Document:

Management Incentive Compensation Plan

 
 

EXHIBIT 10.9

STERIS CORPORATION

Management Incentive Compensation Plan

1.  Objective. The objective of the STERIS Management Incentive Compensation Plan (the "Plan") is to encourage greater initiative, resourcefulness, teamwork, efficiency, and achievement of
objectives on the part of key employees whose performance and responsibilities directly affect profits of STERIS Corporation (the "Company" or "STERIS").

2.  Eligibility. Participation in the Plan will be limited to those key employees that are selected for participation on an annual basis and will normally include employees at or above the rank of Manager
in the various Corporate Departments and in the Manufacturing Group as well as marketing and senior management employees in the Healthcare Group and in the Scientific & Industrial Group.

A key employee will be a participant in the Plan for a particular year only if he or she is selected by the Compensation Committee of the Board of Directors or its designee (the "Committee") for
participation in that year. Key employees selected for participation each year will be notified of their participation and given the parameters for bonus calculations early in the fiscal year.

A participant will be entitled to receive a bonus earned under the Plan for a particular fiscal year if and only if he or she remains in the employ of the Company through the end of that fiscal year and
thereafter through the date on which bonuses are paid for the fiscal year.

3.  Target Bonus. Each participant will be assigned a dollar amount target bonus based upon his or her position and level within the Company. The target bonus will range from 10% to 80% of the
participant's base salary or compensation range midpoint, as the Committee may determine.

4.  Financial Goals. Each year the Committee will select a minimum net income target for the Company , the attainment of which will be a prerequisite to the payment of any bonuses under the Plan. In
addition, the Committee will select one or more other measures of current year financial performance for the Company as a whole, such as revenue growth, earnings before interest and taxes margins, and net income, all to be used as goals for
determining the payment of bonuses under the Plan. Each year the Committee may also select one or more such goals for any one or more of the Company's operating groups to be used to determine payment of bonuses under the Plan to participants in
those groups. The Committee may also determine that a participant's entitlement to a bonus will depend in part on goals for the Company as a whole and in part on goals for one or more operating groups. For each financial goal, the Committee will
designate numerical "threshold," "target," and "maximum" levels. The Committee may adjust the minimum net income target and levels of such other goals it may have selected if, during the course of a fiscal year, the
Company records a special charge that
the Committee determines should be disregarded, either partially or in its entirety, when calculating the amounts of bonuses to be paid under the Plan.

5.  Weighting of Goals. Each year during which the Committee selects more than one goal to be applicable to any group of participants, the Committee will also
specify the weight to be given to each such goal. For example, the Committee might determine to give 75% weight to revenue and 25% weight to EBIT margin.

6.  Achievement Percentages. For each goal, a participant will be entitled to a bonus (with respect to that goal) based on performance as follows:

    (a) If performance is at or below the threshold level, no bonus will be earned. 

    (b) If performance is at the target level, the bonus will be at 100% of target.

    (c) If performance is at or above the maximum level, the bonus will be at 150% of target.

For performance at any level between these set points, the bonus amount will be interpolated. For example, if the performance is exactly three quarters of the way between the threshold level and the target level,
the bonus will be at 75% of target. As a further example, if performance is exactly half way between the target and maximum levels, the bonus will be at 125% of target. 

7.  Calculation of Bonuses. No bonuses will be paid for a fiscal year unless the net income of the company is at least equal to the minimum net income level
selected by the Committee for the year. Assuming that criteria is met, a participant's bonus for a fiscal year will be determined by multiplying his or her target bonus by the achievement percentages attained during the year, taking into account the
weighting of goals as appropriate. The actual bonus earned by any participant during a fiscal year may range from zero (if performance is at or below threshold on all goals) to 150% of the target bonus (if performance is at or above maximum on all
goals).

8.  Payment of Earned Bonuses. Unless the Committee determines to pay all or any part of bonuses under the Plan earlier or either of Sections 11 and 12 applies,
bonuses earned under the Plan will be paid to participants not later than 90 days after the end of the fiscal year in which they are earned.

9.  Midyear Additions and Adjustments. An individual assuming a key position during a fiscal year may, if selected by the Committee, be included in the Plan and be
eligible for such pro rata portion of a full year bonus as the Committee may specify when selecting the individual for participation in the Plan. A participant whose position or level within the Company changes during a fiscal year may, if so
determined by the Committee, be assigned an increased or decreased target bonus for the year taking into account, on a pro rata basis, the participant's new position and compensation.

10.  Denial of Bonus for Just Cause. Notwithstanding any other provision of this Plan, if the Company's Chief Executive Officer or such other member or members of
senior management as the Committee may designate, acting in good faith and before the occurrence of a Change of Control of the Company, determines in his or their sole discretion, that, based on the acts or omissions of any particular participant,
there is just cause to deny payment of a bonus to that participant for a particular fiscal year, no bonus shall be paid to that participant under the Plan for that fiscal year.

11.  Effect of Changes in Operations. If, during any fiscal year, the operations of the Company are materially altered, whether by an acquisition of substantial
additional assets or one or more lines of business, disposition of substantial existing assets or one or more existing lines of business, merger, consolidation, or similar event, the Committee may, in its sole discretion, adjust the parameters of
the Plan for that fiscal year in such a manner as to preserve to the participants the same relative prospects for earning a bonus under the Plan as would have been the case if the material alteration had not occurred. If the Company disposes of an
entire operating division or line of business during a fiscal year, the Company shall make to each participant, if any, who ceases to be employed by the Company as a result of that disposition, an "Interim Payment" in the same amount, at
the same time, and with the same effect, as if the disposition constituted a Change of Control as defined in Section 12 below.

12.  Effect of a Change of Control. Within five days after the occurrence of the first Change of Control (as defined below) to occur in any fiscal year, the Company
shall pay to each participant an interim lump-sum cash payment (the "Interim Payment") with respect to his or her participation in the plan. The amount of the Interim Payment shall be equal to the dollar amount of the participant's target
bonus for the entire fiscal year multiplied by a fraction, the numerator of which is the number of months between the beginning of the fiscal year and the end of the month in which the Change of Control occurs and the denominator of which is 12
(appropriately prorated if the individual first became a participant after the beginning of the fiscal year). The making of the Interim Payment will not reduce the obligation of the Company to make a final payment under the terms of the Plan, but
the amount of any Interim Payment shall be offset against any later payment due under the Plan for the fiscal year in which the Change of Control occurs. Except as an offset against a final payment as provided in the immediately preceding sentence,
the amount of the Interim Payment will not be offset against any amount due to the participant from or on behalf of the Company and a participant will not in any circumstances be required to refund any portion of the Interim Payment to the
Company.

	
For purposes of the Plan, a "Change of Control" shall be deemed to have occurred if at any time or from time to time while this Agreement is in effect:

	 	 
	 	(a) Any person (other than STERIS, any of its subsidiaries, any employee benefit plan or employee stock ownership plan of STERIS, or any person organized, appointed, or established by STERIS for or
pursuant to the terms of any such plan), alone or together with any of its affiliates, becomes the beneficial owner of 15% or more (but less than 50%) of the Common Shares of STERIS then outstanding;
	 	 
	 	(b) Any person (other than STERIS, any of its subsidiaries, any employee benefit plan or employee stock ownership plan of STERIS, or any person organized, appointed, or established by STERIS for or
pursuant to the terms of any such plan), alone or together with any of its affiliates, becomes the beneficial owner of 50% or more of the Common Shares of STERIS then outstanding;
	 	 
	 	(c) Any person commences or publicly announces an intention to commence a tender offer or exchange offer the consummation of which would result in the person becoming the beneficial owner of 15% or
more of the Common Shares of STERIS then outstanding;
	 	 
	 	(d) At any time during any period of 24 consecutive months, individuals who were directors at the beginning of the 24-month period no longer constitute a majority of the members of the Board of
Directors of STERIS, unless the election, or the nomination for election by STERIS's shareholders, of each director who was not a director at the beginning of the period is approved by at least a majority of the directors who (i) are in office at
the time of the election or nomination and (ii) were directors at the beginning of the period;
	 	 
	 	(e) A record date is established for determining shareholders entitled to vote upon (i) a merger or consolidation of STERIS with another corporation in which those persons who are shareholders of
STERIS immediately before the merger or consolidation are to receive or retain less than 60% of the stock of the surviving or continuing corporation, (ii) a sale or other disposition of all or substantially all of the assets of STERIS, or (iii) the
dissolution of STERIS;
	 	 
	 	
(f) (i) STERIS is merged or consolidated with another corporation and those persons who were shareholders of STERIS immediately before the merger or consolidation receive or retain less than 60% of the stock of
the surviving or continuing corporation, (ii) there occurs a sale or other disposition of all or substantially all of the assets of STERIS, or (iii) STERIS is dissolved; or

	 	 
	 	(g) Any person who proposes to make a "control share acquisition" of STERIS, within the meaning of Section 1701.01(Z) of the Ohio General Corporation Law, submits or is required to submit
an acquiring person statement to STERIS.

Notwithstanding anything herein to the contrary, if an event described in clause (b), clause (d), or clause (f) above occurs, the occurrence of that event will constitute an irrevocable Change of Control.
Furthermore, notwithstanding anything herein to the contrary, if an event described in clause (c) occurs, and the Board of Directors either approves such offer or takes no action with respect to such offer, then the occurrence of that event will
constitute an irrevocable Change of Control. On the other hand, notwithstanding anything herein to the contrary, if an event described in clause (a), clause (e), or clause (g) above occurs, or if an event described in clause (c) occurs and the Board
of Directors does not either approve such offer or take no action with respect to such offer as described in the preceding sentence, and a majority of those members of the Board of Directors who were Directors prior to such event determine, within
the 90-day period beginning on the date such event occurs, that the event should not be treated as a Change of Control, then, from and after the date that determination is made, that event will be treated as not having occurred. If no such
determination is made, a Change of Control resulting from any of the events described in the immediately preceding sentence will constitute an irrevocable Change of Control on the 91st day after the occurrence of the event.<PAGE>

                                                                    EXHIBIT 10.1

                 LICENSING, DISTRIBUTION AND SUPPLY AGREEMENT

                                    between

                          CLOSURE MEDICAL CORPORATION

                                      and

                  JOHNSON & JOHNSON CONSUMER COMPANIES, INC.

                                  Dated as of

                                 May 23, 2001
<PAGE>

                               Table of Contents
                               -----------------

<TABLE>
<S>                                                                                                       <C>
Article 1       DEFINITIONS.............................................................................   1

Article 2       LICENSE AND DISTRIBUTION RIGHTS.........................................................   7

   2.1      License and Distribution Rights.............................................................   7

   2.2      Reservation Of Rights.......................................................................   8

   2.3      Market Launch...............................................................................   8

   2.4      Delay of Market Launch......................................................................   8

   2.5      Market Launch [**]..........................................................................   8

   2.6      Regulatory Compliance.......................................................................   9

   2.7      Marketing Updates...........................................................................   9

Article 3       FDA APPROVAL AND [**]...................................................................   9

Article 4       MANUFACTURE AND SUPPLY..................................................................  11

   4.1      Contact Person..............................................................................  11

   4.2      Manufacture And Supply......................................................................  11

   4.3      12-Month Rolling Forecast...................................................................  12

   4.4      Firm Orders.................................................................................  12

   4.5      Annual Minimum Quantities...................................................................  13

   4.6      Labeling, Packaging and Assembly............................................................  14

   4.7      Delivery....................................................................................  14

   4.8      Inspection of Shipment and Notice of Claims.................................................  14

   4.9      Manufacturing Facility......................................................................  15

   4.10     Mutual Assistance...........................................................................  18

Article 5       PRODUCT DEVELOPMENT.....................................................................  21

   5.1      Collaboration...............................................................................  21

   5.2      Steering Committee..........................................................................  21

   5.3      Development Activities......................................................................  22

   5.4      Books and Records...........................................................................  24

Article 6       INTELLECTUAL PROPERTY...................................................................  25

   6.1      Intellectual Property Ownership.............................................................  25

   6.2      Patent Prosecution and Maintenance for New Products and Improvements........................  25

   6.3      Infringement................................................................................  26

   6.4      Ownership of Improvements and New Products..................................................  26
</TABLE>

                                       i                        REDACTED VERSION
<PAGE>

<TABLE>
<S>                                                                                                       <C>
   6.5      Trademarks..................................................................................  28

Article 7       COMMERCIAL TERMS........................................................................  29

   7.1      Product Supply Price........................................................................  29

   7.2      Product Specifications......................................................................  29

   7.3      Reimbursement by CPC........................................................................  30

   7.4      Payment Terms...............................................................................  30

   7.5      Interest....................................................................................  30

Article 8       TERM AND TERMINATION....................................................................  31

   8.1      Automatic Renewal...........................................................................  31

   8.2      Termination for Cause.......................................................................  31

   8.3      Termination without Cause...................................................................  31

   8.4      General.....................................................................................  31

   8.5      Disposal of Product and Device..............................................................  31

Article 9       DISPUTE RESOLUTION......................................................................  32

