AMENDED AND RESTATED LICENSE AGREEMENT

Exhibit 10.39

AMENDED AND RESTATED LICENSE AGREEMENT

by and between

ORTHOVITA, INC.

and

ANGIOTECH PHARMACEUTICALS (US), INC.

CONFIDENTIAL TREATMENT REQUESTED BY ORTHOVITA, INC.

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AMENDED AND RESTATED LICENSE AGREEMENT

THIS AMENDED AND RESTATED LICENSE AGREEMENT ( "Agreement" ) is made and entered into as of this 29 ^th day of December 2006, by and between Orthovita, Inc., a Pennsylvania corporation with principal offices at 77 Great Valley Parkway, Malvern, Pennsylvania 19355 ( "Orthovita" ), and Angiotech Pharmaceuticals (US), Inc., a Washington corporation with principal offices at 101 W. North Bend Way, Suite 201, PO Box 2840, North Bend, WA 98045 ( "Angiotech" ), and amends and restates in its entirety that certain License Agreement executed as of March 20, 2006 and effective January 1, 2006 (the "Original Agreement" ) by and between Orthovita and Angiotech.

W I T N E S S E T H :

WHEREAS, Angiotech is engaged in the business of developing, manufacturing, selling and distributing certain biopharmaceutical and biosurgical products;

WHEREAS, Angiotech (through its former subsidiary, Angiotech BioMaterials Corp., under its former name, Cohesion Technologies, Inc.) and Orthovita previously executed an Exclusive Sales Distribution Agreement dated July 1, 2004, as amended by Amendment No.1 dated September 30, 2005 (the "Distribution Agreement" ), to establish Orthovita as distributor of CoStasis ^® products in the United States (with options for the European Union and the rest of the world);

WHEREAS, pursuant to the terms of the Original Agreement, Orthovita became Angiotech’s licensee for Products in the Territory (as each term is defined in Article 1 hereof), and assumed responsibilities for manufacturing Products for sale within the Territory;

WHEREAS, pursuant to the terms of the Original Agreement, Angiotech granted such license to Orthovita, and transferred CoStasis Product manufacturing responsibilities to Orthovita;

WHEREAS, Orthovita desires to purchase from Angiotech, and Angiotech desires to sell to Orthovita, all royalties payable to Angiotech under the Original Agreement, and the parties hereto are, as of this date, entering into a Royalty Sale Agreement (" Royalty Sale Agreement ") to effect such transaction; and

WHEREAS, to facilitate the purchase of the royalties, the Parties wish, as contemplated by the Royalty Sale Agreement, to enter into this Agreement, which constitutes an amendment and restatement of the Original Agreement, in order to, among other things, eliminate the royalties payable by Orthovita to Angiotech upon sale of the Products; eliminate certain minimum sales requirements for Orthovita; eliminate certain termination rights for Angiotech; extend the term of the Agreement; and effect other amendments as provided herein.

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NOW, THEREFORE, the Parties hereto, in consideration of the premises and mutual covenants and undertakings herein contained, intending to be legally bound, agree as follows:

Article 1.

Definitions

As used in this Agreement, the following terms shall have the meanings specified in this Article 1:

1.1 "AAA" is defined in Section 21.1.

1.2 "Accessory(ies)" means both the Existing Accessories and the New Accessories, collectively.

1.3 Intentionally omitted .

1.4 "Act" means the United States Food, Drug and Cosmetic Act of 1938, as it has been amended prior to the Effective Date and may be amended thereafter during the Term.

1.5 "Action" is defined in Section 10.3(c)(i).

1.6 "Adverse Event" means any untoward medical occurrence in a patient or clinical investigation subject administered a Product and which may or may not have a causal relationship with such treatment. An Adverse Event includes any unfavorable and unintended sign (including an abnormal laboratory finding), symptom or disease temporally associated with the use of a Product, whether or not related to the Product.

1.7 "Affiliate" of a Party means any entity (a) which directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, that Party, but only for so long as the relationship exists; or (b) wherein more than fifty percent (50%) of the voting capital stock (or such lesser maximum percentage permitted by applicable law) is beneficially owned or held by that Party or any of such Party’s subsidiaries or parents.

1.8 "Agent(s)" means an Affiliate(s), a permitted sublicensee(s) or a distributor(s) of Orthovita or Angiotech (as applicable).

1.9 "Agreement" is defined in the introductory paragraph.

1.10 "Angiotech" is defined in the introductory paragraph.

1.11 "Angiotech-Branded CoStasis Product(s)" means a CoStasis Product(s) for use and exploitation in the Non-Orthopedic Hemostat Field that is distributed, promoted, marketed and/or sold by or on behalf of Angiotech and/or its Affiliates under one or more Angiotech Trademarks selected by Angiotech.

