EXHIBIT 10.72

 
 
INTERNATIONAL DISTRIBUTION AGREEMENT

 
    THIS INTERNATIONAL DISTRIBUTION AGREEMENT (the "Agreement") is made
effective on 24 of April, 2009 (the "Effective Date"), by and between
Cyberonics, Inc., a corporation organized under the laws of the State of
Delaware, United States  ("Cyberonics"), and Nihon Kohden Corporation, a
corporation organized under the laws of Japan ("Distributor").

RECITALS

    WHEREAS, Cyberonics is engaged in the research, manufacture, and sale of
implantable medical devices, including the “Products” (as defined below), useful
in the treatment of epilepsy, depression or other treatment-resistant disorders;

    WHEREAS, Distributor desires to be appointed as exclusive distributor of the
“Products” in the “Field” (as defined below) in the “Territory” (as defined
below); and

    WHEREAS, Cyberonics is willing to appoint Distributor of such
distributorship, subject to the terms and conditions set forth below.

    NOW, THEREFORE, Cyberonics and Distributor, intending to be legally bound,
agree as follows:

1.
 Definitions.

    1.1    The following capitalized terms shall be defined as follows:

(i)
“Field” shall expressly be limited to epilepsy.

(ii)
“Products” shall mean those products listed on Schedule A attached hereto, as
modified from time to time by mutual written agreement or pursuant to Section
2.2.

(iii)
“Territory” shall mean Japan, provided that this country is not placed under any
kind of embargo or trade sanction (“Trade Sanction”) which would prohibit the
sale of the “Products” to said country.  To the extent that all or part of the
“Territory” is placed under Trade Sanction, this definition shall automatically
be amended without the need of any action by the parties to exclude such
sanctioned country or countries.

2.
Distributorship Terms.

    2.1    Appointment and Acceptance.  Subject to the terms of this Agreement,
Cyberonics appoints Distributor as its exclusive distributor of “Products” in
the “Field” in the “Territory”.  Distributor accepts this appointment.  Subject
to Section 2.4, Cyberonics shall not appoint any other distributor of the
“Products” in the “Field” in the “Territory” during the term of this
Agreement.  In the event, during the Term of this Agreement, Cyberonics proposes
to sell any new product in the “Field” in the  “Territory”, Cyberonics agrees
that it will not grant sales, distribution and marketing rights to such new
product to any third party in the “Territory” without first offering such
product to Distributor on terms and conditions equivalent to those to be offered
to the third party.  In the event Distributor has not accepted such new product
for sales, distribution and marketing on such terms within sixty (60) days after
receipt of Cyberonics’ offer, Cyberonics shall be free to enter into such
third-party arrangement in Territory without further obligation to Distributor.
 

--------------------------------------------------------------------------------

    2.2    Discontinuation of Production.  Distributor acknowledges that
Cyberonics reserves the right to discontinue the manufacture, production or
distribution of products (including the “Products”) subject to Section 3.4.  To
the maximum extent practicable, Cyberonics agrees to give Distributor at least
one (1) year  advance written notice of any such decision and shall continue to
provide Distributor with repair service, service parts or any other products
necessary for after-sales service to the discontinued  “Products” for six (6)
years after Cyberonics discontinued any “Products.”   In addition, if Cyberonics
changes any specifications of any “Products” that relate to the “Products”
safety or effectiveness , Cyberonics shall provide Distributor with as much
prior notice as is practicable, endeavoring to give Distributor at least six (6)
months prior written notice.

    2.3    Limitation of Appointment.  Nothing in this Agreement is intended to
nor shall grant Distributor any rights to distribute (a) any products other than
the “Products”; (b) any “Products” for indications outside of the “Field;” or
any “Products” outside the “Territory.”

    2.4    Right Reserved by Cyberonics.  Cyberonics expressly reserves the
right to (a) make, market and sell products other than “Products”; (b) make,
market and sell products (including the “Products”) outside  the “Territory”;
(c) make, market and sell products (including the “Products”) in the “Territory”
outside of the “Field” either directly for its own account or via distributors
or agents.

    2.5    No Activities Outside the “Field” or the “Territory”.  In accordance
with Section 2.3, Distributor shall not solicit sales of “Products” or promote
the sale, distribution or marketing of “Products” outside of the “Field” or the
“Territory”.  Distributor shall not establish an office or warehouse outside the
“Territory” for the sale of “Products”.  In the event Distributor receives an
inquiry or purchase order from a third party for delivery or sale outside of the
“Field” or the “Territory”, Distributor shall promptly refer such third party,
and any inquiry or purchase order submitted thereby, to Cyberonics, it being
understood that in no event shall Distributor fill any portion of any such
purchase order unless Cyberonics first consents in writing.  In addition,
Distributor shall not, without the prior written consent of Cyberonics, supply
Products to any customer if Distributor knows that such customer will actively
sell those Products into territories which are not reserved to Distributor or
are allocated exclusively to another reseller. Distributor shall immediately
notify Cyberonics upon learning that Product sold by Distributor has been used
outside of the “Field” or removed from the “Territory”.

    2.6    Sub-Distributors.  Distributor will purchase the “Products” from
Cyberonics for resale on Distributor’s own account and   Distributor shall
notify Cyberonics of its Sales subsidiaries  for the distribution of “Products”
in the “Field” in the “Territory”.

3.
Prices and Terms.

    3.1    Purchase Orders.  During the term hereof, Distributor shall order
“Products” from Cyberonics by submitting a written purchase order
identifying:  the “Products” ordered by catalog number and quantity; the
requested delivery date(s); and any export/import information required to enable
Cyberonics to fill the order.  All purchase orders for “Products” are subject to
acceptance by Cyberonics by either shipping the “Products” or issuing a written
order acknowledgement. Cyberonics reserves the right to fulfill purchase orders
in one or more shipments. In case of such partial shipments, Cyberonics shall
follow Distributor’s shipping instruction and shall not ship without prior
consent of Distributor.  Cyberonics shall have no liability to Distributor with
respect to purchase orders which are not accepted; provided, however, that
Cyberonics will use reasonable efforts to accept any purchase order for
“Products” which does not require any modification or addition in order to meet
the specifications of Distributor or its customers, and which corresponds to
quantities of “Products” forecast by Distributor in accordance with Section 3.2.
Should Cyberonics decide not to accept a purchase order, Cyberonics shall
provide Distributor with a written order rejection within  five(5) days after
receiving the purchase order.  If Cyberonics does not provide such an order
rejection, the purchase order is considered to be accepted.
 
    3.2    Forecasts.  To facilitate Cyberonics' production scheduling, within
five (5) business days of the beginning of each calendar month during the Term,
Distributor shall provide Cyberonics in writing with a rolling, non-binding
forecast of Distributor's anticipated monthly requirements of “Products” for the
six (6) month period commencing on the month following the month of such
forecast.  Distributor agrees to use its best efforts to make each such forecast
as accurate as possible.
 

--------------------------------------------------------------------------------

    3.3    Product Prices.  In consideration of Cyberonics providing “Products”
ordered by Distributor, Distributor shall pay Cyberonics the amount set forth on
Schedule A.   No price change necessitated by a change in the reimbursement
amount shall affect “Products” ordered pursuant to purchase orders accepted by
Cyberonics prior to the date such price change becomes effective.  In the event
that the “Product” price under this Agreement increases, Distributor’s purchases
of “Products” at the previous price shall be limited to the number of “Products”
actually purchased by Distributor in the three-month period immediately prior to
the price increase.  Any purchase orders for “Products” in excess of this
defined amount shall be at Cyberonics’ discretion.

