**EXHIBIT10.1**

 

THIS VERSION HAS BEEN MODIFIED TO OMIT CERTAINCONFIDENTIAL INFORMATIONOF VISION-SCIENCES, INC., WHICH HAS BEEN FILED SEPARATELY WITH THESECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 UNDER THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE PLACES IN THE DOCUMENTWHERE INFORMATION HAS BEEN OMITTED ARE MARKED WITH [*].

 

EXCLUSIVE DISTRIBUTION AGREEMENT

 

This ExclusiveDistribution Agreement (the “Agreement”) is made as of this 6th day of August,2003 by and between Vision-Sciences, Inc., a Delaware corporation with aprincipal office located at 9 Strathmore Road, Natick, Massachusetts 01760(“Company”), and Medtronic Xomed, Inc., a Delaware corporation with a principaloffice located at 6743 Southpoint Drive North, Jacksonville, Florida 32216(“MDTX”).

 

WHEREAS, Companyis engaged in developing, manufacturing and marketing medical devices for usein otorhinolaryngology and related applications; and

 

WHEREAS, Companywishes to appoint MDTX, and MDTX wishes to accept its appointment as, theexclusive distributor of the Products (as defined below) in the Field (asdefined below), all in accordance with the terms and conditions of thisAgreement.

 

NOW, THEREFORE, inconsideration of the mutual covenants and agreements hereinafter set forth, andfor other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, the parties agree as follows:

 

1.                                       DEFINITIONS

 

1.1                                 “Affiliate”means, in respect of any specified Person, any other Person which, but only forso long as such other Person, directly or indirectly, controls, is controlledby, or is under common control with, such specified Person.  The term “control” means the possession,directly or indirectly, of the power to direct or cause the direction of themanagement or policies of a Person, through the ownership of voting securitiesor other equity interests, and the terms “controlled” and “common control”shall have correlative meanings.

 

1.2                                 “EffectiveDate” means the date that is six (6) weeks after the date hereof.

 

1.3                                 “Field”means the field of otorhinolaryngology, as defined by the American Academy ofOtorhinolaryngology and head and neck surgery as and to the extent it ispracticed by licensed otorhinolaryngologists. By way of example, trans-nasal esophageal applications practiced bygastroenterologists are outside the Field.

 

1.4                                 “IntellectualProperty” means all rights to patents, software, copyrights, trademarks, tradesecrets,

 

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know-how,concepts, designs, techniques, formulae, inventions, trade names, labels, tradedress, literature, programs, advertising material or other documents, materialsor information.

 

1.5                                 “Person”means any natural person or any corporation, partnership, limited liabilitycompany, business association, joint venture or other entity.

 

1.6                                 “Products”means the product or product groups listed on Annex A attached to and made apart of this Agreement, improvements and replacements for those products, andsuch other product or product groups as shall be added to Annex A pursuant toSection 2.4, provided that Products shall only include products that aredirected to applications within the Field and that are labeled and intended foruse within the Field.

 

1.7                                 “Territory”means the United States of America and Canada.

 

2.                                       APPOINTMENTOF DISTRIBUTOR; PRODUCTS

 

2.1                                 Companyhereby grants MDTX the exclusive right, effective as of the Effective Date, todistribute, sell, advertise, promote and market the Products solely tocustomers practicing within the Field and for use within the Field and solelyto persons and entities that are within the Territory and for use within theTerritory.  MDTX hereby accepts suchappointment.  From the date hereof untilthe Effective Date, the Company shall wind up its sales and marketing activitieswithin the Territory and the Field consistent with the terms of this Agreement.

 

2.2                                 (a)                                  Exceptas otherwise permitted under this Agreement and unless and until this Agreementshall have been terminated in the manner provided herein, the Company agrees notto, after the Effective Date (i) distribute, market or sell to any Person otherthan MDTX, (ii) authorize any other Person other than MDTX to distribute,market or sell the Products or (iii) enter into any agreement or arrangementfor the private labeling of any of the Products or any product that isidentical or substantially similar in form or function to any of the Products,in each case of clauses (i) through (iii) above within the Territory and foruse or sale within the Territory and for applications within the Field.  The Company reserves the right to promotethe technology underlying Products, the use and application of Products and theCompany’s role in developing and manufacturing Products, both within andoutside the Territory and Field.  It isagreed that the Company shall coordinate with MDTX in advance of any promotionor other publicity of the Products within the Territory and for use orapplication within the Field.

 

(b)                                 Withoutprejudice to any other remedy of the Company hereunder, upon the failure ofMDTX to perform its obligations under Section 3.1 below with respect toany Product, which failure is not cured within thirty (30) days of noticethereof to MDTX by the Company, the Company shall not be restricted fromdistributing, marketing or selling, or authorizing any Person other than MDTXto distribute, market or sell such Products within the Territory and for use orsale within the Territory and for applications within the Field.

 

2.3                                 MDTXshall have the right to perform its obligations and exercise its rights underthis Agreement through one or more of its Affiliates, and to appoint agents(including Affiliates of MDTX)

 

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to market and sell the Products solely to customers practicing withinthe Field and for use with the Field and solely to persons and entities thatare within the Territory and for use within the Territory.  MDTX shall have the right to appointsubdistributors to perform MDTX’s obligations hereunder in such local marketswhere MDTX does not currently maintain a direct sales force.  All such agents and subdistributors shall beparty to agreements with MDTX containing terms and conditions that areconsistent with the terms of this Agreement, including, without limitation,those provisions relating to the marketing and sale of Products, the protectionof the Company’s confidential information, trademarks and intellectual propertyrights and the termination of this Agreement.

 

2.4                                 (a)  Ifthe Company develops new products for use and application within the Field andwithin the Territory (“New Products”) then the Company and MDTX shall, for aperiod of 90 days prior to any commercial launch of such New Product within theField and within the Territory, negotiate exclusively and in good faith thereasonable terms and conditions for adding such New Products to Annex A.  If the parties are unable to agree on theterms and conditions of sale of such New Products, including a minimum purchasecommitment therefor during the first twelve-month period following suchcommercial launch (the “Initial New Product Quota”), then the Company shall befree to market, distribute and sell such New Products either alone or throughone or more distributors.  If the NewProduct is of a substitute nature with respect to an existing Product andotherwise directly competes in the market with any of the Products (a“Substitute Product”), any minimum purchase commitment agreed to with respectto such Product shall automatically be reduced, on a dollar-for-dollar basis,by the sales of such Substitute Product by the Company (or persons appointed bythe Company other than MDTX) over the same period.  The Company shall report such sales of Substitute Products toMDTX for purposes of the adjustment to the minimum purchase commitments ofMDTX.

 

(b)  IfMDTX wishes for Company to develop and manufacture a New Product outside ofCompany’s planned product-development process, Company will, upon MDTX’srequest and within a reasonable timeframe, provide to MDTX a quote for theCompany’s development and manufacturing of such New Product.  MDTX shall promptly notify the Company ofits decision whether to request that the Company develop such New Product andthe parties shall negotiate in good faith the terms and conditions for addingthe New Product to this Agreement, including the terms for the payment of thequoted costs for such development and manufacturing.  Nothing in this Agreement shall be deemed to require the Companyto undertake any particular product development project and the Company shallhave no liability for any failure to develop New Products either on its owninitiative or pursuant to any request of MDTX, except for such liabilities andobligations set forth in any definitive agreement or amendment to thisAgreement setting forth the terms and conditions for the development, marketingand sale of such New Products.

