**Exhibit 10.2**

 

**POLY IMPLANTS PROTHESES, S.A.**

 

**6.75% REVOLVING PROMISSORY NOTE**

 

 

March 30, 2004

 

 

Poly Implants Protheses,S.A. (the “Company”), a French societe anonyme, promises to pay to IIIAcquisition Corp., a Delaware corporation (“III”) or its assigns (collectively,the “Holder”), at the time described below, the principal sum of up to$1,657,675 (or such lesser amount that equals the total amount paid by III onaccount of the Company’s products sold by PIP/USA or III as provided in thenext succeeding paragraph), plus any amounts added thereto pursuant toparagraph 6 of this Note.  The Companyalso promises to pay interest on the balance of that principal sum which isunpaid from time to time at the rate of 6.75% per annum.

 

Concurrently herewith, the Companyand III are entering into an Amended and Restated Non-Exclusive DistributionAgreement dated as of March 30, 2004 (the “Agreement”).  As provided in Section 4(e) of theAgreement, as of February 29, 2004, the Company had certain obligations topatients and doctors in respect of claims related to products sold by PIP/USA, Inc.and III (“Existing Claims”).  III hasundertaken in the Agreement to administer and pay up to US$1,657,675 of suchExisting Claim amounts, with III consulting with the Company prior to payingany such Existing Claim amounts.  Asprovided in the Agreement, if III determines in its sole discretion thatpayment of any Existing Claim amount is necessary or advisable to (1) prosecuteor maintain the PMA (as defined in the Agreement), (2) settle anypresently existing litigation or any related or similar case, (3) avoidany adverse regulatory action, or (4) continue to market Products (asdefined in the Agreement) in any geographical market in the Territory (asdefined in the Agreement), then III may without consent of the Company pay anysuch Existing Claim amount.  As providedin the Agreement, if with respect to any Existing Claim amount III does notmake the determination set forth in the immediately preceding sentence, thenIII will consult with the Company in the administration of such ExistingClaim.  As provided in the Agreement,unless the Company (i) engages counsel reasonably acceptable to III toconsult on such Existing Claim administration and (ii) separatelyindemnifies III from and against any loss, claim or liability related to suchExisting Claim in a manner reasonably acceptable to III, III may pay suchExisting Claim amount.  As provided inthe Agreement, if the Company engages counsel and provides the indemnity as setforth in the immediately preceding sentence in respect of an Existing Claimcovered by such sentence, then III will not pay the respective Existing Claimamount without the Company’s consent, which consent will not unreasonably bewithheld.  In consideration of theforegoing undertakings by III, the Company has issued to III this Note in theinitial nominal principal amount of US$1,657,675 (and an actual principalamount equal to the Existing Claim amounts paid by III as provided above).  As provided in paragraph 6 below, theprincipal amount payable under this Note shall be increased by any additionalamounts paid by III on the Company’s or PIP/USA, Inc.’s behalf withrespect to products sold by the Company, PIP/USA, Inc. or III in theTerritory that are not in respect of Existing Claims.

 

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1.                                       The unpaid principal balance of the sumevidenced by this Note will be due and payable, as follows:

 

(a)                                  Each time the III becomes obligated to make apayment (an “Additional Payment”) to the Company under Section 4(c) ofan Amended and Restated Non-Exclusive Distribution Agreement dated March 30,2004 (the “Distribution Agreement”) between the Company and III, (i) IIIwill not make the Additional Payment to the Company, and (ii) theoutstanding balance of the principal sum evidenced by this Note will be reducedby an amount equal to the payment III was to have made to the Company.  This paragraph will constitute an assignmentby the Company to the Holder of the right to receive all the AdditionalPayments from III until the principal sum evidenced by this Note has been paidin full.  However, the reduction of theprincipal sum evidenced by this Note will be effective whether or not III makesthe payment to the Holder.

 

(b)                                 If the Distribution Agreement is terminatedfor any reason, including, but not limited to, because the products that arethe subject of the Distribution Agreement do not receive governmental approvalsthat are required to permit them to be sold in the Territory described in theDistribution Agreement, because III or the Company ceases or suspends theoperation of all facilities where III is selling or the Company is producingthe products that are the subject of the Distribution Agreement, the entire balanceof the principal sum evidenced by this Note will be due and payable on the daythe Distribution Agreement terminates.

 

2.                                       Interest will be payable on the first day ofJanuary, April, August and October of each year (each an “InterestPayment Date”), with the first interest payment to be made on the firstInterest Payment Date after the date of this Note, except that no interestpayment will be due on April 1, 2004.

 

3.                                       Each payment of principal or interest will bemade to the Holder by certified or bank cashier’s check or wire transfer, atsuch address or to such account as the Holder specifies to the Company inwriting at least three business days before the payment is to be made.

 

4.                                       Any payment of principal or interest which isnot made when it is due will bear interest from the day it is due until it ispaid at the rate which is 200 basis points higher than the interest rate ineffect on the day the payment is due, or such lower rate as is the maximum ratepermitted by law.

 

5.                                       The Company may at any time prepay all or anyportion of the outstanding balance of the principal sum evidenced by this Note,provided that each prepayment must be at least $50,000,or such lesser amount as is the entire principal sum which is outstandingimmediately before the prepayment.  Eachprepayment of principal will be accompanied by all accrued but unpaid intereston the principal sum being prepaid.

