EXHIBIT
10.1


 


THIS VERSION HAS BEEN MODIFIED TO OMIT CERTAIN
CONFIDENTIAL INFORMATION

OF VISION-SCIENCES, INC., WHICH HAS BEEN FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 UNDER THE

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 
THE PLACES IN THE DOCUMENT

WHERE INFORMATION HAS BEEN OMITTED ARE MARKED WITH [*].


 


EXCLUSIVE DISTRIBUTION AGREEMENT


 


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


 


WHEREAS, Company
is engaged in developing, manufacturing and marketing medical devices for use
in otorhinolaryngology and related applications; and


 


WHEREAS, Company
wishes to appoint MDTX, and MDTX wishes to accept its appointment as, the
exclusive distributor of the Products (as defined below) in the Field (as
defined below), all in accordance with the terms and conditions of this
Agreement.


 


NOW, THEREFORE, in
consideration of the mutual covenants and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
are 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 for
so long as such other Person, directly or indirectly, controls, is controlled
by, 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 the
management or policies of a Person, through the ownership of voting securities
or other equity interests, and the terms “controlled” and “common control”
shall have correlative meanings.


 


1.2                                 “Effective
Date” 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 of
Otorhinolaryngology and head and neck surgery as and to the extent it is
practiced by licensed otorhinolaryngologists. 
By way of example, trans-nasal esophageal applications practiced by
gastroenterologists are outside the Field.


 


1.4                                 “Intellectual
Property” means all rights to patents, software, copyrights, trademarks, trade
secrets,


 

















 


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


 


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


 


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


 


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


 


2.                                       APPOINTMENT
OF DISTRIBUTOR; PRODUCTS


 


2.1                                 Company
hereby grants MDTX the exclusive right, effective as of the Effective Date, to
distribute, sell, advertise, promote and market the Products solely to
customers practicing within the Field and for use within the Field and solely
to persons and entities that are within the Territory and for use within the
Territory.  MDTX hereby accepts such
appointment.  From the date hereof until
the Effective Date, the Company shall wind up its sales and marketing activities
within the Territory and the Field consistent with the terms of this Agreement.


 


2.2                                 (a)                                  Except
as otherwise permitted under this Agreement and unless and until this Agreement
shall have been terminated in the manner provided herein, the Company agrees not
to, after the Effective Date (i) distribute, market or sell to any Person other
than MDTX, (ii) authorize any other Person other than MDTX to distribute,
market or sell the Products or (iii) enter into any agreement or arrangement
for the private labeling of any of the Products or any product that is
identical 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 for
use or sale within the Territory and for applications within the Field.  The Company reserves the right to promote
the technology underlying Products, the use and application of Products and the
Company’s role in developing and manufacturing Products, both within and
outside the Territory and Field.  It is
agreed that the Company shall coordinate with MDTX in advance of any promotion
or other publicity of the Products within the Territory and for use or
application within the Field.


 


(b)                                 Without
prejudice to any other remedy of the Company hereunder, upon the failure of
MDTX to perform its obligations under Section 3.1 below with respect to
any Product, which failure is not cured within thirty (30) days of notice
thereof to MDTX by the Company, the Company shall not be restricted from
distributing, marketing or selling, or authorizing any Person other than MDTX
to distribute, market or sell such Products within the Territory and for use or
sale within the Territory and for applications within the Field.


 


2.3                                 MDTX
shall have the right to perform its obligations and exercise its rights under
this 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 within
the Field and for use with the Field and solely to persons and entities that
are within the Territory and for use within the Territory.  MDTX shall have the right to appoint
subdistributors to perform MDTX’s obligations hereunder in such local markets
where MDTX does not currently maintain a direct sales force.  All such agents and subdistributors shall be
party to agreements with MDTX containing terms and conditions that are
consistent with the terms of this Agreement, including, without limitation,
those provisions relating to the marketing and sale of Products, the protection
of the Company’s confidential information, trademarks and intellectual property
rights and the termination of this Agreement.


 


2.4                                 (a)  If
the Company develops new products for use and application within the Field and
within the Territory (“New Products”) then the Company and MDTX shall, for a
period of 90 days prior to any commercial launch of such New Product within the
Field and within the Territory, negotiate exclusively and in good faith the
reasonable terms and conditions for adding such New Products to Annex A.  If the parties are unable to agree on the
terms and conditions of sale of such New Products, including a minimum purchase
commitment therefor during the first twelve-month period following such
commercial launch (the “Initial New Product Quota”), then the Company shall be
free to market, distribute and sell such New Products either alone or through
one or more distributors.  If the New
Product is of a substitute nature with respect to an existing Product and
otherwise directly competes in the market with any of the Products (a
“Substitute Product”), any minimum purchase commitment agreed to with respect
to 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 by
the Company other than MDTX) over the same period.  The Company shall report such sales of Substitute Products to
MDTX for purposes of the adjustment to the minimum purchase commitments of
MDTX.