    3.4    Price Increase or Product Discontinuance.  In the event Cyberonics
wishes to seek a price increase or Product discontinuance, Cyberonics shall
notify Distributor and the parties shall negotiate in good faith regarding the
requested price increase or Product discontinuance.  

    3.5    Sole Remuneration.  The difference between Distributor's resale price
and the purchase price due to Cyberonics under Section 3.3 shall be
Distributor's sole remuneration for the distribution of the “Products” by
Distributor pursuant to this Agreement.

    3.6    Cancellation, Rescheduling, and Returns.  Purchase orders placed by
Distributor and accepted by Cyberonics shall not be canceled or rescheduled
unless mutually agreed upon by both parties, except purchase orders may be
canceled if “Products” are not shipped within thirty (30) days of the delivery
date requested in the corresponding purchase order.  Except in cases of the
return of “Products” which qualify for coverage under the Cyberonics’ Limited
Replacement Warranty set forth on Schedule D and the return of “Products” that
do not conform to Distributor’s order, “Products” may not be returned for any
reason without first obtaining Cyberonics' prior written consent and adhering to
Cyberonics’ Return Policy as set forth in Schedule C, as amended by Cyberonics
upon six (6) months prior written notice to Distributor. Except in cases of the
return of “Products” which qualify for coverage under the Cyberonics’ Limited
Replacement Warranty set forth on Schedule D and the return of “Products” that
do not conform to Distributor’s order, Distributor will bear the cost of and
risk of loss or damage associated with the return of “Products”.

    3.7    Compliance with Laws.  The ultimate shipment of “Products” to
Distributor shall be subject to the right and ability of Cyberonics to make such
sales, and obtain all required licenses and permits, under all applicable
decrees, statutes, rules, laws and regulations then in effect, whether
promulgated by the government of the United States, the governments of the
countries comprising the Territory or any other governmental body and agencies
or instrumentality’s of the foregoing.  Any purchase order, which has been
accepted by Cyberonics but which cannot be fulfilled due to any such decree,
statute, rule, or regulation shall be considered to have been rejected when
submitted to Cyberonics for acceptance or rejection.  Distributor will: (i)
apply for all approvals required for the commercialization of the “Products” in
the “Territory” in Distributor’s name; (ii), transfer such approvals as directed
by Cyberonics upon such termination or expiration of this Agreement as set forth
in Section 8.7.1 or 8.7.2,  after Distributor receives the termination fee from
Cyberonics according to Section 8.7.1 or 8.7.2, if possible under applicable
law; (iii) comply with all decrees, statutes, rules, laws and regulations then
in effect, which shall be applicable to Distributor, whether promulgated by the
government of the United States (including, but not limited to the Foreign
Corrupt Practices Act and Export Administration Regulations), the government of
the Territory or any other governmental body and agencies or instrumentality’s
of the foregoing; (iv)  maintain the necessary records to comply with such
decrees, statutes, rules, laws and regulations; (v) not  export any “Products”
except in compliance with such decrees, statutes, rules, laws and regulations;
(vi) not sell, transfer or otherwise dispose of “Products” in violation of
applicable export decrees, statutes, rules, laws and regulations then in effect;
and (vii)  indemnify and hold harmless Cyberonics, its parent, officers,
directors, and employees from any and all fines, damages, losses, costs and
expenses (including reasonable attorneys' fees) incurred by Cyberonics as a
result of any breach of this Section 3.7 by Distributor or any of its sales
subsidiaries .    It is further agreed that Distributor will notify Cyberonics
of any known, material developments in the applicable decrees, statues, rules,
laws and regulations applicable to the sale of the “Products” in the “Territory”
to the extent reasonably practicable.

--------------------------------------------------------------------------------

    3.8    Shipping.  Unless Distributor requests otherwise, all “Products”
ordered by Distributor pursuant to this Agreement shall be packed for shipment
and storage in accordance with Cyberonics' standard commercial practices and
shipped directly to Distributor. Cyberonics will attempt to comply with any
special packaging requirements requested by Distributor, provided that
Distributor bears any and all expense associated with Cyberonics’ compliance.
Distributor shall purchase the Products from Cyberonics EXW (as defined under
Incoterms 2000 of the International Chamber of Commerce) place of manufacture
with title and risk of loss to “Products” passing to Distributor upon delivery
of the Products to the carrier designated by Distributor at the EXW
point.  Distributor will inspect the “Products” promptly upon arrival. To the
maximum extent that non-conformity can be discovered, all claims for
non-conforming shipments must be made in writing to Cyberonics within thirty
(30) days of the receipt of the “Products” by Distributor.  Any claims for
discoverable non-conformities not made within such period shall be deemed
forever waived and released.

    3.9    Payment.  All amounts due and payable with respect to “Products”
purchased by Distributor shall be paid within 60 days after the invoice
date.    All such amounts, and any other payment due pursuant to the terms of
this Agreement, shall be paid in United States dollars by wire transfer of
immediately available funds to the bank listed below (or such other bank as
Cyberonics may specify in writing) or, if applicable law or regulation prohibits
paying in United States dollars, by other means specified in writing and
mutually agreed by both parties to the account information provided by
Cyberonics in writing from time to time. All costs incurred in connection with
any such wire transfer shall be the responsibility of Distributor.  Whenever any
amount hereunder is due on a day which is not a day on which the bank to which
payments are to be made by Distributor to Cyberonics hereunder is open for
business (a "Business Day"), such amount shall be paid on the next Business
Day.  Amounts due hereunder shall be considered paid as of the day such funds
are received by the aforementioned bank.  No part of any amount payable to
Cyberonics hereunder may be reduced due to any counterclaim, set-off, adjustment
or other right which Distributor might have or assert against Cyberonics, its
parent, any other party or otherwise.

    3.10    Credit Line. At Cyberonics’ sole option, Cyberonics may from time to
time grant Distributor a credit line in an amount and at terms established by
Cyberonics.  Cyberonics reserves the unilateral right to modify, decrease,
increase or cancel said credit line upon written notice to Distributor.  At all
times, the maintenance of the credit line will be conditioned upon the prompt
payment by Distributor of all amounts due and payable under this Agreement. No
modification or cancellation of the credit line shall constitute a waiver by
Cyberonics of any of its rights or Distributor’s obligations pursuant to this
Agreement including, but not limited to, the obligation of Distributor to make
payments as provided herein.  Subject to the terms of this Article 3, as of the
Effective Date, Cyberonics agrees to grant Distributor an initial credit line of
$1,500,000.00.

    3.11    Late Payments.  In addition to the other rights of Cyberonics
hereunder, all amounts due and owing to Cyberonics hereunder but not paid by
Distributor on the due date thereof shall bear interest in United States dollars
at the rate of the greater of: (i) One per cent (1%) per annum above the then
applicable prime interest rate per annum then in effect by Bank of America in
United States dollars on the invoice date; or (ii) the maximum lawful interest
rate permitted under applicable law. Such interest shall accrue on the balance
of unpaid amounts from time to time outstanding from the date on which portions
of such amounts became due and owing until payment thereof in full.  Cyberonics
reserves the right to require advance payment or to decline to accept or make
shipment against purchase orders if Distributor is delinquent in payments or, in
Cyberonics’ sole opinion, Distributor’s ability or willingness to pay appears
doubtful.