1.12 "Angiotech Improvement" is defined in Section 2.3(b)(i).

1.13 "Angiotech Improvement Patents" is defined in Section 10.1.

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1.14 "Angiotech Trademark(s)" means a Trademark(s) owned or Controlled by Angiotech. Angiotech shall select one or more Angiotech Trademarks for use in conjunction with an Angiotech-Branded CoStasis Product(s), and these Angiotech Trademark(s) shall be different from Orthovita Trademark(s) used in conjunction with CoStasis Product(s). Angiotech Trademark(s) shall expressly include ANGIOTECHKNOWLEDGY ^® and CELLPAKER ^® .

1.15 Intentionally omitted.

1.16 "Calendar Quarter" means each three (3) month period during the Term commencing on January 1, April 1, July 1 or October 1; provided, however, that the calendar quarter in which this Agreement is terminated or expires shall extend from the first day of such calendar quarter until the effective date of the termination or expiration of this Agreement.

1.17 "Calendar Year" means each twelve (12) month period during the Term starting on January 1 of a year and ending on December 31 of the same year; provided, however, that the calendar year in which this Agreement is terminated or expires shall extend from January 1 of such calendar year until the effective date of the termination or expiration of this Agreement.

1.18 "CellPaker Field" means human medical uses of the CellPaker Products and/or Accessories in connection with CoStasis Products.

1.19 "CellPaker Product(s)" means a CellPaker ^® Plasma Collection System product(s) for use with CoStasis Products, as further described in Exhibit A hereto.

1.20 "CFO" means Chief Financial Officer.

1.21 "Clinical Data" means the study protocols, results and analysis of data arising from the testing of a biomaterial, device or a combination thereof in vitro, in vivo in non-human subjects and in vivo in human subjects, including safety and toxicity testing (or other pre-clinical testing), patient screening, patient enrollment, patient status, any clinical or patient data included in any communications (including Regulatory Filings) with Regulatory Authorities, actions taken or modification in study design/conduct and summary of data collected on CRFs (Case Report Forms), either paper or electronic, and interactions with a DSMB (data safety monitoring board), if applicable.

1.22 "Co-Chair" is defined in Section 4.1.

1.23 "Competitive Product" means a product, other than a CoStasis Product or a CellPaker Product, which has obtained Regulatory Approval for use as a Hemostat for any indication.

1.24 "Confidential Information" is defined in Section 13.1.

1.25 "Control" or "Controlled" means the legal authority or right of a Party to grant a license or sublicense of intellectual property rights to the other Party, without breaching the terms of any agreement with a Third Party, or misappropriating or unlawfully disclosing the confidential, proprietary or trade secret information of a Third Party.

• "Cost of Goods" means the fully allocated cost of manufacturing a Product, which may include the following items: (a) the costs of labor, including salaries, wages, benefits,

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• payroll taxes and current period employee benefits, (b) material costs, including raw materials, supplies, services and fees, as well as any freight and duty (where applicable), (c) direct and factory overhead determined in accordance with Orthovita’s standard internal practices and consistently applied, including Product-related expenses associated with quality assurance testing, batch review, equipment maintenance costs, manufacturing energy and utilities, waste removal, storage, transportation, insurance, management and administrative costs for personnel integral to manufacturing, general facilities costs, environmental engineering, interest expense and property taxes, and (d) depreciation costs, including the depreciation costs of the manufacturing facility, machinery or equipment dedicated either solely or partly (on a pro rata basis) to the manufacturing cost of such Products, as applicable, all the foregoing items as determined in accordance with generally accepted accounting principles, consistently applied, and in a manner consistent with the exemplary cost determinations set forth in Exhibit C , and with the methods used by Orthovita to calculate cost of goods for its other products. ***

1.26 "CoStasis Ingredient Improvement" is defined in Section 2.3(a)(iii).

1.27 "CoStasis Ingredient Improvement Patents" is defined in Section 10.1.

1.28 "CoStasis Ingredients" means collagen and thrombin.

1.29 "CoStasis Product(s)" means a product(s) containing the Formulated CoStasis Ingredients in a syringe that is manufactured by or for Orthovita or by or for Angiotech (and/or Angiotech’s Affiliates) for use and exploitation in the Licensed Field in accordance with this Agreement. The current formulation of the CoStasis Product is described in Exhibit A hereto. The term "CoStasis Products" includes Angiotech-Branded CoStasis Products. The term "CoStasis Products" shall expressly exclude Drug-Loaded Products. However, Orthovita may add one or more additional ingredients to the CoStasis Ingredients to make a CoStasis Product; provided that no such additional ingredient is an active pharmaceutical ingredient or a drug.