 


(b)  If
MDTX wishes for Company to develop and manufacture a New Product outside of
Company’s planned product-development process, Company will, upon MDTX’s
request and within a reasonable timeframe, provide to MDTX a quote for the
Company’s development and manufacturing of such New Product.  MDTX shall promptly notify the Company of
its decision whether to request that the Company develop such New Product and
the parties shall negotiate in good faith the terms and conditions for adding
the New Product to this Agreement, including the terms for the payment of the
quoted costs for such development and manufacturing.  Nothing in this Agreement shall be deemed to require the Company
to undertake any particular product development project and the Company shall
have no liability for any failure to develop New Products either on its own
initiative or pursuant to any request of MDTX, except for such liabilities and
obligations set forth in any definitive agreement or amendment to this
Agreement setting forth the terms and conditions for the development, marketing
and sale of such New Products.


 


3.                                       MDTX’S
DUTIES


 


3.1                                 MDTX agrees to:


 


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


 


3

















 


and customary market feedback (but without the requirement of MDTX to
undertake or requisition any formal studies from third parties) with respect to
the Products, (ii) maintain a well-staffed and appropriately supervised sales
force, (iii) utilize its existing training facilities and programs to present
live-demonstration courses relating to the Products, (iv) maintain adequate
levels of Product inventory, and (v) feature the Products in its catalogs and
other promotional materials and on each of its appropriate websites, at trade
shows, congresses and similar conferences, and at sales and training courses
and programs for MDTX sales and marketing personnel.


 


(b)         Carry out the marketing, promotion and sale of
the Products in the Territory efficiently and in an orderly and regulated
manner.


 


(c)          Refrain from selling or promoting in the
Territory products that are directly competitive with the Products, and from
marketing or promoting the Products in the Territory in a manner that is
inferior to the manner in which MDTX markets and promotes any other of its
products, including without limitation its other otorhinolaryngological
products that are distributed or sold by MDTX in the Territory.  By way of example, no products currently
marketed and sold by MDTX in the Territory and within the Field as of the date
of this Agreement and featured in MDTX’s most recent product catalogue, a copy
of which has been provided to the Company for the purposes hereof, are directly
competitive with the Products within the meaning of this Section 3.1(c).


 


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


 


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


 


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


 


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


 


(h)         Promptly notify the Company in writing of any
and all modifications, design changes or improvements to the Products
(collectively, “Ideas”) suggested by any customer, employee, subdistributor or
agent of MDTX for any purpose, except those that, in the reasonable opinion of
MDTX, are of no commercial value to either party.  In the event that the Company agrees to incorporate any such Idea
into a Product or New Product, then to the extent that MDTX has, obtains or derives
any 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 any
purpose 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 then
only 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 with
respect to any Ideas.  To the extent
that the Company agrees to incorporate an Idea developed by MDTX and based on
valid claims in patents or patent applications filed by or on behalf of MDTX or
its Affiliates (each such Idea, an “Invention”) into a Product or New Product
which MDTX does not have the right to distribute or sell hereunder, or from
such time as MDTX’s right to distribute and sell such Product or New Product is
terminated or otherwise lapses, the Company shall license the use and
application of such Invention for any purpose, on a non-exclusive, perpetual,
irrevocable and transferable basis, in exchange for a royalty based on a percentage
of the annual net sales of such Products or New Products incorporating such
valid claims in patents or patent applications, ranging from 2% to 4%, as
determined by an independent arbitrator mutually selected by the parties, who
shall base his or her decision on factors typically taken into account in
determining reasonable royalties.  To
the extent that MDTX develops any Invention which the Company has not agreed to
incorporate into a Product, the Company shall have the option to license the
use and application of such Invention for any purpose, on a non-exclusive,
perpetual, irrevocable and transferable basis, in exchange for a royalty based
on a percentage of the annual net sales of products incorporating valid claims
in patents or patent applications granted or filed, as the case may be, with
respect to such Invention, ranging from 2% to 4%, as determined by an
independent arbitrator mutually selected by the parties, who shall base his or
her decision on factors typically taken into account in determining reasonable
royalties.  The Company’s obligation to
pay royalties hereunder with respect to a product incorporating an Invention
shall continue until the expiration of the patent applicable to such Invention.  In no event shall royalties be payable hereunder
with respect to Ideas that are not Inventions (i.e., based on valid claims in
unexpired patents or patent applications filed by or on behalf of MDTX or its
Affiliates).


 


(i)             Not commence or initiate, or cause to be
commenced or initiated, any engineering, research, development or other
technical activities on any of the Products or otherwise utilizing the
Company’s intellectual property without the prior written consent of the
Company.


 


(j)             Consistent with established industry
standards and applicable laws, not pay or make gift of value, directly or
indirectly, to any officer, employee or agent of a political party, government
or 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 agent
appointed by it to comply, in all material respects with all applicable
federal, state and local laws, rules, regulations and orders of all
governmental authorities affecting the sale and distribution of the Products,
as they are presently in effect and as they may be revised or supplemented from
time to time.


