Manufacturing Agreement
 
(1)
QualiMed Innovative Medizinprodukte GmbH

 
 
(2)
Inspire MD Ltd.

 
 

Dated September 11th                   2007
 
 
 

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Contents
 
Contents
     
1.
Definitions and interpretation
1
2.
Manufacture and supply of Products
2
3.
Price payment, taxes
3
4.
Delivery Risk and property in the Products
4
5.
Intellectual property rights of the Company
4
6.
Warranty
4
7.
Liability
5
8.
Confidential information
5
9.
Force majeure
5
10.
Term
6
11.
Termination
6
12.
General
6
13.
Governing law and jurisdiction
7
List of agreement Schedules
8
     

 
 
2

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This Agreement is made on the 11th day of September, 2007
 
Between:
 
(1)
QualiMed Innovative Medizinprodukte GmbH, Boschstr. 16, 21432 Winsen, Germany
("the Manufacturer"); and

(2)
Inspire MD Ltd., 4 Derech Hashalom St., Tel Aviv, Israel ("the Company").

 
Background:
 
The Company and the Manufacturer have agreed that the Manufacturer will
manufacture the Product for the Company on the terms and conditions contained in
this Agreement.
 
It is agreed as follows:
 
1.
Definitions and interpretation

 
1.1
In this Agreement, unless the context otherwise requires, the following words
have the following meanings:

 

 
"this Agreement"
this Agreement (including any schedule or annexure to it and any document in
agreed form);
       
"the Intellectual
 Property"
as defined in clause 5;
       
"the Know-How"
technical information, drawings, designs and other information relating to the
Product and its manufacturing;
       
"Materials"
any materials and components required for the manufacturing of the Product;
       
"Order"
Purchase Order provided by the Company to the Manufacturer for a consignment of
Products; Order shall specify quantity ordered, delivery address and terms, and
delivery date;
       
"the Patent Rights"
shall be All Patent applications filed by the Company to date.
       
"the Price"
as defined in sub-clause 3.1;
       
"the Product"
the product to be manufactured by the Manufacturer for the Company, details of
which are set out in the Specification in schedule B to this Agreement ;

 
 
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"the Specification"
the specification of the Product and its components set out in schedule B to
this Agreement in accordance with which the Product is to be manufactured; and
       
"the Term"
shall mean the duration of this Agreement under clause 11;

 
1.2
In this Agreement, unless the context otherwise requires:

 
 
(a)
words in the singular include the plural and vice versa and words in one gender
include any other gender;

 
 
(b)
the table of contents and headings are for convenience only and shall not affect
the interpretation of this Agreement; and

 
 
(c)
a reference to clauses and schedules are to clauses and schedules of this
Agreement and references to sub-clauses and paragraphs are references to
sub-clauses and paragraphs of the clause or schedule in which they appear.

 
2.
Manufacture and supply of Products

 
2.1
During the Term the Manufacturer shall promptly and diligently manufacture such
numbers of the Products as the Company shall from time to time require in
accordance with the Product Specifications and such Order as the Company shall
serve on the Manufacturer. Purchase Orders may only be given in minimum
quantities of 20 units per Product Type and size. The Company shall place these
Orders in accordance with a monthly rolling, twelve month forecast of which the
first two months should be binding and the third month should be binding with a
tolerance of + / - 10 %. The first month has to be detailed in binding purchases
Orders. All purchase orders delivered by the Company shall be acknowledged by
Manufacturer in writing.

 
In accordance with the above, during the first and second months, the
Manufacturer shall produce at least a “Minimum Quantity” of Products per each
such months. Starting with 500 units per month, which shall be binding on the
Company, the Minimum Quantity may be increased, based on binding notifications
in advance as follows:
 
 
-
3 month in advance for up to 1000 units per month

 
 
-
6 month in advance for up to 2000 units per month

 
 
-
9 month in advance for up to 4000 units per month

 
 
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A copy of the production file relevant to the production of the Product shall be
provided to the Company at its first demand.
 