 

6.                                       (a)                                  Whenever the Company notifies III, or IIIotherwise becomes aware, that a claim other than an Existing Claim (an “AdditionalClaim”) has been made against the Company or PIP/USA in the United States ofAmerica for breach of warranty or for liability relating to productsdistributed in the United States, III will review the Additional Claim andrecommend to the Company that PIP either (a) pay the Additional Claim infull, (b) make a partial payment in settlement of the Additional Claim, or(c) deny liability for the Additional Claim.  In any instance in which III recommends thatthe Company pay an Additional Claim in full, or in which III recommends thatthe Company pay an amount in settlement of the Additional Claim and theclaimant 

 

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agrees to accept that amount in full settlement of the AdditionalClaim, the Company will pay the recommended amount within 30 days after IIIrecommends that it do so.

 

(b)                                 If the Company fails to pay an AdditionalClaim as recommended by III within 30 days after III recommends that theCompany make the payment, III may, but will not be required to, pay theAdditional Claim and add the sum that III paid to the principal balance duethis Note.  At III’s request, the Companywill acknowledge that the principal balance of this Note has been increased bythe amount of the payment made by III (and, if III so requests, issue a newNote reflecting the increased principal balance in exchange for the existingNote).

 

(c)                                  The Company hereby indemnifies III and itsparent, subsidiaries, shareholders, directors, officers, employees and agents,against and agrees to hold each of them harmless from, any liabilities costs orexpenses any of them may incur, because the Company fails to pay an amount thatIII recommends in accordance with paragraph 6(a) within 30 days after IIIrecommends the payment.

 

7.                                       Each of the following events will constitutean Event of Default:

 

(a)                                  The Company fails to make any payment ofprincipal on or before the day on which it is due; or

 

(b)                                 The Company fails to make any payment ofinterest within ten days after the day on which is it due; or

 

(c)                                  The Company defaults in any of itsobligations under this Note other than obligations described in subparagraphs (a) and(b) and fails to cure that default within 30 days after a written demandfrom the Holder that the Company do so; or

 

(d)                                 The Company, Heritage Worldwide, Inc., aDelaware corporation (“HWWI”) or a significant subsidiary of either (as thatterm is defined in Securities and Exchange Commission Regulation S-X) commencesa proceeding seeking relief as a debtor under any French, U.S. or otherinsolvency law; or

 

(e)                                  An order is entered in a proceeding under anyFrench, U.S. or other insolvency law declaring the Company, HWWI or asignificant subsidiary of either to be insolvent or appointing a receiver orsimilar official for substantially all the Company’s, HWWI’s or a significantsubsidiary’s properties, and that order is not dismissed within 90 days; or

 

(f)                                    Because of events of default, holders ofindebtedness of the Company for borrowed money aggregating $100,000 acceleratethe time when that indebtedness is due and payable.

 

8.                                       Upon the occurrence of an Event of Default,the Holder may, by a notice to the Company given while the Event of Default iscontinuing, declare the entire unpaid balance of the principal sum evidenced bythis Note and all accrued but unpaid interest to be due and payable, in whichevent that principal balance and accrued but unpaid interest will beimmediately due and payable, except that if the Event of Default is of the typedescribed in subparagraph (d) or (e), the entire unpaid balance of theprincipal sum evidenced by this Note and all accrued but unpaid interest 

 

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will be immediately due and payable when the Event of Default occurs,without requiring any notice or other action by the Holder.

 

9.                                       No amendment of this Note, waiver of anyprovision of this Note, or extension of the time by which the Company must makeany payment of principal or interest required by this Note, will be effectiveunless it is made in writing by the Holder. Any waiver or extension will be effective only in the instance and forthe purpose for which it is given.

 

10.                                 The remedies provided in this Note arecumulative and are not exclusive of any other remedies provided by law.  The Company will pay on demand any expenses(including reasonable attorneys fees and expenses) incurred by the Holder inenforcing its rights under this Note.

 

11.                                 Any notice or other communication required orpermitted to be given under this Note must be in writing and will be deemedgiven on the day when it is delivered in person or sent by facsimile (withproof of receipt at the number to which it is required to be sent), or on thethird business day after the day on which it is mailed by first class mail fromwithin the United States of America, addressed (i) if to the Company, tothe Company’s principal executive offices and to the principal facsimile numberat those executive offices, Attention: President, or at such other address orfacsimile number as the Company may specify to the Holder in writing, and (ii) ifto the Holder, at the address or facsimile number specified by the Holder tothe Company in writing.

 

12.                                 This Note will be binding upon the Companyand its assigns, and will inure to the benefit of the Holder and the Holder’sassigns.  This Note will be governed by,and construed under, the laws of the State of  Delaware in the United States ofAmerica, without regard to principles of conflicts of laws that might apply thelaws of another jurisdiction.

 

13.                                 The Company agrees that any action orproceeding to collect any principal or interest due under this Note or toenforce any other provision of this Note may be brought in any state or federalcourt sitting in Wilmington, Delaware in the United States of America, and theCompany (i) submits to the jurisdiction of each of those courts for thepurpose of any such action or proceeding, (ii) agrees not to seek tochange the venue of any such action or proceeding which is brought in any ofthose courts, whether because of inconvenience of the forum or otherwise (butnothing in this Paragraph will prevent a party from removing an action orproceeding from a state court sitting in Wilmington, Delaware to a Federalcourt sitting in that county), and (iii) agrees that process in any suchaction or proceeding may be served by registered mail or in any other mannerpermitted by the rules of the court in which the action or proceeding isbrought.

 

IN WITNESS WHEREOF, theCompany is executing this Note on the date shown on the first page.

 
|   | POLY IMPLANT PROTHESES,  S.A. |
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|   | By:                           |   |   |
|   |                          | Title: |

 

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