 


3.3                                 MDTX will, and will cause each agent appointed by
it to, adhere to good and sound business practices and carry out its duties
under this Agreement according to the highest standards of professional
business conduct.


 


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


 


4.                                       COMPANY’S
COVENANTS AND DUTIES


 


4.1                                 Company
agrees to:


 


(a)          Inventory and ship Products upon order and
request of MDTX and in accordance
with MDTX’s instructions.


 


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


 


(c)          Label Products in accordance with this
Agreement.


 


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


 


(e)          Staff and maintain a service and repair
facility for the purpose of repairing and/or replacing Products that are within
or outside of their warranty period.  MDTX shall advise Company of Products
requiring repair or replacement and shall forward such Products to Company’s
designated facility, but only after obtaining from the Company a return
authorization approval pursuant to customary return procedures established from
time to time by the Company.  Company
shall inspect the Products and make necessary repairs or replacement, as
appropriate, at its facilities and return the repaired or replacement Product
to MDTX within thirty (30) business days of
receipt of repair authorization from MDTX.  For Products repaired and/or replaced that are within their
warranty scope and period, Company shall bear all costs and expenses relating
to servicing such Products (including, without limitation, shipping and
handling costs from MDTX to Company
and back to MDTX).  For Products repaired that are outside their
warranty scope or period, Company shall charge MDTX its standard time and materials rate, plus shipping and
handling.


 


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


 


6

















 


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


 


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


 


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


 


(i)             Consistent with established industry
standards and applicable laws, not pay or make gift of value, directly or
indirectly, to any officer, employee or agent of a political party, government
or 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                                 The
Company shall provide MDTX with all technical and clinical information related
to and necessary for the sale of the Products that the Company has in its
possession without any requirement of the Company to produce or requisition any
formal studies, data or information. 
The Company shall be entitled to withhold any information that the
Company determines, in its sole discretion, constitutes trade secrets of the
Company.


 


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


 


4.4                                 The
Company will adhere to good and sound business practices and will carry out its
duties under this Agreement according to the highest standards of professional
business conduct.


 


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5.                                       ORDERING,
SUPPLY, PRICE AND PAYMENT


 


5.1                                 Minimum
Purchase Commitments.


 


(a)                                  Within
thirty (30) days following the Effective Date, MDTX shall issue to the Company
a purchase order for the first twelve months following the Effective Date (the
“Initial Period”), providing for MDTX to purchase pursuant to such purchase
order during the Initial Period no fewer than [*]of the Company’s Slide-On Sheath with the
Company’s catalog number 22-xxxx (hereinafter, the “Basic ENT Sheath”) at a
price of [*] per
individual 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 be
purchased 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 do
not refer to a single package that may contain one or more single units that
are packaged and sold together under one catalog number.  MDTX shall be obligated to purchase the
Products during the Initial Period according to the delivery schedule set
forth on Annex C.  The minimum purchase
requirements of this Section 5.1 shall only apply to and be satisfied by
sales of Products for use and sale within the United States, and shall not
apply to or be satisfied by sales of Products for use and sales in Canada.


 


(b)                                 If
MDTX fails to purchase, during each successive 12-month period following the
Initial Period (each such period, a “Quota Period”), the minimum dollar amounts
of Products (the “Quota”), at a reduced transfer price for the Basic ENT
sheaths of the greater of (i) [*] (as set forth on Annex A) or (ii) [*] of the average
selling price of the sheaths by MDTX during the immediately preceding Quota
Period, which minimum dollar amounts shall be negotiated in good faith between
the parties hereto ninety (90) days prior to the expiration of the Initial
Period or any successive Quota Period, as applicable, then the Company shall
have the right and option, in its sole discretion, to (x) terminate the
exclusivity of this Agreement upon written notice to MDTX or (y) terminate this
Agreement upon written notice to MDTX, provided that if this Agreement is so
terminated, MDTX shall be allowed to continue sales of Products hereunder on a
nonexclusive basis for a period of six (6) months following the date of such
termination, solely for the purpose of reducing its existing Product inventory
(but the Company shall not be obligated to ship any Products to MDTX after the
date of such termination, regardless of the date of the purchase order
therefor).  If the parties are unable to
agree on the Quota for any Quota Period at least forty five (45) days prior to
the scheduled start of such Quota Period, then the Quota for such Quota Period
shall be [*] of
the greater of the Quota for or MDTX’s Product sales during the immediately
previous Quota Period (or during the Initial Period, for the first Quota Period
following the Initial Period).


