EXHIBIT 10.1

 

EXECUTION COPY

 

CONTRACT MANUFACTURING AGREEMENT

 

Entered into on this 25th day of June 2003 (the “Effective Date”)

 

 

By and Between:

 

Vision-Sciences, Inc., a Delaware (U.S.A.) corporation, having its principal
place of business at 9 Strathmore Road, Natick, Massachusetts 01760, U.S.A., Fax
No. +1-508-650-9976 (the “Company”);

 

And

 

Three BY Ltd., a company duly organized under the laws of Israel and having its
principal place of business at Migdal Tefen, Israel, Fax No. + 972-4-987-2340
(the “Manufacturer”);

 

WHEREAS, the Manufacturer provides contract manufacturing services for the
medical products industry including the manufacture of complicated and sensitive
medical products; and

 

WHEREAS, the Company has developed and owns all proprietary rights in the
Products (as defined in Section 1.11 below); and

 

WHEREAS, the Company wishes that the Manufacturer shall manufacture the Products
for and on behalf of the Company (on a non-exclusive basis); and

 

WHEREAS, the Parties desire to hereby define the terms and conditions according
to which the Manufacturer will manufacture Products for the Company; and

 

WHEREAS, in consideration of the mutual promises and covenants set forth below
it is mutually agreed as follows:

 

1.                                       DEFINITIONS

 

1.1.                              TERMS DEFINED IN THIS ARTICLE 1 AND/OR
PARENTHETICALLY DEFINED ELSEWHERE IN THIS AGREEMENT SHALL THROUGHOUT THIS
AGREEMENT HAVE THE MEANING HERE OR THERE PROVIDED.  DEFINED TERMS MAY BE USED IN
THE SINGULAR OR THE PLURAL, AS CONTEXT SHALL REQUIRE.

 

1.2.                              “COMPANY EQUIPMENT” - ANY OFF-THE-SHELF AND/OR
CUSTOM-MADE TOOLING FOR THE MANUFACTURE OF THE PRODUCTS WHICH SHALL BE PROVIDED
TO THE MANUFACTURER BY THE COMPANY. THE COMPANY EQUIPMENT ALREADY PROVIDED TO
THE MANUFACTURER BY THE COMPANY IS DETAILED IN APPENDIX “1.2” ATTACHED HERETO.

 

1.3.                              “CONFORMING PRODUCTS” – ANY PRODUCT WHICH
CONFORMS TO AND DOES NOT DEVIATE FROM, IN ANY MANNER AFFECTING FORM, FIT OR
FUNCTION, THE CORRESPONDING SPECIFICATIONS CONTAINED IN THE SPECIFICATIONS.

 

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1.4.                              “DELIVERY DATE” – THE RELEVANT DELIVERY DATE
PURSUANT TO SECTIONS 8.3 AND/OR 8.4 BELOW.

 

1.5.                              “IMPROVEMENTS” - ANY IMPROVEMENTS,
MODIFICATIONS OR ADOPTIONS PERTAINING TO THE PRODUCTS MADE, CREATED, INVENTED,
DISCOVERED OR ACQUIRED BY THE COMPANY AND/OR THE MANUFACTURER AND/OR ANY OF
ITS/THEIR EMPLOYEES OR AGENTS.

 

1.6.                              “INTELLECTUAL PROPERTY RIGHTS” - MEANS PATENTS
AND ALL APPLICATIONS, CONTINUATIONS, CONTINUATIONS-IN-PART AND DIVISIONALS WITH
RESPECT THERETO; COPYRIGHTS, AND ALL OTHER RIGHTS IN WORKS OF AUTHORSHIP
RECOGNIZED IN ANY JURISDICTION; TRADE SECRETS; TRADEMARKS, SERVICE MARKS, LOGOS
AND PRODUCT NAMES; ALL APPLICATIONS, REGISTRATIONS AND RENEWALS WITH RESPECT TO
ANY OF THE FOREGOING; PROPRIETARY MANUFACTURING METHODS; MORAL RIGHTS; ALL OTHER
INTELLECTUAL PROPERTY RIGHTS AND RIGHTS IN TRADE SECRETS, WHETHER REGISTERED OR
NOT, THAT MAY BE RECOGNIZED IN ANY JURISDICTION; AND ALL RIGHTS TO SUE FOR AND
REMEDIES AGAINST PAST, PRESENT AND FUTURE INFRINGEMENTS OR MISAPPROPRIATIONS OF
THE FOREGOING.

 

1.7.                              “MANUFACTURING EQUIPMENT - THE EQUIPMENT THAT
SHALL BE USED BY THE MANUFACTURER FOR THE MANUFACTURE OF THE PRODUCTS.

 

1.8.                              “MANUFACTURE” – THE MANUFACTURE, ASSEMBLY,
QUALITY TESTING, PACKAGING, STERILIZING AND LABELING OF THE PRODUCTS.

 

1.9.                              “MATERIALS” – THE MATERIALS REQUIRED FOR THE
MANUFACTURE, WHICH ARE DETAILED IN APPENDIX “1.9” ATTACHED HERETO, AND ANY
AMENDMENTS THERETO PROVIDED TO THE MANUFACTURER BY THE COMPANY AND/OR INITIATED
BY THE MANUFACTURER AND APPROVED IN WRITING BY THE COMPANY.

 

1.10.                        “NON-CONFORMING PRODUCTS – ANY PRODUCT WHICH DOES
NOT CONFORM TO OR WHICH DEVIATES FROM, IN ANY MANNER AFFECTING FORM, FIT OR
FUNCTION, THE CORRESPONDING SPECIFICATIONS CONTAINED IN THE SPECIFICATIONS,
EITHER DURING THE COMPANY’S PRE-DELIVERY INSPECTION OR AT ANY LATER TIME, UNLESS
SUCH DEVIATION OR NON-CONFORMITY HAS BEEN APPROVED IN WRITING BY THE COMPANY.

 

1.11.                        “PRODUCTS” – THE PRODUCTS SET FORTH IN APPENDIX
“1.11” ATTACHED HERETO AS SAME MAY BE AMENDED FROM TIME TO TIME BY A WRITTEN
INSTRUMENT SIGNED BY THE PARTIES.

 

1.12.                        “PROPRIETARY INFORMATION” – SHALL MEAN AND INCLUDE
ANY AND ALL KNOW-HOW, DATA AND INFORMATION RELATING TO THE PRODUCTS AND/OR THE
COMPANY, DISCLOSED, MADE AVAILABLE TO AND/OR PREPARED AND/OR GENERATED BY THE
MANUFACTURER OR ON ITS BEHALF, INCLUDING, WITHOUT LIMITATION: (I) TECHNICAL,
ENGINEERING AND MANUFACTURE INFORMATION, PACKAGING, DESIGNS, MANUFACTURE
PROCESSES AND DEVELOPMENT, QUALITY CONTROL TECHNIQUES AND OTHER KNOW-HOW
RELATING TO OR USED, FROM TIME TO TIME, IN THE MANUFACTURE OF THE PRODUCTS; (II)
SALES, MANUFACTURING AND MARKETING INFORMATION; AND (III) INFORMATION CONTAINED
IN DOCUMENTS MARKED “CONFIDENTIAL”.

 

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1.13.                        “SPECIFICATIONS” – THE SPECIFICATIONS OF THE
PRODUCTS AND THE MATERIALS WHICH ARE SET FORTH IN APPENDIX 1.13” ATTACHED
HERETO, INCLUDING ALL RELEVANT DRAWINGS PERTAINING TO THE PRODUCTS AND THE
MATERIALS, AS MAY BE AMENDED FROM TIME TO TIME PURSUANT TO THE PROVISIONS OF
SECTION 3.3 OF THIS AGREEMENT.

 

2.                                       REPRESENTATIONS OF THE MANUFACTURER

 

The Manufacturer hereby warrants and represents that at all times during which
this Agreement is in effect:

 

2.1.                              IT WILL CONTINUE TO HAVE ALL ADEQUATE WORKING
CAPITAL, FACILITIES AND HIGHLY-QUALIFIED PERSONNEL TO ACCOMPLISH ALL OF ITS
UNDERTAKINGS PURSUANT TO THIS AGREEMENT.

