TOEXCLUSIVE SALES DISTRIBUTION AGREEMENT

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Exhibit 10.1

AMENDMENT NO. 1

TO EXCLUSIVE SALES DISTRIBUTION AGREEMENT

THIS AMENDMENT NO. 1 (“Amendment”) to that certain Exclusive Sales Distribution Agreement, dated July 1, 2004 (“Agreement”), is dated September 30, 2005 (“Amendment Effective Date”), and is between Orthovita, Inc., a Pennsylvania corporation with principal offices at 45 Great Valley Parkway, Malvern, Pennsylvania 19355 (“Orthovita”), and Angiotech BioMaterials Corp. (formerly known as Cohesion Technologies, Inc.), a Delaware corporation with principal offices at 2500 Faber Place, Palo Alto, California 94303 (“Cohesion”).

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WHEREAS, Orthovita and Cohesion have previously entered into the Agreement;

WHEREAS, Orthovita and Cohesion are in the process of transitioning manufacturing of Products and Accessories (both as defined in the Agreement) from Cohesion to Orthovita, and by this Amendment Orthovita and Cohesion wish to set forth certain understandings and acknowledgements regarding Cohesion’s supply of Products and Accessories to Orthovita before November 1, 2005, and to make certain additional modifications to the Agreement, all as set forth below;

WHEREAS, Orthovita and Cohesion are negotiating a new license agreement (“License Agreement”) in connection with Orthovita’s assumption of responsibility for manufacturing of Products and Accessories; and

WHEREAS, Orthovita and Cohesion desire that all other terms and conditions of the Agreement remain in full force and effect;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Orthovita and Cohesion hereby agree to amend the Agreement by and in accordance with this Amendment as follows:

1.       Definitions; References. Capitalized terms in this Amendment shall have the same meaning as those in the Agreement, unless specifically defined otherwise in this Amendment. All Article and Section references shall refer to the corresponding Article and Section in the Agreement, unless specifically stated to refer to an Article or Section of this Amendment.

2.1    Amendment to Section 5.1. Section 5.1 is hereby amended and restated in its entirety as follows:

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2.2     Amendment to Section 5.5. Section 5.5 is hereby amended and restated in its entirety as follows:

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2.3     Amendment to Section 6.2. Section 6.2 is hereby amended and restated in its entirety as follows:

2.4     Amendment to Section 6.4. Section 6.4 is hereby amended and restated in its entirety as follows:

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2.5     Amendment to Section 6.15. The first paragraph of Section 6.15 is hereby amended and restated in its entirety as follows:

2.6     Amendment to Exhibit F. Exhibit F is hereby deleted in its entirety, and the attached Amended Exhibit F is hereby substituted therefor. For purposes of this Amendment, the Parties hereby waive the provisions of Section 6.5 with respect to any price changes set forth in Amended Exhibit F.

3.1     Supply of Products and Accessories through October 31, 2005; Manufacturing Technology Transfer; Indemnification.

        (a)         The Parties further acknowledge and agree that they are in the process of transitioning manufacturing of Products and Accessories to Orthovita. Orthovita acknowledges and agrees that Cohesion shall close its manufacturing facility no later than **** (the “Closing Date”). Orthovita shall purchase from Cohesion, prior to or as of the Closing Date, the total number of Products and Accessories set forth in Exhibit G, as well as all the Product-related work-in-process set forth in Exhibit G (such work-in-process referred to hereinafter as the “WIP”). Amended Exhibit F sets forth the total number of items of each Product, Accessory and WIP that have been or will be supplied by Cohesion to Orthovita between the Effective Date of the Agreement and the Closing Date; Exhibit G sets forth the number of items of each Product, Accessory and WIP set forth in Amended Exhibit F that has not been supplied to Orthovita as of the

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Amendment Effective Date, but that will be supplied to Orthovita prior to or as of the Closing Date. The number of items of Products, Accessories and WIP set forth in Exhibit G shall be deemed to constitute a binding Purchase Order of Orthovita, and prior to the Closing Date Orthovita shall, subject to Section 6.12, purchase from Cohesion all such Products, Accessories and WIP set forth in Exhibit G, at the respective prices set forth in Exhibit G; provided that such Products and Accessories provided by Cohesion shall conform to the Product specifications and regulatory requirements as of date of receipt by Orthovita, and such WIP shall conform to Product specifications that are relevant to the stage of manufacture of the WIP as of date of receipt by Orthovita.

        (b)         After Cohesion has supplied to Orthovita the total number of units of a given Product, Accessory or WIP at the “Price A” specified in Amended Exhibit F (wherein counting of such total number of units shall start as of the Effective Date), all subsequent units of such Product or Accessory provided by Cohesion shall be supplied at the “Price B” specified in Amended Exhibit F (up to the total number of each Product, Accessory or WIP set forth in Amended Exhibit F). All Products, Accessories and WIP manufactured by Cohesion for Orthovita prior to and during the 4^th calendar quarter of Calendar Year 2005, as well as all WIP in Cohesion’s possession as of the Closing Date (up to the total amounts specified in Amended Exhibit F) shall be shipped and invoiced by Cohesion no later than the Closing Date.

