Document:

Exhibit 10.84

 

STOCK
ACQUISITION AGREEMENT

 

 

This
agreement is made and entered into by and between NewCorp Resources Electric
Cooperative, Inc., (formerly New West Resources, Inc.) sometimes hereinafter
referred to as “Shareholder”, United Fuel and Energy Corporation, hereinafter
sometimes referred to as “United”, and joined by its subsidiaries
Eddins-Walcher Company, hereinafter sometimes referred to as “EWC” and Three D
Oil Co. of Kilgore, Inc., hereinafter sometimes referred to as “Three D” and
Thomas E. Kelly, hereinafter sometimes referred to as “Kelly”.

RECITALS:

WHEREAS, Shareholder presently owns sixteen
percent, being one hundred sixty (160) shares of common stock, of the
outstanding shares of common stock of United Fuel & Energy Corporation, a
Texas corporation; and

WHEREAS,
Shareholder has acquired rights pursuant to a Warrant Agreement between
Shareholder, Kelly, Richard C. Skillern, and United, whereby Shareholder is
entitled to acquire an additional four percent (4%) of the outstanding shares of
Common Stock of United and Kelly, Richard C. Skillern, and United are obligated
to transfer said shares to Shareholder if Shareholder should exercise its
option granted to it under the Warrant Agreement; and

WHEREAS,
United and its subsidiaries, EWC and Three D have completed a refinancing of
their existing debt structure with CIT Business/Group Credit, Inc., Washington
Mutual Bank, FA, and First American Bank, SSB; and

WHEREAS, Kelly desires to acquire all of the
shares of the common stock of the Shareholder in United pursuant to the terms
and conditions herein; and

WHEREAS, the Shareholder desires to sell all
of its shares of common stock in United to Kelly pursuant to the terms and
conditions of this Agreement.

NOW THEREFORE, for and in consideration of
the mutual covenants and conditions hereinafter set forth, the parties hereto
agree as follows:

 

1

 

Stock
Acquisition Agreement by and between NewCorp Resources Electric Cooperative,
Inc., Thomas E. Kelly, United Fuel & Energy Corporation, Eddins-Walcher
Company and Three D Oil Co. of Kilgore, Inc

 

I.

Shareholder hereby agrees to sell all of its
shares of common stock in United, being one hundred sixty (160) shares of
common stock, to Kelly for and in consideration of one million three hundred
thousand dollars ($1,300,000.00).  Said
$1,300,000.00 shall be paid in the following manner:

On Closing Date (as specified herein), Kelly
will deliver to Shareholder a promissory note in the amount of one million
three hundred thousand dollars ($1,300,000.00) which will bear interest at a
rate of six percent (6%) per annum and will be payable in the following manner:
from Closing Date, interest will be payable quarterly  until Payment Date (as defined below) and on the Payment
Date  Kelly will pay to Shareholder the
sum of five hundred thousand ($500,000.00) plus any accrued unpaid interest and
the remaining principal balance of the promissory note (being eight hundred
thousand dollars ($800,000.00)) will be paid by Kelly to Shareholder in three
annual installments of two hundred sixty-six thousand six hundred sixty-six
dollars and sixty-six cents ($266,666.66) each plus accrued interest with the
first installment being due and payable one (1) year  from the Payment Date; Payment Date is defined as the first to
occur of (i) sixty (60) days after the completion of a reverse merger of United
and its subsidiaries into a publicly held corporation or (ii) twenty-four (24)
months from Closing Date.  The parties
agree that Kelly may prepay the promissory note at any time without penalty.

The parties hereto acknowledge that the one
hundred sixty shares of stock being purchased by Kelly from Shareholder has
been pledged by Shareholder as collateral for the indebtedness of EWC and Three
D to CIT Business/Group Credit, Inc. and Washington Mutual Bank, F.A.  If not a violation of the loan agreements
between United, EWC, and Three D with CIT Business/Group Credit, Inc. and/or
Washington Mutual Bank, F.A., upon the purchase of said shares of stock from
Shareholder, Kelly will pledge said shares to Shareholder as collateral for the
promissory note described hereinabove. 
Any pledge of collateral executed by Kelly to Shareholder shall be
subordinate to the current liens of CIT Business/Group Credit, Inc. and
Washington Mutual Bank, F.A.

 

 

2

 

II.

The parties hereto understand and
acknowledge that Kelly has presently contracted with Richard C. Skillern
(“Skillern”) to purchase all of the shares of stock owned by Skillern in United
and with the execution of this Agreement by Shareholder and United, Kelly will
have a right to acquire all of the issued and outstanding shares of stock of
United not presently owned by Kelly.

Shareholder further acknowledges that United
has entered into negotiations with consultants whereby United may complete a
reverse merger and become a public corporation in the near future.  Shareholder understands that if United is
capable of completing its reverse merger, that its shares of stock presently
owned by Shareholder could possibly be valued well in excess of the one million
three hundred thousand dollars ($1,300,000.00) being paid by Kelly to
Shareholder.

III.

At the closing and as a condition precedent
to the consideration of being paid by United to Shareholder, Shareholder shall
cause stock certificates duly endorsed in blank or accompanying Stock Powers
duly endorsed in blank representing its 160 shares of common stock of United
being sold hereunder to be delivered to Kelly, and will execute a release
terminating all of its rights pursuant to the Warrant Agreement described
herein to acquire additional common stock in United.

IV.

Shareholder further understands and agrees
that as an additional condition precedent to closing, that Shareholder shall
obtain a resignation of David Pruitt as a member of the Board of Directors of
United at the time of closing and submit said resignation to United.

V.

Kelly and United do hereby agree that by the
Payment Date that they will use their best efforts to have Shareholder and its
parent company, Cap Rock Energy Corporation (“Cap Rock”) released from all
liabilities and guaranties issued by either Shareholder and/or Cap Rock to
Washington Mutual Bank, F.A. on the three million and five hundred thousand
dollar ($3,500,000.00) term note executed by EWC and Three D 

 

 

3

 

to Washington
Mutual Bank, F.A. effective as of October 1, 2003, which note is to mature on
September 30, 2004.

VI.

For and in consideration of the monies paid
herein Shareholder does hereby agree at closing to execute a release that fully
releases, remises, quit claims and forever discharges United, Kelly, EWC, Three
D and their agents, employees, officers, directors, legal counsel and all other
persons, firms or corporations in privity with the released parties whatsoever
(the “Released Parties”), of and from all claims, demands or causes of action
in any way related to losses or damages sustained by Shareholder as a result of
the Released Parties actions or omissions to act in relation to their
ownership, directorship, management, or operation of United, EWC, Frank’s
Fuels, Inc. and/or Three D; said causes of action and claims being past and
present, whether known or unknown, which might allegedly be asserted in a law
suit against the Released Parties and/or Shareholder, and shall include any and
all losses sustained or that could be sustained by Shareholder which include
all legal fees and court costs associated with such loss.

Shareholder and United do hereby agree to
execute such release of liability in a form satisfactory to both Shareholder
and United and their legal counsel.

VII.

For and in consideration of the sale of
Shareholder’s ownership interest in United to Kelly, United and its
subsidiaries, EWC and Three D, and Kelly do hereby agree to execute at closing
a release that fully releases, remises, quit claims and forever discharges
Shareholder and its agents, officers, directors, employees, legal counsel and
all other persons, firms, or corporations in privity with the released parties
whatsoever (the “Released Parties”), of and from any and all claims, demands,
and causes of action in any kind and in any way related to losses or damages
sustained by United, Kelly, EWC and Three D, as a result of the Released
Parties acts or omissions to act in its ownership, directorship, management and
operations of United, EWC, Three D and/or Frank’s Fuels, Inc.; said causes of
action and claims being past and present, whether known or unknown, which might
allegedly be asserted against Released Parties and/or United and/or its
subsidiaries and Kelly; said release shall include any and all losses

 

4

 

sustained by
United and/or its subsidiaries and Kelly which includes all legal fees and
court costs associated with such loss.

VIII.

The closing on the sale of stock from
Shareholder to Kelly shall take place on or before March 31, 2004 (“Closing
Date”) at the law offices of RUSH, KELLY, MORGAN, DENNIS, CORZINE & HANSEN,
P.C., 4001 E. 42nd Street, Suite 200, Odessa, Texas 79762 or at such
other time and place as may be mutually agreed upon by the parties hereto.  Kelly hereby agrees to allow Shareholder to
extend closing until April 30, 2004 if Shareholder notifies Kelly in writing of
its desire to extend said closing on or before March 29, 2004.

IX.

This Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

X.

This Agreement may be enforced in accordance
with the laws of the State of Texas and venue shall lie in Midland, Midland
County, Texas.

XI.

This Agreement sets forth the entire
Agreement of the parties hereto and it may not be amended or modified without
the express written consent of all parties hereto.

EFFECTIVE AS OF March 18, 2004.

 

SHAREHOLDER:

                                                                                NewCorp
Resources Electric Cooperative, Inc.,

 

 

 

	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  David W. Pruitt

  

 

 

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  UNITED:

  
	
   

  	
   

  	
   

  	
  United
  Fuel & Energy Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Thomas E. Kelly

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SUBSIDIARIES:

  
	
   

  	
   

  	
   

  	
  EWC:

  
	
   

  	
   

  	
   

  	
  Eddins-Walcher
  Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Thomas E. Kelly

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  THREE
  D:

  
	
   

  	
   

  	
   

  	
  Three
  D Oil Co. Of Kilgore, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Thomas E. Kelly

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  KELLY:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /s/
  Thomas E. Kelly

  
	
   

  	
   

  	
   

  	
   

  	
  Thomas
  E. Kelly

  	
   

  

 

 

6Exhibit 10.16

 

CONFIDENTIAL TREATMENT REQUESTED

 

ASSET
PURCHASE AGREEMENT***

 

THIS ASSET
PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of December
13, 2003, by and among Medicis Ventures
Management GmbH  (as defined
herein, “Medicis”), a German corporation, and MacroPore
Biosurgery, Inc. (as defined herein, “MacroPore”), a Delaware
corporation.

 

WITNESSETH:

 

WHEREAS, MacroPore has developed,
manufactures and sells Bioabsorbable Film Implants; and

 

WHEREAS, the parties hereto desire that MacroPore
sell, transfer and assign to Medicis, and Medicis purchase from MacroPore, the
Specified Assets relating to the Field of Use Business (as such terms are
defined herein) on the terms and for the consideration hereinafter provided;
and

 

WHEREAS, as a condition to MacroPore’s sale
of the Specified Assets, Medicis will grant MacroPore a perpetual (subject to
the conditions of the License Agreement), worldwide exclusive royalty-free
sub-licensable license to certain intangible assets relating to the SurgiWrap
Business for the Spinal Field, and a perpetual worldwide non-exclusive
royalty-free sub-licensable license to certain intangible assets relating to
the SurgiWrap Business for the Field of Regenerative Medicine both licenses
pursuant to a License Agreement in the form attached hereto as Exhibit A (the “License Agreement”); and

 

NOW, THEREFORE, in consideration of the
respective representations, warranties, covenants and agreements contained
herein, and subject to the terms and conditions set forth herein, the parties
hereto agree as follows:

 

ARTICLE
1

DEFINITIONS

 

1.1)          Specific Definitions.  As used in this Agreement, the following
terms shall have the meanings set forth or referenced below:

 

“Affiliate” of a
specified person (natural or juridical) means a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, the person specified.  “Control” shall mean ownership of more than
50% of the shares of stock entitled to vote for the election of directors in
the case of a corporation, and more than 50% of the voting or policy making
power or of the equity in the case of a business entity other than a
corporation.

 

“Assignment and Assumption Agreement”
means the agreement in the form attached hereto as Exhibit D between MacroPore and Medicis under which MacroPore
shall assign to Medicis, and Medicis shall assume from MacroPore, all of
MacroPore’s rights and obligations, to the extent such rights and obligations
arise following the Closing, under the Contracts.

 

“Associate Investors” means the named investors as specified on Exhibit C

 

“Assumed Liabilities”
means the liabilities described in Section 2.6.

 

“Bill of Sale”  means the document delivered by MacroPore to
Medicis under which MacroPore shall convey to Medicis unencumbered title to the
Specified Assets, in the form attached hereto as Exhibit  E (Bill of Sale).

 

***                           Certain confidential portions of this Exhibit
were omitted by means of blackout of the text (the "Mark").  This Exhibit has been filed separately with
the Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 24b-2 under the 1934
Act.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

“Bioabsorbable Film Implants” means bioabsorbable and/or
bioresorbable Thin Polymeric Films and similar products, including current Thin
Polymeric Films in development, for use as surgical implants in the following
medical applications:  soft tissue
support, anti-scarring, anti-adhesion, minimizing the attachment of soft
tissues, and hernia repair.

 

“Business” means any
and all of MacroPore’s business activities related to the Bioabsorbable Film
Implants, as conducted to the date of Closing.

 

“Business Development Agreement”
means the agreement attached hereto as Exhibit
G.

 

“Closing” and “Closing
Date” have the meanings set forth in Section 8.1.

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Confidential Information” means information disclosed by or on
behalf of one of the parties (the “disclosing party”) to the other party
(the “receiving party”), generated under this Agreement, or otherwise
learned by the receiving party from the disclosing party, excluding information
which:

 

(a)           was already in the possession of the
receiving party before its original receipt from the disclosing party (provided
that the receiving party is able to provide the disclosing party with written
proof thereof and, if received from a third party, that such information was
acquired without any party’s breach of a confidentiality or non-disclosure
obligation to the disclosing party related to such information);

 

(b)           is
or becomes part of the public domain by reason of acts not attributable to the
receiving party;

 

(c)           is
or becomes available to the receiving party from a source other than the
disclosing party which source has rightfully obtained such information and has
no direct or indirect obligation of non-disclosure or confidentiality to the
disclosing party with respect thereto; or

 

(d)           has been independently developed by or for
the receiving party without breach of this Agreement or use of any Confidential
Information of the other party (provided that the receiving party is able to
provide the disclosing party with written proof thereof).

 

Notwithstanding the forgoing exceptions, all information learned by
Medicis personnel during the time they were MacroPore personnel shall be
Confidential Information and shall continue to be governed by their agreements
with MacroPore.

 

“Contract(s)” means
those contracts, purchase or sale orders, leases, licenses, commitments and
other agreements listed on the Letter of Assets attached hereto as Exhibit  F.

 

 “Disclosure Letter” means the disclosure
letter dated December 13, 2003 delivered by MacroPore to Medicis before the
execution of this Agreement.

 

“Environmental Laws”
means and includes any one or more of the following:  (a) the Comprehensive Environmental Response Compensation and
Liability Act (“CERCLA”), as amended by the Superfund Amendments and
Reauthorization Act of 1986 (“SARA”), 42 U.S.C. § 9601 et seq.; the
Federal Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C.
§ 6921 et seq.; the Clean Water Act, 33 U.S.C. § 1321 et seq.; the
Clean Air Act, 42 U.S.C. § 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. § 300f et seq.; the Occupational Safety and Health Act of 1976, 29
U.S.C. § 651, all as they may be amended from time to time; any other
federal, state, county, municipal, local or other statute, law, ordinance or
regulation that relates to or deals with Hazardous Substances, human health or
the environment, all as they may be amended from time to time; and all
regulations promulgated by a regulatory body pursuant to any of the foregoing
statutes, laws, regulations, or ordinances; and (b) to the extent that
they apply specifically to MacroPore, judgments, orders, decrees, injunctions,
permits, concessions, grants, franchises, licenses or agreements, to the extent
that either (a) or (b) relate to safety, human health, the environment or
emissions, discharges, or releases of Hazardous Substances into the environment
including ambient air, surface water, ground water, facilities, structures, or

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, Hazardous Substances, or wastes or the investigation,
clean-up, or other remediation thereof.

 

“Facilities” means specialized clean rooms, storage, and/or packaging
facilities which specifically are not being provided to Medicis herein.

 

“FDA” means the
United States Food and Drug Administration.

 

“Field of Regenerative Medicine”
means application or delivery of drugs, growth factors, cells or genes to
repair or regenerate the human body. Nevertheless, the Field of Regenerative
Medicine shall not include any of the above for the sole purpose of, or
intended use in soft tissue support, anti-adhesion, anti-scarring or
minimization of the attachment of soft tissues or hernia repair.

 

“Field of Use” means any applications of Bioabsorbable Film
Implants throughout the human body for one or more of the following: soft
tissue support, anti-adhesion, anti-scarring, minimizing the attachment of
(soft) tissues, or hernia repair.  The
Field of Use specifically does not include any applications in the Spinal Field
(as defined herein) or the Field of Regenerative Medicine.

 

“Field of Use Bioabsorbable Implants” means Bioabsorbable Film
Implants that are designed, developed, manufactured, marketed or sold for use
in the Field of Use by MacroPore as of the Closing Date.

 

“Field of Use Business”
means MacroPore’s activities in connection with the development, manufacturing,
marketing and sale of Field of Use Bioabsorbable Implants, as conducted by
MacroPore to the date of Closing.

 

“Financial Statements”
means the balance sheet, statement of operations, and statement of cash flow of
Medicis prepared under U.S. generally accepted accounting principals.

 

“Hazardous Substance”
means asbestos, urea formaldehyde, polychlorinated biphenyls, nuclear fuel or
materials, chemical waste, radioactive materials, explosives, known
carcinogens, petroleum products, pesticides, fertilizers, or any other
substance that is dangerous, toxic, or hazardous, or that is a pollutant,
contaminant, chemical, material or substance defined as hazardous or as a
pollutant or contaminant in, or the use, transportation, storage, release or
disposal of which is regulated by, any Environmental Laws.

 

“Intellectual Property” means (a) patents and
all divisions, continuations, continuations-in-part, revisions, reissues and
re-examinations relative thereto; (b) copyrights and all works of authorship
including all translations, adaptations, combinations, compilations and
derivations of each of the foregoing; (c) trademarks, trade names, brand names,
service marks, service names, trade dress, logos and corporate names including
all translations, adaptations, combinations and derivations thereof, together
with all common law rights and all goodwill associated with each of the
foregoing; (d) technology, know-how, methods, processes, systems, trade
secrets, inventions (whether or not patentable, copyrightable or susceptible to
any other form of legal protection and whether or not reduced to practice),
proprietary data, formulae, research and development data, and confidential
information (including conceptions, ideas, innovations, manufacturing,
development and production techniques, drawings, specifications, designs,
proposals, financial and accounting data, business and marketing plans,
customer and supplier lists and related information and documentation), in each
case irrespective of whether in human or machine readable form; (e) computer
software and all related program listings and data, systems, user and other
documentation; (f) mask works; (g) all other forms of right by which
one may effectively exclude another from using or otherwise enjoying any and
each of the foregoing; and (h) all applications for any and each of the
foregoing including applications for patent or registration, together with all
registrations, renewals and extensions for any and each of the foregoing.

