Document:

Exhibit
10.13

WAIVER AND FIRST
AMENDMENT TO LOAN AGREEMENT

This WAIVER AND FIRST AMENDMENT (this “Amendment”)
is made and entered into
as of June 8, 2006 but, unless otherwise specified, effective for all purposes
as of December 1, 2005 (the “Effective Date”) to the Loan and
Security Agreement dated as of December 1, 2005 (as heretofore amended,
supplemented or otherwise modified, the “Loan Agreement”), among Insight
Equity A.P. X, L.P. (“Borrower”), the Loan Parties named therein, and
ORIX Finance Corp. as agent for the Lenders (in such capacity, “Agent”).

WITNESSETH:

WHEREAS, Borrower has advised the Agent that (a)
certain Warrants previously valued at $0.00 have been revalued at $2,060,000 by
American Appraisal, Borrower’s third-party evaluation company, (b) pursuant to
regulations issued by the Financial Accounting Standards Board the increased
value of such Warrants may be classified as a liability on Borrower’s financial
statements, thus increasing Borrower’s interest expense for its 2005 financial
statements by an equal amount, and (c) such increased interest expense has
caused or will cause an Event of Default under Section 6.6 of the Loan
Agreement (the “Warrant Default”).

WHEREAS, an Event of Default has occurred and is
continuing under the Loan Agreement by reason of Borrower’s failure to deliver
the financial statements required by Section 9.7 of the Loan Agreement (the “Financial
Statement Default” and collectively with the Warrant Default, the “Existing
Defaults”).

WHEREAS, Borrower has requested that Agent and the
Required Lenders agree to (a) waive the Existing Defaults and any future
Default or Event of Default that will exist under Section 6.6 solely as
a result of an increase in the value of the Warrants, and to (b) amend certain
provisions of the Loan Agreement.

WHEREAS, Agent and the Required Lenders are willing to
agree to such requests upon the terms and conditions of this Amendment.

WHEREAS, this Amendment shall constitute one of the
Other Documents, these Recitals shall be construed as part of this Amendment
and capitalized terms used but not otherwise defined in this Amendment shall
have the meanings described to them in the Loan Agreement.

NOW, THEREFORE, in consideration of the foregoing and
the agreements, promises and covenants set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

Section 1.               Terms Defined.  Unless otherwise defined in this Amendment, each
capitalized term used in this Amendment has the meaning given to such term in
the Loan Agreement (as amended by this Amendment).

Section 2.               Amendments to Loan Agreement.  Subject to the conditions set forth in Section
5 of this Amendment, the Loan Agreement is hereby amended as follows:

 

(a)           Amendment to Definition of “EBITDA”.  Effective as of the Effective Date, the
definition of the term “EBITDA” in Section 1.2 of the Loan Agreement is
hereby amended and restated to read in its entirety as follows:

“EBITDA” shall mean, for any period and
without duplication, the sum of (a) Earnings Before Interest and Taxes for such
period, plus (b) depreciation expenses of Borrower and its consolidated
Subsidiaries for such period, plus (c) amortization expenses of Borrower and
its consolidated Subsidiaries for such period, plus (d) if and to the extent
that such management fee expenses have been deducted for purposes of
determining Earnings Before Interest and Taxes, management fee expenses of
Borrower, to the extent permitted under Section 7.7 hereof, for such
period, plus (e) if and to the extent not already included in clause (c) above,
fees, commissions and charges payable on the Closing Date under this Agreement,
the Fee Letter or the Other Senior Credit Agreement and fees previously amortized
required to be expensed due to the amendment and restatement of that certain
Revolving Credit, Term Loan and Security Agreement, dated as of
October 31, 2004 among Senior Agent, the other financial institutions
party thereto from time to time, Borrower and certain other Loan Parties party
thereto (the “Existing Agreement”) pursuant to the Other Senior Credit
Agreement; provided, however, that EBITDA for each of the months of November
2004 through and including October 2005 shall be the amounts for such month set
forth on Schedule 1.2(c) hereto.