 

3.                                       MDTX’SDUTIES

 

3.1                                 MDTX agrees to:

 

(a)          Use its commercially reasonable best effortsto market, promote, distribute, sell and support the Products on a continuingbasis throughout the term of this Agreement and throughout the entireTerritory.  MDTX’s obligation to marketthe Products under this Agreement shall require MDTX, among other things, to:(i) conduct periodic promotions and obtain usual

 

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and customary market feedback (but without the requirement of MDTX toundertake or requisition any formal studies from third parties) with respect tothe Products, (ii) maintain a well-staffed and appropriately supervised salesforce, (iii) utilize its existing training facilities and programs to presentlive-demonstration courses relating to the Products, (iv) maintain adequatelevels of Product inventory, and (v) feature the Products in its catalogs andother promotional materials and on each of its appropriate websites, at tradeshows, congresses and similar conferences, and at sales and training coursesand programs for MDTX sales and marketing personnel.

 

(b)         Carry out the marketing, promotion and sale ofthe Products in the Territory efficiently and in an orderly and regulatedmanner.

 

(c)          Refrain from selling or promoting in theTerritory products that are directly competitive with the Products, and frommarketing or promoting the Products in the Territory in a manner that isinferior to the manner in which MDTX markets and promotes any other of itsproducts, including without limitation its other otorhinolaryngologicalproducts that are distributed or sold by MDTX in the Territory.  By way of example, no products currentlymarketed and sold by MDTX in the Territory and within the Field as of the dateof this Agreement and featured in MDTX’s most recent product catalogue, a copyof which has been provided to the Company for the purposes hereof, are directlycompetitive with the Products within the meaning of this Section 3.1(c).

 

(d)         Refrain from making any oral or writtenstatements or representations that vary from the specifications, instructions,warranties or representations given or made in this Agreement by Company toMDTX with respect to Products.

 

(e)          Not modify, adulterate, misbrand, alter orremove labels from Products.

 

(f)            Refer to the Company within five (5)working days any inquiry (other than a purchase order or potential purchaseorder originating within the Territory) from the public, any governmentalauthority, any trade association or any news media, publication or reporterconcerning the Products or the Company.

 

(g)         Not take any action detrimental to thereputation or goodwill of the Products and/or the Company.

 

(h)         Promptly notify the Company in writing of anyand all modifications, design changes or improvements to the Products(collectively, “Ideas”) suggested by any customer, employee, subdistributor oragent of MDTX for any purpose, except those that, in the reasonable opinion ofMDTX, are of no commercial value to either party.  In the event that the Company agrees to incorporate any such Ideainto a Product or New Product, then to the extent that MDTX has, obtains or derivesany rights or benefit in or to any such Idea by MDTX, its employees, agents,customers or other persons, MDTX hereby grants to the Company a perpetual,irrevocable, royalty-free, transferable and nonexclusive license to use for anypurpose such Idea, without the payment of any additional consideration thereof

 

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either to MDTX or to any such persons, except to the extent, and thenonly to the extent, required by applicable law or as set forth below.  MDTX shall cause each of its employees,agents and subdistributors to execute invention assignment agreements withrespect to any Ideas.  To the extentthat the Company agrees to incorporate an Idea developed by MDTX and based onvalid claims in patents or patent applications filed by or on behalf of MDTX orits Affiliates (each such Idea, an “Invention”) into a Product or New Productwhich MDTX does not have the right to distribute or sell hereunder, or fromsuch time as MDTX’s right to distribute and sell such Product or New Product isterminated or otherwise lapses, the Company shall license the use andapplication of such Invention for any purpose, on a non-exclusive, perpetual,irrevocable and transferable basis, in exchange for a royalty based on a percentageof the annual net sales of such Products or New Products incorporating suchvalid claims in patents or patent applications, ranging from 2% to 4%, asdetermined by an independent arbitrator mutually selected by the parties, whoshall base his or her decision on factors typically taken into account indetermining reasonable royalties.  Tothe extent that MDTX develops any Invention which the Company has not agreed toincorporate into a Product, the Company shall have the option to license theuse and application of such Invention for any purpose, on a non-exclusive,perpetual, irrevocable and transferable basis, in exchange for a royalty basedon a percentage of the annual net sales of products incorporating valid claimsin patents or patent applications granted or filed, as the case may be, withrespect to such Invention, ranging from 2% to 4%, as determined by anindependent arbitrator mutually selected by the parties, who shall base his orher decision on factors typically taken into account in determining reasonableroyalties.  The Company’s obligation topay royalties hereunder with respect to a product incorporating an Inventionshall continue until the expiration of the patent applicable to such Invention.  In no event shall royalties be payable hereunderwith respect to Ideas that are not Inventions (i.e., based on valid claims inunexpired patents or patent applications filed by or on behalf of MDTX or itsAffiliates).

 

(i)             Not commence or initiate, or cause to becommenced or initiated, any engineering, research, development or othertechnical activities on any of the Products or otherwise utilizing theCompany’s intellectual property without the prior written consent of theCompany.

 

(j)             Consistent with established industrystandards and applicable laws, not pay or make gift of value, directly orindirectly, to any officer, employee or agent of a political party, governmentor administrative or governmental agency or to any candidate for public office,for the purpose of obtaining or retaining business related to the Products.

 

3.2                                 MDTX will comply, and will cause each agentappointed by it to comply, in all material respects with all applicablefederal, state and local laws, rules, regulations and orders of allgovernmental authorities affecting the sale and distribution of the Products,as they are presently in effect and as they may be revised or supplemented fromtime to time.

 

3.3                                 MDTX will, and will cause each agent appointed byit to, adhere to good and sound business practices and carry out its dutiesunder this Agreement according to the highest standards of professionalbusiness conduct.

 

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3.4           Anyand all marketing, promotional, sales and administrative costs, including anycosts associated with attendance at or participation in trade shows, congressesor similar conferences, shall be borne by MDTX at its own expense.

 

4.                                       COMPANY’SCOVENANTS AND DUTIES

 

4.1                                 Companyagrees to:

 

(a)          Inventory and ship Products upon order andrequest of MDTX and in accordancewith MDTX’s instructions.

 

(b)         Regularly inform MDTX about availabledisplays, literature and other promotional and advertising material, as theCompany deems suitable for MDTX in marketing Products for use in theField.  The Company shall, upon MDTX’sreasonable request, deliver such available artwork, pictures, graphic designfiles and other promotional and advertising materials.  Such deliveries will be free of charge,except for freight and insurance.  MDTXis encouraged and allowed to issue, at its own expense, any materials relatedto the Products, provided that MDTX shall obtain written approval from theCompany for each such item prior to issuance, which approval from the Companyshall not be unreasonably withheld or delayed.

 

(c)          Label Products in accordance with thisAgreement.

 

(d)         Comply in all material respects with allapplicable federal, state and local laws, rules, regulations and orders of allgovernmental authorities affecting the manufacture, labeling, inspection andsale of the Products, as they are presently in effect and as they may berevised and/or supplemented from time to time.