 

“Inventory” or “Inventories”
means finished goods, raw materials and ingredients, work-in-process,
consignment goods, wares and merchandise. The list of inventory items is
attached hereto as Exhibit I.

 

“International Distributorship Agreement(s)” means the distribution
agreements related to each of the international distributors identified in
Schedule 5.13.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

“Knowledge” of a
party means actual knowledge of the party’s officers, directors, or management
or the knowledge that any of such persons would reasonably be expected to have
assuming reasonable inquiry of any facts or circumstances actually known to and
recognized by such person to create significant doubt concerning the accuracy
of any representation, warranty, or statement without regard to such
“knowledge” qualifier.

 

“Letter of Assets”
means the listing of assets attached hereto as Exhibit F.

 

“Letter of Intent”
means that specific document signed dated August 27, 2003 and attached hereto
as Exhibit B.

 

“Liens” means liens,
mortgages, charges, security interests, pledges, encumbrances, assessments,
restrictions or other third-party claims of any nature.

 

“License Agreement”
has the meaning set forth in the recitals.

 

“MacroPore” means MacroPore Biosurgery, Inc.
and its Affiliates.

 

“MacroPore Intellectual Property” means all
right, title and interest in and to all Intellectual Property owned by
MacroPore that is necessary to the conduct of the Field of Use Business.

 

“MacroPore Product Information”
means all records, reports (internal and external), submissions (internal and
external), data, files, marketing materials, specifications, manufacturing
documentation and quality assurance information associated with any products or
concepts, or development or manufacturing thereof, that have been created,
initiated and/or conducted by MacroPore relating primarily to the Specified
Assets and/or the Field of Use Bioabsorbable Implants, including but not
limited to all of MacroPore’s currently embodied (in written, electronic or
magnetical form) information and trade secrets, research materials, inventions,
test data, product efficacy, safety data as well as so currently embodied
technical information (including application technical information) relating
primarily to or necessary for use with the respective Field of Use
Bioabsorbable Implants in the Field of Use Business, it being specified that
the know-how shall include all documentation on research and development but
shall not include whole or part of any information, trade secrets, data etc.
owned or controlled by MacroPore which are related exclusively to the Spinal
Field and the Field of Regenerative Medicine or information otherwise primarily
for use outside the Field of Use Business.

 

“MacroPore Regulatory Information”
means all authorizations, permits, licenses, records, reports (internal and external),
submissions (internal and external), data and files associated with regulatory
requirements and communications between MacroPore and outside regulatory bodies
worldwide, including without limitation the FDA, notified bodies, and other
governmental agencies, relating to the Specified Assets and/or the Field of Use
Bioabsorbable Implants.

 

“Manufacturing Cost” of MacroPore with respect to a product means
MacroPore’s per unit average material, labor and manufacturing overhead costs
for such product as specified on Schedule 5.6
(“Cost Statements”).

 

“Material Adverse Effect”
means an effect (other than an effect caused by changes to the economy in
general) that, individually or in the aggregate with other related effects, is
or could reasonably be expected to be materially adverse to the business,
prospects, results of operation or condition (financial or otherwise) of the
Specified Assets or the Field of Use Business, considered as a whole, or is or
could reasonably be expected to be materially adverse to the ability of Medicis
to conduct following the Closing the manufacture and/or sale of Field of Use
Bioabsorbable Implants as presently conducted or contemplated to be conducted
by MacroPore; provided, however, that any of the following, individually or in
the aggregate, shall not constitute a “Material Adverse Effect” on or with
respect to MacroPore:  (a) any changes,
events or effects including without limitation, any acts of terrorism,
affecting the United States economy or world economy as a whole or affecting
generally the industry in which MacroPore operates (and not specially affecting
MacroPore); (b) any adverse changes, events or effects that are demonstrated to
be caused by the announcement or pendency of the transactions contemplated in
this Agreement; (c) the lack of success of MacroPore in retaining existing
employees or of Medicis in hiring MacroPore employees or other employees who
are material to Medicis’s ability to operate the Field of Use Business or
MacroPore’s ability to fulfill its obligations under this Agreement; or (d) any
changes resulting from compliance by MacroPore with the terms of, or the taking
of any action expressly contemplated, permitted or required by, this Agreement.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

“Medicis” means
Medicis Ventures Management GmbH and its Associate Investors and its and their
Affiliates.

 

 “Product Liability” means any liability,
claim or expense related to the Field of Use Business, including but not
limited to reasonable attorneys’ fees and medical expenses, arising in whole or
in part out of a breach of any express or implied product warranty, strict
liability in tort, negligent manufacture of product, negligent provision of
services, product recall, or any other allegation of liability arising from the
design, testing, manufacture, packaging, labeling (including instructions for
use), marketing, distribution or sale of products (whether for clinical trial
purposes, commercial use or otherwise).

 

“Purchase Price” has
the meaning set forth in Section 2.4.

 

“Retained Liabilities” has the meaning set
forth in Section 2.8.

 

 “Specified Assets” means all of the
assets set forth on the Letter of Assets, together with all MacroPore Product
Information and MacroPore Regulatory Information; provided, however, that
copies of certain MacroPore Product Information and MacroPore Regulatory
Information necessary for the continuing operation of MacroPore’s remaining
business, as reasonably agreed to by the parties, may be retained by MacroPore.  Expressly excluded from the Specified Assets
is any and all Inventory of MacroPore to the extent needed to cover open orders
as of the Closing Date.

 

“Spinal Field” means all applications (including but not
limited to: anti-adhesion, anti-scarring, minimizing the attachment of
soft tissues, or soft tissue support)
related to the anatomy of the spine including, but not limited to, applications
in the following: spinal fixation, stabilization and/or fusion, spinal cord
coverings, exiting nerve root coverings, cauda equina coverings, lamina
coverings and vertebral column-cervical, thoracic, lumbar and sacral.  The spinal field does not include distal
peripheral nerve and other structures extrinsic and distal to the spine.

 

 “Transfer, Sales and Value Added (VAT) Taxes”
means all sales tax, use taxes, stamp taxes, conveyance taxes, transfer taxes,
filing fees, recording fees, prepayment fees or penalties, reporting fees and
other similar duties, taxes and fees, if any, imposed upon, or resulting from,
the transfer of the Specified Assets or the Assumed Liabilities hereunder and
the filing of any instruments relating to such transfer.

 

1.2)          Other Terms.  Other terms may be defined elsewhere in the text of this
Agreement and shall have the meaning indicated throughout this Agreement.

 

ARTICLE
2

PURCHASE,
SALE AND TRANSFER OF SPECIFIED ASSETS

 

2.1)          Purchased Assets.  Upon the terms and subject to the conditions
set forth in this Agreement, effective as of the Closing, MacroPore agrees to
sell, transfer, assign and convey to Medicis, and Medicis agrees to purchase,
the Specified Assets, which assets MacroPore represents and warrants includes
all assets, contracts and rights necessary to the conduct of the Field of Use
Business, other than the Excluded Assets specified in Exhibit H. .

 

2.2)          Excluded Assets.  MacroPore shall retain all of its respective
right, title and interest in and to all open orders as attached in Schedule 2.2 (“Open Orders”) and as
subsequently received through the Closing Date, and including any Inventory
necessary to meet such Open Orders, and any receivables or other payments
accruing prior to the Closing Date, Facilities, and all other assets specified
on Exhibit H (the “Excluded
Assets”).

 

2.3)          Contracts and International
Distributorship Agreements. A sale of contract(s) is subject to the consent
of the respective third-party to the assignment of the contract(s) to Medicis.
MacroPore shall use its reasonable efforts to obtain the respective
third-party’s consents and Medicis shall cooperate respectively. If and to the
extent the consent of the relevant third parties to the assignment of the
Contracts/International Distributorship Agreements has not been obtained until
Closing, such Contracts/International Distributorship Agreements will be
retained by MacroPore and the following shall apply with respect to the
individual Contracts/International Distributorship Agreements for which such
consent has not been obtained:

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

If with respect to any of the Contracts/International Distributorship
Agreements the contracting party does not consent (where such consent is
necessary) to an assignment to Medicis, MacroPore performs such
Contracts/Distributorship Agreements on account and on behalf of Medicis and in
accordance with the instruction of Medicis, provided, however, that (i) Medicis
shall provide all support reasonably to be expected to perform such
Contracts/International Distributorship Agreements, and (ii) Medicis shall
indemnify and hold harmless MacroPore from any liability resulting out of or in
connection with such Contracts/International Distributorship Agreements and the
performance therefore after the Closing Date unless MacroPore negligently or
willfully breached its duties, and, further provided, that MacroPore shall not
be obliged to incur any out-of-pocket expenses or to otherwise accept any
contractual liability in order to perform such Contracts/International
Distributorship Agreements unless (i) such out-of-pocket expenses are fully
paid by Medicis, or (ii) such contractual liabilities are fully performed by
Medicis. Within the first [12] months after the Closing MacroPore shall not
exercise any termination rights under such Contracts/International
Distributorship Agreements and shall not reject any extension of such Contracts/
International Distributorship Agreements, without prior written consent of
Medicis. Thereafter, MacroPore may exercise ordinary termination rights in
respect of such Contracts/International Distributorship Agreements at its sole
discretion.

 

If the consent of the relevant third parties as in the first sentence
of this subparagraph 2.3 is refused or otherwise not obtained on existing terms
to Medicis within 120 days of the Closing Date, Medicis shall be entitled at
its sole discretion to require MacroPore to serve proper notice to terminate
the Contract/International Distributorship Agreements in accordance with the
terms and conditions of that Contract/International Distributorship Agreements.

 

2.4)          Purchase Price.  The total cash consideration from Medicis
for the Specified Assets (the “Purchase Price”) shall be Twelve Million Dollars
($12,000,000).

 

2.5)          Payment of Purchase Price.  The Purchase Price shall be paid as follows:

 

(a)           on the Closing Date,
Medicis shall wire transfer to a bank account designated in writing by
MacroPore the sum of Seven Million Dollars ($7,000,000).

 

(b)           on the day after
MacroPore notifies Medicis of MacroPore’s receipt of any 510K clearance from
the U.S. FDA for the hernia wrap product, Medicis shall wire transfer MacroPore
the sum of Two Hundred Thousand Dollars ($200,000).

 

(c)           on or before December
1, 2004, Medicis shall wire transfer to a bank account designated by MacroPore
the sum of Five Million Dollars ($5,000,000).

 

2.6.          Assumed Liabilities.  Subject to Section 2.8, at the Closing,
Medicis shall assume and agree to pay, perform and discharge in due course only
those liabilities and obligations (the “Assumed Liabilities”) that accrue for
periods subsequent to the Closing and which (i) are listed in Exhibit J
(“Express Liabilities”);  (ii) result
from those contracts listed on the Letter of Assets (Exhibit F); (iii) are international distributor agreements for
distributors identified on the International Distributor List (Schedule 5.13),
and (iv) any other contracts that Medicis may, upon agreement with MacroPore,
elect in writing at or following the Closing to assume (it being understood
that Medicis shall not assume any liabilities or obligations, or portions
thereof, with respect to such contracts under (i), (ii) or (iii), including any
breaches, defaults or other events or actions thereunder, that arise or are
accrued or that should have been accrued as of or for periods prior to the
Closing). Liabilities arising from Medicis’ operation of the Field of Use
Business (or disposition of assets acquired hereunder) after the Closing are to
be borne by Medicis

 

If a claim by a third party is made against MacroPore with regard to
any of the Assumed Liabilities, Medicis shall indemnify and hold harmless
MacroPore from any obligation or liability qualified as Assumed Liabilities in
this Section 2.6.

 

2.7)          Business Development Agreement.

Prior to closing the parties Shall execute the Business Development
Agreement attached hereto as Exhibit G
with respect to any partnership, distribution or licensing agreement for the
Territory of Japan.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

2.8)          Retained Liabilities.  The parties agree that Medicis is not, nor
shall be considered, the successor to MacroPore, and that Medicis does not
hereby agree to assume or become liable to pay, perform or discharge any
obligation or liability whatsoever of MacroPore or relating to the Specified
Assets prior to the Closing Date or any former or present employees of
MacroPore, including those that may be hired by Medicis, except as expressly
provided for in Section  2.6).  Section 2.6 and the Letter of Assets
notwithstanding, and without limitation of the foregoing provisions of this Section
2.8, it is expressly agreed and understood that Medicis shall not assume any of
the following obligations or liabilities of MacroPore:

 

(a)           any obligation,
commitment or liability of or claim against MacroPore that relates to or arises
from events occurring before Closing resulting in any lawsuit, action or
proceeding against MacroPore, including any obligation or liability of
MacroPore under any Environmental Laws or Regulations.

 

(b)           any Product Liability
claim relating to (i) any product sold, or service performed, by MacroPore
accruing before the Closing Date, or (ii) any finished goods manufactured
before the Closing Date so long as such products are not repackaged,
resterilized or otherwise physically modified by Medicis; or

 

(c)           any other liability,
obligation or undertaking of MacroPore accruing prior to the Closing Date of
any kind or nature whatsoever, whether known or unknown, fixed or contingent,
determined or determinable, due or not yet due, or otherwise, that is not
expressly assumed by Medicis under Section 2.6 or disclosed in the
Disclosure Letter.

 

If a claim by a third party is made against
Medicis with regard to any of the Retained Liabilities, MacroPore shall
indemnify and hold harmless Medicis from any obligation or liability qualified
as Retained Liabilities in this section 2.8).

 

2.9)          Allocation of Purchase Price.  Set forth in a letter to be delivered by
Medicis to MacroPore concurrently with the execution and delivery of this
Agreement is an allocation of the Purchase Price for tax purposes among the
Specified Assets.  The allocation has
been agreed to by MacroPore and Medicis after arm’s-length negotiations and in
accordance with Section 1060 of the Code and other applicable laws.  MacroPore and Medicis will, to the extent
permitted by applicable law, adopt and utilize the amounts allocated to each
asset or class of assets, as such allocations may be adjusted pursuant to this
Agreement, for purposes of all federal, state, local and other tax returns or
reports, in any claim for refund, or otherwise with respect to such tax returns
or reports.  Each party agrees to timely
file an IRS Form 8594 reflecting the allocation of the Purchase Price and the
Assumed Liabilities among the Specified Assets for the taxable year that
includes the Closing and to timely file any comparable or similar forms
required by applicable state, local, and foreign tax laws.  In
the event of any adjustments to the Purchase Price, the parties shall prepare
and timely file a supplemental asset acquisition statement on IRS Form 8594 in
accordance with the rules under Section 1060 of the Code and the Treasury
regulations issued thereunder and shall prepare and timely file any comparable
or similar form required by applicable state, local, and foreign tax laws.

 

2.10)        Transfer and Sales Taxes.  Medicis shall promptly pay all Transfer,
Sales and VAT Taxes.

 

2.11)        Transfer of Specified Assets.  MacroPore shall on a date to be mutually
agreed to by both parties, deliver the Specified Assets to Medicis, FOB the
shipping dock of the MacroPore’s San Diego facility.

 

2.12)        Security
of Payment for Intellectual Property Assets.  In order to secure the payment obligations of Medicis in Section
2.5 herein (“Obligations”), Medicis does by this Agreement collaterally assign
and grant to MacroPore a lien and security interest in all of Medicis’ right,
title, and interest in and to the MacroPore Intellectual Property, including
all patents, patent applications, trademarks and/or trademark applications set
forth on Exhibits A and B to the License Agreement, and any future patents,
royalties or other fees paid or payment or payments made or to be made to
Medicis in respect thereto (referred to collectively in this Agreement as the
“Patent Collateral”). The security interest provisions of this Section 2.12
shall be null and void (without prejudice to any other rights or remedies of
MacroPore under this agreement) after Medicis has paid MacroPore the Purchase
Price obligations in Section 2.5 (a) for 
$7,000,000 and Section 2.5 (c) for $5,000,000, whether or not any such
payment occurs prior to the time specified in this Agreement.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Medicis further covenants that:

 

(a) 
until all of the Obligations have been satisfied in full, it will (i)
not enter into any agreement, including without limitation, license agreements,
which are inconsistent with Medicis’s undertakings and covenants under this
Agreement or which restrict or impair MacroPore’s rights under this Agreement,
and (ii) maintain the Patent Collateral in full force and effect.

 

(b) 
so long as this security interest is in effect and so long as Medicis
has not received notice from MacroPore that an event of default has occurred
under the Agreement with respect to the Obligations, Medicis shall continue to
have the exclusive right (subject to the License Agreement) to use the Patent
Collateral and grant licenses with respect to them as anticipated in this
Agreement.

 

(c) 
Medicis agrees not to sell, assign, or further encumber its rights and
interests in the Patent Collateral without prior written consent of MacroPore.

 

(d) 
if Medicis fails to meet it’s Obligations at the time specified in this
Agreement, MacroPore, as the holder of a security interest under the U.S.
Uniform Commercial Code as in effect now or in the future in any applicable
U.S. jurisdiction, may take such action as is permitted by law or equity, in
its sole discretion, to foreclose upon or otherwise realize upon the Patent
Collateral covered by this Agreement. For those purposes, Medicis hereby
authorizes and empowers MacroPore to make, constitute, and appoint any officer
or agent of MacroPore as MacroPore may select in its sole discretion, as
Medicis’s true and lawful attorney-in-fact with the power to endorse Medicis’s
name on, and/or file of record, all assignments, applications, documents,
papers, and instruments, whether signed by Medicis or by MacroPore on Medicis’
behalf, necessary for MacroPore or its transferee, successors, or assigns, to
obtain title to and the right to use the Patent Collateral or to grant or issue
any exclusive or nonexclusive license under the Patent Collateral to any other
person, or to assign, pledge, convey, or otherwise transfer title in or dispose
of all or any part of the Patent Collateral to any other person. Medicis here
ratifies all that that attorney shall lawfully do or cause to be done by virtue
of this Agreement. This power of attorney shall be irrevocable for the life of
this Agreement or until all Obligations under this Agreement are satisfied.

