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*Confidential portions have been omitted and filed separately with the Securities and Exchange Commission. 

 
 

Exhibit 10.40    
  

 
 

INTERNATIONAL    
    
    DISTRIBUTION AGREEMENT    
  

        THIS AGREEMENT is made as of the 14th day of June 1996 by and between  BIOMATRIX, INC., a corporation duly organized and existing under the laws of the State of Delaware, having its principal office at 65 Railroad
Avenue, Ridgefield, New Jersey 07657, U.S.A. ("Biomatrix") and COLLAGEN CORPORATION, a corporation duly organized and existing under the laws of the
State of Delaware, having its principal office at 2500 Faber Place, Palo Alto, California 94303, U.S.A. (the "Distributor"). 

        WHEREAS, Biomatrix is engaged in the development and manufacture of the Agreement Product (as hereinafter defined); 

        WHEREAS, the Distributor desires to enter into a distribution agreement and be appointed the exclusive distributor (even to Biomatrix) of
the Agreement Product and any Improved Agreement Product(s) in the Territory (as such terms are hereinafter defined), and Biomatrix is willing to so appoint the Distributor on the terms and subject to
the conditions set forth herein; and 

        WHEREAS, the Distributor desires to purchase from Biomatrix, and Biomatrix desires to sell to the Distributor, the Distributor's orders of
the Agreement Product and any Improved Agreement Product(s) in the Territory on the terms and subject to the condition set forth herein. 

        NOW, THEREFORE, in consideration of the premises and of the mutual covenants of the parties hereto, it is hereby agreed as follows: 

        1.    Definitions and Interpretation.    

        1.1  In
this Agreement, the following words and expressions shall have the following meanings: 

        "Affiliate"
shall mean, with respect to any party, any Person which, directly or indirectly, is controlled by, controls or is under common control with such party. For purposes of this
definition, the term "control" (including with correlative meanings, the terms "controlled by" and "under common control with") shall mean, with respect to any Person, the direct or indirect ownership
of more than fifty percent (50%) of the voting or income interest in such Person or the possession otherwise, directly or indirectly, of the power to direct the management or policies of such Person. 

        "Agreement
Product" shall mean the one product made of hylan B and called by Biomatrix Hylaform®, the specifications for which are set forth on  Exhibit A, for use in the correction of wrinkles and
depressed scars. 

        "Agreement
Product Specifications" shall mean the specifications for the Agreement Product set forth in Exhibit A, as such
specifications may be modified or supplemented by Biomatrix from time to time in accordance with Product License Approvals or to reflect any Improved Agreement Product(s). 

        "Agreement
Year" shall mean, with respect to a country or Region, as applicable, in the Territory, the twelve (12) month period commencing on the date of first commercial sale of
the Agreement Product in such country or Region, as applicable, and each separate successive twelve (12) month period thereafter. 

        "Contract
Quarter" shall mean, for sales of Agreement Product in a country or Region, as applicable in the Territory, the period commencing with the Distributor's first commercial sale
of the Agreement Product in such country or Region, as applicable, and ending on the first to occur of March 31, June 30, September 30 and December 31, as applicable, and
each three (3) month period thereafter throughout the term of this Agreement. 

 

        "Dermal
Tissue Augmentation Products" shall mean biomaterial(s) that are [***]. 

        "Dollars"
and "$" shall mean the lawful currency of the United States of America. 

        "Effective
Date" shall mean June 17, 1996. 

        "EU
Countries" shall mean, collectively, Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and United
Kingdom. 

        "European
Territory" shall mean, collectively, the EU Countries, Switzerland, Norway, Liechtenstein and Iceland. 

        "Formula
Price" shall mean an amount equal to [***] of the Agreement Product by Distributor or an Affiliate of Distributor, calculated on a
[***] basis, provided that if the [***] the Agreement Product in a Region [***],
then the Formula Price for such Region shall mean an amount equal to [***] of the Agreement Product on a [***] basis by Distributor or an Affiliate of
Distributor in such Region. [***] the Formula Price shall mean an amount equal to [***] by Distributor or an Affiliate of Distributor,
[***], for or an [***], including without limitation [***]. 

        "Improved
Agreement Product(s)" shall mean (i) any modification of the Agreement Product (made entirely from hylan B) regarding the formulation of hylan B in the Agreement
Product, that is changes of concentration of the polymer or other changes in the Agreement Product Specifications, whether or not requiring new regulatory approval in the EU Countries or in the United
States, and (ii) any modifications or changes related to the packaging of the Agreement Product, including the syringe used, mode of application or dosage. 

        "Incremental
Royalties" shall mean that term as defined in Section 8.2. 

        "Initial
Term" shall mean that term as defined in Section 3.2. 

        "Launch"
shall mean, with respect to a country in the Territory, the commencement by Distributor of sales of the Agreement Product in commercial quantities for use in such country. Such
Launch shall be made with respect to each country in the Territory in accordance with the dates set forth on Exhibit B. 

        "Minimum
Price" shall mean an amount equal to [***] for each Treatment Syringe, [***], then the Minimum Price payable in such Region
[***] shall equal [***] for each Treatment Syringe. 

        "Net
Retail Sales" shall mean, with respect to sales of a Dermal Tissue Augmentation Product in a country in the Territory, the aggregate gross price invoiced for retail sales of such
product during a period in such country to unaffiliated third-party purchasers [***]. It is Biomatrix's understanding that the foregoing definition is consistent with how the
Distributor reports its sales in its audited financial statements. 

        "New
Products" shall mean [***]. 

        "Patents"
shall mean Letters Patent or similar statutory rights relating to any Agreement Product and any Improved Agreement Product(s) (including any
continuation-in-part, continuation or division thereof or substitute thereof), and patent applications which are pending as of the Effective Date, in each case as set forth in  Exhibit C, together
with any supplementary or complementary protection certificates therefor if and when such are granted. 

        "Person"
shall mean an individual, a corporation, limited liability company, a partnership, a trust, an unincorporated organization or a government or any agency or political subdivision
thereof. 

        "Product
License Approvals" shall mean those regulatory approvals required for the importation, promotion, marketing and sale of the Agreement Product and any Improved Agreement
Product(s) in the Territory (including any reimbursement or pricing approvals). 

2

 

        "Region"
shall mean any one of the following countries or groups of countries: [***]. 

        "Supply
Forecast" shall mean that term as defined in Section 7.3(b). 

        "Territory"
shall mean, collectively, the EU Countries, Switzerland, Norway, Liechtenstein, Iceland, Australia, New Zealand, Japan, Israel, Argentina, Brazil, Mexico, Chile, Columbia,
Cyprus, Lebanon, Turkey and Canada and any countries added hereto pursuant to Section 2.4. 

        "Trademarks"
shall mean (i) the trademark Hylaform®, the details of which are described in Exhibit C, and
(ii) any other trademarks, as may be agreed upon in writing from time to time by the parties hereto for use by the Distributor in connection with the promotion, marketing and sale of the
Agreement Product and any Improved Agreement Product(s) under this Agreement. 

        "Treatment
Syringe" shall mean a ready-for-injection 1.0cc syringe of the Agreement Product. 

        "United
States Consumer Price Index" shall mean the Consumer Price Index, All Items, United States, as published by the Bureau of Labor Statistics. 

        1.2.  In
this Agreement, unless the context otherwise requires: 

        (a)  clause
headings are inserted for convenience of reference only and have no legal effect; 

        (b)  references
to sections, exhibits and schedules are to be construed as references to the sections of, and exhibits and schedules to, this Agreement and references to this
Agreement include its exhibits and schedules. 

        (c)  references
to (or to any specified provision of) this Agreement or any other document shall be construed as references to this Agreement, that provision or that document
as in force for the time being and as amended, varied, substituted, supplemented, restated or novated in accordance with the terms thereof or, as the case may be, with the agreement of the relevant
parties and (where such consent is, by the terms of this Agreement or the relevant document, required to be obtained as a condition to such amendment being permitted) the prior written consent of
Biomatrix; 

        (d)  words
importing the plural shall include the singular and vice versa; 

        (e)  references
to a person shall be construed as including references to an individual, firm, consortium, company, corporation, unincorporated body of persons or any State
or any agency thereof; and 

        (f)    references
to statutory provisions shall be construed as references to those provisions as replaced, amended or re-enacted from time to time. 

        2.    Appointment; Best Efforts; Exclusivity.    

        2.1.    Appointment.    

        (a)  Subject
to the terms and conditions hereinafter set forth, Biomatrix hereby appoints the Distributor as its exclusive [***] (except to the extent
set forth in Section 2.3) distributor for the registration (other than in the European Territory), promotion, marketing, sale and distribution within the Territory of the Agreement Product and
any Improved Agreement Product(s) supplied by Biomatrix or an Affiliate of Biomatrix to the Distributor pursuant to this Agreement. Such appointment does not include the right to sublicense or appoint
subdistirbutors except to an Affiliate of Distributor or a Subdistributor of Distributor set forth on Exhibit E hereto (each a "Subdistributor") without the approval of Biomatrix; (and only for
such time as such an Affiliate remains an Affiliate or Subdistributor of Distributor). 

        (b)  Except
as specifically provided to the contrary herein, the foregoing appointment shall not be construed, by implication or otherwise, (i) to effect any sale of
proprietary Biomatrix 

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technology, (ii) to grant any license relating to Biomatrix's proprietary methods of formulating, fabricating and manufacturing the Agreement Product or any Improved Agreement Product(s), or
(iii) to grant the Distributor any rights in or to any proprietary technology or Patents or Trademarks of Biomatrix. 

        (c)  During
the term of this Agreement the Distributor shall neither seek customers for the Agreement Product or any Improved Agreement Product(s) outside the Territory nor
establish any branch or maintain any distribution facilities outside the Territory for the registration, promotion, marketing, sale or distribution of the Agreement Product or any Improved Agreement
Product(s). 

        (d)  [***]to
enter into subdistribution arrangements shall be limited to arrangements [***] hereto and no Subdistributor shall
have any further right to sublicense any rights or appoint additional subdistributors. The rights of Subdistributors to maintain a sublicense hereunder shall be subject to the following: 

	(i)
	Each
Subdistributor shall agree with Distributor that its rights to sell the Agreement Product and Improved Agreement Product(s) are subject to the terms of this Agreement, including
without limitation Distributor's or Biomatrix's rights to terminate or convert this Agreement into a non-exclusive arrangement;

	(ii)
	[***];

	(iii)
	[***];

	(iv)
	Without
the prior written consent of Biomatrix, Distributor shall not waive any default or breach of any Subdistributor which would adversely affect Biomatrix; and

	(v)
	Upon
any termination of this Agreement (or with respect to any country), all subdistributor arrangements shall automatically terminate; provided that Biomatrix may, in its sole
discretion, negotiate a license directly with any terminated Subdistributor. 

        2.2.    Acceptance of Obligations; Best Efforts.    The Distributor hereby accepts the appointment described in
Section 2.1 and hereby agrees to use its best efforts at all times during the term hereof to register, promote, market, sell and distribute the Agreement Product and any Improved Agreement
Product(s) in the Territory. [***]. 

        2.3.    Conversion to Non-Exclusive Distributorship.    In the event that (i) in any Agreement Year
after and including the third Agreement Year or (ii) from, after and including the first year of the Distributor acquiring and/or commercializing a New Product pursuant to
Section 10.1(b) (and so long as (i) no force majeure condition of the Distributor exists at such time pursuant to Section 20, (ii) Biomatrix has met its supply obligations
under Section 7.4 and (iii) Distributor is able to lawfully sell the Agreement Product and any Improved Agreement product(s) in each of the countries within any such Region) the
Distributor's (or its Affiliates' or Subdistributors', as applicable) Net Retail Sales of the Agreement Product and any Improved Agreement Product(s) in a Region comprise less than
[***] of its Net Retail Sales of [***], including the Agreement Product and any Improved Agreement Product(s), [***]
[***]. Upon conversion of Distributor's rights to a non-exclusive distribution arrangement in any Region, Biomatrix shall have the right to distribute the Agreement
Product and Improved Agreement Product and/or engage another distributor for such Region. Biomatrix will give Distributor [***] days notice prior to appointing a third party
distributor for such Region. From and after the date of a conversion to a non-exclusive distribution arrangement within a Region, the Distributor shall lose its rights hereunder to
register, promote, market, sell and distribute within such Region any Improved Agreement Product(s) commercialized on or after such date. Notwithstanding the foregoing, the Distributor shall retain
the exclusive rights in all trademarks under which the Distributor launched the Agreement Product or any Improved Agreement Product(s) in such Region. Upon conversion of Distributor's rights to a
non-exclusive distribution arrangement in any Region in the 

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European Territory, the arrangements between the parties under this Agreement shall no longer be governed by this Agreement and such Region shall no longer be deemed a part of the Territory, but
rather, such Region shall become the subject of a new agreement between the parties upon the same terms and conditions set forth in this Agreement. Upon such conversion to a non-exclusive
arrangement,
the parties agree to execute such further documents and agreements as are necessary in order to give effect to the provisions of this Section. 