1.30 "Declined Action" is defined in Section 10.3(c)(ii).

1.31 "Distribution Agreement" is defined in the recitals.

1.32 "Dollars" means the lawful currency of the United States of America.

1.33 "Drug-Loaded Product" means a mixture, formulation or product that includes at least one active pharmaceutical ingredient or drug in addition to the CoStasis Ingredients, whether or not such mixture, formulation or product is used as a Hemostat.

1.34 "Effective Date" means January 1, 2006.

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1.35 "Existing Accessory(ies)" means the malleable extended applicator (MEA) and/or the laparoscopic extended applicator (LEA) accessory items, collectively or individually, as the context requires, for use with the CoStasis Products, as such accessories exist as of the Effective Date.

1.36 "Force Majeure" is defined in Section 14.1.

1.37 "Formulated CoStasis Ingredients" means the pharmaceutically formulated sterile suspension of the CoStasis Ingredients in calcium chloride. Notwithstanding the foregoing sentence, the term "Formulated CoStasis Ingredients" shall expressly exclude Drug-Loaded Products. However, Orthovita may add one or more additional ingredients to the Formulated CoStasis Ingredients to make a CoStasis Product; provided that no such additional ingredient is an active pharmaceutical ingredient or a drug.

1.38 "Future Indication" means an indication for a Product in the Licensed Field which has not obtained Regulatory Approval in a given country in the Territory as of the Effective Date. For the sake of clarity, and by way of example only, if a Product has obtained Regulatory Approval for a certain indication in Canada, but not in the United States, as of the Effective Date, then such indication is a Future Indication with respect to the United States.

1.39 "Hemostat" means a product, the primary purpose of which is to stop bleeding through an activation of the coagulation cascade.

1.40 "Improvement(s)" means any enhancement, upgrade, addition or modification to the CoStasis Ingredients, Formulated CoStasis Ingredients, Products and/or Accessories (and/or the manufacture or use thereof) that is or may be useful in the Licensed Field, and that is conceived, reduced to practice, discovered, derived or developed by or on behalf of a Party or its Affiliates prior to or during the Term. The term "Improvements" includes Angiotech Improvements and Orthovita Improvements.

1.41 "Indemnified Party" means the Party entitled to be indemnified by the other Party pursuant to Article 9.

1.42 "Indemnifying Party" means the Party obligated to indemnify the Indemnified Party.

1.43 "Joint Committee" is defined in Section 4.1.

1.44 "Licensed Field" means, collectively or individually, as the context requires, (a) the Orthopedic Hemostat Field; (b) the Non-Orthopedic Hemostat Field; and (c) the CellPaker Field. The terms "Licensed Field," "Orthopedic Hemostat Field" and "Non-Orthopedic Hemostat Field" are expressly inapplicable to Drug-Loaded Products, even if a Drug-Loaded Product is approved for human use in the Licensed Field.

1.45 "Licensed Know-How" means information, materials, formulations, manufacturing technology, trade secrets and data that are owned or Controlled by Angiotech and have been or are transferred by Angiotech or its Affiliates to Orthovita prior to or during the Term, and that are necessary for the manufacture, use, sale, offer for sale or importation of CoStasis Ingredients, Formulated CoStasis Ingredients, CoStasis Product(s), CellPaker Product(s) or Existing Accessories.

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1.46 "Licensed Patents" means all (a) patents and patent applications listed on Exhibit B , and (b) corresponding foreign patents and patent applications, including any patents issuing from any of the foregoing patent applications and any reissues, re-examinations, confirmations, extensions, renewals, substitutions, continuations, divisions, patent term extensions, and continuation-in-part applications (only to the extent, however, that the continuation-in-part applications are entirely supported in the specification and entitled to the priority date of a parent patent application) of the foregoing. The term "Licensed Patents" expressly excludes Angiotech Improvement Patents and CoStasis Ingredient Improvement Patents.

1.47 "Licensed Technology" means, collectively, Licensed Patents and Licensed Know-How.

1.48 "Loss" is defined in Section 9.8.

