**DISTRIBUTOR AGREEMENT**     THIS DISTRIBUTOR AGREEMENT (this “Agreement”) is made effective as of the 24th day of October,2005 by and between (i) ReGen *Biologics*, Inc., a Delaware corporation (“MANUFACTURER”), having itsprincipal place of business located at 509 Commerce Street, East Wing, Franklin Lakes, New Jersey07417, U.S.A., and (ii) **XMedica**, a company organized and existing under the laws of Italy, havingits principal place of business located at Via Francesco Olgiati, 26 , Milan 20143, Italy(“DISTRIBUTOR”).RECITALS     A. MANUFACTURER developed, designed, manufactures, markets, distributes, sells and supplies acollagen meniscus implant and certain other products listed on Schedule A attached hereto(collectively, the “Products”).     B. DISTRIBUTOR possesses expertise in the promotion, marketing, distribution, sale and supplyof products similar to the Products and is knowledgeable of the market for the Products in theTerritory (as hereinafter defined).     C. DISTRIBUTOR desires to promote, market, distribute, sell and supply the Products in theTerritory on an exclusive basis in accordance with the terms and provisions of this Agreement.     D. MANUFACTURER is willing to grant to DISTRIBUTOR the right to promote, market, distribute,sell and supply the Products, and to use MANUFACTURER’s trademarks, trade names and copyrights forsuch purposes, in the Territory on an exclusive basis in accordance with the terms in thisAgreement.     E. The parties hereto desire to set forth herein the terms and provisions of their agreementsand understandings.     NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein set forth andof other good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto, intending legally to be bound, hereby agree as follows:**1. DEFINITIONS.**     1.1. Agreed-Upon Marketing Expenses. The term “Agreed-Upon Marketing Expenses” shallhave the meaning given to such term in Section 2.8 hereof.     1.2. Confidential Information. The term “Confidential Information” shall have themeaning given to such term in Section 5.5 hereof.     1.3. Copyrights. The term “Copyrights” shall mean all MANUFACTURER designs,advertising materials and other copyrightable works as may from time to time be specificallydesignated by MANUFACTURER in writing as Copyrights to be licensed to DISTRIBUTOR under thisAgreement.
 

 
     1.4. Customer. The term “Customer” shall mean any person or entity which purchases theProducts for its own use and not for resale to another person or entity, whether such purchase foruse is from the DISTRIBUTOR or any of its Dealers.     1.5. Dealer. The term “Dealer” shall mean any person or entity appointed byDISTRIBUTOR to promote, market, distribute, sell and supply the Products in the Territory toCustomers pursuant to a dealer agreement consistent with the terms and provisions of thisAgreement.     1.6. Defect. The term “Defect” shall mean any material failure of the Product toconform to the applicable specifications for the Product, as set forth on Schedule B, atthe time of its shipment by the MANUFACTURER.     1.7. Marks. The term “Marks” shall mean the trademarks “ReGen *Biologics*,” “CMI,”“Collagen Meniscus Implant,” “SharpShooter” and all other names, marks and symbols as may from timeto time be specifically designated by MANUFACTURER in writing as Marks to be licensed toDISTRIBUTOR under this Agreement.     1.8. Quota. The term “Quota” shall have the meaning given to such term in Section 2.4hereof.     1.9. Term. The term “Term” shall have the meaning given to such term in Section 7.1hereof.     1.10. Territory. The term “Territory” shall mean the countries and/or regions listedin Schedule C attached hereto and made a part hereof.**2. APPOINTMENT.**     2.1. Appointment.          (a) MANUFACTURER hereby grants to DISTRIBUTOR the right, in accordance with the provisions ofthis Agreement and further described on Schedule A, to market, distribute, sell and supply theProducts to Customers and Dealers located in the Territory in accordance with the terms andprovisions of this Agreement. MANUFACTURER reserves the right to appoint other distributors in theTerritory to market, distribute, sell and supply products other than the Products during the Termof this Agreement.          (b) DISTRIBUTOR agrees not to, directly or indirectly, export or otherwise make available theProducts to any Customer or Dealer for resale outside of the Territory or under circumstances whichreasonably indicate that a Customer or Dealer will sell Products outside the Territory.          (c) DISTRIBUTOR agrees, at its expense, to obtain all approvals of any governmental authorityor “standards association” in the Territory necessary for the importation, sale or distribution ofthe Products in the Territory and to provide MANUFACTURER with evidence thereof.
