INTERNATIONAL DISTRIBUTION AGREEMENT

10.4 Restated


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 conditions 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.


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"Agreement Product" shall mean the one product made of hylan B and
called by Biomatrix Hylaform(R), 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 the 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


* Confidential portions have been omitted and filed separately with the Commission. 3
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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 * Agreement Years immediately following such * shall
equal * , and * such * 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


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


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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).


"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(R), 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


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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,


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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 subdistributors 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 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 * 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


* Confidential portions have been omitted and filed separately with the Commission. 7
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(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),


*


* Confidential portions have been omitted and filed separately with the Commission. 8
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*


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 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").


* Confidential portions have been omitted and filed separately with the Commission. 9
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(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 Date. 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.


(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


* Confidential portions have been omitted and filed separately with the Commission. 10
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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 $500,


*


; 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.


* Confidential portions have been omitted and filed separately with the Commission. 11
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(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 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 ...