 

(e)          Staff and maintain a service and repairfacility for the purpose of repairing and/or replacing Products that are withinor outside of their warranty period.  MDTX shall advise Company of Productsrequiring repair or replacement and shall forward such Products to Company’sdesignated facility, but only after obtaining from the Company a returnauthorization approval pursuant to customary return procedures established fromtime to time by the Company.  Companyshall inspect the Products and make necessary repairs or replacement, asappropriate, at its facilities and return the repaired or replacement Productto MDTX within thirty (30) business days ofreceipt of repair authorization from MDTX.  For Products repaired and/or replaced that are within theirwarranty scope and period, Company shall bear all costs and expenses relatingto servicing such Products (including, without limitation, shipping andhandling costs from MDTX to Companyand back to MDTX).  For Products repaired that are outside theirwarranty scope or period, Company shall charge MDTX its standard time and materials rate, plus shipping andhandling.

 

(f)            Subject to clause (d) of this Section,incorporate any modifications and improvements that Company makes to any of itsproducts into the Products if so desired byMDTX and make

 

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the changed Products immediately available toMDTX.  If MDTX requeststhat Company make modifications or improvements to the Products, such changesshall be made only if mutually agreed to by Company and MDTX (including,without limitation, concerning price).

 

(g)         Provide training to MDTX’s product managersand sales representatives on an as-needed and reasonable basis to enable MDTXto promote the sale of the Product. Such training will be conducted at MDTX’s facilities, and will beprovided without charge to MDTX, except for the reimbursement of reasonableout-of-pocket expenses of the Company. In addition, Company will provide to MDTX Product updates and servicebulletins as they become available.

 

(h)         Provide MDTXProducts for use as demonstration equipment and for training purposes (x) atthe transfer prices specified on Annex A hereto less ***(i) [*]*****(y**)*[*].***  Purchases of demonstration equipment at unit levels above theamounts specified above shall be at the transfer prices set forth on Annex Ahereto.  Except as specifically setforth in Section 5.1(a), sales of demonstration equipment shall not counttoward any minimum purchase obligations under Section 5.1.

 

(i)             Consistent with established industrystandards and applicable laws, not pay or make gift of value, directly orindirectly, to any officer, employee or agent of a political party, governmentor administrative or governmental agency or to any candidate for public office,for the purpose of obtaining or retaining business related to the Products.

 

4.2                                 TheCompany shall provide MDTX with all technical and clinical information relatedto and necessary for the sale of the Products that the Company has in itspossession without any requirement of the Company to produce or requisition anyformal studies, data or information. The Company shall be entitled to withhold any information that theCompany determines, in its sole discretion, constitutes trade secrets of theCompany.

 

4.3                                 TheCompany reserves the right to change a Product or its specifications withoutpayment of compensation to MDTX, so long as such changes do not affect theefficacy, safety, form, fit or function of the Product or require regulatoryapproval or amendment.  If such changesdo affect the efficacy, safety, form, fit or function of a particular Product,or require regulatory approval or amendment, the Company shall not be entitledto make such change without the prior written consent of MDTX, which consentshall not be unreasonably withheld.  TheCompany shall provide MDTX with ninety (90) days’ advance notice of any changesof Products to the extent possible.

 

4.4                                 TheCompany will adhere to good and sound business practices and will carry out itsduties under this Agreement according to the highest standards of professionalbusiness conduct.

 

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5.                                       ORDERING,SUPPLY, PRICE AND PAYMENT

 

5.1                                 MinimumPurchase Commitments.

 

(a)                                  Withinthirty (30) days following the Effective Date, MDTX shall issue to the Companya purchase order for the first twelve months following the Effective Date (the“Initial Period”), providing for MDTX to purchase pursuant to such purchaseorder during the Initial Period no fewer than ***[*]***of the Company’s Slide-On Sheath with theCompany’s catalog number 22-xxxx (hereinafter, the “Basic ENT Sheath”) at aprice of ***[*]*** perindividual unit, and no fewer than ***[*]*** of the Company’s ENT—2000 Nasopharyngo-Laryngoscope(catalog no. 02-2302) at a price of ***[*]*** per unit, of which ***[*]*** of such flexible scopes shall bepurchased by MDTX pursuant to Section 4.1(h)(ii) at a ***[*]*** (the “Initial Quota”).  References in this Section 5.1 to“individual units” of a Product refer to a single unit of such Product and donot refer to a single package that may contain one or more single units thatare packaged and sold together under one catalog number.  MDTX shall be obligated to purchase theProducts during the Initial Period according to the delivery schedule setforth on Annex C.  The minimum purchaserequirements of this Section 5.1 shall only apply to and be satisfied bysales of Products for use and sale within the United States, and shall notapply to or be satisfied by sales of Products for use and sales in Canada.

 

(b)                                 IfMDTX fails to purchase, during each successive 12-month period following theInitial Period (each such period, a “Quota Period”), the minimum dollar amountsof Products (the “Quota”), at a reduced transfer price for the Basic ENTsheaths of the greater of (i) ***[*]*** (as set forth on Annex A) or (ii) ***[*]*** of the averageselling price of the sheaths by MDTX during the immediately preceding QuotaPeriod, which minimum dollar amounts shall be negotiated in good faith betweenthe parties hereto ninety (90) days prior to the expiration of the InitialPeriod or any successive Quota Period, as applicable, then the Company shallhave the right and option, in its sole discretion, to (x) terminate theexclusivity of this Agreement upon written notice to MDTX or (y) terminate thisAgreement upon written notice to MDTX, provided that if this Agreement is soterminated, MDTX shall be allowed to continue sales of Products hereunder on anonexclusive basis for a period of six (6) months following the date of suchtermination, solely for the purpose of reducing its existing Product inventory(but the Company shall not be obligated to ship any Products to MDTX after thedate of such termination, regardless of the date of the purchase ordertherefor).  If the parties are unable toagree on the Quota for any Quota Period at least forty five (45) days prior tothe scheduled start of such Quota Period, then the Quota for such Quota Periodshall be ***[*]*** ofthe greater of the Quota for or MDTX’s Product sales during the immediatelyprevious Quota Period (or during the Initial Period, for the first Quota Periodfollowing the Initial Period).

 

(c)                                  Priorto the introduction of any New Product to the market, the Company and MDTXshall jointly conduct, or cause to be conducted, a market study to determinethe pricing and the Initial New Product Quota for such New Product, which studywill be funded by MDTX.  Based on theresult of such market study, and on the Company’s current and reasonableexpectations regarding the Company’s productions costs for the New Product, theCompany and MDTX shall agree on the Initial New Product Quota and on transferpricing to MDTX that is expected to give MDTX a gross margin on sales of theNew Product to end users of at least ***[*]***.  If MDTXfails to purchase (i) during the first 12-month period following firstcommercial launch of any New Product (the “Initial New Product Period”), noless, in terms

 

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of dollars, of such NewProduct than set forth in the Initial New Product Quota, and (ii) during each12-month period following the Initial New Product Period (each such period, a“New Product Quota Period”), such dollar amounts of the New Product as shall benegotiated in good faith between the parties hereto (the “New Product Quota”)ninety (90) days prior to the expiration of the Initial New Product Period orsuccessive New Product Quota Period, as applicable, then the Company shall havethe right and option, in its sole discretion, to (x) terminate the exclusivityof this Agreement upon written notice to MDTX or (y) terminate this Agreementupon written notice to MDTX, provided that if this Agreement is so terminated,MDTX shall be allowed to continue sales of Products hereunder on a nonexclusivebasis for a period of six (6) months following the date of such termination,solely for the purpose of reducing its existing Product inventory (but theCompany shall not be obligated to ship any Products to MDTX after the date ofsuch termination, regardless of the date of the purchase order therefor).  If the parties are unable to agree on theNew Product Quota for any New Product Quota Period at least forty five (45)days prior to the scheduled start of such New Product Quota Period, then theNew Product Quota for such new Product Quota Period shall be ***[*]*** of the greater ofthe New Product Quota for or MDTX’s New Product sales during the immediatelyprevious New Product Quota Period (or during the Initial New Product Period,for the first New Product Quota Period following the Initial New ProductPeriod).