 

2.2.                              IT AND THE STERILIZATION FACILITIES IT
UTILIZES WILL MAINTAIN THE CERTIFICATIONS SET FORTH IN APPENDIX “2.2” ATTACHED
HERETO AND FULLY MEET ALL THE REQUIREMENTS PERTAINING THERETO.

 

2.3.                              IT WILL NOT BE INVOLVED, DURING THE TERM OF
THIS AGREEMENT AND FOR THREE YEARS THEREAFTER, IN ANY WAY, DIRECTLY OR
INDIRECTLY, IN THE MANUFACTURING OF SHEATHS FOR THE USE IN MEDICAL IMAGING
APPLICATIONS OR IN THE MANUFACTURING OF PRODUCTS RELATED TO THE PRODUCTS, FOR
ANY PERSON OR ENTITY OTHER THAN THE COMPANY, EXCEPT WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.

 

3.                                       GENERAL OBLIGATION OF THE MANUFACTURER

 

3.1.                              THE MANUFACTURER UNDERTAKES TO MANUFACTURE ALL
PRODUCTS FOR THE COMPANY IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS
AGREEMENT.

 

3.2.                              THE MANUFACTURER UNDERTAKES TO MANUFACTURE THE
PRODUCTS ON A REGULAR AND ON-GOING BASIS, ACCORDING TO THE HIGHEST QUALITY
STANDARDS, IN STRICT CONFORMITY WITH THE SPECIFICATIONS AND WITH THE TERMS AND
CONDITIONS OF THIS AGREEMENT AND THE MANUFACTURER SHALL NOT DEVIATE FROM NOR
CHANGE THE SPECIFICATIONS, THE MANUFACTURE PROCESS OR THE MATERIALS WITHOUT THE
PRIOR WRITTEN APPROVAL OF THE COMPANY. THE MANUFACTURER SHALL CONTROL ALL
ENVIRONMENTAL CONDITIONS TO ASSURE THAT THERE IS NO ADVERSE EFFECT TO THE
PRODUCTS.

 

3.3.                              THE SPECIFICATIONS MAY BE MODIFIED BY THE
COMPANY UPON REASONABLE ADVANCE WRITTEN NOTICE TO THE MANUFACTURER. THE COMPANY
SHALL NOT BE LIABLE TO PAY ANY SUM TO THE MANUFACTURER AS A RESULT OF ANY SUCH
MODIFICATIONS, PROVIDED HOWEVER, THAT IF ANY SUCH MODIFICATION SHALL DIRECTLY
AFFECT THE COST OF PRODUCTION OF THE PRODUCTS, THEN THE PARTIES SHALL
RENEGOTIATE, IN GOOD FAITH, THE PURCHASE PRICE (AS DEFINED IN SECTION 10.1
BELOW) OF THE RELEVANT MODIFIED PRODUCTS. ALL CHANGES TO THE SPECIFICATIONS WILL
BE COMMUNICATED TO THE MANUFACTURER IN WRITING AND THE MANUFACTURER SHALL
PROMPTLY CONFIRM IN WRITING THE RECEIPT THEREOF.

 

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3.4.                              ALL MATERIALS SHALL BE PROCURED BY THE
MANUFACTURER AT ITS OWN COST AND EXPENSE. THE COMPANY MAY PROVIDE THE
MANUFACTURER WITH SAMPLE QUANTITIES OF MATERIALS FOR VALIDATION AND TESTING
PURPOSES.

 

3.5.                              THE MANUFACTURER UNDERTAKES TO MAKE ON-GOING
EFFORTS TO REDUCE THE MANUFACTURING COSTS, INCLUDING BUT NOT LIMITED TO COST
REDUCTION OF THE MATERIALS AND/OR THE LABOR, BY SUGGESTING IMPROVEMENTS AND
MODIFICATIONS TO THE PRODUCTS AND/OR THE MANUFACTURING PROCESSES.  ANY SUCH COST
REDUCTION SHALL REDUCE THE PURCHASE PRICE BY THE SAME AMOUNT. THE COMPANY SHALL
REIMBURSE THE MANUFACTURER FOR PRE-APPROVED OUT-OF-POCKET EXPENSES INCURRED BY
IT IN REDUCING THE AFOREMENTIONED MANUFACTURING COSTS.

 

4.                                       COMPANY EQUIPMENT

 

4.1.                              TITLE OF ANY COMPANY EQUIPMENT SHALL, AT ALL
TIMES, BE VESTED SOLELY WITH THE COMPANY AND THE MANUFACTURER SHALL HAVE NO
RIGHT WITH RESPECT THERETO, INCLUDING LIEN IN ACCORDANCE WITH ANY APPLICABLE
LAW, AND UNTIL RETURN OF SAME TO THE COMPANY IN ACCORDANCE WITH THE TERMS OF
THIS AGREEMENT, THE MANUFACTURER SHALL ENSURE THAT THE COMPANY EQUIPMENT IS
ALWAYS MAINTAINED IN GOOD WORKING ORDER AND CONDITION, FREE AND CLEAR OF ANY
LIENS, CHARGES, ATTACHMENTS, ENCUMBRANCES OR OTHER THIRD PARTY RIGHTS. 
NOTWITHSTANDING THE ABOVE, COMPANY EQUIPMENT FINANCED BY THE COMPANY, BUT
PURCHASED BY THE MANUFACTURER, SHALL BE THE PROPERTY OF THE MANUFACTURER.  THE
COMPANY SHALL HAVE THE SOLE RIGHT TO MOVE AND LEASE SUCH COMPANY EQUIPMENT THAT
THE COMPANY FINANCED.

 

4.2.                              UPON TERMINATION OF THIS AGREEMENT, FOR ANY
REASON WHATSOEVER, THE MANUFACTURER SHALL FORTHWITH RETURN ALL COMPANY EQUIPMENT
TO THE COMPANY, AT ITS OWN RISK AND EXPENSE, IN GOOD WORKING ORDER AND
CONDITION.

 

4.3.                              THE MANUFACTURER SHALL INSURE THE COMPANY
EQUIPMENT, AT ITS OWN EXPENSE, IN AN APPROPRIATE AMOUNT, WHICH SHALL NOT BE LESS
THAN THE FULL REPLACEMENT VALUE THEREOF, UNDER A VALID AND ENFORCEABLE INSURANCE
POLICY ISSUED BY A REPUTABLE INSURER (THE “POLICY”).  THE TERMS OF THE POLICY
SHALL BE SUBJECT TO THE APPROVAL OF THE COMPANY WHICH SHALL BE INCLUDED AS A
LOSS PAYEE AND AN ADDITIONAL INSURED PARTY IN SAID POLICY, AND THE MANUFACTURER
SHALL DELIVER TO THE COMPANY A CERTIFICATE FROM THE INSURANCE COMPANY EVIDENCING
THE ADDITION OF THE COMPANY AS SUCH ADDITIONAL INSURED PARTY TO THE POLICY, AND
CONFIRMING THAT THE INSURANCE COMPANY UNDERTAKES NOT TO TERMINATE THE POLICY OR
TO LET IT EXPIRE OR CHANGE ITS TERMS, WITHOUT GIVING THE COMPANY A WRITTEN
NOTICE OF AT LEAST 60 DAYS. THE POLICY SHALL FURTHER STIPULATE THAT ANY MONIES
PAYABLE THEREUNDER SHALL BE REMITTED DIRECTLY TO THE COMPANY. THE MANUFACTURER
SHALL FURNISH THE COMPANY WITH A COPY OF THE RELEVANT POLICY TOGETHER WITH A
COPY OF EACH RECEIPT ISSUED, FROM TIME TO TIME, BY THE INSURER IN RESPECT OF THE
PAYMENT OF PREMIUM THEREON.

