARTICLE 7 ARE THE SOLE WARRANTIES
GIVEN BY THE PARTIES HEREUNDER AND ARE MADE EXPRESSLY IN LIEU OF AND EXCLUDE ANY
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NON-INFRINGEMENT OR OTHERWISE, AND ALL OTHER EXPRESS OR IMPLIED REPRESENTATIONS
AND WARRANTIES PROVIDED BY COMMON LAW, STATUTE OR OTHERWISE ARE HEREBY
DISCLAIMED BY BOTH PARTIES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR INDIRECT, PUNITIVE, SPECIAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES
OF ANY KIND, INCLUDING WITHOUT LIMITATION, LOSS OF PROFITS OR OTHER COMMERCIAL
OR ECONOMIC LOSS, AND LOSS OR INTERRUPTION OF BUSINESS. THE FOREGOING PROVISION
SHALL NOT BE CONSTRUED TO LIMIT A PARTY’S INDEMNIFICATION OBLIGATION UNDER THIS
AGREEMENT FOR THIRD PARTY CLAIMS WHICH MAY INCLUDE CONSEQUENTIAL, PUNITIVE OR
OTHER TYPES OF DAMAGES.

 

7.6 Cohesion shall defend, indemnify and hold harmless Orthovita and its
Affiliates and their employees, officers, agents and directors against any loss,
damages, action, suit, claim, demand, liability, expense, bodily injury, death,
or property damage (a “Loss”) that may be brought, instituted or arise against
or be incurred by such persons to the extent such Loss is based on or arises out
of:

 

  (a) a breach by Cohesion of any of its covenants, representations or
warranties set forth in this Agreement;

 

  (b)

during the time that Cohesion has responsibility for oversight and management of
manufacturing of a Product, whether or not such Product

 

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is manufactured by a third party manufacturer, the failure of Cohesion to ship
Product that meets the Product specifications or that is manufactured in
compliance with current Good Manufacturing Practices or other applicable laws
and regulations;

 

  (c) any negligence, recklessness or wrongful intentional acts or omissions of
Cohesion or its representatives, directors, officers, employees and agents, in
connection with the activities contemplated under this Agreement;

 

  (d) during the time that Cohesion has responsibility for oversight and
management of manufacturing of a Product, whether or not such Product is
manufactured by a third party manufacturer, the attributes of such Product,
including but not limited to the immunogenicity, toxicity, teratogenicity,
carcinogenicity, or inherent risk of the use or administration of such Product;

 

  (e) improper business practices of Cohesion, as determined by a court or
governmental authority having jurisdiction over Cohesion; and

 

  (f) provided that Orthovita shall comply with reasonable instructions from
Cohesion regarding the promotion, marketing, distribution and sales of Products,
any alleged infringement by the Products of patents or other intellectual
property rights owned or controlled by a third party;

 

provided in each case, however, that the foregoing indemnifications in this
Section 7.6 shall not apply to any Loss to the extent such Loss is caused by the
negligence, recklessness or wrongful intentional acts or omissions of Orthovita
or its Affiliates.

 

7.7 Orthovita shall defend, indemnify and hold harmless Cohesion and its
Affiliates and their employees, officers, agents and directors against any Loss
that may be brought, instituted or arise against or be incurred by such persons
to the extent such Loss is based on or arises out of:

 

  (a) a breach by Orthovita of any of its covenants, representations or
warranties set forth in this Agreement;

 

  (b) during the time that Orthovita has responsibility for oversight and
management of manufacturing of a Product, whether or not such Product is
manufactured by a third party manufacturer, the failure of Orthovita to promote,
market, distribute or sell Product that meets the Product specifications or that
is manufactured in compliance with current Good Manufacturing Practices or other
applicable laws and regulations;

 

  (c) any negligence, recklessness or wrongful intentional acts or omissions of
Orthovita or its representatives, directors, officers, employees and agents, in
connection with the activities contemplated under this Agreement;

 

  (d) improper business practices of Orthovita, as determined by a court or
governmental authority having jurisdiction over Orthovita; and

 

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  (e) Orthovita’s advertising, promoting, marketing, distributing and selling
activities of Product that are not in accordance with law or regulation;

 

provided in each case, however, that the foregoing indemnifications in this
Section 7.7 shall not apply to any Loss to the extent such Loss is caused by the
negligence, recklessness or wrongful intentional acts or omissions of Cohesion
or its Affiliates.