        2.4.    Expansion of Territory.    One or more countries may be added to the Territory from time to time after the
Effective Date by mutual written agreement of the parties hereto, conditional upon the satisfactory completion of the necessary due diligence in such country and the satisfaction of Biomatrix with the
proposed arrangements for the registration, promotion, marketing, sale and distribution of the Agreement Product and any Improved Agreement Product(s) by the Distributor in such country. Biomatrix
agrees to discuss the appointment of Distributor or one of its subdistributors prior to appointing a third party distributor of the Agreement Product in any additional country. 

        3.    Term and Termination.    

        3.1.    Effective Date.    This Agreement shall take effect as of the Effective Date 

        3.2.    Term.    

        (a)  Unless
this Agreement is sooner terminated, in its entirety or as to a country or Region in the Territory in accordance with the provisions of this Agreement, the term
of the appointment hereunder for a country in the Territory shall commence on the first day of the first Agreement Year for such country and shall end on the last day of the
[***] Agreement Year for such country (the "Initial Term"). 

        (b)  Unless
this Agreement is sooner terminated, in its entirety or as to any Region in the Territory in accordance with the provisions of this Agreement, the appointment of
the Distributor hereunder as exclusive distributor of the Agreement Product for each Region in the Territory shall be renewable by the Distributor, at its option, upon written notice to Biomatrix
received at least [***] prior to the end of the Initial Term for such Region, for an additional consecutive term of [***] following the date of
expiration of the Initial Term for such Region, provided that the Distributor shall only be entitled to exercise such renewal option with respect to any
Region if as of the date of expiration of the Initial Term for such Region the Distributor is not in material breach of any of its obligations under this Agreement with respect to any Region (it being
understood that any payment default by Distributor under this Agreement will be deemed a default as to the entire Territory). Thereafter, the appointment of the Distributor as exclusive distributor of
the Agreement Product for such Region shall be renewable upon the expiration of such additional [***] term, upon written notice to Biomatrix received at least
[***] prior to the end of such term for such Region, for one additional consecutive renewal term of [***], provided that,  as of the date of expiration of the first renewal term for such Region, the
Distributor is not in material breach of any of its obligations under this Agreement with respect to
any Region (it being understood that any payment default by Distributor under this Agreement will be deemed a default as to the entire Territory). For the avoidance of any doubt, the Distributor's
rights with respect to any Improved Agreement Product(s) commercialized after the [***] of the Effective Date shall terminate upon the [***] of the
Effective Due. Subject to the terms of this Agreement, Distributor shall
have the right to continue to sell the Agreement Product and any Improved Agreement Products it is then currently selling. 

        (c)  This
Agreement may be terminated with respect to any country in the Territory by either party, by written notice to the other party, in the event that (i) a
mutual decision not to Launch the Agreement Product in such country is reached or (ii) a Launch is not commenced with respect to such country within [***] after the time
period set forth on Exhibit B.

5

 

        (d)  In
the event that in any Agreement Year commencing with the [***] Agreement Year (and so long as (i) no force majeure condition of the
Distributor exists at such time pursuant to Section 20, (ii) Biomatrix has met its supply obligations under Section 7.4, and (iii) Distributor is able to lawfully sell the
Agreement product and any Improved Agreement Product(s) in each of the countries within any such Region), the Distributor's (and its Affiliates' or Subdistributors', as applicable) Net Retail Sales of
the Agreement Product and any Improved Agreement Product(s) in any Region comprise less than [***] in such Region of all Dermal Tissue Augmentation Products, including the
Agreement Product and any Improved Agreement Product(s), the Distributor's distribution rights (including, without limitation, its right to use the Trademarks) under this Agreement for the Agreement
Product and any Improved Agreement Product(s) in such Region shall terminate upon [***] after the end of the applicable Agreement Year, to Distributor from Biomatrix;
[***]. By way of example, if Distributor's Net Retail Sales of all Dermal Tissue Augmentation Products in a Region in a given Agreement Year were [***],
and Distributor's Net Retail Sales of the Agreement Product in such Region in such Agreement Year were [***], then [***]; further provided that with
respect to any such Region, at Biomatrix's election, Biomatrix may [***]. Upon any such termination of the Distributor's distribution rights in a Region, the Distributor's
obligation to pay any royalties pursuant to Sections 8.1 and 8.2 for any sales in such Region after such termination shall cease, but the Distributor shall remain obligated to pay all such royalties
for sales in such Region accrued prior to such termination. 

        (e)  If
the Distributor's rights to distribute the Agreement Product and any Improved Agreement Product(s) in any country in the European Territory shall terminate solely
pursuant to subsection (d) above, Biomatrix agrees to sell the Agreement Product and any Improved Agreement Product(s) developed before the date of such termination to the Distributor a
[***] for the period of time equal to the period that would have remained in the Initial Term in such country had the Distributor's distribution rights not terminated. 

        3.3.    Inventory.    

        (a)  Upon
termination of this Agreement for any reason, Biomatrix shall have the right (but not the obligation) to repurchase all or part of the inventory of the Agreement
Product and any Improved Agreement Product(s) held by the Distributor or its Affiliates or Subdistributors. 

        (b)  The
price for inventory to be repurchased by Biomatrix pursuant to Section 3.3(a) above shall be the landed cost thereof actually paid by the Distributor to
Biomatrix. With respect to any quantities not repurchased by Biomatrix, the Distributor shall have the right to sell such inventory of the Agreement Product and any Improved Agreement Product(s), in
its usual and customary manner, in the ordinary course of business, for a period of six (6) months following termination of this Agreement and notwithstanding such termination the terms and
conditions of this Agreement shall apply to such sales. 

        3.4.    Insolvency.    This Agreement may be immediately terminated as to the entire Territory by either party, upon
giving written notice to the other party, in the event that the other party shall become insolvent or be declared bankrupt by a court of competent jurisdiction or shall be the subject of any
reorganization (other than a corporate reorganization effected in the ordinary course of business and not arising out of any insolvency) or winding up, receivership or dissolution, bankruptcy or
liquidation proceeding, or any proceeding or action similar to one or more of the above, in which case termination shall be effective upon such written notice. The failure of either party to give
notice of termination upon obtaining knowledge of any such event shall not be interpreted as a waiver of such party's rights under this Section 3.4, and such party reserves the right to
exercise any such rights at any time after the occurrence of any such event. 

        3.5.    Breach.    This Agreement may be terminated as to the entire Territory by either party if the other party
shall breach any of its payment obligations hereunder or with respect to any Region if 

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Distributor (or its Affiliates or Subdistributors, as applicable) shall commit a material breach of any of its warranties, covenants, conditions, obligations or agreements contained herein with
respect to such Region, provided that such breach shall continue for a period of thirty (30) days after written notice thereof and  provided further that such termination shall be immediately effective upon further written notice to that effect to the breaching party after its
failure to cure such breach within such applicable notice period. For avoidance of doubt, the parties agree that if a Launch is not reached with respect to a country within thirty days after the time
period set forth on Exhibit B, then either party may terminate this Agreement with respect to such country (provided that such failure to reach a
Launch is not caused by a force majeure condition of the Distributor or Biomatrix's failure to meet its supply obligations under Section 7.4). 

        3.6.    Certain Rights Upon Termination.    Upon termination of this Agreement for any reason whatsoever, Biomatrix
shall have the following rights, or if such termination is as to a country in the Territory in accordance with the provisions of this Agreement, Biomatrix shall have the following rights in such
country: 

        (a)  Biomatrix
shall have the unrestricted right to review, access, use and permit others to review, access and use, either directly or by cross-reference or incorporation or
otherwise, all information, data, investigations, preclinical and clinical protocols, marketing information disseminated by Distributor publicly to customers and patients and all information required
to be provided to Biomatrix by law, information relating to laboratory, animal and human studies, and related regulatory approvals
pertaining to the Agreement Product or any Improved Agreement Product(s) (the "Information") which are possessed or controlled by the Distributor or any of its Affiliates or Subdistributors, or to
which the Distributor or any of its Affiliates or Subdistributors has a right to review, access or use. The Distributor unconditionally agrees promptly to take any action and to execute and deliver to
Biomatrix any documents or instruments reasonably requested by Biomatrix to permit Biomatrix to make full use of such unrestricted right. 

        (b)  Further,
Biomatrix shall have exclusive ownership rights to the Trademarks and to all other product specific logos, slogans and other intangibles used by the Distributor
solely in association with the independent sale of the Agreement Product and any Improved Agreement Product(s) (including all registrations relating thereto) possessed or controlled by the Distributor
or any of its Affiliates or Subdistributors, and the Distributor unconditionally agrees, subject to the provisions of Section 3.3(b), (i) immediately upon termination to cease using the
Trademarks and any such logos, slogans, and marketing rights of Biomatrix or any imitations thereof and (ii) immediately to execute and deliver to Biomatrix any documents or instruments
reasonably requested by Biomatrix to give full effect to the provisions of this Section 3.6; provided, however, if the Distributor maintains a license to distribute the Agreement Product(s) in
(a) two Regions, (b) one Region in the European Territory or (c) in the United States, then Distributor shall retain the exclusive rights in the Trademarks in the entire
Territory. 

        (c)  In
addition, the Distributor unconditionally agrees, subject to the provisions of Section 3.3(b), that it shall, upon the request of Biomatrix, immediately inform
all relevant regulatory authorities that the Distributor (or its Affiliate or Subdistributor) is no longer a distributor of the Agreement Product or the Improved Agreement Product(s) and shall take
all action and execute and deliver all documents and instruments necessary in order to transfer to the fullest extent permitted under applicable law all registrations and Product License Approvals, or
applications therefor, for the Agreement Product or any Improved Agreement Product(s) to Biomatrix or any Person nominated by Biomatrix. 

        3.7.    Effects of Termination.    

        (a)  Upon
termination of this Agreement for any reason, the Distributor shall immediately discontinue making any representations regarding its status as a distributor for
Biomatrix and shall 

7

 

immediately cease conducting any activities with respect to the marketing, promotion, sale or distribution of the Agreement Product and any Improved Agreement Product(s),  provided, however, that the
Distributor shall be permitted to sell inventory not repurchased by Biomatrix in accordance with Section 3.3. 

        (b)  Termination
of this Agreement shall not affect obligations of either party that may have accrued prior to the effective date of termination. Subject to Clause 3.8
below, termination of this Agreement shall be in addition to, and shall not be exclusive of or prejudicial to, any other grounds for termination or rights or remedies at law or in equity which either
party may have on account of any default of the other party. 

        3.8.    Waiver.    The Distributor (for itself and on behalf of its Affiliates and Subdistributors) hereby waives, to
the extent it is able to do so under the law of every country in the Territory and other applicable law, any statutory rights it may have or acquire in respect of the termination of the relationship
established hereby pursuant to the terms hereof, and agrees that the rights available to it hereunder in the event of such termination are adequate and reflect the agreement of the parties. The
Distributor shall not have any right to claim any indemnity for goodwill or lost profits or any damages arising from the rightful termination of this Agreement in accordance with the terms hereof. 

        4.    Payments.    All payments hereunder shall be made in Dollars. Payments to
Biomatrix
shall be wired to an account designated by Biomatrix and the costs of any such remittance shall be borne by the Distributor. All amounts (except for the Minimum Price, which shall be denominated in
Dollars) denominated in another currency shall be converted to Dollars using the average month-end rates of exchange for the relevant period as published in The
Wall Street Journal (or, if The Wall Street Journal shall no longer publish such exchange rates, as determined by a method that
is mutually agreed upon in writing by the parties). 

        5.    Withholding.    All payments to be made by the Distributor under this Agreement
shall be
made in full, free and clear of and without any deduction of or withholding for or on account of any taxes levied in any country of the Territory or elsewhere; provided  that if the Distributor shall be
required by law to make any deduction or withholding from any payment to Biomatrix then: 

        (a)  the
Distributor shall ensure that such deduction or withholding does not exceed the minimum legal liability therefor; and 

        (b)  not
later than five (5) days before each deduction or withholding of any taxes, the Distributor shall forward to Biomatrix such documentary evidence as may be
required by Biomatrix in respect of the proposed deduction, withholding or payment; and 

        (c)  prior
to any deduction or withholding the parties shall attempt in good faith to agree upon revised mutually acceptable pricing and/or payment terms. 