 

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5.                                       MANUFACTURING EQUIPMENT

 

5.1.                              THE MANUFACTURER SHALL WORK WITH THE COMPANY
TO PREPARE A PROTOCOL SETTING FORTH THE PROCEDURES FOR TESTING AND VALIDATING
THE QUALITY OF THE MANUFACTURING EQUIPMENT (THE “EQUIPMENT VALIDATION
PROTOCOL”). THE MANUFACTURER SHALL THEN PERFORM THE TESTING OUTLINED IN THE
EQUIPMENT VALIDATION PROTOCOL AS WELL AS RECORD THE TEST DATA AND PROVIDE THE
COMPANY WITH A DETAILED REPORT.

 

5.2.                              THE EQUIPMENT VALIDATION PROTOCOL SHALL BE
SUBJECT TO THE APPROVAL OF THE COMPANY. THE MANUFACTURER SHALL PROMPTLY
IMPLEMENT ALL CHANGES IN THE EQUIPMENT VALIDATION PROTOCOL REQUIRED BY THE
COMPANY IN ACCORDANCE WITH THE COMPANY’S INSTRUCTIONS.

 

5.3.                              PRIOR TO USING THE MANUFACTURING EQUIPMENT FOR
THE MANUFACTURE PURSUANT TO THIS AGREEMENT, THE COMPANY SHALL BE ENTITLED TO
INSPECT SAME, IN ACCORDANCE WITH THE EQUIPMENT VALIDATION PROTOCOL, AND THE
MANUFACTURER SHALL NOT COMMENCE ANY MANUFACTURING ACTIVITIES, SAVE FOR TESTING
AND VALIDATION PURPOSES, WITHOUT THE PRIOR WRITTEN APPROVAL OF THE COMPANY.

 

6.                                       SUB-CONTRACTING 

 

The Parties recognize that the Manufacturer may need to use sub-contractors for
the Manufacture of the Products, however, the Manufacturer shall not have the
right to subcontract the Manufacture or any portion thereof to any third party,
without the prior written consent of the Company and subject to the terms and
conditions to be mutually agreed upon with respect to any subcontract.

 

7.                                       QUALITY AND REGULATORY PROCEDURES

 

7.1.                              THE COMPANY SHALL HAVE THE RIGHT TO OBSERVE
THE PRODUCTS IN THE PROCESS OF MANUFACTURE AND TO INSPECT FINISHED PRODUCTS AT
ANY TIME DURING NORMAL BUSINESS HOURS, EITHER AT THE MANUFACTURING FACILITIES OR
AT THE STORAGE FACILITIES OF THE MANUFACTURER, AND TO INSPECT THE MANUFACTURER’S
SUBCONTRACTORS. ANY SUCH INSPECTION OR THE LACK OF IT SHALL NOT DEROGATE FROM
ANY UNDERTAKING OR OBLIGATION OF THE MANUFACTURER CONTAINED HEREIN.

 

7.2.                              THE MANUFACTURER AGREES THAT THE COMPANY, FOR
THE PURPOSE OF MAINTAINING THE COMPANY’S STATUS AS MEETING THE REQUIREMENTS
UNDER ISO 9001, EN46001 AND ISO 13485 OR ANY OTHER PURPOSE, OR A THIRD PARTY ON
ITS BEHALF, SHALL BE ENTITLED, DURING NORMAL BUSINESS HOURS AND UPON REASONABLE
ADVANCE NOTICE, TO PERFORM A QUALITY AUDIT OF THE MANUFACTURER’S MANUFACTURING
OPERATIONS (INCLUDING ITS SUBCONTRACTORS) AND THE MANUFACTURER SHALL RESPOND TO
ALL AUDIT FINDINGS IN A TIMELY MANNER.

 

7.3.                              THE MANUFACTURER SHALL MANUFACTURE THE
PRODUCTS SOLELY WITH THE MATERIALS AND SHALL NOT USE ANY SUBSTITUTE MATERIALS
WITHOUT THE PRIOR

 

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WRITTEN APPROVAL OF THE COMPANY. THE MANUFACTURER SHALL PURCHASE THE MATERIALS
SOLELY FROM SUPPLIERS APPROVED BY THE COMPANY.

 

7.4.                              EACH PRODUCT LOT SHALL BE IDENTIFIED DURING
ALL PHASES OF MANUFACTURE AND FINISHED PRODUCTS PERMANENTLY IDENTIFIED BY A
CONTROL NUMBER TO FACILITATE FULL TRACEABILITY OF ITS MANUFACTURE AND FIELD
PLACEMENT.

 

7.5.                              THE MANUFACTURER SHALL CAREFULLY DOCUMENT THE
MANUFACTURE OF EACH PRODUCT LOT IN THE DEVICE HISTORY RECORD (“DHR”).  THE DHR
SHALL DOCUMENT, INTER ALIA, THE LOT CONTROL NUMBER, THE DATE OF MANUFACTURE, THE
QUANTITY MANUFACTURED FOR THE LOT, IDENTIFICATION OF THE INDIVIDUAL(S)
PERFORMING THE MANUFACTURING OPERATIONS, IDENTIFICATION OF THE INDIVIDUAL(S)
PERFORMING THE QUALITY TESTING PROCEDURES, ACCEPTANCE RECORDS INCLUDING RESULTS
OF THE QUALITY TESTING PROCEDURES, THE QUANTITY RELEASED FOR DISTRIBUTION, A
SAMPLE OF THE LABELING, AND IDENTIFICATION OF THE INDIVIDUAL(S) RESPONSIBLE FOR
VERIFICATION OF THE DHR AND FINAL RELEASE OF THE PRODUCT. THE MANUFACTURING
OPERATIONS AND QUALITY TESTING PROCEDURES SHALL BE CARRIED OUT IN ACCORDANCE
WITH THE WRITTEN PROCEDURES PREPARED BY THE PARTIES, AS AFORESAID. FOR EACH
PRODUCT LOT, THE MANUFACTURER SHALL PROVIDE THE COMPANY WITH A HARD-COPY OF THE
DHR, APPROPRIATELY SIGNED BY ALL MANUFACTURING AND QUALITY PERSONNEL.  ALL
RECORDS GENERATED BY THE MANUFACTURER AND RELATED TO THE MANUFACTURE OF THE
PRODUCT, SHALL BE MAINTAINED FOR A PERIOD OF AT LEAST 2 YEARS FOLLOWING THE
EXPIRATION OF THE SHELF LIFE OF EACH LOT OF THE PRODUCT. IN THE EVENT THAT THE
COMPANY RECEIVES INFORMATION OF ANY FAILURE OF A PRODUCT PURCHASED FROM THE
MANUFACTURER, THE MANUFACTURER SHALL, WITHIN 72 HOURS OF RECEIVING ANY REQUEST
FROM THE COMPANY, FURNISH THE COMPANY WITH A COPY OF THE DHR PERTAINING TO SUCH
PRODUCT.

 

7.6.                              THE MANUFACTURER SHALL CERTIFY THAT ALL OF THE
MANUFACTURER’S PERSONNEL, AND ANY SUB-CONTRACTOR, WHO ENGAGE IN THE MANUFACTURE
HEREUNDER, SHALL RECEIVE ALL NECESSARY AND APPROPRIATE TRAINING.

 

7.7.                              THE MANUFACTURER AGREES AT NO ADDITIONAL COST
TO THE COMPANY, TO FULLY COOPERATE AS REQUIRED TO PREPARE FOR AND PARTICIPATE IN
QUALITY AUDITS OF THE MANUFACTURER’S FACILITY BY ALL APPLICABLE REGULATORY
AGENCIES.  THE MANUFACTURER AGREES TO MAKE ALL APPROPRIATE PERSONNEL AVAILABLE
AS NECESSARY FOR THIS PURPOSE. THE MANUFACTURER AGREES TO NOTIFY THE COMPANY OF
ALL OBSERVATIONS MADE BY REGULATORY AGENCIES, WHICH PERFORM AUDITS OF THE
MANUFACTURER’S FACILITY FROM TIME TO TIME IN RELATION TO THE PRODUCTS AS WELL AS
TO ANY PRODUCTS OTHER THAN THE PRODUCTS. FOR THE SAKE OF CLARITY, THE
MANUFACTURER SHALL NOT CHARGE THE COMPANY FOR SAID AUDITS. TO FURTHER CLARIFY,
THE MANUFACTURER SHALL NOT BE RESPONSIBLE TO PAY THE OUT-OF-POCKET COST,
INCLUDING TRAVEL RELATED EXPENSES, FOR AUDITS OF THE MANUFACTURER PERFORMED BY
AN AGENT OF THE COMPANY AS PART OF THE AGENT’S AUDIT OF THE COMPANY.