--------------------------------------------------------------------------------

    3.12    Currency Conversion.  If any currency conversion is required in
connection with the calculation of payments hereunder, such conversion shall be
made using the selling exchange rate for conversion of the foreign currency into
United States dollars, quoted for current transactions reported in The Wall
Street Journal for the invoice date.

    3.13    Return Policy.  Except in cases of the return of “Products” which
qualify for coverage under the Cyberonics’ Limited Replacement Warranty set
forth on Schedule D and the return of “Products” that do not conform to
Distributor’s order,, the return of Products shall be made pursuant to the terms
of Cyberonics' return policy.  Said return policy is attached hereto as Schedule
C, and may be changed by Cyberonics upon six (6) months prior written notice to
Distributor.  Cyberonics shall have no duty to accept for return “Products”
reported by Distributor to Cyberonics as sold.

    3.14    Governing Document.  This Agreement, together with its Schedules,
shall supersede any terms used by Cyberonics or Distributor in the ordering,
shipment and receiving of “Products” including, but not limited to, the terms
(excluding quantity) appearing on Distributor’s purchase order or other
documents, none of which shall apply to transactions entered into for the supply
of Products pursuant to this Agreement.

4.
Distributor's Duties.

    4.1    Distributor's Efforts.  Distributor will use its best efforts to
aggressively and vigorously promote the sale of “Products” in the “Field” in the
“Territory” including, but not limited to, maintaining, at its own expense, a
suitable place of business in the “Territory” staffed with a competent sales
force.  Distributor will use its best efforts to maintain and promote and do
nothing to detract from the good name of Cyberonics or the reputation of
“Products”.  At Cyberonics' request, Distributor will attend, exhibit and assist
at trade shows, physician meetings and other professional gatherings in the
“Territory” at Distributor’s own expense.

    4.2    Payment of Account.  Distributor will promptly pay its account with
Cyberonics when due.

    4.3    Purchase Goals.  Distributor agrees to establish and work diligently
to meet or exceed the minimum purchase goals attached as Schedule B hereto.  The
parties expressly agree to review said annual purchase goals (a) on or about
ninety (90) days after the initial establishment of the reimbursement amount for
the “Products” in the “Territory” by Japan’s Ministry of Health, Labour and
Welfare; and (b) on or about sixty (60) days prior to the end of each year of
the Term.

    4.4    Reports.  Distributor will provide Cyberonics with quarterly reports
of Distributor's sales in the “Territory” on a hospital-by-hospital basis in
sufficient detail to allow Cyberonics to confirm that Distributor is meeting its
purchase goals.  Distributor will also provide Cyberonics with quarterly reports
of its efforts to seek and support reimbursement, the reimbursement environment
in the “Territory” and Product approval-related activities.  Upon request,
Distributor will provide Cyberonics with adequate financial information, on a
confidential basis, or credit references to assure Cyberonics of Distributor's
ability to timely pay its account.

    4.5    Regulatory Compliance.  Distributor will comply with all applicable
decrees, statutes, rules, laws and regulations applicable to its distribution of
“Products” (including prohibitions on the promotion of off-label use) and keep
Cyberonics informed with respect to such decrees, statutes, rules, laws and
regulations and the “Products”-related regulatory submissions and
approvals.  Distributor will submit copies of such regulatory submissions and
approvals to Cyberonics  after such submissions are  permitted by or approvals
are submitted by the applicable regulatory authority and receipt of such
approval by Distributor, provided that, Cyberonics shall not submit regulatory
application to  Japan’s Ministry of Health, Labour and Welfare using such copies
of the Distributor’s submissions or resulting approvals without obtaining prior
written consent of Distributor.    

--------------------------------------------------------------------------------

    4.6    Adverse Event Reporting.  If  either party becomes aware of any death
or serious injury (collectively, a “Complaint”) that is, is alleged to be or may
have been caused, in whole or in part, by a defect in or malfunction of one or
more of the “Products”, it will report such Complaint to the other party in
writing within  three (3) business days after having knowledge of said Complaint
by facsimile  or electronic mail (to Cyberonics by facsimile at 281-853-1222,
Attention: Clinical/Technical Services Department, or by electronic mail at
clinicaltechnicalservices@cyberonics.com or to Distributor by facsimile at Japan
3-5348-1518 and provide  the other party with such documentation and assistance
in investigating and reporting such Compliant as required by the applicable laws
in accordance with Schedule E hereto to the extent reasonable practical and the
Pharmaceutical Affairs Law in Japan.  Either party is obligated to notify the
other party under this Section 4.6 without regard to whether there is or appears
to be a valid basis that any Complaint is related to the Products.  Either party
will cooperate with the other party in assuring that all vigilance reporting is
completed.  If permitted by applicable regulatory authority, Cyberonics shall be
responsible for investigating  and reporting Complaints as required by the
applicable laws and Distributor will cooperate with Cyberonics in the conduct of
such investigations and reporting or, if the applicable regulatory authority
will not permit Cyberonics to do such investigations and reporting, Distributor
will be responsible for investigating  and reporting Complaints as required by
the applicable laws and Distributor will send Cyberonics copies of all related
documents.  It is specifically agreed by the parties that they will endeavor to
work together in order to properly report any MDRs as required by applicable
law.  To the extent that Distributor is required by law to report MDRs
to  Japan’s Ministry of Health, Labour and Welfare, Distributor agrees to
provide Cyberonics  with advance copies of any proposed submissions in English
and agrees that no such proposed submission will be submitted unless Cyberonics
has approved same.   Cyberonics agrees to provide Distributor with any
submissions made by it to the U.S. FDA that relates to “Products” sold pursuant
to this Agreement.

    4.7    Recalls.  Cyberonics shall be responsible for conducting any recall
of any or all of the “Products” initiated by Cyberonics or governmental
authority acting within or outside of the “Territory.”  In the event of any
Products recall in Japan, whether it is initiated by Cyberonics or Distributor
(if such recall is mandated by the Japanese regulatory authorities), both
parties shall fully cooperate on the recall.  In principle, if the recall
requires the removal of “Products” from the market, Distributor shall recall the
“Products” in Japan and shall return the recalled “Products” to Cyberonics.
Cyberonics shall provide Distributor with substitute products for the recalled
“Products”.　 Distributor shall also maintain the documentations establishing the
effectiveness of its efforts to initiate and/or support the recall, as
appropriate, and provide Cyberonics with access to such documentation as
requested by Cyberonics.   Cyberonics shall reimburse Distributor for reasonable
expenses incurred by Distributor to conduct the recall.  Distributor shall
cooperate with Cyberonics in any such recall.  In order to assist Cyberonics in
the event of a recall, Distributor will maintain for a period of not less than
ten (10) years a complete and current listing of the locations of all “Products”
in Distributor's inventory, the names and addresses of customers who have
purchased “Products” from Distributor, together with the model number, lot
number and serial numbers of “Products” purchased and the date of such
purchase.  Distributor agrees to make the foregoing information available to
Cyberonics or governmental authority acting within or outside the “Territory”
upon request by Cyberonics.  Within 30 days after expiration or termination of
this Agreement, Distributor will provide a copy of its records containing the
foregoing information to Cyberonics.