 


(c)                                  Prior
to the introduction of any New Product to the market, the Company and MDTX
shall jointly conduct, or cause to be conducted, a market study to determine
the pricing and the Initial New Product Quota for such New Product, which study
will be funded by MDTX.  Based on the
result of such market study, and on the Company’s current and reasonable
expectations regarding the Company’s productions costs for the New Product, the
Company and MDTX shall agree on the Initial New Product Quota and on transfer
pricing to MDTX that is expected to give MDTX a gross margin on sales of the
New Product to end users of at least [*].  If MDTX
fails to purchase (i) during the first 12-month period following first
commercial launch of any New Product (the “Initial New Product Period”), no
less, in terms


 


8

















 


of dollars, of such New
Product than set forth in the Initial New Product Quota, and (ii) during each
12-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 be
negotiated in good faith between the parties hereto (the “New Product Quota”)
ninety (90) days prior to the expiration of the Initial New Product Period or
successive New Product Quota Period, as applicable, then the Company shall have
the right and option, in its sole discretion, to (x) terminate the exclusivity
of this Agreement upon written notice to MDTX or (y) terminate this Agreement
upon written notice to MDTX, provided that if this Agreement is so terminated,
MDTX shall be allowed to continue sales of Products hereunder on a nonexclusive
basis for a period of six (6) months following the date of such termination,
solely for the purpose of reducing its existing Product inventory (but the
Company shall not be obligated to ship any Products to MDTX after the date of
such termination, regardless of the date of the purchase order therefor).  If the parties are unable to agree on the
New 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 the
New Product Quota for such new Product Quota Period shall be [*] of the greater of
the New Product Quota for or MDTX’s New Product sales during the immediately
previous New Product Quota Period (or during the Initial New Product Period,
for the first New Product Quota Period following the Initial New Product
Period).


 


5.2                                 MDTX
shall provide to Company, on a quarterly basis, a rolling twelve-month forecast
of Products it expects to purchase. 
MDTX shall also provide to Company, on a bi-annual basis, a blanket
purchase 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 form
attached to this Agreement as Annex B (the “Min-Max”).  For each Product item, the Min-Max will show
a range of inventory levels (i.e., minimum-maximum) of finished goods that
Company 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 in
inventory at its Jacksonville, Florida facility and at its Mississauga, Ontario
facility.  MDTX will deliver to Company,
on a bi-weekly basis, a completed Min-Max indicating the type and quantity of
Products needed for shipment by Company to MDTX, and Company shall ship Product
to MDTX within five (5) business days from receipt of the applicable
Min-Max.  The Company shall at all times
maintain inventory levels reasonably adequate to meet its obligations under
Section 4.1(a) and the requirements of the Min-Max.  MDTX’s minimum purchase commitments
hereunder shall be tolled for any period during which the Company is unable to
ship Products in accordance with its obligations under Section 4.1(a)
(including in connection with the initial order placed by MDTX in accordance
with Section 5.1(a) above) and any Quota Period (or Initial Period, as
applicable) in respect of which such minimum purchase commitments shall apply
shall be extended by the amount of time during which the minimum purchase
periods have been so tolled.


 


5.3                                 Upon
shipment, Company shall promptly invoice MDTX
in U.S. Dollars.  Payment for Products shall be in U.S. Dollars and is due
net thirty (30) days from shipment of the Product by the Company; provided that MDTX shall be entitled to a [*] on any amounts
paid and received by the Company within [*].  Late
payments will be assigned a monthly service fee equal to [*] of the amount due.  Persistent failure to pay invoices when due
shall 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 rejected
Product pursuant to Section 5.7 below that MDTX may use to reduce payment
of future invoices.


 


5.4                                 Prices
for the Products ordered by MDTX
from Company shall be as set forth in Annex A to this Agreement.


 


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


 


5.6                                 Company
shall package Products in accordance with good commercial practices and
mutually agreed specifications, and in a manner sufficient to withstand the
rigors of transportation.


 


5.7                                 MDTX shall have the right, within fifteen
(15) days from receipt, to reject any Product that does not meet Company’s
published specifications or any applicable laws or regulations or that is
otherwise defective.  Any such rejection
shall be accomplished by a notice from MDTX
identifying and specifying, in reasonable detail, the Product rejected and the
reasons for rejection.  Any Product
rejected by MDTX shall be made
available, on reasonable notice and during normal business hours, for
inspection by Company or its representatives in a manner consistent with the
Company’s return authorization procedures established from time to time and as
previously communicated to MDTX. 
Company will replace any rightfully rejected Product free of charge and
will indemnify MDTX for reasonable
out-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 of
the nonconforming Product back to Company (if so requested by Company and then
pursuant to the Company’s return authorization approval procedures).  In the event of a rejection of defective
Product, Company shall ship replacement Product within seven (7) days of its
receipt of the rejected Product from MDTX,
or such longer period of time as may be reasonable under the circumstances.


 


6.                                       WARRANTIES;
INDEMNITY


 


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


 


(a)                                  Ownership.  Company is the sole and rightful owner of
all right, title and interest in and to the Products or otherwise has the
unrestricted right to grant to MDTX the rights granted in this Agreement
without violating any rights of any third party.  There are no actual or threatened claims against any of the
Products and no demands of any person or entity pertaining to any of the
Products.  No proceedings have been
threatened, instituted or are pending that challenge the rights of Company in
the Products.  Company has not been
charged with infringement or violation of any Intellectual Property right of
any person or entity, and, to the Company’s knowledge, is not infringing any
Intellectual Property right of any person or entity in connection with the
manufacture, use, sale or other disposition of any of the Products.