 

7.8.                              THE MANUFACTURER SHALL IMMEDIATELY REPORT TO
THE COMPANY ANY PROBLEMS, DIFFICULTIES OR DEVIATIONS FROM THE SPECIFICATIONS,
WHICH IT ENCOUNTERS DURING THE MANUFACTURE OF THE PRODUCTS.

 

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7.9.                              THE MANUFACTURER SHALL SUPPLY TO THE COMPANY,
FREE OF CHARGE, AT LEAST ONE COMPLETE SET OF DOCUMENTATION FOR EACH PRODUCT,
INCLUDING THE DOCUMENTATION DETAILED IN APPENDIX “7.9” ATTACHED HERETO.

 

8.                                       ORDERS AND DELIVERY

 

8.1.                              WITHIN 30 DAYS OF THE EFFECTIVE DATE, THE
COMPANY SHALL FURNISH THE MANUFACTURER WITH A NON-BINDING FORECAST, ESTIMATING
THE QUANTITY OF EACH PRODUCT THAT THE COMPANY INTENDS TO PURCHASE FROM THE
MANUFACTURER DURING THE FOLLOWING 6-MONTH PERIOD (THE “FORECAST”). THE FORECAST
WILL BE REVOLVING AND UPDATED, FROM TIME TO TIME, BY THE COMPANY PRIOR TO THE
EXPIRATION OF EACH MONTH COVERED BY THE FORECAST, SO THAT THE FORECAST SHALL AT
ANY GIVEN TIME COVER A PERIOD OF 6 MONTHS.

 

8.2.                              UPON SUBMISSION OF THE FORECAST TO THE
MANUFACTURER, THE COMPANY SHALL FURNISH THE MANUFACTURER WITH A BINDING PURCHASE
ORDER FOR PRODUCTS FOR THE ENSUING 3-MONTH PERIOD AND SHALL, 30 DAYS PRIOR TO
THE EXPIRATION OF THE AFOREMENTIONED 3-MONTH PERIOD AND OF EACH CONSECUTIVE
3-MONTH PERIOD FURNISH THE MANUFACTURER WITH A BINDING PURCHASE ORDER FOR
PRODUCTS FOR THE RESPECTIVE FOLLOWING 3-MONTH PERIOD(S) (THE “BINDING PURCHASE
ORDERS”).

 

8.3.                              ANY PRODUCTS COVERED BY A BINDING PURCHASE
ORDER SHALL BE MANUFACTURED BY THE MANUFACTURER AND DELIVERED TO THE COMPANY, OR
TO A DESTINATION SPECIFIED BY THE COMPANY, WITHIN 5 DAYS, EARLIER OR AFTER, OF
THE DATE SPECIFIED IN THE BINDING PURCHASE ORDER, PROVIDED HOWEVER THAT WITH
RESPECT TO ANY ADDITIONAL INCREASED PRODUCTS (AS DEFINED IN SECTION 8.4.1
BELOW), THE DELIVERY PERIOD SHALL BE WITHIN 30 DAYS OF SUBMISSION BY THE COMPANY
OF THE NOTICE REQUIRING THE RELEVANT INCREASE.

 

8.4.                              NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
CONTAINED HEREIN, THE COMPANY SHALL BE ENTITLED TO (BY GIVING WRITTEN NOTICE TO
THE MANUFACTURER):

 

8.4.1.                     INCREASE THE NUMBER OF PRODUCTS COVERED BY ANY
BINDING PURCHASE ORDER (THE “ADDITIONAL INCREASED PRODUCTS”), PROVIDED THAT THE
AGGREGATE PRODUCTS ORDERED BY THE COMPANY DURING ANY GIVEN 6-MONTH PERIOD SHALL
NOT EXCEED BY MORE THAN 35% THE RESPECTIVE FORECAST, UNLESS ACCEPTED BY THE
MANUFACTURER IN WRITING; OR

 

8.4.2.                     REQUIRE THE MANUFACTURER TO POSTPONE DELIVERY OF ANY
PRODUCT COVERED BY A BINDING PURCHASE ORDER (INCLUDING ANY ADDITIONAL INCREASED
PRODUCTS) BY UP TO 60 DAYS, PROVIDED THAT SUCH REQUIREMENT IS SUBMITTED TO THE
MANUFACTURER NOT LATER THAN 30 DAYS PRIOR TO THE SPECIFIED DELIVERY DATE; OR

 

8.4.3.                     CANCEL ANY BINDING PURCHASE ORDER, IN WHOLE OR IN
PART, PROVIDED THAT A NOTICE WITH RESPECT THERETO IS SUBMITTED TO THE
MANUFACTURER NOT LATER THAN 45 DAYS PRIOR TO THE SPECIFIED DELIVERY DATE AND
THAT THE COMPANY SHALL REIMBURSE THE

 

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MANUFACTURER FOR ALL COSTS ACTUALLY SPENT IN THE PURCHASE OF THE MATERIALS
PERTAINING THERETO, AS EVIDENCED BY PROPER DOCUMENTATION, AGAINST DELIVERY OF
SUCH MATERIALS TO THE COMPANY.

 

8.5.                              DELIVERY OF PRODUCTS SHALL BE MADE ON A FCA
(AS SUCH TERM IS DEFINED IN INCOTERMS 2000, PUBLICATION 560 OF THE INTERNATIONAL
CHAMBER OF COMMERCE) BEN-GURION AIRPORT BASIS. THE COMPANY SHALL HAVE THE RIGHT
TO DESIGNATE ONE OR MORE DESTINATIONS FOR THE PRODUCTS OF EACH BINDING PURCHASE
ORDER 10 DAYS PRIOR TO THE SHIPMENT BY THE MANUFACTURER.

 

8.6.                              IF THE MANUFACTURER DISCOVERS AT ANY TIME
THAT, USING BEST EFFORTS, IT IS UNABLE TO DELIVER A BINDING PURCHASE ORDER ON A
RESPECTIVE DELIVERY DATE, THE MANUFACTURER SHALL IMMEDIATELY SO NOTIFY THE
COMPANY AND INFORM THE COMPANY OF THE EARLIEST POSSIBLE ALTERNATIVE DELIVERY
DATE. UPON THE COMPANY’S RECEIPT OF SUCH NOTICE OR IF THE MANUFACTURER HAS
FAILED TO SO NOTIFY THE COMPANY AT LEAST 30 DAYS PRIOR TO THE RELEVANT DELIVERY
DATE, THE COMPANY MAY, AT ITS SOLE OPTION (WITHOUT DEROGATING FROM ANY
ADDITIONAL OR OTHER REMEDY OR RIGHT THAT MAY BE AVAILABLE TO IT PURSUANT TO THIS
AGREEMENT AND/OR THE APPLICABLE LAW):

 

8.6.1.                     CANCEL, IN WHOLE OR IN PART, THE BINDING PURCHASE
ORDER, REFUSE TO ACCEPT DELIVERY AND RETURN THE CANCELLED PRODUCTS, AS
AFORESAID, TO THE MANUFACTURER, FREIGHT COLLECT, AT THE MANUFACTURER’S RISK; OR

 

8.6.2.                     RESCHEDULE THE DELIVERY DATE TO A DATE AGREEABLE TO
THE MANUFACTURER, WHICH DATE SHALL BECOME THE DELIVERY DATE.

