Document:

EXHIBIT 10.27

LICENSE AGREEMENT

 

BETWEEN

 

ADVANCED TISSUE SCIENCES, INC.

 

a Delaware corporation, as ATS

 

AND

`

INAMED CORPORATION,

 

a Delaware corporation, as IMDC

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
       LICENSE GRANT

  
	
  1.1

  	
  License to Use ATS Intellectual Property Rights for First Phase
  Product Categories

  
	
  1.2

  	
  Option to Acquire License to Use ATS Intellectual Property Rights for

  Second Phase Product Categories.

  
	
  1.3

  	
  Reservation of Rights

  
	
  1.4

  	
  Disclosure of ATS Technology

  
	
   

  	
   

  
	
  ARTICLE 2

  	
       RENUMERATION

  
	
  2.1

  	
  License
  Fees

  
	
  2.2

  	
  Milestone Payments

  
	
  2.3

  	
  Running
  Royalty

  
	
  2.4

  	
  First Additional Royalty

  
	
  2.5

  	
  Second Additional Royalty

  
	
  2.6

  	
  Minimum
  Royalty

  
	
  2.7

  	
  Reports, Records and Royalty Payments

  
	
  2.8

  	
  Currency

  
	
  2.9

  	
  Late
  Charges

  
	
  2.10

  	
  Foreign
  Sales

  
	
  2.11

  	
  Foreign
  Taxes

  
	
  2.12

  	
  Product
  Prices

  
	
  2.13

  	
  Sales to Affiliates

  
	
  2.14

  	
  Books and Records

  
	
  2.15

  	
  Audit
  Rights

  
	
   

  	
   

  
	
  ARTICLE 3

  	
       RESEARCH
  & DEVELOPMENT; COMMERCIALIZATION EFFORTS

  
	
  3.1

  	
  R&D plan; Clinical and Regulatory
  Approval Plan

  
	
  3.2

  	
  ATS Responsibilities

  
	
  3.3

  	
  IMDC Responsibilities

  
	
  3.4

  	
  Ownership of Date and Regulatory Approvals

  
	
  3.5

  	
  Diligence

  
	
  3.6

  	
  Research Committee

  
	
  3.7

  	
  Disputes

  
	
  3.8

  	
  Publications

  
	
   

  	
   

  
	
  ARTICLE 4

  	
       MANUFACTURING,
  PURCHASE AND SALE OF PRODUCTS

  
	
  4.1

  	
  ATS Right to Manufacture

  
	
  4.2

  	
  Third Party Manufacture

  
	
  4.3

  	
  Price

  
	
  4.4

  	
  Forecasts

  
	
  4.5

  	
  Royalty
  Holiday

  
	
  4.6

  	
  Secondary Manufacturing

  
	
  4.7

  	
  Purchase
  Orders

  

 

i

 

	
  4.8

  	
  JMDC Audit Rights

  
	
   

  	
   

  
	
  ARTICLE 5

  	
       INTELLECTUAL PROPERTY
  MATTERS

  
	
  5.1

  	
  Patent Prosecution and Maintenance

  
	
  5.2

  	
  Ownership of ATS Patents and ATS Know-How

  
	
  5.3

  	
  Ownership of Improvements

  
	
  5.4

  	
  Third Party Infringement

  
	
  5.5

  	
  Third Party Infringement Claims

  
	
  5.6

  	
  Marking

  
	
  5.7

  	
  Trademarks

  
	
   

  	
   

  
	
  ARTICLE 6

  	
       INDEMNITY

  
	
  6.1

  	
  IMDC
  Indemnity

  
	
  6.2

  	
  ATS
  Indemnity

  
	
  6.3

  	
  Insurance

  
	
  6.4

  	
  Third
  Party Manufacture

  
	
  6.5

  	
  Cooperation

  
	
   

  	
   

  
	
  ARTICLE 7

  	
       REPRESENTATIONS
  AND WARRANTIES; LIABILITY LIMITATION

  
	
  7.1

  	
  Both Parties' Representations and
  Warranties

  
	
  7.2

  	
  ATS' Representations and Warranties

  
	
  7.3

  	
  No Additional Warranties

  
	
  7.4

  	
  Limitation on Damages

  
	
   

  	
   

  
	
  ARTICLE 8

  	
       COMPLIANCE WITH LAWS

  
	
  8.1

  	
  General

  
	
  8.2

  	
  Governmental Rights

  
	
   

  	
   

  
	
  ARTICLE 9

  	
       CONFIDENTIALITY

  
	
  9.1

  	
  Treatment of Confidential Information

  
	
  9.2

  	
  Publicity

  
	
   

  	
   

  
	
  ARTICLE 10

  	
       TERM AND TERMINATION

  
	
  10.1

  	
  Term

  
	
  10.2

  	
  Term
  Extension

  
	
  10.3

  	
  Termination Upon Default

  
	
  10.4

  	
  Rights Upon Termination

  
	
  10.5

  	
  Survivability

  
	
  10.6

  	
  Work-in-Progress

  
	
  10.7

  	
  Termination Not Exclusive Remedy

  
	
  10.8

  	
  Change
  of Control

  
	
   

  	
   

  
	
  ARTICLE 11

  	
       ASSIGNMENT; SUCCESSORS

  
	
  11.1

  	
  Assignment

  

 

ii

 

	
  11.2

  	
  Binding Upon Successors and Assigns

  
	
   

  	
   

  
	
  ARTICLE 12

  	
       GENERAL PROVISIONS

  
	
  12.1

  	
  Waiver

  
	
  12.2

  	
  Arbitration

  
	
  12.3

  	
  Notices

  
	
  12.4

  	
  Governing
  Law

  
	
  12.5

  	
  Entire
  Agreement

  
	
  12.6

  	
  Amendments

  
	
  12.7

  	
  Force
  Majeure

  
	
  12.8

  	
  Severability

  
	
  12.9

  	
  Recording

  
	
  12.10

  	
  Counterparts

  
	
   

  	
   

  
	
  EXHIBIT A

  	
       DEFINITIONS

  
	
   

  	
   

  
	
  EXHIBIT B

  	
       INAMED RELATED PATENT
  RIGHTS (License Agreement)

  

 

iii

 

LICENSE AGREEMNT

 

THIS LICENSE
AGREEMENT (the “License Agreement” of “Agreement”) is made and entered into as
of May 10, 1999 (the “Effective Date”), by and between Advanced Tissue
Sciences, Inc., a Delaware corporation (“ATS”), and Inamed Corporation, a
Delaware corporation (“IMDC”).

 

RECITALS

 

A.                 
Certain capitalized terms used in this
License Agreement are defined to have the meaning as specified on Exhibit A
attached hereto and made a part hereto and made a part hereof.

 

B.                  
ATS owns certain ATS Intellectual
Property Rights which can be applied toward developing products in the Product
Categories.

 

C.                  
IMDC desires (i) to collaborate with ATS
in the research and development which is necessary to develop and to identify
and formalize the specifications for the Subject Products, which comprise the
Product Portfolio; (ii) to obtain the appropriate FDA and other regulatory
approvals which are necessary to bring the Product Portfolio to commercial
fruition; and (iii) to become the exclusive worldwide licensee authorized to
sell, market and distribute the subject Products.

 

D.                 
In order to accomplish the foregoing, ATS
and IMDC will mutually agree to an R&D Plan and a Clinical and Regulatory
Approval Plan with respect to each of the Subject Products.

 

E.                  
IMDC desires to expand its current
business as the leading company in plastic and reconstructive surgery,
primarily breast implants, by acquiring and developing a broad range of
collagen-based products ( whether bovine-based or human-based, such as those
included within the Product Portfolio). 
This License Agreement initially covers only certain products (“First
Phase Subject Products”) within the Product Portfolio; under certain
circumstances, as specified below, the license granted hereunder may be
expanded to include additional products (“Second Phase Subject Products”)
within the Product Portfolio.

 

F.                  
As of May 10, 1999, ATS and IMDC entered into
that certain Heads of Agreement Setting forth the general agreement of ATS and
IMDC with respect to the activities set forth in recitals C, D and E, above
(the “Heads of Agreement”).  This
License Agreement is the license agreement referenced in said Heads of
Agreement, and sets forth in more detail the rights and obligations of the
parties with respect to said activities as contemplated by the Heads of
Agreement.

 

NOW,
THEREFORE, the parties hereto hereby agree as follows:

 

1

 

ARTICLE 1

LICENSE GRANT

 

1.1           License to Use ATS Intellectual
Property Rights for First Phase Product Categories.  ATS hereby grants to IMDC a
non-transferable, exclusive, worldwide license under the ATS Intellectual
Property Rights to make, use, sell and import the First Phase Subject Products,
subject to the terms of this License Agreement.  IMDC’s right to manufacture First Phase Subject Products is
expressly subject to ATS’ (or ATS’ Affiliates’) first right to manufacture the
First Phase Subject Products as set forth in Section 4.2 (“ATS Rights to
Manufacture”).  The license set forth in
this Section 1.1 does not include any sublicense rights.

 

1.2           Option to Acquire License for Second
Phase Product Categories.  If IMDC
acquires at least 50% of Collagen Aesthetics, Inc. (“CGEN”) by September 30,
1999, IMDC will acquire from ATS a non-transferable, exclusive, worldwide
license under the ATS Intellectual Property Rights necessary to make, use, sell
and import Second Phase Subject Products, subject to the terms of this License
Agreement.  The license referred to in
this Section 1.2 does not include any right to sublicense except rights
relating to the Urinary Incontinence Products. 
Until the earlier of such time as IMDC acquires 50% of CGEN or September
30, 1999, with respect to every aspect of the Second Phase Product Categories,
(i) IMDC shall also have the option acquire such license at its election by
written notice to ATS; and (ii) ATS and IMDC will deal exclusively only with
each other; provided, however, that in the event CGEN is acquired by a third
party prior to September 30, 1999, ATS may give a written notice to IMDC that
ATS no longer wishes to be bound by this Section 1.2; and in the event ATS does
give said written notice, then IMDC shall still be entitled to acquire the
license for the Second Phase Product Categories if IMDC makes payment to ATS
within 30 days after IMDC’s receipt of said written notice in the amounts as
specified in Section 2.1(d) below.  Upon
IMDC so paying for this additional license right, the parties shall enter into
an addendum to this License Agreement adding the Second Phase Product
Categories to this License Agreement, which addendum shall contain any
necessary additional terms incident to adding the Second Phase Product
Categories, including, but not limited to, the conditions under which IMDC may
grant sublicenses to the Urinary Incontinence Products.