    4.8    Traceability, Complaints and Complaint Reporting.  Distributor shall
comply with the traceability program that the parties mutually agree upon in
writing.   Cyberonics has the right to review said traceability program and the
related compliance-related records at reasonable times.

    4.9    [Intentionally Left Blank]

    4.10   No Prohibited Payments to Public Officials.  Distributor will not,
directly or indirectly, make any payment which are prohibited under the laws
promulgated by the government of the United States, which shall be applicable to
Distributor, or any law of the “Territory”  and shall otherwise comply with the
laws and regulations then in effect in the “Territory”, if any, governing
interactions with government officials, political parties, political officials
or candidates for political office (or any agents, employees or representatives
thereof).

 
 

--------------------------------------------------------------------------------

 

    4.11    Training.  Distributor shall be responsible for training all of its
personnel who promote “Products” so that they are knowledgeable about the
“Products” and can aggressively and vigorously promote the “Products” in
accordance with the terms hereof.

    4.12    Attendance at Meetings.  At Cyberonics' request, Distributor shall
at Distributor’s expense have one or more representatives attend product- and
company-related educational meetings at least once each year during the term
hereof.

    4.13    Product Warranty.    The exclusive warranty relating to the
“Products” shall be as set forth in the attached Schedule D.  Said warranty may
be changed from time to time upon mutual agreement of the parties.

    4.14    Technical Support.  In the “Territory”, Distributor will provide
technical support for “Products” during its normal business hours and will
publicize this service in its advertising and literature.

    4.15    Distributor's Expenses.  All costs including, but not limited to,
salaries, commissions, bonuses, and other compensation expenses, and
contributions to social security or other social program payments, benefits,
severance pay, and other expenses incurred by Distributor in connection with its
performance of this Agreement and the maintenance of its sales force shall be
borne solely by Distributor.

    4.16    Insurance Requirement.  Distributor will obtain reasonable amounts
of insurance to protect it and its employees for loss of or damage to inventory
and liability for personal injury and/or property damage arising from
Distributor's activities hereunder, and any other insurance, which may be
required in the “Territory” in which Distributor distributes
“Products”.  Cyberonics shall have the right to examine such insurance policies
upon request.

    4.17    Conflict of Interest.  Distributor warrants and agrees that during
the term of this Agreement, it shall refrain from (i) having any direct or
indirect financial interest consciously in any entity or person that is
developing, manufacturing, clinically investigating or distributing products
that compete with “Products”; or (ii) assisting, engaging in or inducing others
to engage in the development, production, sale, offering for sale or
representation of products that compete with “Products”.  Ownership of mutual
funds or interests in retirement plans managed by an independent trustee will
not violate this obligation.

    4.18    Non-Compete.  Distributor warrant and agree that it does not as of
the Effective Date and will not during the Term of this Agreement and, solely in
the case that this Agreement is terminated  by Cyberonics with cause, for a
period of one (1) year after its expiry or termination, without obtaining the
prior written consent of Cyberonics, directly or indirectly represent, sell,
distribute, or promote, or assist in the sale, distribution, or promotion of any
products in the “Territory” which directly compete with any of the “Products”
,as hereinafter defined.  The products which directly compete with the
“Products” shall mean implantable medical devices used to stimulate the vagus
nerve.  The parties agree that a breach by Distributor of this Section 4.18 will
result in irreparable injury to Cyberonics and Cyberonics will not be adequately
compensated for such damages by monetary award alone.  Accordingly, the parties
agree that in the event of any such breach, in addition to other remedies
available at law, equity, or otherwise, Cyberonics shall be entitled as a matter
of right to relief by injunction, restraining order, decree or other such relief
as may be appropriate to ensure compliance by Distributor. Any remedy expressly
set forth in this Section 4.18 shall be in addition to and not inclusive of or
dependent upon the exercise of any other remedy available at law, equity, or
otherwise.  The parties agree that the non-compete restrictions set forth in
this Section 4.18 are reasonable, necessary, and fundamental to the protection
of Cyberonics.

--------------------------------------------------------------------------------

    4.19    Indemnification.  Distributor shall indemnify and hold Cyberonics
and its parent and their directors, officers, employees, and agents harmless
from any loss, damage, cost, and expense, including attorney's fees and other
professional expenses, arising from:  a) losses relating to the liability of
Distributor as an employer for claims by Distributor's employees,
sub-distributors or agents; b) injury to persons or damage to property caused by
the willful act or negligence of Distributor or Distributor's agents in the
distribution, sale, transportation, possession or use of “Products”; c) any
claim arising from warranties made by Distributor different from or in addition
to those made in writing by Cyberonics and attached hereto as Schedule D; and d)
any claims arising out of the dissemination of marketing materials which contain
claims that are not consistent with the “Products” labeling.

    4.20    Labeling.  It is acknowledged by the parties that (1) Distributor
shall submit any proposed labeling to Cyberonics for pre-approval (with an
English translation) and that such labeling may not be used in connection with
the “Products” until approved by Cyberonics; (2) Distributor will attach
statutory labels as required under the laws of the “Territory” to the packaging
of “Products;” and (3) provided that such labeling is approved by Cyberonics,
the attachment of statutory labels shall be authorized and shall not be deemed
as any alteration of the packaging, form or design of “Products” for the purpose
of this Agreement.

    4.21    Access to Records.  Distributor shall grant Cyberonics access to its
non-confidential books and records relating to the distribution of the
“Products” (excluding books and records relating to the pricing between
Distributor and its sub-distributors) upon reasonable notice and at an agreed
upon time and place.

    4.22    Clinical Matters.  It is acknowledged by the parties that Cyberonics
shall have primary responsibility and decision-making powers regarding any
clinical matters relating to the “Products” including, but not limited to, the
drafting of any study protocols involving the “Products.”

    4.23    Marketing Materials.  Distributor shall submit copies of major
advertising and other promotional materials relating to the “Products” which it
will use or uses in the “Field” in the “Territory” to Cyberonics.   To the
maximum extent possible, Distributor shall submit such materials to Cyberonics
in advance of their printing or other distribution.

5.
Intellectual Property.

    5.1    Cyberonics' Intellectual Property.  Distributor acknowledges that the
patents, trademarks, trade names, emblems, designs, models and methods of
Cyberonics (“Intellectual Property”) relating to the “Products” are the sole
property of Cyberonics and Distributor will take no steps to challenge or impair
same.  Distributor will not acquire any right, title or interest in the
Intellectual Property by virtue of the execution or performance of this
Agreement, nor at any time describe or represent itself to others as having such
right, title or interest.

    5.2    Distributor's Use of Intellectual Property.  Distributor shall use
the Intellectual Property only in connection with and to the extent necessary to
promote, solicit and sell the “Products”.  Distributor will promptly notify
Cyberonics of any improper use of any trademark of Intellectual Property in the
“Territory”, which comes to the attention of Distributor.  Upon termination of
this Agreement, Distributor shall cease using all trademarks of Intellectual
Property.