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          (d) DISTRIBUTOR shall display and use the Marks and the Copyrights, and shall permit andauthorize the same to be displayed or used, only as expressly permitted under Article 5 hereof orotherwise with the prior written consent of MANUFACTURER.          (e) DISTRIBUTOR agrees to conduct its business as an independent contractor under its own nameonly. DISTRIBUTOR acknowledges and agrees that it is not an employee, co-venturer or agent ofMANUFACTURER and has no right or authority to make any representation to such effect. NeitherDISTRIBUTOR nor its employees, agents or dealers shall assume, create or enter into any obligation,agreement or commitment of any kind on behalf of MANUFACTURER.          (f) DISTRIBUTOR shall not make any representations, warranties or covenants to any third partywith respect to the Products except in accordance with the terms of this Agreement and such Productinformation as MANUFACTURER provides to DISTRIBUTOR in writing from time to time.     2.2. Experience. DISTRIBUTOR represents and warrants to MANUFACTURER that it is anexperienced distributor of products similar to the Products and that it is capable, as of theeffective date of this Agreement, and shall remain capable at all times thereafter, of performingeach of its obligations hereunder without assistance from MANUFACTURER (except as specificallyprovided for herein) or any third party other than its Dealers.     2.3. Duties of DISTRIBUTOR. DISTRIBUTOR agrees to fulfill the followingresponsibilities hereunder:          (a) Use its best efforts to promote, market, distribute, sell and supply the Products in theTerritory in compliance with this Agreement;          (b) Promote the sale of the Products by engaging in advertising, promotional and publicrelations activities intended to maximize consumer awareness of, interest in and demand for theProducts;          (c) Utilize its best efforts to meet demand for Products by maintaining inventory adequate toship Products for sale within 24 hours after receipt of an order therefor;          (d) Cooperate with MANUFACTURER to provide MANUFACTURER with relevant and appropriateinformation to prepare labels to be used in the packaging of the Products to be delivered toDISTRIBUTOR;          (e) Appoint and support qualified Dealers in the territory;          (f) Keep adequate records of Product sales by DISTRIBUTOR and its Dealers with regard totraceability, making such records available for inspection, and such other data as MANUFACTURER mayreasonably request from time to time;          (g) Provide methods and means of handling, storing, and delivering product that prevent damageor deterioration;
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          (h) Employ and maintain an adequate number of experienced sales and marketing personnel;          (i) Train Customers and surgeons using the Product, either through MANUFACTURER or a trainercertified by MANUFACTURER, in accordance with the standards and guidelines provided and updatedfrom time to time by MANUFACTURER in writing, as MANUFACTURER shall determine in its solediscretion, as necessary to ensure expertise regarding the Products;          (j) Require all sales and marketing personnel, and Dealers and their respective sales andmarketing personnel, to participate in the training programs conducted by MANUFACTURER pursuant toSection 2.8 hereof;          (k) Advise MANUFACTURER immediately of any disputes between DISTRIBUTOR and any Customer orDealer, and any legal notices or actions relating to the Products or this Agreement; and          (l) Advise MANUFACTURER of all material laws, rules and regulations of the Territory,including any new interpretations thereof, relating to importing, promoting, marketing,distributing and selling the Products in the Territory.     2.4. Standard of Performance. As a material inducement for MANUFACTURER to enter intothis Agreement with DISTRIBUTOR, DISTRIBUTOR agrees to meet or exceed the sales quota(s) (the“Quotas”) described in Schedule D attached hereto, as such Schedule D shall berevised from time to time, which MANUFACTURER and DISTRIBUTOR agree are fair and reasonable.Notwithstanding any provision of this Agreement, if DISTRIBUTOR fails to attain any Quota, thenMANUFACTURER shall have the right to terminate this Agreement in accordance with the provisions ofSection 7.2 hereof.     2.5. Time Restriction on Sales and Use. Notwithstanding any other provision hereof,in no event shall DISTRIBUTOR sell or supply any Product to any Dealer, Customer or other person onor after the expiration date (“Expiration Date”) which shall not be less than eighteen (18) monthsafter the date of shipment of such Product by MANUFACTURER, and DISTRIBUTOR agrees to require allDealers and Customers, and their respective agents and representatives, not to sell or supply anyProduct to any Customer or other person or use any Product on or after the Expiration Date.     2.6. Reporting Defects. DISTRIBUTOR agrees to promptly inspect all Products forDefects and shall notify MANUFACTURER of any such Defects in writing within ten (10) days ofreceipt thereof. Should DISTRIBUTOR fail to give such notice of Defects that it becomes aware of,or with due care should have become aware of, or fail to obtain an extension from MANUFACTURER, theProducts shall be deemed to be accepted by the DISTRIBUTOR. DISTRIBUTOR shall also be obligated toaccept the return of any Product from any surgeon who becomes aware of any Defect in such Productand DISTRIBUTOR shall notify MANUFACTURER of any such Defects in writing within ten (10) days ofreceipt thereof. In the event that DISTRIBUTOR notifies MANUFACTURER in writing of any Defectpursuant hereto, MANUFACTURER shall be obligated to replace such Product or refund the purchase
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price in full to the DISTRIBUTOR. MANUFACTURER reserves the right to investigate any Defectsor other warranty claims to determine whether such claim is proper, including without limitation aninspection of the Product in question, and DISTRIBUTOR shall cooperate with any such investigation.     2.7. Annual, Quarterly and Other Reports.          (a) On or before November 30th of each calendar year during the Term of this Agreement,DISTRIBUTOR agrees to prepare and to submit to MANUFACTURER an annual report, setting forth inadequate detail for the next calendar year (i) DISTRIBUTOR’s plans for marketing, sales and otherefforts and the number of its personnel to be assigned during such calendar year to the performanceof DISTRIBUTOR’s duties under this Agreement (ii) a forecast of projected sales for such calendaryear and (iii) the projected marketing and training expenses related to the Product for such yearpresented on a monthly basis.          (b) No later than fifteen (15) days after the end of each calendar quarter during the Term ofthis Agreement, DISTRIBUTOR shall submit to MANUFACTURER in writing a quarterly report inreasonable detail showing (i) the aggregate sales of the Product for such quarter in units, U.S.dollars and in EUR (ii) the number of surgeries performed by each Hospital (Customer) and the datesince the last surgery for each Hospital (Customer) was performed, (iii) the number and names ofCustomers and surgeons trained by the DISTRIBUTOR, (iv) an attestation stating that all surgeonsperforming the CMI procedure are in compliance with the MANUFACTURER’S then current trainingstandards in accordance with section 2.3 (h) of this Agreement and (v) the marketing and trainingexpenses actually incurred by DISTRIBUTOR in carrying out its obligations hereunder.          (c) DISTRIBUTOR shall submit to MANUFACTURER copies of any market research reports relating toProduct sales and competition which the DISTRIBUTOR commissions or otherwise obtains, except asprohibited by copyright or similar laws (in which case DISTRIBUTOR will simply inform MANUFACTURERof the existence of such information and where it may be obtained). To the extent the foregoinginformation is contained in plans or reports which contain information about other products ormarkets, DISTRIBUTOR may submit to MANUFACTURER only those excerpts from such plans or reportswhich relate to the Product sales and competition.     2.8. Duties of Manufacturer.          (a) MANUFACTURER agrees to fulfill the following responsibilities hereunder: (i) ship theProducts to Distributor in accordance with the terms and conditions hereof, (ii) fulfill theresponsibilities under the warranties made and delivered with the Products, and (iii) providetraining to DISTRIBUTOR, Customers and surgeons in support of DISTRIBUTOR’s responsibilities setforth in Section 2.3 hereof.          (b) MANUFACTURER shall review each annual report provided by DISTRIBUTOR pursuant to Section2.7 and, by written notice delivered to DISTRIBUTOR within 90 days of the receipt of such annualreport, shall approve in its discretion all or such portion of the projected marketing and trainingexpenses related to the Product for such year as
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MANUFACTURER deems necessary or appropriate (such expenses approved by the MANUFACTURER to bereferred to herein as “Agreed-Upon Marketing Expenses”).          (c) MANUFACTURER shall make Dr. William Rodkey or other qualified personnel designated byMANUFACTURER (collectively, “Trainers”) available to provide training sessions to DISTRIBUTOR, itsemployees, Customers, surgeons and Dealers, and their respective employees and other agents, asapplicable, during the Term of this Agreement, as follows: (a) at least twice in calendar year2005, (b) at least four times in calendar year 2006, (c) at least four times in each successiveyear for the remainder of the Term (or a prorated number of times if earlier terminated). Each ofthe training sessions shall consist of an in-person visit by a Trainer for at least [two (2) daysor (six (6) hours per day)]. The substance and format of such sessions shall be determined theTrainer in his or her reasonable discretion. DISTRIBUTOR shall pay for or reimburse MANUFACTURERfor all costs (including travel, meals and hotel) related to the Trainer’s training sessionsprovided pursuant to this Section 2.8, provided that if the Trainer is in or will be traveling toEurope for purposes unrelated to such training sessions, DISTRIBUTOR will pay only the incrementalcosts related to such training sessions, such as the airfare from such point within Europe andexpenses for hotel, meals and local transportation incurred in connection with such trainingsessions. DISTRIBUTOR shall also supply, pay for or reimburse MANUFACTURER for all supplies andmaterials required by the Trainer for such training sessions.**3. PRICE AND PAYMENT TERMS.**     3.1. Price. Subject to and in accordance with the terms and conditions hereof,MANUFACTURER shall supply the Products to DISTRIBUTOR at the prices specified in Schedule Aattached hereto, as amended by MANUFACTURER from time to time in accordance therewith.     3.2. Payment Terms.          (a) DISTRIBUTOR shall promptly pay to MANUFACTURER all amounts due to MANUFACTURER under thisArticle 3 in accordance with Schedule A attached hereto.          (b) All amounts payable to MANUFACTURER shall be paid within thirty (30) days of invoice atMANUFACTURER’s principal place of business in U.S. Dollars or as the parties shall otherwise agreein writing from time to time. Interest thereon shall accrue on amounts due hereunder toMANUFACTURER at the rate of one and one-half percent (1-1/2%) per month or the maximum rateotherwise permitted by applicable law, whichever shall be lower, and be payable from the due datethereof until paid in full. In the event that there shall be imposed by the central bank orsimilar governing body in the Territory any restrictions preventing payment of funds due toMANUFACTURER hereunder, and DISTRIBUTOR shall not otherwise remit amounts due to MANUFACTURERhereunder by a means acceptable to MANUFACTURER, MANUFACTURER may, in its discretion, terminatethis Agreement pursuant to Section 7.2 hereof and instruct DISTRIBUTOR to deposit such funds in abanking institution located within the Territory in accordance with MANUFACTURER’s instructions.
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          (c) Notwithstanding any provision of this Agreement, MANUFACTURER may terminate thisAgreement, immediately upon prior written notice, in the event that DISTRIBUTOR fails to pay toMANUFACTURER all amounts due hereunder within the time specified herein and in Schedule Aattached hereto.**4. PRODUCT ORDERS.**     4.1. General Provisions.          (a) Each purchase order for a Product shall be firm and, subject to the terms and conditionshereof, MANUFACTURER shall use its best efforts to fill such purchase order in accordance with itsterms at its principal place of business. DISTRIBUTOR shall place orders in writing or,notwithstanding Section 9.2, by email, which shall set forth, at a minimum, an identification ofthe Product ordered, the quantity of such Product ordered, shipping instructions, shipping addressand the requested ship date. Notwithstanding the foregoing, MANUFACTURER shall be permitted toship the quantity of the Product ordered at any time during the 90-day period after the date of theorder for the Product. In the event that MANUFACTURER does not fill a firm purchase order byDISTRIBUTOR for any Product, in whole or in part, the sole and exclusive remedy or consequence ofDISTRIBUTOR is as set forth on Schedule D hereto.          (b) Purchase orders for a Product may not be cancelled by DISTRIBUTOR.          (c) In the event that DISTRIBUTOR shall, at any time, be in arrears on payments owing toMANUFACTURER or otherwise in material breach of this Agreement, MANUFACTURER may, immediately uponwritten notice to DISTRIBUTOR, decline to continue the performance of this Agreement withDISTRIBUTOR, and such action by MANUFACTURER shall not give rise to any cause or claim of breach ofcontract or other liability against MANUFACTURER.          (d) All shipments shall be made with shipping, insurance and handling charges prepaid byMANUFACTURER, all of which shall be added to MANUFACTURER’s invoice to DISTRIBUTOR. All risk ofloss shall pass to DISTRIBUTOR upon delivery to the shipper. Products shall be packed and shippedby MANUFACTURER to DISTRIBUTOR in accordance with MANUFACTURER’s standard procedures, unlessDISTRIBUTOR has expressly made a special request for shipping in which case MANUFACTURER shall usecommercially reasonable efforts to honor such request. MANUFACTURER shall not bear any liabilityarising or resulting from any delays in the delivery of the Products to DISTRIBUTOR or to Dealer orCustomer.          (e) MANUFACTURER reserves the right at any time to make changes to the Product at any time andfrom time to time in its sole discretion.          (f) Any order submitted by DISTRIBUTOR which contains terms different from, or in addition to,those contained in this Agreement shall be deemed governed by the terms of this Agreement. Anysuch different or additional terms shall be deemed to be deleted from