 

1.3           Reservation of Rights.  ATS retains and reserves the right to use
ATS Intellectual Property Rights for any and all uses not specifically licensed
to IMDC hereunder, including, without limitation, the right to license the ATS
Intellectual Property Rights to third parties for product categories other than
the First Phase Product Categories and the Second Phase Product Categories.

 

1.4           Disclosure of ATS Technology.  Promptly after the Effective Date, to the
extent it has not already done so, ATS will disclose to IMDC all existing ATS
Intellectual Property Rights useful or necessary for IMDC to reasonably exploit
the rights licensed hereunder.  Further,
ATS will provide reasonable technical assistance to IMDC, to permit IMDC to
reasonably utilize the licensed ATS’ intellectual Property Rights, for which
IMDC, to permit IMDC to reasonably utilize ATS' reasonable and documented
out-of-pocket costs (such as travel expenses), and IMDC will pay for ATS’
direct labor costs related thereto.

 

2

Portions
of the exhibit marked by [***] have been redacted

 

ARTICLE 2

REMUNERATION

 

2.1           License Fees.   IMDC will make payments to ATS as set forth in subsections (a)
through (d) below.

 

(a)           [***] cash license fee on or before
May 20, 1999.

 

(b)           [***] cash license fee on or before
August 1, 1999.

 

(c)           [***] cash license fee on or before
November 1, 1999.

 

(d)           [***] cash if IMDC exercises its
option to acquire a license to the Second Phase Product Categories set forth in
Section 1.2 (“Option to Acquire License to for Second Phase Subject Product
Categories”).

 

2.2           Milestone Payments.  IMDC will pay to ATS as milestone payments
(the “Milestone Payments”) the sum of [***], within thirty (30) days after a
PMA is received for each Subject Product; provided, however, that in no event
will the Milestone Payments exceed an aggregate of [***] during the term of
this Agreement.

 

2.3           Running Royalty.  IMDC will pay to ATS a running royalty
(“Running Royalty”) of [***] of Net Sales of Subject Products.

 

2.4           First Additional Royalty.  For each calendar year, IMDC will pay to ATS
an additional royalty payment (“First Additional Royalty”) based on the
aggregate Net Sales of all Subject Products, as follows:

 

	
  (a)

  	
   

  	
  $25 million
  to $50 million

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  $50 million
  to $100 million

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  $100 million
  to $150 million

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  $150 million
  to $200 million

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Above $200
  million

  	
   

  	
  [***]

  

 

2.5           Second Additional Royalty.  For each calendar year in which the
aggregate Net Sales of all Subject Products manufactured by ATS (or an ATS
Affiliate) exceed [***], IMDC will pay to ATS an additional royalty payment
(“Second Additional Royalty”) equal to [***] of the amount by which IMDC’s
Gross Profit Margin on such Subject Products is more than [***].

 

2.6           Minimum Royalty.  Commencing with the calendar year in which the
FDA approves the first PMA for the first Subject Product within a particular
Product Category, IMDC will pay to ATS a minimum basic royalty payment for that
particular Product Category

 

3

Portions
of the exhibit marked by [***] have been redacted

 

according to the following
schedule, against which IMDC shall receive a credit toward any amounts paid
under Section 2.3 (“Running Royalty”) for that particular Product Category for
such calendar year:

 

	
  (a)

  	
   

  	
  Year one

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Year two

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Year three

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Year four

  	
   

  	
  [***]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  After Year
  four

  	
   

  	
  [***]

  

 

2.6.1        If FDA approval of the first PMA in a
Product Category occurs prior to July 1, the Minimum Royalty payment due for
that year shall be [***].

 

2.6.2        In the event IMDC makes any First
Additional Royalty payments or Second Additional Royalty payments in any given
calendar year, then the obligation to make Minimum Royalty payments under
Section 2.6 will be canceled for both that calendar year and the subsequent
calendar year.

 

2.6.3        The obligation to make Minimum Royalty
payments applies to each and every particular Product Category.

 

2.7           Reports, Records and Royalty Payments.  IMDC shall submit to ATS on a quarterly basis
(commencing with the quarter in which the first sale of a Subject Product
occurs) a written report which specifies the Net Sales of Subject Products for
said quarter for Net Sales made by IMDC. 
Said report and any related payments shall be submitted within 30 days
following the end of each calendar quarter.

 

2.8           Currency.  All payments referred to above shall be in
United States dollars.

 

2.9           Late
Charges.  Any late
payments under this Section 2 shall incur late charges at a rate equal to the
Wall Street Journal Prime Rate, plus two percent (2%).

 

2.10         Foreign Sales.   The remittance of royalties payable on sales outside the United
States shall be payable to ATS in United States Dollar equivalents at the
official rate of exchange of the currency of the country from which the
royalties are payable, as quoted in the Wall Street Journal for the last
business day of the calendar quarter in which the royalties are payable.  If the transfer of or the conversion in the
United States Dollar equivalents of any such remittance in any such instance is
not lawful or possible, the payment of such part of the royalties as is
necessary shall be made by the deposit thereof, in the currency of the country
where the sale was made on which the royalty was based, to the credit and
account of ATS or its nominee in any commercial bank or trust company of ATS’
choice located in that country, and prompt written notice of which shall be
given by IMDC to ATS.

 

4

 

2.11         Foreign Taxes. 
Any tax required to be withheld by IMDC under the laws of any foreign
country for the account of ATS shall be promptly paid by IMDC for and on behalf
of ATS to the appropriate governmental authority, and IMDC shall furnish ATS
with proof of payment of such tax together with official or other appropriate
evidence issued by the applicable governmental authority.  Any such required tax actually paid on ATS’
behalf shall be deducted from the royalty payment due ATS.

 

2.12         Product Prices.  IMDC shall sell all Subject Products at a commercially reasonable
sales price, and if IMDC elects to sell any of the Subject Products at less
than a commercially reasonable sales price (e.g., as a “loss leader”), then the
royalties shall be paid on the commercially reasonable sales price, rather than
on the lower actual reduced price.

 

2.13         Sales to Affiliates.  In order to assure ATS the full royalty
payments contemplated in this License Agreement.  IMDC agrees that in the event any Subject Product is sold for
purposes of resale to an Affiliate of IMDC, then the royalties to be paid in
respect to such Subject Product will be computed on the net selling price at
which the purchaser for resale sells such Subject Products rather than on the
net selling price of IMDC.

 

2.14         Books and Records.  IMDC agrees to keep proper records and books of account in
accordance with good accounting practices, showing the sales upon which the
royalty payments of IMDC are based, and all other information necessary for the
accurate determination of payment to be made hereunder.

 

2.15         Audit
Rights.  On reasonable written
notice, ATS, at its own expense, shall have the right to have an independent
certified public accountant inspect and audit the books and records of IMDC
during usual business hours for the sole purpose of determining the correctness
of payments due under this Agreement. 
Such examination with respect to any fiscal year shall not take place
later than 3 years following the expiration of such period.  The expense of any such audit shall be borne
by ATS; provided, however, that, if the audit discloses an error in excess of
5% in favor of ATS, then IMDC shall pay the cost to ATS of the audit.

 

ARTICLE 3

RESEARCH & DEVELOPMENT; COMMERCIALIZATION EFFORTS

 

3.1           R&D Plan; Clinical and Regulatory
Approval Plan.  Within one hundred
and twenty (120) days of execution of this Agreement, ATS and IMDC will jointly
develop for each Subject Product (i) a research and development plan (the
“R&D Plan”); and (ii) a clinical trial and regulatory plan (the “Clinical
and Regulatory Approval Plan”).  It is
anticipated that an R&D Plan and Clinical and Regulatory Approval Plan for
each Subject Product will be developed and implemented concurrently.

 

3.2           ATS Responsibilities.  ATS will be responsible for conducting the
activities required for (i) the design of the Subject Products; and (ii) the
design of the manufacturing processes for the Subject Products in accordance
with the applicable R&D Plan.  A
reasonable limit on ATS’s expenditures per year for ATS’s work under each
R&D Plan (including work done internally and work contracted out) shall be
determined by the parties hereto, on a product basis, which limit, during the
first 18 months of the R&D Plan,

 

5

 

shall not exceed 50% of the
amount of payments made by IMDC to ATS described in Section 2.1 (“License
Fees”) during such 18 month period. 
Thereafter, the parties will in good faith negotiate the future
allocation of expenses and limitations on ATS expenditures, if any, under the
R&D Plan.  ATS shall design the
Subject Products (including, without limitation, the package size for the
Subject Products, the projected shelf life of the Subject Products, and methods
for use of the Subject Products) based on specifications that reflect the needs
of the marketplace and reflect the collaborative spirit between IMDC and ATS.

 

3.3           IMDC Responsibilities.  IMDC will be responsible for planning,
conducting and funding all of the clinical trials and regulatory submissions
necessary to obtain commercial clearance to sell the Subject Products in
accordance with the applicable Clinical and Regulatory Approval Plan.

 

3.4           Ownership of Data and Regulatory
Approvals.   ATS and IMDC will
fully cooperate in the activities referenced in Section 3.2 (“ATS
Responsibilities”) and Section 3.3 (“IMDC Responsibilities”), including sharing
all data obtained in connection with such activities.  IMDC will own the clinical study data and regulatory approvals;
provided, however, that ATS shall have access to such information for (i)
purposes of marketing the ATS Intellectual Property rights to other parties for
use in products other than the Subject Products; and (ii) for internal research
purposes.  In the event of any early
termination of this Agreement for reasons other than a breach by ATS, rights to
regulatory filings, data and approvals for the Product Portfolio will
automatically be granted to and vested in ATS, and IMDC shall execute and
deliver any and all appropriate documents to evidence and implement such
rights.