6.
Confidential Information; Cyberonics' Property.

    6.1    Confidential Information.  Except as expressly provided herein, for
the term of this Agreement and for five (5) years thereafter, either party
(“Receiving Party”) shall not publish or otherwise disclose and shall not use
for any purpose, except as expressly permitted herein, any information which is
furnished to it by the other party (“Disclosing Party”) pursuant to this
Agreement and which is marked as proprietary or confidential or which is
disclosed orally as proprietary and/or confidential and is confirmed in writing
as so within thirty (30) days of initial disclosure ("Confidential
Information").  Notwithstanding the foregoing, it is understood and agreed that
Confidential Information shall not include information that, in each case as
demonstrated by written documentation:

--------------------------------------------------------------------------------

    (a)    was already known to Receiving Party, other than under an obligation
of confidentiality, at the time of disclosure;

    (b)    was generally available to the public or otherwise part of the public
domain at the time of its disclosure to Receiving Party;

    (c)    became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
Receiving Party in breach of this Agreement; or

    (d)    was subsequently lawfully disclosed to Receiving Party by a person
other than a party hereto or independently developed by Receiving Party without
reference to any Confidential Information disclosed by Disclosing Party.

    6.2    Cyberonics' Property.  Cyberonics may from time to time provide
Distributor with demonstration “Products”, models, advertising materials,
booklets and brochures, reprints of technical articles and marketing plans, and
any such material shall remain the sole property of Cyberonics.  Such items
remaining in the possession of Distributor shall be, at Cyberonics’ request at
the time of expiration or termination of this Agreement, promptly returned to
Cyberonics or destroyed at Cyberonics’ option.
 
7.
Indemnification of Distributor.

 
    7.1    Limitation of Indemnity Rights. To the maximum extent permissible by
applicable law, the indemnification rights established in this Article 7 shall
be to the exclusion of any and all other indemnification rights available.

    7.2    By Cyberonics. Notwithstanding anything to the contrary contained
herein (including but not limited to the provision of  Section 10.9), Cyberonics
shall indemnify and hold Distributor harmless from and against all costs,
expenses, claims, demands, causes of action, damages and judgments (collectively
called “Claim”), including reasonable attorney's fees as follows:  (i) Any
“Claim” alleging loss or damage, personal injury or death, arising out of the
purchase, operation and/or use of the “Products” or any of the “Products” by
third parties; and (ii) Any “Claim” alleging that the “Products” or any of the
“Products” directly infringe any third party’s legally enforceable intellectual
property rights protected by laws in the “Territory”.  Excluded from this
provision, in addition to any indemnification of Cyberonics by Distributor in
accordance with Section 4.19, are any “Claim” which is the result of the
negligent or willful act, omission, or misconduct of Distributor, its officers,
employees, or agents, including but not limited to:

    (1)    any warranty, express or implied, unauthorized by Cyberonics; or

    (2)    (i) any physical or chemical change in the form of a Product made
intentionally by the Distributor,

        (ii) improper storage, handling, or transportation of a Product by the
Distributor, including, but not limited to, improper or unauthorized repackaging
or removal of the Product from its original packaging or canister; or

        (iii) “Products” which after distribution or sale by Cyberonics to
Distributor have been labeled except for such statutory labels set forth in
Section 4.20 or used by or on behalf of Distributor as a container, part or
ingredient of any other product or substance.

    7.3    Conditions of Indemnification.  Cyberonics shall not be obligated to
indemnify Distributor under Section 7.2 unless:

--------------------------------------------------------------------------------

    (a)    Distributor gives Cyberonics prompt written notice of any “Claim” for
which it seeks indemnification;

    (b)    Distributor fully cooperates with Cyberonics in the defense of the
“Claim”;

    (c)    Cyberonics shall have the sole right to defend and to control the
defense of any such “Claim” in the manner it deems advisable, including using
counsel of Cyberonics' choice; and

    (d)    Cyberonics shall have the sole right to settle any such “Claim”,
provided any such settlement completely releases Distributor and that the
settlement terms do not provide for an admission of liability by Distributor.

    7.4    Limited to Distributor.  The indemnity in Section 7.2 applies only to
Distributor and not to any other person or entity.

    7.5    Survival of Indemnity.  The indemnity of Section 7.2 shall apply to
all “Products” sold by Distributor in the “Field” in the “Territory” during the
term of this Agreement and shall survive the termination of this Agreement.

    7.6    Limitation. Notwithstanding anything to the contrary contained
herein, in no event will Cyberonics be liable to Distributor for indirect,
incidental, special or consequential damages for such “Claims” such as those
referred to in Section 7.2, or for any other Claims, nor shall Cyberonics be
liable to Distributor for any loss of revenue or profit, or for any loss of
goodwill or reputation. Any and all damages for which Distributor shall
indemnify any third party in compliance with any decision of the court shall not
be deemed such indirect, incidental, special or consequential damages mentioned
above.

8.
Term and Termination.

    8.1    Term.  Subject to earlier termination as provided herein, this
Agreement shall take effect on the “Effective Date” and will continue until the
fifth anniversary thereof (the “Term”) and shall be automatically renewed for
additional one year periods, unless either party gives to the other party
written notice not to renew this Agreement at least six (6) months prior to the
expiration of the Term of this Agreement or any renewal thereof.  For purposes
of this Agreement, the term “Start Date” is defined as the date of the initial
establishment of the reimbursement amount for the first of the “Products” in the
“Territory” by Japan’s Ministry of Health, Labour and Welfare.
 
    8.2    Termination For Breach 　Either party may terminate this Agreement in
the event the other party breaches this Agreement (including that Distributor
fails to meet any purchase goals on an annual total basis for periods subsequent
to Year One (defined on Schedule B), which shall be agreed upon by the parties
during the Term, Distributor fails to follow any of the aforementioned
traceability programs, or Distributor fails to comply with the reporting
procedures) by giving the breaching party written notice describing the breach
in detail and giving the breaching party thirty (30) days to cure the
breach.  If the breach has not been cured within the thirty (30) days of receipt
of such notice, the party giving such notice may immediately terminate the
Agreement upon notice to the breaching party.  If a breaching party who has been
given written notice and cured a breach subsequently commits the same breach,
then the other non-breaching party shall have the right to immediately terminate
the Agreement without further opportunity to cure and without further
obligation.

    8.3    Immediate Termination.  Notwithstanding anything to the contrary
contained herein, Cyberonics may terminate this Agreement immediately upon
notice without further obligation to Distributor in the event that:  (i)
Distributor directly or indirectly sells “Products” to a country under Trade
Sanctions; or (ii) Distributor deliberately renders its assistance to the sale
or implantation of expired “Products”.

--------------------------------------------------------------------------------

    8.4    Termination for Insolvency.  Upon the filing of a petition in
bankruptcy, insolvency, or reorganization against or by either party, or either
party becoming subject to a composition for creditors, whether by law or
agreement, or either party going into receivership or otherwise becoming
insolvent (the "Insolvent Party"), this Agreement may be terminated by the other
party by giving written notice of termination to the ”Insolvent Party”, such
termination being effective immediately without further obligation upon giving
of such notice.

    8.5    Termination Due to Change in Control.   If either party is acquired
by or merged into any third party or in the event of a change in 50% or more of
the ownership of either party, including sale, transfer or relinquishment of any
such an interest in the ownership of the business, the other party may terminate
this Agreement immediately upon notice.