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such order unless otherwise specifically approved in writing by an authorized officer ofMANUFACTURER.     4.2. Taxes and Other Charges. DISTRIBUTOR agrees to pay, collect and remit on thedates when they are due all import duties, value-added, sales, and other taxes, tariffs, duties,fees and assessments imposed by any governmental agency within the Territory in respect of theProducts (other than income or similar withholding taxes imposed upon amounts remitted toMANUFACTURER). DISTRIBUTOR agrees to indemnify and hold MANUFACTURER harmless against any suchliabilities.     4.3. Import Requirements. Other than obtaining the governmental authorizations andapprovals set forth on Schedule E, all of which shall be MANUFACTURER’s sole responsibilityhereunder, DISTRIBUTOR agrees to obtain at its expense all necessary customs, import and othergovernmental authorizations and approvals in the Territory (including, without limitation, foreignexchange) with respect to this Agreement and delivery of the Products to DISTRIBUTOR.MANUFACTURER’s obligations under this Agreement shall be expressly subject to the grant andeffectiveness of all such authorizations and approvals.     4.4. Export Requirements. MANUFACTURER and DISTRIBUTOR agree to comply fully with allapplicable U.S. export laws, regulations and orders and to adopt such policies and procedures asmay be required thereby. MANUFACTURER’s obligations under this Agreement shall be expresslysubject to the grant and effectiveness of all necessary U.S. export authorizations and approvals.     4.5. Foreign Corrupt Practices Act. DISTRIBUTOR hereby agrees that it shall not, andshall refrain from any acts that would cause MANUFACTURER to, violate the United States ForeignCorrupt Practices Act. DISTRIBUTOR hereby agrees to indemnify and hold harmless MANUFACTURER fromany breach of this Section 4.5.     4.6. Warranty. MANUFACTURER warrants that the Products shall be free of Defects atthe time of its shipment by the MANUFACTURER. Such warranty shall survive until the ExpirationDate. If any Product is determined by MANUFACTURER to have any Defects, then MANUFACTURER’sobligation under this warranty shall be to replace as soon as practicable any such defective itemsat MANUFACTURER’s expense, exclusive of delivery costs to and from the MANUFACTURER, or, atMANUFACTURER’S option, provide a refund with respect to any such defective Product. THE FOREGOINGWARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THEIMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WHETHER IMPOSED BYCONTRACT, STATUTE, COURSE OF DEALING, CUSTOM OR USAGE OR OTHERWISE. MANUFACTURER shall have noresponsibility for any Product that has been modified, repaired, or subjected to misuse or neglect.Notwithstanding any provision of this Agreement, MANUFACTURER shall not be liable under thisAgreement or otherwise for any special, incidental, consequential, punitive, lost profit or similardamages, and shall not in any event be liable to DISTRIBUTOR or any Customer or Dealer thereof foran amount in excess of amounts paid by DISTRIBUTOR to MANUFACTURER hereunder. The provisions inthis Section 4.6, Section 4.1(a) and the indemnity in Section 4.7 constitute the sole
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and exclusive remedy of DISTRIBUTOR for breach of the representations, warranties andcovenants contained herein.     4.7. MANUFACTURER Indemnification. Subject to the terms and conditions hereof,MANUFACTURER agrees to defend, indemnify and hold DISTRIBUTOR, its subsidiaries, affiliates andagents harmless from and against any and all third party claims of loss, liability, costs andexpenses (including reasonable legal fees and costs) arising out of any Defect in the Product.     4.8. Goodwill. DISTRIBUTOR acknowledges and agrees that all goodwill created orotherwise associated with the promotion, marketing, distribution and sale of the Products in theTerritory during or following the Term of this Agreement shall accrue directly to the benefit of,MANUFACTURER and shall be the sole and exclusive property of MANUFACTURER.**5. MARKS, COPYRIGHTS AND OTHER INTELLECTUAL PROPERTY MATTERS.**     5.1. Scope of Use. MANUFACTURER hereby grants to DISTRIBUTOR a no-cost,non-exclusive, limited license to use the Marks and the Copyrights solely for purposes ofperforming its duties and obligations under this Agreement. DISTRIBUTOR hereby acknowledgesMANUFACTURER’s ownership of all right, title and interest in the Marks and the Copyrights.DISTRIBUTOR further acknowledges that it shall acquire no interest in the Marks or the Copyrightsby virtue of this Agreement or the performance by DISTRIBUTOR of its duties and obligationshereunder. Further, all use of the Marks and the Copyrights by DISTRIBUTOR shall be solely in theinterest of and on behalf of MANUFACTURER. DISTRIBUTOR acknowledges that it shall not use the name“ReGen *Biologics*” or any similar name as part of its corporate and/or trade name. MANUFACTURERmakes no warranty, express or implied, as to the use or validity of the Marks or the Copyrights inthe Territory. MANUFACTURER reserves the right to approve all advertising and marketing materialsof DISTRIBUTOR to ensure that the Marks and the Copyrights are properly used by DISTRIBUTOR. Thelimited license granted to DISTRIBUTOR under this Section 5.1 shall continue only during the Termof this Agreement. Upon termination or expiration of this Agreement, DISTRIBUTOR shall cease alluse, including as part of DISTRIBUTOR’s corporate and/or trade name, of the Marks and theCopyrights, or variants sounding like or appearing to be similar thereto in any manner whatsoever.     5.2. Notification of Infringing Uses. DISTRIBUTOR agrees to report promptly toMANUFACTURER any use in the Territory by any third party of the Marks, the Copyrights or any marksor trade or product names identical or similar to the Marks or the Copyrights, and agrees to assistMANUFACTURER at MANUFACTURER’s expense in enforcing such rights in the Territory. DISTRIBUTORacknowledges that MANUFACTURER shall, in its discretion, have the sole right to bring, or toauthorize DISTRIBUTOR to bring in MANUFACTURER’s name, a legal action or suit to enjoin such useand, in such event, DISTRIBUTOR agrees to cooperate fully with MANUFACTURER in connectiontherewith.     5.3. Manufacture Prohibited. Under no circumstances shall DISTRIBUTOR authorize ordirectly or indirectly participate in the manufacture of any Products or, without