1.49 Intentionally omitted .

1.50 Intentionally omitted .

1.51 "Net Sales" means the gross amount invoiced for the sale of the CoStasis Products (other than Angiotech-Branded CoStasis Products) and CellPaker Products anywhere in the Territory during the period commencing October 1, 2006 and ending on the date of this Agreement that are attributable to sales of such Products by Orthovita or its Affiliates to a Third Party, less the sum of the following items (as applicable, and to the extent not included in Cost of Goods) as determined in accordance with generally accepted accounting principles:

• (a) discounts (including cash discounts and quantity discounts), cash and non-cash coupons, refunds, rebates, credits, chargebacks, returns and allowances, vouchers, retroactive price adjustments and any other allowances, including amounts written off by reason of uncollectible debt, actually granted or given with respect to the Products that effectively reduce the net selling price, in each case, as may be extended in the ordinary course of business consistent with past practice or as customary in the industry, including those granted or given to managed health care organizations, wholesalers and other distributors, buying groups, health care insurance carriers, and/or to federal, state and local governments, their agencies;

  (b) any tax imposed on the sale, delivery or use of the Products (other than Angiotech-Branded CoStasis Products), including, without limitation, sales, use, excise or value added taxes, provided in each such case that such tax is included in the gross amount invoiced for such Products; and

  (c) allowances for reasonable and customary Product shipping expenses, provided that such allowance is included in the gross amount invoiced for such Product(s).

For purposes of this Agreement, the sale or transfer of Products in the Territory between Orthovita (or an Affiliate of Orthovita) and an Affiliate of Orthovita for resale by the receiving entity shall not be deemed a sale for the purpose of this provision, but the resale by such receiving entity to any other Third Party shall be a sale for such purposes.

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1.52 "New Accessory(ies)" means any accessory item (other than a CellPaker Product or an Existing Accessory) for use with CoStasis Ingredients, Formulated CoStasis Ingredients, CoStasis Products or CellPaker Product(s) that is conceived, reduced to practice, discovered, derived or developed by or on behalf of Orthovita or its Affiliates, and wherein Orthovita and/or its Affiliates own or Control intellectual property pertaining to such New Accessory(ies) that would preclude a Third Party from making, using, selling, offering for sale, importing or otherwise exploiting such New Accessory(ies) without a license from Orthovita and/or its Affiliates.

1.53 "Non-Orthopedic Hemostat Field" means, with respect to a CoStasis Product, human medical uses of the CoStasis Product as a Hemostat for all indications, other than indications within the Orthopedic Hemostat Field.

1.54 "Orthopedic Hemostat Field" means, with respect to a CoStasis Product, human medical uses of the CoStasis Product as a Hemostat for all indications treated by an orthopedic surgeon or other surgeon relating to the surgical repair of diseases or injuries of the spine, bone or related soft tissue, such as ligaments or cartilage.

1.55 "Orthovita" is defined in the introductory paragraph.

1.56 "Orthovita Improvement" is defined in Section 2.3(a)(i).

1.57 "Orthovita Trademark(s)" means a Trademark(s) owned or Controlled by Orthovita. Orthovita shall select one or more Orthovita Trademarks for use in conjunction with CoStasis Product(s) (other than Angiotech-Branded CoStasis Product(s)), and these Orthovita Trademark(s) shall be different from Angiotech Trademark(s) used in conjunction with Angiotech-Branded CoStasis Product(s).

1.58 "Parties" means both Angiotech and Orthovita, and "Party" means either of them, as the context requires.

1.59 "Post-Licensure Marketing Study" means human clinical trials of a Product in the Licensed Field conducted or continued after Regulatory Approval has been achieved (for example, such trials may be designed to provide information that will optimize or expand use of the Product, and/or to provide additional safety and effectiveness data for a specific procedure for which the Product is currently indicated for use).

1.60 "Product Liability Claim" means a Loss (other than a Loss described in Section 9.8 and/or Section 9.9) resulting from, arising out of, or relating to claims, actions or suits (including a governmental investigation) by Third Parties arising from the attributes of a Product manufactured by or on behalf of Orthovita, including, but not limited to, the immunogenicity, toxicity, teratogenicity, carcinogenicity, or inherent risk of the use or administration of such Product.

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1.61 "Products" means CoStasis Products and CellPaker Products, collectively or individually, as the context requires.

1.62 "Program Director" is defined in Section 4.1.

1.63 "Proposal" is defined in Section 8.2(b).

1.64 "R&D Products" is defined in Section 6.2(b).

1.65 "Regulatory Approval" means all authorizations by the appropriate governmental entity or entities necessary for commercial sale of a Product in a country in the Territory, including, without limitation and where applicable, approval of labeling, price, reimbursement and/or manufacturing.

1.66 "Regulatory Authority" means, with respect to any particular country, territory or union, the governmental authority, body, commission, agency or other instrumentality of such country, territory or union with the primary responsibility for the evaluation and/or approval of Products and Accessories before such Products and Accessories can be tested, marketed, promoted, distributed or sold in such country, territory or union, including, without limitation, such governmental bodies that have jurisdiction over the pricing of such Product. The term "Regulatory Authority" includes, but is not limited to, the United States Food and Drug Administration, the European Agency for the Evaluation of Medicinal Products, European Member State Competent Authorities and the Ministry of Health, Labour and Welfare.