 

(e) 
Medicis shall at its own expense, to the extent Medicis deems it necessary,
diligently file and prosecute all patent applications relating to the
inventions described and claimed in the Patent Collateral in the United States
Patent and Trademark Office, and shall pay or cause to be paid in their
customary fashion all connected fees and disbursements, and shall not abandon
any such application before the exhaustion of all administrative and judicial
remedies or disclaim or dedicate any Patent Collateral without the prior
written consent of MacroPore. Medicis shall not abandon any Patent Collateral
without the prior written consent of MacroPore, that consent not to be
unreasonably withheld. Any and all fees, costs, and expenses, including
reasonable attorneys’ fees and expenses incurred by MacroPore in connection
with the preparation, modification, enforcement, or termination of this lien
and security interest, including the filing and recording of any documents in
public offices, any taxes, counsel fees, maintenance fees, encumbrances, or
costs otherwise incurred in defending or prosecuting any actions or proceedings
arising out of or related to the Patent Collateral, shall be paid by Medicis on
demand by MacroPore and, until paid, shall be added to the Obligations.

 

(f) 
Medicis shall have the right, with the prior written consent of
MacroPore, which consent will not be unreasonably withheld, to bring suit in
its own name to enforce the Patent Collateral, in which case MacroPore may, at
MacroPore’s option, be joined as a nominal party to this suit if MacroPore
shall be satisfied that that joinder is necessary and that MacroPore is not
incurring any risk of liability by that joinder. Medicis shall promptly, upon
demand, reimburse and indemnify, defend, and hold harmless MacroPore for all
damages, costs, and expenses, including reasonable attorneys’ fees, incurred by
MacroPore pursuant to this Section 2.12.

 

(g) 
upon full and unconditional satisfaction of all Medicis’ Obligations to
MacroPore herein, MacroPore shall execute and deliver to Medicis all documents
reasonably necessary to terminate MacroPore’s interests in the Patent
Collateral.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

(h) 
Medicis here acknowledges and agrees that this Agreement will be
recorded in the United States Patent and Trademark Office, and that the
obligations of this Section 2.12 shall be binding upon Medicis, its successors,
and assigns, and shall inure to the benefit of MacroPore, its successors, and
assigns.

 

2.13)        Employees.  Any claims of or liabilities to those MacroPore employees which
Medicis hires for unused vacations, ratifications, bonus payments and similar
arrangements shall be born by MacroPore if and to the extent such claims and
liabilities relate to the period prior to the Closing Date even if they do not
become due until on or after the Closing Date. 
MacroPore shall not interfere in any material or significant way with
the ability of Medicis to hire or retain the employees identified in Section
3.11 (b) of the Disclosure Letter. For example, MacroPore shall not make any
counter offers to such employees, or offer them any raises or bonuses beyond
the ordinary course of business.

 

ARTICLE
3

REPRESENTATIONS
AND WARRANTIES OF MACROPORE

 

MacroPore represents and warrants by way of
an independent guarantee to Medicis except as set forth in the Disclosure Letter
that the following statements are true and complete on the date of signing this
Agreement and on the Closing Date (except where expressly stated otherwise
thereafter):

 

3.1)          Organization; Directors and Officers.  MacroPore is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.  MacroPore has all necessary
power and authority to own its properties and assets and conduct the business
presently being conducted by it.

 

3.2)          Authority.  MacroPore has full power and authority to enter into this
Agreement and to perform its obligations hereunder.  This Agreement has been duly authorized, executed, and delivered
by MacroPore, and constitutes a legal, valid and binding agreement of
MacroPore, enforceable against it in accordance with its terms, subject to (a)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles and (b) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.  No further proceeding on the
part of MacroPore is necessary to authorize this Agreement and the transactions
contemplated hereby.  Neither the
execution and delivery of this Agreement nor compliance by MacroPore with its
terms and provisions will violate (i) any provision of the certificate of
incorporation, bylaws or other governing instruments of MacroPore,
(ii) any contract, permit or license of MacroPore, or (iii) any law,
statute, regulation, injunction, order or decree of any government agency or
authority or court to which MacroPore or any of the Specified Assets is
subject, except for violations which, individually or in the aggregate, would
not have a Material Adverse Effect.

 

3.3)          Absence of Undisclosed Liabilities.  MacroPore has not incurred any undisclosed
liabilities, claims against or obligations, and there is no reasonable legal
basis therefor, that may adversely affect MacroPore’s ability to perform its
obligations hereunder or may adversely affect the ownership of the Specified
Assets or the use thereof by Medicis in the same manner currently used by
MacroPore. Except as provided in this Agreement, MacroPore has no claims or
rights with respect to, nor has MacroPore created any Liens on, the Specified
Assets.

 

3.4)          Absence of Certain Changes and Events.  Since January 1, 2003, there has not been
any (i) Material Adverse Effect; or (ii) to MacroPore’s knowledge, any
occurrence or event that could reasonably be expected to have a Material
Adverse Effect.

 

3.5)          Litigation and Claims.  There are no actions, suits, claims, or
proceedings pending or, to MacroPore’s knowledge, threatened against or by
MacroPore relating to the Specified Assets, the Assumed Liabilities or the
subject matter of this Agreement, at law, in equity or otherwise, in, before,
or by, any court, arbitrator, or governmental agency or authority.  There are no unsatisfied judgments or outstanding
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration) against or affecting
MacroPore relating to any of the Specified Assets or Assumed Liabilities.  MacroPore has never incurred any uninsured
or insured Product Liability, or received a claim based upon alleged Product
Liability, and, to MacroPore’s knowledge, no basis for any such claim exists.
Section 3.5 of the

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Disclosure Letter also sets
forth a true, correct and complete list of all complaint, warranty claim and
defective product claims related to the Field of Use Business in the two (2)
years prior to the date hereof.

 

3.6)          Compliance with Law.  In conducting the Field of Use Business,
MacroPore has not violated and is not in violation of any applicable law,
ordinance or regulation of any governmental entity.  To MacroPore’s knowledge, all governmental approvals,
registrations, notifications, permits, licenses and other permissions or
authorizations (collectively, “Authorizations”) required in connection
with the conduct of the Field of Use Business are in full force and effect and
are being complied with.  MacroPore has
not received any written notification of any asserted past or present violation
in connection with the conduct of the Field of Use Business of any applicable
law, ordinance or regulation, or any written complaint, inquiry or request for
information from any governmental entity relating thereto, with the exception
of one pre-warning letter from FDA alleging off-label promotion that has been
addressed and resolved.  Neither
MacroPore nor the Field of Use Business nor any of the Specified Assets is the
subject of any federal, state or local enforcement action or, to the knowledge
of MacroPore, other investigation, including but not limited to those relating
to Environmental Laws.  All
documentation, correspondence, reports, data, analysis and certifications
relating to or regarding any medical devices of the Field of Use Business,
filed or delivered (or, if amended, as of the date for which such amendment
speaks) by MacroPore on behalf of the Field of Use Business to any governmental
authority, agency or body were true and accurate in all material respects when
so filed or delivered and remain true and accurate in all material respects.
Any failure or omission with respect to a representation or warranty in this
section 3.6 which does not amount (either individually or in the aggregate) to
a Material Adverse Effect shall not constitute a violation of this section.

 

3.7)          Title to and Condition of Specified Assets.  MacroPore has full right, title and interest
to the intangible Specified Assets and good and valid title to the tangible
Specified Assets, free and clear of all Liens. MacroPore is entitled to fully
transfer or dispose of the Specified Assets (other than the Contracts) without
requiring the further consent of any third party and without such disposal
infringing any rights of a third party. The Specified Assets include all
assets, rights, interests, contracts, know how, approvals, permissions and
claims necessary for the conduct of the Field of Use Business, other than the
Excluded Assets.  The Specified Assets
identified in Sections 2 (“Manufacturing Fixed Assets”) and Section 3 (“General
and Administrative Fixed Assets”) of Exhibit F are suitable for the uses for
which they are presently used by MacroPore, in normal operating condition and
free from any significant defects, ordinary wear and tear excepted, and have
been properly serviced and maintained by MacroPore.  All of the Specified Assets are located at MacroPore’s corporate
headquarters at 6740 Top Gun Street, San Diego, CA 92121, or 6749 Top Gun
Street, San Diego, CA 92121 or 61462 Königstein, Ölmühlweg 33, Germany.

 

3.8)          Intellectual Property.  All right, title and interest in and to the
MacroPore Intellectual Property is owned by MacroPore for use in connection
with the Specified Assets and Field of Use Bioabsorbable Implants and, in some
instances, also for other uses, without royalties or fees , and free and clear
of any Liens.  To MacroPore’s knowledge,
neither the use of the MacroPore Intellectual Property in the Field of Use
Business, nor any of the assets included in the Specified Assets, infringe or
will infringe, misuse, or misappropriate the rights, including Intellectual
Property rights or contract rights, of others in the Field of Use
Business.  The MacroPore Intellectual
Property has not been challenged in any judicial or administrative proceeding.  Neither any shareholder nor any employee or
consultant of MacroPore (or the employer of any such consultant) has any rights
in or to any of the MacroPore Intellectual Property.  All patent applications listed in the Specified Assets are still
pending in good standing and have not been abandoned, and all fees necessary to
maintain such MacroPore Intellectual Property in full force and effect have
been and as of the Closing will have been paid.  To MacroPore’s knowledge, no person nor such person’s business
nor any of its products has infringed, misused, or misappropriated the
MacroPore Intellectual Property or currently is infringing, misusing,
misappropriating or conflicting with such rights.  MacroPore has valid confidentiality, assignment of invention
and/or non-competition agreements with each person to whom confidential or
trade secret information relating to the Field of Use Business has been
disclosed.

 

3.9)          Relations with Suppliers .  No material supplier of MacroPore has
cancelled any contract or order for provision of, and there has been no threat
by any such supplier not to provide, raw materials, products, supplies, or
services to the Field of Use Business when owned by MacroPore or when owned by
Medicis.

 

3.10)        Environmental Matters.    Except for any violation or non-compliance
which, individually or the aggregate, would not have a Material Adverse Effect,
(a) MacroPore has obtained, and is in compliance

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

with, all permits, licenses or
other approvals necessary under the Environmental Laws with respect to the
Field of Use Business and the Specified Assets, and is in compliance with all
Environmental Laws; (b) no capital or other expenditures are necessary so
that the Field of Use Business and Specified Assets comply fully with any
Environmental Law; (c) neither MacroPore nor the Field of Use Business or
Specified Assets have been or are subject to any actual or, to MacroPore’s
knowledge, threatened investigations, administrative proceedings, litigation,
regulatory hearings, or other action threatened, proposed or pending that
alleges (i) actual or threatened violation of or noncompliance with any
Environmental Law, or (ii) actual or threatened personal injury or
property damage or contamination of any kind resulting from a release or
threatened release of a Hazardous Substance with respect to the Field of Use
Business and Specified Assets; (d) MacroPore has not taken or failed to
take any action with respect to the Field of Use Business, the Specified Assets
or the real property presently or formerly used in connection therewith that
could reasonably be expected to result in (i) actual or threatened violation of
or noncompliance with any Environmental Law, or (ii) actual or threatened
personal injury or property damage or contamination resulting from a release of
a Hazardous Substance that requires remediation or other similar corrective
action under any applicable Environmental Laws; and (e) no Hazardous Substances
have been used, manufactured, generated, transported, released or disposed of
in violation of any Environmental Law by MacroPore.  MacroPore has delivered to Medicis true and complete copies of
all reports, studies or tests in the possession of or initiated by MacroPore
that pertain to Hazardous Substances or other environmental concerns regarding the
Field of Use Business, the Specified Assets or any real property used in
connection with the Field of Use Business or Specified Assets.  With respect to the real property presently
or formerly used in connection with MacroPore’s business and assets, to
MacroPore’s knowledge, (i) no above-ground or underground storage tanks
for Hazardous Substances are or were present on such real property or any
improvements or structures thereon, (ii) such real property is not listed
on any published federal, state or local list of hazardous waste sites,
(iii) no Lien in favor of any governmental authority in response to a
release or threatened release of any Hazardous Substance has been filed or
attached to such real property, (iv) no person other than MacroPore has used
or is using any portion of such real property for the handling, processing,
storage or disposal of Hazardous Substances except in compliance with
applicable Environmental Laws, (v) in the course of any activities
conducted by MacroPore, no Hazardous Substances have been generated or are
being used on such real property except in compliance with applicable
Environmental Laws, (vi) neither MacroPore nor any other person has caused
or is causing any releases or threatened releases of Hazardous Substances near,
on, to, from or under such real property, and (vii) any Hazardous
Substances that have been generated by MacroPore on any of such real property
have been transported offsite and have been treated or disposed of in
compliance with applicable Environmental Laws.

 

3.11)        Employees.

 

(a)           No employee of
MacroPore providing services for the Field of Use Business is subject to or
otherwise restricted by any employment or noncompetition agreement between such
employee and a former employer of such employee that would restrict such
employee from being employed by, or such employee’s employment with, MacroPore
or (following the Closing) Medicis in their capacity of providing services for
the Field of Use Business.

 

(b)           Set forth in Section
3.11(b) of the Disclosure Letter is a true and complete list of all current
MacroPore employees with duties related primarily to the Field of Use Business
and, with respect to each such employee thereon, the title, years of service,
position, and salary or wages of such employee.  No MacroPore employee listed in Section 3.11(b) is on short-term
or long-term disability or other authorized leave of absence as of the date of
such Disclosure Letter.

 

3.12)        Contracts and International Distributorship
Agreements.  Each Contract and  International
Distributorship Agreement is valid and subsisting and is in full force and
effect in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles, Schedule 5.13 specifies all international distributors with whom
MacroPore has Distributorship agreements in the Field of Use Business and being
in full force and effect and there have been no amendments, creditors
modifications, or supplements to any such Contracts except as disclosed.  Prior to the date of this Agreement,
MacroPore has delivered or made available to Medicis true and complete copies of
all such Contracts. No written or oral amendments or changes of these Contracts
and  International Distributorship Agreements exist. There is no material
default by MacroPore or claim of material default by MacroPore, or any other
party thereto, under any such Contract and International Distributorship
Agreement and to MacroPore’s knowledge, no event has occurred that, with the

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

passage of time or the giving
of notice or both, could reasonably be expected to constitute a material
default by MacroPore or any other party thereto under any such Contract and
International Distributorship Agreement, or could reasonably be expected to
permit modification, acceleration, or termination of any such Contract and
International Distributorship Agreement, or result in the creation of any Lien
on any of the Specified Assets. MacroPore has not entered into other agreements
or obligations relating to these Contracts and International Distributorship
Agreements that would, or is likely to, result in a Material Adverse Change thereto.

 

3.13)        Customer List

 

The Customer List attached as Schedule 3.13 shows all hospitals to
which MacroPore has sold Field of Use Bioabsorbable Implants from January 1,
2003 until October 1, 2003.

 

3.14)        Know-How

 

a)  All know-how which is part of the Specified
Assets is adequately documented and has been kept confidential. There is no
agreement or other arrangement under which any third party can require
disclosure of any part of it. Where such know-how has been made available to a
third party this has been done under a signed confidentiality undertaking.  Access to the all such confidentiality
undertakings has been made available to Medicis through the Data Room and will
be made further available upon request.

 

b)  None of the know-how which is part of the
Specified Assets is information from another person received by MacroPore
subject to any obligation of confidence.

 

3.15)        Miscellaneous

 

a)  The MacroPore Product Information and the
MacroPore Regulatory Information are true and complete. All facts which known
to MacroPore to be relevant for purposes of assessing the Specified Assets have
been disclosed by MacroPore to Medicis.

 

b)  To MacroPore’s Knowledge, no representation
of warranty by MacroPore in this Agreement contains any untrue statement of a
material fact or fails to contain any material fact necessary in order to make
the statement therein not misleading.

 

ARTICLE
4

REPRESENTATIONS
AND WARRANTIES OF MEDICIS

 

Medicis represents and warrants to MacroPore
as follows:

 

4.1)          Organization of Medicis.  Medicis is a corporation duly organized,
validly existing and in good standing under the laws of Germany.  Medicis has all necessary power and
authority to own its properties and assets and conduct the business presently
being conducted by it.

 

4.2)          Authority.  Medicis has full power and authority to enter into this Agreement
and to perform its obligations hereunder. 
This Agreement has been duly authorized, executed, and delivered by
Medicis, and constitutes a legal, valid and binding agreement of Medicis,
enforceable against Medicis in accordance with its terms, subject to (a)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles and (b) laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.  No further proceeding on the
part of Medicis is necessary to authorize this Agreement and the transactions
contemplated hereby.  Neither the
execution and delivery of this Agreement nor compliance by Medicis with its
terms and provisions will violate (i) any provision of the articles of
incorporation or bylaws of Medicis, (ii) any contract, permit or license
of Medicis, or (iii) any law, statute, regulation, injunction, order or
decree of any government agency or authority or court to which Medicis or any
of Medicis’s assets are subject.

 

4.3)          No Finders.  No act of Medicis has given or will give rise to any claim
against any of the parties hereto for a brokerage commission, finder’s fee or
other like payment in connection with the transactions contemplated by this
Agreement

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

4.4)          Litigation and Claims  There are no actions, suits, claims, or proceedings
pending or, to Medicis’s knowledge, threatened against or by Medicis relating
to the Specified Assets or the subject matter of this Agreement, at law, in
equity or otherwise, in, before, or by, any court, arbitrator, or governmental
agency or authority that would prevent Medicis from performing its obligations
hereunder.  There are no unsatisfied
judgments or outstanding orders, injunctions, decrees, stipulations or awards
(whether rendered by a court or administrative agency or by arbitration) against
or affecting Medicis that would prevent Medicis from performing its obligations
hereunder.

 

ARTICLE
5

CERTAIN
COVENANTS AND AGREEMENTS

 

5.1)          Approvals and Consents.  MacroPore will obtain, at its cost and
expense, all approvals and Consents of all third parties necessary for the sale
and transfer of the Specified Assets as contemplated herein.

 

5.2)          Preserve Accuracy of Representations and
Warranties.  MacroPore shall refrain
from taking any action or inaction, except with the prior written consent of
Medicis, which would render any representation, warranty, covenant, or
agreement of MacroPore in this Agreement inaccurate or breached in any material
respect as of the Closing.  Between the
date hereof and the Closing, MacroPore will use all reasonable efforts to
continue to operate the Field of Use Business according to its ordinary and
usual course of business consistent with past practice.