    8.6    Termination Due to Competition.  Cyberonics may terminate this
Agreement immediately upon notice without further obligation to Distributor in
the event Distributor directly or indirectly sells or promotes any product which
directly competes with the “Products” as defined in Section 4.18.

    8.7    Termination Fee.

          8.7.1   In the event that Cyberonics terminates this Agreement other
than pursuant to Section 8.3, 8.4 or 8.6 or Cyberonics gives Distributor written
notice not to renew this Agreement beyond the Term in accordance with Section
8.1, one of the following termination fees shall be due to Distributor according
to the effective date of said termination or expiration within thirty (30) days
of the effective date of said termination or expiration:

Start Date to the third anniversary thereof
$***
Third anniversary of the Start Date plus one day to the fourth anniversary
thereof
$***
Fourth anniversary of the Start Date plus one day to the fifth anniversary
thereof
$***
Fifth anniversary of the Start Date plus one day to the sixth anniversary
thereof
$***

          8.7.2    In the event that the definition of “Products” is amended by
mutual consent of the parties to include a VNS Therapy™ System which includes a
model of the generator that is not available for commercial sale in the United
States as of the Effective Date and Distributor obtains the governmental
approvals for the commercialization of such new Products in the Territory (the
“New Products Approval”), the termination fees set forth in Section 8.7.1 shall
be replaced with the following:

Effective date of the “New Products Approval” to the first anniversary thereof
$***
First anniversary of the “New Products Approval” plus one day to the second
anniversary thereof
$***
Second anniversary of the “New Products Approval” plus one day to the third
anniversary thereof
$***
Third anniversary of the “New Products Approval” plus one day to the fourth
anniversary thereof
$***

 

 
*** Portions of this page have been omitted pursuant to a Confidential Treatment
request and filed separately with the Commission.

 
 

--------------------------------------------------------------------------------

 

    8.8    Effects of Termination.

          8.8.1   In the event that either party terminates this Agreement as
authorized herein, all rights of the parties (other than the right of Cyberonics
to collect any outstanding balances and the rights which survive termination
pursuant to Section 8.9) will immediately cease as of the effective date of the
termination. Except for the right of Cyberonics to collect any outstanding
balances and the rights which survive termination pursuant to Section 8.9, no
party terminating this Agreement in accordance with this Article 8 shall be
liable to the other party by reason of said termination (including, but not
limited to, any liability for indemnification payment, lost profits or
prospective profits or damages relating to expenditures, investments or
commitments in connection with the business or goodwill).

          8.8.2   Within twenty (20) business days of the termination or
expiration of this Agreement, Distributor agrees to make its current inventory
of “Products” (whether in its possession or otherwise) available to Cyberonics
for inspection and testing.  Cyberonics agrees to evaluate whether it would like
to repurchase “Products” which, in Cyberonics’ sole opinion and subject to
Cyberonics' inspection, testing, and acceptance, are saleable, in their original
packaging and unaltered from their original form and design.  Said repurchase
will be at the original invoice price.  Any Product that has not been paid for
by Distributor must be immediately returned to Cyberonics, without obligation of
re-purchase.  For one (1) year after the expiration or termination of this
Agreement, Distributor may sell any of the inventory of Products in its
possession at the time of termination or expiration of this Agreement if
Cyberonics does not elect to directly or indirectly re-purchase pursuant to this
Section 8.8.2. Notwithstanding the provision of Section 5.2, Distributor may
continue to use the trademarks of Cyberonics but only to the extent necessary
for this stated purpose.   

       8.8.3   At Cyberonics’ request at the time of expiration or termination
of this Agreement, promptly, but in no event more than thirty (30) days,
following expiration or termination of this Agreement, Distributor shall return
to Cyberonics all Confidential Information and property of Cyberonics' in
Distributor's possession or destroy them at Cyberonics’ option.

          8.8.4   Upon termination or expiration of this Agreement, Cyberonics
or its designee shall be responsible for  after-sales service to all “Products”
which Distributor sold in “Territory”, including, without limitation, repair
service and supply of service parts, accessories or other necessary products.

    8.9   Survival.  All provisions in this Agreement intended to be observed
and preformed after expiration or termination hereof, including, without
limitation, Articles 6, 7 and 10, and Sections 2.3, 2.4, 3.7, 3.9, 3.10, 3.11,
3.13, 4.2, 4.5, 4.6, 4.7, 4.8,4.13, 4.15, 4.16, 4.18 (for the period stated
therein), 4.19, 8.8 (in its entirety), 8.9, 10.1, 10.3, 10.14 and 10.15 shall
survive expiration or termination of this Agreement.

    8.10    Clinical Trials.   Both parties acknowledge that this Agreement is
based upon the premise that all governmental approvals for the commercialization
of Products in the Territory will be obtained by Distributor without clinical
trials.  In the event that clinical trials are required by Japan’s Ministry of
Health, Labour and Welfare for obtaining the approvals, both parties shall
review and amend the provisions of this Agreement related to the approvals,
including without limitation, the costs for obtaining the approvals, the
transfer of the approval to Cyberonics and the termination fees set forth in
Section 8.7.  If the parties fail to reach an agreement to amend this Agreement
for such clinical trials, either party may terminate this Agreement by giving
written notice to the other party.

    8.11    Post-Marketing Surveillance Studies.     The parties have agreed as
follows regarding  post-marketing surveillance studies that may be required by
Japan’s Ministry of Health, Labour and Welfare :  (A) Distributor shall bear all
costs and expenses associated with  the post-marketing surveillance studies
required by Japan’s Ministry of Health, Labour and Welfare; and (B) Cyberonics
shall bear any costs and expenses associated with any additional data collection
or studies that it may request that is not otherwise required by Japan’s
Ministry of Health, Labour and Welfare.
 

--------------------------------------------------------------------------------

 
9.
[INTENTIONALLY LEFT BLANK]

10.
General Provisions.

    10.1    Notices.  Any notice, request, or other document to be given to a
party under this Agreement shall be in writing and A) sent by registered or
certified mail, postage prepaid, B) hand delivered, C) sent by express mail or
other overnight delivery service which provides documentation of receipt, or D)
sent by email or facsimile, both with confirmation, addressed as follows:

If to Cyberonics:

Cyberonics, Inc.
100 Cyberonics Blvd.
Houston, TX 77058
Attn: Vice President, Sales and Marketing &
          General Manager, International
Facsimile:  (281) 218-9332
E-mail: james.reinstein@cyberonics.com

With copy to:

Cyberonics, Inc.
100 Cyberonics Blvd.
Houston, TX 77058
Attn:  Vice President & General Counsel
Facsimile:  (281) 218-9332
E-mail:  david.wise@cyberonics.com

           If to Distributor:

Nihon Kohden Corporation
14-20 Higashi Nakano 3-chome
Nakano-ku Tokyo
164-0003
Japan
Attention: Hiroshi Aida
Facsimile: 81 3 5348 1517
 
A party may change its address for receiving notices, requests or other
documents by giving notice of the change to the other party.

    10.2    Set-Offs.  Cyberonics reserves the right to set off any amounts
Distributor owes to Cyberonics against any amount Cyberonics owes to
Distributor.