1.67 "Regulatory Filing" means all activities, filings and documents relating to the filing for and procurement of Regulatory Approval for the marketing and sale of a Product or Accessory from the relevant Regulatory Authorities.

1.68 "Sales & Marketing Commission" means the average actual commission paid by Orthovita to its sales representatives, independent sales agencies, and authorized and trained representatives with experience in the Licensed Field for sale of a Product.

1.69 "Section 7.1 Payment" is defined in Section 7.1.

1.70 Intentionally omitted .

1.71 Intentionally omitted .

1.72 "Supplied Products" is defined in Section 6.2(a).

1.73 "Term" is defined in Section 11.1.

1.74 "Territory" means the entire world.

1.75 "Third Party(ies)" means any person or entity other than Angiotech or Orthovita and their respective Affiliates.

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1.76 "Trademarks" means all trademarks, trade names, service marks, logos and derivatives thereof relating to Products and Accessories as of the Effective Date and during the Term that are used, or are intended to be used, in conjunction with distribution, promotion, marketing, sales, offers to sell, import, export or other exploitation of Products or Accessories, but excluding any trademarks, trade names, service marks, logos and derivatives thereof (a) containing the word "Orthovita" or "Angiotech," or (b) which are not used solely on Products or Accessories. The term "Trademarks" includes Angiotech Trademarks and Orthovita Trademarks.

1.77 "Original Agreement" is defined in the introductory paragraph.

1.78 "Royalty Sale Agreement" is defined in the recitals.

Article 2.

Licenses; Responsibilities

2.1 License Grants. Subject to the terms and conditions of this Agreement, during the Term Angiotech hereby grants to Orthovita, and Orthovita hereby accepts:

• (a) an exclusive license under the Licensed Technology, CoStasis Ingredient Improvements and CoStasis Ingredient Improvement Patents to make, have made, sell, have sold, offer for sale, export, have exported, import and have imported CoStasis Products in the Orthopedic Hemostat Field in the Territory;

  (b) until such time as Angiotech elects to distribute, promote, market and/or sell one or more Angiotech-Branded CoStasis Products pursuant to Article 5, an exclusive license under the Licensed Technology, CoStasis Ingredient Improvements and CoStasis Ingredient Improvement Patents to make, have made, sell, have sold, offer for sale, export, have exported, import and have imported CoStasis Products in the Non-Orthopedic Hemostat Field in the Territory;

  (c) from and after such time as Angiotech elects to distribute, promote, market and/or sell one or more Angiotech-Branded CoStasis Products pursuant to Article 5, a co-exclusive (meaning that only Orthovita and Angiotech can act in each country of the Territory) license under the Licensed Technology, CoStasis Ingredient Improvements and CoStasis Ingredient Improvement Patents to make, have made, sell, have sold, offer for sale, export, have exported, import and have imported CoStasis Products in the Non-Orthopedic Hemostat Field in the Territory;

  (d) a non-exclusive license under the Licensed Technology to make, have made, use, sell, have sold, offer for sale, export, have exported, import and have imported CellPaker Products and Accessories in the CellPaker Field in the Territory; and

  (e) a non-exclusive license under the Licensed Technology and CoStasis Ingredient Improvements and CoStasis Ingredient Improvement Patents to use (including, without limitation, to research, have researched, develop and have developed) CoStasis Ingredients and Formulated CoStasis Ingredients (but only for uses directly related to Orthovita’s Product licenses and rights hereunder), Products (other than Angiotech-Branded CoStasis Products) and Accessories in the Licensed Field in the Territory.

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2.2 Sublicense Agreements.