 

7.8 During the time that Orthovita has responsibility for oversight and
management of manufacturing of a Product, and such manufacturing is being
conducted by a third party manufacturer, Cohesion shall defend, indemnify and
hold harmless Orthovita and its Affiliates and their employees, officers, agents
and directors, and Orthovita shall defend, indemnify and hold harmless Cohesion
and its Affiliates and their employees, officers, agents and directors, against
any Loss that may be brought, instituted or arise against or be incurred by such
persons ********; provided, however, that such ******** shall only apply to the
extent required to result in the Parties ******** for such Loss, and ********;
and provided further that the foregoing ******** in this Section 7.8 shall not
apply to any Loss to the extent such Loss is caused by the negligence,
recklessness or wrongful intentional acts or omissions of the Indemnified Party.

 

7.9 In the event that Orthovita begins to ********, the Parties shall promptly
meet and discuss ********. The Parties contemplate that in such event, Orthovita
shall be required to defend, indemnify and hold harmless Cohesion and its
Affiliates and their employees, officers, agents and directors, against any such
Loss that may be brought, instituted or arise against or be incurred by such
persons, except to the extent such Loss is caused by the negligence,
recklessness or wrongful intentional acts or omissions of Cohesion or its
Affiliates.

 

7.10 If indemnification is sought as a result of any third party claim, suit or
demand, the Indemnified Party shall: (a) shall give written notice to the
Indemnifying Party within fifteen (15) days after receipt by the Indemnified
Party of such claim, suit or demand; provided, however, that the failure to give
notice within such time period shall not relieve the Indemnifying Party of its
obligation to indemnify, unless it shall be materially prejudiced by such
failure; (b) permit the Indemnifying Party to assume direction and control of
the defense of claims resulting therefrom; and (c) at its own cost and expense,
cooperate fully as requested by the Indemnifying Party in the defense of the
claims. No offer of settlement, settlement or compromise by the Indemnifying
Party shall be binding on an Indemnified Party without its prior written consent
(which consent shall not be unreasonably withheld or delayed), unless such
settlement fully releases the Indemnified Party without any liability, loss,
cost or obligation to such Indemnified Party. No offer of settlement, settlement
or compromise by the Indemnified Party shall be binding on an Indemnifying Party
without its prior written consent (which consent shall not be unreasonably
withheld or delayed). Notwithstanding the foregoing, if indemnification is
sought by Orthovita as a result of any third party claim, suit or demand for
which Cohesion is obligated to indemnify Orthovita pursuant to Section 7.6(d),
Cohesion shall have the absolute right to control and settle such claim, suit or
demand without consent from Orthovita so long as any such settlement fully
releases Orthovita without any liability, loss, cost or obligation to Orthovita.

 

7.11 Each Party shall, at its own cost, maintain comprehensive general liability
insurance, including broad form contractual liability and product liability
coverages, in amounts

 

22

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and subject to deductibles customary in the pharmaceutical industry and
sufficient to cover its obligations under this Agreement but in no event less
than ******** in coverage. Each Party shall maintain such insurance during the
Term ********. Each Party, upon request, shall provide the other Party with a
certificate of insurance as evidence of such coverages, and shall give the other
Party at least thirty (30) days notice of any cancellation, termination or
change in such insurance. Such insurance shall (a) be issued by reputable,
financially sound companies; (b) provide that the insurance company will
endeavor to provide at least thirty (30) days notice of cancellation,
non-renewal or material change of coverage to both Cohesion and Orthovita, but
its failure to do so shall impose no penalty or additional obligations under
this Agreement; and (c) contain a ********. All of the foregoing liability
policies shall be ******** and contain a ******** in favor of the other Party or
the other Party’s designee. Nothing in this Section 7.11 regarding insurance
coverage amounts shall be deemed or interpreted as a limitation on the
indemnities set forth in this Agreement.

 

7.12 Each Party shall each be solely responsible for the safety of its own
employees, agents, Affiliates or independent contractors with respect to its
performance under this Agreement, and each shall hold the other Party harmless
with regard to any liability for damages or personal injuries resulting from
acts of its respective employees, agents, Affiliates or independent contractors.