        6.    Trademarks; Agreement Product Marking; Promotional Information.    

        6.1.    Trademarks.    Subject to the provisions of Section 3.6, Biomatrix hereby licenses to the Distributor
the right to use, and hereby requires solely in association with the independent sale by the Distributor of the Agreement Product and any Improved Agreement Products the use of, the Trademarks in the
Territory during the term of this Agreement. The Distributor warrants that it shall not use any of the Trademarks at any time outside the Territory or use any of the Trademarks for any products other
than
the Agreement Product and any Improved Agreement Product(s) within the Territory. The Distributor shall not use a trademark or other mark (other than a Trademark) in connection with its distribution
of the Agreement Product and any Improved Agreement Products unless and until it has been agreed upon in writing by each of the parties and become a Trademark as defined herein. Biomatrix shall
prosecute, maintain and defend the Trademarks throughout the Term of this Agreement in all countries in the Territory in which the Distributor, any of its Affiliates or any 

8

 

Subdistributor is selling the Agreement Product and/or any Improved Agreement Product. The parties shall execute a short form Trademark assignment agreement to the extent that it is necessary to
record the Trademark license under this Section 6.1 in any country whose laws require any such registration. 

        6.2.    Termination of Right to Use Trademarks.    Subject to the sell-out right of Section 3.3(b)
and except as otherwise provided in Section 3.6, upon termination of this Agreement, the license to use the Trademarks in the Territory shall terminate, and the Distributor unconditionally
agrees promptly to take all necessary action and execute and deliver to Biomatrix all necessary documents and instruments to remove the Distributor as a registered user and/or a recorded licensee of
the Trademarks. In the event that the Distributor fails promptly upon written request by Biomatrix to comply with any of its agreements in the preceding sentence of this Section 6.2, the
Distributor hereby irrevocably consents to Biomatrix's taking any action necessary to give effect to such agreements. 

        6.3.    Notice.    Each party hereto agrees promptly to notify the other in writing of any infringements or imitations
of the Trademarks by third parties which may come to its attention. 

        6.4.    Labelling and Promotional Materials; Approved Use of Product.    

        (a)  The
Distributor shall provide Biomatrix with labelling masters, instructions, specifications and copies of all marketing, labelling and promotional material it intends
to use relating to the Agreement Product and any Improved Agreement Product(s). All such labelling, packaging and promotional material shall be consistent with the relevant Product License Approvals
and all labelling and packaging materials shall be reviewed by Biomatrix and shall be subject to its written approval prior to use, such approval not to be unreasonably withheld. Biomatrix shall
communicate its acceptance or rejection of such labelling, packaging and any major promotional materials that include claims or items impacting regulatory approvals within
[***] of its receipt thereof and if no such communication is received by Distributor from Biomatrix within such [***] Biomatrix shall be deemed to have
accepted. Distributor shall provide Biomatrix with all major promotional materials for launches and subsequent promotions within a reasonable time prior to their use in order to allow Biomatrix to
comment on such materials. Distributor shall provide Biomatrix with copies of all other promotional materials at or prior to their use. 

        (b)  The
Distributor agrees that its (and its Affiliates' and Subdistributors') promotion, marketing, sale and distribution of the Agreement Product and any Improved
Agreement Product(s) in the Territory, and the promotional materials and labelling used in connection therewith, shall be strictly in
accordance with the approved use of the Agreement Product and any Improved Agreement Product(s) as specified in the Product License Approvals and as further provided in this Agreement. Specifically,
for purposes of this Agreement, the Distributor (and its Affiliates and Subdistributors) agrees [***], or unless agreed to in writing by Biomatrix. 

        6.5.    Legend.    Subject to applicable laws and regulations in the Territory, all relevant packaging and promotional
material for the Agreement Product and any Improved Agreement Product(s) used or sold by the Distributor (and its Affiliates and Subdistributors) shall contain (i) all applicable markings
needed to keep the Trademarks enforceable throughout the Territory as reasonably specified by Biomatrix to the Distributor and (ii) a legend which shall be displayed in a reasonably conspicuous
manner on all packaging of such Agreement Product and any Improved Agreement Product(s) containing the corporate identification logo of Biomatrix and indicating that such product has been developed
and manufactured by Biomatrix, Inc., and its affiliates, 65 Railroad Avenue, Ridgefield, New Jersey, 07657 U.S.A. 

        6.6.    Promotional Support.    Biomatrix and the Distributor (and its Affiliates and Subdistributors) shall provide
to each other on an ongoing basis and without charge (to the extent not prevented by law or contract from doing so) all medical information relating to the Agreement Product and any Improved Agreement
Product(s) (including summary data from studies, clinical trials and the like as 

9

 

well as information regarding adverse events associated with the use of the Agreement Product), the proceedings of all symposia on the Agreement Product and any Improved Agreement Product(s) and all
promotional information that is available to such party relating to the Agreement Product and any Improved Agreement Product(s). In addition, Biomatrix and the Distributor (and its Affiliates and
Subdistributors) shall provide each other with access to such primary data and information in its possession as the other may reasonably request regarding the results of the studies contained in such
summary data referred to above. 

        6.7.    Joint Coordinating Committee.    Upon the execution of this Agreement, Biomatrix and the Distributor shall
establish a joint coordinating committee (the "Committee") to review all matters relating to product labelling, product claims, regulatory matters or clinical trials. The Committee shall consist of an
equal number, not to [***], of voting representatives from each of Biomatrix and the Distributor and shall meet [***]. In the event of a dispute between
representatives of Biomatrix and the Distributor on the Committee, a senior representative of each such party shall be appointed to resolve such dispute, and in the event such senior representatives
are unable to resolve the matter, Biomatrix's view shall prevail over the Distributor's. 

        6.8.    Recalls of the Agreement Product.    

        (a)  If
either party in good faith determines that a recall of the Agreement Product in any country in the Territory is warranted, such party shall immediately notify the
other party in writing and shall advise such other party of the reasons underlying its determination that a recall is warranted. The parties shall
consult with each other as to any action to be taken in regard to such a recall, but in any event if after consultations either party in good faith still believes that such a recall should be
undertaken, the parties shall cooperate in carrying out such recall. 

        (b)  Except
as otherwise provided in (c) below, in the event of a recall of the Agreement Product, Biomatrix shall correct any deficiency relating to its
manufacturing, packaging, testing, labelling, storing or handling of the Agreement Product for which it is responsible, if applicable, and shall at its cost replace the Agreement Product recalled. 

        (c)  Biomatrix
shall reimburse Distributor for all direct costs and expenses (including without limitation shipping, quality control testing and notification costs) incurred
by Distributor and its Affiliates as a result of any recall, except where such recall (i) is the result of the failure of Distributor or its Affiliates or Subdistributors to comply with their
obligations under this Agreement and/or (ii) was opposed by Biomatrix and proved to be unwarranted, in which case Distributor shall reimburse Biomatrix for all direct costs and expenses
(including without limitation shipping, quality control testing and notification costs) incurred by Biomatrix and its Affiliates as a result of such recall. 

        6.9.    Product Vigilance System.    The Distributor shall be responsible for maintaining medical device vigilance
systems, as established for the Agreement Product by Biomatrix, and shall promptly provide Biomatrix with notice of all product complaints, including medical complaints. Biomatrix shall be solely
responsible for processing, analyzing and, if necessary, reporting medical complaints to regulatory authorities. The Distributor shall provide all necessary support to Biomatrix for carrying out such
activities. 

        7.    Supply of Agreement Product.    

        7.1.    General; Fee.    

        (a)  Biomatrix
agrees to sell the Agreement Product and any Improved Agreement Product(s) to the Distributor, on the terms and subject to the conditions set forth herein, for
resale by the Distributor within the Territory, and the Distributor shall obtain the Agreement Product and any Improved Agreement Product(s) for resale in the Territory only from Biomatrix or its
Affiliates. 

10

 

Biomatrix shall not sell the Agreement Product or any Improved Agreement Product(s) itself or supply or license the manufacture of the Agreement Product or any Improved Agreement Product(s) to any
third party for resale within the Territory, provided that Biomatrix's obligations under this sentence shall be subject to (i) applicable law, including without limitation EU competition law
and, in particular, EEC Regulation 1983/83 (as amended or succeeded) and (ii) the provisions of this Agreement, including Section 2.3. 

        (b)  [***].

        7.2.    Price; Adjustment; Reports; Payment.    

        (a)  The
parties shall attempt in good faith to agree in writing, prior to the Launch in each country, upon mutually acceptable supply pricing for the Distributor's purchase
of the Agreement Product and any Improved Agreement Product(s), but such pricing in any event shall not be less than the greater of (i) the Minimum Price, or (ii) the Formula Price,
except as provided in subsection (b) below. The parties shall attempt in good faith to agree in writing upon mutually acceptable minimum pricing for the Agreement Product in sizes other than
the 1.0cc Treatment Syringe and for any Improved Agreement Product(s). For any syringe with a fill volume of greater than one cc(1cc), the Minimum Price shall be the amount calculated as
[***] plus the dollar amount which equals [***] of such product with a larger fill volume [***] of the one cc(1cc) syringe. In
the event that Biomatrix's actual incremental Cost of Goods Sold exceeds such dollar amount, the Minimum Price shall be the amount calculated as [***]. Subject to the general
commercial availability of appropriate syringes for the Agreement Product, the [***] for a one and one-half (1.5)cc syringe, [***] for a two
(2.0)cc syringe, and [***] for a two and one-half (2.5)cc syringe. 

        (b)  If
Biomatrix has appointed a new distributor for a country in the Territory pursuant to Section 2.3 and the Distributor has the right to distribute the Agreement
Product and any Improved Agreement Product(s) in such country, the supply pricing for the Distributor's purchase of the Agreement Product and any Improved Agreement Product(s) for resale in such
country shall [***][***]. 

        (c)  The
price initially payable by the Distributor to Biomatrix for each unit of the Agreement Product during each month of each Agreement Year shall be the Minimum Price
applicable to sales in such country (subject to adjustment at the close of each applicable Contract Quarter and Agreement Year in accordance with Section 7.2(e) below). 

        (d)  Within
[***] after the end of each month of each Agreement Year for each country in the Territory, the Formula Price for the Agreement Product in
such country shall be calculated, and, to the extent that such Formula Price exceeds the applicable Minimum Price for such Agreement Year for such country, an adjustment resulting from the
[***] with respect to all units of the Agreement Product sold by the Distributor (and its Affiliates and Subdistributors) in such country during such monthly period, such
payment to be made [***] after the end of the month following such monthly period. 

        (e)  Within
[***] days after the end of each Contract Quarter and Agreement Year for each country, the Formula Price for the Agreement Product in such
country shall be calculated and an adjustment resulting from the [***], as appropriate, to the other party with respect to all units of the Agreement Product sold by the
Distributor in such country during such Contract Quarter and Agreement Year, such payment to be made within [***] after the end of such [***] period
following the end of such
Contract Quarter and Agreement Year. The price calculated annually in this manner shall be the final price payable for all units of the Agreement Product sold by the Distributor, any Affiliates or
Subdistributors of Distributor during such Agreement Year. For the avoidance of doubt, the aggregate amount payable by Distributor for the Agreement Product(s) 

11

 

and any Improved Agreement Product(s) in any country for any Agreement Year shall in no event be lower than the Minimum Price multiplied by the total units sold in such Agreement Year in such
country. 

        (f)    Within
[***] following the end of each calendar month in each Agreement Year, the Distributor shall submit to Biomatrix written reports detailing
the units and value of the Distributor's, Affiliates' and Subdistributors' Net Retail Sales and aggregate number of units sold of the Agreement Product and any Improved Agreement Product(s) in each
country in the Territory during the immediately preceding calendar month. 

        (g)  Within
[***] following the end of each Agreement Year, the Distributor shall submit to Biomatrix written reports detailing the Distributor's and
its Affiliates' and Subdistributors' sales of the Agreement Product and any Improved Agreement Product(s) during the immediately preceding Agreement Year, which reports shall contain the Net Retail
Sales of the Agreement Product and any Improved Agreement Product(s) in each country in the Territory, and the aggregate number of units of the Agreement Product and any Improved Agreement Product(s)
sold in each country in the Territory during the applicable Agreement Year. 

        (h)  All
purchases of the Agreement Product and any Improved Agreement Product(s) hereunder shall be billed and paid in Dollars within [***]after the
later of the date of delivery or the date of the Distributor's receipt of the invoice for each shipment of same to the Distributor. 

        7.3.    Sales and Supply Forecasts; Accounts.    

        (a)  Exhibit D, which shall be supplied by the Distributor within [***] of the Effective Date,
sets forth a sales forecast of units of the Agreement Product in the Territory for the first year after the Effective Date. 

        (b)  Within
[***] after the end of each month, the Distributor shall provide to Biomatrix an updated rolling twelve (12) month monthly supply
forecast for all unit sizes of the Agreement Product in the Territory. Each such supply forecast described in this subsection (b) is referred to herein as a "Supply Forecast";  provided, that
updated Supply Forecasts shall not vary (whether up or down) from the immediately preceding Supply Forecast by more than
[***] with respect to each month covered by such preceding Supply Forecast. 