 

5.3)          Pre-Closing Access to Information and
Records.  Subject to Section 12.13,
prior to the Closing, MacroPore shall permit Medicis and such persons as it may
designate, at Medicis’s expense, to visit and inspect any of the properties of
MacroPore relating to the Specified Assets and to examine the MacroPore Product
Information and MacroPore Regulatory Information and take copies and extracts
there from, all at reasonable times and upon reasonable notice.

 

5.4)          Further Assurances.  At such times and from time to time on and
after the Closing Date, upon reasonable request by Medicis, MacroPore will
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, and assurances that may reasonably
be required for the better conveying, transferring, assigning, delivering and
confirming ownership to, or reducing to the possession of, Medicis or its
respective successors and assigns all of the Specified Assets and to otherwise
carry out the purposes of this Agreement.

 

5.5)          Training.  MacroPore shall make available to Medicis, at MacroPore’s
facility and during regular business hours, knowledgeable MacroPore employees
for the purpose of training Medicis employees in all aspects of the
manufacturing processes of the Field of Use Business.  Such training is not to exceed 300 (three hundred) hours in
aggregate, or if so shall be billed at an hour rate that is competitive with
the then going rate for such services, but in any case, shall not exceed a rate
of $250 per hour, per employee. The training period shall not exceed one year
from the date of Closing.

 

5.6)          Back-Up
Supply.  For a period from the
closing date up to and including December 1, 2004 MacroPore shall act as a
back-up supplier to Medicis supplying its requirements (not otherwise provided
for or self-manufactured) for Field of Use Bioabsorbable Implants (“Products”)
as manufactured by MacroPore in the Field of Use Business as follows:

 

5.6.1)  
Purchase Price.  The
purchase price per unit of Product to Medicis under this Section 5.6 shall be
as follows:

 

(a) for duration of the back-up supply
period, the transfer price to be paid to MacroPore per unit (except as
specified in section (b) below) shall be MacroPore’s

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Manufacturing Cost as specified for each product on the attached  Schedule 5.6
(“Cost Statements”) 
plus a *** handling fee; and

 

(b) Medicis agrees to purchase from MacroPore
the first  ***  units of TiMesh / SurgiWrap product (“Combination Product”)
ordered by or for  *** from Medicis, and
MacroPore agrees to sell the same to Medicis at a price of ***   per Unit. This arrangement lasts for a
period of twelve months after Closing. After the first *** units are purchased
from MacroPore, any additional Combination Product requirements of Medicis
during the initial 12 months shall be supplied to on the terms specified in
Section 5.6.1 (a) above.

 

(c) the minimum acceptable order for any
specific Product shall be 100 units.

 

5.6.2) 
Purchase Order Payments. Unless otherwise specified in this
agreement, all payments to be made by Medicis pursuant to this Agreement shall
be due and payable in full within 30 days after the date of invoice by
MacroPore.  Any payments due hereunder
which are not paid on the date such payments are due shall bear interest at the
lesser of one and one-half percent (1-1/2%) per month or the maximum rate
permitted by law, calculated on the number of days such payment is
delinquent.  This Section 5.6 shall in
no way limit any other remedies available to MacroPore.

 

5.6.3) 
Purchase Orders.  Medicis
shall submit purchase orders for Products to MacroPore in writing, whether by
mail, telecopier, or otherwise.  Each
purchase order shall, at a minimum, set forth the product numbers, quantities,
delivery dates, and shipping instructions and shipping addresses for all
Products ordered.  Each purchase order
shall be subject to and governed by the terms of this Agreement.  Purchase orders shall be binding upon
MacroPore to the extent submitted at least 60 days in advance of the earliest
scheduled delivery date for such order. 
The terms and conditions of this Agreement shall so govern and supersede
any additional or contrary terms set forth in Medicis’s purchase order or any
MacroPore or Medicis acceptance, confirmation, invoice or other document. For certain
products it may be necessary to temporarily transfer certain molds or other
Specified Assets, including tooling, to MacroPore’s facility to complete
manufacturing.  Medicis agrees to
cooperate and bear the entire cost and risk of such transfer if and when such
transfers are required, subject to MacroPore’s obligation to use reasonable
care to protect and maintain such assets.

 

5.6.4) 
Modification of Orders. 
Medicis may cancel or reschedule purchase orders for Products only with
MacroPore’s prior written approval. 
Notwithstanding the foregoing, any purchase order may be cancelled by
Medicis as to any Products that are not delivered within 60 days after the
delivery date requested by Medicis pursuant to a purchase order, and any such
cancellation shall not limit or affect any contract remedies available to
Medicis with respect thereto.  Any such
cancellation by Medicis must be by written notice to MacroPore given within 10
business days after such  60th day.

 

5.6.5) 
Delivery Terms.  All
deliveries of Products shall be F.O.B. MacroPore’s facility in California.
MacroPore shall have no further responsibility for risk of damage to or loss or
delay of Products after their delivery at the aforesaid F.O.B point.  All Product deliveries shall be made by a common
carrier specified by Medicis or, in the event that no carrier shall have been
specified by Medicis on or before the date 15 days before the requested
shipment date, a reputable common carrier selected by MacroPore.

 

5.6.6) 
Product Changes. 
MacroPore shall not, without Medicis’s prior written consent, modify the
Specifications for a Product in a manner that materially affects the
performance or regulatory approval status of the Product or materially
increases Medicis’s costs or expenses.

 

5.6.7) 
Manufacture and Supply of Products.  MacroPore shall manufacture Products in accordance with the Field
of Use Business and ship such Products to Medicis in the quantities ordered by
Medicis as contemplated by this Section 5.6. 
MacroPore shall be responsible for packaging in accordance with
packaging specifications to be mutually agreed upon by Medicis and MacroPore,
and

 

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

for any necessary sterilization of Products purchased under this
Agreement in accordance with the conduct of the Field of Use Business.

 

5.6.8) 
Good Manufacturing Practices/Quality Systems Regulations.  MacroPore shall be responsible for
compliance with present and future applicable statutes, laws, ordinances and
regulations of national, federal, state and local governments now or hereafter
in effect relating to the manufacture and/or quality of Products.  Without limitation of the foregoing,
MacroPore represents and warrants to Medicis that all Products sold and
delivered to Medicis under this Section 5.6 will have been manufactured and
labeled in accordance with all applicable requirements and fully comply with
the contractual requirements and Specifications.  MacroPore shall cause Medicis’s regulatory personnel to be
provided with reasonable access from time to time to the facilities and records
of MacroPore for the purpose of confirming MacroPore’s compliance with this Section
5.6.8.

 

5.6.9) 
Inspection of Product. 
Medicis shall inspect all Products promptly upon receipt thereof, and in
the event of any shortage, damage or discrepancy in or to a shipment of
Products or in the event any of the Products fail to comply with the then
current Specifications for the Products (except for latent defects not readily
observable by Medicis), Medicis shall report the same to MacroPore within 15
days after delivery thereof to Medicis and furnish such written evidence or
other documentation as MacroPore reasonably may deem appropriate.  If the substantiating evidence delivered by
Medicis reasonably demonstrates that such shortage, damage or discrepancy or
nonconformity with Specifications existed at the time of delivery of the
Products, Medicis may return the Products to MacroPore, at MacroPore’s expense,
and, at Medicis’s request, MacroPore shall use all reasonable efforts to
deliver promptly replacement Products to Medicis in accordance with the
delivery procedures set forth herein.

 

5.6.10) 
Warranty of Product. MacroPore represents and warrants to Medicis
that all Products sold under this Section 5.6 will have been manufactured,
labeled, packaged and sold to Medicis in accordance with all applicable laws
and regulations, including (as applicable) FDA GMP requirements, European
Medical Device Directive requirements and ISO 9001 certification or successor
requirements.  Upon prior written
notice, MacroPore shall cause Medicis’s regulatory personnel to be provided
with reasonable access from time to time to the facilities and records of
MacroPore for the purpose of confirming MacroPore’s and the Product’s
compliance with the applicable laws and regulations. MacroPore warrants to that
Products shall, when delivered to Medicis, meet the Specifications and, for a
period of one (1) year be free from defects in materials and workmanship.  MacroPore will repair or replace any Product
that it reasonably determines was defective at the time of shipment to Medicis
or that does not conform to the express warranties herein; provided, however,
that MacroPore shall have no obligation under this warranty to repair or make
replacements necessitated in whole or in part by accidents; failure to maintain
in accordance with any transportation, storage, handling, or maintenance,
instructions supplied by MacroPore; damage by acts of nature, vandalism,
burglary, neglect or misuse; or other fault or negligence of Medicis or (except
for any strict liability of MacroPore) the customer or user.  Before returning any Product alleged to be
defective, Medicis shall notify MacroPore in writing of the claimed defect and
shall include the model and lot/serial number of such Product, as well as the
number and date of the invoice therefor. 
No Product shall be returned without first obtaining a returned goods
authorization from MacroPore, which authorization shall not be unreasonably
withheld.

 

Limited Warranty for Back-Up Supply Product.  THE EXPRESS WARRANTIES SET FORTH ABOVE ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY SPECIFICALLY DISCLAIMED,
INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE. 
IN NO EVENT SHALL MACROPORE’S LIABILITY FOR PRODUCT WARRANTY INCLUDE ANY
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES.

 

5.7)          Supply of Raw Materials.  Until the earlier of 12 months from the
Closing Date; or (ii) the date when a supplier reasonably acceptable to Medicis
commences delivery to Medicis of its requirements of such raw material related
to the Field of Use Business pursuant to an agreement reasonably acceptable to
Medicis, MacroPore shall, or shall cause its suppliers to, provide Medicis with
such raw material at MacroPore’s cost, including shipping and handling costs
actually incurred; provided that Medicis shall provide MacroPore

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

non-cancelable purchase orders
recognizing that lead times may be as much as four months, or, as otherwise
required by MacroPore’s supplier(s). 
MacroPore further agrees that it shall use commercially reasonable
efforts to keep in effect all supply agreements between MacroPore and its
suppliers, both before and during the period in which MacroPore is required to
supply Medicis with its raw material requirements hereunder. MacroPore provides
no warranty for the raw materials supplied hereunder, except for and only to
the extent of that specific warranty, if any, actually provided to MacroPore by
MacroPore’s supplier. Payment terms shall be those specified in section 5.6.2.

 

5.8)          Post-Closing Access to Information and
Records.  From and after the
Closing, Medicis shall permit MacroPore and such persons as it may designate,
at MacroPore’s expense, access to the MacroPore Product Information and
MacroPore Regulatory Information and to take copies and extracts there from, as
and to the extent required for MacroPore to fulfill its obligations under
Section 5.6 hereof and for any other legitimate purpose, all at reasonable
times and upon reasonable notice.

 

5.9)          Employee
Solicitation / Sales Force Transition. 
Medicis shall be allowed, but is not obligated, to solicit the Field of
Use Business employees as set forth in 3.11 (b) of the Disclosure Letter for a
period of 30 days following the Closing. MacroPore and Medicis agree that
MacroPore shall continue operate and support the U.S. SurgiWrap sales force for
up to a period of 30 days after Closing on behalf of Medicis, and Medicis
agrees to pay any and all costs and expenses of MacroPore attributable to such
activities during this period, however, only in so far as those costs do not
exceed $100,000 USD. At the conclusion of the 30 day period MacroPore shall
pass all operations of the sales force to Medicis and MacroPore is free to
transfer or terminate any employee of the sales force that Medicis has been
entitled to solicit pursuant to this Agreement. Payment terms shall be those
specified in section 5.6.2.

 

5.10)        No Solicitation of Other Offers.  Prior to the Closing and after signing the
Letter of Intent, neither MacroPore nor any of its Affiliates shall directly or
indirectly discuss or negotiate with any person (other than Medicis and its
agents), encourage the submission of inquiries, proposals or offers from any
person (other than Medicis), or otherwise provide information to any other
person, with respect to the sale of the Specified Assets or the sale,
licensing, distribution or other disposition of any of the Specified Assets.

 

5.11)        Maintenance of Specified Assets.  Until MacroPore shall have effected the
transfer of the Specified Assets, MacroPore shall maintain the condition of the
Specified Assets so that such Specified Assets continue to be suitable for the
uses for which they are used by MacroPore in the Field of Use Business, and are
in normal operating condition and free from any significant defects, ordinary
wear and tear excepted, including the usual and customary service and
maintenance of such Specified Assets.

 

5.12)        Enforcement
of Agreement(s).  If (i) the
employment or engagement of any MacroPore employee or consultant is terminated
and, following such termination, MacroPore obtains knowledge that such employee
or consultant has used or disclosed the confidential information of MacroPore
with respect to the Field of Use Business in violation of the terms of any
agreement between such employee or consultant and MacroPore, or (ii) any other
individual or entity has used or disclosed the confidential information of
MacroPore with respect to the Field of Use Business in violation of the terms
of any agreement between such individual or entity and MacroPore, then
MacroPore shall immediately notify Medicis in writing of such violation.  If Medicis determines in good faith that
such violation will result in material harm to Medicis’s manufacture and/or
sale of Field of Use Bioabsorbable Implants, then MacroPore will at Medicis’s
expense, to the extent enforceable under California law, use its reasonable
efforts to enforce any rights of MacroPore, its successors or assigns available
under such agreements to prevent further violation by such party.

 

5.13)        International
Sales. Medicis agrees to assume all rights and obligations relating to each
international distribution agreement identified in Schedule 5.13 (“International Distributor List”), as well as
any distribution agreement for the territory of Japan entered into prior to the
Closing with Medicis prior written consent. Medicis also agrees to assume all
rights and obligations of the manufacturing and distribution agreement (if any)
for Combination Product Field of Use Bioabsorbable Implants with  *** 
as attached hereto in Schedule 5.13 b (if any). In the event that (after
the Section 5.6 back-up supply period) Medicis or any successor

 

*** Portions of this page have been omitted
pursuant to a request for Confidential Treatment and filed separately with the
Commission.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

of Medicis fails to supply the
contractual requirements for the Japanese distribution partner (as contemplated
by the Business Development Agreement), and fails to cure such deficiency
within 60 days after delivery of written notice of such failure from the
Japanese distributor or MacroPore, MacroPore shall have the right and be
granted a limited exclusive license to manufacture and sell Field of Use
Bioabsorbable Implants to the Japanese Distributor in amounts sufficient to
meet the distributors requirements for the remainder of the initial Japanese
distribution agreement or until Medicis proves to the reasonable satisfaction
of the distributor that they are able to supply the product required by the
distributor as provided in the distribution agreement. During any such exercise
of the limited license Medicis shall be paid a royalty equal to 10% of the
gross revenues (after deduction of Manufacturing Costs) from such sales.

 

ARTICLE
6

CONDITIONS
TO MEDICIS’S OBLIGATIONS

 

The obligations of Medicis under this
Agreement shall, at its option, be subject to the satisfaction, on or prior to
the Closing Date, of all of the following conditions:

 

6.1)          Representations, Warranties and Covenants.  The representations and warranties of
MacroPore herein shall be true in all material respects on the Closing Date
with the same effect as though made at such time.  MacroPore shall in all material respects have performed all of its
obligations and complied with all of its covenants herein prior to or as of the
Closing Date.  MacroPore shall have
delivered to Medicis a certificate in form and substance satisfactory to
Medicis dated as of the Closing Date and executed by its chief executive
officer to all such effects.

 

6.2)          Approvals; Consents.  All permissions, releases, Consents or
approvals, governmental or otherwise, necessary on the part of MacroPore and
Medicis to consummate the transactions contemplated hereunder shall have been
obtained.

 

6.3)          Litigation Affecting Closing.  No suit, action or other proceeding shall be
pending or, to MacroPore’s knowledge, threatened by any third party or by or
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated by this Agreement, and no
governmental investigation that might result in any such suit, action or other
proceeding shall be pending or threatened.

 

6.4)          Transfer Documents.  Medicis shall have received from MacroPore
such instruments of transfer, assignment, conveyance and other instruments
sufficient to convey, transfer and assign to Medicis all right, title and
interest in the Specified Assets, free and clear of all Liens, all in form and
substance reasonably satisfactory to Medicis and its counsel, including but not
limited to the Assignment and Assumption Agreement and the Bill of Sale.

 

6.5)          Transaction Documents.  MacroPore shall have executed and delivered
the License Agreement, the Bill of Sale, and the Assignment and Assumption
Agreement.

 

ARTICLE
7

CONDITIONS
TO MACROPORE’S OBLIGATIONS

 

The obligations of MacroPore under this
Agreement shall, at its option, be subject to the satisfaction, on or prior to
the Closing Date, of all of the following conditions:

 

7.1)          Representations, Warranties and Covenants.  The representations and warranties of
Medicis herein, shall be true in all material respects on the Closing Date with
the same effect as though made at such time. 
Medicis shall in all material respects have performed all of its
obligations and complied with all of its covenants herein prior to or as of the
Closing Date.

 

7.2)          Approvals; Consents.  All permissions, releases, Consents or
approvals, governmental or otherwise, necessary on the part of MacroPore and
Medicis to consummate the transactions contemplated hereunder shall have been
obtained.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

7.3)          Litigation Affecting Closing.  No suit, action or other proceeding shall be
pending or to Medicis knowledge, threatened by any third party or by or before
any court or governmental agency in which it is sought to restrain or prohibit
or to obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement, and no
governmental investigation that might result in any such suit, action or other
proceeding shall be pending or threatened

 

7.4)          Transaction Documents.  Medicis shall have executed and delivered
the Assignment and Assumption Agreement, the License Agreement, and the letter
required by Section 2.9 hereof (allocation of purchase price), and the Business
Development Agreement.

 

ARTICLE
8

CLOSING

 

8.1)          Closing Date.  The consummation of the transactions
provided for herein (the “Closing”) shall take place at 9:00 a.m. (California
time) on or before Wednesday, January 21, 2004, (the “Closing Date”).  The Closing shall take place at such place
or in such other manner (e.g., by telecopy exchange of signature pages
with originals to follow by overnight delivery) as the parties hereto may
agree.  Each party agrees to use its
reasonable best efforts to ensure that all closing conditions to the other
party’s obligations are satisfied at or prior to the Closing.

 

8.2)          Proceedings.  All proceedings taken and all documents executed and delivered by
the parties hereto at the Closing shall be deemed to have been taken and
executed simultaneously and no proceedings shall be deemed taken nor any
documents executed or delivered until all have been taken, executed and
delivered.