 

5.2                                 MDTXshall provide to Company, on a quarterly basis, a rolling twelve-month forecastof Products it expects to purchase. MDTX shall also provide to Company, on a bi-annual basis, a blanketpurchase order setting forth MDTX’s expected purchase volume, in U.S. Dollars,for the subsequent six-month period based on the forecasted Product mix.  Together with the blanket purchase order,MDTX shall provide to Company a Min-Max Spreadsheet substantially in the formattached to this Agreement as Annex B (the “Min-Max”).  For each Product item, the Min-Max will showa range of inventory levels (i.e., minimum-maximum) of finished goods thatCompany shall maintain in stock at its facility for immediate shipment to MDTX;the Min-Max will also show a target stocking level that MDTX will retain ininventory at its Jacksonville, Florida facility and at its Mississauga, Ontariofacility.  MDTX will deliver to Company,on a bi-weekly basis, a completed Min-Max indicating the type and quantity ofProducts needed for shipment by Company to MDTX, and Company shall ship Productto MDTX within five (5) business days from receipt of the applicableMin-Max.  The Company shall at all timesmaintain inventory levels reasonably adequate to meet its obligations underSection 4.1(a) and the requirements of the Min-Max.  MDTX’s minimum purchase commitmentshereunder shall be tolled for any period during which the Company is unable toship Products in accordance with its obligations under Section 4.1(a)(including in connection with the initial order placed by MDTX in accordancewith Section 5.1(a) above) and any Quota Period (or Initial Period, asapplicable) in respect of which such minimum purchase commitments shall applyshall be extended by the amount of time during which the minimum purchaseperiods have been so tolled.

 

5.3                                 Uponshipment, Company shall promptly invoice MDTXin U.S. Dollars.  Payment for Products shall be in U.S. Dollars and is duenet thirty (30) days from shipment of the Product by the Company; provided that MDTX shall be entitled to a ***[*]*** on any amountspaid and received by the Company within ***[*]***.  Latepayments will be assigned a monthly service fee equal to ***[*]*** of the amount due.  Persistent failure to pay invoices when dueshall constitute a material breach of this Agreement.

 

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MDTX shall pay all invoices in full according to the stated terms.  Company will issue credits for any rejectedProduct pursuant to Section 5.7 below that MDTX may use to reduce paymentof future invoices.

 

5.4                                 Pricesfor the Products ordered by MDTXfrom Company shall be as set forth in Annex A to this Agreement.

 

5.5                                 Allprices and charges for Products are FOB designated Company facility.  Title to Products delivered hereunder andall risks of loss or damage thereto shall pass to MDTX upon shipment from Company’s facility.

 

5.6                                 Companyshall package Products in accordance with good commercial practices andmutually agreed specifications, and in a manner sufficient to withstand therigors of transportation.

 

5.7                                 MDTX shall have the right, within fifteen(15) days from receipt, to reject any Product that does not meet Company’spublished specifications or any applicable laws or regulations or that isotherwise defective.  Any such rejectionshall be accomplished by a notice from MDTXidentifying and specifying, in reasonable detail, the Product rejected and thereasons for rejection.  Any Productrejected by MDTX shall be madeavailable, on reasonable notice and during normal business hours, forinspection by Company or its representatives in a manner consistent with theCompany’s return authorization procedures established from time to time and aspreviously communicated to MDTX. Company will replace any rightfully rejected Product free of charge andwill indemnify MDTX for reasonableout-of-pocket expenses (including freight and customs clearance, if any)incurred by MDTX in connection with(a) shipment of replacement Product to the same location and (b) shipment ofthe nonconforming Product back to Company (if so requested by Company and thenpursuant to the Company’s return authorization approval procedures).  In the event of a rejection of defectiveProduct, Company shall ship replacement Product within seven (7) days of itsreceipt of the rejected Product from MDTX,or such longer period of time as may be reasonable under the circumstances.

 

6.                                       WARRANTIES;INDEMNITY

 

6.1                                 Companyhereby represents and warrants to, and covenants with, MDTX as follows:

 

(a)                                  Ownership.  Company is the sole and rightful owner ofall right, title and interest in and to the Products or otherwise has theunrestricted right to grant to MDTX the rights granted in this Agreementwithout violating any rights of any third party.  There are no actual or threatened claims against any of theProducts and no demands of any person or entity pertaining to any of theProducts.  No proceedings have beenthreatened, instituted or are pending that challenge the rights of Company inthe Products.  Company has not beencharged with infringement or violation of any Intellectual Property right ofany person or entity, and, to the Company’s knowledge, is not infringing anyIntellectual Property right of any person or entity in connection with themanufacture, use, sale or other disposition of any of the Products.

 

(b)                                 ProductWarranty.  The Products have beenand shall be designed, manufactured, labeled, packaged and sold to MDTX inaccordance with the Company’s quality system, all applicable laws andregulations of the United States and Canada, all applicable ISO-9001, EN-46001and ISO 13485

 

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certification or successorrequirements, and all other applicable manufacturing requirements.  Company further represents and warrants toMDTX that Company’s manufacturing and quality system is in compliance with theQuality System Regulations promulgated by the U.S. Food and Drug Administration(or any successor requirements) and has been certified to be in compliance withthe standards set forth in ISO-9001 and EN-46001, as the same may be amended orsuperceded by ISO 13485.  Once per yearduring the Initial Term (as hereafter defined) of this Agreement or any renewalthereof, the Company shall provide MDTX’s regulatory personnel reasonableaccess to the facilities and records of the Company for the purpose ofconfirming the Company’s and the Products’ compliance with all applicable lawsand regulations.  The Products shall,for a period of time (as specified by Company for its products in its relevantpublished specifications) from date of sale by MDTX (or its subdistributor oragent) to the customer, be free from defects in material and workmanship andremain in good working order, and function properly and in conformity with theterms of this Agreement and with published specifications and documentation.  Company shall inform MDTX in writing of thewarranty periods applicable to all of its products.  Company shall, at the request of MDTX, its customer or end-user,promptly repair or replace at its sole cost and expense any Product found to bedefective (in accordance with the above) within the applicable warrantyperiod.  MDTX may pass such Companywarranty to its customers and to end-users.