 


(b)                                 Product
Warranty.  The Products have been
and shall be designed, manufactured, labeled, packaged and sold to MDTX in
accordance with the Company’s quality system, all applicable laws and
regulations of the United States and Canada, all applicable ISO-9001, EN-46001
and ISO 13485


 


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certification or successor
requirements, and all other applicable manufacturing requirements.  Company further represents and warrants to
MDTX that Company’s manufacturing and quality system is in compliance with the
Quality System Regulations promulgated by the U.S. Food and Drug Administration
(or any successor requirements) and has been certified to be in compliance with
the standards set forth in ISO-9001 and EN-46001, as the same may be amended or
superceded by ISO 13485.  Once per year
during the Initial Term (as hereafter defined) of this Agreement or any renewal
thereof, the Company shall provide MDTX’s regulatory personnel reasonable
access to the facilities and records of the Company for the purpose of
confirming the Company’s and the Products’ compliance with all applicable laws
and regulations.  The Products shall,
for a period of time (as specified by Company for its products in its relevant
published specifications) from date of sale by MDTX (or its subdistributor or
agent) to the customer, be free from defects in material and workmanship and
remain in good working order, and function properly and in conformity with the
terms of this Agreement and with published specifications and documentation.  Company shall inform MDTX in writing of the
warranty 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 be
defective (in accordance with the above) within the applicable warranty
period.  MDTX may pass such Company
warranty to its customers and to end-users.


 


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


 


(d)                                 No
Royalties.  No royalties or other
amounts will be payable by MDTX to others as a result of this Agreement or any
of the transactions contemplated hereby.


 


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


 


11

















 


(i) modify the infringing Product without impairing in any material respect
the functionality or performance, so that it is non-infringing, (ii) procure
for MDTX the right to continue to distribute, sell, advertise, promote, market
and otherwise commercialize the infringing Product, or (iii) replace said
Product with equally suitable, non-infringing product.  If none of the foregoing alternatives are
available to Company, the Company shall repurchase from MDTX at the price
charged to MDTX by the Company, all Products that are in good and saleable
condition and are in unopened, undamaged, sterile packages.  Except as set forth above, the Company shall
have no further liability to MDTX with respect to any Infringement Claim.


 


7.                                       RELATIONSHIP


 


The relationship between Company and MDTX is that of independent
contractors.  Nothing contained in this
Agreement shall be construed to imply a joint venture, partnership, or
principal-agent relationship between the parties; and neither party by virtue
of 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, and
Company and MDTX shall each refrain from making any representations to the
contrary.  Except as otherwise set forth
herein, all costs of each party’s operations, including but not limited to
salaries, wages, taxes (corporate, service, employment, franchise, etc.) and
employee benefits of each party and its employees shall be paid solely by such
party, and the other party hereto shall have no liability or responsibility
therefor.


 


8.                                       TERM
AND RENEWAL


 


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


 


9.                                       TERMINATION


 


9.1                                 Each
party shall have the right to terminate this Agreement if the other party is in
material breach of any term or condition herein.  A party that materially breaches this Agreement shall be given
written notice of such breach by the other party and shall have the opportunity
to take remedial action within a period of sixty (60) days or other longer period
defined in such notice.  If the
breaching party fails to remedy the breach within such sixty (60) day or other
longer defined period, the other party shall have the right to immediately
terminate this Agreement.


 


9.2                                 If
either party becomes insolvent or files, or has filed against it, any petition
under any bankruptcy or insolvency law or similar law which is not dismissed or
stayed 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 the
like, 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.


 


12

















 


9.3                                 Any
expiration or termination of this Agreement shall not alter the rights, duties
and obligations of the parties for any purchase orders placed by MDTX, or
amounts due, prior to the date of such expiration or termination, nor shall it
affect the rights of end-users of the Products.


 


9.4                                 Upon
termination or expiration of this Agreement, MDTX shall have the right to sell
its existing, saleable inventory of Products in the market, and MDTX shall be
obligated to purchase from Company finished goods Products held in inventory by
Company up to the “maximum” quantity indicated in the most recent Min-Max
provided by MDTX to Company.  MDTX shall
retain the rights under this Agreement necessary for it to sell its remaining
inventory of Products and Company shall provide the necessary materials and
support to assist MDTX in doing so.


 


9.5                                 If
any of the Products sold by MDTX is recalled from the market or withdrawn from
sale within the Territory for reasons of product safety or quality as
determined by any applicable governmental authority or by mutual agreement of
the parties, any minimum purchase commitment or Quota with respect to such
Product shall be suspended until 90 days after the date on which the Product
has been re-introduced into the market.


