Document:

Exhibit
10.1

	
  

  	
  Magna Entertainment Corp.

  
	
   

  	
   

  
	
  MEC

  	
  337 Magna Drive

  
	
   

  	
  Aurora, Ontario,

  
	
   

  	
  Canada L4G 7K1

  
	
   

  	
  Tel (905) 726-2462

  
	
   

  	
  Fax (905) 726-2585

  

 

HAND DELIVERED

June 22, 2007

Mr. Michael A. Neuman

160 Valley Road

Toronto, Ontario

M2L 1G4

Dear Michael:

Reference is made to our recent conversations
concerning your departure as Chief Executive Officer and as an employee and
director of Magna Entertainment Corp. (“MEC” or the “Corporation”) and our
agreements, which are as follows:

1.               Effective immediately (the “Effective Date”), your employment with MEC
shall end and you shall resign as a director of MEC and as an officer and/or
director of all subsidiaries of MEC or its affiliates for which you serve in
such capacities.  You agree to promptly
execute and provide to MEC all documents reasonably requested by MEC and its
affiliates to evidence your resignation as a director and/or officer of MEC and
its affiliates.

2.               Pursuant to Section 7(g) of your employment agreement with MEC dated
February 27, 2007 (your “Employment Agreement”), you agree to execute the full
and final release attached hereto as Schedule A (the “Release”), waiving
any and all claims against the Corporation, its subsidiaries and their
respective directors and officers.

3.               You acknowledge and agree that you are still subject to, and shall abide
by, your obligations as set forth in Section 8 of your Employment Agreement.

4.               Pursuant to Section 7(e) of your Employment Agreement, and conditional
upon you delivering an executed copy of the Release within 10 days of the
Effective Date and you complying with the obligations set forth in Section 8 of
your Employment Agreement, you shall be entitled to receive the pro rata portion of your Base Salary of US$500,000 and
Annual Bonus  of US$500,000 up to and including
the Effective Date.  You acknowledge that
you have received such Annual Bonus up to and including March 31, 2007  so that you 

are
only entitled to such Annual Bonus for the period from April 1, 2007 to the
Effective Date (the “2007 Second Quarter Partial Bonus”).  You shall receive prompt payment of the full
amount of the 2007 Second Quarter Partial Bonus in cash (net of all applicable
withholdings) from MEC at the same time that senior executives of MEC are paid
their bonuses for the second quarter of 2007.

5.               Pursuant to Section 7(c) of your Employment Agreement, and conditional
upon you delivering an executed copy of the Release within 10 days of the
Effective Date and you complying with the obligations set forth in Section 8 of
your Employment Agreement, you shall be entitled to receive a retiring
allowance of US$1,000,000, payable in cash (net of all applicable withholdings)
monthly in arrears in twelve (12) equal instalments commencing thirty (30) days
after the Effective Date.

6.               Pursuant to Section 7(c) of your Employment Agreement, and conditional
upon you delivering an executed copy of the Release within 10 days of the
Effective Date and you complying with the obligations set forth in Section 8 of
your Employment Agreement, the Corporation shall maintain on your behalf the
benefits referred to in Section 4(a) of your Employment Agreement for twelve
(12) months from the Effective Date.

7.               You acknowledge and agree that no options were ever issued to you
pursuant to Section 5 of your Employment Agreement and that the Corporation has
no obligations to you under such section.

8.               As soon as reasonably practicable following the Effective Date, you
shall submit a final expense report or reports for all outstanding expenses which
you have incurred on behalf of MEC or any of its subsidiaries in accordance
with typical practice and which have not previously been reimbursed.  All such expenses shall be reimbursed to you
by MEC promptly following receipt of such expense report(s).

9.               MEC’s obligations to indemnify you pursuant to its by-laws shall
continue in effect in respect of all your activities as a director, officer and
employee of MEC and its subsidiaries, and MEC shall continue to cover you under
its directors’ and officers’ insurance policies in respect of your service as
an officer or director of MEC and its subsidiaries.

10.         Except as required by any applicable law, regulation or stock exchange
rule, neither you nor MEC shall make any public announcement, issue any press
release or otherwise make any communication with respect to your employment
with MEC and/or your resignation as a director and officer of, and your
departure from, MEC; provided, however, that on the Effective Date MEC shall
issue the press release attached hereto as Schedule B.