 

ARTICLE
9

INDEMNIFICATION

 

9.1)          Indemnification of Medicis.  MacroPore  shall indemnify, defend and hold
harmless Medicis and each of its subsidiaries, divisions, officers, directors,
employees, and shareholders from and against and in respect of any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection
therewith and in seeking indemnification therefore, and any amounts or expenses
required to be paid or incurred in connection with any action, suit,
proceeding, claim, appeal, demand, assessment or judgment) whether or not
involving a third-party claim (collectively “Indemnifiable Losses”), directly
or indirectly resulting from, arising out of, or imposed upon or incurred by
any person to be indemnified hereunder by reason of any one or more of the
following:

 

(a)           Any breach of any
representation, warranty, covenant, obligation or agreement of MacroPore
contained in this Agreement or any agreement, certificate or document executed
and delivered by MacroPore pursuant hereto or in connection with any of the
transactions contemplated by this Agreement; or

 

(b)           Any liability or
claimed liability of MacroPore not expressly assumed by Medicis pursuant to
this Agreement or any other agreement.

 

9.2)          Indemnification of MacroPore.  Medicis shall indemnify, defend and hold
harmless MacroPore and each of its subsidiaries, divisions, officers,
directors, employees and shareholders from and against and in respect of any
and all Indemnifiable Losses resulting from, arising out of, or imposed upon or
incurred by any person to be indemnified hereunder by reason of the following:

 

(a)           Any breach of any
representation, warranty, covenant, obligation or agreement of Medicis
contained in this Agreement or any agreement, certificate or document executed
and delivered by Medicis pursuant hereto or in connection with the transactions
contemplated by this Agreement; or

 

(b)           Any liability of
MacroPore expressly assumed by or required to be borne by Medicis pursuant to
this Agreement or any other agreement; or

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

(c)           Any liability of
MacroPore for personal injury to Medicis employees while receiving training at
MacroPore’s facility pursuant to the terms of this Agreement, unless due to the
gross negligence or willful misconduct of MacroPore or its employees concerned.

 

(d)           Any liability arising
from the operation of the Business or use of the Specified Assets, accruing
after the Closing.

 

9.3)          Third-Party Claims and Other Claims.

 

(a)           If a claim by a third
party is made against any indemnified party, and if the indemnified party
intends to seek indemnity with respect thereto under this Article 9, such
indemnified party shall promptly notify the indemnifying party of such claim;
provided, however, that failure to give timely notice shall not affect the
rights of the indemnified party so long as the failure to give timely notice
does not adversely affect the indemnifying party’s ability to defend such claim
against a third party.  If the
indemnifying party acknowledges that the indemnified party is entitled to
indemnification hereunder for such claim, the indemnifying party shall be
entitled to settle or assume the defense of such claim, including the
employment of counsel reasonably satisfactory to the indemnified party.  If the indemnifying party elects to settle
or defend such claim, the indemnifying party shall notify the indemnified party
within thirty (30) days (but in no event less than twenty (20) days before any
pleading, filing or response on behalf of the indemnified party is due) of the
indemnifying party’s intent to do so. 
If the indemnifying party elects not to settle or defend such claim or
fails to notify the indemnified party of the election within thirty (30) days
(or such shorter period provided above) after receipt of the indemnified
party’s notice of a claim of indemnity hereunder, the indemnified party shall
have the right to contest, settle or compromise the claim without prejudice to
any rights to indemnification hereunder. 
Regardless of which party is controlling the settlement or defense of
any claim, (i) both the indemnified party and indemnifying party shall act in
good faith, (ii) the indemnifying party shall not thereby permit to exist any
lien, encumbrance or other adverse charge upon any asset of any indemnified party
or of its subsidiaries, (iii) the indemnifying party shall permit the
indemnified party to participate in such settlement or defense through counsel
chosen by the indemnified party, with all fees, costs and expenses of such
counsel borne by the indemnified party, unless the indemnifying party and
indemnified party have available inconsistent defenses to such third-party
claim, in which case such fees, costs and expenses shall be borne by the
indemnifying party, (iv) no entry of judgment or settlement of a claim may be
agreed to without the written consent of the indemnified party, which consent
shall not be unreasonably withheld, and (v) the indemnifying party shall
promptly reimburse the indemnified party for the Indemnified Amount as incurred
by the indemnified party pursuant to this Article 9.  So long as the indemnifying party is reasonably contesting any
such third party claim in good faith as permitted herein, the indemnified party
shall not pay or settle any such claim (or, if it does, it shall not be
indemnified for such settlement amount). 
The controlling party shall upon request deliver, or cause to be
delivered, to the other party copies of all correspondence, pleadings, motions,
briefs, appeals or other written statements relating to or submitted in
connection with the settlement or defense of any such claim, and timely notices
of any hearing or other court proceeding relating to such claim.

 

(b)           A claim for
indemnification for any matter not involving a third-party claim may be
asserted by notice to the party from whom indemnification is sought.  Such notice shall state the amount of
Indemnifiable Losses, if known, the method of computation thereof, and contain
a reference to the provisions of the Agreement in respect to which such right
of indemnification is claimed or arises. 
If the party from whom indemnification is sought disputes such claim,
then the parties shall then follow the dispute resolution mechanism set forth
in Section 12.7.

 

9.4)          Indemnification Limitations.  MacroPore shall have no liability (for
indemnification or otherwise) with respect to claims under Section 9.1 until
the total of all Indemnifiable Losses with respect to such matters, when added
to the amount of all claims of Medicis to indemnification under this Agreement
and the License Agreement exceeds Four Hundred Thousand Dollars ($400,000) (the
“Threshold Amount”) and then only for the amount by which such Indemnifiable
Losses exceed the Threshold Amount. 
Notwithstanding anything to the contrary in the Agreement, the total
amount of Indemnifiable Losses that MacroPore shall be obligated to pay to
Medicis in the aggregate shall not exceed 
50 % of the total Purchase Price actually paid. The total amount of
Indemnifiable Losses that Medicis shall be obligated to pay to MacroPore in the
aggregate shall not exceed 50% of the Purchase Price. The Threshhold Amount
under this section 9.4, does also apply for any liability of Medicis. For
purposes of these Section 9.4 limitations, contractual obligations of Medicis
to pay

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

specific or calculable amounts
of money to MacroPore shall not be so limited to enable Medicis to avoid any
purchase payment or product payment obligations to MacroPore.

 

9.5)          Cooperation as to Indemnified Liability.  Each party hereto shall cooperate fully with
the other parties with respect to access to books, records, or other
documentation within such party’s control, if deemed reasonably necessary or
appropriate by any party in the defense of any claim that may give rise to
indemnification hereunder.

 

9.6)          Tax Treatment.  The parties shall report any indemnification
payment made pursuant to this Article 9 as a purchase price adjustment unless
otherwise required by law.

 

ARTICLE
10

TERMINATION

 

10.1)        Termination Prior to Closing.  Notwithstanding any contrary provisions of
this Agreement, the respective obligations of the parties hereto to consummate
the Closing may be terminated and abandoned at any time at or before the
Closing only as follows:

 

(a)           By and at the option of
Medicis if the Closing shall not have occurred by January 21, 2004; provided
that Medicis shall not have breached in any material respect its obligations
under this Agreement in any manner that shall have been the proximate cause of,
or resulted in, the failure to consummate the Closing.

 

(b)           By and at the option of
MacroPore if the Closing shall not have occurred by January 21, 2004; provided
that MacroPore shall not have breached in any material respect its obligations
under this Agreement in any manner that shall have been the proximate cause of,
or resulted in, the failure to consummate the Closing.

 

(c)           At any time, without
liability of any party to the others, upon the mutual written consent of
MacroPore and Medicis.

 

10.2)        Medicis Termination.  If at any time at or before the Closing
Date:

 

(a)           MacroPore fails to
comply with all or any of its obligations contained in this Agreement whether
to be performed on or before the Closing Date; or

 

(b)           Medicis becomes aware
of any fact or event (not being effect or event provided for by the Agreement)
which in its reasonable opinion:

 

(i)            is a material breach
of or in any way materially inconsistent with any of the representations or
warranties contained in Section 3 or would be a material breach of or in any
way materially inconsistent with any of the representations or warranties
contained in Section 3 when repeated at the Closing Date; or

 

(ii)           is evidence that any of
the representations or warranties is misleading in any respect material to
Medicis or that any obligation of MacroPore has not been or will not be
complied with within the period required by this Agreement; or

 

(iii)          would affect the
willingness of a prudent purchaser for value of the Field of Use Business to
complete its purchase or the price which such purchaser would be prepared to
pay for the Field of Use Business or the terms of such purchase; or

 

(iv)          would be likely to
prevent or hinder Medicis from having effective use and possession of or from
disposing of any of the Specified Assets or from carrying on the Field of Use
Business following the Closing Date in substantially the same manner as it is
now carried on; or

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

(c)           any of the Specified
Assets are effected by loss or damage on account of fire, flat, explosion,
death, strike or any other course (whether similar or not) which in the
reasonable opinion of Medicis materially and adversely affects the value of the
Specified Assets or the Field of Use Business or the manner in which it can
continue to be carried on; or

 

(d)           circumstances occur
with respect to the Field of Use Business which would have a material adverse
effect on the Field of Use Business and/or if, between the date of signing this
Agreement and the Closing Date, there is any material adverse change, either
individually or in the aggregate, in the assets, financial situation or
operational results of the Field of Use Business.

 

then Medicis may elect to withdraw from this Agreement without
prejudice to its remedies against MacroPore.

 

10.3) No Waiver.  Nothing contained in this Article 10 shall
be construed as a release or waiver by any party hereto of any of its rights
against any other party arising out of any breach of this Agreement by the
other party.

 

ARTICLE
11

COMPETITION
RESTRAINT

 

11.1) 
For a period of [2] years after the Closing Date MacroPore shall not
(except in connection with its Development and Supply arrangements with
Medtronic for the Spinal Field, and products of MacroPore for use in the Field
of Regenerative Medicine):

 

(a)           develop, manufacture or distribute
Bioabsorbable Film Implants (hereinafter referred to as “Competitive Products”)
except as provided for in this Agreement;

 

(b)           establish an enterprise which develops,
manufactures or distributes Competitive Products, acquire such enterprise,
participate – in any manner whatsoever – in such enterprise and support such
enterprise in any other manner;

 

(c)           compete directly or indirectly in any other
manner in the business of developing, manufacturing or distributing Competitive
Products or support such competition by third parties, e.g. by contacting
customers of the Field of Use Business.

 

11.2         This competition restraint shall not apply to
the acquisition of shares, which are quoted on the stock exchange in
competitive companies, for the purpose of a mere capital investment with a
maximum participation of 10 %.

 

11.3         The competition restrained pursuant to section
11.1 shall apply to all countries in which MacroPore presently conducts and
solicits all or part of its Field of Use Business or has conducted or solicited
any Field of Use Business during the last five years prior to the Closing Date,
including, but not limited to the countries which are listed in Schedule 5.13.

 

ARTICLE
12

MISCELLANEOUS

 

12.1)        Cooperation. The Parties shall, also
after the Closing Date, execute such documents and do such other things and
acts as may still be necessary or desirable to perform and fully carry out the
terms and purposes of this Agreement.

 

12.2  Complete
Agreement.  The Schedules and
Exhibits to this Agreement shall be construed as an integral part of this
Agreement to the same extent as if they had been set forth verbatim
herein.  This Agreement and the
Schedules and Exhibits hereto constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements whether written or oral relating hereto.

 

12.3)        Survival of Representations and Warranties.  The representations and warranties contained
in this Agreement shall survive and remain in full force and effect for one
year after the Closing Date.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

12.4)        Waiver, Discharge, Amendment, Etc.  The failure of any party hereto to enforce
at any time any of the provisions of this Agreement, shall in no way be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision.  No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach. 
Any amendment to this Agreement shall be in writing and signed by the
parties hereto.

 

12.5)        Notices.  All notices hereunder shall be deemed given if in writing and
delivered personally or sent by telecopy (with confirmation of transmission) or
certified mail (return receipt requested) or reputable courier service to the
parties at the following addresses (or at such other addresses as shall be
specified by like notice):

 

if to Medicis, to:

 

Managing Director

Medicis Ventures Management GmbH

Poschingerstr. 9

D-81679 München, Germany

Fax

 

and if to MacroPore, to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

Attention: Christopher J. Calhoun

FAX (858) 458-0995

 

with separate copies thereof addressed to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

Attention: In-House Counsel

FAX (858) 458-0994

 

Any party may change the above specified
recipient and/or mailing address by notice to all other parties given in the
manner herein prescribed.  All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally, by telecopy or by reputable courier service) or on the
date that is three days after the date shown on the return receipt (if
delivered by mail).

 

12.6)        Expenses.  Except as otherwise expressly provided herein, Medicis and
MacroPore shall each pay their own expenses (including, but not limited to, all
compensation and expenses of counsel, financial advisors, consultants,
actuaries and independent accountants) incident to this Agreement and the
preparation for, and consummation of, the transactions provided for herein.

 

12.7)        Governing
Law and Arbitration.  This Agreement
shall be governed by and interpreted in accordance with the laws of the State
of California, including all matters of construction, validity, performance and
enforcement, without giving effect to principles of conflict of laws and
without application of the United Nations Convention for the International Sale
of Goods.  Any dispute arising out of or
relating to this Agreement (including the formation, interpretation or alleged
breach thereof) shall be settled by final and binding alternative dispute resolution
conducted under the auspices of, and in accordance with, the Commercial
Arbitration Rules of the American Arbitration Association, in San Francisco,
California.  The results of such
arbitration proceedings shall be binding upon the parties hereto, and judgment
may be entered upon the arbitration award in any court having jurisdiction
thereof.  Notwithstanding the foregoing,
either party may seek interim injunctive relief from any court of competent
jurisdiction.  Any legal actions or
proceedings relating to the Agreement or the enforcement of any provision of
the Agreement shall be brought or otherwise commenced

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

in California (and if in court,
in any state or federal court located in the California).  Each of the parties hereto expressly and
irrevocably consents and submits to the jurisdiction of each state and federal
court located in California in connection with any such legal proceedings.

 

12.8)        Public Announcement.  In the event any party proposes to issue any
press release or public announcement concerning any provisions of this
Agreement or the transactions contemplated hereby, such party shall so advise
the other parties hereto, and the parties shall thereafter use their best
efforts to cause a mutually agreeable release or announcement to be issued.  Neither party will publicly disclose or
divulge any provisions of this Agreement or the transactions contemplated
hereby without the other party’s written consent, except as may be required by
applicable law or stock exchange regulation, and except for communications to
such party’s employees or customers or investors or prospective investors
(subject to appropriate confidentiality obligations); provided that, prior to
disclosure of any provision of this Agreement that either party considers
particularly sensitive or confidential to any governmental agency or stock
exchange, the parties shall cooperate to seek confidential treatment or other
applicable limitations on the public availability of such information.

 

12.9)        Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors or assigns of the
parties hereto; provided that the rights and obligations of MacroPore herein
may not be assigned except that all such rights and obligations of MacroPore
may be assigned to an entity that will succeed to substantially all of the
polylactic-acid-related business of MacroPore, and the rights of Medicis may be
assigned only to an Affiliate of Medicis or to such business organization that
shall succeed to substantially all of the Field of Use Business of Medicis or
of such subsidiary to which this Agreement relates.

 

12.10)      Titles and Headings; Construction.  The titles and headings to Sections herein
and Exhibits and Schedules hereto are inserted for the convenience of reference
only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.  This
Agreement shall be construed without regard to any presumption or other rule
requiring construction hereof against the party causing this Agreement to be
drafted.  Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties hereto or their respective permitted successors or assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

 

12.11)      Severability.  If any provision of this Agreement is held invalid, unenforceable
or void by a court of competent jurisdiction, the remaining provisions shall
nonetheless be enforceable according to their terms.  In such case, the parties agree to negotiate in good faith to
create an enforceable contractual provision to achieve the purpose of the
invalid provision.  Further, if any
provision is held to be overbroad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable according to applicable law and shall be enforced as amended.

 

12.12)      Counterparts.  This Agreement may be executed in any number of counterparts,
each of which shall be deemed as original and all of which together shall
constitute one instrument.

 

12.13) 
Confidentiality.  Each
party will (i) keep confidential, and not disclose to others, all Confidential
Information of the other party, and (ii) not use any of the other party’s
Confidential Information for its own direct or indirect benefit, or the direct
or indirect benefit of any third party, except that a party may use the other
party’s Confidential Information to the extent necessary to perform its duties
and obligations, or to enforce such party’s rights, under this Agreement, or to
exercise such party’s rights under the License Agreement.  The foregoing shall not prohibit
disclosures: (x) made to the receiving party’s sub-distributors, employees or
agents who have a “need to know” the other party’s Confidential Information to
the extent such disclosure is necessary to perform such party’s duties and
obligations, or to enforce such party’s rights, under this Agreement or the
License Agreement, provided that such sub-distributors, employees or agents
agree in writing or are otherwise actually compelled to comply with the
obligations of this Section 12.13, and the receiving party remains directly
responsible to the disclosing party for their compliance; or (y) compelled to
be made by any requirement of law or pursuant to any legal, regulatory or
investigative proceeding before any court, or governmental or regulatory
authority, agency or commission so long as the party so compelled to make
disclosure of Confidential Information of the other party provides prior
written notice to such other party so that the other party may seek a
protective order or other remedy to protect the confidentiality of the
Confidential Information and/or waive the compelled party’s compliance with
this Section 12.13, provided that all such information so disclosed (other than
in a way which makes it generally available to the public) shall remain
Confidential Information for all

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

other purposes.  If such protective order, other remedy or
waiver is not obtained by the time the compelled party is required to comply,
the compelled party may furnish only that portion of the Confidential
Information of the other party that it is legally compelled, in the opinion of
counsel, to disclose and shall request, at the other party’s expense, that such
Confidential Information be accorded confidential treatment (if such procedure
is available), including redaction of any payment terms specified herein.  Each party further agrees to take
appropriate measures to prevent any such prohibited disclosure of Confidential
Information by its present and future employees, officers, agents,
subsidiaries, or consultants.  This
Section shall survive indefinitely with respect to manufacturing information
and, with respect to all other Confidential Information, for a period of three
years from and after the Closing or any termination of this Agreement.

 

(Remainder
of page intentionally blank; signatures follow on next page)

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS
WHEREOF, each of the parties has caused this Asset Purchase Agreement to be
executed in the manner appropriate for each, as of the date first above
written.