        (c)  The
Distributor shall maintain, and shall require its Affiliates and Subdistributors to maintain, books of account with respect to sales of the Agreement Product in the
Territory by it and its Affiliates and Subdistributors. Biomatrix shall have the right, not more than once during each calendar year, to have an independent accountant selected and retained by
Biomatrix (reasonably acceptable to the Distributor, provided that any "big six" accounting firm shall be deemed reasonable) to inspect and examine such books of the Distributor, its Affiliates and
Subdistributors during regular business hours for the purpose of verifying the statements of the aggregate Net Retail Sales of all Dermal Tissue Augmentation Products for all purposes hereunder,
including verification of Formula Price and the royalties described in Section 8. The cost of each such audit shall be borne by Biomatrix unless a material error is discovered in the course of
such audit, in which case the cost shall be borne by the Distributor. For purposes of this Section 7.3(d), a material error shall be defined as an understatement of five percent (5%) or more of
the aggregate amount owed to Biomatrix with respect to sales of Dermal Tissue Augmentation Products in a country in the Territory. Any additional payments required as a result of such inspection and
examination shall be immediately paid to Biomatrix and shall bear interest from the date such amount would otherwise have been paid until the date of actual payment at the rate per annum set forth in
Section 20. Such independent accounting firm shall conduct such inspections and examinations under conditions of confidentiality. 

12

 

        7.4.    Shipment and Delivery; Packaging.    

        (a)  Biomatrix
or an Affiliate of Biomatrix shall arrange for shipment to the Distributor of the Agreement Product and any Improved Agreement Product(s) ordered by the
Distributor [***]. [***]. 

        (b)  The
Distributor shall submit a firm purchase order setting forth the quantities, delivery date and shipping instructions with respect to each shipment of the Agreement
Product and any Improved Agreement Product(s), such purchase orders to be received by Biomatrix at least [***] prior to the requested delivery date;  provided that the Distributor shall not submit any
purchase order for fewer than [***] units of the Agreement Product or the
Improved Agreement Product(s) (although multiple delivery sites for purchase orders shall be allowed). Biomatrix shall use commercially reasonable efforts but shall have no obligation to supply
Distributor with quantities of the Agreement Product(s) and Improved Agreement Product(s) in excess of the amounts in the then current Supply Forecast for the relevant monthly period. For avoidance of
doubt, so long as Biomatrix supplies Distributor with quantities of the Agreement Product and Improved Agreement Product(s) as set forth in the Supply Forecast, then Biomatrix shall not be deemed to
be in default under this section or any other provision of this Agreement relating to Biomatrix's supply obligations. In addition to the foregoing, within [***], in
consideration for which units the Distributor shall pay to Biomatrix a price of [***] per unit. 

        (c)  Biomatrix
agrees that with respect to languages for packaging for the European Territory three separate forms of packaging shall be made available, as applicable, as
follows: 

	(i)
	Northern
Europe—English, Dutch, French, German and Italian;

	(ii)
	Southern
Europe—English, Italian, Spanish, Portuguese and Greek; and

	(iii)
	Scandinavia—English,
Swedish, Norwegian, Danish and Finnish. 

        (d)  Each
unit of the Agreement Product and any Improved Agreement Products shipped to the Distributor shall have, as of the time of delivery, a remaining shelf life of no
less than [***] less than the maximum shelf life for such product, as approved by the United States Food and Drug Administration. Biomatrix shall continually use its best
efforts at all times during the term hereof to lengthen to [***] the shelf life of the Agreement Product and any Improved Agreement Products to the extent supported by
stability data. Biomatrix' "best efforts" in this section shall mean that Biomatrix shall use such methods, exercise such degree of effort and diligence, and adhere to such standards as are
commercially reasonable. 

        7.5.    Title.    Legal title to all quantities of the Agreement Product and any Improved Agreement Product(s) sold
hereunder shall remain in Biomatrix until delivery of the Agreement Product and any Improved Agreement Product(s) to Distributor or its agent and acceptance thereof and upon such delivery and
acceptance the title to such Agreement Product and any Improved Agreement Product(s) shall, without further action, be transferred to and vested in the Distributor. 

        7.6.    Risk of Loss.    Biomatrix shall bear all risk of loss of, or damage to, all units of the Agreement Product
and any Improved Agreement Product(s) to the extent the same is in its possession or the possession of its Affiliates, nominees or agents. The Distributor shall bear all risk of loss of, or damage to,
all units of the Agreement Product and any Improved Agreement Product(s) after delivery to a common carrier for shipment to the Distributor in accordance with Section 7.4. 

        7.7.    Acceptance.    [***]. All units of the Agreement Product and Improved Agreement
Products delivered to Distributor pursuant to this Agreement shall be [***], the specifications listed in Exhibit A. Any non-conformity which arises after
acceptance by Distributor directly associated with product specification shall be the responsibility of Biomatrix unless such non-conformity is due to improper storage conditions
subsequent to delivery of the Agreement Product. All other non-conformities of the 

13

 

Agreement Product shall be the responsibility of the Distributor. Biomatrix and the Distributor agree to consult with each other in order to resolve the discrepancy between each other's
determinations. If
such consultation does not resolve the discrepancy, the parties agree to nominate a reputable independent laboratory, acceptable to both parties, that shall carry out tests on representative samples
taken from such shipment, and the results of such tests shall be binding on the parties. Biomatrix shall at its expense replace any such shipment to the extent that it does not conform to the
Agreement Product Specifications. All defective units of the Agreement Product or any Improved Agreement Product(s) shall be returned to Biomatrix at the address set forth in Section 23 of this
Agreement, accompanied or preceded by a reasonably detailed statement of the claimed defect or non-conformity and proof of date of purchase, and packed and shipped according to
instructions provided by Biomatrix. The shipping costs of any such returned units shall be borne by Biomatrix, unless such units are determined not to be defective under the terms of this Agreement,
in which case such shipping costs shall be borne by the Distributor. 

        7.8.    Purchase Orders.    The provisions of this Agreement shall prevail over any inconsistent statement or
provisions contained in any document related to this Agreement passing between the parties hereto including, but not limited to, any purchase order, acknowledgment, confirmation or notice. 

        7.9.    Limited Warranty; Limitation on Liability.    

        Biomatrix
represents and warrants that the Agreement Product and any Improved Agreement Product(s) supplied to the Distributor hereunder shall: 

        (a)  conform
to the Agreement Product Specifications; and 

        (b)  be
manufactured, labelled, packaged and tested (while in the possession or control of Biomatrix) in accordance with the applicable Product License Approvals therefor and
all applicable laws and regulations in the Territory relating to the manufacture, labelling, packaging and testing of the Agreement Product, and shall be manufactured for use for the indications
specified in the applicable Product License Approvals therefor. 

        THE FOREGOING WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY BIOMATRIX WITH RESPECT TO THE AGREEMENT PRODUCT, AND BIOMATRIX GIVES AND MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, OTHER THAN THE FOREGOING. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO IMPLIED WARRANTY OF MERCHANTABILITY, NO IMPLIED WARRANTY
OF FITNESS FOR ANY PARTICULAR PURPOSE, AND NO IMPLIED WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE IS GIVEN OR MADE BY BIOMATRIX OR SHALL ARISE BY OR IN CONNECTION
WITH ANY SALE OR PROVISION OF THE AGREEMENT PRODUCT BY BIOMATRIX, OR THE DISTRIBUTOR'S (OR ITS AFFILIATES' OR SUBDISTRIBUTORS') USE OR SALE OF THE AGREEMENT PRODUCT, OR BIOMATRIX'S AND/OR THE
DISTRIBUTOR'S (OR ITS AFFILIATES' OR SUBDISTRIBUTORS') CONDUCT IN RELATION THERETO OR TO EACH OTHER. NO REPRESENTATIVE OF
BIOMATRIX IS AUTHORIZED TO GIVE OR MAKE ANY OTHER REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING WARRANTY IN ANY WAY.

        The
limited warranty set forth in this Section 7.9 does not apply to any non-conformity of the Agreement Product or any Improved Agreement Product(s) resulting from
(a) repair or alteration by any party other than Biomatrix or its Affiliates. (b) misuse, negligence, abuse, accident, mishandling or storage in an improper environment by an party other
than Biomatrix or its Affiliates, or (c) use, handling, storage or maintenance other than in accordance with instructions and recommendations provided by Biomatrix or its Affiliates. 

14

 

        Biomatrix's
obligation with respect to units of the Agreement Product and any Improved Agreement Product(s) which do not meet the warranty contained herein is limited to replacement of
such units of the Agreement Product or Improved Agreement Product(s) as applicable, provided that such units are returned to Biomatrix accompanied by a reasonably detailed statement of the claimed
defect or non-conformity and proof of date of purchase, and packed and shipped according to instructions provided by Biomatrix, and only if, upon examination by Biomatrix, such units of
the Agreement Product or the Improved Agreement Product(s) are determined to have been defective under the terms of this Agreement. 

        BIOMATRIX'S LIABILITY, AND THE EXCLUSIVE REMEDY, IN CONNECTION WITH THE SALE OR USE OF THE AGREEMENT PRODUCT AND ANY IMPROVED AGREEMENT PRODUCT(S) (WHETHER BASED
ON CONTRACT, NEGLIGENCE, BREACH OF WARRANTY, STRICT LIABILITY OR ANY OTHER LEGAL THEORY), SHALL BE STRICTLY LIMITED TO BIOMATRIX'S OBLIGATIONS AS SPECIFICALLY AND EXPRESSLY PROVIDED IN THIS SECTION
7.9 AND IN SECTION 9 BELOW. EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 7.9 AND IN SECTION 9 BELOW, BIOMATRIX SHALL HAVE NO LIABILITY, OBLIGATION OR RESPONSIBILITY OF ANY KIND, IN ANY WAY OR TO
ANY EXTENT, FOR ANY DAMAGES, LOSSES, COSTS, EXPENSES OR LIABILITIES FOR ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO THE AGREEMENT PRODUCT AND ANY IMPROVED AGREEMENT PRODUCT(S) OR THE
PERFORMANCE THEREOF, OR ARISING IN ANY WAY IN CONNECTION WITH THE PURCHASE OR USE OR INABILITY TO USE THE AGREEMENT PRODUCT OR ANY IMPROVED AGREEMENT PRODUCT(S), EVEN IF BIOMATRIX HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT WHATSOEVER SHALL BIOMATRIX HAVE ANY LIABILITY, OBLIGATION OR RESPONSIBILITY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
ARISING IN ANY WAY IN CONNECTION WITH THE AGREEMENT PRODUCT OR ANY IMPROVED AGREEMENT PRODUCT(S) OR THEIR SALE OR USE.

15

  

        8.    Royalty Payments by Distributor.    

        8.1.    Royalties for Sales of Dermal Tissue Augmentation Products.    The Distributor shall pay to Biomatrix a
royalty of [***] of the Net Retail Sales by the Distributor and its Affiliates and Subdistributors of all Dermal Tissue Augmentation Products (other than sales of the Agreement
Product and any Improved Agreement Product(s)) in all countries in the Territory on a country-by-country basis, including any countries that are added to the Territory after
the Effective Date, [***]. Such royalty shall commence with respect to each country in the Territory at the earlier of (a) the Launch of the Agreement Product in such
country or (b) the Launch date for such country set forth on Exhibit B; provided that if a Launch is delayed due to Biomatrix's failure to meet its supply obligations under
Section 7.4, due to a force majeure condition of Distributor or if the Distributor is not able to lawfully sell the Agreement product in such country, such royalty with respect to any such
country shall not commence until Biomatrix meets its supply obligations, Distributor is able to lawfully sell the Agreement Product in such country, or until such force majeure condition ceases. Such
royalty shall be paid by not later than [***] after the end of each Contract Quarter. 

        8.2.    Incremental Royalties.    The Distributor shall pay to Biomatrix the following annual royalties (the
"Incremental Royalties") on the Distributor's and its Affiliates' and Subdistributors' total incremental increases in Net Retail Sales of all Dermal Tissue Augmentation Products (including the
Agreement Product and any Improved Agreement Product(s)), in each country in the Territory based on the incremental increases, if any, in Net Retail Sales of all Dermal Tissue Augmentation Products in
such country in each Agreement Year over a base year amount comprised of Net Retail Sales of Dermal Tissue Augmentation Products in the twelve (12) months immediately preceding the first
commercial sale of either the Agreement Product or any Improved Agreement Product(s) in such country: 

	Sales Over

Increase in Total

Base Year Amount
	 	Royalty on Total

Incremental Sales

	[***]	 	[***]
	[***]	 	[***]
	[***]	 	[***]
	[***]	 	[***]
	[***]	 	[***]
	[***]	 	[***]

The
Distributor's obligation to pay the Incremental Royalties shall cease with respect to a country in the Territory in the event that the Distributor's rights to sell, distribute, market and promote
the Agreement Product and any Improved Agreement Product have become non-exclusive with respect to such country pursuant to Section 2.3 or have terminated pursuant to
Section 3.2(d). The Incremental Royalty shall be paid by not later than [***] after the end of each Agreement Year. For the avoidance of doubt, if the Distributor had no
sales of any Dermal Tissue Augmentation Products in a country prior to the first commercial sale of either the Agreement Product or any Improved Agreement Product in such country, the Distributor
shall be obligated to pay a [***] royalty on Net Retail Sales of all Dermal Tissue Augmentation products sold after such first commercial sale. 