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11.         You hereby acknowledge and agree that this letter agreement, including
without limitation Schedule A, supersedes all previous agreements
between you and MEC and its affiliates, whether oral or written, including
without limitation your employment agreement.

If you are in agreement with the foregoing, would you
kindly execute a duplicate copy of this letter where indicated and return the
same to me.

Yours truly,

	
  /s/ Frank Stronach

  	
   

  	
   

  
	
  Frank Stronach

  Chairman

  	
   

  	
   

  

 

ACCEPTED and
AGREED:

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Michael A. Neuman

  	
   

  
	
   

  	
   

  	
  Michael
  A. Neuman

  

 

 3

Schedule
A

Release and Resignation

To:                              Magna Entertainment Corp. and its affiliates

I hereby resign as an employee, officer and/or director of Magna
Entertainment Corp. and its affiliates (collectively, “MEC”) effective June 22,
2007.

I hereby agree:

(i)                                    to, and do hereby, release MEC, its officers,
directors and employees, its associates and affiliates and its shareholders,
directors, officers, employees and agents and the respective successors and
assigns of all such persons and corporations (collectively described as the “Corporation”)
of and from all liabilities, damages, actions, causes of action, claims
(including, without limitation, any claim under the Ontario Employment
Standards Act) and demands, costs or expenses (including, without limitation,
lawyers’ fees), agreements, deferred compensation, provisions and covenants, of
any nature or kind now accrued, arising out of any employment relationship with
the Corporation and the cessation thereof;

(ii)                                 that the release contained herein shall be
binding on my heirs, executors, administrators, personal representatives and
assigns;

(iii)                              not to make any claim or to commence or
maintain any action or proceeding against any other person or corporation who
might claim contribution, indemnity or relief over from the Corporation with
respect to the subject matter of this release, excepting only any rights
enforced in respect of directors’ and officers’ liability under policies of
insurance for such;

(iv)                             at any time hereafter, except with the
consent of MEC or as required by law, not to disclose any confidential
information concerning the business and affairs of the Corporation and its
customers and suppliers, including its trade secrets and confidential or
proprietary information to which I have been exposed during the term of my
employment with MEC; and

(v)                                nothing in this release affects my rights:

(a)                                  under my letter agreement with MEC dated June
22, 2007, relating to my departure from MEC;

(b)                                 to be indemnified and held harmless by MEC
and to the benefit of coverage under any directors’ and officers’ insurance
policy in respect of any claim that may be made against me respecting any act
or thing arising from my having served as a director or officer of MEC and its
affiliates; and

(c)                                  as a shareholder of MEC.

DATED this 26th day of June, 2007.

	
   

  	
  /s/
  Michael A. Neuman

  	
   

  
	
   

  	
  Michael
  A. Neuman

  

 

Schedule
B

MEC Press Release

MEC

	
  

  	
   

  	
  Magna Entertainment Corp.

  
	
   

  	
   

  	
  337 Magna Drive

  
	
   

  	
   

  	
  Aurora, Ontario,

  
	
   

  	
   

  	
  Canada L4G 7K1

  

 

PRESS RELEASE

MAGNA ENTERTAINMENT CORP.

ANNOUNCES DEPARTURE OF

CHIEF EXECUTIVE OFFICER

June 22,
2007, Aurora, Ontario, Canada......Magna Entertainment Corp. (“MEC”) (NASDAQ:
MECA; TSX: MEC.A) announced today that Michael Neuman, its
Chief Executive Officer, will be leaving the company effective immediately to
pursue other opportunities.  Frank
Stronach, MEC’s Chairman, will assume the position of Interim Chief Executive
Officer and stated: “Michael worked very hard during his time at MEC and we
wish him well in his future endeavors.” 
Mr. Neuman stated: “I wish my colleagues at MEC well going forward and
hope that the company will be successful in implementing its long-term plans.”

Mr. Stronach also
noted that “MEC remains focused on implementing the strategic initiatives
described at our recent annual meeting, including the sale of non-core assets
to further reduce debt.”

MEC, North America’s largest
owner and operator of horse racetracks, based on revenue, acquires, develops,
owns and operates horse racetracks and related pari-mutuel wagering operations,
including off-track betting facilities. MEC also develops, owns and operates
casinos in conjunction with its racetracks where permitted by law. MEC owns and
operates AmTote International, Inc., a provider of totalisator services to the
pari-mutuel industry, XpressBet®, a national Internet and telephone account
wagering system, as well as MagnaBetTM internationally.  Pursuant to joint ventures, MEC has a fifty
percent interest in HorseRacing TVTM, a 24-hour horse racing television network,
and TrackNet Media Group LLC, a content management company formed for
distribution of the full breadth of MEC’s horse racing content.