 


10.                                 PRODUCT
LABELING, REGISTRATION


 


10.1                           Product
Labeling.   All Products shall be
marketed and sold under MDTX’s name and logos, provided that all Products and
Product packaging shall also prominently and conspicuously bear the name of the
Company and the Company’s logo, and shall also contain such other designations
of the Company, including identification of the Company as the manufacturer of
the Products, and the country of manufacture, where applicable, as may be
necessary to comply with Title III of the Medical Device User Fee and Modernization
Act of 2002 (P.L.107-250).  MDTX shall
sell the Products in the same condition as they are delivered to it and shall
not alter, deface, remove, cover up or mutilate in any manner whatsoever any
trademark, serial or model number, the words “patent pending” and/or “patent”
and/or the patent number, copyright symbol and any other reference to the
Intellectual Property rights of the Company which the Company may attach or fix
to or make part of the Products.  So
long 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 be
entitled to affix to Products such additional labels as it shall deem
reasonably necessary to identify MDTX as the distributor of the Products, provided,
that, the Company shall have approved in writing in advance of such
labeling, such approval not to be unreasonably withheld.


 


10.2                           Product
Registration.  Company shall obtain
and maintain all necessary registrations, licenses and permits for the Products
with health and other competent authorities that may from time to time be
required by law, regulation or otherwise throughout the countries and regions
of the Territory in which MDTX is promoting, advertising and selling the
Product within a six-month time period. 
Any such registrations, licenses or permits shall be in the name of
Company unless prohibited by law, in which case they shall be held in trust by
MDTX acting as in-country caretaker for Company, and shall be subject to
transfer, cancellation, modification or supplement for Product changes at
Company’s direction.  The cost and
expense of obtaining such registration shall be the responsibility of
Company.  Company shall provide, free of
charge, such samples of Products, data and investigation reports and all


 


13

















 


other documentation as it
possesses to the extent that they are required by local law and will facilitate
registration throughout the Territory. 
Company shall also obtain the appropriate approval of all governmental
control agencies as required throughout the Territory for any purchases and
sales contemplated by this Agreement, and specifically Company shall obtain all
necessary approvals for the importing, storing and selling of Products subject
to sterile conditions.


 


11.                                 RECALLS;
COMPLAINTS


 


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


 


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


 


12.                                 INTELLECTUAL
PROPERTY


 


12.1                           Company
shall have and shall retain at all times all rights in and to its Intellectual
Property relating to the Products.


 


12.2                           Company
and MDTX acknowledge and agree that MDTX will market and sell the Products
under the Company’s and MDTX’s trademarks, as mutually agreed by the parties; provided
that in connection with any promotional or other Product related materials
or events, MDTX shall use reasonable efforts to prominently depict or display
the Company’s name, logo and Product related trademarks or service marks, and
indicate that the Products have been manufactured by the Company using the Company’s
proprietary technologies and all packaging and physical embodiments of the
Product shall display the Company’s mark. 
Any use of any trademarks or service marks that are owned by the Company
in any such promotional materials shall be accompanied by an appropriate legend
indicating that such trademarks and service marks are the property of the
Company.


 


14

















 


13.                                 REPRESENTATIONS,
WARRANTIES AND COVENANTS OF COMPANY


 


Company hereby
represents, warrants and covenants to MDTX that:


 


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


 


13.2                           Each
Product shall be manufactured and/or developed in a manner consistent with good
commercial practice and regulations and guidelines of the U.S. Food and Drug
Administration for such medical devices, free from defects in material and
workmanship, and shall conform to all applicable laws and regulations relating
to medical devices and to the Product’s published specifications.


 


13.3                           Company
does not have any obligations or liabilities that might reasonably be expected
to have a material adverse effect on its ability to perform its obligations
hereunder.


 


13.4                           There
are no actions, suits, or proceedings instituted or pending or, to the best
knowledge of Company’s management, threatened against Company that might
reasonably be expected to have a material adverse effect on the ability of
Company to perform its obligations hereunder.


 


13.5                           Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified to do business in all jurisdictions where
it does business, and has all requisite corporate power and authority to
execute, deliver and perform the terms of this Agreement.


 


13.6                           The execution, delivery and performance of the
obligations of this Agreement have been validly authorized by all necessary
corporate action of the Company, and this Agreement represents the Company’s
valid and legally binding obligation.


 


13.7         The
execution, delivery and performance of the obligations of this Agreement by the
Company in accordance with the terms of this Agreement do not and will not
conflict with or otherwise violate the terms of any other agreement to which
the 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 to
provide all related materials and services required under this Agreement.


 


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


 


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


 


15

















 


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


 


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


 


15.                                 LIMITATION
OF LIABILITY


 


IN NO
EVENT 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 COMMERCIAL
DAMAGE, WHETHER OR NOT THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES OCCURRING, AND WHETHER SUCH DAMAGES ARISE FROM CONTRACT, NEGLIGENCE,
TORT OR OTHERWISE.  TO THE EXTENT THAT A
PARTY HERETO IS HELD LIABLE TO ANY THIRD PARTY FOR ANY SUCH PUNITIVE OR
CONSEQUENTIAL DAMAGES AS A RESULT OF ANY ACT OR OMISSION OF THE OTHER PARTY
HERETO SUBJECT TO THE INDEMNIFICATION PROVISIONS OF SECTIONS 6.2 AND 16, SUCH
DAMAGES SHALL NOT SOLELY BY VIRTUE OF THIS SECTION 15 BE EXCLUDED OR
DISCLAIMED.