Manufacturer represents and warrants to the Company, that: (i) it does now, and
shall at all times during the term it shall maintain at all times the required
skill, personnel, equipment and facility required to fulfil its obligations
under this Agreement; and (ii) that it is duly licensed to perform its
obligations under this Agreement; (iii) to the best of its knowledge, fulfilling
its obligations under this Agreement does not infringe on the intellectual
property rights of a third party that is not a party to this Agreement;
 
2.2
The Manufacturer shall in addition to producing the Products to meet an Order
manufacture for, and hold in stock, such quantities of components for Products
as shall from time to time be agreed in writing between the Company and the
Manufacturer.  The Manufacturer shall in addition hold in stock such other items
as shall be agreed from time to time in writing between the Company and the
Manufacturer. Initial quantities of components to be held in stock by
Manufacturer are set forth in Schedule C to this Agreement.

 
Irrespective of the purchase Orders and forecast the Company is bound to
purchase as much products as are required to clear the agreed minimum stock in
case of termination of this agreement.
 
2.3
Upon receipt of Product(s) by the Company, Company shall perform acceptance
tests to the Product and shall inform Manufacturer of any defects found and
manufacturer shall then proceed with the immediate ratification of such defects
pursuant to Section 6.2 below.

 
3.
Price, payment, taxes

 
3.1
The price of each complete unit of the Product shall be as defined in Schedule D
to this Agreement.

 
The Price is valid "ex works". Price does not include any delivery expenses,
such as freight, transfer, or insurance, which have to be paid by Company
separately. The Company has to remove packing at his own expense.
 
3.2
The Company has to bear taxes and customs as well as to organise all formalities
(for example customs declarations). Insurance will only be effected on the
Company´s explicit request and only, if Company defrays costs.

 
3.3
The Price is a net price and does not include German sales tax (Umsatzsteuer,
VAT). German sales taxes, if any, shall be borne by the Company. With regard to
deliveries within the European Union, Manufacturer will invoice German sales tax
except for the case that the Company provides Manufacturer with the required
proofs according to German sales tax law (Umsatzsteuerrecht) and that the German
tax office confirms these proofs.

 
 
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3.4
The Price is a net price also with respect to local withholding taxes in Israel.
To the extent that the Company has to pay withholding taxes on the purchase
price according to his national tax law, Company is obligated to provide
Manufacturer with an attestation of the paid withholding taxes.

 
3.5
Deduction of cash discount must be agreed upon in writing.

 
3.6
The purchase price becomes due within 30 calendar days upon the date of receipt
of defectless Products by the Company unless otherwise agreed. Upon expiry of
this period without timely payment, the Company will be in delay with payment.
If the Company is in delay with payment, Manufacturer is entitled to claim
interest on arrears at the rate of LIBOR + 3% per annum.

 
3.7
Set-offs may only be declared in writing. The Company may only exercise a right
of retention, if his counterclaim results from the same contractual
relationship. The Company shall have no right of retention because of partial
performances pursuant to § 320 para. 2 BGB.

 
4.
Delivery Risk and property in the Products

 
4.1
The delivery shall be on ex works basis.

 
4.2
The risk of loss to the Products shall pass to the Company upon despatch (ex
works) unless otherwise agreed.

 
4.3
The Products remain the Property of the Manufacturer until full payment of the
uncontested amounts by the Company.

 
5.
Intellectual property rights of the Company

 
5.1
The Manufacturer acknowledges the Company's right with regard to the Patent
Rights, the Know-How, the Trade Name and any other intellectual property rights
to the Products (including the Company's copyright in drawings, specifications,
names and part numbers) ("the Intellectual Property") and the Manufacturer
agrees that it will not either during the term of this Agreement or at any time
thereafter (i) do or suffer to be done any act which may in any way infringe the
Company's said rights or goodwill relating to the Products or the Company or its
business.(ii) Directly or indirectly challenge the vailidity of the intellectual
property of the Company;