 

Article 8.

Term and Termination

 

8.1 The term of this Agreement shall be for a period commencing on the Effective
Date and ending on December 31, 2009, unless extended pursuant to Section 2.5 or
6.16 or this Section 8.1 (the “Term”). At least six (6) months prior to
expiration of the then-current Term, the Parties will meet to discuss in good
faith whether the then-current Term shall be extended by mutual agreement.
However, this Agreement shall automatically terminate at the end of the
then-current Term unless the Parties mutually agree in writing to extend such
Term prior to the expiration date. Notwithstanding the foregoing, this Agreement
may be terminated earlier in accordance with the provisions of this Article 8 or
as expressly provided elsewhere in this Agreement.

 

8.2 Cohesion shall have the absolute right to terminate this Agreement upon
thirty (30) days prior written notice to Orthovita if Orthovita fails to perform
or breaches, in any material respect, any material terms or provisions of this
Agreement; provided, however, that such termination shall become effective only
if Orthovita shall fail to remedy or cure the breach within such thirty (30) day
period, or initiate a remedy or cure within such period if it is not practicable
to complete the cure in such period. Without limiting the events which shall be
deemed to constitute a breach or material breach of this Agreement by Orthovita,
Orthovita understands and agrees that it shall be in material breach of this
Agreement, and Cohesion shall have the right to terminate (subject to the
applicable cure period) this Agreement under this Section 8.2, if Orthovita
fails or refuses to pay to Cohesion any sum when due.

 

8.3 Each Party shall have the absolute right to terminate this Agreement in the
event the other Party shall become insolvent, or if there is instituted by or
against the other Party procedures in bankruptcy that are not dismissed within
sixty (60) days, or under insolvency laws

 

23

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or for reorganization, receivership or dissolution, or if the other Party loses
any franchise or license to operate its business as presently conducted in any
part of the Territory.

 

8.4 ********

 

8.5 ********

 

8.6 Upon expiration or termination of this Agreement for any reason, Orthovita
and any successor or Acquiring Party of Orthovita, shall (a) have no further
right to promote, market, distribute or sell Product, except as set forth in
Section 8.7, (b) shall make Product customer information reasonably available to
Cohesion, (c) at the end of sales period set forth in Section 8.7, transfer to
Cohesion advertising or promotional materials and training materials that were
used in conjunction with the Products prior to expiration or termination, (d) if
Orthovita has assumed oversight and management of third party Product
manufacturers, provide reasonable assistance to Cohesion to allow Cohesion to
take over such oversight and control ********.

 

8.7 During the six (6)-month period following expiration or termination of this
Agreement, any inventory of Products held by Orthovita at such expiration or
termination may be sold by Orthovita to customers in the Territory in the
ordinary course; provided, however, that for the period required to liquidate
such inventory, all of the provisions contained herein governing Orthovita’s
performance obligations and Cohesion’s rights shall remain in effect. In order
to accelerate the liquidation of any such inventory, Cohesion shall have the
option, but not the obligation, to purchase all or any part of such remaining
inventory at the price at which the inventory was originally purchased by
Orthovita from Cohesion or a third party manufacturer.

 

8.8 The termination of this Agreement shall not impair the rights or obligations
of either Party hereto which shall have accrued hereunder prior to such
termination. The provisions of Article 1, to the extent definitions are embodied
in the following listed Articles and Sections of this Agreement; Sections
7.5-7.12, 8.6-8.8, 9.4 and 9.5; and Articles 10-23, and the rights and
obligations of the Parties thereunder shall survive the expiration or
termination of this Agreement.

 

Article 9.

Trademarks

 

9.1 All Trademarks used by Cohesion in connection with the Products, and all
patents, technology and other intellectual property and Know-how relating to the
Products, and the goodwill associated with the Products and the Trademarks of
Cohesion, are and shall remain the sole and exclusive property of Cohesion
and/or its Affiliates. Cohesion hereby grants Orthovita permission to use the
Trademarks of Cohesion and to use its own Trademarks for the Product for the
limited purpose of performing its obligations under this Agreement. For purposes
of this Article 9, the trademark ANGIOTECHKNOWLEDGY™ shall be deemed to be a
Trademark of Cohesion.