For more information,
please contact:

Blake Tohana

Executive Vice-President and Chief Financial Officer

Magna Entertainment Corp.

905-726-7493Exhibit 10.32

AMENDED AND RESTATED EXCLUSIVE DISTRIBUTION
AGREEMENT

This Amended and Restated Exclusive Distribution
Agreement (the “Agreement”) is made as of March 1, 2007 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 appointed MDTX as its exclusive distributor of certain products
pursuant to the terms and conditions of that certain Exclusive Distribution
Agreement effectively dated August 6, 2003, as first amended effective as of
January 26, 2004, and as further amended effective as of April 21, 2004 (the “Prior
Agreement”); and

WHEREAS,
Company and MDTX have entered an Asset Purchase Agreement (the “Purchase
Agreement”) pursuant to which MDTX has agreed to purchase certain assets
from the Company; and

WHEREAS,
pursuant to the Purchase Agreement, Company and MDTX have agreed to enter into
this Agreement and to amend and restate the terms upon which MDTX distributes
Sheath Products and Scope Products in the Field as set forth herein.

NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth and pursuant to the Purchase Agreement, 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 hereof.

1.3                                 “Field”
means the field of otorhinolaryngology (as defined by the American Academy of
Otorhinolaryngology and Head and Neck Surgery), including, without limitation,
sinus endoscopy, laryngoscopy, esophagoscopy and other applications or
procedures where flexible scopes are inserted into the ear, nose or throat, all
of the foregoing as and to the extent it is practiced by licensed
otorhinolaryngologists.

1.4                                 “Intellectual
Property” means all forms of intellectual property in any jurisdiction and
under any law, whether now or hereafter existing, including, without
limitation: (a) inventions, 

discoveries,
patent applications, patents (including letters patent, industrial designs, and
inventor’s certificates), design registrations, invention disclosures, and
applications to register industrial designs, and any and all rights to any of
the foregoing anywhere in the world, including any provisionals, substitutions,
extensions, supplementary patent certificates, reissues, re-exams, renewals,
divisions, continuations, continuations in part, continued prosecution applications,
and other similar filings or notices provided for under the laws of the United
States, or of any other country; (b) trademarks and any all rights thereto
anywhere in the world; (c) trade secrets and other confidential or non-public
business information, including ideas, formulas, compositions, inventor’s
notes, discoveries, improvements, concepts, know-how, manufacturing and
production processes and techniques, testing information, research and
development information, data resulting or derived from research activities,
inventions, blue prints, drawings, specifications designs, plans, proposals and
technical data, business and marketing plans, market surveys, market know-how
and customer lists and related information; (d) copyrights, whether or not
registered, and any non-registered copyright to any writings and other
copyrightable works of authorship, including source code, object code,
documentation (whether or not released), and databases; (e) integrated circuit
topographies and mask works; (f) moral rights; (g) features of shape,
configuration, pattern or ornament; and (h) registrations of, and applications
to register, any of the foregoing with any governmental entity and any renewals
or extensions thereof and all other rights to any of the foregoing.

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 Scope Products and the Sheath Products, collectively.

1.7                                 “Scopes”
means those endoscope products listed under the heading “Scopes” on Annex A.

1.8                                 “Scope
Accessories and Replacement Components” means those products listed under
the heading “Scope Accessories and Replacement Components” on Annex A.

1.9                                 “Scope
Products” means the product or product groups listed on Annex A
attached to and made a part of this Agreement, including Scopes and Scope
Accessories and Replacement Products and all improvements and replacements for
those products, and such other product or product groups as shall be added to Annex
A by the mutual agreement of the parties, as contemplated by Section 2.4.

1.10                           “Sheath
Products” means the product or product groups listed on Annex B
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
B by the mutual agreement of the parties.

1.11                           “Territory”
means the entire world, excluding the jurisdictions set forth in Annex C
or any other jurisdiction that MDTX shall have notified the Company in writing
that it does not intend to distribute or sell Products to in accordance with
the terms of this Agreement.