 

	
   

  	
  MEDICIS Ventures Management GmbH

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Kai Deusch .

  
	
   

  	
   

  	
  Its

  	
  Managing Director .

  
	
   

  	
   

  	
   

  
	
   

  	
  MACROPORE BIOSURGERY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Christopher J. Calhoun

  
	
   

  	
   

  	
  Its

  	
  Chief
  Executive Officer

  
					

 

SCHEDULES:

 

	
  2.2

  	
  –

  	
  Open Orders

  
	
  3.13

  	
  –

  	
  Customer List

  
	
  5.6

  	
  –

  	
  Cost Statements

  
	
  5.13

  	
  –

  	
  International Distributor List

  

 

EXHIBITS:

 

	
  A

  	
  –

  	
  License Agreement

  
	
  B

  	
  –

  	
  Letter of Intent

  
	
  C

  	
  –

  	
  Associate Investors List

  
	
  D

  	
  –

  	
  Assignment and Assumption Agreement

  
	
  E

  	
  –

  	
  Bill of Sale

  
	
  F

  	
  –

  	
  Letter of Assets

  
	
  G

  	
  –

  	
  Business Development Agreement

  
	
  H

  	
  –

  	
  Excluded Assets

  
	
  I

  	
  –

  	
  Inventory

  
	
  J

  	
  –

  	
  Express Liabilities

  

 

pdf

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT A

LICENSE
AGREEMENT

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

LICENSE
AGREEMENT

 

THIS LICENSE AGREEMENT (the “Agreement”) is made and entered into
as of December 13, 2003, (the “Effective
Date”) between Medicis Ventures
Management GmbH, (“Medicis”),
a German corporation, and MacroPore
Biosurgery, Inc., a Delaware corporation (“MacroPore”).

 

WITNESSETH:

 

WHEREAS, MacroPore and
Medicis have entered into an Asset Purchase Agreement dated December 13, 2003 pursuant
to which MacroPore is selling Medicis certain assets (the “Purchase
Agreement”); and

 

WHEREAS, as part of the
transaction between the parties relating to the Purchase Agreement, Medicis
will license to MacroPore certain rights to intellectual property in accordance
with the terms of the Agreement and the Purchase Agreement; and

 

WHEREAS, the execution and delivery of this Agreement is a condition
precedent to the consummation of the Purchase Agreement.

 

AGREEMENTS:

 

NOW THEREFORE, in consideration of the
representations, warranties, covenants and agreements contained herein, and in
the Purchase Agreement and for other valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties mutually agree as
follows:

 

ARTICLE
1

DEFINITIONS

 

1.1           Specific Definitions.  As used in this Agreement, the following
definitions and terms shall have the designated meanings:

 

“Affiliate” has
the meaning set forth in the Purchase Agreement.

 

“Agreement” means
this Agreement and all Exhibits hereto.

 

“Bioabsorbable Film Implants” has the meaning set forth in the
Purchase Agreement..

 

“Confidential Information” means Intellectual Property (as
defined below) disclosed (whether before or during the term of this Agreement)
by or on behalf of one of the parties (the “disclosing party”) to the
other party (the “receiving party”), generated under this Agreement, or
otherwise learned by the receiving party from the disclosing party, excluding
information which:

 

(a)           was already in the possession of the receiving
party before its original receipt from the disclosing party (provided that the
receiving party is able to provide the disclosing party with written proof
thereof and, if received from a third party, that such information was acquired
without any party’s breach of a confidentiality or non-disclosure obligation to
the disclosing party related to such information);

 

(b)           is
or becomes part of the public domain by reason of acts not attributable to the
receiving party;

 

(c)           shall
have been disclosed to the receiving party from a source other than the
disclosing party which source has rightfully obtained such information and has
no direct or indirect obligation of non-disclosure or confidentiality to the
disclosing party with respect thereto; or

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

(d)           has been independently developed by or for
the receiving party without breach of this Agreement or use of any Confidential
Information of the other party (provided that the receiving party is able to
provide the disclosing party with written proof thereof).

 

Notwithstanding the foregoing exceptions, all information learned by
Medicis personnel during the time they were MacroPore personnel shall be
Confidential Information of MacroPore and shall continue to be governed by their
agreements with MacroPore.

 

“Expiration” or “Expired” means, with respect to a
particular patent, the patent’s expiration, abandonment, cancellation,
disclaimer, award to another party other than Medicis or MacroPore in an
interference proceeding, or declaration of invalidity or unenforceability by a
court or other authority of competent jurisdiction (including final rejection
in a re-examination or re-issue proceeding).

 

“Field of Regenerative Medicine”
has the meaning set forth in the Purchase Agreement.

 

 “Intellectual Property” means U.S. and foreign patents and
patent applications, trademarks, service marks and registrations thereof and
applications therefor, copyrights and copyright registrations and applications,
mask works and registrations thereof, know-how, trade secrets, inventions,
discoveries, works of authorship, ideas, technology, data, information,
methods, processes, drawings, designs, licenses, computer programs and
software, and technical information including but not limited to information
embodied in material specifications, processing instructions, equipment
specifications, product specifications, confidential data, electronic files,
research notebooks, invention disclosures, research and development reports and
the like related thereto, and all amendments, modifications, and improvements
to any of the foregoing.

 

“Invention” means
any invention, discovery, works of authorship, know-how, trade secret, data,
information, technology, process or concept, whether or not patented or patentable,
and whether or not memorialized in writing.

 

“Knowledge” shall have the meaning set forth in the Purchase
Agreement.

 

“Licensed Product(s)” means Bioabsorbable Film Implants covered
by MacroPore Intellectual Property (as sold to Medicis pursuant the Purchase
Agreement) and any related products.

 

“MacroPore Intellectual Property” means all Intellectual
Property sold to Medicis pursuant to the Purchase Agreement, including, without
limitation, the Patents and the Trademarks.

 

“Medicis” means Medicis Ventures Management GmbH and its
Associate Investors and its and their Affiliates and successors.

 

“Patents” means: (a) the patents and patent applications,
together with any patents that may issue based thereon, set forth on Exhibit A; (b) all continuation, divisional,
re-issue, re-examination and substitution applications that may be filed by or
for the benefit of Medicis based on the foregoing referenced patents or patent
application, together with any patents that may issue based thereon; and (c)
all foreign applications that may be filed by or for the benefit of Medicis
based on the foregoing referenced patents and patent applications, together
with all patents which may issue based thereon.

 

“Specified Assets” has the meaning set forth in the Purchase Agreement.

 

“Spinal Field” means all applications (including but not
limited to: anti-adhesion, anti-scarring, minimizing the attachment of
soft tissues, or soft or hard tissue
support) related to the anatomy of the spine including, but not limited to,
applications in the following: spinal fixation, stabilization and/or fusion,
spinal cord coverings, exiting nerve root coverings, cauda equina coverings,
lamina coverings and vertebral column-cervical, thoracic, lumbar and sacral.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

“Trademarks” means any trademark and trademark applications,
together with any registrations that may issue based thereon, set forth on Exhibit B.

 

1.2           Other Terms.  Other terms may be defined elsewhere in the
text of this Agreement and shall have the meaning indicated throughout this
Agreement.

 

1.3           Definitional Provisions.

 

The words “hereof,” “herein,” and “hereunder” and
words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provisions of this Agreement.

 

The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.

 

References to an “Exhibit” are, unless otherwise
specified, to one of the Exhibits attached to or referenced in this Agreement,
and references to an “Article” or a “Section” are, unless otherwise specified,
to one of the Articles or Sections of this Agreement.

 

The term “person” includes any individual,
partnership, joint venture, corporation, limited liability company, trust,
unincorporated organization or government or any department or agency thereof.

 

ARTICLE
2

LICENSE
TO MACROPORE

 

2.1           Grant of License for the Spinal Field.
Subject to the terms and conditions of this Agreement, Medicis hereby grants to
MacroPore and its Affiliates a worldwide, sublicensable (subject to the
limitations set forth in Section 2.3 and 2.4 below), exclusive, royalty-free
license to the MacroPore Intellectual Property to make, have made, use, import,
offer to sell, sell and distribute Licensed Products in the Spinal Field and
otherwise to commercialize and exploit the MacroPore Intellectual Property in
the Spinal Field for a term equal to and determined by the length of the Spinal
Development and Supply Agreement (including any extensions thereof) between
MacroPore (including any of its affiliates, subsidiaries and assigns) and
Medtronic, Inc. (including any of its affiliates, subsidiaries and assigns).

 

2.2           Grant of License for the Field of
Regenerative Medicine. Subject to the terms and conditions of this
Agreement, Medicis hereby grants to MacroPore and its Affiliates a perpetual,
worldwide, sublicensable (subject to the limitations set forth in Section 2.3
below), non-exclusive, royalty-free license to the MacroPore Intellectual
Property to make, have made, use, import, offer to sell, sell and distribute
Licensed Products in the Field of Regenerative Medicine and otherwise to
commercialize and exploit the MacroPore Intellectual Property in the Field of
Regenerative Medicine and to perform MacroPore’s back-up supply obligations as
specified in the Purchase Agreement.

 

2.3           Restriction on Sublicense.  MacroPore’s right to sublicense its rights
hereunder shall be limited as follows: 
(a) MacroPore shall be responsible for and indemnify Medicis for actions
or omissions of sublicensees and any breach by the sublicensee (whether by
action, omission or otherwise) shall be deemed a breach by MacroPore; (b) all
sublicense agreements shall contain terms at least as protective of the
MacroPore Intellectual Property as the terms in this Agreement; and (c) all
sublicense agreements shall expressly state that Medicis retains all right,
title, and interest in and to all MacroPore Intellectual Property, other than
those rights herein licensed to MacroPore and its Affiliates, and there shall
be no license or rights granted by implication.

 

2.4           Efforts to Terminate License for the
Spinal Field.  No more than one year
prior and no less than six months prior to the termination of the current term
of the MacroPore-Medtronic Development & Supply Agreement (On or about July
7, 2011), MacroPore shall give notice to Medtronic that the rights to the
Spinal Field are to be terminated at

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

the end of the term in the
event that Medtronic is not selling the Hydrosorb Bioabsorbable Film Implants
for use in the spine.

 

ARTICLE
3

ADDITIONAL
OBLIGATIONS

 

3.1           Maintain Intellectual Property in Force.   Medicis agrees to maintain in full force
and effect (including, without limitation, preventing disclosures which would
defeat trade secret status) all MacroPore Intellectual Property covering
applications within the Spinal Field and/or the Field of Regenerative Medicine,
or if Medicis wishes to abandon any such MacroPore Intellectual Property, it
shall notify MacroPore in writing at least ninety days before any abandonment
of such MacroPore Intellectual Property and MacroPore shall have the right, but
not the obligation, to maintain such MacroPore Intellectual Property in full
force and effect at its own expense. In the event that MacroPore elects to
assume the prosecution or maintenance of any MacroPore Intellectual Property
abandoned by Medicis, Medicis agrees to assign all right, title and interest to
the abandoned property to MacroPore. 
Medicis also agrees that it shall not transfer any of its rights, title
or interest in the MacroPore Intellectual Property to any third party without
first notifying such third party of MacroPore’s rights under this Agreement and
obtaining such third party’s express agreement to assume Medicis’s obligations
under this Agreement.

 

ARTICLE
4

INTELLECTUAL
PROPERTY

 

4.1           Confidentiality.  Each party will, for the term of this
Agreement and thereafter, (i) keep confidential and not disclose to others, all
Confidential Information of the other party, and (ii) not use any of the other
party’s Confidential Information for its own direct or indirect benefit, or the
direct or indirect benefit of any third party, except that a party may use the
other party’s Confidential Information to the extent necessary to perform its
duties and obligations, or to enforce such party’s rights, under this
Agreement; and if the Confidential Information is part of the MacroPore
Intellectual Property, MacroPore and its Affiliates may use it within the scope
of the licenses granted in Sections 2.1 and 2.2 herein. The foregoing shall not
prohibit disclosures: (x) made to the receiving party’s distributors, employees
or agents who have a “need to know” the other party’s Confidential Information
to the extent such disclosure is necessary to perform such party’s duties and
obligations, or to enforce such party’s rights, under this Agreement, provided
that such distributors, employees or agents agree in writing or are otherwise
actually compelled to comply with the obligations of this Section 4.1, and the
receiving party remains directly responsible to the disclosing party for their
compliance; or (y) compelled to be made by any requirement of law or pursuant
to any legal, regulatory or investigative proceeding before any court, or
governmental or regulatory authority, agency or commission so long as the party
so compelled to make disclosure of Confidential Information of the other party
provides prior written notice to such other party so that the other party may
seek a protective order or other remedy to protect the confidentiality of the
Confidential Information and/or waive the compelled party’s compliance with
this Section 4.1, provided that all such information so disclosed (other than
in a way which makes it generally available to the public) shall remain
Confidential Information for all other purposes.  If such protective order, other remedy or waiver is not obtained
by the time the compelled party is required to comply, the compelled party may
furnish only that portion of the Confidential Information of the other party
that it is legally compelled, in the opinion of counsel, to disclose and shall
request, at the other party’s expense, that such Confidential Information be
accorded confidential treatment (if such procedure is available), including
redaction of any payment terms specified. 
Each party further agrees to take appropriate measures to prevent any
such prohibited disclosure of Confidential Information by its present and
future employees, officers, agents, subsidiaries, or consultants.

 

4.2           Prosecution of Infringement of MacroPore
Intellectual Property.  Each of
MacroPore and Medicis shall promptly notify the other if it knows or has reason
to believe that rights to the MacroPore Intellectual Property in the Spinal
Field or Field of Regenerative Medicine are being infringed or misappropriated
by a third party or that such infringement or misappropriation is
threatened.  MacroPore shall have the
first right to prosecute such alleged infringement or misappropriation for
MacroPore’s own account.  In the event
MacroPore elects to prosecute such alleged infringement or misappropriation for
its own account, MacroPore shall be solely responsible for payment of all of its
own costs of prosecution and of negotiating settlement, and shall retain all
proceeds from such prosecution.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

MacroPore’s prosecution of such
infringement shall be by counsel reasonably acceptable to Medicis.  MacroPore shall have the right to join
Medicis as a party plaintiff to any such proceeding if MacroPore believes it is
necessary to successfully prosecute such infringement or misappropriation.
Medicis shall cooperate in connection with the initiation and prosecution by
MacroPore of such suit.  Notwithstanding
the foregoing, Medicis shall have the right to initiate or join in any
prosecution concerning the MacroPore Intellectual Property.  In the event Medicis initiates or joins as a
plaintiff in any such action involving the MacroPore Intellectual Property,
MacroPore and Medicis shall attempt to agree on a sharing ratio which shall
apply to the expenses of prosecution and to the proceeds of prosecution.  If MacroPore and Medicis cannot agree, the
ratio shall be that of the gross revenues for each party (for the preceding 12
months) attributable to the use of the MacroPore Intellectual Property to the
extent that such gross revenues are consistent with the terms of this
Agreement.  In any case where MacroPore
exercises its first right to prosecute, MacroPore shall control the handling of
the case; provided, that if the alleged infringer challenges the validity of a
claim of a Patent which has primary applicability outside the Spinal Field or
the Field of Regenerative Medicine, Medicis shall control the handling of that
portion of the case.  If MacroPore
elects not to prosecute any infringement involving the MacroPore Intellectual
Property, then Medicis shall be entitled to prosecute it without any
participation by MacroPore and to keep all proceeds from such prosecution.

 

ARTICLE
5

REPRESENTATIONS
AND WARRANTIES

 

5.1           Representations of Medicis.  Medicis represents, warrants and covenants
to MacroPore that:

 

(a)           Medicis is a corporation duly organized,
validly existing, and in good standing under the laws of Germany and has full
corporate power to conduct the business in which it is presently engaged and to
enter into and perform its obligations under this Agreement.

 

(b)           Medicis has taken all necessary corporate
action under the laws of the place of its incorporation and its governing
documents to authorize the execution and consummation of this Agreement and
this Agreement constitutes the valid and legally binding agreement of Medicis
enforceable against Medicis in accordance with the terms hereof, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles.

 

(c)           Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will
violate any provision of the governing documents of Medicis or any law, rule,
regulation, writ, judgment, injunction, decree, determination, award or other
order of any court or governmental agency or instrumentality, domestic or
foreign, or conflict with or result in any breach of any of the terms of or
constitute a default under or result in termination of or the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature pursuant to the terms of any contract
or agreement to which Medicis is a party or by which Medicis or any of its
assets is bound.

 

5.2           Representations of MacroPore.  MacroPore represents, warrants and covenants
to Medicis that:

 

(a)           MacroPore is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has full corporate power to conduct the business in which it is presently
engaged and to enter into and perform its obligations under this Agreement.

 

(b)           MacroPore has taken all necessary corporate
action under the laws of the state of its incorporation and its certificate of
incorporation and bylaws to authorize the execution and consummation of this
Agreement and this Agreement constitutes the valid and legally binding
agreement of MacroPore enforceable against MacroPore in accordance with the
terms hereof, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors’ rights and to general equity principles.

 

(c)           Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated herein will
violate any provision of the certificate and bylaws of MacroPore or any law,
rule, regulation,

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

writ, judgment, injunction,
decree, determination, award or other order of any court or governmental agency
or instrumentality, domestic or foreign, or conflict with or result in any
breach of any of the terms of or constitute a default under or result in
termination of or the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance of any nature
pursuant to the terms of any contract or agreement to which MacroPore is a
party or by which MacroPore or any of its assets is bound.

 

5.3           Warranties.           Unless otherwise expressly provided herein, the MacroPore Intellectual
Property is provided “as is” without any warranty whatsoever. Medicis disclaims
all warranties, conditions, representations, indemnities and guarantees,
whether express, implied or statutory, as to any matter whatsoever, including
all implied warranties of merchantability, fitness for a particular purpose and
non-infringement of third party rights. Especially, this applies to any
infringement, alleged or otherwise, of patent, utility model, design, trade
mark, copyright or any other Intellectual Property Rights in connection with
the MacroPore Intellectual Property. Medicis disclaims any warranty or
representation to any person other than MacroPore with respect to the MacroPore
Intellectual Property.