 

9.2 Orthovita and Cohesion shall ********. Cohesion’s Trademarks shall appear on
all Product packaging, labels, and inserts and other materials which Orthovita
uses for the marketing of the Products. Cohesion retains the right to review and
approve all intended uses of the

 

24

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Trademarks of Cohesion in any packaging, inserts, labels, or promotional or
other materials relating to the Products prior to Orthovita’s actual use
thereof. To the extent permitted by applicable law, all jointly branded Product
promotional materials and labeling affixed to the jointly branded Products shall
contain (a) Trademarks, corporate name and logo of Cohesion (and or its
Affiliates) as may be provided by Cohesion to Orthovita from time to time, (b)
trademarks, corporate name and logo of Orthovita as may be provided by Orthovita
to Cohesion from time to time, and (c) the trademark ANGIOTECHKNOWLEDGY™, in
positions of equivalent prominence and emphasis.

 

9.3 Orthovita agrees to use the Trademarks of Cohesion in full compliance with
the rules prescribed from time to time by Cohesion. The Trademarks of Cohesion
shall always be used together with the symbol “®” or the symbol “™”. Orthovita
may not use any Trademark of Cohesion as part of any corporate name or with any
prefix, suffix or other modifying word, term, design or symbol, except as
approved by the Joint Sales and Marketing Committee. In addition, Orthovita may
not use any Trademark of Cohesion in connection with the sale of any
unauthorized product or service or in any other manner not explicitly authorized
in writing by Cohesion.

 

9.4 In the event of any infringement of, or threatened or presumed infringement
of, or challenge to Orthovita’s use of, any Trademark of Cohesion, Orthovita is
obligated to notify Cohesion immediately. Cohesion shall investigate any alleged
violation and, if necessary, shall take the appropriate legal action to resolve
the issue and to prevent other competitors from infringing on said intellectual
property rights within the Territory. Cohesion shall have sole and absolute
discretion to take such action as it deems appropriate.

 

9.5 In the event of the termination of this Agreement for any reason,
Orthovita’s right to use the Trademarks of Cohesion shall cease at such time as
Orthovita’s inventory of Products has been sold as set forth in Section 8.7.
Thereafter, Orthovita shall, as soon as it is reasonably possible, remove all
Trademarks of Cohesion which appear on or about the premises of the office(s) of
Orthovita and any of the advertising of Orthovita used in connection with the
Products.

 

9.6 In the event of a breach or threatened breach by Orthovita of the provisions
of this Article 9, Cohesion shall be entitled to an injunction or injunctions to
prevent such breaches. Nothing herein shall be construed as prohibiting Cohesion
from pursuing other remedies available to it for such breach or threatened
breach of this Article 9, including the recovery of damages from Orthovita.

 

9.7 Should for some reason a Trademark of Cohesion be prevented from being used
in any part or whole of the Territory, the Parties shall consult as to a
suitable other trademark (which trademark shall be deemed a Trademark for
purposes of this Agreement) owned by Cohesion or to be transferred from
Orthovita to Cohesion for use during the Term in connection with the marketing,
promotion, distribution and sale of the Products; it being agreed, however, that
Cohesion retains the right to ultimately determine what such alternative
Trademark shall be used, provided it is not confusingly similar to a trademark
owned by Orthovita in the Territory.

 

25

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9.8 Nothing contained in this Agreement shall be construed as giving Orthovita
the right to use a Trademark of Cohesion outside the Territory or for any other
product than the Products.

 

Article 10.

Confidential Information

 