 

8.7.                              THE MANUFACTURER MAY MAKE DELIVERY OF LESS
THAN THE FULL NUMBER OF PRODUCTS INCLUDED IN A BINDING PURCHASE ORDER ONLY WITH
THE PRIOR WRITTEN APPROVAL OF THE COMPANY.

 

8.8.                              THE MANUFACTURER WARRANTS THAT IT HAS OBTAINED
ALL STANDARD GOVERNMENT, HEALTH, CONSUMER PROTECTION AND SAFETY APPROVALS
REQUIRED BY THE APPLICABLE LAW, IF ANY, IN ISRAEL, EUROPE AND IN THE U.S.A.,
WITH RESPECT TO THE MANUFACTURE, SALE AND DELIVERY OF THE PRODUCTS.

 

9.                                       INVENTORY

 

Within 90 days following the Manufacture of the first Products by the
Manufacturer pursuant to this Agreement and during the entire term of this
Agreement, the Manufacturer shall maintain, at its warehouse in New Jersey,
U.S.A., a rolling inventory of Products in such quantity that meets the amount
of Products set forth in the Forecast for at least a 3 month period.

 

10.                                 PAYMENT TERMS

 

10.1.                        IN CONSIDERATION FOR THE FULFILLMENT OF ALL OF THE
MANUFACTURER’S UNDERTAKINGS AND OBLIGATIONS HEREUNDER, THE COMPANY UNDERTAKES TO
PAY THE MANUFACTURER FOR EACH PRODUCT DELIVERED TO IT PURSUANT TO THE TERMS OF

 

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THIS AGREEMENT THE PRICE SET FORTH IN APPENDIX “10.1” ATTACHED HERETO (THE
“PURCHASE PRICE”).

 

10.2.                        THE COMPANY SHALL PAY THE PURCHASE PRICE FOR EACH
PRODUCT WITHIN 30 DAYS FOLLOWING THE EXPIRATION OF THE CALENDAR MONTH DURING
WHICH SUCH PRODUCT SHALL HAVE BEEN DELIVERED TO THE COMPANY IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT.

 

10.3.                        THE PARTIES SHALL EVALUATE THE COSTS OF PRODUCTION
OF THE PRODUCTS ON AN ANNUAL BASIS AND ANY CHANGE OF THE PURCHASE PRICE SHALL
NOT BE EFFECTED, EXCEPT WITH THE PRIOR WRITTEN CONSENT OF THE PARTIES, WHO SHALL
NEGOTIATE ANY REQUIRED CHANGE IN GOOD FAITH. FOR THE SAKE OF CLARITY, ANY
BINDING PURCHASE ORDERS PLACED BY THE COMPANY PRIOR TO AGREEING IN WRITING WITH
THE MANUFACTURER ON ANY CHANGE IN THE PURCHASE PRICE, SHALL NOT BE AFFECTED BY
ANY SUCH CHANGE AND BE SUPPLIED TO THE COMPANY AT THE PRICE SPECIFIED IN THE
BINDING PURCHASE ORDERS .

 

11.                                 ACCEPTANCE OF PRODUCTS

 

11.1.                        THE COMPANY SHALL BE ENTITLED TO REJECT ANY
NON-CONFORMING PRODUCTS DELIVERED TO IT WITHIN 30 DAYS OF DELIVERY OF THE
RELEVANT PRODUCT TO THE COMPANY.

 

11.2.                        THE MANUFACTURER SHALL, AT ITS SOLE COST AND
EXPENSE, REPLACE ANY REJECTED NON-CONFORMING PRODUCTS AND SUPPLY THE COMPANY
WITH REPLACED NEW CONFORMING PRODUCTS, AT ITS OWN RISK AND EXPENSE, WITHIN 15
DAYS FOLLOWING RECEIPT BY THE MANUFACTURER OF THE REJECTED NON-CONFORMING
PRODUCTS.

 

11.3.                        FOR THE SAKE OF CLARITY, THE COMPANY’S RIGHTS UNDER
THIS SECTION ARE IN ADDITION TO, AND NOT IN LIEU OF, ANY OTHER RIGHTS OR
REMEDIES THAT THE COMPANY MAY HAVE UNDER THIS AGREEMENT OR AT LAW.

 

12.                                 INSURANCE

 

12.1.                        THE MANUFACTURER SHALL ASSUME FULL LIABILITY
REGARDING, AND HOLD HARMLESS AND IMMEDIATELY DEFEND AND INDEMNIFY THE COMPANY,
ITS CUSTOMERS, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES, SHAREHOLDERS, SUCCESSORS
AND ASSIGNEES, AND EACH OF THEM, FROM AND AGAINST, ANY AND ALL CLAIMS, ACTIONS
AND SUITS, WHETHER GROUNDLESS OR OTHERWISE, AND FROM AND AGAINST ANY AND ALL
LIABILITIES, JUDGMENTS, LOSSES, DAMAGES, COSTS, CHARGES, ATTORNEY’S FEES AND
OTHER EXPENSES OF EVERY NATURE OR CHARACTER REGARDING ANY DEATH OR PERSONAL
INJURY, OF ANY NATURE WHATSOEVER, OR PROPERTY DAMAGES, OF ANY NATURE WHATSOEVER,
CAUSED BY OR RESULTING FROM THE PRODUCTS, INCLUDING, WITHOUT LIMITING, FROM THE
MANUFACTURE, OR OTHERWISE, ARISING OUT OF OR RESULTING FROM ANY ACT OR OMISSION
ATTRIBUTABLE TO THE MANUFACTURER, ITS PERMITTED SUB-CONTRACTORS, IF ANY, OR
ANYBODY ELSE FOR WHICH THE MANUFACTURER IS RESPONSIBLE.

 

12.2.                        THE MANUFACTURER SHALL, AT ITS OWN EXPENSE, KEEP
ITSELF INSURED, AS LONG AS ANY OF THE AFOREMENTIONED RISKS EXIST, IN AN
APPROPRIATE AMOUNT, WHICH

 

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SHALL NOT BE LESS THAN $1,000,000 AGAINST ANY THIRD PARTY CLAIMS, AND SHALL
EFFECT SUCH INSURANCE UNDER A VALID AND ENFORCEABLE INSURANCE POLICY ISSUED BY A
REPUTABLE INSURER. THE MANUFACTURER SHALL PROCURE THAT THE COMPANY SHALL BE
INCLUDED AS AN ADDITIONAL INSURED PARTY IN SAID POLICY, AND SHALL DELIVER TO THE
COMPANY, WITHIN 7 (SEVEN) DAYS AFTER THE SIGNATURE OF THIS AGREEMENT, A
CERTIFICATE FROM THE INSURANCE COMPANY EVIDENCING THE ADDITION OF THE COMPANY AS
SUCH ADDITIONAL INSURED PARTY TO THE POLICY, AND CONFIRMING THAT THE INSURANCE
COMPANY UNDERTAKES NOT TO TERMINATE THE POLICY OR TO LET IT EXPIRE, WITHOUT
GIVING THE COMPANY A WRITTEN NOTICE OF AT LEAST 60 (SIXTY) DAYS, PRIOR TO THE
TERMINATION OR EXPIRATION OF SAID POLICY.  THE MANUFACTURER SHALL FURNISH THE
COMPANY WITH A COPY OF THE RELEVANT POLICY TOGETHER WITH A COPY OF EACH RECEIPT
ISSUED, FROM TIME TO TIME, BY THE INSURER IN RESPECT OF THE PAYMENT OF PREMIUM
THEREON.

 

13.                                 WARRANTY

 

13.1.                        THE MANUFACTURER REPRESENTS, WARRANTS AND COVENANTS
THAT EACH PRODUCT MANUFACTURED FOR THE COMPANY HEREUNDER SHALL BE A CONFORMING
PRODUCT FOR A PERIOD OF THE APPLICABLE SHELF LIFE OF SUCH PRODUCT AS SET FORTH
IN THE SPECIFICATIONS (THE “WARRANTY PERIOD”).