 

(c)                                  Disclaimer.  THE COMPANY MAKES NO REPRESENTATION ORWARRANTY WITH REGARD TO ANY PRODUCT OR OTHER ITEM FURNISHED UNDER THISAGREEMENT EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT.  EXCEPT AS EXPRESSLY PROVIDED IN THISAGREEMENT, THE COMPANY DISCLAIMS AND MDTX WAIVES AND RELEASES ALL RIGHTS ANDREMEDIES OF MDTX AND ALL WARRANTIES AND OBLIGATIONS OF THE COMPANY, EXPRESS ORIMPLIED, ARISING BY LAW OR OTHERWISE, WITH RESPECT TO ANY PRODUCTS OR OTHERITEMS DELIVERED BY OR ON BEHALF OF THE COMPANY PURSUANT TO THIS AGREEMENT,INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY ORFITNESS FOR A PARTICULAR PURPOSE, IMPLIED WARRANTY ARISING FROM COURSE OFPERFORMANCE, COURSE OR DEALING OR USAGE OF TRADE, AND ANY IMPLIED WARRANTY OFNONINFRINGEMENT.

 

(d)                                 NoRoyalties.  No royalties or otheramounts will be payable by MDTX to others as a result of this Agreement or anyof the transactions contemplated hereby.

 

6.2                                 InfringementIndemnity.  Company, at its ownexpense, shall defend, indemnify and hold harmless MDTX, its subsidiaries,affiliates or permitted assignees, and their respective directors, officers,employees, agents, permitted subcontractors, representatives, successors andpermitted assigns, and defend any action brought against same with respect toany claim, demand, cause of action, debt or liability, including attorneys’fees, based upon a claim that any Product infringes or violates anyIntellectual Property right of any third party (an “Infringement Claim”).  MDTX may, at its own expense, assist in suchdefense if it so chooses, provided that, as long as Company can demonstrate sufficientfinancial resources, Company shall control such defense and all negotiationsrelative to the settlement of any such claim. MDTX shall promptly provide Company with written notice of any claimwhich MDTX believes falls within the scope of this Section 6.2.  In the event that the Product, or anyportion thereof, is held to infringe and its use is enjoined, Company shallhave the obligation to, at its option and expense,

 

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(i) modify the infringing Product without impairing in any material respectthe functionality or performance, so that it is non-infringing, (ii) procurefor MDTX the right to continue to distribute, sell, advertise, promote, marketand otherwise commercialize the infringing Product, or (iii) replace saidProduct with equally suitable, non-infringing product.  If none of the foregoing alternatives areavailable to Company, the Company shall repurchase from MDTX at the pricecharged to MDTX by the Company, all Products that are in good and saleablecondition and are in unopened, undamaged, sterile packages.  Except as set forth above, the Company shallhave no further liability to MDTX with respect to any Infringement Claim.

 

7.                                       RELATIONSHIP

 

The relationship between Company and MDTX is that of independentcontractors.  Nothing contained in thisAgreement shall be construed to imply a joint venture, partnership, orprincipal-agent relationship between the parties; and neither party by virtueof this Agreement shall have any right, power or authority, express or implied,to act on behalf of or enter into any undertaking binding the other party, andCompany and MDTX shall each refrain from making any representations to thecontrary.  Except as otherwise set forthherein, all costs of each party’s operations, including but not limited tosalaries, wages, taxes (corporate, service, employment, franchise, etc.) andemployee benefits of each party and its employees shall be paid solely by suchparty, and the other party hereto shall have no liability or responsibilitytherefor.

 

8.                                       TERMAND RENEWAL

 

Subject to earlier termination as provided in Section 9 of thisAgreement, the term of this Agreement shall commence on the date hereof andcontinue in full force and effect until the third (3rd) anniversary of theEffective Date (the “Initial Term”). Thereafter, this Agreement will automatically be renewed for successiveone (1) year periods unless either party notifies the other party in writing atleast ninety (90) days prior to the end of the Initial Term or any renewalthereof that it does not wish to extend this Agreement.  The Initial Term and any renewal thereof, ifany, are collectively referred to as the “Term.”

 

9.                                       TERMINATION

 

9.1                                 Eachparty shall have the right to terminate this Agreement if the other party is inmaterial breach of any term or condition herein.  A party that materially breaches this Agreement shall be givenwritten notice of such breach by the other party and shall have the opportunityto take remedial action within a period of sixty (60) days or other longer perioddefined in such notice.  If thebreaching party fails to remedy the breach within such sixty (60) day or otherlonger defined period, the other party shall have the right to immediatelyterminate this Agreement.

 

9.2                                 Ifeither party becomes insolvent or files, or has filed against it, any petitionunder any bankruptcy or insolvency law or similar law which is not dismissed orstayed within sixty (60) days, is adjudged bankrupt or insolvent or the like,makes or attempts to make an assignment for the benefit of creditors or thelike, or a trustee in bankruptcy or a receiver is appointed for either party,the other party shall have the right to immediately terminate this Agreement.

 

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9.3                                 Anyexpiration or termination of this Agreement shall not alter the rights, dutiesand obligations of the parties for any purchase orders placed by MDTX, oramounts due, prior to the date of such expiration or termination, nor shall itaffect the rights of end-users of the Products.

 

9.4                                 Upontermination or expiration of this Agreement, MDTX shall have the right to sellits existing, saleable inventory of Products in the market, and MDTX shall beobligated to purchase from Company finished goods Products held in inventory byCompany up to the “maximum” quantity indicated in the most recent Min-Maxprovided by MDTX to Company.  MDTX shallretain the rights under this Agreement necessary for it to sell its remaininginventory of Products and Company shall provide the necessary materials andsupport to assist MDTX in doing so.

 

9.5                                 Ifany of the Products sold by MDTX is recalled from the market or withdrawn fromsale within the Territory for reasons of product safety or quality asdetermined by any applicable governmental authority or by mutual agreement ofthe parties, any minimum purchase commitment or Quota with respect to suchProduct shall be suspended until 90 days after the date on which the Producthas been re-introduced into the market.

 

10.                                 PRODUCTLABELING, REGISTRATION

 

10.1                           ProductLabeling.   All Products shall bemarketed and sold under MDTX’s name and logos, provided that all Products andProduct packaging shall also prominently and conspicuously bear the name of theCompany and the Company’s logo, and shall also contain such other designationsof the Company, including identification of the Company as the manufacturer ofthe Products, and the country of manufacture, where applicable, as may benecessary to comply with Title III of the Medical Device User Fee and ModernizationAct of 2002 (P.L.107-250).  MDTX shallsell the Products in the same condition as they are delivered to it and shallnot alter, deface, remove, cover up or mutilate in any manner whatsoever anytrademark, serial or model number, the words “patent pending” and/or “patent”and/or the patent number, copyright symbol and any other reference to theIntellectual Property rights of the Company which the Company may attach or fixto or make part of the Products.  Solong as the requirements of this Section 10.1 are otherwise complied with,and subject to MDTX’s obligations under Section 12.2 hereof, MDTX shall beentitled to affix to Products such additional labels as it shall deemreasonably necessary to identify MDTX as the distributor of the Products, provided,that, the Company shall have approved in writing in advance of suchlabeling, such approval not to be unreasonably withheld.