 

3.5           Diligence.  ATS and IMDC shall each use commercially
reasonable and diligent efforts to perform its respective activities and
responsibilities under the R&D Plans and Clinical and Regulatory Approval
Plans and otherwise in order to fulfill its responsibilities under Section 3.2
(“ATS Responsibilities”) and Section 3.3 (“IMDC Responsibilities”).

 

3.6           Research Committee.   ATS and IMDC shall establish a Research
Committee (the “Research Committee”), comprised of an equal number of members
from ATS and IMDC:

 

(a)                                  to
prepare the R&D Plans and Clinical and Regulatory Approval Plans, and any
amendments; and

 

(b)                                 to
review and evaluate progress under the R&D Plans and Clinical and
Regulatory Approval Plans;

 

(c)                                  to
coordinate and monitor publication of research results obtained from the
R&D Plans and Clinical and Regulatory Approval Plans and to coordinate and
monitor the exchange of information and materials that relate to the R&D
Plans and Clinical and Regulatory Approval Plans.

 

3.7           Disputes.  If the parties are not able to promptly
reach mutual agreement for the R&D Plan or a Clinical and Regulatory
Approval Plan for a particular Subject Product, then either (i) the unresolved
aspects for said R&D Plan or Clinical and Regulatory Approval

 

6

Portions
of the exhibit marked by [***] have been redacted

 

Plan shall be resolved by a
decision made jointly by the Research Committee; (ii) if a joint decision
cannot be reached pursuant to (i), IMDC may make the decision as to the
unresolved aspect for said R&D Plan or Clinical and Regulatory Approval
Plan so long as IMDC shall provide all of the funding for implementing such
unresolved aspect of the R&D Plan or Clinical and Regulatory Approval Plan
for the particular Subject Product; or (iii) the particular Subject Product
shall be removed from the license granted to IMDC, and thereafter ATS shall
have the sole right to pursue research and development and commercialization
efforts to said Subject Product.

 

3.8           Publications. 
Results obtained in the course of the R&D Plan or Clinical and
Regulatory Approval Plan may be submitted for publication following scientific
review by the Research Committee and subsequent written approval by ATS’ and
IMDC’s managements, which approval shall not be unreasonably withheld.  After receipt of the proposed publication by
both parties’ managements, written approval or disapproval shall be provided
within 30 days for a manuscript, and within 14 days for an abstract for presentation
at, or inclusion in the proceedings of a scientific meeting, and within 14 days
for presentation materials to be used at a scientific meeting.

 

ARTICLE 4

MANUFACTURING; PURCHASE AND SALE PRODUCTS

 

4.1           ATS Right to Manufacture.  ATS, or an Affiliate of ATS, shall have the
first right to manufacture each and every one of the Subject Products
comprising the Product Portfolio; and ATS shall sell those Subject Products
(for which IMDC has obtained and maintained exclusive license rights pursuant
to this License Agreement) exclusively to IMDC (as to the Product Categories
included within this Agreement) during the term of this Agreement, based on
forecasts and purchase orders submitted by IMDC.  ATS shall elect whether to so manufacture a Subject Product by
delivering written notice of election to IMDC at least six (6) months prior to
IMDC receiving PMA approval from the FDA for the particular Subject Product;
provided, however, that IMDC shall keep ATS reasonably informed as to the
status of the PMA applications for each Subject Product.  Upon such election to manufacture, the
parties shall agree upon the price for the Subject Product as set forth in
Section 4.4 (“Price”), as well as all other necessary terms for purchase and
sale such as acceptance of product, delivery terms, payment terms, etc.

 

4.2           Third Party Manufacture.  If ATS, or an Affiliate of ATS, does not
elect to manufacture a given Subject Product as set forth in Section 4.1 (“ATS
Rights to Manufacture”), then either (i) IMDC may elect to manufacture said
Subject Product; or (ii) ATS and IMDC shall mutually agree as to a third party
manufacturer for said Subject Product.

 

4.3           Price.  If ATS (or an Affiliate of ATS) elects to
manufacture a given Subject Product, ATS (or an Affiliate of ATS) shall charge
IMDC a “transfer price” which reflects commercially reasonable rates.  IMDC shall have the right to audit the costs
for ATS (or ATS’ Affiliate) to manufacture the Subject Product as set forth in
Section 4.8 (“IMDC Audit Rights”). 
Recognizing that until ATS (or ATS’ Affiliate) achieves a higher
utilization rate of its manufacturing facilities the transfer price may not
reflect a reasonable price at which IMDC can sell to its customers, the
transfer price plus royalties payable under Section 3.2 (“Running

 

7

Portions
of the exhibit marked by [***] have been redacted

 

Royalty”) shall not exceed
[***] of the commercially reasonable selling price which IMDC charges its
customers, except as otherwise noted below. 
If said [***] price would result in a transfer price which is less than
1.5 times the Direct Cost for ATS (or ATS’ Affiliate) to manufacture the
Subject Product, then the parties shall pursue good faith negotiations for a
mutually agreeable transfer price.  If
no such agreement is reached, then ATS (or ATS’ Affiliate) to 1.5 times the
Direct Cost for manufacture; and any such refusal of ATS (or ATS’ Affiliate) to
manufacture and sell at a lower price shall not activate the “royalty holiday”
referenced in Section 4.5 (“Royalty Holiday”) below.  Any inability of IMDC to obtain the Subject Product from ATS (or
ATS’ Affiliate) because of the foregoing disagreement regarding pricing shall
excuse IMDC from its obligation to pay the minimum royalty for the particular
Product Category as specified in Section 2.6 (“Minimum Royalty”) above.

 

4.3.1        In the situation where ATS is supplying
a component which is incorporated in a product finished by IMDC which would be
considered a Subject Product, the “transfer price” plus royalties payable under
Section 3.2 shall not exceed [***] percent [***] of IMDC’s total cost of goods
(according to GAAP) for such finished product. 
If said [***] price would result in a transfer price which is less than
[***] the Direct Cost for ATS (or ATS’s Affiliate) to manufacture the
component, then the parties shall pursue good faith negotiations for a mutually
agreeable transfer price; and if no such agreement is reached, then the
provisions set forth in the last two sentences of Section 4.3 shall apply.

 

4.3.2        Pricing formulas and mechanisms for
Subject Products shall be agreed to by the parties and attached hereto as
Exhibit C.

 

4.4           Forecasts.  If ATS (or an Affiliate of ATS) exercises
its right to manufacture, then within 30 days after regulatory approval for the
Subject Product in the first market, IMDC will provide a 12-month forecast with
estimated monthly purchase quantities. IMDC will provide an updated forecast
monthly on a rolling basis.  The first
five (5) months of each forecast will be binding on IMDC and will be treated as
legally binding and firm purchase order. 
ATS (or ATS’ Affiliate) agrees to use commercially reasonable and
diligent efforts to support any demand that is higher than the forecast.

 

4.5           Royalty Holiday.  In the event in any calendar month ATS (or ATS’ Affiliate) is out
of stock with respect to more than [***] of IMDC’s forecasts for a particular
Subject Product, and as a consequence ATS (or ATS’ Affiliate) is unable to ship
to IMDC [***] or more of the forecasted amount, IMDC will receive a “royalty
holiday”, in which case all royalty payments under Section 2.3 (“Running
Royalty”), Section 2.4 (“First Additional Royalty”), Section 2.5 (“Second
Additional Royalty”), and Section 2.6 (“Minimum Royalty”) (including any
pro-rata allocation of annual payment; e.g.,1/12 of the Minimum Royalty will be
allocated to each month) shall be reduced by [***] for that month that
particular Subject Product.

 

4.6           Secondary Manufacturing.  The parties will work together from time to
time to develop comprehensive plans for secondary manufacturing sources, and/or
inventory stockpiles, to ensure and adequate level of supply of the
commercialized products to suit IMDC’s anticipated needs.

 

8

Portions
of the exhibit marked by [***] have been redacted

 

4.7           Purchase Orders.  The terms of any purchase orders submitted by IMDC shall not be
binding upon ATS unless ATS specifically consents to such terms in writing, to
the extent such terms are inconsistent with or in addition to the terms of this
License Agreement.

 

4.8           IMDC Audit Rights.  On reasonable written notice, IMDC, at its
own expense, shall have the right to have an independent certified public
accountant inspect and audit the books and records of ATS (or ATS’ Affiliate)
during usual business hours for the sole purpose of determining the cost of ATS
(or ATS’ Affiliate) to manufacture a given Subject Product.  Such examination with respect to any Subject
Product shall not take place later than 12 months following calendar year in
which IMDC purchased the Subject Product in question.  The expense of any such audit shall be borne by IMDC; provided,
however, that, if the audit discloses an error in excess of 5% in favor of
IMDC, then ATS (or ATS’ Affiliate) shall pay the cost to IMDC of the audit.

 

ARTICLE 5

INTELLECTUAL
PROPERTY MATTERS

 

5.1           Patent Prosecution and Maintenance.  ATS shall have full control over prosecution
and maintenance of the patent applications and patents contained in the ATS
Patents and Improvements.  IMDC shall be
responsible for the costs of such prosecution and maintenance and shall
reimburse ATS for such costs upon a quarterly basis within thirty (30) days
after receipt of ATS’ invoice; provided, however, that in the event any of such
costs are incurred with respect to a patent or patent application which has
been licensed to third parties or used commercially by ATS for other than the
Product Categories licensed to IMDC under this Agreement, then IMDC shall be
responsible for only an equitable allocation of such costs which allocation
shall not exceed [***] dollars [***] per year. ATS shall deliver to IMDC copies
of all patent applications, amendments, material related correspondence, and
other material related matters for all ATS Patents within a reasonable period
of time after such items are received by or reported to ATS.  ATS shall take into consideration any
comments or suggestions made by IMDC with respect to such prosecution and
maintenance, but final decisions shall reside with ATS.  ATS shall file foreign patent applications
in those countries reasonably requested by IMDC or such other countries as ATS
may deem necessary and desirable.  If
ATS elects not to file a patent application in a country in which IMDC has
requested ATS to file an application, or if ATS decides not to continue the
prosecution of any patent application or patent, domestic or foreign, contained
in the ATS Patents or Improvements, IMDC shall be free to do so at its expense;
provided, however, that (i) while IMDC shall be the sole owner of any such
patent applications or patents filed or prosecuted by IMDC, such patent
applications and patents shall be included within the definition of ATS Patents
or Improvements hereunder, and any Subject Products sold in such countries
shall be subject to the royalty obligations of this License Agreement and (ii)
IMDC will keep ATS advised of the status of such prosecution and maintenance by
providing ATS with copies of all official communications with respect to such
patent applications and patents, and IMDC shall take into consideration any
comments or suggestions made by ATS with respect to such prosecution and
maintenance.