   9.1      Negotiation and Escalation..................................................................  32

   9.2      Arbitration.................................................................................  32

Article 10      CONFIDENTIALITY.........................................................................  35

   10.1     Confidentiality Obligations.................................................................  35

   10.2     Exclusions..................................................................................  35

   10.3     Termination.................................................................................  35

   10.4     Publicity...................................................................................  36

Article 11      REPRESENTATIONS AND WARRANTIES..........................................................  36

   11.1     Mutual......................................................................................  36

   11.2     Closure Medical Warranties..................................................................  36

   11.3     CPC Representations and Warranties..........................................................  37

Article 12      DISCLAIMER OF WARRANTY, LIMITATION OF LIABILITY AND INDEMNIFICATION.....................  37

   12.1     Disclaimer of Warranties....................................................................  37

   12.2     Indemnification by CPC......................................................................  37

   12.3     Indemnification by Closure Medical..........................................................  38

   12.4     Indemnitee Obligations......................................................................  38

   12.5     Insurance...................................................................................  38

Article 13      FORCE MAJEURE...........................................................................  39
</TABLE>

                                       ii                       REDACTED VERSION
<PAGE>

<TABLE>
<S>                                                                                                       <C>
Article 14      MISCELLANEOUS...........................................................................  40

   14.1     Disclosures.................................................................................  40

   14.2     Governing Law...............................................................................  40

   14.3     No Assignment...............................................................................  40

   14.4     Independent Contractors.....................................................................  40

   14.5     Notices.....................................................................................  40

   14.6     Amendment or Modification...................................................................  41

   14.7     Entire Agreement............................................................................  41

   14.8     Severability................................................................................  41

   14.9     No Waiver...................................................................................  41

   14.10    Survival....................................................................................  41

   14.11    No Third Party Beneficiaries................................................................  42

   14.12    Titles......................................................................................  42

   14.13    Compliance with Laws........................................................................  42

   14.14    Execution in Counterparts, Facsimiles.......................................................  42
</TABLE>

                                      iii                       REDACTED VERSION
<PAGE>

                                    Schedules
                                    ---------

Schedule 1.18         Device Specifications
Schedule 1.35         Stability Requirements
Schedule 1.43         Definition of Manufacturing Costs
Schedule 1.55         Product Specifications
Schedule 1.61         Secondary Packaging Specifications
Schedule 2.3          Launch Schedules
Schedule 2.6          Regulatory Roles and Responsibilities
Schedule 3.1          [**]
Schedule 4.6.1        Closure Medical's Design Control Procedure
Schedule 4.7          Form of Certificate of Conformance
Schedule 4.9.5        [**]
Schedule 4.9.6        [**]
Schedule 5.3.1        [**]
Schedule 10.4         Form of Press Release
Schedule 12.5         Insurance Requirements

                                       iv                       REDACTED VERSION
<PAGE>

                 LICENSING, DISTRIBUTION AND SUPPLY AGREEMENT
                 --------------------------------------------

This Licensing, Distribution and Supply Agreement by and between Closure Medical
Corporation, a Delaware corporation having a principal place of business at 5250
Greens Dairy Road, Raleigh, NC 27616 ("Closure Medical"), and Johnson & Johnson
Consumer Companies, Inc., a New Jersey corporation having a principal place of
business at Grandview Road, Skillman, New Jersey 08558 ("CPC"), is dated as of
May 23, 2001 (the "Effective Date"). Closure Medical and CPC may be referred to
herein as a "Party" or, collectively, as the "Parties."

         WHEREAS, Closure Medical and CPC wish to enter into this exclusive
licensing, distribution and supply agreement;

         WHEREAS, under this Agreement, Closure Medical intends to manufacture
certain products for exclusive distribution by CPC and CPC wishes to purchase
the Product from Closure Medical and assemble such Product and its related
Secondary Packaging to produce a Device; and

         NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, the Parties agree as
follows:

                                   Article 1

                                  DEFINITIONS

1.1     "[**]" shall mean [**].

1.2      "Affiliate" shall mean, when used with reference to a Party, any
         individual or entity directly or indirectly controlling, controlled by
         or under common control with such Party. For purposes of this
         definition, "control" means (a) the direct or indirect ownership of at
         least 50% of the outstanding voting securities of an entity, (b) the
         right to control the policy decisions of such entity or (c) has the
         power to elect or appoint at least 50% of the members of the governing
         body of the entity.

1.3      "Agreement" shall mean this Licensing, Distribution and Supply
         Agreement, including its Exhibits, Schedules and Attachments hereto as
         such may be amended from time to time.

1.4      "Bankruptcy Event" shall mean the person or entity in question becomes
         insolvent, or voluntary or involuntary proceedings by or against such
         person or entity are instituted in bankruptcy or under any insolvency
         law, or a receiver or custodian is appointed for such person or entity,
         or proceedings are instituted by or against such person or entity for
         corporate reorganization or the dissolution of such person or entity,
         which proceedings, if involuntary, shall not have been dismissed within
         sixty (60) days after the date of filing, or such person or entity
         makes an assignment for the benefit of its creditors, or substantially
         all of the assets of such person or entity are seized or attached and
         not released within sixty (60) days thereafter.
<PAGE>

1.5      "[**]" shall mean [**], including, without limitation, [**] products,
         all of the forgoing intended for use in the [**].

1.6      "Business Day" shall mean any day that is not a Saturday, Sunday or
         United States federal holiday.

1.7      "Claim" shall have the meaning ascribed thereto in Section 12.5.

1.8      "Closure Records" shall have the meaning ascribed thereto in Section
         4.9.2(a).

1.9      "Commencement Date" shall mean the date on which CPC provides written
         notice to Closure Medical that it will proceed with commercializing the
         Initial Device pursuant to Section 3.2.2.

1.10     "Components" shall mean any component designed in accordance with the
         Design Control Procedure for use in conjunction with the Product.

1.11     "Confidential Information" shall mean all proprietary and confidential
         information of a Party, including, without limitation, trade secrets,
         technical information, business information, sales and forecast and
         launch information, customer and potential customer lists and
         identities, product sales plans, sublicense agreements, inventions,
         product development plans, discoveries, software, know-how, methods,
         techniques, formulae, data, processes and other trade secrets and
         proprietary ideas, whether or not protectable under patent, trademark,
         copyright or other areas of law, that the other Party has access to or
         receives and which, if disclosed in writing, is marked as "Confidential
         Information," and which if disclosed verbally is indicated as being
         confidential prior to disclosure and confirmed in writing as being
         confidential within seven (7) Business Days after disclosure; provided,
                                                                       --------
         however, that the term Confidential Information does not include
         -------
         information that (a) is or becomes publicly available through no fault
         of the receiving Party; (b) was already known to the receiving Party at
         the time it was disclosed to the receiving Party, as evidenced by
         competent records of the receiving Party; (c) is independently
         developed by or on behalf of the receiving Party without reference or
         access to Confidential Information received hereunder, as evidenced by
         competent records of the receiving Party; or (d) is received from a
         Third Party who is under no obligation of confidentiality to the
         disclosing Party.

1.12     "Contract Year" shall mean any 12-month period beginning on the date of
         First Commercial Sale or an anniversary thereof. (The first Contract
         Year shall mean the date of First Commercial Sale through the day prior
         to the first anniversary of such date; the second Contract Year shall
         mean the first anniversary of such date through the day prior to the
         second anniversary of such date; the third Contract Year shall mean the
         second anniversary of such date through the day prior to the third
         anniversary of such date, etc.).

1.13     "[**]" shall mean any [**]. For purposes of example and clarification,
         [**] shall not include [**].

1.14     "CPC Records" shall have the meaning ascribed thereto in Section
         4.9.3(a).

                                       2                        REDACTED VERSION
<PAGE>

1.15     "Design Control Procedure" shall have the meaning ascribed thereto in
         Section 4.6.1.

1.16     "Development Plan" shall have the meaning ascribed thereto in Section
         5.3.1(b).

1.17     "Device" shall mean the Product, Improvement or New Product together
         with its respective Secondary Packaging, as described in detail in the
         Device Specifications.

1.18     "Device Specifications" shall mean, with respect to the Device, and
         with respect to each Improvement or New Product, those specifications
         as are required by the applicable marketing approval (and as
         supplemented or amended in accordance with this Agreement) for the
         applicable Territory as set forth in Schedule 1.18 for the Device and
         as supplemented at such later point in time as agreed by the Parties
         for New Products and Improvements.

1.19     "[**]" shall mean a product [**].

1.20     "Ethicon Agreement" shall mean that certain Supply and Distribution
         Rights Agreement dated as of March 20, 1996, between Ethicon, Inc. and
         Closure Medical.

1.21     "FDA" shall mean the United States Food and Drug Administration of the
         United States Department of Health and Human Services and any successor
         agency or entity that may be established hereafter. "FDA" shall also be
         deemed to include the applicable regulatory authority having
         jurisdiction over the Device in any country outside of the U.S.

1.22     "FDCA" shall mean the Federal Food, Drug and Cosmetic Act (21 U.S.C.
         301 et seq.), as amended from time to time and any successor acts
         thereto and its counterpart in the European Union, together with any
         rules and regulations promulgated thereunder.

1.23     "Field" shall mean Topical products which the U.S. FDA regulates as OTC
         products for use in humans; provided, however, that the Field shall
                                     --------  -------
         specifically exclude Oral Applications, [**]. Notwithstanding the
         foregoing, the Field shall include [**].

1.24     "Firm Order" shall mean a firm, non-cancelable, written purchase order
         sent by mail, facsimile, telegram, electronic data interchange or other
         mutually agreeable means, which purchase order shall, at a minimum, set
         forth quantity, delivery dates, shipping instructions and U.S. shipping
         addresses.

1.25     "First Commercial Sale" shall mean the first shipment of the Device to
         a Third Party by CPC or an Affiliate or sublicensee of CPC in the
         United States of America.

1.26     "Force Majeure Event" shall mean any event beyond the reasonable
         control of a Party, including, but not limited to, act of God, [**],
         fire, flood, earthquake, storm, war, riot, revolt, act of a public
         enemy, embargo, explosion, civil commotion, [**], or any law, rule,
         regulation, order or other action by any public authority.

                                       3                        REDACTED VERSION
<PAGE>

1.27     "Governmental Authority" shall mean any federal, state, municipal,
         local, territorial or other governmental department, regulatory
         authority, judicial or administrative body, whether domestic or
         foreign, including, but not limited to, the FDA.

1.28     "Improvement" shall mean a Non-Absorbable Cyanoacrylate Product
         encompassed by the Technology that has the same or substantially
         similar Indication as the Initial Device.

1.29     "[**]" shall mean the [**].

1.30     "Indemnitee" shall have the meaning ascribed thereto in Section 12.5.

1.31     "Indication" shall mean a recognized disease or condition, an important
         manifestation of a disease or condition, or symptoms associated with a
         disease or syndrome as would be identified on the Device's label under
         applicable U.S. FDA regulations or the foreign equivalent thereof.

1.32     "Initial Device" shall mean the Initial Product together with its
         respective Secondary Packaging, as described in detail in the Initial
         Device Specifications.

1.33     "Initial Device Specifications" shall mean, with respect to the Initial
         Device, those specifications as are required by the applicable
         marketing approval (and as supplemented or amended in accordance with
         this Agreement) for the applicable Territory as set forth in Schedule
         1.18 for the Initial Device.

1.34     "Initial Firm Order" shall have the meaning ascribed thereto in Section
         4.4.1.

1.35     "Initial Product" shall mean a Product that meets the stability
         requirements set out on Schedule 1.35.

1.36     "Initial Term" shall mean the Effective Date through the day prior to
         the [**] of the Effective Date, unless earlier terminated pursuant to
         Article 8.

1.37     "Intellectual Property" shall mean (i) any and all trade secrets,
         patents, copyrights, trade dress, URLs, know-how and similar rights of
         any type under the laws of any applicable governmental authority,
         including, without limitation, all applications and registrations
         relating to any of the foregoing and (ii) such trade secrets, patents,
         know-how and similar rights, whether or not patented or patentable,
         that are or come to be at least in part owned or controlled by a Party
         during the term of this Agreement and which are based upon any of the
         patents or know-how of such Party as of the date of this Agreement
         (including, but not limited to, formulas, processes, data, techniques,
         methods, technology, materials and compositions). For purposes of this
         definition, "control" of Intellectual Property shall mean the
         possession, directly or indirectly, of power to direct or cause the
         direction of its management or use.

1.38     "Intellectual Property Rights" shall mean all rights in and to
         Intellectual Property.

1.39     "Joint Invention" shall have the meaning ascribed thereto in Section
         6.4.3.

                                       4                        REDACTED VERSION
<PAGE>

1.40     "Launch Deadline" shall have the meaning ascribed thereto in Section
         2.3.

1.41     "Law" shall mean any applicable declaration, decree, directive,
         legislative enactment, order, ordinance, regulation, rule or other
         binding restriction of or by any Governmental Authority, as amended
         from time to time, including, but not limited to, the FDCA.

1.42     "Manufacturing Facility" shall mean Closure Medical's U.S.
         manufacturing facility located at 5250 Greens Dairy Road, Raleigh,
         North Carolina.