    10.3    Disputes.  The laws of England and Wales shall govern the
construction, validity and performance of this Agreement, without reference to
conflict of laws provisions.  The terms of the United Nations Convention on
Contracts for the International Sale of Goods are expressly rejected by the
parties hereto and are not applicable to this Agreement.  All disputes between
the parties arising out of or in connection with this Agreement or relating to
the performance of the parties hereunder shall be finally settled by binding
arbitration as follows:

--------------------------------------------------------------------------------

        a)  If Cyberonics requests the arbitration, it shall take place in
Tokyo, Japan pursuant to the Commercial Arbitration Rules of The Japan
Commercial Arbitration Association.

        b)  If Distributor requests the arbitration, it shall be conducted
according to the rules of conciliation and arbitration of the Center for Public
Resources before one arbitrator selected by mutual agreement of the
parties.  The arbitration will be conducted in Houston, Texas, in the English
language, applying the laws of England and Wales, excluding its conflicts of law
provisions.  Each party will bear its own costs for the presentation,
prosecution and defense of its own case, and both parties will share equally the
costs, if any, of the arbitrator.  Each party hereby submits to such arbitration
and jurisdiction, and agrees that the decision of the arbitrator will be final
and binding on the parties and may be enforced by the prevailing party in any
court having jurisdiction over the person or property of the other party.  Upon
request of either party, the arbitrator will provide both parties with a written
decision, including conclusions of fact and conclusions of law.

    10.4    No Oral Modifications.  Except as provided in Section 1.1, this
Agreement may not be modified except in writing, such written modification to be
signed by the parties hereto.

    10.5    No Implied Waiver.  No failure of either party to enforce any
obligations shall prevent later enforcement of that obligation.  Any waiver of
an obligation must be in writing, will only apply to the specific circumstances
to which it relates, and shall not prevent the enforcement of the obligation in
the event of a subsequent breach.

    10.6    Assignment.   Neither party may assign or transfer this Agreement or
any right, benefit or obligation under this Agreement without the prior written
consent of the other party.  In the event such assignment is permitted by the
other party, this Agreement shall be binding upon and inure to the benefit of
the permitted successor and assignee.

    10.7    Relationship of Parties.  The relationship between the parties
established by this Agreement is that of independent contractors and not an
agency, employment, joint venture, franchise, or partnership relationship.

    10.8    Taxes.  Taxes now or hereafter imposed with respect to the
transactions contemplated hereunder (with the exception of income taxes or other
taxes imposed upon Cyberonics and measured by the gross or net income of
Cyberonics) shall be the responsibility of Distributor, and if paid or required
to be paid by Cyberonics, the amount thereof shall be added to and become a part
of the amounts payable by Distributor to Cyberonics hereunder.

    10.9    Force Majeure.  Neither Cyberonics nor Distributor shall be liable
in damages to the other or any third party, for any delay or default in
performing any obligation hereunder if that delay in or failure to perform is
directly or indirectly caused by or resulting from any cause, event or
circumstances beyond the reasonable control and without fault or negligence of
the party claiming force majeure (the “Force Majeure Event”); provided, however,
that in order to excuse its delay in or failure to perform hereunder, a party
claiming a “Force Majeure Event” shall notify the other party in writing within
fifteen (15) calendar days of the occurrence thereof, specifying the nature and
particulars thereof and the expected duration thereof; and provided further that
within fifteen (15) calendar days after the termination of such occurrence, the
party claiming a “Force Majeure Event” shall give written notice to the other
party, specifying the date of termination thereof. All obligations of the
parties shall return to being in full force and effect upon the termination of
such occurrence or cause (including, without limitation, any payments which
became due and payable hereunder prior to the termination of such occurrence or
cause).  For the purposes of this Section 10.9, a "Force Majeure Event" shall
include, without limitation of the phrase, any act of God, act of any government
or other authority or judicial or statutory undertaking, industrial dispute,
fire, explosion, accident, delay or failure of carriers, subcontractors or
suppliers, strike or other labor difficulty,  energy shortage, power failure,
climatic conditions, flood, civil disturbance, riot, war (declared or
undeclared) and/or any other events or circumstances (whether or not of the same
or similar kind to those enumerated) beyond the reasonable control and without
the fault or negligence of the party claiming force majeure. If a Force Majeure
Event prevents a party’s performance hereunder and continues for more than
ninety (90) consecutive days, the other party may terminate this Agreement by
giving written notice to the party that claimed a Force Majeure Event under this
Section 10.9.

--------------------------------------------------------------------------------

    10.10    Severability.  If any provision of this Agreement is declared
invalid or unenforceable by an arbitrator or court having competent
jurisdiction, it is mutually agreed that this Agreement shall endure except for
the provision declared invalid or unenforceable.   In such event, the parties
shall consult and use their best efforts to agree upon a valid and enforceable
provision, which shall be a reasonable substitute for such invalid or
unenforceable provision in light of the original intent of the parties upon
entry into this Agreement.

    10.11    Headings.  The Article and Section headings contained in this
Agreement are for reference purpose only and shall not affect in any way the
meaning or interpretation of this Agreement.

    10.12    Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

    10.13    Entire Agreement.  The Schedules referred to in this Agreement are
considered to be part of this Agreement.  This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all previous agreements and understandings, whether written or oral,
between the parties regarding the subject matter hereof.  Neither party has
entered into this Agreement in reliance upon any representation, warranty or
undertaking of the other party which is not expressly set out or referred to in
this Agreement  and neither party shall have any remedy in respect of any
misrepresentation or untrue statement made by the other party which is not
contained in this Agreement SAVE THAT this clause shall not exclude any
liability for, or remedy in respect of, fraudulent misrepresentations, or
misrepresentations in respect of fundamental matters.  

    10.14    Disclaimer of Warranties; Limitation of Liability.  THE LIMITED
WARRANTY PROVIDED IN SCHEDULE D TO THIS AGREEMENT IS OFFERED IN LIEU OF ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, SATISFACTORY QUALITY, AND
NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.   CYBERONICS AND ITS THIRD PARTY SUPPLIERS (IF ANY) GRANT NO OTHER
WARRANTIES, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, REGARDING THE
“PRODUCTS”, AND CYBERONICS AND ITS THIRD PARTY SUPPLIERS (IF ANY) HEREBY
DISCLAIM THE IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE,
SATISFACTORY QUALITY, AND NON-INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS
OF THIRD PARTIES.  ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ANY PERSON OR
ENTITY, INCLUDING EMPLOYEES OF DISTRIBUTOR OR CYBERONICS, THAT ARE INCONSISTENT
HEREWITH SHALL BE DISREGARDED AND SHALL NOT BE BINDING UPON CYBERONICS OR ITS
THIRD PARTY SUPPLIERS (IF ANY).  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR LOST PROFITS, OR FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR
INDIRECT DAMAGES UNDER ANY THEORY OF LIABILITY.  THIS LIMITATION SHALL APPLY
EVEN WHERE THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

10.15           Use of Name.  Neither party to this Agreement shall use the name
of any other party hereto or the name of any of the other party’s employee
without the prior written consent of such party.

IN WITNESS WHEREOF, the parties hereto have signed this Agreement.

CYBERONICS, INC.
 