 

5.2           Ownership of ATS Patents and ATS
Know-How.  All ATS
Patents and ATS Know-How shall be solely owned by ATS, and IMDC shall execute,
or cause its employees to execute, any documents necessary to perfect ATS’
ownership rights therein.

 

9

Portions
of the exhibit marked by [***] have been redacted

 

5.3           Ownership of Improvements.  ATS shall solely own all Improvements
(including any patents or patent applications disclosing and claiming such
Improvements) made by its employees as a result of the activities contemplated
by the R&D plans or Clinical and Regulatory Plans.  Where ATS and IMDC employees are
co-inventors of (in the case of patents) or make an essential contribution to
(in the case of Know-how) any Improvement, ATS shall solely own such Improvement,
and IMDC shall execute, or cause its employees to execute, any documents
necessary to perfect ATS’ ownership rights therein.  Upon termination of this Agreement, IMDC shall have rights in
such Improvements as specified in Section 10.9 hereof. Where all inventors are
employed by IMDC, IMDC shall be the sole owner of the Improvement.

 

5.4           Third Party Infringement.  In the event IMDC or ATS becomes aware of
any actual or threatened infringement of the Intellectual Property Rights with
respect to the Product Categories, that party shall promptly notify the other
and the parties shall discuss the most appropriate action to take.  Both parties shall use their reasonable
efforts in cooperating with each other to terminate such infringement without
litigation.  Within one hundred twenty
(120) days after the date of notification of infringement, if attempts to abate
such infringement are unsuccessful, then IMDC may (but is not obligated to)
bring such action at its own expense. in which event ATS shall cooperate with
IMDC as reasonably requested, at IMDC's expenses ATS may (but is not obligated
to), on its own initiative, join in such suit. 
All recoveries, damages and awards in such suit, after reimbursement of
all litigation expenses not previously reimbursed by the defendant or
insurance, shall be allocated [***] to IMDC and [***] to ATS.  In the event that IMDC elects not to
institute or prosecute any suit to enjoin or recover damages from any
infringer, then ATS alone may (but is not obligated to), in its sole discretion
and at its expense, initiate and conduct an infringement action and keep any
settlement or award, which may be obtained. 
IMDC and ATS agree that neither will settle any action commenced by it
in a manner that is prejudicial to any ATS Intellectual Property Rights without
the other party’s prior written approval. The parties recognize that ATS may
also license some of the ATS Patents to third parties for other than those
product Categories licensed to IMDC under this Agreement; and if that does
occur and there are infringement actions which affect both IMDC under this
Agreement; and if that does occur and there are infringement actions which
affect both IMDC and said third party, then the parties agree that there will
be cooperation between ATS, IMDC and said third party(ies) regarding the
handling of the infringement claim and an equitable allocation of any
settlement or award based upon the relative rights and contributions of ATS,
IMDC and the third party(ies).

 

5.5           Third Party Infringement Claims.  In the event any Subject Product becomes the
subject of a claim for patent or other proprietary right infringement anywhere
in the world, the parties shall promptly give notice to the other and meet to
consider the claim and the appropriate course of action.  IMDC shall have the right (but is not
obligated to) to conduct the defense of any such suit brought against IMDC
and/or ATS, and shall have the sole right and authority to settle any such
suit; provided that ATS shall cooperate with IMDC, as reasonably requested by
IMDC, in connection with the defense of such claim, at IMDC’s expense.
Notwithstanding the foregoing, however, if any such claim is directed at the
validity or scope of an ATS Patent, Improvement or ATS Know-How, then, with
respect to such claim, ATS shall have the right (but not the obligation) to
conduct the defense of any such suit, and shall have the sole right and
authority to settle any such suit; provided that IMDC shall cooperate with ATS,
as reasonably requested by ATS, in connection with the defense of such claim, at
ATS’ expense.

 

10

 

5.6           Marking.  IMDC agrees to mark and to cause any
sublicensee to mark any Subject Products (or their containers or labels) made,
sold, or otherwise disposed of by it or them with any notice of patent rights
necessary or desirable under applicable law to enable the ATS Patents or
Improvements to be enforced to their fill extent in any country where Subject
Products are made, used or sold.

 

5.7           Trademarks.  IMDC shall be responsible for the selection
trademarks it uses in connection with Subject products; provided, however, that
the use of such trademarks will be subject to the prior approval of ATS, which
approval will not be unreasonably withheld. 
IMDC agrees not to select any trademarks which may cause confusion with
any ATS trademarks or trademarks of any ATS Affiliate.  IMDC shall own and control the trademarks it
select for the Subject Products.  IMDC
shall be responsible for registration and maintenance of all such trademarks at
IMDC’s cost.

 

ARTICLE 6

INDEMNITY

 

6.1           IMDC Indemnity.  IMDC herby agrees to indemnify, defend and hold harmless ATS and
its Affiliates and their respective directors, officers, employees and agents
from and against any liability or expense arising from the promotion of the
Product Portfolio, including without limitation (i) any product liability or
similar claim asserted by any party as to any Subject Products; (ii) any claims
arising from the use of any ATS Intellectual Property Rights pursuant to this
License Agreement which use infringes the issued valid patents of a third party
(iii) any claims for death, personal injury or related property damage arising
from the manufacture, sale, marketing, distribution or use of any Subject
Products; and (iv) the material breach by IMDC of its representations,
warranties or obligations hereunder; provided, however, that such
indemnification shall not include any liability or expense directly and solely
attributable to design or development characteristics solely under the control
of ATS which were designed or developed solely by ATS or defects related to
ATS’ (or ATS’ Affiliate’s) manufacturing of Subject Products which ATS (or ATS’
Affiliates) elects to manufacture. Without limiting the generality of the
foregoing, such indemnity and defense obligation shall apply to any product
liability or other claims, including without limitation, personal injury, death
or property damage, made by employees, subcontractors, or agents of IMDC, as
well as by any customer, patient, hospital, doctor, or member of the general
public who buys or uses the Subject Products. 
IMDC shall monitor customer complaints and will be responsible for
corrections, withdrawal or alert notices.

 

6.2           ATS Indemnity.  ATS hereby agrees to indemnify, defend and hold harmless IMDC and
its Affiliates and their respective directors, officers, employees and agents
from and against any claims, action, costs, damage, liability or expense
directly and solely attributable to design or development characteristics solely
under the control of ATS which were designed or developed solely by ATS and any
defects related to ATS’ (or ATS’ Affiliate’s) manufacturing of Subject Products
which ATS (or ATS’ Affiliate) agrees to manufacture in accordance with IMDC’s
product specifications;.

 

6.3           Insurance.  Each party shall purchase and maintain
customary products liability insurance, at reasonable levels to be agreed upon
from time to time, such that each party

 

11

 

bears responsibility for its
own defects and negligence. Each party shall have the other named as an
additional insured party on any such product liability insurance policies.

 

6.4           Third Party Manufacture.   In the event that ATS elects not to
manufacture one or more Subject Product, the ATS and IMDC will jointly ensure
that the party who conducts the manufacturing process for such Subject
Products(s) accepts responsibility for its own defects and negligence.

 

6.5           Cooperation.  In the event that either party seeks
indemnification under Section 6.1 (“IMDC Indemnity”) or Section 6.2 (“ATS
Indemnity”), it (i) shall inform the other party of a claim as soon as
reasonably practical after it receives notice of the claim; (ii) shall permit
the other party to assume direction and control of the defense of the claims
(including the right to settle the claim); and (iii) shall cooperate as
requested in the defense of the claim, subject to being reimbursed for its
reasonable expenses incurred in connection therewith.

 

ARTICLE 7

REPRESENTATIONS AND WARRANTIES;

LIABILITY LIMITATION

 

7.1           Both Parties’ Representations and
Warranties.  ATS and IMDC each
represents and warrants to the other that (i) it has the authority to enter
into and perform this License Agreement; and (ii) its execution, delivery and
performance of this License Agreement will not conflict with the terms of any
other agreement to which it is a party. 
ATS and IMDC each covenant not to enter into any agreement which will
conflict with the terms of this License Agreement.

 

7.2           ATS’ Representations and Warranties.  ATS represents, warrants and covenants to
IMDC that: (i) as of the Effective Date, ATS owns or has sufficient rights in
the ATS Patents and ATS Know-How, free and clear of any liens or encumbrances,
to grant the rights to IMDC as contained in this License Agreement; (ii) during
the term of this License Agreement, ATS will use reasonable best efforts not to
encumber or diminish the rights granted to IMDC hereunder; (iii) ATS is not
aware of any existing or threatened infringement action or claim of invalidity
or adverse ownership with respect to the Subject Products or of any facts which
indicate that any such action or claim is likely to be instituted or
asserted.  IMDC understands, however,
that the ATS Intellectual Property Rights involve technologies which have not
been approved by any regulatory agency, and that ATS cannot guarantee the
safety or usefulness of any Subject Products.

 

7.3           No Additional Warranties.  ATS MAKES NO WARRANTIES OTHER THAN AS SET
FORTH IN SECTION 7.2 (“ATS' Representations and Warranties”) CONCERNING ATS
INTELLECTUAL PROPERTY COVERED BY THIS LICENSE AGREEMENT, INCLUDING WITHOUT
LIMITATION, ATS MAKES NO EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS SET FORTH IN SECTION 7.2 (“ATS’
Representations and Warranties”), ATS MAKES NO WARRANTY OR REPRESENTATION AS TO
THE VALIDITY OR SCOPE OF THE ATS INTELLECTUAL PROPERTY RIGHTS, OR THAT

 

12

 

ANY OF THE SUBJECT PRODUCTS
WILL BE FREE FROM AN INFRINGEMENT ON PATENTS OF THIRD PARTIES, OR THAT NO THIRD
PARTIES ARE IN ANY WAY INFRINGING ATS INTELLECTUAL PROPERTY RIGHTS.