 
 
6

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5.2 The Manufacturer hereby warrants to the Company that to the best of its
knowledge it has not and shall not provide the Company, under this Agreement,
with any Product and or component that is designated to be part of the end
product sold by the Company for which to the best of its knowledge may be
infringing on the intellectual property rights of a third party. Should such
alleged claim of infringement be brought against Manufacturer during the term of
this Agreement, Manufacturer shall: 1) Immediately cease the production of such
claimed against Product and or component, including its distribution or any
other act that may be considered infringing by such third party; and 2)
Immediately notify the Company of such alleged claim of infringement.
 
6.
Warranty

 
6.1
Manufacturer warrants that its Products will, under its intended use comply and
function in accordance with their specifications and associated documentation in
all material respects for a period of twelve (12)  form the date of delivery
("Warranty Period").

 
6.2
The Company will report any defects to Manufacturer in writing as soon as such
information becomes known to the Company. Manufacturer will then examine and
analyze the defects and use its best effort to provide a rectification within a
reasonable period. Manufacturer shall fix all defects in the Product(s) in
accordance with the Company’s request by either: i) exchanging the Product, ii)
modifying or repairing the Product or work result, or iii) reperforming the
manufacturing of the defective Product to achieve the agreed work result.
Manufacturer may employ subcontractors to provide warranty services provided
that use of subcontractors shall not relieve Manufacturer of any of its
obligations under this Agreement. Should Manufacturer refuse or fail to provide
such remedy within 60 days of notice from the Company the Company is entitled at
its choice to terminate this Agreement and amend amount due to Manufacturer
accordingly, deducting all damages suffered by the Company limited to the value
of the defect Product.

 
6.3
Warranty claims are excluded in cases of insignificant deviations from the
agreed quality such as non-reproducible errors and of natural wear and tear.
They are also excluded if the Company used the Products or work results for
other than the intended use, or in particular if they are modified without the
prior written consent of Manufacturer.

 
7.
Liability

 
Claims of the Company to lost profits or consequential damages shall be
excluded. The Manufacturer shall, at all times that it is supplying the Product
commercially, maintain product liability insurance policies with insurers of
recognized standing, with policy limits of not less than 5 million Euros per
occurrence. The Company shall, at all times that it is selling or having sold
the Product for commercial use, maintain product liability insurance policies
with insurers of recognized standing, with policy limits of not less than 5
million Euros per occurrence. Each Party shall promptly notify the other Party
in writing if such policies are to be revoked, canceled or materially decreased.
Upon request, each party will provide the other party with a certificate of
insurance from its insurers evidencing such insurance. Any further Liability of
the Manufacturer is excluded, unless the Manufacturer (i) acted with wilful
intend and/or gross negligence (ii) or wilfully concealed a default.
 
 
7

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8.
Confidential information

 
The Parties agree both during the Term and thereafter that they shall cause
their respective employees to sign all documents required to ensure that its
employees and agents will not disclose or make any use whatsoever of all (i)
Information exchanged between the parties and marked as confidential at time of
disclosure; (ii) information pertaining to the Materials or the Products or the
sale of them or (iii) the conduct of the Party's business, unless such
information is:
 
 
(a)
lawfully and properly proved to be known to or in the possession of the Parties
at the date of this Agreement; or

 
 
(b)
in the public domain at the date of this Agreement or which subsequently comes
into the public domain through no fault of the other Party.

 
9.
Force majeure

 
9.1
The Manufacturer may totally or partially suspend manufacture of the Products
and shall be under no liability whatsoever to the Company for any
non-performance under this Agreement due to accidents, Acts of God, riots, civil
commotions, fire, governmental action or any other circumstances beyond the
control of the Manufacturer. It is however, agreed between the parties that
should the Manufacturer fail to produce the Minimum Quantity or any quantity
ordered by the Company during the Term for a period of more than 90 days, for
whatever reason (the “Supply Short Fall), the Company shall have the right to
terminate this Agreement and proceed with manufacturing of the Product using
other entities. Company shall provide Manufacturer with a one month's written
notice and upon expiry of such notice each party shall be released from all
future obligations hereunder but such termination shall not relieve either party
of any rights or from any obligations accruing before the occurrence of any such
circumstances.