1.43     "Manufacturing Costs" shall have the meaning set forth in Schedule
         1.43.

1.44     "New Product" shall mean a Non-Absorbable Cyanoacrylate Product
         encompassed by the Technology which has a different Indication from the
         Initial Device.

1.45     "Non-Absorbable Cyanoacrylate Product" shall mean [**].

1.46     "Notice" shall have the meaning ascribed thereto in Section 14.5.

1.47     "Oral Applications" shall mean Topical applications on the lips and
         tissues inside the mouth.

1.48     "Over the Counter" or "OTC" shall mean (i) products which may be sold
         or distributed in a manner which does not require the prescription or
         written direction of a medical professional, health professional,
         entity or institution, and (ii) if applicable outside of the U.S.,
         products which must be sold or distributed under the supervision or
         assistance of a pharmacist but which do not require a prescription
         given by an appropriate practitioner.

1.49     "Package Inserts" means labeling for use in the Field that, to the
         extent applicable, meets the FDA regulations and/or requirements as set
         forth in s 201.56 and 201.57 of the U.S. Code of Federal Regulations
         (as such may be amended from time to time) and its EU counterparts in
         the European Union.

1.50     "Prescription Product" shall mean a therapeutic product that requires a
         prescription or the written direction of a medical professional, entity
         or institution for use by the ultimate consumer.

1.51     "Product" shall mean a Non-Absorbable Cyanoacrylate Product packaged in
         its primary container and described in detail in the Product
         Specifications.

1.52     "Product Development Team" shall have the meaning ascribed thereto in
         Section 5.3.1(a).

1.53     "Product Labeling" shall mean labeling of the primary container of the
         Product in accordance with applicable FDA regulations.

1.54     "Product Price" shall have the meaning ascribed thereto in Section 7.1.

                                       5                        REDACTED VERSION
<PAGE>

1.55     "Product Specifications" shall mean, with respect to any product which
         becomes covered by this Agreement, at a minimum those specifications as
         are required by the applicable marketing approval (and as supplemented
         or amended by mutual agreement of the Parties from time to time) for
         the applicable Territory, and shall be substantially in the form as set
         forth in Schedule 1.55, which specifications shall also include the
         stability requirements set out on Schedule 1.35.

1.56     "PTO" shall have the meaning ascribed thereto in Section 6.2.2.

1.57     "Quality Systems Regulations" or "QSR" shall mean all applicable
         standards relating to manufacturing practices for the Product
         promulgated by the U.S. FDA in the form of laws or regulations.

1.58     "Renewal Term" shall have the meaning ascribed thereto in Section 8.1.

1.59     "Research and Development Costs" shall mean [**].

1.60     "Rolling Forecast" shall have the meaning ascribed thereto in Section
         4.3.

1.61     "Secondary Packaging" shall mean all packaging, labeling, Package
         Inserts and Components (other than the Product) reasonably necessary
         for sale of the Product to the ultimate consumer for use in the Field
         (including, without limitation, the CE Mark designation), as such
         Secondary Packaging is described in Schedule 1.61 as such may be
         amended from time to time in accordance with this Agreement.

1.62     "[**]" shall have the meaning set forth in Section 3.2.1.

1.63     "[**]" shall have the meaning set forth in Section 3.1.

1.64     "Steering Committee" shall have the meaning set forth in Section 5.2.1.

1.65     "Technology" shall mean Closure Medical's Intellectual Property
         directly related to any Non-Absorbable Cyanoacrylate Product.

1.66     "Term" shall mean the Initial Term and any Renewal Terms.

1.67     "Territory" shall mean the entire world.

1.68     "Third Party" shall mean any individual or entity other than a Party or
         an Affiliate of a Party.

1.69     "Topical" shall mean involving the external tissue of the human body
         such as the skin, but shall not include the external surface of the
         eyeball and tissues inside of the mouth.

1.70     "Trademarks" shall have the meaning ascribed thereto in Section 6.5.1.

1.71     "Valuation Analysis" shall have the meaning set forth in Section
         5.3.1(c)(i).

                                       6                        REDACTED VERSION
<PAGE>

                                   Article 2

                         LICENSE AND DISTRIBUTION RIGHTS

2.1     License and Distribution Rights.

         2.1.1   Subject to the terms and conditions of this Agreement, Closure
                 Medical hereby grants to CPC, during the term of this
                 Agreement, an exclusive right and license (including the
                 limited right to sub-license) to the Technology to market,
                 advertise, promote, distribute and sell goods incorporating the
                 Non-Absorbable Cyanoacrylate Products in the Field throughout
                 the Territory. Although CPC shall have the right to grant
                 sublicenses to any Affiliate or to any Third Party with respect
                 to any rights conferred upon CPC under this Agreement, any such
                 sublicense shall be subject in all respects to the same terms,
                 conditions and provisions contained in this Agreement, and CPC
                 shall be responsible for ensuring that any sub-licensee
                 complies with such terms and conditions; provided however, that
                                                          -------- -------
                 CPC shall not be entitled to sublicense its entire rights and
                 obligations under this Agreement (other than in connection with
                 a permitted assignment of this Agreement).

         2.1.2   During the term of this Agreement and except as specifically
                 permitted in this Agreement, Closure Medical shall not directly
                 or indirectly (such as through the grant of a license or
                 distribution rights or other conveyance of rights in the
                 Technology for use in the Field) sell or otherwise
                 commercialize any Non-Absorbable Cyanoacrylate Product intended
                 to compete with a Product, Improvement or any New Product in
                 the Field.

         2.1.3   The parties initially intend for this Agreement to cover the
                 supply, distribution and sale of the Initial Device. Additional
                 Devices may be added to this Agreement as contemplated by
                 Article 5.

2.2      Reservation Of Rights. CPC acknowledges that its rights to the
         Intellectual Property of Closure Medical are only as expressly provided
         in this Article 2 and elsewhere in this Agreement. Except to the extent
         of the rights and obligations set out in this Agreement, Closure
         Medical shall not be restricted from exploiting any of its Intellectual
         Property.

2.3      Market Launch. CPC shall use commercially reasonable efforts to
         consummate a First Commercial Sale of the Initial Device within the
         launch schedules set out on Schedule 2.3 (the "Launch Deadline").

2.4      Delay of Market Launch. CPC shall promptly notify Closure Medical in
         writing of any delay past the Launch Deadline in its efforts to
         introduce the Initial Device to retailers in the United States. Within
         [**] of such notification, [**]. Notwithstanding the foregoing, [**]
         if:

         2.4.1   the [**];

         2.4.2   the [**];

                                       7                        REDACTED VERSION
<PAGE>

         2.4.3   an [**]; or

         2.4.4   if [**].

2.5      Market Launch [**]. After the Commencement Date, CPC shall use its
         commercially reasonable efforts to obtain regulatory approval of the
         Device [**]. Closure Medical shall provide such information and
         reasonable assistance as shall be necessary in order for CPC to obtain
         such approval. Such information and assistance shall be provided
         without charge; provided, however, that Closure Medical shall not be
                         --------  -------
         obligated to incur costs for things like travel [**], clinicals
         required for [**] market, translation of materials [**], etc. Upon
         obtaining of the regulatory approval for the Device [**], CPC shall use
         its commercially reasonable efforts to introduce the Device to
         retailers [**] within six (6) months of obtaining such regulatory
         approval.

2.6      Regulatory Compliance. All marketing efforts shall be conducted in a
         manner consistent with applicable Laws. CPC shall not promote or market
         the Device for any use outside the Field. Any labeling for the Device
         shall comply with the FDA's approval for the Device. The general roles
         and responsibilities of the parties with respect to obtaining and
         maintaining regulatory approvals are as set out on Schedule 2.6.

2.7      Marketing Updates. On no less than an annual basis or upon the
         reasonable request of Closure Medical, CPC shall brief Closure Medical
         about the current marketplace conditions for the Devices. Such updates
         shall be done at such locations and through such means as the parties
         shall mutually determine (i.e., either by phone, videoconference,
         in-person or similar means). Closure Medical shall provide such
         information and assistance with respect to the Product and Technology
         as CPC shall reasonably require at such meetings in order for CPC to
         understand as fully as possible the Product and the Technology. At no
         time shall CPC be required to disclose any Confidential Information of
         CPC as a result of such updates.

                                    Article 3

                              FDA APPROVAL AND [**]

3.1      Closure Medical shall use commercially reasonable efforts to complete
         [**]. CPC shall cooperate with Closure Medical as may be reasonable
         necessary in order for Closure Medical to [**].

3.2      During the course of [**], Closure Medical shall [**] that is the
         subject of the [**]. Such [**] shall [**], unless the parties mutually
         determine to [**] and shall be held in such manner as the parties shall
         reasonably agree. Closure Medical shall [**] identified in Schedule
         3.1.

         3.2.1   Schedule 3.1 shall identify [**].

         3.2.2   After completion of [**] shall determine, [**]:

         (a)     If, [**] in order to [**], then [**] shall be made [**].

                                       8                        REDACTED VERSION
<PAGE>

         (b)     If the [**], then [**] shall be made [**].

         (c)     If the [**], then [**] shall be made [**].

         If [**] that it [**], then [**], and further, [**] shall not have [**].

3.3      If, [**] the Initial Product will have to be re-submitted to the FDA
         for regulatory approval, the Agreement shall remain in effect and
         Closure Medical shall take such steps and undertake such commercially
         reasonable efforts as shall be required in order to obtain FDA approval
         of such Initial Product which also meets the [**]. Upon receipt of
         regulatory approval from the FDA for such Initial Product, Closure
         Medical shall provide CPC with written documentation thereof, whereupon
         such Initial Product shall be supplied to CPC to be incorporated into
         the Initial Device as contemplated under this Agreement.

3.4      If FDA approval for the Initial Product does not occur [**] of the
         Effective Date, CPC may terminate this Agreement upon [**] prior
         written notice; provided, however, that CPC shall not retain, and
                         --------  -------
         Closure Medical shall not have any obligations to provide, [**], and
         further, CPC shall not have any rights or owe Closure Medical any
         obligations under this Agreement.

                                    Article 4

                             MANUFACTURE AND SUPPLY

4.1      Contact Person. As soon as reasonably practicable after the Effective
         Date, each Party shall identify a contact person to serve as the
         primary liaison between the Parties with regard to manufacture and
         supply issues. Each Party may replace its contact person, at any time,
         upon written notice identifying the new contact person to the other
         Party.

4.2      Manufacture And Supply. CPC shall accept Product exclusively from
         Closure Medical, and Closure Medical shall exclusively supply to CPC
         the Product for packaging and distribution as the Device in the
         Territory. The Parties acknowledge and agree that, subject to the
         provisions of Section 4.9, Closure Medical may use Third Parties to
         perform any of its obligations under this Agreement. Any Third Parties
         performing on behalf of Closure Medical shall be subject to the
         compliance and quality assurance requirements of this Agreement.

         4.2.1   Closure Medical shall be responsible for the [**]. CPC shall
                 provide [**]. If CPC makes any change to its Product Labeling
                 specifications (unless such changes are required as a result of
                 FDA or other government action or requirements), [**].

         4.2.2   Regulatory Filings.

                 (a)   CPC shall be responsible for complying with the
                       applicable Laws and Device Specifications provided by
                       Closure Medical with respect to the

                                       9                        REDACTED VERSION
<PAGE>

                       assembly, distribution, storage, warehousing and delivery
                       of the Product and the Device and labeling, marketing,
                       promotion, advertising and sale of the Device. The
                       Parties acknowledge and agree that under no circumstances
                       shall CPC label, market, promote, advertise or sell the
                       Product except as incorporated a Device.

                 (b)   Closure Medical shall be responsible for all quality
                       control and quality assurance matters related to the
                       manufacture of the Product. Closure Medical shall advise
                       CPC of any FDA compliance issues, including but not
                       limited to any quality assurance problems with Closure
                       Medical's manufacturing facilities used in the
                       manufacture of the Product. Closure Medical shall have
                       sole authority to interact with the FDA, but shall take
                       into account CPC's views and concerns when dealing with
                       any issues with the FDA that relate to this Agreement.

                 (c)   Closure Medical shall obtain and maintain any regulatory
                       approval for the Device required to market and sell the
                       Device in the United States and European Union. Technical
                       documentation shall be maintained by CPC and promptly
                       supplied at Closure Medical's reasonable request, in
                       order to maintain such regulatory approvals for the
                       Device, including, but not limited to, requirements of
                       the Medical Devices Directive (MDD 93/42/EEC) for Class I
                       devices (Annex VII).

                 (d)   In obtaining such regulatory approvals, Closure Medical
                       shall regularly advise CPC about the strategies and
                       issues involved in obtaining such regulatory approvals,
                       and shall give due consideration to CPC's views and
                       concerns with respect to such regulatory approvals.
                       Closure Medical shall provide CPC with access to its
                       regulatory filings as may be needed by CPC in order for
                       CPC to perform its obligations under this Agreement. CPC
                       shall be responsible for assembling the Device.

                 (e)   Closure Medical shall take all reasonable steps necessary
                       to correct any deficiencies, if any, found by the FDA
                       relating to the manufacture of the Product.