DISTRIBUTOR
           
By:/s/Daniel J Moore
 
By:/s/Fumio Suzuki
      Daniel J. Moore
   
      President & Chief Executive Officer
 
Printed Name: Fumio Suzuki
         
Title: President and Chief Operating Officer
     
Date:  24 April 2009
 
Date:  20 May 2009

 

--------------------------------------------------------------------------------

SCHEDULE A

PRODUCTS

Pricing for other components of the “Products” shall be as follows:

·
Model 103 or Model 104 VNS Therapy System Generators:  ***
·
Model 302 Bipolar Stimulation Lead or Model 303 Bipolar Stimulation Lead:  ***
·
Model 402 Tunneling Tool:  $***
·
Model 201 Programming Wand: $***
·
Model 250 7.1 Software and Hand-held Computer: $***
·
Patient Essentials Kit: $***

For purposes of this Agreement, the term “Year One" shall mean the period from
the “Start Date” to the first anniversary thereof.

*** Portions of this page have been omitted pursuant to a Confidential Treatment
request and filed separately with the Commission.

 
 

--------------------------------------------------------------------------------

 

SCHEDULE B

 PURCHASE GOALS

 

Purchase Goal: Year One

A “Product Unit” shall be defined as including one of each of the items outlined
in No. 1, 2 and 3, below:
1.  Model 103 or Model 104 VNS Therapy System Generator
2.  Model 302 or Model 303 Bipolar Stimulation Lead
3.  Model 402 Tunneling Tool

Total Revenue Goal:  *** Product Units

Year One
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Epilepsy
***
***
***
***

 
For purposes of this Agreement, the term “Year One " shall mean the period from
the ”Start Date” to the first anniversary thereof.  Distributor’s failure to
meet this Purchase Goal for Year One shall not be the cause for the termination
set forth in Section 8.2.

*** Portions of this page have been omitted pursuant to a Confidential Treatment
request and filed separately with the Commission.

 
 

--------------------------------------------------------------------------------

 
SCHEDULE C

CYBERONICS, INC. LOGO [cybx-logo.jpg]
VNS Therapyä System for Vagus Nerve Stimulation

 
 
 
Returned Material Policy ~ CYBX

 

Process Overview
Products to be returned to Cyberonics must meet the following requirements:
▪ Product must be in their original packaging and condition.
▪ A Returned Goods Authorization (RGA) number must be obtained within 14 days of
receipt by calling:
001+866-332-1375 ~ Cyberonics Customer Support
▪ Return must be approved by an authorized Cyberonics representative.
▪ The RGA number must be clearly printed on the outside packaging of the
returned product.
▪ A completed Return Product Form must accompany all returned product.
Notwithstanding the foregoing, there shall be no return or exchange of expired
product.
Receiving Inspection
Each shipment must be inspected at the time of receipt for accuracy and damage.
Any discrepancy should be promptly reported to Cyberonics Customer Support.
Note: If Cyberonics shipped an item incorrectly, Cyberonics will (at Cyberonics’
expense), ship the proper item and arrange to have the wrong item returned to
Cyberonics.
Damaged Goods     
Since damage claim procedures vary from one carrier to another, immediately
contacting Cyberonics Customer Support is imperative so the proper steps can be
taken to arrange for replacement.
Shipping Returned Product
Return Address
Return packages to the following address:
Cyberonics, Inc.
100 Cyberonics Boulevard
Houston, Texas 77058
Label Requirement     
Returned products will not be accepted unless package is clearly marked with
Cyberonics-issued RGA number.
Shipping Charges     
Shipping-related charges on returns are at the expense of the Sender.
Restocking Fees & Credit
If product is returned with original packaging and condition as confirmed by the
Quality Assurance Department, credit is issued in the form of a credit memo net
the restocking charges of 35%.
Credit will not be issued for:
▪ Product returned with opened and/or damaged packaging regardless of invoice
date
▪ Product returned outside of terms (i.e., RGA not requested or requested after
14 days of receipt).

 

 
 

--------------------------------------------------------------------------------

 
SCHEDULE D

CYBERONICS, INC. LOGO [cybx-logo.jpg]

VNS Therapy Pulse Model 102 Generator, Pulse Duo
Model 102R Generator, & VNS Therapy Model 302 Lead
 
Cyberonics Limited Replacement Warranty

 
Warranty & Exclusions
Cyberonics, Inc. warrants the VNS Therapy Pulse Generator against any defects
due to faulty material or workmanship for a period of two (2) years from the
date of implant. This warranty applies only to the original purchaser of the VNS
Therapy Pulse Generator and the patient implanted with it. This Limited
Replacement Warranty also applies only when the product is used in accordance
with the product’s Physician’s Manual and excludes damage due to improper
handling, defacing, accident (including dropping), or misuse. This product is
not warranted when used or implanted by a person(s) not trained in or familiar
with the VNS Therapy Lead, Pulse Generator, and Model 250 Software Physician’s
Manuals. This Limited Replacement Warranty is not a representation that any one
VNS Therapy Pulse Generator will last the entire time of the Limited Replacement
Warranty.
Damages   
In no event shall Cyberonics, Inc, be liable for any special, incidental,
indirect, or consequential damages based on the failure of the device to
function within normal tolerances, or resulting from damage to the device by
external forces, whether the claim is based on warranty, contract, tort, or
otherwise, or in connection with the purchase, use, or surgical implantation of
this device or associated components or costs over and above the original
purchase price from Cyberonics, Inc.
Qualifications
To qualify for the Limited Replacement Warranty, the following conditions must
be met:
▪ A properly completed Implant and Warranty Registration Card for both the VNS
Therapy Pulse Generator and the VNS Therapy Lead must be returned to Cyberonics,
Inc. within thirty (30) days of device implantation;
▪ The battery cannot have been depleted as a result of programming to unusually
high output currents, pulse widths, or duty cycles, which will cause a high
energy/current drain;
▪ The product must have been used and prescribed in accordance with the
VNS Therapy Lead, VNS Therapy Pulse Generator, and Model 250 Software
Physician’s Manuals;
▪ The VNS Therapy Pulse Generator must have been implanted prior to its
“Expiration Date”;
▪ The defective VNS Therapy Pulse Generator must be returned to Cyberonics, Inc.
with an accompanying Returned Goods Authorization (RGA) number, available from
Customer Support at 001+866-332-1375, and confirmed defective by the Quality
Assurance Department; and
▪ All returned VNS Therapy Pulse Generators shall become the property of
Cyberonics, Inc.
Replacement Process
If the VNS Therapy Pulse Generator becomes defective within the warranty period,
contact Cyberonics Customer Support Service for a no-cost replacement.
Warranty Breach
The exclusive remedy for any breach of this Limited Warranty shall be the
replacement of the product or, at Cyberonics’ sole option, the return of the
purchase price paid for the product.  Cyberonics, Inc. reserves the right to
replace a product with the most comparable product currently available. Returned
bio-hazardous product should be clearly identified as such on the outside
surface of the package.
Remedy & Authority
This Limited Warranty is offered in lieu of all other warranties, express or
implied, including but not limited to, any implied warranty of merchantability
or fitness for a particular purpose. This replacement warranty shall be the
exclusive remedy available to any person. No person has any authority to bind
Cyberonics, Inc. to any representation, condition, or warranty except this
Limited Replacement Warranty.