        9.    Indemnification; Confidentiality; Public Announcement.    

        9.1.    Indemnification from the Distributor.    Subject to the provisions of Section 9.3, the Distributor
shall defend, indemnify and hold Biomatrix and its Affiliates and their respective directors, officers, agents and employees harmless from and against any and all liabilities, claims, damages and
expenses 

16

 

(including without limitation actual court costs and reasonable attorneys' fees regardless of outcome) resulting from claims of third parties or arising out of: 

        (a)  [***]

        (b)  [***]

        (c)  [***] 

provided, however, that upon Biomatrix being advised of any assertions of any such third party claims or suits or upon the bringing or filing of such
claims or suits by any third party against Biomatrix, Biomatrix will promptly notify the Distributor thereof and Biomatrix may, at its option, permit the Distributor's attorneys to handle and control
the defense of such claims or suits at the Distributor's cost and Biomatrix will co-operate with the Distributor in the defense thereof. The parties agree that there shall be no
settlements, whether agreed to in court or out of court, without the prior written consent of the indemnifying party. 

        9.2.    Indemnification from Biomatrix.    Subject to the provisions of Section 9.3, Biomatrix shall defend,
indemnify and hold the Distributor and its Affiliates and their respective directors, officers, agents and employees harmless from and against any and all liabilities, claims, damages and expenses
(including without limitation actual court costs and reasonable attorneys' fees regardless of outcome) resulting from claims of third parties arising out of: 

        (a)  [***]; 

        (b)  [***] 

        (c)  [***]. 

provided, however, that upon the Distributor being advised of any assertions of any such third party claims or suits or upon the bringing or filing of
such claims or suits by any third party against the Distributor, the Distributor will promptly notify Biomatrix thereof and, at Biomatrix's cost, permit Biomatrix's attorneys to handle and control the
defense of such claims or suits and will co-operate with Biomatrix in the defense thereof. The parties agree that there shall be no settlements, whether agreed to in court or out of court,
without the prior written consent of the indemnifying party. 

        9.3.    Limitation on Liability.    

        NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN SECTIONS 9.1 AND 9.2 ABOVE, OR ANY OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT (INCLUDING THE FAULT,
NEGLIGENCE OR STRICT LIABILITY OF EITHER PARTY) SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES OTHER THAN TO THE EXTENT NECESSARY
TO REIMBURSE SUCH OTHER PARTY FOR DAMAGES ACTUALLY PAID TO A NON-AFFILIATED THIRD PARTY, PROVIDED THAT SUCH DAMAGES ARE OTHERWISE COVERED BY
THE PROVISIONS OF SECTION 9.1 OR SECTION 9.2, AS THE CASE MAY BE.

        9.4.    Confidential Information.    All information acquired by either party (the "Recipient") from the other party
or any of its Affiliates (the "Discloser") during the term of this Agreement or prior to the Effective Date, relating directly or indirectly to the present or potential business, operations,
corporate, technical or financial situation of the Discloser, or to manufacturing know-how, patents, data, test results, techniques, processes, procedures, raw materials, dealer, supplier
and customer lists, pre-clinical and clinical protocols or any improvements thereof of the Discloser ("Confidential Information") is confidential, and shall be held in trust by the
Recipient for the exclusive benefit of the Discloser. Unless otherwise agreed to in writing by the Discloser, the Recipient shall not at any time, either during or subsequent to the term of this
Agreement, use for itself (other than in accordance with the terms of this Agreement) or any other Person, or disclose or divulge to any Person, other than to 

17

 

those of its employees and advisors and Affiliates who require the same for the purposes hereof and who are bound by the same obligations of confidentiality, non-disclosure and
non-use as set forth herein, any Confidential Information or any other confidential or proprietary information of the Discloser of which the Recipient may acquire knowledge;  provided, however, that the
confidentiality, non-disclosure and non-use provisions contained in this Section 9.4 shall
not apply to any information or data to the extent that the Recipient: 

        (a)  shall
demonstrate by clear and convincing evidence that such information or data is known generally to persons in the trade through no act or omission of the Recipient
or any of its Affiliates; 

        (b)  is
required by any government authority to disclose such information or data, including without limitation for the purposes of obtaining and maintaining any Product
License Approvals under this Agreement; or 

        (c)  shall
demonstrate by its written records was disclosed to or created by it or its Affiliates on a non-confidential basis from a source other than the
Discloser or its Affiliates and that such disclosure or creation did not constitute a breach of any applicable confidentiality obligations. 

Confidential
Information shall be immediately returned to the Discloser upon termination of this Agreement, along with any copies, reproductions, digests, abstracts or the like of all or any part
thereof in the Recipient's possession or under the Recipient's control, and upon such return any computer entries or the like relating thereto shall, to the extent legally permissible, be destroyed.
Such return (and destruction) will not affect the Recipient's obligations hereunder which shall survive indefinitely.
Notwithstanding anything herein to the contrary, the provisions of this Section 9.4 shall be subject to Biomatrix's rights under Section 3.6. 

        9.5.    Public Announcement.    Except as shall be necessary for governmental notification purposes or to comply with
applicable laws and regulations, and except as otherwise agreed to by the parties hereto in writing, the parties agree to keep the existence of this Agreement, and the transactions contemplated
hereby, strictly confidential. In the event that a party must file this document or otherwise disclose any of its subject matter pursuant to public filing requirements, such party shall seek
confidential treatment of those portions of the Agreement as the parties shall mutually agree upon; provided, however, that the Distributor must provide written notice to Biomatrix no later than
June 30, 1996 of those portions of the Agreement for which the Distributor requests confidential treatment. The parties shall agree upon the text of an initial public announcement relating to
the transactions contemplated by this Agreement as soon as possible. Any subsequent public announcements regarding this Agreement or the transactions contemplated herein shall also be agreed upon in
writing between the parties prior to any release thereof. 

        10.    New Products.    

        10.1 [***],
Distributor shall not commercialize nor begin the commercialization process with respect to or acquire any New Product anywhere in the
Territory or the United States, either independently or in conjunction with one or more third parties, unless and until the following conditions have been satisfied: 

        (a)  Distributor
has made a commercially reasonable written offer to Biomatrix to participate with Distributor in the development and commercialization of such New Product;
and 

        (b)  Biomatrix
has failed to accept such written offer within [***] of its receipt of such offer. 

        In
the event that Biomatrix fails to accept any written offer made by Distributor pursuant to this Section 10.1 within [***] of Biomatrix's receipt
thereof, then Distributor, subject to the terms of this Agreement, shall have the right to independently or with other parties develop and/or commercialize any New Product to which such written offer
relates; provided, however, that any such New Product 

18

 

does not infringe upon any of the intellectual property rights of Biomatrix. Distributor shall not be required to make the written offer to Biomatrix set forth in Section 10.1(a) above only in
the event and to the extent that it is prevented from doing so due to patented proprietary rights of a third party. 

        (c)  At
all times during the term of this Agreement, Distributor shall notify Biomatrix in writing within [***] of each occurrence of one or more of
the following: 

	(i)
	Distributor's
entering into an agreement with one or more third parties with regard to the development, acquisition and/or commercialization of any New Product, and Distributor shall
provide to Biomatrix notice of such agreement and any and all agreements relating thereto and a non-confidential summary of such agreements; or

	(ii)
	Distributor's
commencing a clinical trial (either alone or in conjunction with a third party) with respect to any New Product, together with notice of the commencement of such
clinical trial and a list of all countries where such clinical trial will take place; or

	(iii)
	Distributor's
filing of an application (either alone or in conjunction with a third party) for marketing approval with the United States Food and Drug Administration or an
equivalent regulatory agency in any country with respect to any New Product stating in which countries any such filings have been made. 

        10.2 [***]

        10.3    Nothing
in this Section 10 shall be construed, by implication or otherwise, (i) to effect any sale or license of proprietary Biomatrix technology
(including any New Products), (ii) to grant any license relating to Biomatrix's proprietary methods of formulating, fabricating and manufacturing the Agreement Product, Improved Agreement
Products or New Products, or (iii) to grant Distributor any rights in or to any proprietary technology or Patents or Trademarks of Biomatrix. 

        11.    Representations of Biomatrix.    Biomatrix represents, warrants and covenants
as
follows: 

        11.1.    It
is a corporation duly organized and validly existing under the laws of the State of Delaware with the full power to conduct its affairs as currently conducted and
contemplated hereunder. All necessary action has been taken to enable it to execute and deliver this Agreement and perform its obligations hereunder. 

        11.2.    This
Agreement is a valid and binding obligation of Biomatrix enforceable in accordance with its terms. Biomatrix has the unencumbered right to enter into this
Agreement and to fulfill its duties hereunder. It is not and will not become a party to any agreement in conflict herewith. Accordingly, Biomatrix has the right to appoint the Distributor as the
exclusive distributor of the Agreement Product in the Territory in accordance with the terms of this Agreement and such appointment will not constitute a breach of any existing contractual or other
arrangements between Biomatrix and any
Affiliated or non-Affiliated third party, nor shall it infringe the rights of any Affiliated or non-Affiliated third party. 

        11.3.    No
approval, consent, order, authorization or license by, giving notice to or taking any other action with respect to, any governmental or regulatory authority is
required in connection with the execution and delivery of this Agreement by Biomatrix and the performance by Biomatrix of its obligation hereunder. 

        12.    Representations of the Distributor.    The Distributor represents, warrants
and
covenants as follows: 

        12.1    It
is a corporation duly organized and validly existing under the laws of Delaware with full power to conduct its affairs as currently conducted and contemplated
hereunder. All necessary action has been taken to enable it to execute and deliver this Agreement and perform its obligations hereunder. 

19

 

        12.2.    This
Agreement is the Distributor's valid and binding obligation enforceable in accordance with its terms. The Distributor has the unencumbered right to enter into
this Agreement and to fulfill its obligations hereunder. It is not and will not become a party to any agreement in conflict herewith. Accordingly, the Distributor has the right to act as the exclusive
distributor of the Agreement Product in the Territory in accordance with the terms of this Agreement and the performance of its obligations hereunder will not constitute a breach of any existing
contractual or other arrangements between the Distributor and any Affiliated or non-Affiliated third party, nor shall it infringe the rights of any Affiliated or non-Affiliated
third party. 

        12.3.    No
approval, consent, order, authorization or license by, giving notice to or taking any other action with respect to any governmental or regulatory authority is
required in connection with the execution and delivery of this Agreement by the Distributor and the performance by the Distributor of its obligations hereunder. 

        13.    Insurance.    Each party hereto shall (a) obtain and maintain such
insurance
policies as are adequate to cover its respective obligations hereunder and which are consistent with normal business practices of prudent companies similarly situated and (b) provide the other
party, upon request, with certificates of insurance confirming the existence of such insurance policies. 

        14.    Infringement.    Each of the Distributor and Biomatrix will promptly notify
the other
party in writing of any infringement of a Patent or Trademark or unauthorized disclosure or use of any Confidential Information, of which it becomes aware in the Territory. Biomatrix shall have the
exclusive right at its
own cost to take all legal action in the Territory it deems necessary or advisable to eliminate or minimize the consequences of such infringement of a Patent or Trademark in the Territory. For the
purpose of taking any such legal action, Biomatrix shall have the right, subject to the Distributor's consent which consent shall not be unreasonably withheld or delayed, to use the name of the
Distributor as plaintiff, either solely or jointly in accordance with the applicable rules of procedure; provided that Biomatrix shall give the
Distributor prior notice of such use of the Distributor's name. The Distributor shall promptly furnish Biomatrix with whatever written authority may be required in order to enable Biomatrix to use the
Distributor's name in connection with any such legal action, and shall otherwise cooperate fully and promptly with Biomatrix in connection with any such action. All proceeds realized upon any judgment
or settlement regarding such action shall belong to Biomatrix. 