         4.2.3   Secondary Packaging. CPC shall promptly advise Closure Medical
                 of any FDA inspections and the findings thereof and shall take
                 all reasonable steps necessary to correct deficiencies, if any,
                 found by the FDA relating to packaging of the Device. CPC shall
                 advise Closure Medical of any FDA compliance issues or any
                 quality assurance problems with CPC's packaging facilities used
                 for the packaging of the Device.

4.3      12-Month Rolling Forecast. As soon as reasonably practicable, but in no
         event later than 90 days after the Commencement Date, and on the first
         Business Day of each month during the Term, CPC shall send to Closure
         Medical a good faith, non-binding 12-month rolling forecast (each, a
         "Rolling Forecast") identifying CPC's anticipated requirements of the
         Product by SKU. Each new Rolling Forecast after the initial Rolling
         Forecast may

                                      10                        REDACTED VERSION
<PAGE>

         adjust the anticipated requirements of the Product for the fourth month
         of such Rolling Forecast by an amount in the range of (a) [**] of units
         of the Product contained for such month in the previous Rolling
         Forecast for the first three Contract Years and (b) [**] of units of
         the Product contained for such month in the previous Rolling Forecast
         for each Contract Year after the first three Contract Years. There
         shall be no limitations on adjustments in months five through twelve of
         each such Rolling Forecast.

4.4     Firm Orders.

         4.4.1   Initial Firm Order. With the initial Rolling Forecast, CPC
                 shall provide Closure Medical with a Firm Order that shall not
                 exceed [**] of the Initial Product, representing the [**] of
                 the first Rolling Forecast (the "Initial Firm Order"), such
                 ordered units of the Initial Product to be delivered by Closure
                 Medical in no less than four (4) equal installments over the
                 period covered by the Initial Firm Order.

         4.4.2   Ongoing Firm Orders. With each Rolling Forecast, CPC shall
                 provide a Firm Order for the Product by SKU for the [**] of
                 such Rolling Forecast. Each Firm Order shall be for the Product
                 in an amount in the range of [**] of units of the Product
                 contained in the [**] of the previous Rolling Forecast.

         4.4.3   Formation of Contract. If a Firm Order is outside the [**]
                 range required by Section 4.4.2, Closure Medical may either
                 accept or reject, in whole or in part, the amount of such Firm
                 Order which is outside such [**] range by written notification
                 to CPC within [**] after receipt thereof. Notwithstanding the
                 foregoing, Closure Medical shall use its reasonable commercial
                 efforts to satisfy the requirements of such Firm Order that are
                 outside such parameters.

4.5     Annual Minimum Quantities.

         4.5.1   During each Contract Year, CPC shall place Firm Orders for a
                 minimum quantity of the Product as follows:

                 (a)   During the first Contract Year, CPC shall purchase [**]
                       of the Products from Closure Medical.

                 (b)   During each subsequent Contract Year, CPC shall purchase
                       [**] of the Products from Closure Medical

         4.5.2   If CPC fails to purchase from Closure Medical the minimum
                 quantity of the Products set forth in Section 4.5.1 during any
                 Contract Year, CPC, at its sole discretion, shall either (i)
                 [**] or (ii) [**].

         4.5.3   If CPC [**], then notwithstanding the provisions of Section
                 4.5.2, Closure Medical may [**].

         4.5.4   CPC shall not be considered [**].

                                      11                        REDACTED VERSION
<PAGE>

     4.5.5   It is expressly understood that any such failure to meet the
             annual purchase minimums [**].

4.6  Labeling, Packaging and Assembly.

     4.6.1   CPC shall be responsible for providing all Secondary Packaging and
             assembling the Product and the Secondary Packaging into the Device.
             Any changes to Secondary Packaging must conform to the requirements
             of the Design Control Procedure as attached hereto as Schedule
             4.6.1 as the same may be amended by Closure Medical from time to
             time at its sole discretion (the "Design Control Procedure"). CPC
             shall be solely responsible for any and all costs associated with
             the Secondary Packaging and any changes made to the Secondary
             Packaging including, without limitation, the costs associated with
             the proper disposal or reworking of Product rendered obsolete by
             such change to Secondary Packaging.

     4.6.2   Except to the extent prohibited by Law, CPC shall (a) reasonably
             identify Closure Medical as the manufacturer and licensor of the
             Product on all packaging materials and (b) mark each Device in
             accordance with the requirements of 35 U.S.C. 287(a), with at least
             two (2) U.S. patent numbers selected by Closure Medical whose
             claim(s) encompass the Product.

4.7  Delivery. All Product shall be delivered to CPC [**]. Each batch of the
     Product shall be accompanied by a packing slip that identifies the batch
     and purchase order numbers, and a certificate of conformance, such
     certificate of conformance shall be substantially in the form of Schedule
     4.7. Closure Medical shall retain a sample of each batch of the Product
     delivered to CPC.

4.8  Inspection of Shipment and Notice of Claims.

     4.8.1   Inspection. Delivery of any Product by Closure Medical to CPC shall
             constitute a certification by Closure Medical that the Product
             conforms with the Product Specifications. After delivery of a
             shipment of any Product to CPC, CPC shall have forty-five (45) days
             to examine the Product to determine if they conform to the Product
             Specifications and, on the basis of such examination, to accept or
             reject such shipment. Any claims for failure to so conform
             ("Claims") shall be made by CPC in writing to Closure Medical,
             indicating the nonconforming characteristics of the Product. If CPC
             does not provide such notice to Closure Medical, CPC shall be
             deemed to have accepted the shipment of the Product as complete and
             conforming to the Product Specifications (except for latent defects
             or deficiencies which were not reasonably discoverable by CPC). For
             those latent defects or deficiencies which were not reasonably
             discoverable by CPC (such as stability problems), CPC shall provide
             written notice of such Claims promptly after discovery thereof, and
             such Claims shall be handled in accordance with the provisions set
             out in this Section 4.8.

     4.8.2   If Closure Medical agrees with such Claim, then as promptly as
             possible after the submission of a Claim by CPC, Closure Medical
             shall, [**].

                                       12
<PAGE>

     4.8.3   If Closure Medical does not agree with such Claim, then the parties
             agree to submit the Products in question to an independent party
             which has the capability of testing the Products to determine
             whether or not it complies with the Product Specifications. In the
             event the parties cannot agree upon such independent party, or in
             the event it is not possible to acquire the services of such an
             independent party, then such dispute shall be resolved pursuant to
             Article 9.

     4.8.4   Notwithstanding the foregoing, Closure Medical shall have no
             liability to the extent that: (a) the replacement of any Product
             shall have been necessitated by the fault or negligence of CPC; (b)
             the contamination or defect complained of is caused by the handling
             of the Product by CPC or a Third Party outside of Closure Medical's
             control; or (c) the Product has not been stored or used in
             accordance with Closure Medical's then applicable Product
             Specifications.

4.9  Manufacturing Facility.

     4.9.1   Location. Closure Medical shall initially manufacture the Product
             at its Manufacturing Facility. If Closure Medical determines to
             change the site of manufacture of the Product, it shall provide to
             CPC as much prior notice as reasonably possible, but in any event,
             other than as a result of a Force Majeure Event, [**]. CPC shall be
             provided the opportunity to review and audit such site prior to
             commencement of manufacture, such audit (and the remedy of any
             deficiencies noted as a result thereof) to be conducted generally
             following the procedures set out in Section 4.9.2. Closure Medical
             shall, to the extent reasonably required for manufacture of Product
             pursuant to this Agreement, remedy any material deficiencies
             identified by CPC in such audit prior to commencement of
             manufacture. If CPC does not conduct its audit within such [**]
             (assuming it was given the reasonable opportunity to do so), then
             Closure Medical shall be free to commence manufacture at such new
             manufacturing site.

     4.9.2   Inspections by CPC.

             (a)   CPC shall have the right on an annual basis, upon reasonable
                   advance notice and during regular business hours, to inspect
                   and audit the Manufacturing Facility and the records
                   (including batch records) being maintained by Closure Medical
                   in connection with the manufacture of the Product at the
                   Manufacturing Facility (the "Closure Records") to assure
                   compliance with all Laws. To the extent practicable, CPC
                   shall also have the same rights as Closure Medical to inspect
                   and audit Closure Medical's subcontractors, accompanied by an
                   authorized Closure Medical employee. Such inspections and
                   audits shall be conducted at CPC's sole cost and expense and
                   in a manner so as to minimize disruption of Closure Medical's
                   business operations. Except as required by any Law or as
                   otherwise provided in this Agreement, CPC shall not be
                   entitled to conduct more than [**] and audit during each
                   Contract Year of the Manufacturing Facility and of the
                   Closure Records, without the prior written approval of
                   Closure Medical, such approval not to be unreasonably

                                       13
<PAGE>

                   withheld. CPC shall be responsible for ensuring that each
                   designee or representative of CPC that conducts an inspection
                   and audit of the packaging facility or the Closure Medical
                   Records or the subcontractor's records shall comply with the
                   confidentiality obligations set out in Article 10 of this
                   Agreement.

             (b)   To the extent CPC reasonably determines during any such
                   inspection and audit that Closure Medical or any of its
                   subcontractors is not in material compliance with all Laws,
                   CPC shall provide Closure Medical with written notice
                   detailing such material non-compliance. Upon receipt of such
                   notice from CPC, Closure Medical shall use [**] to promptly
                   remedy, or cause its subcontractors to promptly remedy, such
                   material non-compliance [**] of such notice. Thereupon, CPC
                   shall have the right to re-inspect and re-audit the
                   applicable facility or the Closure Records or the
                   subcontractor's records, as applicable, upon reasonable
                   notice and during regular business hours to determine whether
                   Closure Medical or its subcontractor has remedied such non-
                   compliance.

             (c)   In the event such deficiency is material and is not remedied
                   within such [**], then CPC shall have the right to terminate
                   this Agreement upon written notice to Closure Medical without
                   any penalty or cost of any nature whatsoever; provided,
                   however, that if a plan to remedy such deficiency (which plan
                   has been accepted by CPC) has been implemented by Closure
                   Medical and such plan cannot be completed within [**], then
                   CPC shall not have the right to terminate this Agreement so
                   long as Closure Medical is implementing such plan in a good
                   faith fashion.

     4.9.3   Inspections by Closure Medical.

             (a)   Closure Medical shall have the right on an annual basis, upon
                   reasonable advance notice and during regular business hours,
                   to inspect and audit the packaging facility and the records
                   being maintained by CPC in connection with the packaging of
                   the Device at the packaging facility (the "CPC Records") to
                   assure compliance with all Laws. To the extent practicable,
                   Closure Medical shall also have the same rights as CPC to
                   inspect and audit CPC's subcontractors involved with the
                   packaging of the Device, accompanied by an authorized CPC
                   employee. Such inspections and audits shall be conducted at
                   Closure Medical's sole cost and expense and in a manner so as
                   to minimize disruption of CPC's business operations. Except
                   as required by any Law or as otherwise provided in this
                   Agreement, Closure Medical shall not be entitled to conduct
                   more than [**] and audit during each Contract Year of the
                   packaging facility and of the CPC Records, without the prior
                   written approval of CPC, such approval not to be unreasonably
                   withheld.

             (b)   To the extent Closure Medical reasonably determines during
                   such inspection and audit that CPC or any of its
                   subcontractors is not in

                                       14
<PAGE>

                   material compliance with all Laws, Closure Medical shall
                   provide CPC with written notice detailing such material non-
                   compliance. Upon receipt of such notice from Closure Medical,
                   CPC shall use [**] to promptly remedy, or cause its
                   subcontractors to promptly remedy, such material non-
                   compliance within [**] of such notice. Thereupon, Closure
                   Medical shall have the right to re-inspect and re-audit the
                   applicable facility or the CPC Records or the subcontractor's
                   records, as applicable, upon reasonable notice and during
                   regular business hours to determine whether CPC or its
                   subcontractor has remedied such material non-compliance.
                   Closure Medical shall be responsible for ensuring that each
                   designee or representative of Closure Medical that conducts
                   an inspection and audit of the packaging facility or the CPC
                   Records or the subcontractor's records shall comply with the
                   confidentiality obligations set out in Article 10 of this
                   Agreement.

     4.9.4   Compliance with Certain Laws. Closure Medical agrees to comply with
             the applicable provisions of any Federal or state law and all
             executive orders, rules and regulations issued thereunder, whether
             now or hereafter in force, including Executive Order 11246, as
             amended, Chapter 60 of Title 41 of the Code of Federal Regulations,
             as amended, prohibiting discrimination against any employee or
             applicant for employment because of race, color, religion, sex or
             national origin; 60-741.1 of Chapter 60 of 41 Code of Federal
             Regulations, as amended, prohibiting discrimination against any
             employee or applicant for employment because of physical or mental
             handicap; 60.250.4 of Chapter 60 of 41 Code of Federal Regulations,
             as amended, providing for the employment of disabled veterans and
             veterans of the Vietnam era; Chapter 1 of Title 48 of the Code of
             Federal Regulations, as Amended, Federal Acquisition Regulations;
             Sections 6, 7 and 12 of the Fair Labor Standards Act, as amended,
             and the regulations and orders of the United States Department of
             Labor promulgated in connection therewith; and any provisions,
             representations or agreements required thereby to be included in
             this Agreement are hereby incorporated by reference.