• (a) Except as otherwise expressly set forth herein, Orthovita shall have no right to grant a sublicense under the license rights granted to Orthovita in Section 2.1 without Angiotech’s prior written consent. If applicable laws and/or regulations require Orthovita to grant a sublicense to its Agent in a country(ies) in the Territory to enable such Agent to distribute, promote, market, sell, offer for sale and/or import Products and/or Existing Accessories in the Licensed Field in accordance with this Agreement, then Orthovita shall notify the Joint Committee of such requirement. The Joint Committee shall determine in good faith whether Orthovita is required by applicable law and/or regulation to grant such sublicense for this limited purpose to such Agent, and if the Joint Committee determines that such limited sublicense is required, such limited sublicense agreement shall be subject to the following: (i) Orthovita shall promptly provide to Angiotech a copy of the applicable executed limited sublicense agreement, subject to applicable confidentiality restrictions; (ii) Orthovita’s execution and delivery of each such limited sublicense agreement does not in any way diminish, reduce or eliminate any of Orthovita’s obligations under this Agreement, and Orthovita remains liable for all such obligations; and (iii) Orthovita shall not receive cash or non-cash consideration for such limited sublicense. In addition, Orthovita shall obtain contractual undertakings from every such permitted sublicensee that provide that the rights of such permitted sublicensee shall terminate upon expiration or termination of this Agreement. For the avoidance of doubt, the foregoing shall not preclude Orthovita from appointing an Agent who does not need a sublicense to distribute, promote, market, sell, offer for sale and/or import Products and/or Existing Accessories in the Licensed Field.

  (b) Except as otherwise expressly set forth herein, Angiotech shall have no right to grant a license under the Licensed Technology with respect to Angiotech-Branded CoStasis Products in the Non-Orthopedic Hemostat Field without Orthovita’s prior written consent. If applicable laws and/or regulations require Angiotech to grant a license to its Agent in a country(ies) in the Territory to enable such Agent to distribute, promote, market and/or sell Angiotech-Branded CoStasis Products in the Licensed Field in accordance with this Agreement, then Angiotech shall notify the Joint Committee of such requirement. The Joint Committee shall determine in good faith whether Angiotech is required by applicable law and/or regulation to grant such license for this limited purpose to such Agent and if the Joint Committee determines that such limited license is required, such limited license agreement shall be subject to the following: (i) Angiotech shall promptly provide to Orthovita a copy of the applicable executed limited license agreement, subject to applicable confidentiality restrictions; and (ii) Angiotech’s execution and delivery of each such limited license agreement does not in any way diminish, reduce or eliminate any of Angiotech’s obligations under this Agreement, and Angiotech remains liable for all such obligations. For the avoidance of doubt, the foregoing shall not preclude Angiotech from appointing an Agent who does not need a sublicense to distribute, promote, market, sell, offer for sale and/or import Products and/or Existing Accessories in the Non-Orthopedic Hemostat Field.

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• (c) For the avoidance of doubt, Angiotech shall have no right to grant a license (except for the licenses granted to Orthovita under this Agreement) under the Licensed Technology (i) with respect to CoStasis Products in the Orthopedic Hemostat Field or (ii) except as set forth in Section 2.2(b), with respect to CoStasis Products in the Non-Orthopedic Hemostat Field.

2.3 Improvements and New Accessories .

• (a) By Orthovita and its Affiliates . Orthovita and its Affiliates have a right to make Improvements prior to or during the Term. Orthovita shall notify the Joint Committee in writing of any CoStasis Ingredient Improvements as soon as reasonably possible, and shall provide the Joint Committee with a written description of all such CoStasis Ingredient Improvements. Within sixty (60) days after the end of each Calendar Year during the Term, Orthovita shall deliver to the Joint Committee a summary report of all other Improvements that have been conceived, reduced to practice, discovered, derived or developed by Orthovita and its Affiliates during that Calendar Year which are relevant to Angiotech’s rights, licenses and retained rights in connection with this Agreement.

  • • (i) Orthovita Improvements . Orthovita and/or its Affiliates (as applicable) shall own all right, title and interest in and to Improvements to the CoStasis Products (other than the CoStasis Ingredient Improvements), CellPaker Products and Accessories that are conceived, reduced to practice, discovered, derived or developed by or on behalf of Orthovita and/or its Affiliates (as applicable); provided that no employee or agent of Angiotech or its Affiliates is properly named as an inventor of such Improvement (each, an "Orthovita Improvement" ).

      (ii) Angiotech Licenses to Orthovita Improvements .

      • (A) During the period when Angiotech is distributing, promoting, marketing and/or selling Angiotech-Branded CoStasis Products in the Non-Orthopedic Hemostat Field in the Territory, Orthovita hereby grants to Angiotech an exclusive option to obtain on commercially reasonable terms a license to any Orthovita Improvements to make, have made, use, sell, have sold, offer for sale and import Angiotech-Branded CoStasis Products, CellPaker Products and/or Accessories (as applicable) to which such Orthovita Improvements relate within the Non-Orthopedic Hemostat Field and/or CellPaker Field, as applicable, in the Territory.