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MANUFACTURER’s prior written consent, the creation of any advertising materials whichincorporate or use in any way the Marks or the Copyrights.     5.4. Conflicts. DISTRIBUTOR covenants and agrees that, during the Term hereof, exceptwith the express prior written consent of MANUFACTURER, neither the DISTRIBUTOR nor any ofDISTRIBUTOR’s affiliates shall for any reason whatsoever, directly or indirectly, for theDISTRIBUTOR or on behalf of or in conjunction with any other person, through a relative or as amember of a partnership, or as an executive, employee, stockholder, owner, investor, jointventurer, officer or director of a corporation or in a position of managerial capacity, whether asan employee, independent contractor, consultant or advisor, or as an agent, associate or consultantof any person, promote, market, distribute, sell or supply any implant for growing tissue in themeniscus of the knee or otherwise interfere with any actual or prospective client or customer ofthe MANUFACTURER or any of its affiliates. If, however, DISTRIBUTOR decides to do so, DISTRIBUTORagrees that, in advance of accepting such work, DISTRIBUTOR will promptly notify MANUFACTURER inwriting, specifying the organization for which DISTRIBUTOR proposes to work, and will promptlyprovide information sufficient to allow MANUFACTURER to determine if such work would conflict with(i) the terms of this Agreement, including the terms of this Section 5.4, (ii) the interests of theMANUFACTURER or (iii) further work which the MANUFACTURER might request of DISTRIBUTOR. If theMANUFACTURER determines that such work conflicts with any of the foregoing, the MANUFACTURERreserves the right to terminate this Agreement immediately by providing written notice toDISTRIBUTOR.     5.5. Treatment of Information.          (a) DISTRIBUTOR acknowledges that, as a result of DISTRIBUTOR’s engagement by theMANUFACTURER, DISTRIBUTOR will develop, have access to and use confidential information andmaterials of the MANUFACTURER which is of a special and unique nature and value. For purposes ofthis Agreement, the term “Confidential Information” shall include, but not be limited to, theMANUFACTURER’s financial information, customer lists, designs, computer programs, manuals, works ofauthorship, copyrights, inventions, patents, know-how, discoveries, trade secrets and otherintellectual property rights. DISTRIBUTOR further acknowledges that any information and materialsreceived by the MANUFACTURER from third parties (including, without limitation, customers andclients of the MANUFACTURER) in confidence (or subject to non-disclosure or similar covenants)shall be deemed to be Confidential Information. As a material inducement to the MANUFACTURER toengage (or to continue to engage) DISTRIBUTOR and to compensate DISTRIBUTOR hereunder, DISTRIBUTORcovenants and agrees not to, except with the prior written consent of the MANUFACTURER, directly orindirectly, disclose, transfer or use, for any purpose whatsoever, any such ConfidentialInformation other than for the purposes required by this Agreement.          (b) Disclosure of Confidential Information shall not be prohibited if such disclosure isdirectly pursuant to a valid and existing court order; provided, however, that (i) DISTRIBUTORshall first have given prompt notice to the MANUFACTURER of any such possible or prospective orderand (ii) the MANUFACTURER shall have been afforded a
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reasonable opportunity to prevent or limit any such disclosure at MANUFACTURER’s sole cost andexpense.          (c) For purposes of this Agreement, Confidential Information shall not include informationwhich is or becomes available to the public through no fault of DISTRIBUTOR, is disclosed toDISTRIBUTOR by a third party under no obligation to keep such information confidential, or isindependently developed without reference to any Confidential Information.          (d) DISTRIBUTOR covenants and agrees that all right, title and interest in any ConfidentialInformation shall be and shall remain the exclusive property of the MANUFACTURER. DISTRIBUTORagrees immediately to disclose to the MANUFACTURER all Confidential Information developed in wholeor in part by DISTRIBUTOR in connection with any services provided by DISTRIBUTOR hereunder and toassign to the MANUFACTURER any right, title or interest DISTRIBUTOR may have in such ConfidentialInformation. DISTRIBUTOR agrees to execute any instruments and to do all other things reasonablyrequested by the MANUFACTURER (both during and after DISTRIBUTOR’s engagement by the MANUFACTURER)in order to vest more fully in the MANUFACTURER all ownership rights in those items transferred byDISTRIBUTOR to the MANUFACTURER.          (e) DISTRIBUTOR understands and agrees that the MANUFACTURER shall suffer irreparable harm inthe event that DISTRIBUTOR breaches any of DISTRIBUTOR’s obligations under Section 5.4 or thisSection 5.5 of the Agreement and that monetary damages shall be inadequate to compensate theMANUFACTURER for such breach. Accordingly, DISTRIBUTOR agrees that, in the event of a breach orthreatened breach by DISTRIBUTOR of any of the provisions of Section 5.4 or this Section 5.5, theMANUFACTURER, in addition to and not in limitation of any other rights, remedies or damagesavailable to the MANUFACTURER at law or in equity, shall be entitled to a temporary restrainingorder, preliminary injunction, permanent injunction or other specific performance in order toprevent or to restrain any such breach by DISTRIBUTOR, or by any or all of DISTRIBUTOR’s partners,co-venturers, employers, employees, servants, agents and other representatives and any and allpersons directly or indirectly acting for, on behalf of or with DISTRIBUTOR.          (f) All notes, data, tapes, reference items, sketches, drawings, memoranda, records and othermaterials in any way relating to any of the information referred to in Section 5.5 hereof(including, without limitation, any Confidential Information) or to the MANUFACTURER’s businessshall belong exclusively to the MANUFACTURER and DISTRIBUTOR agrees to turn over to theMANUFACTURER all copies of such materials in DISTRIBUTOR’s possession or under DISTRIBUTOR’scontrol at the request of the MANUFACTURER or, in the absence of such a request, upon thetermination or expiration of DISTRIBUTOR’s obligation to provide any services hereunder.          (g) DISTRIBUTOR agrees that the breach or alleged breach by the MANUFACTURER of (i) anycovenant contained in this Agreement or any other agreement between the MANUFACTURER andDISTRIBUTOR or (ii) any obligation owed to DISTRIBUTOR by the MANUFACTURER, shall not affect thevalidity or enforceability of the covenants and agreements of DISTRIBUTOR set forth in Section 5.4or this Section 5.5.