        15.    Regulatory Activities; Clinical Trials and Marketing Studies.    

        15.1.    General.    

        (a)  Biomatrix
shall be responsible for maintaining at its cost the Product License Approvals required for the marketing and sale of the Agreement Product and any Improved
Agreement Product(s) in the European Territory throughout the term of this Agreement. The Distributor shall use its best efforts to obtain and maintain at its cost any Product License Approvals and to
conduct at its cost any clinical trials required for the marketing and sale of the Agreement Product and any Improved Agreement Product(s) in each country in the Territory, except for the European
Territory, throughout the term of this Agreement. "Best efforts" in this context shall mean such that Distributor shall generally use the same methods, exercise the same degree of effort and
diligence, and adhere to the same standards as Distributor and its Affiliates would apply to their own actively promoted pharmaceutical products in the Territory, and shall be as are commercially
reasonable. 

        (b)  Biomatrix
shall assist the Distributor in submitting applications for Product License Approvals, provided that
(i) Biomatrix shall be entitled generally to oversee the strategy and content of regulatory approval applications (in their original form whether in English or any other language) and
(ii) the content of all such applications shall be subject to Biomatrix's prior written approval, such approval or disapproval to be given by Biomatrix within [***] of
its receipt thereof. 

20

 

The timing of such applications shall be mutually agreed in writing by the parties. Biomatrix shall hold in its name all regulatory approvals required for the marketing and sale of the Agreement
Product and any Improved Agreement Product(s) in the Territory, except to the extent that applicable law requires that such regulatory approvals be held in the name of the Distributor. 

        (c)  The
Distributor and Biomatrix shall provide reasonable advice and assistance to each other as may be necessary to obtain and maintain Product License Approvals. 

        (d)  Except
to the extent necessary to give effect to the provisions of Section 3.3(b), the Product License Approvals relating to the Agreement Product and any
Improved Agreement Product(s) in the Territory in the name of the Distributor or any of its Affiliates shall be transferred to Biomatrix immediately upon termination of the Agreement. 

        (e)  During
the term of this Agreement, each party shall immediately notify the other in writing in the event that such party becomes aware of any failure of the Agreement
Product and any Improved Agreement Product(s) to comply with any of the requirements therefor specified in any Product License Approvals. 

        (f)    Each
of the Distributor and Biomatrix shall keep the other advised of regulatory interactions, activities and correspondence and the registration status of the Agreement
Product and any Improved Agreement Product(s) on at least a quarterly basis, and any matters requiring immediate attention shall be communicated as soon as practicable. 

        15.2.    Clinical Trials and Marketing Studies.    

        (a)  The
Distributor shall be responsible at its own cost for conducting and managing any clinical trails which the Distributor or Biomatrix may be required to undertake in
order to obtain Product License Approvals in the Territory, except in the European Territory. The protocols for any such clinical trials will be developed jointly by Biomatrix and the Distributor, and
Biomatrix shall have the right to audit the performance of any clinical studies performed by or on behalf of the Distributor in respect of the Agreement Product and any Improved Agreement Product(s).
The Distributor shall provide Biomatrix with the results of all such clinical trials, and Biomatrix and its Affiliates shall be free to use the results of such clinical trials. 

        (b)  The
parties agree that if any marketing-related studies are deemed necessary, such studies will not delay the Launch in any country in the European Territory. The
protocols for any marketing-related studies requested by the Distributor will be developed jointly by Biomatrix and the Distributor, and the Distributor will be responsible for conducting and managing
such studies at its own expense. Biomatrix shall have the right to audit the performance of any marketing-related studies performed by or on behalf of the Distributor. The results of such studies will
not be published or publicized in any way without the prior written approval of Biomatrix. 

        16.    Further Assurances.    The parties hereto agree to execute such further or
other
documents and assurances as are necessary from time to time in order to give effect to the provisions of this Agreement. 

        17.    Assignment.    The rights and obligations of the parties hereto shall inure to
the
benefit of and shall be binding upon the authorized successors and permitted assigns of each party. Neither party may assign
its rights or obligations under this Agreement or may designate another person to perform all or part of its obligations under this Agreement, or to have all or part of its rights and benefits under
this Agreement without the prior written consent of the other party, except to an Affiliate or to a successor of the business, by merger or otherwise, to which this Agreement relates,  provided that in
the case of an assignment to an Affiliate the assigning party shall promptly notify the other party in writing of such assignment and
shall remain liable (both directly and as guarantor) with respect to all obligations so assigned. In the event of any assignment or in the event that an Affiliate of either party shall exercise 

21

 

rights and/or perform obligations hereunder pursuant to the terms of this Agreement, the assignee or Affiliate, as the case may be, shall specifically assume and be bound by the provisions of the
Agreement by executing and agreeing to an assumption agreement satisfactory to the other party hereto. 

        18.    Governing Law; Arbitration; Injunctive Relief.    

        (a)  This
Agreement shall be governed by and construed in accordance with the internal and substantive laws of the State of New York, United States of America. The parties
hereby agree that the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement or any other document contemplated hereby. In the event of any
dispute touching or concerning this Agreement, the parties hereby agree to submit such dispute to their respective presidents by notice delivered in accordance with the provisions of
Section 23, and if within thirty (30) days, or such other period as is agreed upon in writing by the parties hereto, following such reference the dispute remains unresolved, to submit
the dispute for arbitration in Boston, Massachusetts under the Rules of the American Arbitration Association in effect on the date of this Agreement (the "Rules") by arbitrators appointed in
accordance with said Rules. Any decision of such arbitrators shall be written and shall be final and binding upon the parties. In any arbitration pursuant to this Section the award shall be rendered
by a majority of three (3) arbitrators, one (1) of whom shall be appointed by each party and the third of whom shall be appointed by mutual agreement of the two
(2) party-appointed arbitrators. In the event of failure of a party of appoint an arbitrator within thirty (30) days after commencement of the arbitration proceeding or in the event of
failure of the two (2) party-appointed arbitrators to agree upon the appointment of the third arbitrator within sixty (60) days after commencement of the arbitration proceeding, such
arbitrator shall be appointed by the American Arbitration Association in accordance with the Rules. The arbitrators shall apply the governing law set forth in this Section. Judgment upon an award
rendered by the arbitrators may be entered in any court having jurisdiction thereof. 

        (b)  Each
of the parties hereto acknowledges and agrees that damages will not be an adequate remedy for any material breach or violation of this Agreement if such material
breach or violation would cause immediate and irreparable harm (an "Irreparable Breach"). Accordingly, notwithstanding the provisions of Section 18(a) to the contrary, in the event of a
threatened or ongoing Irreparable Breach, each party hereto shall be entitled to seek, in any state or federal court in the State of New York, equitable relief of a kind appropriate in light of the
nature of the ongoing threatened Irreparable Breach, which relief may include, without limitation, specific performance or injunctive relief; provided,
however, that if the party bringing such action is unsuccessful in obtaining the relief sought, the moving party shall pay the non-moving party's reasonable costs,
including attorney's fees, incurred in connection with defending
such action. Such remedies shall not be the parties' exclusive remedies, but shall be in addition to all other remedies provided in this Agreement. 

        19.    Severability.    In the event that any provision of this Agreement shall be
held by a
court of competent jurisdiction or by any governmental body to be invalid or unenforceable, such provision shall be deemed severable and the remaining parts and provisions of this Agreement shall
remain in full force and effect. 

        20.    Force Majeure.    Each of the parties shall be excused from the performance of
its
obligations hereunder in the event such performance is prevented by force majeure, and such excuse shall continue as long as the condition constituting such force majeure continues. For the purpose of
this Agreement, force majeure is defined as contingencies beyond the reasonable control of either party, including, without limitation, acts of God, judicial or regulatory action, war, civil
commotion, destruction of 

22

 

production facilities or materials by fire, earthquake or storm and labor disturbances (whether or not any such labor disturbance is within the power of the affected party to settle). 

        21.    Interest.    Any overdue amounts payable by either party hereunder shall bear
interest
compounded monthly at the prime lending rate for Dollars published from time to time in The Wall Street Journal plus [***] per
annum, or, if lower, the highest rate permissible by applicable law, from the due date until the date of payment. 

        22.    No Partnership or Agency.    This Agreement and the relations hereby
established by and
between Biomatrix and the Distributor do not constitute a partnership, joint venture, agency or contract of employment between them. 

        23.    Notices.    All communications in connection with this Agreement shall be in
writing
and sent by postage prepaid first class mail, courier, or telefax, and if relating to default, late payment or termination, by certified mail, return receipt requested, telefax or courier, addressed
to each party at the address set forth at the beginning of this Agreement, in the case of Biomatrix, Attn: Chief Executive Officer, with a copy to: Justin P. Morreale, Esq., Bingham, Dana &
Gould LLP, 150 Federal Street, Boston, Massachusetts 02110, U.S.A., and in the case of the Distributor, Attn: President, with a copy to Kimberlie L. Cerrone, Esq., Venture Law Group, 2800 Sand Hill
Road, Menlo Park, California 94025, or to such other address as the addressee shall last have designated by notice to the communicating party. The date of giving any notice shall be the date of its
actual receipt. 

        24.    EU Regulations.    It is the intention of the parties hereto that this
Agreement shall
at all times qualify for the exemption from the provisions of Article 85(1) of the Treaty of Rome dated 25 March, 1957, as amended, which either (a) is available under EEC Regulation
Number 1983/83, or (b) may subsequently be available under any successor regulation or regulations thereto. In the event that any provision of
this Agreement is deemed to violate the conditions for qualifying for the exemption, set out in whichever of those regulations may be in effect at the relevant time, or if any such regulation is
amended after the date of this Agreement so as to cause this Agreement to fail to qualify for the exemption, the parties hereto agree that they will, as soon as it is practicable to do so, enter into
good faith negotiations to amend this Agreement as necessary in order to re-qualify for the exemption or to notify the Agreement. If those negotiations are not successfully concluded
within a reasonable time (not to exceed ninety (90) days, or such other period as is agreed upon in writing by the parties hereto, after the relevant regulation is amended), either party may
terminate this Agreement upon written notice to the other party. 

        25.    Survival.    The provisions of Sections 3.3, 3.6, 3.7, 3.8, 6.2, 9.1, 9.2, 9.3,
 9.4 and
9.5 of this Agreement shall survive the termination or expiration of this Agreement (as the case may be) and shall remain in full force and effect. The provisions of this Agreement that do not survive
termination or expiration hereof (as the case may be) shall, nonetheless, be controlling on, and shall be used in construing and interpreting the rights and obligations of the parties hereto with
regard to, any dispute, controversy or claim which may arise under, out of, or in connection with this Agreement. 

        26.    Miscellaneous.    This Agreement sets forth the entire agreement between the
parties
with respect to the transactions and arrangements contemplated hereby and supersedes all prior oral or written arrangements. This Agreement may be modified or amended only by a written instrument
executed and delivered by both parties. None of the provisions of this Agreement shall be deemed to have been waived by any act or acquiescence on the part of either party except by an instrument in
writing signed and delivered by the party executing the waiver. This Agreement may be executed in several identical counterparts, each of which shall be an original, but all of which constitute one
instrument, and in making proof of this Agreement it shall not be necessary to produce or account for more than one such counterpart. 

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

23

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. 

	 	 	COLLAGEN CORPORATION
	

 	
 	

By:	
 	

/s/  HOWARD D. PALEFSKY      
 Name: Howard D. Palefsky

Title: CHAIRMAN & CEO
	 	 	 	 	 
	 	 	BIOMATRIX, INC.
	 	 	 	 	 
	 	 	By:	 	/s/  ENDRE A. BALAZS      
 Name: Endre A. Balazs

Title: CEO

24

 
 
 

EXHIBITS    
  

	 
	 	 
	 	 

	Exhibit A	 	—	 	Agreement Product Specification and Approval Documents
	
Exhibit B	
 	

—	
 	

Launch Schedule
	
Exhibit C	
 	

—	
 	

Patents and Trademarks
	
Exhibit D	
 	

—	
 	

Sales Forecasts
	
Exhibit E	
 	

—	
 	

Subdistributors

25

 
 
 

EXHIBIT A    
    
    Agreement Product Specification and Approval Documents    
  

[***] 

26

 
 
 

EXHIBIT B    
    
    Launch Schedule    
  

	 
	 	Country:
 
	 	Date of Launch

	1.	 	Australia	 	[***]
	2.	 	Austria	 	[***]
	3.	 	Belgium	 	[***]
	4.	 	Denmark	 	[***]
	5.	 	Finland	 	[***]
	6.	 	France	 	[***]
	7.	 	Germany	 	[***]
	8.	 	Greece	 	[***]
	9.	 	Iceland	 	[***]
	10.	 	Ireland	 	[***]
	11.	 	Italy	 	[***]
	12.	 	Japan	 	[***]
	13.	 	Liechtenstein	 	[***]
	14.	 	Luxembourg	 	[***]
	15.	 	The Netherlands	 	[***]
	16.	 	New Zealand	 	[***]
	17.	 	Norway	 	[***]
	18.	 	Portugal	 	[***]
	19.	 	Spain	 	[***]
	20.	 	Sweden	 	[***]
	21.	 	Switzerland	 	[***]
	22.	 	United Kingdom	 	[***]
	23.	 	Israel	 	[***]
	24.	 	Argentina	 	[***]
	25.	 	Brazil	 	[***]
	26.	 	Mexico	 	[***]
	27.	 	Canada	 	[***]
	28.	 	Chile	 	[***]

27

 
 
 

EXHIBIT C    
    
    Patents and Trademarks    
  

Patents(1)

[***] 

	(1)
	All
numbers given are for issued patents except [***].