 

10.2                           ProductRegistration.  Company shall obtainand maintain all necessary registrations, licenses and permits for the Productswith health and other competent authorities that may from time to time berequired by law, regulation or otherwise throughout the countries and regionsof the Territory in which MDTX is promoting, advertising and selling theProduct within a six-month time period. Any such registrations, licenses or permits shall be in the name ofCompany unless prohibited by law, in which case they shall be held in trust byMDTX acting as in-country caretaker for Company, and shall be subject totransfer, cancellation, modification or supplement for Product changes atCompany’s direction.  The cost andexpense of obtaining such registration shall be the responsibility ofCompany.  Company shall provide, free ofcharge, such samples of Products, data and investigation reports and all

 

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other documentation as itpossesses to the extent that they are required by local law and will facilitateregistration throughout the Territory. Company shall also obtain the appropriate approval of all governmentalcontrol agencies as required throughout the Territory for any purchases andsales contemplated by this Agreement, and specifically Company shall obtain allnecessary approvals for the importing, storing and selling of Products subjectto sterile conditions.

 

11.                                 RECALLS;COMPLAINTS

 

11.1                           MDTXshall provide the Company, on a quarterly basis, a list of MDTX customers,including customer contact information and the lot numbers and models ofProducts purchased by such customers, for the purpose of being able to trackProducts in the event of a Product recall otherwise to ensure that the Companyis able to comply with any statutory or other obligation in respect of Productssold hereunder.  In the event of arecall, MDTX must provide the above-mentioned information within forty-eight(48) hours.  In this regard, MDTX agreesto advise the Company within forty-eight (48) hours of each complaint that MDTXmay receive or become aware of concerning the Products, including any complaintthat any of the Products may have been associated in any way with an injury ordeath to a user or patient or may have been associated with an incident thatcould likely cause serious health problems or death.  MDTX agrees to work with and cooperate with the Company toresolve complaints.  In the event of aProduct recall, Company shall promptly reimburse MDTX for all reasonable costsand expenses incurred by MDTX in connection with any such recall.  Each of the Company and MDTX shall notifythe other and the appropriate governmental agencies within the Territory of anyreportable product incident of which either the Company or MDTX becomes aware.

 

11.2                           MDTXshall handle all customers’ complaints with a view of securing and maintainingthe goodwill of the Company and of the Products, and shall record allcomplaints in detail and promptly submit the same to the Company for itsreview, as set forth above.  Companyshall be responsible for investigation of the reports and submission of U.S.Medical Device Reports (21 CFR Part 803), and/or other governmental agencyreports as required by applicable law or regulation within the Territory.

 

12.                                 INTELLECTUALPROPERTY

 

12.1                           Companyshall have and shall retain at all times all rights in and to its IntellectualProperty relating to the Products.

 

12.2                           Companyand MDTX acknowledge and agree that MDTX will market and sell the Productsunder the Company’s and MDTX’s trademarks, as mutually agreed by the parties; providedthat in connection with any promotional or other Product related materialsor events, MDTX shall use reasonable efforts to prominently depict or displaythe Company’s name, logo and Product related trademarks or service marks, andindicate that the Products have been manufactured by the Company using the Company’sproprietary technologies and all packaging and physical embodiments of theProduct shall display the Company’s mark. Any use of any trademarks or service marks that are owned by the Companyin any such promotional materials shall be accompanied by an appropriate legendindicating that such trademarks and service marks are the property of theCompany.

 

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13.                                 REPRESENTATIONS,WARRANTIES AND COVENANTS OF COMPANY

 

Company herebyrepresents, warrants and covenants to MDTX that:

 

13.1                           Companyand its employees have all necessary rights, authorizations or licenses toperform their obligations hereunder and to provide all related materials andservices required under this Agreement.

 

13.2                           EachProduct shall be manufactured and/or developed in a manner consistent with goodcommercial practice and regulations and guidelines of the U.S. Food and DrugAdministration for such medical devices, free from defects in material andworkmanship, and shall conform to all applicable laws and regulations relatingto medical devices and to the Product’s published specifications.

 

13.3                           Companydoes not have any obligations or liabilities that might reasonably be expectedto have a material adverse effect on its ability to perform its obligationshereunder.

 

13.4                           Thereare no actions, suits, or proceedings instituted or pending or, to the bestknowledge of Company’s management, threatened against Company that mightreasonably be expected to have a material adverse effect on the ability ofCompany to perform its obligations hereunder.

 

13.5                           Company is a corporation duly organized, validlyexisting and in good standing under the laws of the jurisdiction of itsincorporation, and is duly qualified to do business in all jurisdictions whereit does business, and has all requisite corporate power and authority toexecute, deliver and perform the terms of this Agreement.

 

13.6                           The execution, delivery and performance of theobligations of this Agreement have been validly authorized by all necessarycorporate action of the Company, and this Agreement represents the Company’svalid and legally binding obligation.

 

13.7         Theexecution, delivery and performance of the obligations of this Agreement by theCompany in accordance with the terms of this Agreement do not and will notconflict with or otherwise violate the terms of any other agreement to whichthe Company is a party.

 

14.                                 REPRESENTATIONS,WARRANTIES AND COVENANTS OF MDTX

 

MDTX hereby represents, warrants and covenants to Company that:

 

14.1                           MDTX and its employees have all necessary rights,authorizations or licenses to perform their obligations hereunder and toprovide all related materials and services required under this Agreement.

 

14.2                           MDTX does not have any obligations or liabilitiesthat might reasonably be expected to have a material adverse effect on itsability to perform its obligations hereunder.

 

14.3                           There are no actions, suits, or proceedingsinstituted or pending or, to the best knowledge of MDTX’s management,threatened against MDTX that might reasonably be expected to have a materialadverse effect on the ability of MDTX to perform its obligations hereunder.

 

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14.4                           MDTX is a corporation duly organized,validly existing and in good standing under the laws of the jurisdiction of itsincorporation, and in all jurisdictions where it does business, and has allrequisite corporate power and authority to execute, deliver and perform theterms of this Agreement.

 

14.5                           Theexecution, delivery and performance of the obligations of this Agreement havebeen validly authorized by all necessary corporate action on the part of MDTX,and this Agreement represents MDTX’s valid and legally binding obligation.

 

15.                                 LIMITATIONOF LIABILITY

 

IN NOEVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, INDIRECT,SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR FOR LOST PROFITS,SAVINGS, USE, OPPORTUNITY OR REVENUES OF ANY KIND, OR ANY OTHER COMMERCIALDAMAGE, WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCHDAMAGES OCCURRING, AND WHETHER SUCH DAMAGES ARISE FROM CONTRACT, NEGLIGENCE,TORT OR OTHERWISE.  TO THE EXTENT THAT APARTY HERETO IS HELD LIABLE TO ANY THIRD PARTY FOR ANY SUCH PUNITIVE ORCONSEQUENTIAL DAMAGES AS A RESULT OF ANY ACT OR OMISSION OF THE OTHER PARTYHERETO SUBJECT TO THE INDEMNIFICATION PROVISIONS OF SECTIONS 6.2 AND 16, SUCHDAMAGES SHALL NOT SOLELY BY VIRTUE OF THIS SECTION 15 BE EXCLUDED ORDISCLAIMED.

 

16.                                 INDEMNIFICATION

 

16.1                           MDTX shallindemnify and defend Company, its affiliates, and their respective directors,officers, representatives, employees, agents, subcontractors, successors andassigns, against and hold them harmless from any liability, damage, cost orexpense resulting from any claim made by any third party (including, withoutlimitation, any claim alleging personal injury or property damage) attributableto any breach of this Agreement by MDTX or to any intentional or negligent actor omission of MDTX, its employees, agents, or subcontractors in theperformance of this Agreement, except to the extent that a claim is caused bythe negligence or willful misconduct of Company, its employees, agents, orsubcontractors.