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2.             APPOINTMENT OF DISTRIBUTOR;
PRODUCTS

2.1           Appointment.

(a)  Sheath Products.  Company hereby agrees to manufacture and to
supply to MDTX Sheath Products for MDTX’s distribution and sale of Sheath
Products to customers practicing within the Field and for use within the Field
anywhere in the Territory effective for each area of the Territory as of the
dates set forth in Annex D for each such area.  Notwithstanding anything to the contrary set
forth in this Agreement, Company’s obligation to manufacture and supply Sheath
Products for MDTX shall terminate on the date on which MDTX provides written
notice to the Company pursuant to Section 2.2(c) of the Transition Agreement to
be entered into between the Company and MDTX as of the Closing Date (as defined
in the Purchase Agreement) that the Company is to begin the transfer of the
Phase 2 Equipment (as defined in the Transition Agreement) to MDTX pursuant to
the terms of the Transition Agreement (the “Phase 2 Equipment Transfer Date”);
provided that MDTX may terminate the supply by Vision-Sciences of Sheath
Products earlier than the Phase 2 Equipment Transfer Date by providing a sixty
(60) days prior written notice to Vision-Sciences (the “Sheath Distribution
Termination Date”).  MDTX hereby
grants the Company a worldwide, royalty-free license to use the Vision-Sciences
Intellectual Property (as defined in the License Agreement to be entered into
between the Company and MDTX as of the Closing Date (as defined in the Purchase
Agreement), the “License Agreement”) in the Field, which was licensed to
MDTX pursuant to the License Agreement, solely for the purpose of performing
the Company’s obligations with respect to the manufacture and supply of Sheath
Products to MDTX pursuant to this Agreement, which license to use such
Vision-Sciences Intellectual Property in the Field shall terminate on the
Sheath Distribution Termination Date.

(b) Scope
Products.  Company hereby grants MDTX
the exclusive right to distribute, sell, advertise, promote and market the
Scope Products solely to customers practicing within the Field and for use
within the Field anywhere in the Territory effective for each area of the
Territory as of the dates set forth in Annex E for each such area.  MDTX hereby accepts such appointment.

2.2           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 the Products to any Person other than MDTX,
(ii) authorize any 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 for applications within the Field.  The Company reserves the right to promote the
technology underlying Scope Products, the use and application of Scope Products
and the Company’s role in developing and manufacturing Scope Products, both
within and outside the Field.  Subject to
Section 2.4 below, it is agreed that the Company shall coordinate with
MDTX in advance of any promotion or other publicity of the Scope Products
within the Territory and for use or application 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) to
market and sell the Products solely to customers practicing within the Field
and for use within the Field.  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 

 3
 

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 Scope Products, the protection of the
Company’s confidential information, trademarks and intellectual property
rights, the compliance with regulatory requirements, and the termination of
this Agreement.

2.4           If the Company develops new Scope
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 Product to Annex A.  If the parties are unable to reach an
agreement with respect to the terms and conditions of the sale of New Products
within such ninety (90) days period, then the Company shall have the right to
market and sell such New Products in any areas within the Territory, whether
directly or through any third party, at its sole discretion; provided, however,
that if the Company, directly or indirectly, sells a New Product that competes
with the Scope Products in one or more of the Designated Areas, then (i) MDTX shall
be relieved of its minimum purchase requirement obligations pursuant to Section
5.1, and (ii) MDTX shall be relieved of its non-compete obligations
pursuant to Section 3.1(c).

2.5           The Company may, at any time during
the Term, request to have the right to sell Scope Products in areas within the
Territory by written notice to MDTX (“Company Notice”).  MDTX shall, within thirty (30) days following
the furnishing of such Company Notice, notify the Company in writing of its
decision regarding whether to allow the Company to sell Scope Products in the
area(s) designated in the Company Notice (“MDTX Notice”).  MDTX shall not unreasonably withhold its
consent to allow the Company to sell Scope Products in an area as set forth in
a Company Notice.  Unless otherwise
agreed in writing by the Company and MDTX, in the event MDTX allows the Company
to sell Scope Products in an area within the Territory pursuant to this Section
2.5, this Agreement shall terminate with respect to such area within the
Territory and MDTX will have no right to distribute Scope Products in such
area, but will not be subject to the non-compete obligations set forth in Section
3.1(c) and Medtronic shall have no further obligations hereunder with
respect to such area.