	(2)
	This
[***] been allowed and will issue in the next few months under the same number. 

28

 
[***]

29

QuickLinks

Exhibit 10.40

INTERNATIONAL DISTRIBUTION AGREEMENT

EXHIBITS

EXHIBIT A Agreement Product Specification and Approval Documents

EXHIBIT B Launch Schedule

EXHIBIT C Patents and TrademarksAMENDED AND RESTATED SUPPLEMENTAL EQUITY CONTRIBUTION GUARANTEE

          AMENDED AND RESTATED SUPPLEMENTAL EQUITY CONTRIBUTION GUARANTEE (this "Guarantee"), dated as of May 22, 2002, made by COGENTRIX ENERGY, INC., a North Carolina corporation (the "Equity Guarantor"), in favor of SOUTHAVEN POWER, LLC (the "Borrower") and CREDIT LYONNAIS NEW YORK BRANCH, as security agent (in such capacity, the "Security Agent") for the Secured Parties (as defined in the Loan Agreement (as hereinafter defined)) under the Loan and Reimbursement Agreement, dated as of May 24, 2001 (as the same may be amended, supplemented or otherwise modified from time to time, the "Loan Agreement"), Borrower, the several banks and other financial institutions party thereto and each other bank or financial institution that becomes a party thereto (the "Lenders"), CREDIT LYONNAIS NEW YORK BRANCH, as issuing bank (in such capacity, the "Issuing Bank") and as administrative agent for the Lenders and the Issuing Bank, and CREDIT LYONNAIS NEW YORK BRANCH and the other parties named therein as arrangers.

W I T N E S S E T H:

          WHEREAS, the Equity Guarantor has entered into the Supplemental Equity Contribution Guarantee (the "Original Guarantee"), dated as of February 28, 2002, in favor of the Borrower and the Security Agent;

          WHEREAS, the Borrower entered into an Engineering and Equipment Procurement Agreement dated and effective as of December 22, 2000 (as amended, supplemented or otherwise modified from time to time, the "Original Procurement Agreement") with NEPCO Power Procurement Company (as assignee of NEPCO Procurement Company, a division of Enron Equipment Procurement Company, pursuant to an Assignment Agreement, dated as of December 1, 2001), a Delaware corporation (the "Original Supplier"), and a Construction Agreement dated and effective as of December 22, 2000 (as amended, supplemented or otherwise modified from time to time, the "Original Construction Agreement"; together with the Original Procurement Agreement, the "Original EPC Agreements") with National Energy Production Corporation, a Delaware corporation (the "Original Construction Contractor"; together with the Original Supplier, the "Original Contractor Entities", and each, an "Original Contractor Entity");

          WHEREAS, the Original Contractor Entities and the Borrower also entered into a Coordination Agreement dated as of December 22, 2000 (as amended, supplemented or otherwise modified from time to time, the "Original Coordination Agreement"; together with the Original EPC Agreements, the "Original Contractor Agreements");

          WHEREAS, the Borrower entered into the Loan Agreement in order, among other things, to finance its obligations under the Original Contractor Agreements and secured payment of its Secured Obligations (as defined in the Loan Agreement) by, among other things, assigning to the Security Agent all of the Borrower's right, title and interest in, to and under each Original Contractor Agreement;

          WHEREAS, as of May 17, 2002, in connection with one or more defaults by the Original Construction Contractor and Original Supplier, the Borrower terminated each of the Original Contractor Agreements and executed in replacement thereof (i) an Engineering and Equipment Procurement Agreement dated as of May 14, 2002 (as amended, supplemented or otherwise modified from time to time, the "Procurement Agreement") with SNC-Lavalin Procurement, Inc. (the "Supplier"), (ii) a Construction Agreement dated as of May 14, 2002 (as amended, supplemented or otherwise modified from time to time, the "Construction Agreement") with SNC-Lavalin Constructors Inc. (the "Construction Contractor"; together with the Supplier, the "Contractor Entities") and (iii) a Coordination Agreement dated as of May 14, 2002 (as amended, supplemented or otherwise modified from time to time, the "Coordination Agreement"; together with the Procurement Agreement and the Construction Agreement, the "Contractor Agreements") with both Contractor Entities;

          WHEREAS, each of the Original Construction Contractor and the Original Supplier anticipates filing a voluntary petition for relief under Chapter 11 of the Bankruptcy Code;

          WHEREAS, such filing, termination and execution constitute Defaults under Sections 10.1(g), 10.1(j) and 10.1(c), respectively, of the Loan Agreement (the "NEPCO-Related Defaults");

          WHEREAS, the Borrower has requested that the Lenders waive the NEPCO-Related Defaults and amend the Loan Agreement and certain other Financing Documents in order to, among other things, amend the Construction Budget and the mechanics involving Extension of Credit Requests and replace the Original Contractor Entities with the Contractor Entities (the "Waiver");

          WHEREAS, as a condition to granting the Waiver, the Lenders have required that Cogentrix Southaven Holdings, Inc. ("CSH") and Cogentrix Southaven Holdings II, Inc. ("CSH II", and together with CSH, the "Borrower Members") enter into the Amended and Restated Supplemental Equity Contribution Agreement (the "Supplemental Equity Contribution Agreement"), dated as of the date hereof, together with Cogentrix Delaware Holdings, Inc. ("Delaware Holdings", and collectively with the Borrower Members, the "Equity Contributors"), Cogentrix Energy, Inc. and Credit Lyonnais New York Branch, as Security Agent, pursuant to which the Equity Contributors will make cash equity contributions to the Borrower upon the terms and subject to the conditions set forth therein; 

          WHEREAS, the Equity Guarantor is the direct or indirect parent of each Equity Contributor and the Borrower, and it is to the advantage of the Equity Guarantor that the Lenders grant the Waiver; and

          WHEREAS, it is a condition precedent to the Lenders' granting of the Waiver that the Equity Contributors shall have executed and delivered the Supplemental Equity Contribution Agreement and that the Equity Guarantor shall have executed and delivered this Guarantee to the Security Agent for the ratable benefit of the Secured Parties.

          NOW, THEREFORE, in consideration of the Lenders' granting of the Waiver, the Equity Guarantor hereby covenants and agrees that the Original Guarantee will be amended and restated in its entirety as follows:

          1.     Defined Terms.  (a)    Unless otherwise defined herein, terms defined in Annex A to the Loan Agreement and used herein shall have the meanings given to them in Annex A to the Loan Agreement.

               (b)     As used herein, (i) "LD Equity Contributions" shall have the meaning given to such term in the Supplemental Equity Contribution Agreement, (ii) "Maximum Guaranteed Amount" means (x) as of the date hereof through December 31, 2002, $14,850,000 and (y) as of January 1, 2003, $54,850,000 minus the Cost Savings (as defined in the Supplemental Equity Contribution Agreement) and (iii) "Obligations" means the collective reference to any and all LD Equity Contributions due and payable under the Supplemental Equity Contribution Agreement plus interest accruing at the then applicable rate provided in the Supplemental Equity Contribution Agreement after the LD Equity Contributions are due, and interest accruing at the then applicable rate provided in the Supplemental Equity Contribution Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to any Equity Contributor whether or not a claim for post-filing or post-petition interest is allowed in such proceeding, due under the Supplemental Equity Contribution Agreement.

               (c)     The words "hereof," "herein" and "hereunder" and words of similar import when used in this Guarantee shall refer to this Guarantee as a whole and not to any particular provision of this Guarantee, and section and paragraph references are to this Guarantee unless otherwise specified.

               (d)     The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

          2.     Guarantee.  (a)    The Equity Guarantor hereby unconditionally and irrevocably guarantees to the Borrower and the Security Agent, for the ratable benefit of the Secured Parties and their respective successors, indorsees, transferees and assigns, the prompt and complete payment by each Equity Contributor when due of the Obligations; provided that the Equity Guarantor's Obligations hereunder shall in no event exceed, in the aggregate, the Maximum Guaranteed Amount.

               (b)     The Equity Guarantor further agrees to pay any and all expenses (including, without limitation, all fees and disbursements of counsel) which may be paid or incurred by the Borrower, the Security Agent or any Secured Party in enforcing, or obtaining advice of counsel in respect of, any rights with respect to, or collecting against, the Equity Guarantor under this Guarantee.  

               (c)     The Equity Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to the Security Deposit Agent on account of its liability hereunder, it will notify the Security Agent in writing that such payment is made under this Guarantee for such purpose.

               (d)     If at any time, and for only so long as, (i) the long-term unsecured debt securities of the Equity Guarantor shall be rated less than BBB- by Standard & Poor's and less than Baa3 by Moody's, (ii) the long-term unsecured debt securities of the Equity Guarantor shall not be rated by either Standard & Poor's or Moody's or (iii) both (A) there shall not exist an issues rating for senior long-term unsecured debt of the Equity Guarantor of at least BBB- by Standard & Poor's and Baa3 by Moody's and (B) either (x) there shall not be outstanding any long-term unsecured debt securities of the Equity Guarantor or (y) the long-term unsecured debt securities of the Equity Guarantor shall be supported by a guarantee of any kind whatsoever (unless the entity providing such guarantee has guaranteed the obligations of the Equity Guarantor hereunder and shall be rated not less than BBB- by Standard & Poor's or not less than Baa3 by Moody's), the Equity Guarantor shall provide to the Security Agent a letter of credit, in form and substance satisfactory to the Security Agent, issued by a commercial bank whose long-term unsecured debt securities are rated A or better by Standard & Poor's or A2 or better by Moody's (or such other commercial bank as shall be acceptable to the Required Lenders) in an amount equal to the Maximum Guaranteed Amount less the aggregate amount of all LD Equity Contributions theretofore made under the Supplemental Equity Contribution Agreement other than LD Equity Contributions made through drawings on the Supplemental Equity Contribution Letter of Credit (as defined in the Supplemental Equity Contribution Agreement).

          3.     Right of Set-off.  The Security Agent and each Secured Party is hereby irrevocably authorized at any time and from time to time without notice to the Equity Guarantor, any such notice being expressly waived by the Equity Guarantor, to set off and appropriate and apply any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by the Security Agent or such Secured Party to or for the credit or the account of the Equity Guarantor, or any part thereof in such amounts as the Security Agent or such Secured Party may elect, against or on account of the obligations and liabilities of the Equity Guarantor to the Security Agent or such Secured Party hereunder, whether or not the Security Agent or such Secured Party has made any demand for payment and although such obligations, liabilities and claims may be contingent or unmatured.  The Security Agent and each Secured Party shall notify the Equity Guarantor promptly of any such set-off and the application made by the Security Agent or such Secured Party, as the case may be, of the proceeds thereof; provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of the Security Agent and each Secured Party under this paragraph are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Security Agent or such Secured Party may have.

          4.     No Subrogation.  Notwithstanding any payment or payments made by the Equity Guarantor hereunder, or any set-off or application of funds of the Equity Guarantor by the Security Agent or any Secured Party, the Equity Guarantor shall not be entitled to be subrogated to any of the rights of the Security Agent or any Secured Party against the Equity Contributors or against any collateral security or guarantee or right of offset held by the Security Agent or any Secured Party for the payment of the Obligations, nor shall the Equity Guarantor seek or be entitled to seek any contribution or reimbursement from any Equity Contributor in respect of payments made by the Equity Guarantor hereunder, until all amounts owing to the Security Agent and the Secured Parties on account of the Obligations and the Secured Obligations are paid in full.  If any amount shall be paid to the Equity Guarantor on account of such subrogation rights at any time when all of the Obligations and the Secured Obligations shall not have been paid in full, such amount shall be held by the Equity Guarantor in trust for the Security Agent and the Secured Parties, segregated from other funds of the Equity Guarantor, and shall, forthwith upon receipt by the Equity Guarantor, be turned over to the Security Agent in the exact form received by the Equity Guarantor (duly indorsed by the Equity Guarantor to the Security Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Security Agent may determine.  After all amounts owing to the Security Agent and the Secured Parties on account of the Obligations and the Secured Obligations are paid in full, the Equity Guarantor shall be subrogated to the rights of the Security Agent and the Secured Parties against the Equity Contributors. 

