Fourth Amendment



 Exhibit 10.1 
  
 FOURTH AMENDMENT TO 
 SUPPLY AND DISTRIBUTION RIGHTS AGREEMENT 
  
 THIS FOURTH AMENDMENT (the “Fourth Amendment”) is effective as of December 19, 2003, by and between Ethicon, Inc. (“Ethicon”) and Closure Medical Corporation (“Closure Medical” or
“Closure”). 
  
 BACKGROUND 
  
 WHEREAS, Ethicon and Closure Medical have entered into that certain Supply
and Distribution Rights Agreement, dated as of March 20, 1996, as amended by the First Amendment, dated as of September 15, 1998; the Second Amendment, dated as of September 30, 1998; and the Third Amendment, dated as of November 6, 2001 and
thereafter as modified by the Letter Agreement, dated June 5, 2003 (collectively referred to herein as, the “Agreement”); 
  
 WHEREAS, Ethicon and Closure Medical have agreed to amend the Agreement as set forth herein to provide certain additional terms and conditions under which
disposable, sterile, single use medical adhesive applicators, developed and manufactured by Closure Medical and identified by Ethicon as the PropenTM applicator and Propen XLTM applicator, will be supplied to Ethicon for use in administering the Dermabond® medical adhesive. 
  
 TERMS 
  
 NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows: 
  
 1. All capitalized terms not defined herein shall have the definitions given to them in the Agreement. 
  
 2. To the extent consistent with this Fourth Amendment, each Single Use Applicator Product
shall be treated as a Product under the Agreement. 
  
 3. The definition of
“Invoice Price” set forth in Article I(W) shall be amended by adding to the end thereof the following: 
  
 “W. With respect to the Single Use Applicator Product, the invoice price for a Single Use Applicator Product when shipped by Closure Medical to
Ethicon shall be ** per unit for the PropenTM
applicator and ** per unit for the Propen XLTM
applicator and (B) ** (or ** as the case may be) per unit of each new Single Use Applicator Product; provided, that **. The invoice price for all other new Single Use Applicator Products will be set by mutual agreement of the parties.”








 4. New Article I(AR1) shall be added to read in its entirety as follows: 
  
 ‘“Single Use Applicator Product” shall mean the
Dermabond® adhesive application systems of Closure (A) identified by Ethicon as the PropenTM applicator and Propen XLTM applicator and identified in detail in the Specifications attached hereto as Exhibit A, Subsections III as may be amended from time- to time by mutual agreement of the parties and (B) which are developed by
Closure as a modification of or improvement to the application systems identified in clause (A) above.” 
  
 5. Article IV(B)(1) shall be amended by adding the following to the end: 
  
 “The Purchase Price for the initial ** units (** of each PropenTM and Propen XLTM applicators) of the Single Use Applicator Products, which Ethicon (together with its Affiliates) shall order from Closure prior to ** shall be $** per
unit for each of the PropenTM and Propen XLTM applicators and ** as Closure Medical begins internal
production. For the purposes of clarity, these initial ** units shall not (i) **; (ii) **; or (iii) **. 
  
 The Purchase Price for the Single Use Applicator Products ** will be subject to quarterly reconciliations in accordance with Article IV(B)(2) of the
Agreement and shall be as set forth below: 
  

	 	(a)	For the period commencing on the ** and ending on **, the Purchase Price will be ** of Ethicon’s ** for the Single Use Applicator Product; 

  

	 	(b)	For the period commencing ** and ending on the later of (i) ** and (ii) the date that Ethicon (together with its Affiliates) has sold, in the aggregate, ** units of Single Use
Applicator Product, the Purchase Price will be ** of Ethicon’s ** for the Single Use Applicator Product; 

  

	 	(c)	For the period commencing on the later of (i) ** and (ii) the day after the date that Ethicon (together with its Affiliates) has sold, in the aggregate, ** units of Single Use
Applicator Product and up to and including the date that is the later of (i) ** and (ii) the date that Ethicon (together with its Affiliates) has sold, in the aggregate, ** units of Single Use Applicator, the Purchase Price will be ** of
Ethicon’s ** for the Single Use Applicator Product; and 

  

	 	(d)	For the period commencing on the later of (i) ** and (ii) the day after the date that Ethicon (together with its Affiliates) has sold, in the aggregate, ** units of Single Use
Applicator and ending on the termination of the Agreement, the Purchase Price will be ** of Ethicon’s ** for the Single Use Applicator Product; and 

  

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	 	(e)	For each unit of Single Use Applicator Product sold by Ethicon (together with its Affiliates) during the term of this Agreement Ethicon will pay Closure on a country by country
basis royalties in accordance with Article IV(D) of the Agreement. 