     4.9.5   [**] Closure Medical has [**] attached as Schedule 4.9.5. [**]
             Closure Medical shall [**] and shall provide to [**] the term of
             this agreement. [**]

     4.9.6   [**] agrees that the [**] under this Agreement shall be in
             compliance with [**] set out as Schedule 4.9.6 to this Agreement
             [**] shall review with [**].

     4.9.7   Protection of [**]. The parties acknowledge and agree that [**].

4.10 Mutual Assistance.

     4.10.1  General. Each Party shall cooperate with the other Party to provide
             all reasonable assistance and take all actions reasonably requested
             by the other Party that are necessary or desirable to enable the
             other Party to comply with any Law

                                       15
<PAGE>

             applicable to the Product and the Device, including, but not
             limited to, submitting or filing U.S. promotional materials with
             the FDA.

     4.10.2  Duties to Inform.

             (a)   The Parties shall cooperate to, among other things, keep each
                   Party informed, commencing [**] of notification of any action
                   by, or notification or other information which it receives
                   (directly or indirectly) from a regulatory authority or any
                   other Governmental Authority, which (a) raises any material
                   concerns regarding the safety of any Product or Device, (b)
                   which indicates or suggests a potential material liability
                   for either Party to Third Parties arising in connection with
                   any Device, or (c) which is reasonably likely to lead to a
                   recall or market withdrawal of any Device; provided that
                   neither Party shall be obliged to disclose such information
                   in breach of any contractual restriction which it could not
                   reasonably have avoided.

             (b)   Each Party shall promptly notify the other Party of any of
                   the following, including any corrective actions initiated by
                   such Party and copies of all relevant documentation relating
                   thereto, to the extent controlled by such Party:

                   (i)   governmental or regulatory inspections of
                         manufacturing, distribution or other related facilities
                         used for the Product or Device;

                   (ii)  inquiries by governmental or regulatory authorities
                         concerning clinical investigation activities (including
                         inquiries of investigators, clinical monitoring
                         organizations and other related Parties) relating to
                         the Product or Device;

                   (iii) any communication from governmental or regulatory
                         authorities pertaining to the manufacture, sale,
                         promotion or distribution of the Product or Device;

                   (iv)  any other governmental or regulatory authority reviews
                         or inquiries relating to the Product or Device;

                   (v)   receipt of a warning letter relating to the Product or
                         Device; and

                   (vi)  an initiation of any governmental or regulatory
                         authority investigation, detention, seizure or
                         injunction concerning any Product or Device.

     4.10.3  Device Recall.

             (a)   In the event any governmental agency having applicable
                   jurisdiction shall order any corrective action with respect
                   to any Product or Device supplied

                                       16
<PAGE>

                   hereunder, customer notice, restriction, change, corrective
                   action or market action or the Product or Device change, [**]
                   particular Product or Device shall be established to be [**]
                   hereunder.

             (b)   In the event that [**] recall of the Product or Device
                   supplied hereunder [**], customer notice, restriction,
                   change, corrective action or market action or any Product
                   change, [**] particular Product or Device shall be
                   established to be [**] hereunder.

             (c)   Any such recalls shall be implemented and administered by CPC
                   and Closure Medical in a manner which is appropriate and
                   reasonable under the circumstances and in conformity with any
                   requests or orders of the FDA as well as accepted trade
                   practices. Each Party shall give immediate notice by
                   telephone (to be confirmed in writing) to the other Party
                   upon discovery that any Product or Device should be recalled,
                   corrected or withdrawn from the market, or may be required to
                   be recalled, corrected or withdrawn from the market. The
                   obligations under this section shall survive the complete or
                   partial termination of this Agreement.

             (d)   If both Parties share responsibility with respect to a
                   recall, the costs shall [**].

             (e)   CPC undertakes to use reasonable efforts to establish a batch
                   tracing and recall system which will enable CPC, to the
                   extent reasonably possible, to identify, as quickly as
                   possible, customers within the Territory who have been
                   supplied with Devices of any particular batch, and to recall
                   such Devices from such customers.

     4.10.4  Inquiries and Complaints.

             (a)   United States. For Devices sold in the United States, Closure
                   Medical is recognized as the Product manufacturer and CPC is
                   recognized as the Device distributor, as defined in Part 803
                   of Title 21 of the Code of Federal Regulations ("21 CFR Part
                   803"). In accordance with the requirements of this
                   regulation, the responsibilities for complaint handling are
                   agreed as follows:

                   (i)   CPC will: (A) receive and log all complaints from Third
                         Parties; (B) report all Device complaints to Closure
                         Medical; (C) evaluate complaints and conduct
                         investigations related to the Secondary Packaging or
                         distribution of the Device, as appropriate; (D) respond
                         to the complainant regarding complaint status; and (E)
                         implement corrective action as required to ensure
                         Device quality under a plan jointly agreed to by the
                         parties.

                   (ii)  Closure Medical will: (A) receive and log all
                         complaints from CPC; (B) report all Device complaints
                         received directly from Third Parties to CPC; (C)
                         provide Medical Device Reports to the FDA as

                                       17
<PAGE>

                         defined in 21 CFR (S).803.50, with copies to CPC; (D)
                         evaluate complaints and conduct investigations related
                         to the manufacture of the Product or the Component
                         design; (E) respond to CPC regarding complaint and
                         investigation status; and (F) implement corrective
                         action as required to ensure Device quality under a
                         plan jointly agreed to by the parties.

             (b)   CE Mark Countries. For Devices sold in countries recognizing
                   the CE Mark, CPC is recognized as the Device manufacturer as
                   defined in MDD 93/42/EEC. In accordance with the requirements
                   of this regulation, CPC will (i) provide reports of serious
                   injuries to the competent authority (vigilance) as defined in
                   MDD 93/42/EEC, Annex VII, with copies to Closure Medical and
                   (ii) provide manufacturing, labeling and distribution records
                   regarding the Device upon request by the applicable
                   Governmental Authority as appropriate, with copies to Closure
                   Medical.

             (c)   Remainder of Territory. In order to facilitate compliance
                   with the Parties' regulatory obligations and commitments in
                   the remainder of the Territory, the Parties agree jointly to
                   develop written procedures for the surveillance, receipt,
                   evaluation and reporting of inquiries and complaints relating
                   to the Device, in accordance with applicable Law. Each Party
                   will ensure that adequate records are kept of medical
                   inquiries and reports received concerning the Device.

                                   ARTICLE 5

                              PRODUCT DEVELOPMENT

5.1  Collaboration. The Parties shall collaborate to explore the development of
     Improvements and New Products for use in the Field.

5.2  Steering Committee.

     5.2.1   Governance. As soon as reasonably practicable, and in any event no
             more than thirty (30) days after the Commencement Date, the Parties
             shall establish a joint steering committee (the "Steering
             Committee"). Each Party shall designate two (2) members to form the
             Steering Committee. The chairperson of the Steering Committee shall
             be designated annually on an alternating basis between the Parties
             commencing with Closure Medical. The Party not designating the
             chairperson shall designate one of its representative members as
             secretary to the Steering Committee for such year. Each Party may
             replace its representatives at any time, upon notice to the other
             Party identifying the new representative. Any member of the
             Steering Committee may designate a substitute to attend and perform
             the functions of that member at any meeting of the Steering
             Committee.

     5.2.2   Responsibilities. The Steering Committee shall be responsible for
             overseeing strategic direction, project prioritization, and
             Improvement and New Product

                                       18
<PAGE>

             development and commercialization. The Steering Committee shall
             review and approve development plans and budgets for any
             Improvement or New Product.

     5.2.3   Meetings; Minutes. The Steering Committee shall meet in person or
             by teleconference on a calendar quarter basis (provided that at
             least two meetings per year shall be in person) or more frequently
             as necessary and as may be agreed upon, with each Party bearing all
             travel and related costs for its representatives. Within two weeks
             after each such meeting, the secretary of the Steering Committee
             shall prepare and distribute minutes of the meeting, which shall
             provide a description in reasonable detail of the discussions had
             at the meeting and a list of any actions, decisions or
             determinations approved by the Steering Committee. Minutes shall be
             approved or disapproved, and revised as necessary, at the next
             meeting. Each Party may, in its discretion, invite non-member
             representatives of such Party to attend meetings of the Steering
             Committee.

     5.2.4   Voting. Each Party shall have one vote in all matters decided by
             the Steering Committee. The Parties shall attempt to resolve any
             disagreement among members of the Steering Committee within the
             Steering Committee based on the efficient achievement of the
             objectives of this Agreement. If the parties cannot reach such
             agreement, then the dispute resolution procedures set out in
             Section 5.3 shall apply.

5.3  Development Activities.

     5.3.1   Inclusion of Improvements and New Products under Agreement.

             (a)   The Steering Committee shall designate a product development
                   team (the "Product Development Team").

             (b)   The Product Development Team shall evaluate the proposed
                   Improvement or New Product and propose a development plan
                   (the "Development Plan"), in accordance with Section 5.3.4,
                   to the Steering Committee.

             (c)   Upon receipt of the Development Plan the Steering Committee
                   shall promptly (i) review and evaluate the proposed
                   Improvement or New Product in light of the Development Plan;
                   and (ii) [**] accommodate such proposed Improvement or New
                   Product, in accordance with the following standards:

                   (i)   In the case of a New Product, the Steering Committee
                         shall [**].

                   (ii)  In the case of an Improvement, the Steering Committee
                         shall [**]

             (d)   If the Steering Committee agrees to develop the proposed
                   Improvement or New Product, then such Improvement or New
                   Product shall be included under this Agreement and shall be
                   subject to the same licenses, rights and obligations as the
                   Product in the Field. Neither Party shall unreasonably

                                       19
<PAGE>

                   withhold or delay the decision to include an Improvement or
                   New Product in the Agreement.

     5.3.2   Disputes Regarding the Development of Improvements. If the Steering
             Committee disagrees whether or not to pursue development of an
             Improvement, the following general principals will apply:

             (a)   If CPC voted to pursue development of such Improvement and
                   Closure Medical voted against pursuing such development, then
                   (i) if [**] of the Product, [**] under this Agreement or (ii)
                   if [**] of the Product [**].

             (b)   If CPC voted against pursuing development of such
                   Improvement, then [**] pursuant to this Agreement and [**].
                   For clarification purposes, [**] for such Improvement.

     5.3.3   Disputes Regarding the Development of New Products. If the Parties
             disagree whether or not to pursue development of the New Product,
             the following general principals will apply:

             (a)   If Closure Medical voted to pursue development of such New
                   Product and CPC voted against pursuing such development, then
                   [**] (i) [**] to the New Product and [**] such New Product
                   and (ii) [**] the New Product [**]. In the event [**] in the
                   New Product, then [**] such New Product [**].

             (b)   If CPC voted to pursue development of the New Product and
                   Closure Medical voted against pursuing such development,
                   then, [**].

     5.3.4   Development Plan. The Development Plan, as amended from time to
             time, shall set forth in reasonably sufficient detail (i) [**];
             (ii) the development [**], (iii) a [**] concerned, (iv) the [**],
             (v) the [**] and (vi) all such [**].

     5.3.5   Research and Development Costs. [**] the Research and Development
             Costs. [**]

     5.3.6   Development Efforts. Upon the Steering Committee's approval of the
             Development Plan for an Improvement or New Product, the Product
             Development Team shall conduct all product development and design
             of Improvements and New Products in accordance with the then-
             current Design Control Procedure. [**] to develop such Improvement
             or New Product in accordance with the Development Plan and obtain
             regulatory approvals therefor. Furthermore, each Party agrees to
             conduct such development activities in compliance with all
             applicable laws and regulations that are applicable to the
             particular stage of development of such New Product or Improvement,
             including, without limitation, QSRs. Development activities will
             commence once a written budget is approved and signed by both of
             Closure Medical and CPC.

                                       20
<PAGE>

5.4       Books and Records. The Parties shall keep comprehensive books and
          records relating to its obligations under this Agreement on either a
          cash or accrual basis of accounting in accordance with generally
          accepted accounting principles. All such records shall be maintained
          for [**] following the relevant Contract Year during the term of this
          Agreement or, upon termination of this Agreement, [**] following such
          termination date, or such longer period as is required by Law. During
          each Contract Year, and for [**] thereafter, CPC and Closure Medical,
          shall have the right, at its own expense, to have an independent
          accounting firm audit such books and records in order to verify the
          amount of the payments owed and/or paid pursuant to this Agreement.
          Each Party may perform such an audit not more than once in any 12-
          month period, unless a prior audit within the past two (2) years
          revealed that the amount owed by the other Party to such Party was
          underpaid in [**] amount owed, in which case an audit may be performed
          no more frequently than twice in any 12-month period. If the amount
          owed by one Party to the other Party was underpaid, the underpaying
          Party shall pay the additional amount owed and all accrued interest
          thereon to the other Party within [**] after its receipt of notice of
          such underpayment. If the amount underpaid was in [**] amount owed,
          the fees of such audit shall also be paid by such underpaying Party
          within [**] after its receipt of notice of same. Each audit shall be
          conducted during normal business hours, upon reasonable advance notice
          and in a manner that does not cause unreasonable disruption to the
          conduct of business by the audited Party.