 

7.4           Limitation on Damages.  IN NO EVENT WILL EITHER PARTY BE LIABLE FOR
ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING FROM THIS AGREEMENT.

 

ARTICLE 8

COMPLIANCE
WITH LAWS

 

8.1           General.  Each party shall, at its expense, comply
with all laws, rules and regulations applicable to the performance by them of
their respective obligations under this License Agreement. IMDC shall register
this License Agreement with any governmental agency which requires such
registration, and IMDC shall pay all costs and legal fees in connection
therewith.

 

8.2           Governmental Rights.  Certain of the research underlying the ATS
Intellectual Property Rights has been funded in part by the National Institutes
of Health of the United States of America, and as a result of such governmental
funding, the United States Government has certain rights in the inventions made
from said funding.  The license rights
granted by ATS to IMDC under this License Agreement are subject to said
governmental rights, and IMDC agrees to comply with said governmental rights,
to the extent applicable.  ATS shall
furnish to IMDC from time to time such material information and documents as
may reasonably be required to evaluate the rights of the United States
Government.

 

ARTICLE 9

CONFIDENTIALITY

 

9.1           Treatment of Confidential
Information.  During the term of
this License Agreement, and for a period of five (5) years after this License
Agreement expires of terminates, a party receiving Confidential Information of
the other party will (i) maintain in confidence such Confidential Information
to the same extent such party maintains its own proprietary information (but at
a minimum each party shall use reasonable efforts); (ii) not disclose such
Confidential Information to any third party without prior written consent of
the other party; and (iii) not use such Confidential Information for any
purpose except those permitted by this License Agreement.  A party shall have no such obligation with
respect to any portion of such Confidential Information which:

 

9.1.1        is publicly disclosed by the disclosing
party, or is otherwise publicly disclosed without the fault of the receiving
party, either before or after it becomes know to the receiving party; or

 

9.1.2        was known to the receiving party prior
to when it was received from the disclosing party; or

 

9.1.3        is subsequently disclosed to the
receiving party in good faith by a third party who has a right to make such a
disclosure; or

 

13

Portions
of the exhibit marked by [***] have been redacted

 

9.1.4        has been published by a third party as a
matter of right; or

 

9.1.5        has been independently developed by the
receiving party without the aid, application or use of Confidential Information
from the disclosing party; or

 

9.1.6        is required by law to be disclosed, but
then only to the limited extent of such legally required disclosure.

 

9.2           Publicity.  Any publication, new releases or other
announcement relating to this License Agreement, including the Exhibits and any
of its or their respective terms, or to the performance hereunder, shall first
be reviewed and approved by both parties, which approval shall not be
unreasonably withheld; provided, however, that any disclosure which is required
by law may be made without the prior consent of the other party, although the
other party shall be given prompt notice of any such legally required
disclosure and an opportunity to comment on the proposed disclosure reasonably
in advance to the extent feasible. Further, the disclosing party shall make
diligent efforts to limit the nature and scope of any disclosure to the extent
reasonably possible.  Either party shall
be entitled to disclose the substance of this License Agreement to its
shareholders (and to prospective shareholders to whom its stock is offered for
purchase) under the customary confidentiality agreement and subject to the diligence
requirements in the second sentence preceding this sentence.  Each party shall also be entitled to provide
a copy of this License Agreement to the Securities and Exchange Commission (if
required).

 

ARTICLE 10

TERM AND
TERMINATION

 

10.1         Term.
 Unless terminated sooner in
accordance with the provisions set forth herein, or extended in accordance with
Section 10.2 (“Term Extension”), this License Agreement, and the licenses
granted hereunder, shall commence on the Effective Date of this License Agreement
and shall terminate at the later of (i) 15 years; or (ii) such time as the last
of the patents included within the ATS Intellectual Property Rights expires.

 

10.2         Term Extension.  Subject to the terms of this Section 10.2, IMDC shall have the
right to extend the term of this Agreement for successive annual renewal terms
on a Product Category-by-Product Category basis by giving to ATS written notice
of renewal at least one year in advance. 
In the event of such an extension, the minimum annual royalty payment
under Section 2.6 (”Minimum Royalty”) shall be re-set, on a Product
Category-by-Product Category basis, at [***] of the average royalty payment
under Section 2.6 (“Minimum Royalty”) for the prior three years for the
particular Product Category.  ATS shall
have the right to reject IMDC’s notice of extension for the particular Product
Category if the actual Running royalties paid by IMDC for the particular
Product Category have not exceeded the Minimum Royalty payment under section
2.6 (“Minimum Royalty”) for at least three of the prior five years.

 

10.3         Termination Upon Default.

 

10.3.1      ATS shall have the right to terminate
IMDC’s license rights with respect to any particular Subject Product or Product
Category if:

 

14

Portions
of the exhibit marked by [***] have been redacted

 

(a)           IMDC fails to exceed the Minimum
Royalty payments under Section 2.6 (“Minimum Royalty”) for that particular
Product Category for any two years, commencing after year four as defined in
that section; or

 

(b)           Within the time periods agreed upon
by the parties from time to time in the R&D Plan or Clinical and Regulatory
Approval Plan, IMDC does not use commercially reasonable efforts to obtain PMA
approval for (i) [***] product Categories if the option under Section 1.2
(“Option to Acquire License for Second Phase Product Categories”) is exercised;
or (ii) [***] of the First Phase Product Categories if the option is not
exercised; provided, however, that in the event ATS retakes the licensing
rights to a Product Category pursuant to section 3.7 (“Disputes”) or pursuant
to this Section 10.3, then the thresholds specified above shall be
appropriately reduced in a manner which does not increase the percentage of
product Categories for which a PMA must be obtained; or

 

(c)           IMDC fails to comply with the R&D
Plan or the Clinical and Regulatory Approval Plan mutually agreed to at the
commencement of such activities for the particular Subject Product or Product
Category, and said failure is not cured by IMDC within 30 days after written
notice of the failure is delivered to IMDC; or

 

(d)           IMDC is in material breach of any of
its other obligations with respect to the particular Subject Product or Product
Category, and said breach is not cured within 30 days after written notice of
the breach is delivered to IMDC.

 

10.3.2      Either party shall have the right to
terminate this Agreement in its entirety upon notice to the other party in the
event the other party is in material breach of any of its obligation hereunder,
including without limitation the failure of IMDC to make the payments specified
in Section 2.1 (“License Fees”), which breach is not cured within thirty (30)
days of written notice of such breach for nonpayment and within sixty (60) days
of written notice of such breach for all other breaches.

 

10.3.3      Termination Rights Due To Alternate
Product.

 

(a)           With respect to any Product Category
for which IMDC has made a Milestone Payment, in the event IMDC enters into an
agreement with any tissue engineering or similar company for the development
and/or sale of any human-based product related to a given Product Category and
commences commercial sales of such alternative product while IMDC still retains
license rights to such Product Category under the terms of this Agreement, then
upon such alternative product sales reaching a cumulative sales threshold of
[***] dollars [***] per year ATS shall have the right to terminate IMDC’s
license rights with respect to such Product Category within 60 days.  Provided, IMDC may retain the rights to such
Product Category by continuing to comply with the terms of this agreement and
by paying to ATS a royalty on such alternative product sales equal to [***]
percent [***] of the ATS royalty rate-assuming for purposes of calculating the
payment that all the sales of that alternative product were based upon ATS
Intellectual Property Rights. Provided further, that the royalty rate on
alternative product sales payable to ATS shall decrease ten percent per year
but in no event shall fail below [***] percent [***] of the ATS royalty
rate.  At such time as the royalty
payable to ATS on alternative product sales under this section falls below
twenty-five percent of 

 

15

 

the ATS royalty rate that would
otherwise have been payable, the license shall convert to non-exclusive for the
remainder of the term of the Agreement.

 

(b)           In the event IMDC elects to retain
its rights and later desires to terminate the license rights for the Product
Category, IMDC may terminate the Product Category by giving ATS six months
prior written notice.  In the event of
such notice, ATS may immediately license such rights to any other third party.

 

(c)           Notwithstanding the foregoing, the
provisions of this Section 10.3.3 shall not be applicable to obligations of
IMDC relating to products of Pharming where such obligation existed prior to
the date of this Agreement.

 

10.4         Rights Upon Termination.  Notwithstanding any other provision of this
License Agreement, upon any early termination of this License Agreement, in
whole or with respect to a particular subject Product or Product Category, the
following provisions shall apply, as applicable, to the Subject Product(s) or
Product Category(ies) for which the Agreement is being terminated:

 

(a)           except as set forth in Section 10.9
(“License to Jointly Developed Improvements”), all license rights granted from
ATS to IMDC shall terminate;

 

(b)           all payments made by IMDC to ATS
shall be retained by ATS and be non-refundable;

 

(c)           all ATS stock issued to IMDC and all
stock warrants granted to IMDC shall remain outstanding and in full force and
effect;

 

(d)           all intellectual property rights
belonging to each party shall be retained by that party, with neither party
having any license rights to use the other party’s intellectual property
rights;

 

(e)           any regulatory approvals for the
Subject Products shall be transferred from IMDC to ATS, as set forth in Section
3.4 (“Ownership of Data and Regulatory Approvals”);

 

(f)            all claims for damages caused by any
breach occurring prior to the termination shall survive and remain enforceable;

 

(g)           except as provided in Section 10.6
(“Work in Progress”), IMDC shall have no further right to use the ATS Patents
or the ATS Know-How; and

 

(h)           IMDC shall promptly return to ATS all
samples, documents, information, and other materials which embody or disclose
the ATS Intellectual Property Rights.