 

ARTICLE
6

INDEMNIFICATION

 

6.1           Indemnification by Medicis.  Medicis shall indemnify, defend and hold
harmless MacroPore and each of its subsidiaries, officers, directors,
shareholders, employees, agents and affiliates (collectively, all such
indemnitees are referred to in this Section as “MacroPore”) against and in
respect of any and all claims, demands, losses, obligations, liabilities,
damages, penalties, deficiencies, actions, settlements, judgments, costs and
expenses which MacroPore may incur or suffer or with which it may be faced
(including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor), (referred to as “Costs”) arising out of or based
upon the breach by Medicis of any of its representations, warranties, covenants
or agreements contained or incorporated in this Agreement or any agreement,
certificate or document executed and delivered to MacroPore by Medicis in
connection with the transactions hereunder. 
An amount for which MacroPore is entitled to indemnification pursuant
hereto is referred to as an “Indemnified Amount.”

 

6.2           Indemnification by MacroPore.  MacroPore shall indemnify, defend and hold
harmless Medicis and each of its subsidiaries, officers, directors,
shareholders, employees, agents and affiliates (collectively, all such
indemnitees are referred to in this Section as “Medicis”) against and in
respect of any and all claims, demands, losses, obligations, liabilities,
damages, penalties, deficiencies, actions, settlements, judgments, costs and
expenses which Medicis may incur or suffer or with which it may be faced
(including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor), (referred to as “Costs”) arising out of or based
upon the breach by MacroPore of any of its representations, warranties,
covenants or agreements contained or incorporated in this Agreement.  An amount for which Medicis is entitled to
indemnification pursuant hereto is referred to as an “Indemnified Amount.”

 

6.3           Third Party Claims.  If a claim by a third party is made against
any indemnified party, and if the indemnified party intends to seek indemnity
with respect thereto under this Article 6, such indemnified party shall
promptly notify the indemnifying party of such claim; provided, however, that
failure to give timely notice shall not affect the rights of the indemnified
party so long as the failure to give timely notice does not adversely affect
the indemnifying party’s ability to defend such claim against a third
party.  If the indemnifying party
acknowledges that the indemnified party is entitled to indemnification
hereunder for such claim, the indemnifying party shall be entitled to settle or
assume the defense of such claim, including the employment of counsel
reasonably satisfactory to the indemnified party.  If the indemnifying party elects to settle or defend such claim, the
indemnifying party shall notify the indemnified party within thirty (30) days
(but in no event less than twenty (20) days before any pleading, filing or
response on behalf of the indemnified party is due) of the indemnifying party’s
intent to do so.  If the indemnifying
party elects not to settle or defend such claim or fails to notify the
indemnified party of the election within thirty (30) days (or such shorter
period provided above) after receipt of the indemnified party’s notice of a
claim of indemnity hereunder, the indemnified party shall have the right to
contest, settle or compromise the claim without prejudice to any rights to
indemnification hereunder.  Regardless
of which party is controlling the settlement of defense of any claim, (a) both
the indemnified party and indemnifying party shall act in good faith, (b) the
indemnifying party shall not thereby permit to exist any lien, encumbrance or
other adverse charge upon any asset of any indemnified party or of its
subsidiaries, (c) the

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

indemnifying party shall permit
the indemnified party to participate in such settlement or defense through
counsel chosen by the indemnified party, with all fees, costs and expenses of
such counsel borne by the indemnified party, unless the indemnifying party and
indemnified party have available inconsistent defenses to such third-party
claim, in which case such fees, costs and expenses shall be borne by the
indemnifying party, (d) no entry of judgment or settlement of a claim may be
agreed to without the written consent of the indemnified party, which consent
shall not be unreasonably withheld, and (e) the indemnifying party shall
promptly reimburse the indemnified party for the Indemnified Amount as incurred
by the indemnified party pursuant to this Article 6.  So long as the indemnifying party is reasonably contesting any
such third party claim in good faith and the foregoing clause (b) is being
complied with, the indemnified party shall not pay or settle any such claim
(or, if it does, it shall not be indemnified for such settlement amount).  The controlling party shall upon request
deliver, or cause to be delivered, to the other party copies of all
correspondence, pleadings, motions, briefs, appeals or other written statements
relating to or submitted in connection with the settlement or defense of any
such claim, and timely notices of any hearing or other court proceeding
relating to such claim.

 

6.4           Non-Third Party Claims.  A claim for indemnification for any matter
not involving a third-party claim may be asserted by notice to the party from
whom indemnification is sought.  Such
notice shall state the amount of the Indemnified Amount, if known, the method
of computation thereof, and contain a reference to the provisions of this
Agreement in respect to which such right of indemnification is claimed or
arises.  If the party from whom
indemnification is sought disputes such claim then the parties shall then
follow the dispute resolution mechanism set forth in Section 9.15 of this
Agreement.

 

6.5)          Indemnification Limitations.               MacroPore shall
have no liability (for indemnification or otherwise) with respect to claims
under Article 6 until the total of all Indemnifiable Losses with respect to
such matters, when added to the amount of all claims of Medicis to
indemnification under the Purchase Agreement exceeds Five Hundred Thousand
Dollars ($500,000) (the “Threshold Amount”) and then only for the amount by
which such Indemnifiable Losses exceed the Threshold Amount.  Notwithstanding anything to the contrary in
the Agreement, the total amount of Indemnifiable Losses that MacroPore shall be
obligated to pay to Medicis in the aggregate shall not exceed the lesser of
fifty percent (50%) of the total Purchase Price (as defined in the Purchase
Agreement) or the portion of the Purchase Price actually paid to and received
by MacroPore pursuant to the terms of the Purchase Agreement (i.e., if the
total amount of Indemnified Amounts exceeds the portion of the Purchase Price
actually paid to MacroPore prior to such time but is less than 50% of the total
Purchase Price, then Medicis shall only offset such amounts against future
installments of the Purchase Price up to the maximum of 50% of the total
Purchase Price).

 

6.6)          Cooperation as to Indemnified Liability.  Each party hereto shall cooperate fully with
the other parties with respect to access to books, records, or other
documentation within such party’s control, if deemed reasonably necessary or
appropriate by any party in the defense of any claim that may give rise to
indemnification hereunder.

 

ARTICLE
7

TERM
AND TERMINATION

 

7.1           Term.  Unless otherwise terminated under provisions of Section 7.2, this
Agreement shall continue as to each respective item of MacroPore Intellectual
Property until such item has Expired or is otherwise no longer
legally-protectable Intellectual Property. 
Termination of this Agreement for any reason will not affect Section 4.1
or the license rights granted to MacroPore in Sections 2.1 and 2.2, or either
party’s pre-termination rights and remedies, which shall survive termination of
this Agreement.

 

7.2           Termination.  MacroPore may terminate this Agreement, at
its option and without prejudice to any of its other legal and equitable rights
and remedies, by giving Medicis notice in writing at least thirty (30) days in
advance of the effective date of such termination.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

ARTICLE
8

FORCE
MAJEURE

 

8.1           Force Majeure.  Neither party shall be in default because of
any failure to perform such party’s obligations under this Agreement to the
extent such failure is due to causes beyond the control of such party (“the
first party”) and without the fault or negligence of such first party,
including without limitation, Acts of God or of the public enemy, acts of
terrorism, acts of the Government in either its sovereign or contractual
capacity, fires, floods, earthquakes, epidemics, quarantine restrictions,
strikes, or freight embargoes (each a “Force Majeure Event”).  In each instance, the failure to perform
must be beyond the reasonable control and without the fault or negligence of
the first party.  Once performance is
again possible, performance must be given.

 

8.2           Notice.  If it appears that performance under of obligations may be
delayed by a Force Majeure Event, the first party will immediately notify the
other party as soon as practicable in writing at the address specified in this
Agreement.  During the period that the
performance by one of the parties of its obligations has been suspended by reason
of a Force Majeure Event, the other party may likewise suspend the performance
of all or part of its obligations hereunder to the extent that such suspension
is commercially reasonable.

 

ARTICLE
9

MISCELLANEOUS

 

9.1           Assignment.  Neither party shall have the right to assign or otherwise
transfer its rights and obligations under this Agreement (whether by merger,
share exchange, combination or consolidation of any type, operation of law,
purchase or otherwise) except with the prior written consent of the other
party, which consent will not be unreasonably withheld, provided that either  MacroPore or Medicis may, without a need
for consent, assign its respective rights and obligations pursuant to this
Agreement to any person who, by merger, share exchange, combination or
consolidation of any type, purchase, operation of law, asset purchase or
otherwise, acquires substantially all of the business of the assigning party to
which this Agreement relates. MacroPore may assign the license for the Spinal
Field granted in Section 2.1 to the purchasing party without the need for a
consent in the event that MacroPore sells all or substantially all of the
assets of its spinal implant business. Any prohibited assignment shall be null
and void.

 

9.2           Complete Agreement.  This Agreement, the Purchase Agreement and
the Exhibits of each constitute the entire agreement between the parties hereto
with respect to the subject matter hereof and supersede all prior or
contemporaneous agreements whether written or oral relating hereto.

 

9.3           Governing Law.  This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California, including
all matters of construction, validity, performance and enforcement, without
giving effect to principles of conflict of laws and without application of the
United Nations Convention on Contracts for the International Sale of Goods.

 

9.4           Waiver, Discharge, Amendment, Etc.  The failure of any party hereto to enforce
at any time any of the provisions of this Agreement shall not, absent an
express written waiver signed by the party making such waiver specifying the
provision being waived, be construed to be a waiver of any such provision, nor
in any way to affect the validity of this Agreement or any part thereof or the
right of the party thereafter to enforce each and every such provision.  No waiver of any breach of this Agreement
shall be held to be a waiver of any other or subsequent breach.  Any amendment to this Agreement shall be in
writing and signed by the parties hereto or else it shall be of no effect.

 

9.5           Notices.  All notices hereunder shall be deemed given if in writing and
delivered personally or sent by telecopy (with confirmation of transmission) or
certified mail (return receipt requested) or reputable courier service to the
parties at the following addresses (or at such other addresses as shall be
specified by like notice):

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

if to MacroPore, to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

USA

Attention: Christopher J. Calhoun

FAX: (858) 458-0995

 

with duplicate copy thereof addressed to

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA  92121

USA

Attention: In-House Counsel

FAX: (858) 458-0994

 

and if to Medicis, to:

 

Medicis Ventures Management GmbH

Poschingerstr. 9

D-81679 München, Germany

Attention: Managing Director

FAX:

 

with duplicate copy thereof addressed to:

 

 

 

Any party may change the above specified
recipient and/or mailing address by notice to all other parties given in the manner
herein prescribed.  All notices shall be
deemed given on the day when actually delivered as provided above (if delivered
personally, by telecopy or by reputable courier service) or three business days
after the date sent (if delivered by mail).

 

9.6           Expenses.  Except as expressly provided herein, Medicis and MacroPore shall
each pay their own expenses incident to this Agreement and the preparation for,
and consummation of, the transactions provided for herein.

 

9.7           Titles and Headings; Construction.  The titles and headings to Sections and
Articles herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.  This Agreement shall be
construed without regard to any presumption or other rule requiring
construction hereof against the party causing this Agreement to be drafted.

 

9.8           Severability.  If any provision of this Agreement is held
invalid, illegal or unenforceable, such provision shall be deemed replaced with
a provision which enables the enforcement, to the maximum extent possible, of
the parties’ original intent, and the remaining provisions shall nonetheless be
enforceable according to their terms.

 

9.9           Relationship.  This Agreement does not make either party
the employee, partner, agent or legal representative of the other for any
purpose whatsoever.  Neither party is
granted any right or authority to assume or to create any obligation or
responsibility, express or implied, on behalf of or in the name of the other
party, and each

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

party agrees not to purport to
do so. In fulfilling its obligations pursuant to this Agreement, each party
shall be acting as an independent contractor.

 

9.10         Benefit.  Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties to this
Agreement or their respective successors or permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

 

9.11         Survival.  All of the representations, warranties, and covenants made in
this Agreement, and all terms and provisions hereof intended to be observed and
performed by the parties after the termination hereof, shall survive such
termination and continue thereafter in full force and effect, subject to any
applicable statutes of limitations.

 

9.12         Counterparts.  This Agreement may be executed in any number of counterparts,
each of which shall be deemed as original and all of which together shall
constitute one instrument.

 

9.13         Execution of Further Documents.  Each party agrees to execute and deliver
without further consideration any further applications, licenses, assignments
or other documents, and to perform such other lawful acts as the other party
may reasonably request to fully secure and/or evidence the rights or interests
herein.

 

9.14         Public Announcement.  In the event either party proposes to issue
any press release or public announcement concerning any provisions of this
Agreement or the transactions contemplated hereby, such party shall so advise
the other party hereto, and the parties shall thereafter use their best efforts
to cause a mutually agreeable release or announcement to be issued.  Neither party will publicly disclose or
divulge any provisions of this Agreement or the transactions contemplated
hereby without the other party’s written consent, except as may be required by
applicable law or stock exchange regulation, and except for communications to
such party’s employees or customers or investors or prospective investors
(subject to appropriate confidentiality obligations).

 

9.15         Dispute Resolution.             Any dispute arising out of or relating to
this Agreement (including the formation, interpretation or alleged breach
thereof) shall be settled by final and binding arbitration conducted under the
auspices of, and in accordance with, the Commercial Arbitration Rules of the
American Arbitration Association, in San Francisco, California.  The results of such arbitration proceedings
shall be binding upon the parties hereto, and judgment may be entered upon the
arbitration award in any court having jurisdiction thereof. Notwithstanding the
foregoing, a party may seek interim injunctive relief from any court of
competent jurisdiction.

 

(Remainder
of page intentionally blank; signatures follow on next page)

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS
WHEREOF, each of the parties has caused this License Agreement to be executed
in the manner appropriate to each, as of the date first written above.

 

	
   

  	
  MEDICIS VENTURES MANAGEMENT GmbH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MACROPORE BIOSURGERY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT
D

ASSIGNMENT
AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT is made as of January 21,
2004, by and among Medicis Ventures Management GmbH., a German corporation (“Buyer”) and MacroPore Biosurgery, Inc., a Delaware
corporation (“Seller”).

 

WHEREAS, Buyer and Seller are parties to that certain Asset Purchase
Agreement dated December 13, 2003 (the “Purchase Agreement”) pursuant to which
Buyer will purchase certain businesses and assets of the Seller effective as of
the close of business on the date hereof (the “Effective Date”); and

 

WHEREAS, as part of the transfer of the businesses and assets of
Seller, Seller desires to assign and delegate to Buyer, and Buyer desires to
accept an assignment of and assume Seller’s obligations pursuant to, the
“Assumed Liabilities” (as defined in the Purchase Agreement).

 

NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.             Assignment
and Delegation.  Seller hereby
sells, assigns, delegates, and transfers to Buyer all of Seller’s duties and,
Agreement obligations under and to the Assumed Liabilities, effective as of the
Effective Date.

 

2.             Assumption.  Buyer hereby assumes and agrees to perform
all of the duties and Agreement obligations of Seller under the Assumed Liabilities
from and after the Effective Date.

 

3.             Binding
Upon Assigns.  This Assignment and
Assumption Agreement shall bind and inure to the benefit of Sellers and Buyer
and their respective successors and assigns.

 

4.             Miscellaneous.  All representations, warranties and
covenants of Seller and of Buyer with respect to the Assumed Liabilities
contained in the Purchase Agreement, subject to the limitations therein
contained, are incorporated herein by reference.  This Agreement shall be construed and enforced in accordance with
and governed by the laws of California, without regard to principles of
conflicts of laws.  This Assignment and
Assumption may be executed in any number of counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument.

 

IN WITNESS WHEREOF, this Assignment and Assumption Agreement has been
duly executed and delivered on behalf of the parties as of the date first above
written.

 

	
   

  	
  MACROPORE BIOSURGERY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEDICIS VENTURES MANAGEMENT GmbH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT
E

BILL
OF SALE

 

THIS BILL OF SALE is made, executed and delivered as of January 21,
2004 (“Bill of Sale”) by MacroPore
Biosurgery, Inc., a Delaware corporation (“Seller”) to Medicis
Ventures Management GmbH, a German corporation (“Medicis”).

 

WITNESSETH:

 

WHEREAS, Buyer and Seller have entered into an Asset Purchase
Agreement, dated as of December 13, 2003 (the “Purchase Agreement”), pursuant
to which Seller agreed, among other things, to sell, convey, assign, transfer
and deliver to Buyer the Specified Assets (such term and all other capitalized
terms used but not defined herein having the same meanings ascribed to such
terms in the Purchase Agreement) all as more fully described in the Purchase
Agreement, for consideration in the amount and on the terms and conditions
provided in the Purchase Agreement; and

 

WHEREAS, Seller and Buyer now desire to carry out the intent and
purpose of the Purchase Agreement by Seller’s execution and delivery to Buyer
of this instrument evidencing the sale, conveyance, assignment, transfer and
delivery to Buyer of the Specified Assets;

 

NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration to Seller, the receipt and adequacy of
which are hereby acknowledged, Seller, as of the close of business on the date
hereof, is selling, conveying, assigning, transferring and delivering, and by
this Bill of Sale does, effective as of the close of business on the date
hereof, sell, convey, assign, transfer and deliver unto Buyer, its successors
and assigns in accordance with the terms and provisions of the Purchase
Agreement:

 

TO HAVE AND TO HOLD all of Seller’s right, title and interest in and to
the Specified Assets unto Buyer, and Buyer’s successors and assigns, all in
accordance with the terms of the Purchase Agreement FOREVER.

 

2.             Seller
further covenants and agrees that the covenants herein contained shall inure to
the benefit of the successors and assigns of Buyer.

 

3.             All
representations, warranties and covenants of the Seller with respect to the
Specified Assets contained in the Purchase Agreement, subject to the
limitations therein contained, are incorporated hereby by reference.

 

4.             This
Bill of Sale shall be construed and enforced in accordance with and governed by
the laws of the State of California, without giving effect to principles of
conflicts of laws.

 

5.             Seller
shall do such acts and shall execute such further documents, conveyances,
deeds, assignments, transfers and the like, and will cause the doing of such
acts and will cause the execution of such further documents as are within its
power as Buyer may in writing at any time and from time to time reasonably
request be done or executed, in order to give full effect to the provisions of
this Bill of Sale.

 

IN WITNESS WHEREOF, this Bill of Sale has been duly executed and
delivered on behalf of Seller as of the date first above written.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

	
   

  	
  MACROPORE BIOSURGERY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  
				

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXHIBIT G

BUSINESS DEVELOPMENT AGREEMENT

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

Business Development Agreement***

 

This Business Development Agreement (“Development Agreement”) is made
and entered into as of
January         , 2004, by and
among Medicis Ventures Management GmbH  (as defined herein, “Medicis”), a German
corporation, and MacroPore Biosurgery, Inc.
(as defined herein, “MacroPore”), a Delaware corporation.