                                   ARTICLE 6

                             INTELLECTUAL PROPERTY

6.1       Intellectual Property Ownership.

          6.1.1   Except for the express rights granted to CPC under this
                  Agreement, CPC acknowledges and agrees that the Intellectual
                  Property of Closure Medical (including all Intellectual
                  Property Rights associated therewith) is and shall remain the
                  sole property of Closure Medical and nothing in this Agreement
                  shall confer in CPC any right of ownership in Closure
                  Medical's Intellectual Property.

          6.1.2   Closure Medical acknowledges and agrees that the Intellectual
                  Property of CPC (including all Intellectual Property Rights
                  associated therewith) is and shall remain the sole property of
                  CPC and nothing in this Agreement shall confer in Closure
                  Medical any right of ownership in CPC's Intellectual Property.

6.2       Patent Prosecution and Maintenance for New Products and Improvements.

          6.2.1   Cooperation. After development of each New Product or
                  Improvement, the Parties shall consult and cooperate with each
                  other on all aspects of patent filings, prosecution or
                  maintenance of patents and know-how (as the case may be)
                  covering such New Product or Improvements.

          6.2.2   Patent Filing. Such filings and prosecution before the United
                  States Patent and Trademark Office ("PTO") and its foreign
                  counterparts shall be in the name of

                                      21
<PAGE>

                 [**]. Subject to Closure Medical's approval as hereinafter
                 described, such filings shall be prosecuted by [**].

         6.2.3   Responsibilities. Closure Medical's counsel shall handle all
                 patent prosecution with the PTO and its foreign counterparts.
                 All expenses of Closure Medical in connection with such patent
                 prosecution shall be borne by Closure Medical. CPC shall
                 reasonably cooperate with the reasonable requests of Closure
                 Medical in connection with any such patent prosecution.

         6.2.4   Discretion. Closure Medical shall, in its sole discretion, have
                 the right to abandon or not to pursue or maintain a patent or
                 patent application in a country in the Territory so long as, in
                 Closure Medical's sole good faith opinion, pursuit or
                 maintenance of such patent or patent application in such
                 country is not technically feasible or reasonably commercially
                 justifiable.

6.3      Infringement.

         6.3.1   If, as a result of the manufacture, use or sale of any Device
                 in any country of the Territory, Closure Medical or CPC and/or
                 its Affiliate is sued for patent infringement or threatened
                 with such a lawsuit or other action by a Third Party, Closure
                 Medical and CPC shall meet to analyze the infringement claim
                 and avoidance of same. If it is necessary to obtain a license
                 from such Third Party, Closure Medical and CPC in negotiating
                 such a license shall make every effort to minimize the license
                 fees and/or royalty payable to such Third Party. Closure
                 Medical shall [**]. CPC shall [**].

         6.3.2   In the event that there is infringement of a patent involving
                 the Device by a Third Party, Closure Medical and CPC (or its
                 Affiliate or sublicensee) shall notify each other in writing to
                 that effect, including with said written notice evidence
                 establishing a case of infringement by such Third Party.
                 Closure Medical shall bear all the expenses of any suit brought
                 by it and shall retain all damages or other monies awarded or
                 received in settlement of such suit. CPC and/or its Affiliates
                 will cooperate with Closure Medical in any such suit or shall
                 have the right to consult with Closure Medical and be
                 represented by its own counsel at its own expense. If after the
                 expiration of [**] from the date of receipt of said notice,
                 Closure Medical has not overcome the case of infringement,
                 obtained a discontinuance of such infringement, or brought suit
                 against the Third Party infringer, then CPC shall have the
                 right, in its sole discretion, but not the obligation to bring
                 such suit at its own expense and in its own name, if possible.
                 CPC shall bear all the expenses of any suit brought by it and
                 shall retain all damages or other monies awarded or received in
                 settlement of such suit. Closure Medical will cooperate with
                 CPC in any such suit and take such actions and provide such
                 assistance as CPC shall request in connection with the
                 prosecution of such suit including, but not limited to, being
                 joined as a plaintiff in any such suits. Closure Medical shall
                 have the right to consult with CPC and be represented by its
                 counsel at its own expense.

                                       22
<PAGE>

6.4      Ownership of Improvements and New Products.

         6.4.1   Inventions. Ownership and use of any and all inventions,
                 discoveries, developments, know-how, methods, techniques,
                 formulae, processes and compositions of matter, whether or not
                 patentable, derived from or directly resulting from any
                 development work ("Development Work") undertaken pursuant to
                 Article 5 (each, an "Invention") shall be handled as set out in
                 this Article 6.4. Inventorship for patentable inventions [**]
                 during the course of the performance of activities pursuant to
                 this Agreement shall be determined in accordance with U.S.
                 patent laws for determining inventorship. Ownership shall be
                 initially determined based on inventorship, but may be modified
                 based upon the following provisions:

                 (a)   In the event a Party is deemed an owner or joint owner of
                       a patentable Invention [**] in the conduct of the
                       Development Work and that Invention either (i) [**] or
                       (ii) is [**], then in either case [**].

                 (b)   In the event a Party is deemed an owner or joint owner of
                       a patentable Invention [**] in the conduct of the
                       Development Work that either (i) does [**] or (ii) does
                       [**], then in either case [**].

         6.4.2   Closure Medical shall have primary responsibility for filing,
                 prosecuting and maintaining any U.S. patent application(s) or
                 patent(s) and foreign counterpart thereof for Inventions
                 described in Section 6.4.1(a), but shall give full
                 consideration to CPC's recommendations including selection of
                 attorney(s). CPC shall have primary responsibility for filing,
                 prosecuting and maintaining any U.S. patent application(s) or
                 patent(s) and foreign counterpart thereof for Inventions
                 described in Section 6.4.1(b), but shall give full
                 consideration to Closure Medical's recommendations including
                 selection of attorney(s). The patent expenses for such
                 Inventions shall be borne equally by CPC and Closure Medical,
                 but either may, by giving timely notice to the other, withdraw
                 from further participation in the filing, prosecution and/or
                 maintenance of any such patent application(s) or patent(s) and
                 shall not be liable for any expenses incurred after written
                 notice is given. If either party does not elect to file,
                 prosecute or maintain any such patent application(s) or
                 patent(s) in a country or countries and is not seeking another
                 form of proprietary protection, or after electing to
                 participate in the filing, prosecution and/or maintenance on
                 such Inventions in a country or countries, does not pay its
                 share of the expenses within [**] of written notification of
                 expenses being due, the other party, in its sole discretion,
                 shall have the right to file, prosecute or maintain at its
                 expense on a country by country basis each such patent
                 application(s) and patent(s). In that event, the party ceasing
                 to pay its share of the costs and expenses shall not be
                 entitled to practice such Invention unless and until it has
                 paid its share of such costs and expenses.

         6.4.3   Each party shall require its employees or agents responsible
                 for conducting research in performance of this Agreement to
                 keep contemporaneous records of

                                       23
<PAGE>

                 their results and findings in sufficient detail to document any
                 inventions of discoveries made by such employees and agents
                 under this Agreement in bound notebooks (which notebooks shall
                 be reviewed and signed by a witness on a regular basis).

         6.4.4   Closure Medical and CPC will cooperate in a timely manner to
                 prepare, review and execute patent applications and all such
                 further papers, as may be necessary to enable the parties to
                 protect Inventions by patent in any and all countries and to
                 vest title to said patent application(s) and patent(s) and
                 assist in any patent office or agency proceedings.

         6.4.5   Either party may practice any Invention outside the grant
                 provided to CPC under Article 2, and CPC may practice any such
                 Invention within such grant as well. If either party wishes to
                 practice a patented Invention outside the grant provided to CPC
                 under Article 2, the party practicing the patented Invention
                 will not be obligated to pay any royalty or other compensation
                 to the other for such practice.

6.5      Trademarks.

         6.5.1   Selection and Ownership of Trademarks for Products. Selection
                 of trademarks for any and all Products, Improvements and New
                 Products (the "Trademarks") shall be [**] and [**] all right,
                 title and interest in and to any and all such Trademarks. [**]
                 shall not use, and shall not permit any Third Party to use,
                 such Trademarks without the express written consent of [**].

         6.5.2   Registration and Maintenance of Trademarks. [**] shall be
                 responsible for maintaining and registering any Trademarks.
                 [**] shall be responsible for all costs relating to the filing
                 and renewal of trademark applications for the Trademarks.

         6.5.3   Defense of Trademark Infringements.

                 (a)   Duty to Inform the Other Party of Trademark
                       Infringements. [**] agrees to notify [**] promptly in
                       writing if it becomes aware of any conflicting use of or
                       application for registration of the Trademarks, or of any
                       trademark confusingly similar thereto, or of any known or
                       alleged infringements as well as of unfair competition
                       involving the trademarks of the other Party which shall
                       come to its attention.

                 (b)   Defense of [**] Trademarks. [**] shall be responsible for
                       the defense of the Trademarks and shall determine in its
                       sole discretion as to whether it will bring any actions
                       in connection therewith. If [**] decides to do so, [**]
                       shall cooperate with [**] and render [**] its
                       commercially reasonable assistance in the defense of the
                       Trademarks at [**] expense. Any damages and costs
                       recovered shall be for [**] sole benefit.

                                       24
<PAGE>

                                   ARTICLE 7

                               COMMERCIAL TERMS

7.1      Product Supply Price. During the Initial Term, the price per unit of
         the Initial Product (the "Product Price") shall be [**]. The Product
         Price for each shipment of the Product shall be paid to Closure Medical
         within [**] after CPC's receipt of Closure Medical's invoice for such
         shipment (such invoice to be issued the date of shipment).

         7.1.1   If, [**] either (i) [**] or (ii) [**], then the Parties [**].
                 For purposes of this paragraph, [**].

         7.1.2   [**] shall have the right [**] but shall be limited to [**] by
                 the Parties.

7.2      Product Specifications. Upon achieving the Initial Product, the
         specifications for such Product shall be deemed to be the Product
         Specifications.

         7.2.1   Product Specifications for each Improvement (to the extent
                 applicable) shall be agreed by the Parties no less than [**]
                 prior to the placement of the first order for each such
                 Improvement. Such Product Specifications shall become part of
                 this Agreement and be attached as part of Schedule 1.52 hereof.

         7.2.2   Closure Medical shall not make any material changes to the
                 Product Specifications or to the Products without the prior
                 written approval of CPC, such approval not to be unreasonably
                 withheld or delayed.

         7.2.3   With respect to non-material changes to the Product
                 Specifications or to the Products, Closure Medical shall notify
                 CPC of such changes in writing, and CPC shall have [**] to
                 respond in writing as to whether it considers such changes as
                 material or non-material. If CPC does not respond within such
                 [**] period, or if CPC agrees that such change is non-material,
                 then Closure Medical may proceed with such change. If CPC
                 responds to Closure Medical and advises Closure Medical that
                 such change is material, then such change shall not be made
                 without the prior written approval of CPC, such approval not to
                 be unreasonably withheld or delayed.

         7.2.4   In addition, any changes to the Product, the Product
                 Specifications or the manufacturing process which may require
                 the submission of any amendment, filing or other documentation
                 with any regulatory authority shall be identified and reviewed
                 in accordance with the Design Control Procedure. To the extent
                 reasonably practicable, CPC shall provide a response to any
                 such proposed changes within [**] after receipt.

7.3      Reimbursement by CPC.

         7.3.1   In recognition of Closure Medical's research expenditures in
                 the Field to date, CPC will make the following payments

                                       25
<PAGE>

                 (a)   [**] on [**];

                 (b)   [**] after [**].

                 (c)   [**] upon [**].

         7.3.2   In recognition of Closure Medical development expenditures in
                 the Field to date, CPC will make the following payments:

                 (a)   [**] within [**].

                 (b)   [**] upon [**].

         7.3.3   Each reimbursement is due [**] after notification of CPC
                 (including any related documentation) of satisfaction of each
                 incremental requirement.

7.4      Payment Terms. All payments due to either Party hereunder shall be made
         in immediately available U.S. funds, without set-off or counterclaim
         (unless being contested in good faith).

7.5      Interest. All payments not paid by the date such payments are due shall
         bear interest from the due date to the date payments are actually paid
         at the annual rate of the Prime Rate of Interest (as then specified in
         THE WALL STREET JOURNAL) [**].
         -----------------------

                                   ARTICLE 8

                             TERM AND TERMINATION

8.1      Automatic Renewal. This Agreement will automatically renew at the end
         of the Initial Term or a subsequent renewal term for [**] (each, a
         "Renewal Term"), unless either Party notifies the other at least [**]
         prior to the end of the Initial Term or then current Renewal Term, as
         applicable, of its intention not to renew this Agreement.