 


16.                                 INDEMNIFICATION


 


16.1                           MDTX shall
indemnify and defend Company, its affiliates, and their respective directors,
officers, representatives, employees, agents, subcontractors, successors and
assigns, against and hold them harmless from any liability, damage, cost or
expense resulting from any claim made by any third party (including, without
limitation, any claim alleging personal injury or property damage) attributable
to any breach of this Agreement by MDTX or to any intentional or negligent act
or omission of MDTX, its employees, agents, or subcontractors in the
performance of this Agreement, except to the extent that a claim is caused by
the negligence or willful misconduct of Company, its employees, agents, or
subcontractors.


 


16.2                           Company
shall indemnify and defend MDTX, its affiliates, and their respective
directors, officers, employees, agents, subcontractors, successors and assigns,
against and hold them harmless from any liability, damage, cost or expense
resulting from:


 


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


 


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


 


16

















 


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


 


(c)          any
Product recalls or replacements by any competent government authority or other
agency deemed appropriate by mutual agreement of Company and MDTX, except to
the extent such recall or replacement is caused by the negligence or willful
misconduct of MDTX in its sale, distribution or handling of the Products.


 


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


 


17.                                 CONFIDENTIALITY
AND NON-DISCLOSURE


 


17.1                           Both
parties acknowledge and agree that this Agreement creates a privileged and
confidential relationship between MDTX and Company and that information
concerning both parties’ business affairs, customers, vendors, finances,
properties, methods of operations, computer programs and documentation,
diagrams, verbal and written disclosures, drawings, samples, technical
descriptions, specific configurations, dimensions, materials, concepts, developments,
techniques, know-how, inventions, and other such materials and  information, whether written or oral, is
confidential in nature.  All such
information is hereinafter collectively referred to as “Confidential
Information.”  Neither party will use,
directly or indirectly, for its own benefit or the benefit of others, both
during the term of this Agreement and subsequent to its termination, any
Confidential Information of the other party which may be acquired or developed
in connection with or as a result of the performance of this Agreement without
the prior written consent of the other party.


 


17.2                           Both
parties agree, except as directed by the other party or provided in this
Section 17.2, not to disclose any Confidential Information of the other
party to any person whatsoever at any time during or after the term of this
Agreement.  Upon termination of this
Agreement and at a party’s written request, each party will turn over to the
other party all documents, papers and other materials in its possession or
control (except for one copy that may be retained solely for archival purposes)
that relate to the other party or the Intellectual Property of the other
party.  Both parties further agree to
bind its employees and subcontractors to the terms and conditions of this
Agreement.  Each party acknowledges that
disclosure of any Confidential Information of the other party by it may give
rise to irreparable injury to the other party, its subsidiaries and/or
affiliated companies or the owner of such information, inadequately compensable
in damages.  Accordingly, the disclosing
party may seek and obtain injunctive relief against the breach or threatened
breach of the foregoing undertakings, in addition to any other legal remedies
that may be available.  Each party acknowledges
and agrees that the covenants contained herein are necessary for the protection
of legitimate business interests of the other party, its subsidiaries and/or
affiliated companies and are reasonable in scope and content.


 


17.3                           Each
party’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 to
the public, (ii) which the receiving


 


17

















 


party can show was properly in its possession prior to disclosure,
(iii) that is published or otherwise becomes available to the public through no
fault of the receiving party, (iv) that the receiving party can show was
received by it from a third party without breach of a confidentiality
obligation, (v) is independently developed by the receiving party without use
of any Confidential Information of the other party, or (vi) is required to be
disclosed by any governmental agency, provided that the disclosing party shall
give the other party reasonable notice of such requirement and shall afford the
other party the opportunity to prevent such disclosure.


 


 


18.                                 NOTICES


 


Any
notice or other communication required or permitted hereunder shall be in
writing and shall be delivered by (a) personal delivery, (b) expedited delivery
service, (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

  



 


18

















 


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


 


19.                                 GENERAL
PROVISIONS


 


19.1                           This
Agreement shall be governed in all respects by the laws of the State of New
York, without regard to any rules of conflict and choice of laws that would
require the application of laws of another jurisdiction.


 


19.2                           This
Agreement shall be binding on the parties and their respective successors and
assigns.  This Agreement constitutes the
entire Agreement between the parties with respect to the subject matter hereof
and supersedes all previous proposals, negotiations, representations or
commitments between the parties, both written and oral.  The terms of this Agreement shall prevail in
the event that there is a conflict or variance with the terms and conditions of
any purchase order form or other document submitted by MDTX or with any invoice
or other document submitted by Company.


 


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


 


19.4                           The
failure by either party to enforce any term or condition of this Agreement, the
written waiver of any term or condition of this Agreement or the acceptance of
any payment shall not be a waiver of further enforcement of that or any other
term or condition.