10.1 All disclosures of Confidential Information related to the subject matter
of this Agreement, whether made after the Effective Date or prior to the
Effective Date under the Mutual Confidentiality Agreement between the Parties,
dated February 9, 2004, shall be governed by this Agreement. Both Parties
recognize and acknowledge that each will have access to confidential information
and trade secrets, including Know-how, of the other and other entities doing
business with each Party relating to research, development, manufacturing,
marketing, financial and other business-related activities (“Confidential
Information”). Such Confidential Information constitutes valuable, special and
unique property of each Party and/or other entities doing business with each
Party. Other than as is necessary to perform the terms of this Agreement,
neither Party shall, during and after the Term, make any use of such
Confidential Information, or disclose any of such Confidential Information to
any person or firm, corporation, association or other entity, for any reason or
purpose whatsoever, except as specifically allowed in writing by an authorized
representative of the other. In the event of a breach or threatened breach by
either Party of the provisions of this Article 10, each Party shall be entitled
to an injunction restraining the other from disclosing and/or using, in whole or
in part, such Confidential Information. Nothing herein shall be construed as
prohibiting either Party from pursuing other remedies available to it for such
breach or threatened breach of this Article 10, including the recovery of
damages from the other. The above does not apply to information or material that
(i) was known to the public or generally available to the public prior to the
date it was received by either Party; (ii) is rightfully acquired by the
receiving Party from a third party that is not under a confidentiality
restriction on disclosure or use; (iii) was already known to the receiving Party
prior to receipt from the disclosing Party as evidenced by written records; (iv)
is required to be disclosed by law or court order or in periodic reports to the
Securities and Exchange Commission or to any Regulatory Authority, provided that
notice of the disclosure requirement is promptly delivered to the disclosing
Party in order to provide the disclosing Party with an opportunity to challenge
or limit the disclosure obligations.

 

10.2 Except as permitted pursuant to Section 10.1, neither Party shall disclose
any of the terms of this Agreement without the prior written consent of the
other Party.

 

Article 11.

Force Majeure

 

11.1 Neither Orthovita nor Cohesion shall have any liability hereunder if either
is prevented from performing any of its obligations hereunder by reason of any
factor beyond its control, including, without limitation, fire, explosion,
accident, riot, flood, drought, storm, earthquake, lightning, frost, civil
commotion, sabotage, vandalism, smoke, hail, embargo, act of God or the public
enemy, other casualty, strike or lockout, or interference, prohibition or
restriction imposed by any government or any officer or agent thereof (“Force
Majeure”), nor shall Orthovita’s or Cohesion’s obligations, except as may be
necessary, be suspended during the period of such Force Majeure, nor shall
either Party’s obligations be cancelled with respect to

 

26

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such Products as would have been sold hereunder but for such suspension. Such
affected Party shall give to the other Party prompt notice of any such Force
Majeure, the date of commencement thereof and its probable duration and shall
give a further notice in like manner upon the termination thereof. Each Party
hereto shall endeavor with due diligence to resume compliance with its
obligations hereunder at the earliest date and shall do all that it reasonably
can to overcome or mitigate the effects of any such Force Majeure upon both
Party’s obligations under this Agreement. Should the Force Majeure continue for
more than six (6) months, then the other Party shall have the right to cancel
this Agreement and the Parties shall seek an equitable agreement on the Parties’
reward of interests.

 

11.2 The Parties agree that any obligation to pay money is never excused by
Force Majeure.

 

Article 12.

Amendment

 

12.1 No oral explanation or oral information by either Party hereto shall alter
the meaning or interpretation of this Agreement. No modification, alteration,
addition or change in the terms hereof shall be binding on either Party hereto
unless reduced to writing and executed by the duly authorized representative of
each Party.

 

Article 13.

Entire Agreement

 

13.1 Except for the Mutual Confidentiality Agreement between the Parties, dated
February 9, 2004, which shall remain in full force and effect and shall govern
disclosures of confidential information and other matters unrelated to the
subject matter of this Agreement, this Agreement represents the entire agreement
between the Parties and shall supersede any and all prior agreements,
understandings, arrangements, promises, representations, warranties, and/or any
contracts of any form or nature whatsoever, whether oral or in writing and
whether explicit or implicit, which may have been entered into prior to the
execution hereof between the Parties, their officers, directors or employees as
to the subject matter hereof. Neither of the Parties hereto has relied upon any
oral representation or oral information given to it by any representative of the
other Party.

 

13.2 Should any provision of this Agreement be rendered invalid or
unenforceable, it shall not affect the validity or enforceability of the
remainder of this Agreement.

 

Article 14.