8.2      Termination for Cause.

         8.2.1   Either Party may terminate this Agreement immediately upon
                 written notice to the other Party that any material breach of a
                 material provision of this Agreement by such other Party
                 remains uncured [**] after notice of such breach was received
                 by such other Party.

         8.2.2   Either Party may terminate this Agreement immediately upon
                 written notice to the other Party where the other Party becomes
                 subject to a Bankruptcy Event.

8.3      Termination without Cause. CPC may terminate this Agreement without
         cause by providing [**]; provided, however, that if CPC terminates this
         Agreement at any time (i) prior to the [**], then CPC shall [**]; (ii)
         during the [**], then CPC shall [**]; and (iii) after the [**], then
         CPC shall [**]. For purposes of clarification, if this Agreement either
         is terminated [**], or if it is terminated by CPC for cause under
         Section 8.2, then [**].

                                       26
<PAGE>

8.4      General. Upon termination of this Agreement, each Party's liability for
         any charges, payments or expenses due to the other Party that accrued
         prior to the date of termination shall not be extinguished by
         termination.

8.5      Disposal of Product and Device. Upon termination or expiration of this
         Agreement, CPC shall have [**] to dispose in the Field any Devices
         remaining in its inventory on the effective date of such termination or
         expiration in such manner as CPC shall reasonably determine.
         Notwithstanding the foregoing, CPC or its authorized representative
         shall not market or sell any such Device [**]. Any Device or Product
         remaining in CPC's inventory after the [**] period shall be properly
         destroyed at CPC's expense.

                                   ARTICLE 9

                              DISPUTE RESOLUTION

9.1      Negotiation and Escalation. If any controversy or claim arises relating
         to this Agreement, the Parties will attempt in good faith to negotiate
         a solution to their differences, including progressively escalating any
         controversy or claim through senior levels of management. If
         negotiation does not result in a resolution within [**] of when one
         Party first notifies the other of the controversy or claim, either
         Party may resort to arbitration under Section 9.2. For purposes of this
         Section 9.1, senior levels of management shall mean, with respect to
         CPC, the management of CPC and its direct supervisory management in the
         consumer business area.

9.2      Arbitration.

         9.2.1   Any dispute, claim or controversy arising from or related in
                 any way to this agreement or the interpretation, application,
                 breach, termination or validity thereof, including any claim of
                 inducement of this agreement by fraud or otherwise, will be
                 submitted for resolution to arbitration pursuant to the rules
                 then pertaining of the CPR Institute for Dispute Resolution, or
                 successor ("CPR"), except where those rules conflict with these
                 provisions, in which case these provisions control. The
                 arbitration will be held in the Borough of Manhattan, City of
                 New York, State of New York.

         9.2.2   The panel shall consist of three arbitrators chosen from the
                 CPR Panels of Distinguished Neutrals (or, by agreement, from
                 another provider of arbitrators) each of whom is a lawyer with
                 at least fifteen (15) years experience with a law firm or
                 corporate law department of over 25 lawyers or was a judge of a
                 court of general jurisdiction. Each such arbitrator shall also
                 have had substantive experience or exposure to intellectual
                 property matters. In the event the aggregate damages sought by
                 the claimant are stated to be less than [**], and the aggregate
                 damages sought by the counterclaimant are stated to be less
                 than [**], and neither side seeks equitable relief, then a
                 single arbitrator shall be chosen, having the same
                 qualifications and experience specified above. Each arbitrator
                 shall be

                                       27
<PAGE>

                 neutral, independent, disinterested, impartial and shall abide
                 by The Code of Ethics for Arbitrators in Commercial Disputes
                 approved by the American Arbitration Association. There shall
                 be no ex parte communications with an arbitrator either before
                       -- -----
                 or during the arbitration, relating to the dispute or the
                 issues involved in the dispute or the arbitrator's views on any
                 such issues.

         9.2.3   The parties agree to cooperate (1) to attempt to select the
                 arbitrator(s) by agreement within forty-five (45) days of
                 initiation of the arbitration, including jointly interviewing
                 the final candidates, (2) to meet with the arbitrator(s) within
                 forty-five (45) days of selection and (3) to agree at that
                 meeting or before upon procedures for discovery and as to the
                 conduct of the hearing which will result in the hearing being
                 concluded within no more than nine (9) months after selection
                 of the arbitrator(s) and in the award being rendered within
                 sixty (60) days of the conclusion of the hearings, or of any
                 post-hearing briefing, which briefing will be completed by both
                 sides within forty-five (45) days after the conclusion of the
                 hearings.

         9.2.4   In the event the parties cannot agree upon selection of the
                 arbitrator(s), the CPR will select arbitrator(s) as follows:
                 CPR shall provide the parties with a list of no less than 25
                 proposed arbitrators (15 if a single arbitrator is to be
                 selected) having the credentials referenced above. Within
                 twenty-five (25) days of receiving such list, the parties shall
                 rank at least 65% of the proposed arbitrators on the initial
                 CPR list, after exercising cause challenges. The parties may
                 then interview the five candidates (three if a single
                 arbitrator is to be selected) with the highest combined
                 rankings for no more than one hour each and, following the
                 interviews, may exercise one peremptory challenge each. The
                 panel will consist of the remaining three candidates (or one,
                 if one arbitrator is to be selected) with the highest combined
                 rankings.

         9.2.5   In the event these procedures fail to result in selection of
                 the required number of arbitrators, CPR shall select the
                 appropriate number of arbitrators from among the members of the
                 various CPR Panels of Distinguished Neutrals, allowing each
                 side challenges for cause and three peremptory challenges each.

         9.2.6   In the event the parties cannot agree upon procedures for
                 discovery and conduct of the hearing that meet the schedule set
                 forth in Section 9.2.3 above, then the arbitrator(s) shall set
                 dates for the hearing, any post-hearing briefing, and the
                 issuance of the award in accord with the schedule set forth in
                 Section 9.2.3. The arbitrator(s) shall provide for discovery
                 according to those time limits, giving recognition to the
                 understanding of the parties that they contemplate reasonable
                 discovery, including document demands and depositions, but that
                 such discovery be limited so that the schedule set forth in
                 Section 9.2.3 may be met without difficulty. In no event will
                 the arbitrator(s), absent agreement of the parties, allow more
                 than a total of ten (10) days for the hearing or permit either
                 side to obtain more than a total of forty (40) hours of
                 deposition testimony from all witnesses, including both fact
                 and expert witnesses, or serve more than twenty (20) individual
                 requests for documents, including subparts, or twenty (20)
                 individual

                                       28
<PAGE>

                 requests for admission or interrogatories, including subparts.
                 Multiple hearing days will be scheduled consecutively to the
                 greatest extent possible.

         9.2.7   The arbitrator(s) must render their award by application of the
                 substantive law of New York and are not free to apply "amiable
                 compositeur" or "natural justice and equity." The arbitrator(s)
                 shall render a written opinion setting forth findings of fact
                 and conclusions of law with the reasons therefor stated. A
                 transcript of the evidence adduced at the hearing shall be made
                 and shall, upon request, be made available to either party. The
                 arbitrator(s) shall have power to exclude evidence on grounds
                 of hearsay, prejudice beyond its probative value, redundancy,
                 or irrelevance and no award shall be overturned by reason of
                 such ruling on evidence. To the extent possible, the
                 arbitration hearings and award will be maintained in
                 confidence.

         9.2.8   The United States District Court for the District in which the
                 arbitration is held may enter judgment upon any award. In the
                 event the panel's award exceeds [**] in monetary damages or
                 includes or consists of equitable relief, or rejects a claim in
                 excess of that amount or for that relief, then the court shall
                 vacate, modify or correct any award (including remanding to the
                 arbitrators for further proceedings) where the arbitrators'
                 findings of fact are clearly erroneous, and/or where the
                 arbitrators' conclusions of law are erroneous; in other words,
                 the court will undertake the same review as if it were a
                 federal appellate court reviewing a district court's findings
                 of fact and conclusions of law rendered after a bench trial. An
                 award for less than [**] in damages and not including equitable
                 relief, or which neither rejects a claim in excess of that
                 amount or for that relief, may be vacated, modified or
                 corrected only pursuant to the Federal Arbitration Act. The
                 parties consent to the jurisdiction of the above-specified
                 court for the enforcement of these provisions, the review
                 specified herein, and the entry of judgment on any award. In
                 the event such court lacks jurisdiction, then any court having
                 jurisdiction of this matter may enter judgment upon any award
                 and provide the same relief, and undertake the same review, as
                 specified herein.

         9.2.9   In the event the expanded judicial review provided for under
                 Section 9.2.8 above is not available from the court as a matter
                 of law, the party unable to obtain such review may instead
                 obtain review of the arbitrators' award or decision by a single
                 appellate arbitrator (the "Appeal Arbitrator") selected from
                 the CPR list of distinguished neutrals and pursuant to
                 selection procedures specified in paragraph d above. If CPR
                 cannot provide such services, the parties will together select
                 another provided of arbitration services that can. No Appeal
                 Arbitrator shall be selected unless he or she can commit to
                 rendering a decision within forty-five (45) days following oral
                 argument as provided in this paragraph. Any such review must be
                 initiated within thirty (30) days following the date the court
                 declines the expanded review specified in Section 9.2.8 above.
                 In the event timely review is sought, the Appeal Arbitrator
                 will make the same review of the arbitration panel's ruling and
                 its bases that the U.S. Court of Appeals of the Circuit where
                 the arbitration hearings are held would make of findings of
                 fact and conclusions of law rendered by a district court after
                 a bench trial and then modify,

                                       29
<PAGE>

                 vacate or affirm the arbitration panel's award or decision
                 accordingly, or remand to the panel for further proceedings.
                 The Appeal Arbitrator will consider only the arbitration
                 panel's findings of fact and conclusions of law, pertinent
                 portions of the hearing transcript and evidentiary record as
                 submitted by the parties, opening and reply briefs of the party
                 pursuing the review, and the answering brief of the opposing
                 party, plus a total of no more than four (4) hours of oral
                 argument evenly divided between the parties. The party seeking
                 review must submit its opening brief and any reply brief within
                 seventy-five (75) and one hundred thirty (130) days,
                 respectively, following the date the court declines the
                 expanded review specified in Section 9.2.8; whereas, the
                 opposing party must submit its responsive brief within one
                 hundred ten (110) days of that date. Oral argument shall take
                 place within five (5) months after the court declines the
                 expanded review specified in Section 9.2.8 and the Appeal
                 Arbitrator shall render a decision within forty-five (45) days
                 following oral argument. That decision will be final and not
                 subject to further review, except pursuant to the Federal
                 Arbitration Act.

         9.2.10  Each party has the right before or, if the arbitrator(s) cannot
                 hear the matter within an acceptable period, during the
                 arbitration to seek and obtain from the appropriate court
                 provisional remedies such as attachment, preliminary
                 injunction, replevin, etc. to avoid irreparable harm, maintain
                 the status quo, or preserve the subject matter of the
                     ------ ---
                 arbitration.

         9.2.11  EACH PARTY HERETO [**].

         9.2.12  EACH PARTY HERETO [**].

         9.2.13  EACH PARTY HERETO [**].

         9.2.14  EACH PARTY HERETO [**].

                                  ARTICLE 10

                                CONFIDENTIALITY

10.1     Confidentiality Obligations. Except as permitted elsewhere under this
         Agreement, each Party shall (a) receive and maintain the Confidential
         Information of the other Party in strict confidence, (b) not disclose
         such Confidential Information to any Third Parties and (c) promptly
         notify the disclosing Party upon learning of any law, rule, regulation
         or court order that purports to compel disclosure of any Confidential
         Information of the disclosing Party and to reasonably cooperate with
         the disclosing Party in the exercise of the disclosing Party's right to
         protect the confidentiality of such Confidential Information. Neither
         Party hereto shall use all or any part of the Confidential Information
         of the other Party for any purpose other than to perform its
         obligations under this Agreement. Each Party shall ensure that its
         employees, representatives and agents comply with this provision. The
         obligations of confidentiality shall remain in effect for the duration
         of this Agreement and for a period of [**] thereafter.

                                       30
<PAGE>

10.2     Exclusions. Nothing contained herein shall prevent a Party from
         disclosing Confidential Information pursuant to any applicable law,
         rule, regulation or court order; provided, however, that such Party
         shall provide notice to the other Party in such event as set out in
         Section 10.1(c). Such disclosure shall not alter the status of such
         information hereunder for all other purposes as Confidential
         Information.

10.3     Termination. Upon termination of this Agreement, all Confidential
         Information shall be returned to the disclosing Party or destroyed
         unless otherwise specified or permitted elsewhere under this Agreement.
         The confidentiality obligations contained in this Article 10 shall
         survive termination of this Agreement.

10.4     Publicity. Except as may be required by applicable laws, rules or
         regulations (including those arising under any securities laws),
         neither Party will originate any publicity, news release or other
         public announcement, written or oral, whether to the public press or
         otherwise, concerning the relationship between the Parties or the
         transactions described in this Agreement without the prior written
         consent of the other Party, which consent shall not be unreasonably
         withheld or delayed. In the event disclosure is required by applicable
         law, rules or regulations, then the Party required to so disclose such
         information shall, to the extent possible, provide to the other Party
         for its approval (such approval not to be unreasonably withheld) a
         written copy of such public announcement at least five (5) Business
         Days prior to disclosure. Notwithstanding the foregoing, either Party
         shall have the right to make a press release with respect to its
         entering into this Agreement in the form attached as Schedule 10.4.