 

10.5         Survivability.        Any such termination shall not relieve either party from any
obligations accrued to the date of such termination.  The parties’ obligations which have applicability after the
termination shall survive the termination of the License Agreement, such

 

16

 

as those applicable obligations
in Section 5.2 (“Ownership of ATS Patents and ATS Know-How”); Section 5.3
(“Ownership of Improvements”); Article 6 (“Indemnity”); Article 7
(“Representations and Warranties; Liability Limitation”); Article 9
(“Confidentiality”) and Section 12.2 (“Arbitration”).

 

10.6         Work-in-Progress.   Upon any such early termination of the license granted hereunder
in accordance with this License Agreement, IMDC and its Affiliates shall be
entitled to finish any work-in-progress and to sell any completed inventory of
Subject Products covered by such license which remains on hand as of the date
of the termination, so long as IMDC pays to ATS the royalties (if any) and
submits the required reports applicable to said subsequent sales in accordance
with the terms and conditions as set forth in this License Agreement, provided
that no such sales shall be permitted after the expiration of six (6) months
after the date of termination.

 

10.7         Termination Not Exclusive Remedy.   The termination rights shall be in addition
to and not in substitution for any other remedies that may be available to the
aggrieved party in connection with default by the other party.  Termination shall no relieve the breaching
party from liability and damages to the aggrieved party for breach of this
Agreement.  Waiver by the aggrieved
party of a single default or a succession of defaults shall not deprive such
party of any right to terminate this License Agreement arising by reason of any
subsequent default.

 

10.8         Change of Control.  This License Agreement shall not be
terminable due to a change of control, sale or merger of either ATS, IMDC, or
any of their respective Affiliates, including subsidiaries; and no approval or
prior notice of such event shall be required. 
Any such change of control, sale or merger shall not constitute an
assignment under Section 11.1, however, prompt notice thereof shall be given in
writing.

 

10.9         License to Jointly Developed
Improvements.  Section 5.3
(“Ownership of Improvements”) provides in part that where ATS and IMDC
employees are co-inventors of (in the case of patents) or make an essential
contribution to (in the case of know-how) any Improvement, ATS shall be the
sole owner of such Improvement (“Jointly Developed Improvement”).  The parties hereby agree that upon
termination of this Agreement, IMDC shall retain a royalty-free,
non-transferable, non-exclusive, worldwide license under such Jointly Developed
Improvement(s) to make, use and sell Subject Products.

 

ARTICLE 11

ASSIGNMENT;
SUCCESSORS

 

11.1         Assignment.  Neither this License Agreement nor any
rights granted hereunder may be assigned, transferred or sublicensed by either
party except with the prior written consent of the other party, which consent
shall not be unreasonably withheld, except (i) to a party which acquires substantially
all of the assets of the assignor party; (ii) to an Affiliate of a party; or
(iii) to a sublicense in the case of Urinary Incontinence Products, in any of
such cases consent of the other party is not necessary.  Any such purported assignment which requires
consent shall be void without consent.

 

17

 

11.2         Binding Upon Successors and Assigns.  Subject to the limitations on assignment
herein, this License Agreement shall be binding upon and inure to the benefit
of any successors in interest and assigns of ATS and IMDC.  Any such successor or assignee of a party’s
interest shall expressly assume in writing the performance of all the terms and
conditions of this License Agreement to be performed by such party.

 

11.3         Research & Development Credits.  It is the intention of the parties to this
Agreement that from a tax standpoint IMDC’s investments and other payments to
ATS until the point of commercial sales for a given Product Category are
treated as a “cost sharing” arrangement whereby IMDC is defraying a portion of
the research and development expenditures relating to the Product
Portfolio.  It is agreed that such
expenditures constitute research and development expenses as defined in Section
174 of the Internal Revenue Code of 1986, as amended (“the Code”), and that
those expenditures should be entitled to a research and development tax credit
by IMDC under Section 41 of the Code.

 

ARTICLE 12

GENERAL
PROVISIONS

 

12.1         Waiver.  The failure of a party to enforce any of its
rights under this License Agreement or to object to action taken by the other
party shall not constitute the waiver of any rights hereunder. Any waiver by a
party hereunder must be in writing signed by the waiving party. No waiver of any
breach of this License Agreement shall be held to constitute a waiver of any
other or subsequent breach.

 

12.2         Arbitration.  Any disputes arising from this Agreement
(other than validity of the ATS Intellectual Property rights) shall be resolved
through final and binding arbitration under the rules of the American
Arbitration Association by one arbitrator in Los Angeles, California. The
parties will share the cost of the arbitration, and each party will bear its
own expenses unless the arbitrator determines that a party has acted in bad
faith. The decision of the arbitrator shall be final and non-appealable and may
be enforced in any court of competent jurisdiction. The parties consent to
jurisdiction in any federal or state court located in Los Angeles, California.

 

12.3         Notices.  All notices shall be deemed complete on
transmission by facsimile or telecopier or within three business days after the
date of mailing if sent by mail or upon delivery by same day or next day
delivery service. Notices shall be sent to the following addresses unless
either party designates a different address:

 

For IMDC:

 

INAMED
Corporation

5540 Ekwill
Street, Suite D

Santa Barbara,
California 93111

Attention:  President

Attention:  General Counsel

Phone:  805-692-5430

Fax:  805-692-5432

 

18

 

For ATS:

 

Advanced
Tissue Sciences, Inc.

10933 North
Torrey Pines Road

La Jolla,
California 92037-1005

Attention:  General Counsel

Attention:  Chief Financial Officer

Phone:  858-713-7300

Fax:  858-713-7900

 

12.4         Governing
Law.  This License Agreement
shall be governed by the substantive law of the State of California.

 

12.5         Entire Agreement.  This License Agreement, together with all Exhibits attached
hereto and with the Heads of Agreement and the other agreements referenced in
the Heads of Agreement represent the entire agreement of the parties with
respect to the subject matter hereof. 
In the event of any inconsistency among the provisions of any of the agreements,
the terms of this License Agreement shall prevail.

 

12.6         Amendments.  This License Agreement may be amended only
by an agreement in writing executed by both parties.

 

12.7         Force
Majeure.  The obligations of the
parties under this License Agreement shall be subject to government regulations,
significant material shortages, labor disputes, war, embargoes, and causes
beyond the reasonable control of a party. 
The party whose performance is prevented as the result of any of the
foregoing shall use continuous and diligent efforts to remedy its inability to
perform.

 

12.8         Severability.  If one of the provisions of this License
Agreement should be declared void or unenforceable, the remaining terms of this
License Agreement shall continue in full force and effect unless such
construction is unreasonable.

 

12.9         Recording.  If requested by either party, ATS and IMDC
shall enter into one or more additional short form license agreements, having
terms consistent with License Agreement, for recording with the U.S. Patent and
Trademark Office.

 

12.10       Counterparts.  This License Agreement may be signed in one
or more counterparts; signatures may be transmitted by facsimile.

 

19

 

IN WITNESS
WHEREOF, the parties have executed this license Agreement by their duly
authorized representatives to be effectives as of the date set forth above.

 

	
   

  	
  IMDC:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INAMED
  CORPORATION,

  
	
   

  	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  Title:

  	
  PRESIDENT
  & CO. CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ATS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ADVANCED
  TISSUE SCIENCES, INC.,

  
	
   

  	
   

  	
  a Delaware
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  Title:

  	
  [ILLEGIBLE]

  	
   

  

 

20

 

EXHIBIT A

 

DEFINITIONS

 

As used in the
License Agreement, the following terms shall have the meanings set forth in
this Exhibit A.

 

Affiliate means (i) any entity directly or
indirectly controlling, controlled by or under common control with another
entity, (ii) any person or entity owning or controlling fifty percent (50%) or
more of the outstanding voting securities of an entity, or (iii) any officer,
director or partner of any entity. 
“Control” shall mean the possession of the power to direct or cause the
direction of the management and the polices of an entity, whether through the
ownership of a majority of the outstanding voting securities or by contract or
other wise.

 

ATS Know-How shall mean all know-how, trade
secret, data, processes, procedures, methods, formulas, protocols and
information which are not covered by the ATS Patents or improvements or any
other patent rights of ATS, but which are know by ATS and are necessary or
useful for the commercial exploitation of the Subject Products.

 

ATS Patents shall mean the patents and patent
applications listed on Exhibit B hereto, and any and all patents issuing
thereon and all foreign equivalents thereof, owned by or licensed to ATS with
the right to sublicense which disclose subject matter useful or necessary for
the commercial exploitation of the Subject Products.  Exhibit B shall be amended from time to time to add any new intellectual
property of ATS which might arise, other than by business acquisition or
merger, that is applicable to the Product Categories.  The term “patents” as used in this License Agreement shall
include, without limitation, all substitutions, continuations,
continuations-in-part (to the extent the invention described in the
continuation-in-part application claims subject matter supported by the
original application), division, reissues, extensions and foreign counterparts
of the aforementioned.

 

ATS Intellectual Property Rights shall mean
the ATS Patents and the ATS Know-How.

 

Breast Reconstruction Product means a collagen
and living cells-based, human matrix product grown outside the body for use in
reconstructive surgery of the human breast Whether following a mastectomy or
lumpectomy, or to treat deformities.

 

Burn Treatment Product means a non-viable
human dermal matrix and fibroblast coated biocompatible scaffold (e.g.,
“TransCyteÔ”) for use in cosmetic surgery for the
enhancement of normal skin in connection with procedures such as chemical
peels, laser resurfacing or other aesthetic treatments.

 

Clinical and Regulatory Approval Plan shall
have the meaning set forth in Section 3.1(“R&D Plan; Clinical and
Regulatory Approval Plan”).

 

 

Confidential Information means any and all
oral or written or tangible proprietary or confidential ideas, inventions,
information, data, materials and know-how or the like owned or controlled by
IMDC or ATS and disclosed by or on behalf of one party to the other, from time
to time in connection with this License Agreement, which the other party should
reasonably expect to be proprietary or confidential.  A party shall attempt to identify the confidential status of
Confidential Information disclosed hereunder, but the failure to so mark or
identify shall not destroy the confidential or proprietary nature of the
Confidential Information.  Without
limiting the generality of  the
foregoing, ATS’s Confidential Information includes, without limitation, all
non-published ATS Intellectual Property Rights.