 

13.2.                        THE MANUFACTURER UNDERTAKES TO ASSUME FULL
LIABILITY TOWARDS THE COMPANY AND EACH PERSON WHO PURCHASE THE PRODUCTS FROM THE
COMPANY OR FROM THE COMPANY’S DISTRIBUTORS OR DEALERS, AND AT THE REQUEST OF THE
COMPANY REPLACE, FREE OF CHARGE, ANY NON-CONFORMING PRODUCT WITH A NEW
CONFORMING PRODUCT, AND SUPPLY SUCH NEW CONFORMING PRODUCT TO THE COMPANY OR ITS
DESIGNEE(S), WITHIN 15 DAYS AFTER THE RECEIPT BY THE MANUFACTURER OF THE
RELEVANT RETURNED NON-CONFORMING PRODUCT. THE MANUFACTURER SHALL IMMEDIATELY
REIMBURSE THE COMPANY FOR ALL EXPENSES INCURRED IN THE RETURN OF SUCH
NON-CONFORMING PRODUCTS TO THE MANUFACTURER, AND SHALL DELIVER THE REPLACEMENT
CONFORMING PRODUCTS TO THE COMPANY OR ITS DESIGNEE(S), WITHIN THE AFOREMENTIONED
PERIOD, AT ITS OWN RISK AND EXPENSE.

 

13.3.                        ALL REQUESTS WITH RESPECT TO THE MANUFACTURER’S
WARRANTY HEREUNDER SHOULD BE SUBMITTED TO THE MANUFACTURER WITHIN THE WARRANTY
PERIOD.

 

14.                                 CONFIDENTIAL INFORMATION

 

14.1.                        THE MANUFACTURER AGREES AND DECLARES THAT ALL
PROPRIETARY INFORMATION AND ANY RIGHTS IN CONNECTION THEREWITH SHALL BE THE SOLE
PROPERTY OF THE COMPANY AND ITS ASSIGNEES AT ALL TIMES.

 

14.2.                        THE MANUFACTURER WILL KEEP IN STRICTEST CONFIDENCE
AND TRUST ALL PROPRIETARY INFORMATION AND WILL NOT DIRECTLY OR INDIRECTLY,
COMMUNICATE, PUBLISH, DESCRIBE, OR DIVULGE ANY PROPRIETARY INFORMATION OR
ANYTHING RELATING THERETO TO ANY PERSON OR BODY, EXCEPT TO ITS EMPLOYEES AND
SUB-CONTRACTORS ON A “NEED-TO-KNOW” BASIS AND SOLELY FOR THE PURPOSE OF
DISCHARGING ITS OBLIGATIONS PURSUANT TO THIS AGREEMENT (THE “PURPOSE”) AND
PROVIDED THAT ANY SUCH EMPLOYEE OR SUB-CONTRACTOR HAS EXECUTED AN

 

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UNDERTAKING PROHIBITING THE USE AND DISCLOSURE OF PROPRIETARY INFORMATION IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.

 

14.3.                        THE MANUFACTURER UNDERTAKES TO TAKE ALL NECESSARY
STEPS TO ENSURE THAT THE PROPRIETARY INFORMATION WILL NOT REACH THE HANDS OF ANY
THIRD PARTY AND THAT THE AFOREMENTIONED EMPLOYEES AND SUB-CONTRACTORS WILL
MAINTAIN ABSOLUTE SECRECY WITH REGARDS TO THE PROPRIETARY INFORMATION. IT IS
AGREED AND UNDERSTOOD THAT THE DISCLOSURE OR USE OF PROPRIETARY INFORMATION BY
ANY SUCH EMPLOYEE OR SUB-CONTRACTOR, IN VIOLATION OF THE PROVISIONS OF THIS
AGREEMENT, SHALL BE DEEMED FOR ALL INTENTS AND PURPOSES AS DISCLOSURE OR USE BY
THE MANUFACTURER ITSELF, CONTRARY TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.

 

14.4.                        THE MANUFACTURER UNDERTAKES NOT TO, DIRECTLY OR
INDIRECTLY, USE OR APPLY THE PROPRIETARY INFORMATION IN ANY WAY WHATSOEVER,
EXCEPT FOR THE PURPOSE.

 

14.5.                        ALL DRAWINGS, PRINTS, PRINT-OUTS, CALCULATIONS,
COMPUTATIONS, DOCUMENTS, REPORTS, WRITTEN AND OTHER RECORDS, DISCS, MAGNETIC AND
OTHER TAPES AND ALL OTHER FORMS OR METHODS OF STORAGE OF INFORMATION (ALL OF THE
ABOVE SHALL HEREINAFTER BE REFERRED TO AS “ISD”) GIVEN, DELIVERED OR MADE
AVAILABLE TO OR PREPARED OR GENERATED BY OR ON BEHALF OF THE MANUFACTURER IN
CONNECTION WITH THE PROPRIETARY INFORMATION HEREUNDER SHALL REMAIN AT ALL TIMES
AND FOR ALL INTENTS AND PURPOSES THE PROPERTY OF THE COMPANY AND SHALL BE DEEMED
LOANED TO THE MANUFACTURER FOR THE PURPOSE.

 

14.6.                        UPON TERMINATION OF THIS AGREEMENT THE MANUFACTURER
SHALL RETURN TO THE COMPANY ANY AND ALL PROPRIETARY INFORMATION, WHETHER
CONTAINED IN ISD OR OTHERWISE, INCLUDING ALL COPIES THEREOF, IF ANY.

 

14.7.                        ALL INTELLECTUAL PROPERTY RIGHTS AND ANY OTHER
RIGHTS OF WHATSOEVER KIND AND NATURE IN, TO AND IN CONNECTION WITH THE
PROPRIETARY INFORMATION AND THE USE, APPLICATION, UTILIZATION, AND
COMMERCIALIZATION THEREOF ARE AND SHALL BE VESTED EXCLUSIVELY IN THE COMPANY.
THIS AGREEMENT AND THE PERFORMANCE THEREOF DO NOT GRANT TO OR CONFER UPON AND
SHALL NOT BE CONSTRUED OR INTERPRETED AS GRANTING TO OR CONFERRING UPON THE
MANUFACTURER ANY RIGHT, LICENSE OR PRIVILEGE IN, TO OR IN CONNECTION WITH THE
PROPRIETARY INFORMATION OR THE USE, APPLICATION, UTILIZATION OR
COMMERCIALIZATION THEREOF, EXCEPT FOR THE PURPOSE.

 

14.8.                        NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED OR
DEEMED AS DEROGATING FROM ANY RIGHT OR REMEDY AVAILABLE TO THE COMPANY BY REASON
OF ANY INTELLECTUAL PROPERTY RIGHT WHICH IS OR MAY BE AVAILABLE TO OR REGISTERED
IN THE NAME OF THE COMPANY IN ANY JURISDICTION, NOR FROM ANY ADDITIONAL RIGHT OR
REMEDY AVAILABLE TO THE COMPANY UNDER THE RELEVANT LAWS OF ANY APPLICABLE
JURISDICTION.

 

15.                                 INTELLECTUAL PROPERTY RIGHTS AND
IMPROVEMENTS

 

15.1.                        THE MANUFACTURER ACKNOWLEDGES THE COMPANY’S
EXCLUSIVE RIGHT, TITLE AND INTEREST IN ANY AND ALL INTELLECTUAL PROPERTY RIGHTS
PERTAINING TO COMPANY

 

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AND/OR THE PRODUCTS AND/OR THE PROPRIETARY INFORMATION, AND THE MANUFACTURER
UNDERTAKES THAT IT SHALL NOT DO, OR CAUSE TO BE DONE, ANY ACTS OR THINGS
CONTESTING OR IN ANY WAY IMPAIRING OR TENDING TO IMPAIR ANY PORTION OF COMPANY’S
RIGHT, TITLE AND INTEREST IN AND TO THE INTELLECTUAL PROPERTY RIGHTS OR
REPRESENT IN ANY MANNER THAT IT POSSESSES ANY OWNERSHIP INTEREST IN THE
INTELLECTUAL PROPERTY RIGHTS OR THE REGISTRATION THEREOF.