 
10.
Term

 
This Agreement shall commence on the execution of this Agreement and (subject to
earlier termination as provided in this Agreement) shall continue for a period
of 10 years, unless terminated pursuant to section 11 below.
 
 
8

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11.
Termination

 
11.1
Termination for cause:

 
The Parties may by notice in writing to the other Party immediately terminate
this Agreement if:
 
 
(a)
the other Party shall at any time be in breach of any of its obligations
contained in this Agreement and such breach shall not be remedied within 30 days
after notice from the Party of such breach;

 
 
(b)
the other Party shall go into liquidation other than for the purpose of
reconstruction or amalgamation or be subject to an administration order or if a
Receiver Administrator or Administrative Receiver be appointed in respect of the
whole or any part of its assets or if the whole or any substantial part of its
said assets be assigned for the benefit of its creditors;

 
 
(c)
In case of a supply shortfall, whereby Manufacturer has not delivered the
Products to the Company for a period of over 60 days.

 
 
(d)
In case a any component provided by a party is claimed to be infringing on the
intellectual property rights of a third party and such claim is supported by the
written opinion of an independent patent attorney, then the non claimed-against
party shall have the right to terminate this Agreement with a 30 days prior
written notice.

 
 
(e)
In case the Development Agreement executed between the Parties on January 15th
2007 terminates, either party shall have the right to terminate this Agreement
with a 30 days prior written notice.

 
12.
General

 
12.1
Entire agreement

 
This Agreement sets out the entire agreement and understanding between the
parties in respect of the subject matter of this Agreement.
 
12.2
Invalidity

 
To the extent that any provision of this Agreement is found by any court or
competent authority to be invalid, unlawful or unenforceable in any
jurisdiction, that provision shall be deemed not to be a part of this Agreement,
it shall not affect the enforceability of the remainder of this Agreement nor
shall it affect the validity, lawfulness or enforceability of that provision in
any other jurisdiction.
 
 
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12.3
No partnership

 
Nothing in this Agreement shall be deemed to create a partnership between the
parties.
 
12.4
Notices

 
Any notice to a party under this Agreement shall be in writing signed by or on
behalf of the party giving it and shall, unless delivered to a party personally,
be left at, or sent by prepaid first class post, prepaid recorded delivery,
telex or facsimile to the address of the party as set out on page 1 of this
Agreement or as otherwise notified in writing from time to time.
 
12.5
Variations

 
No purported variation of this Agreement shall be effective unless it is in
writing and signed by or on behalf of each of the parties.  This applies also to
this clause.
 
12.6
Assignment of rights

 
The Agreement or any right or obligation contained herein may be assigned to
third parties only upon the prior written consent of the other party that shall
not be unreasonably withheld. Notwithstanding the above, the Company shall have
the right to assign its rights in: 1) case of an IPO, M&A or another form of
change of control, provided that the assignee shall take all obligations
incurred by the Company under this Agreement, or 2) to an affiliate company, or
a company owned by the Company.
 
12.7
Releases and waivers

 
 
(a)
Any party may, in whole or in part, release, compound, compromise, waive or
postpone, in its absolute discretion, any liability owed to it or right granted
to it in this Agreement by any other party or parties without in any way
prejudicing or affecting its rights in respect of that or any other liability or
right not so released, compounded, compromised, waived or postponed.

 
 
(b)
No single or partial exercise, or failure or delay in exercising any right,
power or remedy by any party shall constitute a waiver by that party of, or
impair or preclude any further exercise of, that or any right, power or remedy
arising under this Agreement or otherwise.