 

Direct Cost shall mean actual costs incurred
for labor and materials calculated in accordance with generally accepted cost
accounting principles (“GAAP”).

 

FDA shall mean the United States Food and Drug
Administration.

 

First Additional Royalty shall have the
meaning set forth in Section 2.4 (“First Additional Royalty").

 

First Phase Subject Products shall mean
products within the First Phase Product Categories.

 

First Phase Product Categories shall mean Burn
Treatment Products, Reconstructive Cartilage Products, and Breast
Reconstruction Products.

 

Gross Profit Margin shall mean Net Sales minus
costs of goods sold divided by Net Sales, expressed as a percent, all
calculated in accordance with GAAP to the extent applicable and consistent with
the past practice of IMDC.

 

Heads of Agreement shall have the meaning set
forth in Recital F hereof.

 

Human Collagen Product shall mean a
collagen-based, human matrix inject able product for use in the correction of
wrinkles and lip enhancement.

 

Improvements shall mean future inventions and
patent rights and know-how that are discovered by ATS and/or IMDC which are
based on the ATS Patents and ATS Know-How.

 

Milestone Payments shall have the meaning set
forth in Section 2.2 (“Milestone Payments”).

 

Minimum Royalty shall have the meaning set
forth in Section 2.6 (“Minimum Royalty”).

 

Net Sales shall mean the amount actually
billed by IMDC or any Affiliate on sales of the Subject Products (corrected for
billing errors) after the following deduction (but only to the extent the
billed amount had included such deduction) all calculated in accordance with
GAAP to the extent applicable:

 

(a)           trade and/or quantity discounts, if
any, allowed and taken;

 

2

 

(b)           credits or allowances, if any, given
or made on account of the return of the Subject Products by the purchaser, or a
price adjustment based upon a decrease in the prices of the Subject Products;

 

(c)           sales taxes, other taxes and duties
(but only to the extent included in the amount billed for Subject Products as
specified above);

 

(d)           transportation (but only to the
extent included in the amount billed for Subject Products as specified above);

 

(e)           insurance (but only to the extent
included in the amount billed for Subject Products as specified above); and

 

(f)            bad debts.

 

If the Subject
Product is consumed by IMDC in connection with the operation of a business
(excluding the conduct of clinical trials for obtaining regulatory approval),
for example if the IMDC conducts a healthcare treatment service for patients
and consumes  the Subject Product in
connection with said patient services, the 
normal sale price at which IMDC customarily sells the Subject Product to
third parties shall be deemed to constitute “Net Sales” for such consumed
Subject Product.

 

PMA means a Pre-Market Approval application
submitted to United States Food and Drug Administration.

 

Product Categories shall mean (i) Burn
Treatment Products, Reconstructive Cartilage Products and Breast Reconstruction
Products (the First Phase Product Categories); and (ii) Human Collagen Products
and Urinary Incontinence Products (the Second Phase Product Categories) if IMDC
has exercised its option to obtain a license to the Second Phase Product Categories.

 

Product Portfolio means all of the Subject
Products.

 

R&D Plan shall have the meaning set forth
in Section 3.19 (“R&D Plan; Clinical and Regulatory Approval Plan”).

 

Reconstructive Cartilage Product shall mean an
allogenic, collagen-based product for use in plastic and reconstructive surgery
to provide human cartilage for aesthetic, cosmetic, or other reasons; the
primary anticipated application being rhinoplasty.

 

Running Royalty shall have the meaning set
forth in Section 2.3 (“Running Royalty”).

 

Second Additional Royalty shall have the
meaning set forth in Section 2.5 (“Second Additional Royalty”).

 

Second Phase Product Categories shall mean
Human Collagen Products and Urinary Incontinence Products.

 

3

 

Second Phase Subject Products shall mean
products within the Second Phase Products Categories.

 

Subject Products  shall
mean (i) First Phase Subject Products; and (ii) Second Phase Subject Products
if IMDC has exercised its option to obtain a license to the Second Phase
Product Categories.

 

Territory is worldwide.

 

Urinary Incontinence Product shall mean a
collagen-based, human matrix bulking product for use in the treatment of
urinary incontinence.

 

Wall Street Prime Rate means the  rate of interest published from time to time
in The Wall Street Journal newspaper under “Money Rates” as the “Prime
Rate” comprising the base rate on corporate loans posted by at least 75% of the
nation’s 30 largest banks.

 

4

 

EXHIBIT
B

 

INAMED
RELATED PATENT RIGHTS

 

FIRST
PHASE PRODUCTS

 

U.S. AND
FOREIGN PATENTS

 

U.S.  Pat. No. 4,963,489, issued 10/16/90, entitled “Three-Dimensional
Cell and Tissue Culture System” (Core patent)

 

U.S. Pat. No. 5,443,950, issued
08/25/95, entitled “Three-Dimensional Cell and Tissue Culture System”
(Transplantation/Implantation methods)

 

U.S. Pat. No. 5,460,939, issued
10/24/95, entitled “Temporary Living Skin Replacement” (TRANSCYTETM)

 

U.S. Pat. No. 5,830,708, issued
11/03/98, entitled “Methods for the Production of a Naturally Secreted
Extracellular Matrix” (Isolation methods)

 

U.S. Pat. No. 5,843,766, issued
12/01/98, entitled “Apparatus for the Growth and Packaging of Three-Dimensional
Tissue Cultures” (TRANSCYTE bioreactor)

 

U.S. Pat. No. 5,902,741, issued
05/11/99, entitled “Three-Dimensional Cartilage Cultures” (Cartilage
compositions and methods)

 

Australian Pat. No. 644578,
granted 04/06/94, entitled “Three-Dimensional Cell and Tissue Culture System”
(Core patent)

 

Canadian Pat. No. 1,310,926,
granted 12/01/92, entitled “Process for Replicating Bone Marrow and Other
Tissue In Vitro and Using the Same” (Core patent)

 

European Pat. No. 0 309 456,
granted 09/13/95, entitled “Stromal Tissue” (Core patent; Contracting
countries: Austria, Belgium, France, Germany, Italy, Luxembourg, Netherlands,
Sweden, and UK)

 

Finnish Pat. No. 100249,
granted 10/31/97, entitled “Process for Replicating Bone Marrow” (Core patent)

 

Hong Kong Pat. No. 1007684,
granted 04/23/99, entitled “Stromal Tissue” (Core patent)

 

Hungarian Pat. No. 202,578,
granted 11/01/91, entitled “Process for Replicating Bone Marrow” (Core patent)

 

Israeli Pat. No. 85957, granted
09/25/94, entitled “Living Stromal Tissue Prepared In Vitro Comprising Stromal
Cells and Connective Tissue Proteins” (Core patent)

 

 

Korean Pat. No. 156571, granted
07/23/98, entitled “Three-Dimensional Cell and Tissue Culture System” (Core
patent)

 

Japanese Pat. No. 2857392,
granted 11/27/98, entitled “Process for Replicating Bone Marrow” (Core patent)

 

New Zealand Pat. No. 230572,
granted 09/06/89, entitled, “Three-Dimensional Cell and Tissue Culture System”
(Core patent)

 

Portuguese Patent No. 87136,
granted 05/25/92, entitled “Process for Replicating Bone Marrow and Other
Tissue In Vitro and Using the Same” (Core patent)

 

Romanian Pat. No. 106655,
granted 04/15/87, entitled, “Process for Replicating Bone Marrow” (Core patent)

 

South African Pat. No. 87/2805,
granted 04/21/87, entitled “Process for Replicating Bone Marrow” (Core Patent)

 

Spanish Pat. No., 2,009,894,
granted 04/04/88, entitled “Replicating Bone Marrow” (Core patent)

 

Norwegian Pat. No. 179181,
granted 08/21/96, entitled entitled “Process for Replicating Bone Marrow” (Core
patent)

 

Australian Pat. No. 689605,
granted 07/16/98, entitled, “Three-Dimensional Cartilage Cultures” (Cartilage
compositions and methods)

 

New Zealand Pat. No. 288467,
granted 02/09/99, entitled, “Three-Dimensional Cartilage Cultures” (Cartilage
compositions and methods)

 

U.S. AND
FOREIGN APPLICATIONS

 

U.S.S.N. 08/660,787, filed
06/06/96, entitled, “Compositions and Methods for Production and Use of an
Injectable Naturally Secreted Extracellular Matrix” (Extracellular matrix
compositions)

 

U.S.S.N. 08/735,620, filed
10/23/96, entitled “Production of Cartilage Tissue Using Cells Isolated from
Wharton’s Jelly” (Isolation methods)

 

U.S.S.N. 08/753,104, filed
11/20/96, entitled “Application of Shear Flow Stress to Chondrocytes or
Chondrocyte Stem Cells to Produce 
Cartilage” (Shear flow stress application)

 

2

 

U.S.S.N. 08/912,948, filed
08/14/97, entitled “Apparatus and Method for Sterilizing, Seeding, Culturing,
Storing, Shipping and Testing Replacement Cartilage Tissue Cultures” (Cartilage
bioreactor)

 

U.S.S.N. 09/001,609, filed
December 31, 1997, entitled, “Apparatus and Method for Simulating In Vivo
Conditions for the Growth and Culture of Three Dimensional Tissue” (Omnibus
bioreactor)

 

U.S.S.N. 09/157,306, filed
September 18, 1998, entitled, “Three-Dimensional Stromal Tissue Cultures”
(Mesenchymal stem cell application)

 

U.S.S.N. 09/182,822, filed
10/29/98, entitled, “Compositions and Methods for Production and Use of an
Injectable Naturally Secreted Extracellular Matrix” (Methods of use)

 

Greek Application No.
880100216, filed 04/01/88, entitled “Process for Replicating Bone Marrow”
(Core)

 

Irish Application No. 1007/87,
filed 04/16/87, entitled “Process for Replicating Bone Marrow” (Core)

 

Singapore Application No.
9790773-7, filed 04/15/97, entitled “Stromal Tissues” (Core)