        (B) Upon the request of Angiotech or the election of Orthovita, Orthovita (in its sole discretion) may provide notice to Angiotech, through the Joint Committee, that Orthovita desires to offer to Angiotech on commercially reasonable terms a license under one or more Orthovita Improvements to research, have researched, develop, have developed, make, have made, use, sell, have sold, offer for sale and import one or more (1) CellPaker Products and/or Accessories (as applicable) to which such Orthovita Improvements relate outside the Non-Orthopedic Hemostat Field in the Territory; and/or (2) products other than CellPaker Products and/or Accessories (and related processes) to which such Orthovita Improvements relate within or outside of the Licensed Field in the Territory.

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• • • • (C) Except as otherwise expressly provided herein or as otherwise mutually agreed by the Parties in writing, Angiotech shall have no right to any Orthovita Improvement for any purpose.

      (iii) CoStasis Ingredient Improvements . With respect to an Improvement to the CoStasis Ingredients and/or the Formulated CoStasis Ingredients (including, without limitation, any Improvement constituting a composition, method of making and/or method of using any of the foregoing) that is conceived, reduced to practice, discovered, derived or developed by or on behalf of Orthovita or its Affiliates (each, a "CoStasis Ingredient Improvement" ), Orthovita and its Affiliates agree to assign, and hereby do assign, their right, title and interest in and to each such CoStasis Ingredient Improvement to Angiotech.

  (b) By Angiotech and its Affiliates . Angiotech and its Affiliates have a right to make Improvements. Within sixty (60) days after the end of each Calendar Year during the Term, Angiotech shall deliver to the Joint Committee a summary report of all Angiotech Improvements that have been conceived, reduced to practice, discovered, derived or developed during that Calendar Year which are relevant to Orthovita’s rights and licenses in the Licensed Field.

  • • (i) Angiotech Improvements . Angiotech and/or its Affiliates (as applicable) shall own all right, title and interest in and to Improvement(s) to the CoStasis Ingredients, Formulated CoStasis Ingredients, CoStasis Products, CellPaker Products and/or Accessories (including, without limitation, any Improvement constituting a composition, method of making and/or method of using any of the foregoing) that are conceived, reduced to practice, discovered, derived or developed by or on behalf of Angiotech and/or its Affiliates (as applicable); provided that no employee or agent of Orthovita or its Affiliates is properly named as an inventor of such Improvement (each an "Angiotech Improvement" ).

      (ii) Orthovita Licenses to Angiotech Improvements .

      • (A) Upon the request of Orthovita or the election of Angiotech, Angiotech (in its sole discretion) may provide notice to Orthovita, through the Joint Committee, that Angiotech desires to offer to Orthovita on commercially reasonable terms a license (without the right to sublicense) under one or more Angiotech Improvements to research, have researched, develop, have developed, make, have made, use, sell, have sold, offer for sale and import one or more products (including, without limitation, Products and/or Accessories) and related processes to which such Angiotech Improvements relate within the Licensed Field in the Territory.

        (B) For the avoidance of doubt, Orthovita shall have no right to any Angiotech Improvement outside of the Licensed Field or in connection with any Drug-Loaded Product, or for any purposes other than those expressly set forth herein or otherwise mutually agreed by the Parties in writing.

      (iii) Orthovita’s First Right to Negotiate . With respect to any CoStasis Ingredient Improvement(s), if Angiotech elects (in its sole discretion) to use a Third Party (other than distributors or contract sales organizations that Angiotech and/or its Affiliates then use (or in the future elect to use) for distribution, promotion, marketing and/or sale of other Angiotech

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• • • products and/or products of Angiotech’s Affiliates) to distribute any product that incorporates such CoStasis Ingredient Improvement, Orthovita shall have a first right to negotiate in good faith with Angiotech for a commercially reasonable period of time a mutually acceptable agreement whereby Orthovita would obtain a right to distribute such product on commercially reasonable terms.

  (c) New Accessories . Orthovita shall own all right, title and interest in and to New Accessories that are conceived, reduced to practice, discovered, derived or developed by or on behalf of Orthovita. Upon the request of Angiotech or the election of Orthovita, Orthovita (in its sole discretion) may provide notice to Angiotech, through the Joint Committee, that Orthovita desires to offer to Angiotech on commercially reasonable terms a license to research, have researched, develop, have developed, make, have made, use, sell, have sold, offer for sale and import New Accessories for use with the Products and/or other products and processes within or outside of the Licensed Field.