 

15.2.                        ALL IMPROVEMENTS AND ALL INTELLECTUAL PROPRIETARY
RIGHTS THEREIN, SHALL BE AND REMAIN AT ALL TIMES THE PROPERTY OF THE COMPANY AND
THE MANUFACTURER SHALL NOT HAVE ANY RIGHT, TITLE OR INTEREST THEREIN.

 

15.3.                        THE MANUFACTURER SHALL FORTHWITH COMMUNICATE TO THE
COMPANY THE DETAILS OF ANY SUCH IMPROVEMENT, AND, UPON THE REQUEST OF THE
COMPANY, EXECUTE OR CAUSE ANY OF ITS EMPLOYEES OR AGENTS TO EXECUTE, ANY AND ALL
DOCUMENTS REQUIRED BY THE COMPANY IN ORDER TO PROPERLY EFFECT THE TITLE OF ANY
SUCH IMPROVEMENT IN THE NAME OF THE COMPANY.

 

15.4.                        WITHOUT DEROGATING FROM THE GENERALITY OF THE
AFORESAID, ALL THE PROVISIONS OF THIS AGREEMENT, SHALL APPLY, MUTATIS MUTANDIS,
ALSO WITH RESPECT TO ALL IMPROVEMENTS.

 

15.5.                        THE MANUFACTURER SHALL NOT BE ENTITLED TO
MANUFACTURE, SELL OR DISTRIBUTE THE PRODUCTS, EXCEPT TO THE COMPANY AND IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT.

 

16.                                 TRADEMARKS

 

The Manufacturer shall affix to the Products such trademarks, brand names,
copyright symbols or other intellectual property rights notices, as shall be
required by the Company, from time to time. The Manufacturer expressly
recognizes and agrees that it shall acquire no right, title or interest in or to
the aforementioned by the terms of this Agreement or by performance of its
obligations hereunder.

 

17.                                 TERM AND TERMINATION

 

17.1.                        THIS AGREEMENT SHALL ENTER INTO FORCE UPON THE DATE
OF SIGNATURE HEREOF BY BOTH PARTIES AND SHALL REMAIN IN FORCE AND AFFECT FOR AN
INDEFINITE PERIOD, UNLESS AND UNTIL TERMINATED BY EITHER PARTY IN ACCORDANCE
WITH THE PROVISIONS OF THIS AGREEMENT.

 

17.2.                        EITHER PARTY SHALL BE ENTITLED TO TERMINATE THIS
AGREEMENT AT ANY TIME BY GIVING THE OTHER PARTY A PRIOR WRITTEN NOTICE OF AT
LEAST 180 DAYS.

 

17.3.                        EITHER PARTY SHALL HAVE THE RIGHT TO TERMINATE THIS
AGREEMENT WITHOUT NOTICE (WITHOUT PREJUDICE TO OTHER RIGHTS OR REMEDIES TO WHICH
IT MAY BE ENTITLED PURSUANT TO THIS AGREEMENT AND/OR TO THE APPLICABLE LAW) BY
WRITING TO THE OTHER IN ANY OF THE FOLLOWING EVENTS:

 

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17.3.1.               THE OTHER PARTY ENTERS INTO LIQUIDATION OR IS DECLARED
INSOLVENT OR BANKRUPT, OR HAS A LIQUIDATOR OR AN INTERIM LIQUIDATOR OR A
RECEIVER OR AN INTERIM RECEIVER OF ITS ASSETS OR A MATERIAL PART THEREOF
APPOINTED, AND SUCH APPOINTMENT IS NOT REMOVED WITHIN A PERIOD OF 60 (SIXTY)
DAYS, OR SEEKS OR IS SUBJECT TO ANY OTHER SIMILAR RELIEF OR PROCEDURE UNDER ANY
BANKRUPTCY LAWS, INSOLVENCY LAWS OR SIMILAR STATUTES;

 

17.3.2.               THE OTHER PARTY COMMITS ANY IRREMEDIABLE BREACH OF THIS
AGREEMENT OR FAILS IN ANY OTHER RESPECT WHICH IS NOT REMEDIABLE TO COMPLY WITH
THE TERMS OF THIS AGREEMENT;

 

17.3.3.               THE OTHER PARTY COMMITS ANY MATERIAL BREACH OF THIS
AGREEMENT OR FAILS IN ANY OTHER RESPECT TO COMPLY WITH ANY MATERIAL TERM OF THIS
AGREEMENT AND SHALL FAIL TO REMEDY SUCH BREACH OR FAILURE TO COMPLY WITH THIS
AGREEMENT WITHIN A PERIOD OF 14 DAYS FROM THE SERVICE ON IT OF A NOTICE FROM THE
OTHER PARTY, SPECIFYING THE BREACH OR FAILURE AND REQUIRING IT TO BE REMEDIED.

 

17.4.                        THE COMPANY MAY, UPON THIRTY (30) DAYS ADVANCE
WRITTEN NOTICE TO THE MANUFACTURER, TERMINATE THIS AGREEMENT IF THERE IS ANY
CHANGE IN THE OWNERSHIP OR EFFECTIVE CONTROL OF THE MANUFACTURER OR THE COMPANY.
EITHER PARTY SHALL PROMPTLY ADVISE THE OTHER PARTY ON ANY SUCH ENVISAGED OR
ACTUAL CHANGE.

 

18.                                 EFFECTS OF TERMINATION

 

18.1.                        ALL BINDING PURCHASE ORDERS PLACED BY THE COMPANY
PRIOR TO THE TERMINATION OF THIS AGREEMENT SHALL BE HONORED BY THE MANUFACTURER
IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, UNLESS THE PARTIES AGREE TO
DIFFERENT TERMS IN WRITING. PROVIDED THAT, IN THE EVENT THAT THIS AGREEMENT IS
TERMINATED BY THE COMPANY IN PURSUANT TO THE PROVISIONS OF SECTION 17.3 ABOVE,
THE COMPANY SHALL BE ENTITLED TO CANCEL ALL OUTSTANDING ORDERS NOT YET
DELIVERED.

 

18.2.                        FOR THE SAKE OF CLARITY, IT IS HEREBY AGREED AND
UNDERSTOOD THAT THE TERMINATION OF THIS AGREEMENT FOR ANY REASON WHATSOEVER,
WILL NOT RELEASE EITHER PARTY FROM ANY:

 

18.2.1.               OBLIGATIONS, DUTIES OR LIABILITIES THAT HAVE BEEN INCURRED
PRIOR TO SUCH TERMINATION;

 

18.2.2.               OBLIGATIONS, DUTIES OR LIABILITIES WHICH, FROM THE CONTEXT
HEREOF OR THE NATURE THEREOF, ARE INTENDED TO SURVIVE THE TERMINATION OF THIS
AGREEMENT, INCLUDING THOSE CONTAINED IN SECTIONS 4.3, 13, 14 AND 15 ABOVE.

 

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19.                                 GENERAL REPRESENTATIONS

 

Either Party hereby warrants, confirms and undertakes that:

 

19.1.                        IT HAS THE CORPORATE POWER AND AUTHORITY TO ENTER
INTO THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED THEREIN;

 

19.2.                        THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION AND THIS
AGREEMENT CONSTITUTES A VALID, LEGAL AND BINDING AGREEMENT OF SUCH PARTY,
ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS;

 

19.3.                        NEITHER THE EXECUTION AND DELIVERY OF THIS
AGREEMENT BY IT NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY
WILL (I) VIOLATE, OR RESULT IN A DEFAULT UNDER ANY NOTE, AGREEMENT, CONTRACT,
UNDERSTANDING, ARRANGEMENT, RESTRICTION OR OTHER INSTRUMENT OR OBLIGATION TO
WHICH IT IS A PARTY OR BY WHICH IT MAY BE BOUND; OR (II) VIOLATE ANY ORDER,
AWARD, INJUNCTION, JUDGMENT OR DECREE TO WHICH IT IS SUBJECT;

 

19.4.                        UPON THE SIGNATURE HEREOF, IT SHALL SUBMIT TO THE
OTHER PARTY A LETTER FROM ITS LEGAL COUNSEL CONFIRMING ITS DUE ESTABLISHMENT,
POWERS AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO PERFORM ITS OBLIGATIONS
THEREUNDER, AND THAT THE PERSON WHO SIGNED THIS AGREEMENT ON ITS BEHALF IS DULY
AUTHORIZED AND EMPOWERED TO SIGN THIS AGREEMENT ON ITS BEHALF.