 

Canadian Application No.
2,192,064, filed 06/06/95, entitled, “Three-Dimensional Cartilage Cultures”
(Cartilage compositions and methods)

 

European Application No.
95923009.5 filed 06/06/95, entitled, “Three-Dimensional Cartilage Cultures”
(Cartilage compositions and methods)

 

Israeli Application No. 114017,
filed 06/06/95, entitled, “Three-Dimensional Cartilage Cultures” (Cartilage
compositions and methods)

 

Japanese Application No.
08-501308, filed 06/06/95, entitled, "Three-Dimensional Cartilage Cultures"
(Cartilage compositions and methods)

 

Korean Patent No. 706946/96,
filed 06/06/95, entitled, “Three-Dimensional Cartilage Cultures” (Cartilage
compositions and methods)

 

Australian Application No.
62609/96, filed 06/06/96, entitled, “Compositions and Methods for Production
and Use of an Injectable Naturally Secreted Extracellular Matrix”
(Extracellular compositions and methods)

 

Canadian Application No.
2,223,892, filed 06/06/96, entitled, “Compositions and Methods for Production
and Use of an Injectable Naturally Secreted Extracellular Matrix”
(Extracellular compositions and methods)

 

3

 

European Application No.
96921369.3 filed 06/06/96, entitled, “Compositions and Methods for Production
and Use of an Injectable Naturally Secreted Extracellular Matrix”
(Extracellular compositions and methods)

 

Japanese Application No.
09-50179, filed 06/06/96, entitled, “Compositions and Methods for Production
and Use of an  Injectable Naturally
Secreted Extracellular Matrix” (Extracellular compositions and methods)

 

New Zealand Application No.
311313, filed 06/06/96, entitled, “Compositions and Methods for Production and
Use of an Injectable Naturally Secreted Extracellular Matrix” (Extracellular
compositions and methods)

 

Korean Application No.
708695/97, filed 06/06/96 entitled, “Compositions and Methods for Production
and Use of an Injectable Naturally Secreted Extracellular Matrix”
(Extracellular compositions and methods)

 

Australian Application No.
49888/97,  filed 10/23/97, entitled
“Production of Cartilage Tissue Using Cells Isolated from Wharton’s Jelly”
(Cell compositions and methods)

 

Canadian Application No. TBA,
filed 10/23/97, entitled “Production of Cartilage Tissue Using Cells Isolated
from Wharton’s Jelly” (Cell compositions and methods)

 

European Application No.
97912786.7, filed 10/23/97, entitled "Production of Cartilage Tissue Using
Cells Isolated from Wharton's Jelly" (Cell compositions and methods)

 

Japanese Application No. TBA,
filed 10/23/97, entitled "Production of Cartilage Tissue Using Cells
Isolated from Wharton's Jelly" (Cell composition and methods)

 

New Zealand Application No.
335531, filed 10/23/97, entitled “Production of Cartilage Tissue Using Cells
Isolated from Wharton’s Jelly” (Cell compositions and methods)

 

Korean Application No.,
7003506/99, filed 10/23/99, filed 10/23/97, entitled "Production of
Cartilage Tissue Using Cells Isolated from Wharton's Jelly" (Cell
compositions and methods)

 

International Application No.
PCT/US97/21088, filed 11/18/97, entitled, “Application of Shear Flow Stress to
Chondrocytes or Chondrocyte Stem Cells to Produce Cartilage” National stage
filed in Australia, Canada, Europe, Japan, Korea, and New Zealand (5/99)

 

Phillippines Application No.
58583, filed 11/20/97, entitled, “Application of Shear Flow Stress to
Chondrocytes or Chondrocyte Stem Cells to Produce Cartilage”

 

International Application No.
PCT/US98/27845, filed 12/30/98, entitled, “Apparatus and Method for Simulating
In Vivo Conditions for the Growth and Culture of Three Dimensional Tissue”

 

4

 

SECOND
PHASE PRODUCTS

 

U.S.S.N. 09/313,538, filed
05/14/99, entitled “Conditioned Cell Medium Compositions and Methods of  Use” (Methods purifying soluble collagen)

 

Human Extracellular
Matrix-coated Device and Methods for the Production and Use Thereof” (To be
filed)

 

5

Portions
of the exhibit marked by [***] have been redacted

 

EXHIBIT C

 

PRICING FORMULA & MECHANISM

 

 

The pricing for facial wrinkle
products is set forth in the table below. Initial pricing will be based upon
the assumptions in the model containing [***] average selling price. Identified
variables will be adjusted quarterly as real experience is determined.

 

INAMED
& ADVANCED TISSUE

SCIENCES

Pricing
for Facial Wrinkle

Products

 

ATS
Initial Cost

Assumptions

 

	
  Direct costs (direct labor + materials)*

  	
   

  	
  [***]

  	
   

  	
  per roller
  bottle

  	
   

  
	
  Overhead costs*

  	
   

  	
  [***]

  	
   

  	
  per roller
  bottle

  	
   

  
	
  ATS fully allocated cost*

  	
   

  	
  [***]

  	
   

  	
  per roller
  bottle

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Yield Assumption (through 

  purification: Zygen)*

  	
   

  	
  [***]

  	
   

  	
  grams per
  roller 

  bottle

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  
	
  Formula Price:

  	
   

  	
   

  	
   

  	
  per roller
  bottle

  	
   

  
	
  (ATS fully allocated cost + [***] margin)

  	
   

  	
  [***]

  	
   

  	
  per gram

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  per cc of
  finished 

  product 

  (assuming 40 milliliters of collagen per cc)*

  	
   

  
									

 

	
  Floor Price:

  	
   

  	
  [***]

  	
   

  	
  per roller
  bottle

  	
   

  
	
  (1.5 times ATS direct costs)

  	
   

  	
  [***]

  	
   

  	
  per gram

  	
   

  
	
   

  	
   

  	
  [***]

  	
   

  	
  per cc of
  finished 

  product 
 (assuming 40 milliliters of collagen
  per cc)*

  	
   

  

 

	
  Cap Price:

  	
   

  	
  IMDC’s total
  cost will not exceed [***] of the average selling 

  price; provided, however, that the cap price cannot go below the floor
  price.ATS’s basic [***] royalty is recognized as long as the cap exceeds the
  floor; and no minimum annual royalty is payable to the extent that total IMDC
  costs would exceed [***] of ASP

  	
   

  

 

*              Denotes an assumption which will be adjusted quarterly,
based on actual experience

 

Portions
of the exhibit marked by [***] have been redacted

 

Model
at Various ASPs:

 

	
  ASP*

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  50% GP

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IMDC costs*

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Available 

  cap dollars

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basic 7% royalty

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial cap price

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Per cc

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Per gram

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Is cap below floor?

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Royalty 

  adjustment

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Revised cap price

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Per cc

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Per gram

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Is formula price 

  above 

  the cap price?

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If No, then formula price applies 

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If Yes, then cap price applies

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*              Denotes an assumption which will be adjusted quarterly
based on actual experience

 

2Portions
of the exhibit marked by [***] have been redacted

 

EXHIBIT 10.28

ADDENDUM 
TO

 

LICENSE AGREEMENT

 

BETWEEN

 

ADVANCED TISSUE SCIENCES, INC.

 

a Delaware corporation, as ATS

 

AND

 

INAMED CORPORATION,

 

a Delaware corporation, as IMDC

 

THIS ADDENDUM
(the “Addendum”) is made and entered into as of September 14, 1999 (the
“Effective Date”), by and between Advanced Tissue Sciences, Inc., a Delaware
corporation (“ATS”), and INAMED Corporation, a Delaware corporation (“IMDC”).

 

RECITALS

 

A.            ATS and IMDC entered into a License
Agreement dated May 10,1999 (the “License Agreement”).

 

B.            Capitalized terms not otherwise
defined in this Addendum shall have the meaning set forth in the License
Agreement.

 

C.            Section 1.2 of the License Agreement
granted IMDC an option to acquire from ATS a license with respect to the Second
Phase Product Categories upon (i) the acquisition by IMDC of at least [***] of
CGEN by September 30, 1999; and (ii) the payment of [***] cash to ATS, as set
forth in Section 2.1 of the License Agreement.

 

D.            IMDC has acquired at
least [***] of CGEN, IMDC has made the [***] payments to ATS, and IMDC has
exercised said option to obtain a license with respect to the Second Phase
Product Categories.

 

E.             Section 1.2 of the
License Agreement required ATS and IMDC to enter into an addendum to the
License Agreement implementing the exercise of said option.

 

NOW,
THEREFORE, the parties hereto hereby agree as follows:

 

Section 1.1 is modified as of
the Effective Date to read as follows:

 

“1.1         (a)           License
to Use ATS Intellectual Property Rights for First Phase Product Categories and Second Phase Product Categories.  ATS hereby grants to IMDC a non-

 

 

transferable, exclusive,
worldwide license under the ATS Intellectual Property Rights to make, use, sell
and import the First Phase Subject Products and the Second Phase Subject Products,
subject to the terms of this License Agreement.  IMDC’s right to manufacture First Phase Subject Products and Second Phase Subject Products
is expressly subject to ATS’ (or ATS’ Affiliates’) first right to manufacture
the First Phase Subject Products and Second Phase Subject Products as set forth in
Section 4.2 (“ATS Right to Manufacture”) The license set forth in this Section
1.2 does not include any sublicense rights except with respect to the Urinary Incontinence Products, which
sublicense rights are set forth in Section 1.1(b) hereof.

 

IN WITNESS
WHEREOF, the parties have executed  this
Addendum by their duly authorized representatives to be effective as of the
date set forth above.

 

	
  INMAED
  CORPORATION,

  	
  ADVANCED
  TISSUE SCIENCES, INC.,

  
	
  a Delaware
  corporation

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Ilan K.
  Reich

  	
   

  	
  By: 

  	
  /s/
  [ILLEGIBLE]

  	
   

  	 

	
  Title: 

  	
  President
  & Co. CEO

  	
   

  	
  By: 

  	
  /s/
  [ILLEGIBLE]

  	
   

  	 

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00036-of-00352.parquet"}]]