Assignment

 

14.1 Neither this Agreement nor any of the rights or obligations of either Party
hereunder shall be transferred or assigned by such Party without the prior
written consent of the other Party, executed by a duly authorized officer of
such Other Party. Notwithstanding the foregoing, (a) Cohesion may assign this
Agreement, without the consent of Orthovita, (i) in part or in whole to any of
its Affiliates, if Cohesion remains liable for the full performance of its
Affiliates’ obligations hereunder, and (ii) in connection with the transfer or
sale of all or substantially all of its assets or business to which this
Agreement relates, or in the event of its

 

27

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merger or consolidation with, acquisition by, or sale to another company
(including an Affiliate of Cohesion); and (b) subject to Orthovita’s compliance
with Sections 8.4 and 8.5, Orthovita may assign this Agreement, without the
consent of Cohesion, in connection with the transfer or sale of all or
substantially all of its assets or business to which this Agreement relates, or
in the event of its merger or consolidation with, acquisition by, or sale to
another company.

 

Article 15.

Governing Law

 

15.1 It is expressly agreed that the validity, performance and construction of
this Agreement shall be governed by the laws and jurisdiction of the state of
California.

 

Article 16.

Notices

 

16.1 Any notice required or permitted to be given under this Agreement by one of
the Parties to the other shall be given for all purposes by delivery in person,
registered air-mail, commercial courier services, postage prepaid, return
receipt requested, or by fax addressed to:

 

  (a) Cohesion at: 2500 Faber Place, Palo Alto, CA 94303; Attention: President,
or at such other address as Cohesion shall have theretofore furnished in writing
to Orthovita (Fax No. (650) 320-5511).

 

With a copy to:

 

Angiotech Pharmaceuticals, Inc. at: 1618 Station Street, Vancouver, BC Canada
V6A 1BC; Attention: General Counsel, or at such other address as Cohesion shall
have theretofore furnished in writing to Orthovita (Fax No. (604) 221-2330)

 

  (b) Orthovita at: 45 Great Valley Parkway, Malvern, PA 19355, Attention:
President and CEO, or at such other address as Orthovita shall have theretofore
furnished in writing to Cohesion (Fax No. (610) 640-2603).

 

Article 17.

Waiver

 

17.1 Neither Orthovita’s nor Cohesion’s failure to enforce at any time any of
the provisions of this Agreement or any right with respect thereto, shall be
considered a waiver of such provisions or rights or in any way affect the
validity of same. Neither Orthovita’s nor Cohesion’s exercise of any of its
rights shall preclude or prejudice either Party thereafter from exercising the
same or any other right it may have, irrespective of any previous action by
either Party.

 

28

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Article 18.

Arbitration

 

18.1 Except as expressly provided otherwise herein, any dispute, controversy or
claim arising out of or in relation to or in connection with this Agreement, the
operations carried out under this Agreement or the relationship of the Parties
created under this Agreement, shall be exclusively and finally settled by
confidential arbitration, and any Party may submit such a dispute, controversy
or claim to arbitration. The arbitration proceeding shall be held at the
location of the non-instituting Party in the English language and shall be
governed by the rules of the American Arbitration Association (the “AAA”) as
amended from time to time. Any procedural rule not determined under the rules of
the AAA shall be determined by the laws of California, other than those laws
that would refer the matter to another jurisdiction.

 

A single arbitrator shall be appointed by unanimous consent of the Parties. If
the Parties cannot reach agreement on an arbitrator within forty-five (45) days
of the submission of a notice of arbitration, the appointing authority for the
implementation of such procedure shall be the AAA, who shall appoint an
independent arbitrator who does not have any financial or conflicting interest
in the dispute, controversy or claim. If the AAA is unable to appoint, or fails
to appoint, an arbitrator within ninety (90) days of being requested to do so,
then the arbitration shall be heard by three (3) arbitrators, one selected by
each Party within thirty (30) days of being required to do so, and the third
promptly selected by the two arbitrators selected by the Parties.

 

The arbitrators shall announce the award and the reasons therefor in writing
within six (6) months after the conclusion of the presentation of evidence and
oral or written argument, or within such longer period as the Parties may agree
upon in writing. The decision of the arbitrators shall be final and binding upon
the Parties. Judgment upon the award rendered may be entered in any court having
jurisdiction over the person or the assets of the Party owing the judgment or
application may be made to such court for a judicial acceptance of the award and
an order of enforcement, as the case may be. Unless otherwise determined by the
arbitrator, each Party involved in the arbitration shall bear the expense of its
own counsel, experts and presentation of proof, and the expense of the
arbitrator and the AAA (if any) shall be divided equally among the Parties to
the arbitration.