                                  ARTICLE 11

                        REPRESENTATIONS AND WARRANTIES

11.1     Mutual. Each Party hereby represents, covenants and warrants to the
         other Party that: (a) it has the corporate power to enter into this
         Agreement and to grant the rights and licenses granted herein and
         otherwise perform this Agreement; (b) it is not a Party to any
         agreement or understanding and knows of no law or regulation that would
         prohibit it from entering into and performing this Agreement or that
         would conflict with this Agreement; (c) when executed and delivered by
         it, this Agreement will constitute a legal, valid and binding
         obligation of it, enforceable against it in accordance with the
         provisions of this Agreement; and (d) it shall perform its obligations
         under this Agreement in compliance with all applicable Laws.

11.2     Closure Medical Warranties. Closure Medical represents and warrants to
         CPC that:

         11.2.1  the Products supplied by Closure Medical will be [**];

         11.2.2  the Products shall [**];

         11.2.3  Closure Medical has not [**] and, to the best of Closure
                 Medical's knowledge, are [**];

                                       31
<PAGE>

         11.2.4  the Products, and their manufacture, use or sale, do not, to
                 Closure Medical's best knowledge, [**]; and

         11.2.5  there are [**].

11.3     CPC Representations and Warranties. CPC represents and warrants that it
         shall not sell the Product in a form other than as a Device.

                                  ARTICLE 12

DISCLAIMER OF WARRANTY, LIMITATION OF LIABILITY AND INDEMNIFICATION

12.1     Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS
         AGREEMENT, CLOSURE MEDICAL HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS,
         IMPLIED OR STATUTORY, WITH RESPECT TO THE PRODUCT AND THE DEVICE,
         INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY
         OR FITNESS FOR A PARTICULAR PURPOSE.

12.2     Indemnification by CPC. CPC shall indemnify and hold harmless Closure
         Medical and its officers, directors, employees and agents from and
         against any and all losses, damages, liabilities, obligations,
         penalties, judgments, awards, costs, expenses and disbursements
         (including, without limitation, the costs, expenses and disbursements,
         as and when incurred, of investigating, preparing or defending any
         claim, action, suit, proceeding or investigation asserted by a Third
         Party) (collectively, the "Losses"), caused by, relating to, based
         upon, arising out of or in connection with:

         12.2.1  [**] by CPC or its Affiliates [**] of any of the Devices;

         12.2.2  the [**] by CPC or its Affiliates;

         12.2.3  the [**] in this Agreement;

         12.2.4  any [**] (i) for the [**] and (ii) for [**] of such Product; or

         12.2.5  [**] on the part of CPC or its Affiliates or its officers,
                 directors, employees, agents or consultants, in each case [**].

12.3     Indemnification by Closure Medical. Closure Medical shall indemnify and
         hold harmless CPC and its officers, directors, employees and agents
         from and against any and all Losses, caused by, relating to, based
         upon, arising out of or in connection with:

         12.3.1  the [**] in this Agreement;

         12.3.2  the [**] on the Device;

         12.3.3  any [**] (a) arising from [**] or (b) as a [**] for such
                 Product; or

                                       32
<PAGE>

         12.3.4  [**] on the part of Closure Medical or its Affiliates or its
                 officers, directors, employees, agents or consultants, in each
                 case [**].

12.4     Indemnitee Obligations. Each person seeking to be reimbursed,
         indemnified, defended and/or held harmless under Section 12.2 or 12.3
         (each, an "Indemnitee") shall (a) provide the Party obliged to
         indemnify such Indemnitee with prompt written notice of any claim,
         suit, demand or other action for which such Indemnitee seeks to be
         reimbursed, indemnified, defended or held harmless (each, a "Claim"),
         which notice shall include a reasonable identification of the alleged
         facts giving rise to such Claim, (b) grant such Party reasonable
         authority and control over the defense and settlement of any such Claim
         and (c) reasonably cooperate with such Party and its agents in defense
         of any such Claim. Each Indemnitee shall have the right to participate
         in the defense of any Claim for which such Indemnitee seeks to be
         reimbursed, indemnified, defended or held harmless, by using attorneys
         of such Indemnitee's choice, at such Indemnitee's expense. Any
         settlement of a Claim for which any Indemnitee seeks to be reimbursed,
         indemnified, defended or held harmless under this Article 12 shall be
         subject to the prior written approval of such Indemnitee, such approval
         not to be unreasonably withheld, conditioned or delayed.

12.5     Insurance. During the term of this Agreement and for a period of [**]
         after its expiration or termination, the Parties shall obtain and/or
         maintain at their sole cost and expense, product liability insurance
         that meets the levels of insurance as set out on Schedule 12.5.

                                  ARTICLE 13

                                 FORCE MAJEURE

13.1     The obligations of Closure Medical and CPC hereunder shall be subject
         to any delays or non-performance caused by a Force Majeure Event, and
         each party shall be under no liability to the other for anything which
         would constitute a breach of this Agreement arising by reason of such
         matters. The party which is not performing its obligations under this
         Agreement as a result of a Force Majeure Event shall use diligent
         efforts to resume compliance with this Agreement as soon as possible.
         Should the Force Majeure Event continue unabated for a period of [**]
         or more, the parties shall enter into good faith discussions with a
         view to alleviating its affects or to agreeing upon such alternative
         arrangements as may be fair and reasonable having regard to the
         circumstances prevailing at that time.

13.2     In the event that such alternative arrangements cannot be agreed upon
         within [**] period, and in the event that such Force Majeure Event
         results in [**] manufacture of the Products as soon as reasonably
         practicable.

13.3     In the event that such alternative arrangements cannot be agreed upon
         with [**] after occurrence of the Force Majeure Event, and in the event
         that such Force Majeure Event does not result in [**] of the Products
         in accordance with the terms of this Agreement, then the non-performing
         party shall continue to diligently attempt to alleviate such Force

                                       33
<PAGE>

         Majeure Event until it is removed or eliminated. Each party has full
         management discretion in dealing with its own labor issues.

13.4     Closure Medical shall [**] include such [**] to allow for Closure
         Medical to [**] if a Force Majeure Event [**] in supply. In any event,
         [**] the [**] (including such equipment and supplies as are reasonably
         appropriate) [**] facilities where the Products are being produced.

                                       34
<PAGE>

                                  ARTICLE 14

                                 MISCELLANEOUS

14.1     Disclosures. Closure Medical recognizes and acknowledges that CPC and
         its Affiliates have been, and will continue to be, [**]. Closure
         Medical acknowledges that [**] the term of this Agreement.

14.2     Governing Law. This Agreement shall be governed by and interpreted
         under the laws of the State of New York, without regard to its
         conflicts of law provisions.

14.3     No Assignment. Except as otherwise set forth herein, neither Party
         shall transfer, assign or cede any rights or delegate any obligations
         hereunder, in whole or in part, whether voluntarily or by operation of
         law, without the prior written consent of the other Party, which
         consent may be withheld at the other Party's reasonable business
         discretion; provided, however, that either Party may transfer this
         Agreement without prior written consent of the other Party to an
         Affiliate or in connection with a merger or sale of all or
         substantially all of the stock or assets of such Party, or with respect
         to CPC, in connection with the sale of all or substantially all of the
         business which relates to this Agreement.

14.4     Independent Contractors. In connection with this Agreement, each Party
         is an independent contractor. This Agreement does not, and shall not be
         construed to, create an employer-employee, agency, joint venture or
         partnership relationship between the Parties. Neither Party shall have
         any authority to act for or to bind the other Party in any way, to
         alter any of the terms or conditions of any of the other Party's
         standard forms of invoices, sales agreements, warranties or otherwise,
         or to warrant or to execute agreements on behalf of the other or to
         represent that it is in any way responsible for the acts, debts,
         liabilities or omissions of the other Party.

14.5     Notices. All notices, reports, payments and other communications
         required or permitted to be given under this Agreement (each, a
         "Notice") shall be in writing and shall be given either by personal
         delivery against a signed receipt, by express delivery using a
         nationally recognized overnight courier or by facsimile. All Notices
         shall be properly addressed as follows, or to such other addresses as
         may be specified in a Notice given hereunder:

If to Closure Medical:                              with a copy to:

         Attn: Robert V. Toni                       Attn: Manya S. Deehr, Esq.
         Closure Medical Corporation                Morgan, Lewis & Bockius LLP
         5250 Greens Dairy Road                     1701 Market Street
         Raleigh, North Carolina 27616              Philadelphia, Pennsylvania
         Facsimile: 919-877-7874                    Facsimile: 215-963-5299

                                       35
<PAGE>

If to CPC:                                         with a copy to:

       President-Wound Care                        Office of General Counsel
       Johnson & Johnson Consumer Companies, Inc.  Johnson & Johnson
       Grandview Road                              One Johnson & Johnson Plaza
       Skillman, NJ 08533                          New Brunswick, NJ 08933
       Facsimile: 908-904-3988                     Facsimile: 732-524-2788
                                                   Attention:  John Crisan, Esq.

A Notice shall be deemed to be effective upon personal delivery or, if sent via
overnight delivery, upon receipt thereof. A Notice sent via facsimile is deemed
effective on the same day (or if such day is not a Business Day, then on the
next succeeding Business Day) if such facsimile is sent before 5:00 p.m. Eastern
Standard/Daylight Time and on the next day (or if such day is not a Business
Day, then on the next succeeding Business Day) if such Notice is sent after 5:00
p.m. Eastern Standard/Daylight Time.

14.6   Amendment or Modification. No subsequent amendment, modification or
       waiver of any of the provisions of this Agreement shall be effective
       unless in writing and signed by the Parties.

14.7   Entire Agreement. This Agreement sets out the entire agreement between
       the Parties with respect to the subject matter of this Agreement and
       supersedes all prior agreements, proposals, arrangements and
       communications, whether oral or written, with respect to the subject
       matter hereof.

14.8   Severability. If any provision of this Agreement is held by a tribunal of
       competent jurisdiction to be illegal, invalid or otherwise unenforceable
       in any jurisdiction, then to the fullest extent permitted by law (a) the
       same shall not effect the other provisions of this Agreement, (b) such
       provision shall be deemed modified to the extent necessary in the
       tribunal's opinion to render such provision enforceable, and the rights
       and obligations of the Parties shall be construed and enforced
       accordingly, preserving to the fullest extent the intent and agreements
       of the Parties set forth herein and (c) such finding of invalidity,
       illegality or unenforceability shall not affect the validity, legality or
       enforceability of such provision in any other jurisdiction.

14.9   Waiver. Failure to enforce any term of this Agreement is not a waiver of
       future enforcement of that or any other term. No term or provision of
       this Agreement will be deemed waived and no breach excused unless such
       waiver or excuse is in writing and signed by the Party against whom
       enforcement of such waiver or excuse is sought.

14.10  Survival. Articles 6, 8.4, 8.5, 9, 10, 11, 12 and 14; any payment
       obligations of the Parties hereunder accruing prior to the date of
       termination; and any other provision herein expressly surviving
       termination or necessary to interpret the rights and obligations of the
       Parties in connection with the termination of the term of this Agreement
       will survive the termination or expiration of this Agreement.

                                       36
<PAGE>

14.11    No Third Party Beneficiaries. Nothing in this Agreement is intended to
         confer benefits, rights or remedies unto any person or entity other
         than the Parties and their permitted successors and assigns.

14.12    Titles. The headings appearing at the beginning of the sections
         contained in this Agreement have been inserted for identification and
         reference purposes only and shall not be used to determine the
         construction or interpretation of this Agreement. The nomenclature of
         the defined terms in this Agreement shall only be used for the
         construction of this Agreement and are not to be used for any other
         purpose, including, but not limited to, interpretation for accounting
         purposes.

14.13    Compliance with Laws. Each Party shall comply with all prevailing laws,
         rules and regulations and obtain all necessary approvals, consents and
         permits required by the applicable agencies of the government of the
         jurisdictions that apply to its activities or obligations under this
         Agreement.

14.14    Execution in Counterparts, Facsimiles. This Agreement may be executed
         in one or more counterparts, each of which shall be deemed an original
         and all of which together shall constitute one and the same instrument.
         This Agreement shall become binding when any one or more counterparts
         hereof, individually or taken together, bear the signatures of both
         Parties hereto. For the purposes hereof, a facsimile copy of this
         Agreement, including the signature pages hereto, shall be deemed an
         original.

           [The remainder of this page is intentionally left blank.]

                                       37
<PAGE>

        IN WITNESS WHEREOF, the Parties to the Agreement by their duly
authorized representatives have executed this Agreement as of the date first
written above.

CLOSURE MEDICAL CORPORATION

By:_______________________________
     Name:
     Title:

                                       38
<PAGE>

JOHNSON & JOHNSON CONSUMER COMPANIES, INC.

By:______________________________
     Name:
     Title:

                                       39

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