  
 For the purposes of determining the number of units of Single Use Applicator Products sold by Ethicon and its Affiliates ** pursuant to this Section 5 (a)-(e): one PropenTM applicator shall be treated as one unit of Single Use Applicator Product and one
Propen XLTM applicator shall be treated as two
units of Single Use Applicator Product. Further, for the purpose of calculating the number of aggregate units of Single Use Applicator Product sold, the sales of Single Use Applicator Product made by Ethicon and its Affiliates shall, from and
after the effective date of this Amendment, be counted on a cumulative basis.” 
  
 6. Article IV(B)(3) shall be amended by adding the following to the end: 
  
 “In the event that in the course of the quarterly reconciliation conducted pursuant to Article IV(B)(2), it is determined that the Invoice Price
paid for a Single Use Applicator Product, was greater than the applicable Purchase Price for such Single Use Applicator Product in such quarter (“measurement quarter”), then the Invoice Price for such Single Use Applicator Product
purchased by Ethicon during the subsequent quarter shall be reduced to the applicable Purchase Price of each Single Use Applicator Product that was determined to apply for the measurement quarter.” 
  
 7. Article IV(C)(1) shall be amended by adding the following to the end: 
  
 ‘For the purposes of calculating Annual Purchase Minimums of Product,
the purchase of one PropenTM applicator shall be
treated as the purchase of one unit of Product and the purchase of one Propen XLTM applicator shall be treated as the purchase of two units of Product. For the avoidance of any doubt, to calculate whether the Annual Purchase Minimums have been satisfied, the purchases of the Single Use Applicator
Products shall be aggregated with purchases of the other applicable Products.” 
  
 8. Closure Medical represents and warrants to Ethicon that the representations and warranties made in (IV)(J)(1) subsections (d), (e) and (f) for the Product are true and accurate as of the date of this Third Amendment for the Single
Applicator Product and that the representations and warranties in (IV)(J)(1)(g) and (h), as if such related to the entering into of the Fourth Amendment by Closure Medical, are true and accurate. Ethicon represents that the representations and
warranties in (IV)(J)(2), as if such related to the entering into of the Fourth Amendment by Ethicon, are true and accurate. 
  
 9. Article IV(M) “Insurance” shall be amended by replacing on Exhibit D of the Agreement the reference to ** with**. 
  

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 10. Except as set forth herein, all terms, provisions and conditions of the Agreement shall remain in full force and
effect. 
  
 12. This Fourth Amendment shall be governed by and construed in
accordance with the laws of the State of New Jersey without regard to conflicts of law rules or principles. 
  
 13. This Fourth Amendment may be executed and delivered in any number of separate counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same original
agreement. 
  
 IN WITNESS WHEREOF, the parties have caused this Fourth Amendment
to be executed by their duly authorized officers. 
  

			
	ETHICON, INC.
		
	By:	 	 LINDA C. MORGAN FOR JOE AGRESTA


	Name:	 	Joe Agresta
	Title:	 	World Wide Director Procurement
	Date:	 	March 15, 2004
	
	CLOSURE MEDICAL CORPORATION
		
	By:	 	 DANIEL A. PELAK


	Name:	 	Daniel A. Pelak
	Title:	 	President and Chief Executive Officer
	Date:	 	March 18, 2004


  

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 EXHIBIT A 
  
 SUBSECTION III 
  
 Specifications for the Single Use Applicator Product (Propen and Propen XL) 
  
 Product Description 
  
 The Closure DERMABOND®TM Applicator is a disposable, sterile, single use applicator for the HVD DermabondTM medical adhesive. The purpose of the device is to provide easier, more consistent application of the adhesive.

  
 [**] 
  
 (See attached Specifications)