 

20.                                 RIGHT OF FIRST REFUSAL

 

As long as the business of the Company with the Manufacturer exceeds 10% of the
Manufacturer’s revenues during the immediately preceding 12-month period, the
Company shall have a right of first refusal with respect to: (i) the sale of all
or substantially all of the assets of the Manufacturer; and/or (ii) the sale of
all or substantially all of the shares of the Manufacturer; and/or (iii) the
sale by Lily Baranes and/or S.P.R.A. Trustee Ltd. (or any successors thereof) of
all or substantially all of their shares in the Manufacturer. The Manufacturer
shall promptly advise the Company in writing on any such envisaged sale,
including all the terms and conditions pertaining thereto (the “Offer”), and
including the price and the identity of the envisaged purchaser (the
“Purchaser”). If the Company shall not advise the Manufacturer within 90 days of
receipt of the Offer that it accepts the Offer, then the Manufacturer or its
shareholders, as the case may be, shall be entitled to consummate the relevant
sale with the Purchaser, within a period of 90 days following the expiration of
said 90-day period, on terms not more favorable to the Purchaser than those
contained in the Offer. Any sale following the expiration of said 90-day period
shall be subject to the aforementioned right of first refusal, mutatis
mutandis.  It is agreed and understood that the right set forth in (iii) above
is subject to the right of first refusal granted to Ilan Brandt under the
Articles of Association of the Manufacturer. In the event that the Company shall
desire to exercise its right of first refusal, as aforesaid, and such exercise
shall be prevented due to Ilan Brandt’s desire to exercise his right of first
refusal, then Lily Baranes and/or

 

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S.P.R.A. shall use best efforts to cause Ilan Brandt to waive his right of first
refusal or purchase his shares in the Company. Concurrently with the signature
hereof the Manufacturer shall furnish the Company with an undertaking from Lily
Baranes and/or S.P.R.A., in a form acceptable to the Company, to comply with the
terms of this Section 20.

 

21.                                 MISCELLANEOUS

 

21.1.                        THE COMPANY MAY, WITHOUT OBTAINING THE CONSENT OF
THE MANUFACTURER, ASSIGN OR TRANSFER THIS AGREEMENT OR ANY PART THEREOF, TO ANY
THIRD PARTY. THE MANUFACTURER SHALL NOT BE ENTITLED TO ASSIGN OR TRANSFER THIS
AGREEMENT OR ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER, IN WHOLE OR IN PART, TO
ANY THIRD PARTY, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY.

 

21.2.                        THE RELATIONSHIP BETWEEN THE PARTIES IS THAT OF
INDEPENDENT CONTRACTORS. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR CONSTRUED
TO CONSTITUTE OR CREATE BETWEEN THE PARTIES HERETO, A PARTNERSHIP OR A JOINT
VENTURE, OR TO CREATE A RELATIONSHIP OF EMPLOYER-EMPLOYEE BETWEEN THE PARTIES
AND NO EMPLOYEE OF EITHER PARTY SHALL BE CONSIDERED TO BE AN EMPLOYEE OF THE
OTHER PARTY FOR ANY PURPOSE WHATSOEVER.

 

21.3.                        THE MANUFACTURER UNDERTAKES NOT TO INCUR ANY
LIABILITY ON BEHALF OF COMPANY OR IN ANY WAY PLEDGE OR PURPORT TO PLEDGE THE
CREDIT OF COMPANY OR ACCEPT ANY ORDER OR ENTER INTO ANY OBLIGATION OR ANY
CONTRACT ON BEHALF OF COMPANY AND/OR WHICH MAY BIND COMPANY, UNLESS SO
INSTRUCTED BY COMPANY IN WRITING AND IN ADVANCE.

 

21.4.                        FAILURE OF EITHER PARTY TO ENFORCE ANY RIGHT
HEREUNDER SHALL NOT WAIVE ANY RIGHT IN RESPECT OF THE SAME OR OTHER FUTURE
OCCURRENCES.

 

21.5.                        IN CASE ANY ONE OR MORE OF THE PROVISIONS OF THIS
AGREEMENT SHALL BE HELD INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT UNDER
ANY APPLICABLE LAW, THE VALIDITY, LEGALITY AND ENFORCEABILITY OF THE REMAINING
PROVISIONS CONTAINED HEREIN, INCLUDING THE AFFECTED PROVISION TO THE EXTENT
VALID, LEGAL AND ENFORCEABLE, SHALL NOT IN ANY WAY BE AFFECTED OR IMPAIRED
THEREBY.

 

21.6.                        THE HEADINGS OF THIS AGREEMENT ARE FOR EASE OF
REFERENCE ONLY AND SHALL NOT GOVERN OR AFFECT THE CONSTRUCTION HEREOF.

 

21.7.                        THE TERMS AND CONDITIONS HEREIN CONTAINED,
CONSTITUTE THE ENTIRE AND ONLY AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT
TO THE SUBJECT MATTER HEREOF AND SHALL SUPERSEDE ALL PREVIOUS COMMUNICATIONS,
REPRESENTATIONS AND/OR AGREEMENT, EITHER WRITTEN OR ORAL, BETWEEN THE PARTIES IN
RESPECT OF SUCH SUBJECT MATTER.  NO MODIFICATION OF SAID TERMS AND CONDITIONS
SHALL BE BINDING UNLESS AGREED UPON IN WRITING AND SIGNED BY BOTH PARTIES.

 

21.8.                        THE PREAMBLE TO THIS AGREEMENT AND ALL THE
APPENDICES ATTACHED THERETO SHALL BE DEEMED INCORPORATED BY REFERENCE HEREIN AND
SHALL FORM AN INTEGRAL PART HEREOF.

 

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21.9.                        THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ISRAEL AND THE PARTIES HEREBY SUBMIT
TO THE EXCLUSIVE JURISDICTION OF THE COMPETENT COURTS OF THE CITY OF TEL-AVIV,
TO THE EXCLUSION OF ANY OTHER JURISDICTION.

 

21.10.                  ANY NOTICE AND/OR DOCUMENTS REQUIRED OR PERMITTED TO BE
SUBMITTED BY EITHER PARTY TO THE OTHER UNDER THIS AGREEMENT, SHALL BE IN WRITING
TO THE PARTY’S RESPECTIVE ADDRESSES SET FORTH IN THE PREAMBLE OF THIS AGREEMENT,
OR TO ANY OTHER ADDRESS, AS EITHER PARTY MAY DESIGNATE BY GIVING A WRITTEN
NOTICE TO THE OTHER, AND BE DEEMED EFFECTIVELY DELIVERED:

 

21.10.1.         IF DELIVERED PERSONALLY, UPON THE DATE OF DELIVERY;

 

21.10.2.         IF REGISTERED MAILED, WITHIN 4 (FOUR) WORKING DAYS FROM THE
DISPATCH THEREOF;

 

21.10.3.         IF DELIVERED BY FACSIMILE, WITHIN 24 (TWENTY FOUR) WORKING
HOURS FROM THE DISPATCH THEREOF.

 

IN WITNESS WHEREOF, the Parties have signed this Agreement on the date first
hereinabove written.

 

 

Vision-Sciences, Inc.

Three BY Ltd.

[SEAL]

 

 

By:

/s/Ron Hadani

 

By:

Nahum Silvio, Adv. and /s/Zvi Haim

 

 

 

Title: President and CEO

Titles: Director and General Manager

 

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