 

16.2                           Companyshall indemnify and defend MDTX, its affiliates, and their respectivedirectors, officers, employees, agents, subcontractors, successors and assigns,against and hold them harmless from any liability, damage, cost or expenseresulting from:

 

(a)          any claim made by any third party (includingany claim alleging personal injury or property damage) attributable to anybreach of this Agreement by Company or to any intentional or negligent act oromission of Company, its employees, agents, or subcontractors in theperformance of this Agreement, except to the extent that a claim is caused bythe negligence or willful misconduct of MDTX, its employees, agents, orsubcontractors;

 

(b)         any third party claim for bodily injury,including death, or property damage caused by defects in design or manufactureof the Products, except to the extent a claim is caused by

 

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the negligence or willful misconduct of MDTX in its sale, distributionor handling of the Products; and

 

(c)          anyProduct recalls or replacements by any competent government authority or otheragency deemed appropriate by mutual agreement of Company and MDTX, except tothe extent such recall or replacement is caused by the negligence or willfulmisconduct of MDTX in its sale, distribution or handling of the Products.

 

16.3                           In theevent of any claim subject to the indemnification provisions of thisSection 16, the party seeking indemnification shall promptly notify theother party in writing, and permit that party upon its request, to control thedefense and/or settlement of the relevant claim.  Each party shall make a reasonable effort to cooperate in suchsettlement and/or defense and neither party shall settle any claim for which itis obligated under this Section 16 without the prior written approval ofthe other party.

 

17.                                 CONFIDENTIALITYAND NON-DISCLOSURE

 

17.1                           Bothparties acknowledge and agree that this Agreement creates a privileged andconfidential relationship between MDTX and Company and that informationconcerning both parties’ business affairs, customers, vendors, finances,properties, methods of operations, computer programs and documentation,diagrams, verbal and written disclosures, drawings, samples, technicaldescriptions, specific configurations, dimensions, materials, concepts, developments,techniques, know-how, inventions, and other such materials and  information, whether written or oral, isconfidential in nature.  All suchinformation is hereinafter collectively referred to as “ConfidentialInformation.”  Neither party will use,directly or indirectly, for its own benefit or the benefit of others, bothduring the term of this Agreement and subsequent to its termination, anyConfidential Information of the other party which may be acquired or developedin connection with or as a result of the performance of this Agreement withoutthe prior written consent of the other party.

 

17.2                           Bothparties agree, except as directed by the other party or provided in thisSection 17.2, not to disclose any Confidential Information of the otherparty to any person whatsoever at any time during or after the term of thisAgreement.  Upon termination of thisAgreement and at a party’s written request, each party will turn over to theother party all documents, papers and other materials in its possession orcontrol (except for one copy that may be retained solely for archival purposes)that relate to the other party or the Intellectual Property of the otherparty.  Both parties further agree tobind its employees and subcontractors to the terms and conditions of thisAgreement.  Each party acknowledges thatdisclosure of any Confidential Information of the other party by it may giverise to irreparable injury to the other party, its subsidiaries and/oraffiliated companies or the owner of such information, inadequately compensablein damages.  Accordingly, the disclosingparty may seek and obtain injunctive relief against the breach or threatenedbreach of the foregoing undertakings, in addition to any other legal remediesthat may be available.  Each party acknowledgesand agrees that the covenants contained herein are necessary for the protectionof legitimate business interests of the other party, its subsidiaries and/oraffiliated companies and are reasonable in scope and content.

 

17.3                           Eachparty’s obligation of non-disclosure and non-use shall not apply to information(i) which at the time of its disclosure to the receiving party is available tothe public, (ii) which the receiving

 

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party can show was properly in its possession prior to disclosure,(iii) that is published or otherwise becomes available to the public through nofault of the receiving party, (iv) that the receiving party can show wasreceived by it from a third party without breach of a confidentialityobligation, (v) is independently developed by the receiving party without useof any Confidential Information of the other party, or (vi) is required to bedisclosed by any governmental agency, provided that the disclosing party shallgive the other party reasonable notice of such requirement and shall afford theother party the opportunity to prevent such disclosure.

 

 

18.                                 NOTICES

 

Anynotice or other communication required or permitted hereunder shall be inwriting and shall be delivered by (a) personal delivery, (b) expedited deliveryservice, (c) facsimile transmission or (d) certified or registered mail,postage prepaid, addressed as follows:

 
| If to MDTX:     |
|-----------------|
|            |   |
|            | Medtronic Xomed, Inc. |
|            | 6743 Southpoint Road North |
|            | Jacksonville, Florida 32216 |
|            | Attn:  Mark J. Fletcher, President ENT Division |
|            | Tel:  (904) 279-7511 |
|            | Fax:  (904) 281-2779 |
|            | and |
|            | Jaime A. Frias, Esq., Vice President, Senior Legal Counsel |
|            | Tel:  (904) 332-2451 |
|            | Fax:  (904) 332-8914 |
|            |   |
| If  to Company: |
|            |   |
|            | Vision-Sciences, Inc. |
|            | 9 Strathmore Road |
|            | Natick, Massachusetts 01760 |
|            | Attn:  Ron Hadani, President  & CEO |
|            | Tel:  (845) 365-0600 (ext.116) |
|            | Fax:  (845) 365-0620 |
|            |   |
|            | With a copy to (which shall not constitute notice): |
|            |   |
|            | Proskauer Rose LLP |
|            | 1585 Broadway |
|            | New York, NY 10036 |
|            | Attn:  Paul I. Rachlin, Esq. |
|            | Tel:  (212) 969-3640 |
|            | Fax  (212) 969-2900 |

 

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Any party may, by notice given in accordance with this Section 18to the other party, designate another address or person for receipt of notices.

 

19.                                 GENERALPROVISIONS

 

19.1                           ThisAgreement shall be governed in all respects by the laws of the State of NewYork, without regard to any rules of conflict and choice of laws that wouldrequire the application of laws of another jurisdiction.

 

19.2                           ThisAgreement shall be binding on the parties and their respective successors andassigns.  This Agreement constitutes theentire Agreement between the parties with respect to the subject matter hereofand supersedes all previous proposals, negotiations, representations orcommitments between the parties, both written and oral.  The terms of this Agreement shall prevail inthe event that there is a conflict or variance with the terms and conditions ofany purchase order form or other document submitted by MDTX or with any invoiceor other document submitted by Company.

 

19.3                           Allrights and remedies conferred under this Agreement or by any other instrumentor law shall be cumulative and may be exercised singularly or concurrently.

 

19.4                           Thefailure by either party to enforce any term or condition of this Agreement, thewritten waiver of any term or condition of this Agreement or the acceptance ofany payment shall not be a waiver of further enforcement of that or any otherterm or condition.

 

19.5                           Thecaptions used herein are for convenience only and shall not be considered inconstruing or interpreting the provisions hereof.

 

19.6                           If anyprovision of this Agreement shall be held to be invalid, illegal orunenforceable, the validity, legality and enforceability of the remainingprovisions shall in no way be affected or impaired thereby.