3.             MDTX’S DUTIES

3.1                                 MDTX
agrees to:

(a)          Use its commercially
reasonable best efforts to market, promote, distribute, sell and support the
Scope Products in those major market areas within the Territory set forth on Annex
H (“Designated Areas”) and use its commercially reasonable best
efforts to refrain from marketing or promoting the Scope Products in the
Territory in a manner that is materially inferior to the manner in which MDTX
markets and promotes any other comparable products.  MDTX’s obligation to market the Scope
Products under this Agreement in the Designated Areas shall require MDTX, among
other things, to: (i) conduct periodic promotions and obtain usual and
customary market feedback (but without the requirement of MDTX to undertake or
requisition any formal studies from third parties) with respect to the Scope
Products, (ii) maintain a well-staffed and appropriately supervised sales
force, 

 4
 

(iii) utilize its existing training facilities and
programs to present live-demonstration courses relating to the Scope Products,
(iv) maintain adequate levels of Product inventory, and (v) feature the Scope
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 Scope Products in the Territory efficiently and in an
orderly and regulated manner.

(c)          From and after the date
that is set forth in Annex E with respect to each area within the
Territory, until the termination or expiration of this Agreement, refrain from
selling or promoting in the Territory products that are directly competitive
with the Scope Products, provided, however, that the restrictions
in this Section 3.1(c) shall not apply from and after the date that the
repair rate resulting from design or manufacturing quality defects for Scope
Products in any six (6) month period meets or exceeds twenty-five percent (25%)
of the Scope Products sold by  MDTX or
its distributors pursuant to this Agreement; and provided  further,
however, that the restrictions in this Section 3.1(c) shall not
apply with respect to any area of the Territory in which MDTX is not the
exclusive distributor of the Scope Products; and provided further, however,
that the restrictions in this Section 3.1(c) shall not apply with
respect to the sale by MDTX of no more than 62 scopes in the aggregate held in
inventory by MDTX for sale in the territories of France, Australia, New Zealand
and Latin America.

(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 the Company to MDTX with respect to Products.

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

(f)            MDTX shall be
responsible to report incidents and near incidents, as applicable, to the
competent regulatory authorities in the Territory in accordance with applicable
laws and regulations (in the case of the European Union, MDDEV 2.12). MDTX
shall promptly inform Company of any such incident and near incident.

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

(h)         Promptly notify the
Company in writing of any and all material modifications, design changes or
improvements to the Scope 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 Scope 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 either to
MDTX or to any such persons, except to the extent, and then 

 5
 

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 Scope
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 Scope
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 Scope 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 Scope 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 Scope Products or,
except as set forth in the License Agreement, otherwise utilize 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 any 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 Scope 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.

 6
 

 

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.

3.5           If MDTX shall fail to
perform its obligations pursuant to Section 3.1(a) above and does not
cure any such failure within thirty (30) days after receiving written notice
from the Company, then, as the sole and exclusive remedy of the Company
pursuant to this Agreement or otherwise, the Company shall have the
right and option, in its sole discretion, upon written notice to MDTX, to (x)
terminate the exclusivity of this Agreement in the Designated Area or other
area in the Territory with respect to which MDTX failed to perform its
obligations or (y) terminate this Agreement with respect to such Designated
Area or other such area within the Territory.

3.6           For the avoidance of doubt, it is
hereby clarified that in the event that MDTX’s exclusivity rights pursuant to
this Agreement are terminated pursuant to Section 3.5 or Section 5.1
hereunder, with respect to the Territory or any area of the Territory, the
restrictions on MDTX that are set forth in Section 3.1(c) shall no
longer apply and MDTX may distribute, market, sell or promote in any area of
the Territory with respect to which MDTX’s exclusivity or this Agreement was
terminated, products that are directly competitive with the Scope Products.

4.             THE
COMPANY’S COVENANTS AND DUTIES

4.1                                 The
Company agrees to:

(a)          Inventory and ship
Products upon order and request of MDTX,
in accordance with Section 5.

(b)         Label Products in
accordance with this Agreement.

(c)          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.  The Company shall provide MDTX all
translations for the labels and instructions for use for Scope Products it
currently has in its possession.