        (c)         Cohesion shall use commercially reasonable efforts to supply the total number of units of each Product, Accessory and WIP set forth in Amended Exhibit F prior to the Closing Date. However, in any event, Cohesion shall cease manufacturing at its manufacturing facility no later than the Closing Date, regardless of the total number of units of each Product, Accessory and WIP supplied to Orthovita prior to or as of the Closing Date. For the sake of clarity, Cohesion shall have no obligation to supply any additional Products, Accessories or WIP to Orthovita after the Closing Date. Regardless of whether Orthovita (a) is capable of manufacturing Products and/or Accessories (or processing or packaging WIP) itself, or is able to obtain Products and/or Accessories from a third party supplier, and/or (b) has obtained Regulatory Approval to manufacture Products and/or Accessories (or to process or package WIP) pursuant to a Product Manufacturing Application (or other required application for Regulatory Approval) submitted by or on behalf of Orthovita, Orthovita shall be solely responsible, at Orthovita’s sole expense, for obtaining the CoStasis Ingredients and for manufacturing (or having manufactured) and otherwise obtaining Products and Accessories after the Closing Date. Notwithstanding Section 2.3 of the Agreement, after the Closing Date Cohesion shall be under no obligation to maintain any of its Product or Accessory Regulatory Approvals; provided that Cohesion shall maintain its approved U.S. Premarket Approval Application (“PMA”) in effect until Orthovita either obtains approval of its own PMA or determines that it will no longer seek approval of its own PMA.

        (d)         Notwithstanding anything to the contrary set forth in the Agreement, the Parties shall each bear their own costs and expenses in connection with manufacturing technology transfer from Cohesion to Orthovita after the Effective Date

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and neither Party shall be obligated to reimburse the other Party for any such costs or expenses.

        (e)         Notwithstanding anything in the Agreement, Orthovita shall be responsible for any storage and/or use of raw materials, CoStasis Ingredients, other components of Products or Accessories, WIP or its components, or finished Products and Accessories (whether or not in kit form) at any time past the limits of the applicable stability data of Cohesion. Orthovita shall defend, indemnify and hold harmless Cohesion and its Affiliates and their employees, officers, agents and directors against any Loss (including, without limitation, reasonable attorneys’ fees and expenses) that may be brought, instituted or arise against or be incurred by such person to the extent such Loss is based on or arises out of, or relates to, claims, actions or suits (including a governmental investigation) relating to any raw materials, CoStasis Ingredients, other components of Products or Accessories, WIP or its components, or finished Products and Accessories (whether or not in kit form) provided by Cohesion that are stored by Orthovita, or incorporated by Orthovita into a final finished product and sold to a customer or distributor, after expiration of the time period or nonconformance with an applicable release specification corresponding to Cohesion’s stability study data for such raw material, CoStasis Ingredient, other component, WIP or its components, and/or finished Product or Accessory (as applicable).

        (f)         Orthovita further agrees that it shall not further process and/or package into final finished product any raw materials, CoStasis Ingredients, other components of Products or Accessories, WIP or its components, or finished Products and Accessories (whether or not in kit form) until such time as Orthovita has obtained all Regulatory Approvals necessary in connection with such processing and/or packaging.

3.2     Purchase Orders. All open Purchase Orders (to the extent unfilled as of the Amendment Effective Date) submitted by Orthovita are hereby canceled. Orthovita’s execution of this Amendment shall be deemed to constitute a firm and binding Purchase Order for all remaining, as yet undelivered, numbers of units of Products, Accessories and WIP set forth in Exhibit G. Any raw materials supplied by Cohesion to Orthovita hereunder shall be provided ****.

4.1     Continuing Effect; Inconsistencies. This Amendment shall be effective for all purposes as of the Amendment Effective Date. As of the Amendment Effective Date, the term “Agreement” (as used herein and in the Agreement) shall mean the Agreement as amended by this Amendment. Except as expressly modified herein, the Agreement shall remain in full force and effect in accordance with its terms. To the extent that there are any inconsistencies between this Amendment and the unamended Agreement, the terms of this Amendment shall supersede those set forth in the unamended Agreement.

4.2    Governing Law. The construction, validity and performance of this Amendment shall be governed in all respects by the laws of the State of California, U.S.A., excluding conflict of laws principles.

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4.3     Counterparts. This Amendment may be executed in two or more counterparts, including by facsimile signature, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be signed by their respective duly authorized representatives as of the Amendment Effective Date.

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AMENDED EXHIBIT F

Price and Numbers of Products to be Supplied by Cohesion between the Effective Date of the Agreement and the Closing Date

*Excludes MEA and LEA units listed on Exhibit B of the Agreement

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EXHIBIT G

Price and Numbers of Products still to be Supplied by Cohesion between the

Amendment Effective Date and the Closing Date

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EXHIBIT H

Numbers of Products still Subject to the Royalty