 

19.7                           Notwithstandingthe termination or expiration of this Agreement, it is acknowledged and agreedthat the following provisions shall survive any such termination in addition tosuch other provisions of this Agreement which by their terms are intended tosurvive the termination of this Agreement: Sections 6.2, 9.3, 9.4, 11.1, 11.2, 12.1, 12.2, 15, 16.1, 16.2, 16.3, 17.1,17.2, 17.3, 18 and 19.1.

 

19.8                           ThisAgreement may be executed in any number of counterparts, each of which shall bedeemed an original but all such counterparts together shall constitute but oneand the same instrument.

 

19.9                           ThisAgreement shall not be valid until signed and accepted by authorizedrepresentatives for each party, and no party shall be bound by any change,alteration, amendment modification, termination or attempted waiver of any ofthe provisions hereof unless in writing and signed by an authorized officer ofthe party against whom it is sought to be enforced.

 

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19.10                     Withoutderogating from anything contained in Section 2.3 hereof, neither thisAgreement nor any rights granted hereby may be assigned by either party withoutthe other party’s prior written consent, such consent not to be unreasonablywithheld.  Any attempted assignment inviolation of the proceeding sentence shall be null and void.  Notwithstanding the foregoing, consent shallnot be required for an assignment of this Agreement resulting from (i) amerger, reorganization, reincorporation or other acquisition of a party or (ii)the sale of all or substantially all of the ENT business of the Company.  This Agreement shall inure to the benefit ofand be binding upon the successors and permitted assigns of the partieshereto.  In the event that thisAgreement is assigned by the Company to a direct competitor of MDTX as a resultof the sale of all or substantially all of the Company’s otorhinolaryngologicalbusiness to such competitor of MDTX, MDTX shall have the right to terminatethis Agreement upon written notice to the Company.

 

19.11                     Neitherparty shall be liable for any delay or failure to perform in whole or in part,resulting from causes beyond such party’s reasonable control, including, butnot limited to, fires, war, terrorism, strikes, insurrections, riots,embargoes, delays in transportation, inability to obtain supplies of rawmaterials, or requirements or regulations of any governmental and/or semi-governmentalauthority.  If such delay or failureextends beyond thirty (30) days, the party not affected by the delay shall havethe right to terminate this Agreement upon written notice.

 

19.12                     Nothingin this Agreement, whether express or implied, is intended to confer any rightsor remedies under or by reason of this Agreement on any person other than theparties to this Agreement and their respective successors and permittedassigns.

 

19.13                     Uponexecution of this Agreement, MDTX and the Company shall issue a joint pressrelease substantially in the form of Annex D hereto (the “Release”).  The Company shall be entitled to file aredacted copy of this Agreement with the Securities and Exchange Commissionafter review thereof by MDTX, which review by MDTX shall be completed in atimely fashion.  Except to the extentrequired by applicable law, neither party shall make any public announcement orstatement regarding the relationship of the parties hereunder inconsistent withthe Release or any public filings of either party without the prior writtenconsent of the other party, which shall not be unreasonably withheld.

 

[END OF TEXT]

 

IN WITNESSWHEREOF the parties hereto have executed this Agreement as of the date abovewritten.

 

 
| MEDTRONIC XOMED, INC.   | VISION-SCIENCES, INC.                       |
|-------------------------|---------------------------------------------|
|                    |                                        |
| By: /s/ Mark Fletcher   |                                        |   | By: | /s/ Ron Hadani |   |
| Name:                   |                                        |   | Name: Ron Hadani |
| Title: Pres US ENT      | Title:   President & CEO |
| Date:  8/6/03 | Date:                                       |   |   |
|                         |                                             |  |  |  |  |  |  |  |

 

 

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## ***C.****            ANNEX A*

 

### *PRODUCTSAND PRICING*

 

 

***[*]***

 

 

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***ANNEX B***

 

 

***[*]***

 

 

 

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***ANNEX C***

 

***[*]***

 

 

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ANNEX D

 

FORM OF JOINT PRESS RELEASE

 

Medtronic Xomed and Vision Sciences AnnounceDistribution Agreement

Exclusive for ENT Products within the US and Canada

 

Jacksonville, Fla. andNatick, Mass. — August XX, 2003 — Medtronic Xomed, the ear, nose andthroat (ENT) business division of Medtronic, Inc. (NYSE: MDT) and Vision-Sciences,Inc., (Nasdaq: VSCI) announced today that they have signed a three-yeardistribution agreement under which Medtronic Xomed has become the exclusivedistributor in the U.S. and Canada of Vision Sciences’ Slide-OnTM EndoSheath®System products within the field of otorhinolaryngology, including head andneck surgery.  Medtronic Xomed willmarket and sell Vision Sciences’ ENT products, co-branded with both companies’names and logos, through its dedicated sales force.

 

[Suggested language: “Weare excited about adding Vision Sciences’ EndoSheath System products to ourwide ranging ENT product line. We believe that the Slide-On EndoSheath productline offers otolaryngologists and speech pathologists the simplest and mosteconomical way to perform diagnostic and therapeutic flexible endoscopicprocedures. We expect that these innovative products will provide substantialbenefits to the practice of otorhinolaryngology, through significantly improvedpractice efficiency both in the private practice and hospital settings, whilecontinuing to provide patient and provider safety.” stated Mark Fletcher,President of Medtronic Xomed.]

 

“We are extremely pleasedto have Medtronic Xomed endorse the EndoSheath System and become our marketingand distribution partner in the US and Canada for our growing ENT product line.We expect these products to expand significantly the use of the existing,widely installed base of diagnostic ENT endoscopes due to their compatibilitywith existing models and because they also provide a ‘delivery system’ forprocedures such as biopsy and sensory testing for evaluation of swallowingdisorders. We believe that the innovative EndoSheath System, coupled withMedtronic Xomed’s highly professional and established sales and marketingforces, will result in effective market penetration for the products.  We look forward to a long and mutuallyrewarding relationship between the two companies.” stated Ron Hadani, Presidentand CEO of Vision-Sciences, Inc.

 

Based in Jacksonville,Fla., Medtronic Xomed www.xomed.com is a global leader in the market of medicaldevices for the treatment of ear, nose and throat diseases and it is a leadingmanufacturer of surgical products for use by ENT specialists. Medtronic Xomedis a part of Medtronic, Inc., www.medtronic.com, the world’s leading medicaltechnology company, providing lifelong solutions for people with chronicdisease.

 

Vision-Sciences, Inc.develops, manufactures and markets unique flexible endoscopic productsutilizing sterile disposable sheaths, the Slide-On EndoSheath System, whichenable physicians to perform diagnostic and therapeutic procedures without theneed for specialized endoscopes, while providing quick and efficient productturnover and ensuring the patient a contaminant-free product. Information aboutVision Sciences products is available on the Internet at www.EndoSheath.com,and company information is available at www.visionsciences.com.

 

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Except for the historicalinformation herein, the matters discussed in this news release includeforward-looking statements for the purposes of the safe harbor protectionsunder The Private Securities Litigation Reform Act of 1995. Future results mayvary significantly based on a number of factors including, but not limited to,the availability of capital resources, risks in market acceptance of newproducts and services and continuing demand for the same, the impact ofcompetitive products and pricing, seasonality, changing economic conditions andother risk factors detailed in our most recent annual report and other filingswith the SEC.  The Company assumes noobligation to update any forward-looking statements as a result of newinformation or future events or developments.

 ###

 

 

 

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