(d)         Staff and maintain a
service and repair facility for the purpose of repairing and/or replacing Scope
Products that are within or outside of their warranty period.  When MDTX receives Scope Products on return
from customers, MDTX shall advise
the Company of Scope Products requiring repair or replacement and shall forward
such Scope Products to the 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.  The Company shall inspect the Scope Products
and make necessary repairs or replacement, as appropriate, at its facilities
and return the repaired or replacement Scope Product to MDTX within thirty (30) business days of receipt of repair authorization
from MDTX.  For Scope Products
repaired and/or replaced that are within their warranty scope and period, the
Company shall bear all costs and expenses relating to servicing such 

 7
 

Scope Products (including, without limitation,
shipping and handling costs from MDTX
to Company and back to MDTX).  For Scope Products repaired that are outside
their warranty scope or period, the Company shall charge MDTX its standard time and materials rate,
plus shipping and handling.  
Notwithstanding anything to the contrary herein, upon MDTX’s reasonable
request, the Company, at no charge to MDTX, shall engage and train up to three
(3) third parties at the Company’s production facilities or other location to
be determined by the Company at its sole discretion, to perform repair services
in areas outside the United States, in which case the Company agrees to sell
spare parts to such third parties as may be needed for such third parties to
perform repair services.

(e)          Subject to clause (d) of
this Section, incorporate any modifications and improvements that the Company
makes to any of its products into the Scope
Products if so desired by MDTX and make the changed Scope Products immediately
available to MDTX.  If MDTX
requests that the Company make modifications or improvements to the Scope
Products, such changes shall be made only if mutually agreed to by the Company
and MDTX (including, without limitation, concerning price).

(f)            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 Scope
Products.  Such training will be
conducted at MDTX’s facilities or other facilities designated by MDTX, and will
be provided without charge to MDTX, except for the reimbursement of reasonable
out-of-pocket expenses of the Company. 
In addition, the Company will provide to MDTX Product updates and
service bulletins as they become available.

(g)         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 Scope 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 Scope 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 Scope Product or require regulatory approval or amendment.  If such changes do affect the efficacy,
safety, form, fit or function of a particular Scope 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 Scope
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.

 8

 

5.             ORDERING,
SUPPLY, PRICE AND PAYMENT

5.1           Minimum Purchase Commitments.  If MDTX fails to purchase, during each
12-month period set forth on Annex F (each such period, a “Quota
Period”), the number of Scope Products as set forth on Annex F for
such Quota Period and such failure has not been cured within thirty (30) days
after the Company has furnished to MDTX a written notice of such failure, then
the Company shall have the right and option, in its sole discretion, and as its
sole and exclusive remedy, to (x) terminate the exclusivity of this Agreement
upon written notice to MDTX or (y) terminate this Agreement upon written notice
to MDTX.

5.2           Forecasts/Purchases.  MDTX shall provide to the Company, on a
monthly basis, a rolling twelve-month forecast of Products it expects to
purchase.  The current month plus the
following three (3) months-forecast will represent firm order quantities for
Scopes and the current month plus the following one (1) month-forecast will
represent firm order quantities for Sheath Products and Scope Accessories and
Replacement Components.  MDTX shall also
provide to the Company a Min-Max spreadsheet substantially in the form attached
to this Agreement as Annex G (the “Min-Max”).  For each Product, the Min-Max will show a
target range of inventory levels (i.e., minimum-maximum) of finished goods that
the Company shall maintain in stock at its facility to meet the firm order
quantities noted above.  The minimum
inventory level shall be set to approximately one month of forecasted demand
and adjusted on a quarterly basis, and the maximum quantity shall be set to the
sum of the unshipped portion of Products out of the forecasted demand for the
current month plus (i) with respect to Scopes, the subsequent three (3) months
of forecasted demand and (ii) with respect to Sheath Products and Scope
Accessories and Replacement Components, the subsequent one (1) month of
forecasted demand.  The Min-Max will also
show a target stocking level that MDTX will retain in inventory at its
Jacksonville, Florida facility at a level of approximately one month of
forecasted demand.  MDTX will deliver to
the Company, on a semi-monthly basis, a completed Min-Max indicating the type
and quantity of Products needed for shipment by the Company to MDTX, and the
Company shall ship such Products to MDTX within five (5) business days from
receipt of the applicable Min-Max.  The
Company shall maintain inventory levels adequate to meet its obligations under
this Agreement 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 this Agreement and any Quota
Period 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, the 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 one percent (1%)
discount on any amounts paid and received by the Company within ten (10) days
of invoice.  Late payments will be
assigned a monthly service fee equal to 1% of the amount due.  Persistent failure to pay invoices when due
shall constitute a material breach of this Agreement.   MDTX shall pay all invoices in full
according to the stated terms.  The
Company will issue credits for any rejected Product pursuant to Section 5.7
below that MDTX may use to reduce payment of future invoices.