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          (h) DISTRIBUTOR represents and warrants that neither DISTRIBUTOR nor any of DISTRIBUTOR’spartners, employees, assistants, agents or other representatives is bound by any fiduciary duty,contract or any other pre-existing obligation which is in conflict or in any way inconsistent withthe provisions of this Agreement. DISTRIBUTOR represents and warrants that DISTRIBUTOR’sperformance of all the terms of this Agreement will not breach any agreement to keep in confidenceproprietary information acquired by DISTRIBUTOR in confidence or in trust prior to commencement ofthis Agreement. DISTRIBUTOR warrants that DISTRIBUTOR has the right to disclose and/or or use allideas, processes, techniques and other information, if any, which DISTRIBUTOR has gained from thirdparties, and which DISTRIBUTOR discloses to the MANUFACTURER or uses in the course of performanceof this Agreement, without liability to such third parties. Notwithstanding the foregoing,DISTRIBUTOR agrees that DISTRIBUTOR shall not bundle with or incorporate into any deliveriesprovided to the MANUFACTURER herewith any confidential or proprietary third party products, ideas,processes, or other techniques. DISTRIBUTOR represents and warrants that DISTRIBUTOR has notgranted and will not grant any rights or licenses to any intellectual property or technology thatwould conflict with DISTRIBUTOR’s obligations under this Agreement. DISTRIBUTOR will not knowinglyinfringe upon any copyright, patent, trade secret or other property right of any former client,employer or third party in the performance of the services required by this Agreement.**6. REGULATORY MATTERS.**     6.1. Regulatory Compliance. Other than obtaining the governmental authorizations andapprovals set forth on Schedule E, DISTRIBUTOR shall comply with all health registrationlaws, regulations and orders of any government entity within the Territory and with all othergovernmental requirements relating to the promotion, marketing, distribution, sale and supply ofthe Product in the Territory. DISTRIBUTOR shall provide all information in its possession asnecessary for MANUFACTURER to comply with its regulatory or other governmental reportingrequirements.     6.2. Reports. DISTRIBUTOR shall keep MANUFACTURER fully informed of any governmentalactivities and plans which potentially or actually affect the sale of the Product in the Territory.     6.3. Complaints and Adverse Incident Reporting. DISTRIBUTOR shall adviseMANUFACTURER, by telephone or facsimile, within such time as is required by any regulatory bodywith jurisdiction over the Product in the Territory after it becomes aware of any complaints oradverse incidents from the use of the Product. DISTRIBUTOR shall provide MANUFACTURER with awritten report delivered by confirmed facsimile of any reported complaints or adverse incidents,stating the full facts known to it, including but not limited to customer name, address, telephonenumber and lot or serial number, as appropriate.     6.4. Product Recalls and Advisory Notices. MANUFACTURER and DISTRIBUTOR each shallnotify the other promptly if the Product is alleged or proven to be the subject of a recall, marketwithdrawal, correction, or advisory notice, if either party believes a recall, market withdrawal,correction, or advisory notice may be advisable. The parties shall cooperate in the handling anddisposition of any such recall, market withdrawal, correction, or advisory notice.