          5.     Amendments, etc. with respect to the Obligations; Waiver of Rights.  The Equity Guarantor shall remain obligated hereunder notwithstanding that, without any reservation of rights against the Equity Guarantor, and without notice to or further assent by the Equity Guarantor, any demand for payment of any of the Obligations made by the Borrower, the Security Agent or any Secured Party may be rescinded by the Borrower, the Security Agent or such Secured Party, and any of the Obligations continued, and the Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Borrower, the Security Agent or any Secured Party, and the Supplemental Equity Contribution Agreement, the Loan Agreement, any Notes, and the other Financing Documents and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Borrower or the Security Agent (or the Required Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Security Agent or any Secured Party for the payment of the Obligations may be sold, exchanged, waived, surrendered or released.  Neither the Security Agent nor any Secured Party shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Obligations or for this Guarantee or any property subject thereto. When making any demand hereunder against the Equity Guarantor, the Borrower, the Security Agent or any Secured Party may, but shall be under no obligation to, make a similar demand on any Equity Contributor or any other guarantor, and any failure by the Borrower, the Security Agent or any Secured Party to make any such demand or to collect any payments from such Equity Contributor or any such other guarantor or any release of such Equity Contributor or such other guarantor shall not relieve the Equity Guarantor of its obligations or liabilities hereunder, and shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of the Borrower, the Security Agent or any Secured Party against the Equity Guarantor.  For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings.

          6.     Guarantee Absolute and Unconditional.  The Equity Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Borrower, the Security Agent or any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Guarantee; and all dealings between the Equity Contributors or the Equity Guarantor, on the one hand, and the Borrower, the Security Agent and the Secured Parties, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee.  The Equity Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Equity Contributors or the Equity Guarantor with respect to the Obligations.  This Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity, regularity or enforceability of the Supplemental Equity Contribution Agreement, the Loan Agreement, any Note, or any other Financing Document, any of the Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Borrower, the Security Agent or any Secured Party, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Equity Contributor against the Borrower, the Security Agent or any Secured Party, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any Equity Contributor or the Equity Guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Equity Contributor for the Obligations, or of the Equity Guarantor under this Guarantee, in bankruptcy or in any other instance.  When pursuing its rights and remedies hereunder against the Equity Guarantor, the Borrower, the Security Agent and any Secured Party may, but shall be under no obligation to, pursue such rights and remedies as it may have against any Equity Contributor or any other Person or against any collateral security or guarantee for the Obligations or any right of offset with respect thereto, and any failure by the Borrower, the Security Agent or any Secured Party to pursue such other rights or remedies or to collect any payments from such Equity Contributor or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of such Equity Contributor or any such other Person or of any such collateral security, guarantee or right of offset, shall not relieve the Equity Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Borrower, the Security Agent or any Secured Party against the Equity Guarantor. 

          7.     Reinstatement.  This Guarantee shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Borrower, the Security Agent or any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Equity Contributor or any other Person or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower, such Equity Contributor or any such other Person or any substantial part of its property, or otherwise, all as though such payments had not been made.  

          8.     No Commencement of Bankruptcy Proceedings.  The Equity Guarantor shall not commence or join with any other Person (other than the Secured Parties) in commencing any proceeding against any Equity Contributor or the Borrower under any bankruptcy, reorganization, liquidation or insolvency law or statute now or hereafter in effect in any jurisdiction.

          9.     Payments.  The Equity Guarantor hereby agrees that all payments of the Obligations will be paid to the Security Deposit Agent on or before the first Business Day after such payments are due and shall be made by wire transfer of immediately available funds in Dollars to the Security Deposit Agent at First Union National Bank, ABA No. 053000219, Account No. 5000000016439, Attention: James Long, Branch 898, Reference: Cogentrix Southaven, Account 1072000936, or at such other address as the Security Deposit Agent may designate in writing from time to time.

          10.     Representations and Warranties.  The Equity Guarantor represents and warrants to the Security Agent and the Secured Parties that:

               (a)     Corporate Existence and Business.  The Equity Guarantor is a corporation duly organized and validly existing in good standing under the laws of the jurisdiction of its incorporation, is duly qualified to do business and is in good standing in each other jurisdiction where the failure to so qualify could reasonably be expected to have a  material adverse effect on its ability to perform hereunder.  As of the date hereof, the Equity Guarantor directly or indirectly owns 100% of the equity interests in each of the Equity Contributors. 

               (b)     Power and Authorization; Enforceable Obligations.  The Equity Guarantor has full power and authority and the legal right to own its properties and to conduct its business as now conducted and proposed to be conducted by it, to execute, deliver and perform this Guarantee and to take all action as may be necessary to complete the transactions contemplated hereunder and thereunder.  The Equity Guarantor has taken all necessary corporate action to authorize the execution, delivery and performance of this Guarantee.  No consent or authorization of, filing with, or other act by or in respect of any other Person (including any of its stockholders or creditors) is required in connection with its execution, delivery or performance or the validity or enforceability as to it of this Guarantee.  This Guarantee has been duly executed and delivered by it and constitutes a legal, valid and binding obligation enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity. 

               (c)     No Legal Bar.  The execution, delivery and performance by the Equity Guarantor of this Guarantee and the making of any payments hereunder by it will not violate any Requirement of Law applicable to it or its properties or any of its contractual obligations and will not result in, or require, the creation or imposition of any Lien on any of its properties or revenues pursuant to any applicable law or contractual obligation. 

               (d)     No Proceeding or Litigation.  No litigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the best of the Equity Guarantor's knowledge, threatened against or affecting it or against or affecting any of its properties, rights, revenues or assets or the transactions contemplated by this Guarantee and the other Transaction Documents which could reasonably be expected to have a material adverse effect on the Equity Guarantor's ability to perform its obligations hereunder. 

               (e)     Investment Company Act.  The Equity Guarantor is not an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. 

               (f)     The Equity Guarantor agrees that the foregoing representations and warranties shall be deemed to have been made by the Equity Guarantor on the date of each borrowing by the Borrower under the Loan Agreement on and as of such date of borrowing as though made hereunder on and as of such date. 

          11.     Maintenance of Existence, Properties, Etc.  The Equity Guarantor hereby covenants and agrees with the Security Agent and the Secured Parties that, from and after the date of this Guarantee until the Obligations are paid in full, the Equity Guarantor shall at all times preserve and maintain its legal existence as a validly existing corporation under the laws of its jurisdiction of incorporation, its qualification to do business in each other jurisdiction where the failure to so qualify could reasonably be expected to have a material adverse effect on its ability to perform its obligations hereunder and other material rights, franchises, privileges and consents necessary for the maintenance of its existence and the conduct of its business. 

          12.     Authority of Security Agent.  (a)    The Equity Guarantor acknowledges that the rights and responsibilities of the Security Agent under this Guarantee with respect to any action taken by the Security Agent or the exercise or non-exercise by the Security Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Guarantee shall, as between the Security Agent and the Secured Parties, be governed by the Loan Agreement, the other Financing Documents and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Security Agent and the Equity Guarantor, the Security Agent shall be conclusively presumed to be acting as Security Agent for the Secured Parties with full and valid authority so to act or refrain from acting, and the Equity Guarantor shall not be under any obligation, or entitlement, to make any inquiry respecting such authority.

               (b)     The Equity Guarantor agrees that the Security Agent (acting for the benefit of the Secured Parties) and any assignee thereof shall be entitled to enforce this Guarantee in its own name and to exercise any and all rights of the Borrower under this Guarantee in accordance with the terms hereof (either in its own name or in the name of the Borrower as the Security Agent may elect), and the Equity Guarantor and the Borrower agree to comply and cooperate in all respects with such exercise.  Without limiting the generality of the foregoing, the Security Agent and any assignee thereof shall have the full right and power to enforce directly against the Equity Guarantor all obligations of the Equity Guarantor under this Guarantee, and otherwise to exercise all remedies available to the Borrower hereunder and to make all demands and give all notices and make all requests (either in its own name or in the name of the Borrower, as the Security Agent may elect) required or permitted to be made or given by the Borrower under this Guarantee, and the Equity Guarantor acknowledges and agrees that any such action taken by the Security Agent shall be deemed effective for all purposes of this Guarantee to the same extent as if such action had been taken directly by the Borrower.  If the Equity Guarantor shall receive inconsistent directions from the Borrower and the Security Agent, the directions of the Security Agent shall be deemed the effective directions, and the Equity Guarantor shall accordingly comply with such directions of the Security Agent.

          13.     Consent.  The Equity Guarantor hereby consents to the terms and provisions of the Borrower Security Agreement and each of the other Transaction Documents, including, without limitation, the assignment by the Borrower of all of its right, title and interest in, to and under this Guarantee to the Security Agent pursuant to the terms of the Borrower Security Agreement.

          14.     Notices.  All notices, requests and demands to or upon the Security Agent, any Secured Party or the Equity Guarantor to be effective shall be in writing (or by telex, fax or similar electronic transfer confirmed in writing) and shall be deemed to have been duly given or made  when delivered by hand or  if given by mail, when deposited in the mails by certified mail, return receipt requested, or  if by telex, fax or similar electronic transfer, when sent and receipt has been confirmed, addressed as follows:

               (a)     if to the Borrower, the Security Agent or any Secured Party, at its address or transmission number for notices provided in subsection 12.2 of the Loan Agreement; and

               (b)     if to the Equity Guarantor, at its address or transmission number for notices set forth under its signature below.

          The Security Agent, each Secured Party and the Equity Guarantor may change its address and transmission numbers for notices by notice in the manner provided in this Section.

          15.     Severability.  Any provision of this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

          16.     Integration.  This Guarantee represents the agreement of the Equity Guarantor with respect to the subject matter hereof and there are no promises or representations by the Borrower, the Security Agent or any Secured Party relative to the subject matter hereof not reflected herein.

          17.     Amendments in Writing; No Waiver; Cumulative Remedies.  (a)    None of the terms or provisions of this Guarantee may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Equity Guarantor, the Borrower and the Security Agent, provided that any provision of this Guarantee may be waived by the Security Agent and the Secured Parties in a letter or agreement executed by the Security Agent or by telex or facsimile transmission from the Security Agent.

               (b)     Neither the Borrower, the Security Agent nor any Secured Party shall by any act (except by a written instrument pursuant to paragraph (a) hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof.  No failure to exercise, nor any delay in exercising, on the part of the Borrower, the Security Agent or any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Borrower, the Security Agent or any Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Borrower, the Security Agent or such Secured Party would otherwise have on any future occasion.

               (c)     The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies provided by law.

          18.     Section Headings.  The section headings used in this Guarantee are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

          19.     Successors and Assigns.  This Guarantee shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that neither the Equity Guarantor nor the Borrower may assign nor otherwise transfer any of its rights or obligations hereunder (other than the assignments by the Borrower in favor of the Security Agent pursuant to the Security Agreement) without the prior written consent of each of the Lenders.

          20.     Governing Law.  This Guarantee shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.

          21.     Counterparts.  This Guarantee may be executed by one or more of the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  A set of the copies of this Guarantee signed by all the parties shall be lodged with the Borrower and the Security Agent.

          22.     Submission to Jurisdiction; Waivers.  The Equity Guarantor hereby irrevocably and unconditionally:

               (a)     submits for itself and its property in any legal action or proceeding relating to this Guarantee and the other Transaction Documents, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;  

               (b)     consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

               (c)     agrees that nothing herein shall affect the right to effect service of process in any manner permitted by law or shall limit the right to sue in any other jurisdiction; and

               (d)     waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

          23.     WAIVER OF JURY TRIAL.  THE EQUITY GUARANTOR, THE BORROWER AND THE SECURITY AGENT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER TRANSACTION DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

          24.     Termination.  This Guarantee shall terminate and be of no further force and effect, and the Equity Guarantor shall have no further obligations hereunder, on the Conversion Date.

          IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly executed and delivered by its duly authorized officer as of the day and year first above written.

	
COGENTRIX ENERGY, INC. 

By:            /s/ CLAY S. COLEMAN            

      Name:  Clay S. Coleman

      Title:    Vice President - Project Finance

Address for Notices:

Cogentrix Energy, Inc.

9405 Arrowpoint Blvd.

Charlotte, North Carolina 28273

Attention: Chief Financial Officer 

Telephone: 704-525-3800

Telecopy: 704-529-1006

With a copy to:

Cogentrix Southaven Holdings, Inc. 

9405 Arrowpoint Blvd.

Charlotte, North Carolina 28273

Attention: General Counsel 

Telephone: 704-525-3800

Telecopy: 704-529-1006

	
Acknowledged and Agreed:

SOUTHAVEN POWER, LLC, as Borrower

By:  COGENTRIX SOUTHAVEN HOLDINGS, INC., 

   its Manager

By:            /s/ CLAY S. COLEMAN            

      Name:  Clay S. Coleman

      Title:    Vice President - Project Finance

CREDIT LYONNAIS NEW YORK BRANCH, 

   as Security Agent

By:            /s/ TED VANDERMEL               

      Name:  Ted Vandermel

      Title:    Vice President

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