 9
 

 

5.4           Prices for the Scope Products ordered
by MDTX from Company shall be as set
forth in Annex A to this Agreement. 
Prices for Sheath Products ordered by MDTX from the Company shall be as
set forth in Annex B 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 the Company’s facility.

5.6           The
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 the 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 the
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.  The 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 the Company (if so requested by the Company and then pursuant
to the Company’s return authorization approval procedures).  In the event of a rejection of defective
Product, the 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           The
Company hereby represents and warrants to, and covenants with, MDTX as follows:

(a)           Ownership. 
Except for rights held by MDTX pursuant to the License Agreement, the
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 the Company in the Products. 
The 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 a manner consistent with good
commercial practice, and the 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 in the Territory relating to medical devices
and to the Product’s published specifications and all other applicable
manufacturing requirements.  The Company further represents and
warrants to MDTX that the 

 10
 

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 (i) ISO 13485:2003 or later;
(ii) for E.U. countries, the appropriate European Medical Device Directive
93/42/EEC annexes; and (iii) for Canada, CAN/CSA ISO 13485:2003 or later.  The Company shall maintain such
certifications (or successor requirements) in force throughout the Term of this
Agreement, at its sole cost.  The Company
shall promptly inform MDTX when the Company has identified a quality issue that
affects the safety or efficacy of any Product or that otherwise affects the
performance of any Product.  Once per
year during the Initial Term (as hereafter defined) of this Agreement or any
renewal thereof, the Company shall provide MDTX’s 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 the 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.  The
Company shall inform MDTX in writing of the warranty periods applicable to all
of its products.  The 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.  The 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 Scope 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 the Company can demonstrate
sufficient financial resources, the Company shall control such defense and all
negotiations relative to the settlement of any such claim.  MDTX shall promptly provide the Company with
written notice of any claim which MDTX believes falls within the scope of this Section
6.2.  In the event that the Scope
Product, or any 

 11
 

portion thereof, is held to infringe and its use is
enjoined, the Company shall have the obligation to, at its option and expense,
(i) modify the infringing Scope 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 Scope Product, or (iii)
replace said Scope Product with equally suitable, non-infringing product.  If none of the foregoing alternatives are
available to the Company, the Company shall repurchase from MDTX at the price
charged to MDTX by the Company, all Scope Products that are in good and
saleable condition and are in unopened, undamaged 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
the 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 the 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

This Agreement shall
apply only to Sheath Products purchased by MDTX on or prior to the Sheath
Distribution Termination Date.  With
respect to Scope Products, 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 December 31, 2008 (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 negotiate in good faith
with the Company regarding the purchase of finished goods Products held in
inventory by the Company pursuant to the terms specified in Section 5.2
..  MDTX shall retain the rights under
this Agreement necessary for it to sell its remaining inventory of Products,
and the Company shall provide the necessary materials and support to assist
MDTX in doing so, for a period of six (6) months following any such termination
or expiration of this Agreement and unless and until the Company shall elect,
in its sole discretion, to repurchase such remaining inventory at MDTX’s cost.

9.5           If any of the Scope 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 Scope Product shall be
suspended until 90 days after the date on which the Product has been
re-introduced into the market.

9.6           This Agreement shall terminate
automatically in the event that the Purchase Agreement terminates prior to the
Closing (as defined in the Purchase Agreement). 
Notwithstanding anything to the contrary herein, in the event this
Agreement terminates pursuant to this Section 9.6, the terms of the
Prior Agreement shall be revived effective simultaneously with the termination
of this Agreement and shall continue in full force and effect as if never
amended pursuant to the terms of this Agreement.

10.           PRODUCT LABELING,
REGISTRATION

10.1         Product Labeling.   All Products shall be marketed to indicate
that MDTX is the distributor of Products and shall 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.