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Each party shall maintain records of all sales of the Product and Dealers and Customerssufficient to adequately administer a recall, market withdrawal, correction, or advisory notice fora period of five (5) years after termination or expiration of this Agreement.     6.5. Authorized Representative. DISTRIBUTOR shall act as the AuthorizedRepresentative for the MANUFACTURER or its European subsidiary in accordance with Schedule F tothis Agreement. MANUFACTURER at its sole discretion may at any time elect to transfer theseresponsibilities to its subsidiary or other representative and therefore release the DISTRIBUTORfrom any future obligations herein.**7. TERM**; **TERMINATION.**     7.1. Term of Agreement. The term of this Agreement (including any extensions hereof,the “Term”) shall commence as of the effective date hereof and shall continue until terminated at11:59 p.m. U.S. Eastern Time on December 31, 2007; provided, however, thisAgreement shall be renewed as of the anniversary date each year for an additional one year periodfrom such date if the MANUFACTURER notifies the DISTRIBUTOR in writing of such renewal, such noticeto be delivered at least sixty (60) days prior to the end of the then-current Term;provided, further, however, DISTRIBUTOR shall have the right to accept orreject such renewal by delivering written notice thereof to MANUFACTURER at least thirty (30) daysprior to the end of the then current Term. In the event no notice from DISTRIBUTOR is received byMANUFACTURER, the renewal shall be deemed accepted by DISTRIBUTOR. Any dealer agreement enteredinto between DISTRIBUTOR and any Dealer shall specify a term not exceeding the Term of thisAgreement.     7.2. Termination by MANUFACTURER. Notwithstanding the provisions of Section 7.1hereof, MANUFACTURER may terminate this Agreement immediately at any time after the occurrence ofany of the following events:          (a) DISTRIBUTOR fails to attain any of the Quotas referred to in Section 2.4 hereof andspecified in Schedule D attached hereto and MANUFACTURER has given DISTRIBUTOR thirty (30)days’ written notice of such failure;          (b) DISTRIBUTOR fails to make timely payment to MANUFACTURER of any amount payable toMANUFACTURER in accordance with Section 3.2(c) hereof and such failure continues for ten (10) daysafter written notice to DISTRIBUTOR by MANUFACTURER;          (c) MANUFACTURER has given thirty (30) days’ prior written notice to DISTRIBUTOR of suchtermination, for any reason or no reason; if such termination notice is delivered on or beforeDecember 31, 2007, DISTRIBUTOR shall deliver a final report to MANUFACTURER showing the marketingand training expenses actually incurred by DISTRIBUTOR in carrying out its obligations hereunderthrough the date of the termination notice. On or before the thirtieth (30th) day afterreceiving such final report from DISTRIBUTOR, MANUFACTURER shall pay DISTRIBUTOR an amount equal tofifty percent (50%) of the Agreed-Upon Marketing Expenses actually incurred by DISTRIBUTOR in
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carrying out its obligations hereunder for a period of up to 24 months through the date of thetermination notice;          (d) (i) DISTRIBUTOR has been liquidated or dissolved or has discontinued its business; (ii) atrustee or receiver is appointed for the DISTRIBUTOR or for all or a substantial part of itsassets; (iii) the DISTRIBUTOR makes a general assignment for the benefit of creditors; (iv) theDISTRIBUTOR files or is the subject of any insolvency proceeding, petition in bankruptcy or similarproceeding (whether such petition or proceeding shall be pursued in a court of law or equity),which in the case of an involuntary bankruptcy, remains undismissed or unstayed for thirty (30)days; (v) the DISTRIBUTOR becomes insolvent or the DISTRIBUTOR at any time fails generally to payits debts as such debts become due; or (vi) any governmental agency or bankruptcy court or othercourt of competent jurisdiction assumes custody or control of the whole or any part of the assetsof the DISTRIBUTOR;          (e) Without the prior written approval of MANUFACTURER, DISTRIBUTOR enters into an agreementeffecting a Change of Control of DISTRIBUTOR. For purposes of this Agreement, a “Change ofControl” shall be deemed to have occurred if (i) any person (as such term is used in Sections 13(d)and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)), who is not, as of the dateof this Agreement, a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directlyor indirectly, of securities of the DISTRIBUTOR representing fifty percent (50%) or more of thecombined voting power of the DISTRIBUTOR’s then outstanding securities, becomes, after the date ofthis Agreement, such a beneficial owner, (ii) the stockholders of the DISTRIBUTOR approve a merger,consolidation or similar business combination involving the DISTRIBUTOR, or (iii) the stockholdersof the DISTRIBUTOR approve a plan of liquidation or dissolution of the DISTRIBUTOR or the sale ordisposition by the DISTRIBUTOR of all or substantially all of the DISTRIBUTOR’s assets;          (f) The central bank or similar governing body in the Territory imposes restrictionspreventing DISTRIBUTOR from payment of funds payable to MANUFACTURER hereunder, and no alternativeacceptable to MANUFACTURER to effectuate payment to MANUFACTURER is available; or          (g) DISTRIBUTOR breaches or violates any material provision of this Agreement and fails tocure same (to the extent such breach or violation is capable of cure) within thirty (30) days’written notice from MANUFACTURER thereof.     7.3. Termination by DISTRIBUTOR. Notwithstanding the provisions of Section 7.1hereof, DISTRIBUTOR may terminate this Agreement at any time after the occurrence of any of thefollowing events:          (a) MANUFACTURER breaches or violates any material provision of this Agreement and fails tocure same (to the extent such breach or violation is capable of cure) within thirty (30) days’written notice from DISTRIBUTOR thereof; or          (b) (i) MANUFACTURER is liquidated or dissolved or discontinues its business; (ii) a trusteeor receiver is appointed for the MANUFACTURER or for all or a substantial part of its assets; (iii)the MANUFACTURER makes a general assignment for the