 
 
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13.
Governing law and jurisdiction

 
13.1
This Agreement shall be governed by and construed in accordance with Swiss law
excluding its conflict of law provisions and the UN Convention on Contracts for
the International sales of Goods.

 
13.2
Each of the parties irrevocably submits for all purposes in connection with this
Agreement to the exclusive jurisdiction of the courts of Switzerland.

 
13.3
All disputes arising out the performance of this agreement shall first be
discussed and resolved between the parties. If such discussion do not yield
positive results, the parties shall use an agreed upon mediator to solve the
conflict. Mediation shall take place in the English language and be limited to a
3 hour international phone conference. Costs of mediation shall be equally borne
between the parties hereto.

 
This Agreement has been signed on the date appearing at the head of page 1.
 
_______________ (place and date)   
 
 
 
 
______________ (place and date)
 
QualiMed Innovative Medizinprodukte GmbH
 
Represent by
 
Name: _________________________
 
Title:   _________________________
 
 
Inspire MD Ltd.
 
Represent by
 
Name: _________________________
 
Title:   _________________________

 
List of Agreement Schedules:
 
Schedule A – Reserved
 
Schedule B – Product Specifications and Product Description
 
Schedule C – Initial Quantity for Production Stock
 
Schedule D – Prices and Delivery addresses and terms
 
 
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Schedule D
 
To the QualiMed – Inspire Manufacturing Agreement:
 
Prices, Delivery Addresses and Terms
 
The price for each MGuard Stent Implantation System will be calculated according
to a two phase pricing model:
 
Monthly Orders – the Company will pay the Manufacturer a price per stent in
accordance with the number of stents purchased per month, as depicted in the
following table.
 
Stents Purchased per Month
Stent*
Add –ons**
System
 
Month
       
Euro
Euro
Euro
 
stents
Euro
From
-
Up to
500
40.0
109.5
149.5
X
500
74,750
                   
From
501
Up to
1,000
40.0
99.0
139.0
X
500
69,500
                   
From
1,001
Up to
2,000
40.0
88.5
128.5
X
1,000
128,500
                   
From
2,001
Up to
4,000
40.0
82.5
122.5
X
2,000
245,000

 
Annual Incentive Plan – the Manufacturer will rebate the Company with respect to
the number of stents purchased per year. The rebate will be equal to the
difference between the price per stent correlated with the annual number of
stents purchased, as depicted in the following table, and the actual payments to
the Manufacturer. For the purpose of calculation of the rebate, a “year” shall
start on October 1st and end on September 30th. Rebates shall be calculated 30
days following the yearend.
 
 
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Stents Purchased per Year
Stent*
Add –ons**
System  
Year
       
Euro
Euro
Euro  
stents
Euro
From
-
Up to
6,000
40.0
109.5
149.5
X
6,000
897,700
                   
From
6,001
Up to
12,000
40.0
99.0
139.0
X
12,000
1,668,000
                   
From
12,001
Up to
24,000
40.0
88.5
128.5
X
24,000
3,084,000
                   
From
24,001
Up to
48,000
40.0
82.5
122.5
X
48,000
5,880,,000

 
*The transfer price of the bare metal stent (BMS, electropolished, cleaned and
quality controlled) which will be delivered to Inspire by QualiMed is € 40 / per
stent, not depending on the quantity ordered.
 
**The add-ons include the catheter, crimpimg, sterilization, packaging and
labeling of the MGuard Stent Implantation System.
 
The products will be delivered 30 days after written purchase order, according
to section 2.-4. of the Manufacturing Agreement.
 
 
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Date:__.__.____ 
 
 
 
 
Date:__.__.____
 
QualiMed Innovative 
 
Medizinprodukte GmbH
 
 
 
Represent by
 
Name: _________________________
 
Title:   _________________________
 
 
Inspire MD Ltd.
 
 
 
 
Represent by
 
Name: _________________________
 
Title:   _________________________