2.4 Independent Contractor. Orthovita shall be considered an independent contractor and shall not be considered a partner, employee, agent or servant of Angiotech or its Affiliates. As such, Orthovita and its Agents have no authority of any nature whatsoever to bind Angiotech or its Affiliates, or to incur any liability for or on behalf of Angiotech or its Affiliates, and Orthovita shall not represent itself as anything other than a licensee of Angiotech in the Licensed Field with respect to Products and Accessories in the Territory; and Angiotech and its Agents have no authority of any nature whatsoever to bind Orthovita or its Affiliates, or to incur any liability for or on behalf of Orthovita or its Affiliates, and Angiotech shall not represent itself as anything other than a licensor of Orthovita in the Licensed Field with respect to Products and Accessories in the Territory. For the avoidance of doubt, Orthovita agrees to make clear in all dealings with Third Parties that it is acting as a licensee of the Products and Accessories in the Licensed Field in the Territory, and not as an agent of Angiotech or any of its Affiliates.

2.5 Misappropriation of Licensed Patents and Licensed Know-How. Orthovita shall, and shall ensure that its Agents shall, promptly inform Angiotech of any misappropriation of the Licensed Patents and Licensed Know-How which comes to Orthovita’s or its Agents’ attention. After discussing any such misappropriation situation with Orthovita, Angiotech shall have the sole right, in its discretion, to take such action as it deems appropriate, and Orthovita, at Angiotech’s written request and expense, shall cooperate with and assist Angiotech in taking legal action, if deemed appropriate by Angiotech, to stop any such misappropriation of Licensed Know-How; provided that if Orthovita has reasonably requested that Angiotech take legal action to stop such misappropriation of Licensed Know-How, and if Angiotech determines that such legal action is not appropriate, then Orthovita may present this issue to the Joint Committee. Promptly thereafter, and taking into account each Party’s circumstances and concerns, the Joint Committee shall analyze and resolve such issue regarding misappropriation of Licensed Know-How in a commercially reasonable manner that is acceptable to both Parties.

2.6 Retained Rights of Angiotech. Except as expressly set forth herein or as otherwise mutually agreed by the Parties in writing, no rights or licenses are granted to Orthovita under this Agreement. Angiotech retains all rights to all Licensed Technology, Angiotech Improvement Patents, CoStasis Ingredient Improvement Patents, Angiotech Improvements and CoStasis Ingredient Improvements, to the extent such rights are not expressly granted to

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Orthovita under this Agreement. The Parties acknowledge and agree that Angiotech retains the right under the Licensed Technology, Angiotech Improvement Patents, CoStasis Ingredient Improvement Patents, Angiotech Improvements and CoStasis Ingredient Improvements to research, develop, make, have made, use, sell, have sold, offer for sale, import and otherwise exploit the CoStasis Ingredients, Formulated CoStasis Ingredients, Product(s) and Existing Accessories for all purposes other than those expressly granted to Orthovita hereunder. For the avoidance of doubt, Angiotech has and retains (a) the sole and exclusive right (even as to Orthovita and its Affiliates) to research, develop, make, have made, use, sell, have sold, offer for sale and import (i) CoStasis Ingredients, Formulated CoStasis Ingredients and Products and Existing Accessories outside the Licensed Field in the Territory, and (ii) Drug-Loaded Products in and outside of the Licensed Field in the Territory, and (b) the sole and exclusive right (even as to Orthovita and its Affiliates) to distribute, promote, market and sell Angiotech-Branded CoStasis Products outside of the Orthopedic Hemostat Field in the Territory.

2.7 Costs Borne by each Party. Except as expressly set forth herein, all costs and expenses connected with a Party’s activities or performance under this Agreement shall be borne solely by that Party.

Article 3.

Certain Performance Requirements

3.1 Orthovita’s Commercialization of Products. Orthovita shall use commercially reasonable efforts to promote, market, sell and distribute the Products (other than Angiotech-Branded CoStasis Products) in the Licensed Field in the Territory. Orthovita shall not knowingly, under any circumstances, either directly or indirectly through Third Parties, promote, market, sell, or distribute CoStasis Products (a) for any use outside the Licensed Field, or (b) in any circumstance wherein the purchaser incorporates, or intends to incorporate, such CoStasis Product into a Drug-Loaded Product.

3.2 *** For purposes of estimating the transfer price of any Angiotech-Branded CoStasis Products, Supplied Products and R&D Products provided to Angiotech and/or its Affiliates by Orthovita hereunder, within sixty (60) days prior to the end of each Calendar Year, Orthovita shall provide Angiotech with a good faith, reasonable estimate of *** for the following Calendar Year; provided that the forecast for Calendar Year 2006 shall be provided within sixty (60) days after the Effective Date. Orthovita shall promptly notify Angiotech if it reasonably believes that *** at any time in such Calendar Year will vary from the applicable estimated ***, by more than ***.

3.3 Collection of Taxes. Orthovita shall be responsible for and shall collect all governmental and regulatory sales and other taxes, charges, duties and fees that are due and owing upon sales of