 13
 

 

10.2         Product Registration.  The Company, at its cost,  shall
obtain and maintain all necessary registrations, licenses and permits for the
Scope Products with health and other competent authorities that may from time
to time be required by law, regulation or otherwise in the US and shall obtain
in its own name and maintain at its sole expense the CE Mark for Scope
Products.  The Company shall appoint an
affiliate of MDTX (as designated by MDTX) within the European Union to serve as
the EC Representative of Scope Products for as long as MDTX is the exclusive
distributor of the Scope Products in all the Designated Areas within the
European Union, and MDTX shall bear all costs and expenses in connection with
such representation.  MDTX, at its cost,  shall obtain and maintain all necessary registrations,
licenses and permits for the Scope 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 Scope Product, outside the US, within a six-month time period.  Any such registrations, licenses or permits
shall be in the name of the Company unless prohibited by law, in which case
they shall be held in trust by MDTX
acting as in-country caretaker for the Company, and shall be subject to
transfer, cancellation, modification or supplement for Scope Product changes at
the Company’s direction.  The Company
shall provide, free of charge, data and investigation reports and all other
documentation as it possesses to the extent that they are required by local law
and will cooperate with MDTX, as reasonably requested by MDTX, in obtaining the
registration throughout the Territory. 
The Company shall also obtain the appropriate approval of all
governmental control agencies as required in the US and MDTX  shall obtain the appropriate approval of all governmental
control agencies as required throughout the Territory for any purchases and
sales contemplated by this Agreement where MDTX is selling Scope Products, and
specifically, MDTX  shall obtain
all necessary approvals for the importing, storing and selling of Scope
Products subject to sterile conditions.  

11.           RECALLS;
COMPLAINTS

11.1         MDTX
shall provide the Company from time to time upon the reasonable written request
of the Company, 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 two business days of being advised in
writing of such recall by the Company. 
In this regard, MDTX agrees
to advise the Company within forty-eight (48) hours of each complaint that
responsible employees of MDTX (those employees or agents that are usually and
customarily required to receive and report on customer complaints or adverse
events involving the Products) 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, the 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 of any potentially reportable
product incident of which either the Company or MDTX becomes aware and MDTX
shall, in its sole discretion, determine to report such incident to the
appropriate governmental agencies within the Territory or to take a field
action or commence a recall as a result of such incident.

 14
 

 

11.2         MDTX shall handle all customers’
complaints it receives with a view of securing and maintaining the goodwill of
the Company and of the Products, and shall record all complaints it receives in
detail and promptly submit the same to the Company for its review, as set forth
above.  Company (a) shall notify MDTX of
any complaints it receives related to Products in the Territory; and (b) 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         The Company shall
have and shall retain at all times all rights in and to its Intellectual
Property relating to the Scope Products.

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

13.           REPRESENTATIONS,
WARRANTIES AND COVENANTS OF COMPANY

The
Company hereby represents, warrants and covenants to MDTX that:

13.1         The
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         The
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 the Company’s management, threatened against the Company that
might reasonably be expected to have a material adverse effect on the ability
of the Company to perform its obligations hereunder.

 15
 

 

13.5         The 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.

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

 

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 the 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 the Company, its employees, agents, or subcontractors.

16.2         The 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 the
negligence or willful misconduct of MDTX
in its sale, distribution or handling of the such Products; provided however,
that with respect to Sheath Products, this provision shall apply only to Sheath
Products purchased pursuant to the Prior Agreement.

(c)          any third party claim
for bodily injury, including death, or property damage caused by defects in
manufacture of the Sheath Products, except to the extent a claim is caused by
the negligence or willful misconduct of MDTX
in its sale, distribution or handling of the Sheath Products; and

(d)         any Product recalls or
replacements by any competent government authority or other agency deemed
appropriate by mutual agreement of the 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; provided, however,
that with respect to Sheath Products purchased after the date of this
Agreement, this provision shall apply only to the extent that such recall or
replacement is initiated as a result of a manufacturing defect.

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 

 17
 

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 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 

 18
 

(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 the 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

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 Delaware, 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 

 19
 

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 the 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 or otherwise apply to the interpretation or meaning
of any provisions of this Agreement that 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.

19.10       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 or endoscope 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 ENT endoscope business to
such competitor of MDTX, MDTX shall have the right to terminate this Agreement
upon written notice to the Company.

 20
 

 

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       Except as set forth in the Asset Purchase
Agreement, neither party shall make any public announcement or statement
regarding the relationship of the parties hereunder.

[END OF TEXT]

 

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

	
  MEDTRONIC XOMED, INC.

  	
   

  	
   

  	
  VISION-SCIENCES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
  Name:

  	
  Ron Hadani

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
  President & CEO

  
	
  Date:

  	
   

  	
   

  	
   

  	
  Date:

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