 


19.5                           The
captions used herein are for convenience only and shall not be considered in
construing or interpreting the provisions hereof.


 


19.6                           If any
provision of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.


 


19.7                           Notwithstanding
the termination or expiration of this Agreement, it is acknowledged and agreed
that the following provisions shall survive any such termination in addition to
such other provisions of this Agreement which by their terms are intended to
survive 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                           This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original but all such counterparts together shall constitute but one
and the same instrument.


 


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


 


19

















 


19.10                     Without
derogating from anything contained in Section 2.3 hereof, neither this
Agreement nor any rights granted hereby may be assigned by either party without
the other party’s prior written consent, such consent not to be unreasonably
withheld.  Any attempted assignment in
violation of the proceeding sentence shall be null and void.  Notwithstanding the foregoing, consent shall
not be required for an assignment of this Agreement resulting from (i) a
merger, 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 of
and be binding upon the successors and permitted assigns of the parties
hereto.  In the event that this
Agreement is assigned by the Company to a direct competitor of MDTX as a result
of the sale of all or substantially all of the Company’s otorhinolaryngological
business to such competitor of MDTX, MDTX shall have the right to terminate
this Agreement upon written notice to the Company.


 


19.11                     Neither
party 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, but
not limited to, fires, war, terrorism, strikes, insurrections, riots,
embargoes, delays in transportation, inability to obtain supplies of raw
materials, or requirements or regulations of any governmental and/or semi-governmental
authority.  If such delay or failure
extends beyond thirty (30) days, the party not affected by the delay shall have
the right to terminate this Agreement upon written notice.


 


19.12                     Nothing
in this Agreement, whether express or implied, is intended to confer any rights
or remedies under or by reason of this Agreement on any person other than the
parties to this Agreement and their respective successors and permitted
assigns.


 


19.13                     Upon
execution of this Agreement, MDTX and the Company shall issue a joint press
release substantially in the form of Annex D hereto (the “Release”).  The Company shall be entitled to file a
redacted copy of this Agreement with the Securities and Exchange Commission
after review thereof by MDTX, which review by MDTX shall be completed in a
timely fashion.  Except to the extent
required by applicable law, neither party shall make any public announcement or
statement regarding the relationship of the parties hereunder inconsistent with
the Release or any public filings of either party without the prior written
consent of the other party, which shall not be unreasonably withheld.


 


[END OF TEXT]


 


IN WITNESS
WHEREOF the parties hereto have executed this Agreement as of the date above
written.


 


 


	
  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:

  	
   

  	
   

  
									



 


 


20

















 


C.            ANNEX A


 


PRODUCTS
AND PRICING


 


 


[*]


 


 


21

















 


ANNEX B


 


 


[*]


 


 


 


22

















 


 


ANNEX C


 


[*]


 


 


23

















 


ANNEX D


 


FORM OF JOINT PRESS RELEASE


 


Medtronic Xomed and Vision Sciences Announce
Distribution Agreement


Exclusive for ENT Products within the US and Canada


 


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


 


[Suggested language: “We
are excited about adding Vision Sciences’ EndoSheath System products to our
wide ranging ENT product line. We believe that the Slide-On EndoSheath product
line offers otolaryngologists and speech pathologists the simplest and most
economical way to perform diagnostic and therapeutic flexible endoscopic
procedures. We expect that these innovative products will provide substantial
benefits to the practice of otorhinolaryngology, through significantly improved
practice efficiency both in the private practice and hospital settings, while
continuing to provide patient and provider safety.” stated Mark Fletcher,
President of Medtronic Xomed.]


 


“We are extremely pleased
to have Medtronic Xomed endorse the EndoSheath System and become our marketing
and 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 compatibility
with existing models and because they also provide a ‘delivery system’ for
procedures such as biopsy and sensory testing for evaluation of swallowing
disorders. We believe that the innovative EndoSheath System, coupled with
Medtronic Xomed’s highly professional and established sales and marketing
forces, will result in effective market penetration for the products.  We look forward to a long and mutually
rewarding relationship between the two companies.” stated Ron Hadani, President
and CEO of Vision-Sciences, Inc.


 


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


 


Vision-Sciences, Inc.
develops, manufactures and markets unique flexible endoscopic products
utilizing sterile disposable sheaths, the Slide-On EndoSheath System, which
enable physicians to perform diagnostic and therapeutic procedures without the
need for specialized endoscopes, while providing quick and efficient product
turnover and ensuring the patient a contaminant-free product. Information about
Vision 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 historical
information herein, the matters discussed in this news release include
forward-looking statements for the purposes of the safe harbor protections
under The Private Securities Litigation Reform Act of 1995. Future results may
vary significantly based on a number of factors including, but not limited to,
the availability of capital resources, risks in market acceptance of new
products and services and continuing demand for the same, the impact of
competitive products and pricing, seasonality, changing economic conditions and
other risk factors detailed in our most recent annual report and other filings
with the SEC.  The Company assumes no
obligation to update any forward-looking statements as a result of new
information or future events or developments.


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