 

Article 19.

Interpretation

 

19.1 The headings in this Agreement are inserted for convenience only and shall
not affect its construction.

 

19.2 Where appropriate, the terms defined in Article 1 and denoting a singular
number only shall include the plural and vice versa.

 

19.3 References to any law, regulation, statute or statutory provision includes
a reference to the law, regulation, statute or statutory provision as from time
to time amended, extended or re-enacted.

 

Article 20.

Exhibits

 

20.1 Any and all exhibits referred to herein shall be considered an integral
part of this Agreement.

 

29

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Article 21.

Currency of Account

 

21.1 All payments to be made by Orthovita to Cohesion hereunder shall be made in
Dollars in either (i) in immediately available funds by confirmed wire transfer
to a bank account to be designated by Cohesion or (ii) in the form of a check
payable to the order of Cohesion.

 

Article 22.

Binding Effect

 

22.1 This Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the Parties.

 

Article 23.

Counterparts; Facsimile

 

23.1 This Agreement may be executed by original or facsimile signature in
several counterparts, all of which shall be deemed to be originals, and all of
which shall constitute one and the same Agreement. Notwithstanding the
foregoing, the Parties shall deliver original execution copies of this Agreement
to one another as soon as practicable following execution thereof.

 

[SIGNATURE PAGE FOLLOWS]

 

30

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first above written.

 

COHESION TECHNOLOGIES, INC.       ORTHOVITA, INC. By:           By:    

Name:

         

Name:

   

Title:

         

Title:

   

Date:

         

Date:

   

 

[SIGNATURE PAGE TO EXCLUSIVE SALES DISTRIBUTION AGREEMENT]

 

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EXHIBIT A

 

Description of Products

 

CoStasis® Surgical Hemostat product

 

Description:    A sterile suspension of bovine collagen and bovine thrombin in
calcium chloride. Indications:    As described in the label and instruction for
use approved by the Regulatory Authority, IFU revision dated as of February
2002. Administration:    The CoStasis® Surgical Hemostat product is supplied in
one syringe, and at the time of administration is mixed with an aliquot of
plasma obtained from the patient that is contained in a second syringe. The
patient plasma serves as a source of fibrinogen, which in the presence of
collagen and thrombin forms a collagen-reinforced fibrin clot. Unit Dose
Package:    Includes disposable parts consisting of a ported pouch, sterile
delivery set in trays and a CoStasis Surgical Hemostat syringe.

 

CellPaker® Plasma Collection System

 

Description:    a needle-less syringe device for drawing blood from a human for
direct placement into a centrifuge for centrifuging to separate plasma from red
and white blood cells.

 

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EXHIBIT B

 

Accessories

 

Description

--------------------------------------------------------------------------------

   Existing Quantity*

--------------------------------------------------------------------------------

MEA (malleable extended applicator)

   42

LEA (laparoscopic extended applicator)

   51

Centrifuges

   500

 

* The quantities of Accessories are estimated as of June 22, 2004. Any change to
these quantities prior to the Effective Date shall be in the ordinary course.

 

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EXHIBIT C

 

Minimum Sales

 

North America

 

  • ******** in Net Sales per Calendar Year, beginning in Calendar Year 2005

 

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EXHIBIT D

 

Product Samples

 

During Calendar Year 2004

 

  • CoStasis Products: ******** and

 

  • CellPaker Products: ********, packaged in boxes of 10.

 

During Calendar Year 2005

 

  • CoStasis Products: ********, and

 

  • CellPaker Products: ********, packaged in boxes of 10.

 

During each Calendar Year after Calendar Year 2005

 

  • CoStasis Products: ********, where each unit can be any size unit under
production by Cohesion at the time the order for such Samples are placed, and

 

  • CellPaker Products: ********, packaged in boxes of 10.

 

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EXHIBIT E

 

Schedule of Royalties

 

North America

 

  • ********;

 

  • ********;

 

  • ********;

 

  • ********; and

 

  • ********.

 

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EXHIBIT F

 

Price

 

CoStasis Products:

 

  • ******** dose package of CoStasis Product

 

CellPaker Products:

 

  • ******** per box of 10 CellPaker Product units