 

WITNESSETH:

 

MacroPore has sold Medicis certain assets
pursuant to the Asset Purchase Agreement (“Asset Agreement”) and the License
Agreement of even date. This Development Agreement is the one contemplated by
the Asset Agreement. Capitalized terms not otherwise defined herein shall have
the meanings given to them in the Asset Agreement.

 

WHEREAS, Medicis desires to establish a
partnership, distribution or licensing arrangement (“Business Arrangement”)
between Medicis and a Japanese company (“Partner” the identity of which is not
yet determined) for marketing Bioabsorbable Film Implants (“Implants”) in and
for use in Japan (“Territory”); and

 

WHEREAS, MacroPore has contacts,
relationships and abilities to assist Medicis in establishing a Business
Arrangement with a Partner, and relevant regulatory experience related to the
marketing of the Implants;

 

NOW, THEREFORE, in consideration of the
agreements contained herein, and subject to the terms and conditions set forth
herein, the parties hereto agree as follows:

 

ARTICLE
1

DEVELOPMENT
ACTIVITES OF MACROPORE

 

1.1)          General Development Assistance.  MacroPore shall exercise all commercially
reasonable efforts until December 1, 2004 to: (i) jointly establish (on behalf
of and subject to advice and consent of Medicis), a Business Arrangement with a
Partner related to the sale of Implants in the Territory; and, (ii) assist
Medicis in obtaining the required regulatory clearances to market the Implants
in the Territory.

 

1.2)          Regulatory Clearances in Japan.  Subject to Section 1.1, MacroPore will
provide Medicis and the Partner strategic, documentary and technical support to
assist them in obtaining regulatory clearance for the Implants in the
Territory.

 

ARTICLE
2

DEVELOPMENT
ACTIVITES OF MEDICIS

 

2.1)          General Development Assistance.  Medicis shall exercise all commercially
reasonable efforts and work with MacroPore to: (i) establish a business
relationship with a Partner to the sell Implants in the Territory and (ii)
cooperate with the Partner in the Territory to obtain the required regulatory
clearances to market the Implants in the Territory.

 

ARTICLE
3

OBLIGATIONS,
COSTS AND EXPENSES

 

3.1)          Authority.  This Development Agreement does not create any relationship of
partnership, agency or joint venture. Neither party has authority for and on
behalf of the other. Neither party may incur any debt, obligation, expense, or
liability of any kind which is binding against the other without the other’s
express written approval.

 

3.2)          Costs.     Except as otherwise provided in this agreement,
each party shall be responsible for their own costs and expenses in fulfilling
their obligations hereunder.

 

***                           Certain confidential
portions of this Exhibit were omitted by means of blackout of the text (the
"Mark").  This Exhibit has
been filed separately with the Secretary of the Commission without the Mark
pursuant to the Company's Application Requesting Confidential Treatment under
Rule 24b-2 under the 1934 Act.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

3.3)          Clinical/Pre-Clinical Trials.  In the event that it is necessary to conduct
clinical trials to commercially market Implants in the Territory, all costs and
expenses related to the clinical trial shall be borne by Medicis. MacroPore
shall be immediately reimbursed for any reasonable costs and expenses incurred
with Medicis’ prior written consent (which consent shall not be unreasonable
withheld) in supporting such activities. 
In the event that any additional pre-clinical work is required to obtain
regulatory approval in the Territory, MacroPore and Medicis shall divide these
costs as far as incurred with Medicis’ prior written consent (which consent
shall not be unreasonable withheld) equally between the parties with the costs
to MacroPore not to exceed $50,000. MacroPore shall be immediately reimbursed
for any such reasonable costs and expenses that exceed $50,000 in supporting
such pre-clinical activities.

 

ARTICLE
4

COMPENSATION

 

4.1)          Agreement Fee / Up-Front Payments.  Within 10 days of Medicis having received
any payment relating to any Business Arrangement with a Partner in the
Territory, Medicis shall pay MacroPore *** of any *** fee or *** payable to
Medicis by way of such agreement. 
Medicis agrees not to *** as are currently contemplated in negotiations
with any potential partner, in such a way as to transfer economic value away
from the *** and toward another manner of transferring economic benefit, and
effectively to reduce the amount payable to MacroPore.  If such *** fails to provide for *** to
Medicis at the execution of the agreement, then MacroPore shall be entitled to
***  payment of *** of any deferred
payment for a *** (including any easily-achievable *** payment, even if not
expressly identified as a ***, etc.). In the event that the *** contains any
type of regulatory milestone payments, *** of any such payments received by
Medicis shall be *** paid to MacroPore by Medicis (net of any pre-clinical or
clinical trial costs referenced in section 3.3). Any other milestone payment
that may be agreed upon between the parties shall be shared equally by
MacroPore and Medicis.

 

4.2)          Regulatory Approval Fee.  For a period of *** years from the first lawful
commercial launch of Qualified Implants into the Territory, MacroPore shall
receive quarterly payments from Medicis equal to *** of the excess of (a) the
*** of Medicis from sales (whether or not to Partner) of all Implants in the
Territory, over (b) the actual *** incurred by Medicis (if any) for the goods
sold. In no event shall the cost subtracted ***  or specified by MacroPore in the Asset Agreement.  This fee is payable whether or not any
clinical or pre-clinical trials are required by authorities in the Territory
prior to commercial launch. The fee shall be paid for all products sold during
such *** year period even though actual payments for such products are not
received by Medicis until a later date. “Qualified Implants” include any
Implant with Japanese regulatory approval at least as favorable as the 510 K
clearance received by MacroPore on September 22, 2003 for the minimization of
attachment of soft tissue (“MAST”) in the U.S. In addition, in the event and to
the extent that the Business Arrangement is structured in such a way that the
Medicis is to receive *** for products sold in the Territory, then MacroPore shall
be entitled to ***  of any such ***
received from the first lawful commercial launch of Qualified Implants into the
Territory for a period of *** years thereafter.

 

4.3)          MacroPore Liability Waiver By Medicis / Japanese
Partner.  Medicis agrees
that any definitive written agreements between Medicis and any Partner for
distribution or licensing of Implants in the Territory shall include provisions
providing a full and complete waiver by both parties of liability of MacroPore
in regards to such agreement. MacroPore shall by no means be held liable for
any breach of contract or warranty whether express or implied resulting from
such agreement except in so far as it shall be established according to U.S.
law that MacroPore acted with gross negligence or clear intent to defraud the
either party to such contract.

 

ARTICLE
5

REPORTS
AND RECORDS

 

5.1)          Quarterly Revenue Reports.  Beginning at the first commercial launch of
Qualified Implants into the Territory as provided in Section 4.2 above, Medicis
will make quarterly fee reports to MacroPore on or before each January 21 (for
the quarter ending December 31), April 21 (for the quarter ending March 31),
July 21 (for the quarter ending June 30) and October 21 (for the quarter ending
September 30) of each year.  Each fee
report will cover Medicis’s most recently completed calendar quarter and will,
at a minimum, show:

 

5.1.1)       the gross invoice prices for all Implants sold
in the Territory and actual manufacturing costs (incurred by Medicis) for those
goods sold;

 

5.1.2)       the Section 4.2 fees due, in United States
dollars, payable to MacroPore for the quarter being reported;

 

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

5.1.3)       the amount of the cash and the amount of the
cash equivalent of the non-cash consideration including the method used to
calculate the non-cash consideration;

 

5.1.4)       any other information reasonably necessary to
confirm Medicis’s calculation of its fee obligations *** hereunder;

 

5.2)          Quarterly Fee Payments.  All
fees payable to MacroPore as identified in Section 4.2 shall be paid
simultaneously with the delivery of the quarterly report with which they
correspond. Conversion into US dollars shall be at the mean average daily
closing conversion rate over the quarter in question, based on rates as
reported in the Wall Street Journal.

 

5.3)          Document Retention.  Medicis will keep accurate books and records
showing all Implants sold in or for the Territory sufficient to verify the
quarterly reports required in Section 5.1. Such books and records will be
preserved for at least three (3) years after the date of the payment to which
they pertain.

 

5.4)          Document Inspection.  The books and records required to be
maintained in Section 5.3 will be open to inspection by experts appointed by
MacroPore and bound by their obligation to professional secrecy at reasonable
times to determine their accuracy and assess Medicis’s compliance with the
terms of this Agreement.  MacroPore
shall bear the fees and expenses of such examination.  If, however, an error in fees of more than five percent (5%) of
the total fees due for any year is discovered in any examination, then Medicis
shall bear the fees and expenses related to such examination.

 

5.5)          Provision of Financial Statements.  Medicis (or their successor in interest)
shall provide MacroPore financial statements for every calendar quarter within
30 calendar days of the quarter most recently ended. The statements must
contain the balance sheet, statement of operations, and statement of cash flow
of Medicis. The obligation to provide financial statements terminates after the
last payment required to be made under this agreement has been paid to MacroPore.

 

ARTICLE
6

INDEMNIFICATION

 

6.1)          Indemnification by Medicis.  Each Party shall indemnify, defend and hold
harmless the other and each of its subsidiaries, officers, directors,
shareholders, employees, agents and affiliates (collectively, all such indemnitees
are referred to in this Section as “Indemnified Party”) against and in respect
of any and all claims, demands, losses, obligations, liabilities, damages,
penalties, deficiencies, actions, settlements, judgments, costs and expenses
which Indemnified Party may incur or suffer or with which it may be faced
(including reasonable costs and legal fees incident thereto or in seeking
indemnification therefor), (referred to as “Costs”) arising out of or primarily
based upon activities of the other party (“Indemnitor”) in performing under the
terms of this agreement. An amount for which the Indemnified Party is entitled
to indemnification pursuant hereto is referred to as an “Indemnified Amount.”

 

6.2)          Third
Party Claims.  If a claim
by a third party is made against any Indemnified Party, and if the Indemnified
Party intends to seek indemnity with respect thereto under this Article 6, such
Indemnified Party shall promptly notify the Indemnitor of such claim; provided,
however, that failure to give timely notice shall not affect the rights of the
Indemnified Party so long as the failure to give timely notice does not
adversely affect the Indemnitor’ ability to defend such claim against a third
party.  If Indemnitor acknowledges that
the Indemnified Party is entitled to indemnification hereunder for such claim,
Indemnitor shall be entitled to settle or assume the defense of such claim,
including the employment of counsel reasonably satisfactory to the Indemnified
Party.  If Indemnitor elects to settle
or defend such claim, Indemnitor shall notify the Indemnified Party within
thirty (30) days (but in no event less than twenty (20) days before any
pleading, filing or response on behalf of the Indemnified Party is due) of
Indemnitor’ intent to do so.  If
Indemnitor elects not to settle or defend such claim or fails to notify the
Indemnified Party of the election within thirty (30) days (or such shorter
period provided above) after receipt of the Indemnified Party’s notice of a
claim of indemnity hereunder, the Indemnified Party shall have the right to
contest, settle or compromise the claim without prejudice to any rights to
indemnification hereunder.  Regardless
of which party is controlling the settlement or defense of any claim, (a) both
the Indemnified Party and Indemnitor shall act in good faith, (b) Indemnitor
shall not thereby permit to exist any lien, encumbrance or other adverse charge
upon any asset of any Indemnified Party or of its subsidiaries, (c) Indemnitor
shall permit the Indemnified Party to participate in such settlement or defense
through counsel chosen by the Indemnified Party, with all fees, costs and
expenses of such counsel borne by the Indemnified Party, unless Indemnitor and
Indemnified Party have available inconsistent defenses to such third-party
claim, in which case such fees, costs and expenses shall be borne by
Indemnitor, (d) no entry of judgment or settlement of a claim may be agreed to
without the written consent of the Indemnified Party, which consent shall not
be unreasonably withheld, and (e) Indemnitor shall promptly reimburse the
Indemnified Party for the Indemnified Amount as incurred by the Indemnified
Party pursuant to this Article 6.  So
long as Indemnitor is reasonably contesting any such third party claim in good
faith and the foregoing clause (b) is being complied with, the Indemnified
Party shall not pay or settle any such claim (or, if it does, it shall not be
indemnified for such settlement amount). 
The controlling party shall upon request deliver, or cause to be
delivered, to the other party

 

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

copies of all correspondence,
pleadings, motions, briefs, appeals or other written statements relating to or
submitted in connection with the settlement or defense of any such claim, and
timely notices of any hearing or other court proceeding relating to such claim.

 

6.3)          Non-Third Party Claims.  A claim for indemnification for any matter
not involving a third-party claim may be asserted by notice to Indemnitor.  Such notice shall state the amount of the
Indemnified Amount, if known, the method of computation thereof, and contain a
reference to the provisions of this Agreement in respect to which such right of
indemnification is claimed or arises. 
If Indemnitor disputes such claim then the parties shall then follow the
dispute resolution mechanism set forth in Section 8.10 of this Development
Agreement.

 

ARTICLE
7

CONFIDENTIALITY

 

7.1)          Confidential Information. The
parties shall keep in confidence and trust all Confidential Information
disclosed under this Agreement.  The
party which receives such Confidential Information from the other is called the
“Recipient”. Each party agrees not to use or disclose any Confidential
Information or anything relating to it without the written consent of the
other. As used in this Agreement, Confidential Information means information
related to the subject matter of this Agreement provided by MacroPore or
Medicis, and designated at time of such disclosure as proprietary or
Confidential Information.  Any oral or
other non-written disclosures of Confidential Information will be reduced to
writing within thirty (30) days of disclosure. Notwithstanding the foregoing,
the parties shall regard all advice, counsel, information and strategies of
MacroPore relating to potential Partners and regulatory strategies provided
hereunder as Confidential Information whether or not any specific designation
or reduction to writing is provided. Confidential Information does not include
information which (1) is now public knowledge or subsequently becomes such
through no breach of this Agreement; (2) is rightfully in Recipient’s
possession prior to the other parties disclosure to Recipient as shown by
written records, (3) is rightfully disclosed to Recipient by a third party; (4)
is independently developed by or for Recipient without reliance upon
confidential information received from the other party. In addition, to the
extent Confidential Information is required to be disclosed by law, it may be
disclosed as required. This Article 7 shall survive any expiration or
termination of this Development Agreement.

 

ARTICLE
8

MISCELLANEOUS

 

8.1)          Complete
Agreement.  This
Agreement (together with the Asset Agreement and the other agreements
contemplated by the Asset Agreement) constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior or contemporaneous discussions or agreements whether written or oral
relating hereto.

 

8.2)          Governing
Law.  This Agreement
shall be governed by and interpreted in accordance with the laws of the State
of Delaware, including all matters of construction, validity, performance and
enforcement, without giving effect to principles of conflict of laws and
without application of the United Nations Convention on Contracts for the
International Sale of Goods.

 

8.3)          Waiver,
Discharge, Amendment, Etc. 
The failure of any party hereto to enforce at any time any of the
provisions of this Agreement shall not, absent an express written waiver signed
by the party making such waiver specifying the provision being waived, be
construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part thereof or the right of the party
thereafter to enforce each and every such provision.  No waiver of any breach of this Agreement shall be held to be a
waiver of any other or subsequent breach. 
Any amendment to this Agreement shall be in writing and signed by the
parties hereto or else it shall be of no effect.

 

8.4)          Notices.  All notices hereunder shall be deemed given
if in writing and delivered personally or sent by telecopy (with confirmation
of transmission) or certified mail (return receipt requested) or reputable
courier service to the parties at the following addresses (or at such other
addresses as shall be specified by like notice):

 

if to MacroPore, to:

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA 92121

USA

Attention: Christopher J. Calhoun

FAX: (858) 458-0995

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

with duplicate copy thereof addressed to

 

MacroPore Biosurgery, Inc.

6740 Top Gun Street

San Diego, CA  92121

USA

Attention: In-House Counsel

FAX: (858) 458-0994

 

and if to Medicis, to:

 

Medicis Ventures Management GmbH

Poschingerstr. 9

D-81679 München, Germany

Attention: Managing Director

FAX:

 

with duplicate copy thereof addressed to:

 

Any party may change the above specified
recipient and/or mailing address by notice to all other parties given in the
manner herein prescribed.  All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally, by telecopy or by reputable courier service) or three
business days after the date sent (if delivered by mail).

 

8.5)          Titles
and Headings; Construction. 
The titles and headings to Sections and Articles herein are inserted for
the convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.  This Agreement shall be construed without regard to any
presumption or other rule requiring construction hereof against the party
causing this Agreement to be drafted.

 

8.6)          Severability.  If any provision of this Agreement is held
invalid, illegal or unenforceable, such provision shall be deemed replaced with
a provision which enables the enforcement, to the maximum extent possible, of
the parties’ original intent, and the remaining provisions shall nonetheless be
enforceable according to their terms.

 

8.7)          Relationship.  This Agreement does not make either party the employee, partner,
agent or legal representative of the other for any purpose whatsoever.  Neither party is granted any right or
authority to assume or to create any obligation or responsibility, express or
implied, on behalf of or in the name of the other party, and each party agrees
not to purport to do so. In fulfilling its obligations pursuant to this
Agreement, each party shall be acting as an independent contractor.

 

8.8)          Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed as original and all of which
together shall constitute one instrument.

 

8.9)          Execution
of Further Documents.  Each
party agrees to execute and deliver without further consideration any further
applications, licenses, assignments or other documents, and to perform such
other lawful acts as the other party may reasonably request to fully secure
and/or evidence the rights or interests herein.

 

8.10)        Dispute
Resolution.            Any
dispute arising out of or relating to this Agreement (including the formation,
interpretation or alleged breach thereof) shall be settled by final and binding
arbitration conducted under the auspices of, and in accordance with, the
Commercial Arbitration Rules of the American Arbitration Association, in San
Francisco, California.  The results of
such arbitration proceedings shall be binding upon the parties hereto, and
judgment may be entered upon the arbitration award in any court having
jurisdiction thereof. Notwithstanding the foregoing, a party may seek interim
injunctive relief from any court of competent jurisdiction.

 

(Remainder
of page intentionally blank; signatures follow on next page)

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

IN WITNESS
WHEREOF, each of the parties has caused this Business Development Agreement to
be executed in the manner appropriate to each, as of the date first written
above.

 

	
   

  	
  MEDICIS VENTURES MANAGEMENT GmbH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MACROPORE BIOSURGERY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

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