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benefit of creditors; (iv) the MANUFACTURER files or is the subject of any insolvencyproceeding, petition in bankruptcy or similar proceeding (whether such petition or proceeding shallbe pursued in a court of law or equity), which in the case of an involuntary bankruptcy, remainsundismissed or unstayed for thirty (30) days; (v) the MANUFACTURER is or becomes insolvent or theMANUFACTURER any time fails generally to pay its debts as such debts become due; or (vi) anygovernmental agency or bankruptcy court or other court of competent jurisdiction assumes custody orcontrol of the whole or any part of the assets of the MANUFACTURER;     7.4. Actions Following Termination.          (a) In the event of the termination of this Agreement or the expiration of the Term hereof,DISTRIBUTOR shall promptly (i) account for and pay to MANUFACTURER upon demand all amounts thenowing to MANUFACTURER pursuant to the terms hereof and (ii) cease holding itself out as aDISTRIBUTOR of MANUFACTURER. At the election of the MANUFACTURER, any inventory of Products inDISTRIBUTOR’s possession shall be returned in exchange for a full refund by MANUFACTURER or acredit against any amounts owed to MANUFACTURER by DISTRIBUTOR.          (b) In the event of the termination of this Agreement or the expiration of the Term hereof,all of DISTRIBUTOR’s rights hereunder to promote, market, distribute, sell and supply the Productsand to use the Marks and Copyrights shall automatically terminate.          (c) In the event of the termination of this Agreement or the expiration of the Term hereof,MANUFACTURER shall be entitled, without liability to DISTRIBUTOR, but shall not be obligated, todeal, directly or through its authorized distributors, dealers and representatives, with Dealersand Customers.          (d) Following any such termination or expiration, DISTRIBUTOR agrees to cooperate fully withMANUFACTURER and its authorized representatives and promptly to provide all information relating tothe promotion, marketing, distribution, sale and supply of the Products.     7.5. Continuing Obligations. No termination or expiration of this Agreement shall inany way affect the continuing obligations of DISTRIBUTOR under Article 5 hereof or this Article 7.DISTRIBUTOR agrees that each of the provisions of this Article 7 is reasonable and further agreesnot to contest the validity or enforceability thereof by way of wrongful termination proceedings orotherwise.     7.6. Liability on Termination. MANUFACTURER shall not be liable to DISTRIBUTOR byreason of the termination or expiration of this Agreement in accordance with its terms, or thefailure to renew or extend this Agreement, in whole or in part. MANUFACTURER shall not have anyobligation (statutory or otherwise) to compensate, indemnify or reimburse DISTRIBUTOR, for anyclaims, indemnities, liabilities or damages attributable to DISTRIBUTOR’s loss of future profits,or losses attributable to any expenditure, investment, lease or other commitment of DISTRIBUTOR ofany nature whatsoever (whether financial, employment or otherwise) incurred by DISTRIBUTOR inconnection with the
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performance of its duties and obligations under this Agreement. DISTRIBUTOR hereby agrees toindemnify and hold MANUFACTURER harmless from and against all claims of the employees and agents ofDISTRIBUTOR for compensation or severance, disability or national insurance, social security orsimilar payments.     7.7. DISTRIBUTOR Indemnification. DISTRIBUTOR agrees to defend, indemnify and holdMANUFACTURER, its subsidiaries, affiliates and agents harmless from and against any and all claimsof loss, liability, costs and expenses (including reasonable legal fees and costs) arising out of(i) any misrepresentations by DISTRIBUTOR or its employees, dealers and agents with respect to theProducts or its or their relationship to MANUFACTURER, (ii) any material breach or violation byDISTRIBUTOR of this Agreement or (iii) any negligent, wrongful or intentional acts or omissions onthe part of DISTRIBUTOR or its employees dealers and agents.**8. REPRESENTATIONS AND WARRANTIES.**     8.1. General Representations and Warranties. On the date hereof, each party heretorepresents and warrants to the other party hereto as follows:          (a) Authorization. Such party is duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its organization. Such party has full power andauthority to execute, deliver and perform the terms and provisions of this Agreement and toconsummate the transactions contemplated hereby. All corporate action of such party necessary forthe execution and delivery of this Agreement and the consummation of the transactions contemplatedherein has been duly taken. This Agreement has been duly and validly executed and delivered bysuch party and constitutes a legal, valid and binding obligation enforceable against such party inaccordance with its terms.          (b) No Violation. Neither the execution, delivery or performance of this Agreementnor the consummation of the transactions contemplated hereby by such party do or will: (a)violate, or constitute a default under, any license, permit or agreement to which such party is aparty or subject, or by which such party is bound; or (b) violate the certificate of incorporation,bylaws or other organizational documents of such party or violate any statute or law or anyjudgment, decree, order, regulation or rule of any court or governmental agency or body by whichsuch party is bound.          (c) Consents. No consent, approval, waiver, authorization or order of, orregistration or filing with, any court or governmental agency or body or other third party isrequired in connection with the execution, delivery or performance by such party of this Agreementor the consummation by such party of the transactions contemplated hereby.          (d) Litigation. There is no action, suit, arbitration, mediation, proceeding, claimor investigation pending against such party (or against any officer, director, employee or agentthereof in their capacity as such or relating to their employment, services or relationship withsuch party) before any governmental authority or arbitrator, nor, to such party’s knowledge, hasany such action, suit, arbitration, mediation, proceeding, claim or investigation been
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threatened, in each case that may adversely affect, contest or challenge such party’sauthority, right or ability to perform such party’s obligations under this Agreement.**9. GENERAL PROVISIONS.**     9.1. Assignability. Except as specifically provided in Section 2 hereof, DISTRIBUTORshall not sell, assign, transfer, convey, delegate or encumber its duties and obligationshereunder, or any rights or interests hereunder, and DISTRIBUTOR shall not suffer or permit anyassignment or transfer or encumbrance thereof, whether voluntary, by operation of law or otherwise,without the prior written consent of MANUFACTURER.     9.2. Notices. All notices, requests, reports, submissions and other communicationspermitted or required to be given under this Agreement shall be in writing in the English language,and shall be deemed to have been duly delivered or given upon personal delivery to the party to benotified (or upon the date of attempted delivery where delivery is refused), or five days afterdeposit with the United States Postal Service, by registered or certified mail, or one day afterdeposit with next day air courier, with postage and fees prepaid, or on the same day of anyfacsimile transmission (with confirmation), in each case if such notice or other communication isaddressed to the party entitled thereto at the address indicated for such party set forth below (orat such other address as such party may designate by ten (10) days’ advance written notice to theother parties to this Agreement):          If to MANUFACTURER:ReGen *Biologics*, Inc.