(b)           Amendment to Definition of “Fixed
Charge Coverage Ratio”.  Effective as
of the Effective Date, the definition of the term
“Fixed Charge Coverage Ratio” in Section 1.2 of the Loan Agreement is
hereby amended and restated to read in its entirety as follows:

“Fixed Charge Coverage Ratio” shall mean and
include, with respect to any fiscal period, the ratio of (a) (i) EBITDA minus
(ii) Capital Expenditures actually paid in cash (and not financed) by Borrower
and its consolidated Subsidiaries during such fiscal period minus (iii) all
cash taxes paid or payable by Borrower and its consolidated Subsidiaries during
such fiscal period, minus (iv) all dividends and/or distributions (but
excluding the payment, on or before the Closing Date, of accrued dividends on
the issued and outstanding Class A-1 Preferred Partnership Rights of Borrower
in an aggregate amount not to exceed $600,821.92 and accrued dividends on, and
the redemption price of, the issued and outstanding Class A-2 Preferred
Partnership Rights of Borrower in an aggregate amount not to exceed
$2,000,000.00 and $12,500,000.00, respectively) paid pursuant to Section
7.7(c) hereof or otherwise to (b) all Senior Debt  Payments, other than
mandatory prepayments of principal based upon Excess Cash Flow required
pursuant to Section 2.14(b), plus all Subordinated Debt Payments, in
each case paid or payable during such fiscal period.

(c)           Amendment to Definition of
Tangible Net Worth.  Effective as of
the Effective Date, the definition of the term “Tangible Net Worth” in Section
1.2 of the Loan Agreement is hereby amended and restated to read in its
entirety as follows:

 2
 

 

“Tangible Net Worth” shall mean, at a particular date and without
duplication, (a) the aggregate amount of all assets of Borrower and its
consolidated Subsidiaries as may be properly classified as such in accordance
with GAAP consistently applied excluding such assets as are properly classified
as intangible assets under GAAP, plus (b) intangible assets acquired or created
on or before December 1, 2005, less (c) the aggregate amount of all liabilities
of Borrower and its consolidated Subsidiaries as may be properly classified as
such in accordance with GAAP, plus (d) the sum of (i) the aggregate amount of the
prepayment fees or penalties paid by Borrower to the holders of the
Subordinated Loans in connection with the prepayment of the Subordinated Loans,
provided that such amount shall not exceed $720,000, (ii) the aggregate amount
of Borrower’s costs associated with the closing of the Existing Agreement which
were required to be expensed by Borrower in connection with the execution of
the Other Senior Credit Agreement (as an amendment and restatement of the
Existing Agreement), provided that such amount shall not exceed $859,000, and
(iii) Permitted Tax Payments made and permitted to be made in accordance with Section
7.7(b) of this Agreement; provided, however, that for purposes of clause (c)
preceding, liabilities consisting of the Warrants shall be excluded.

Section 3.               Limited
Waivers.

(a)           Waiver.  Notwithstanding anything to the contrary
contained in the Agreement or any Other Document, Lenders hereby waive the
Event of Default that occurred as a result of Borrower’s failure to timely
furnish to Agent financial statements of Borrower and its consolidated
Subsidiaries for the fiscal year ended December 31, 2005 and other documents
required to be delivered therewith, all as required by Section 9.7 of
the Agreement, and Lenders hereby agree that delivery of such financial
statements and such other documents on or before June 15, 2006 is hereby
consented to and shall not constitute a violation of Section 9.7 of the
Agreement or an Event of Default under the Agreement or an event of default under any Other Document.

(b)           Limitation
of Waiver.  The waiver and consent
set forth in Section 3.1 of this Amendment shall be limited strictly as
written and shall not be deemed a waiver of, or a consent to noncompliance
with, any term or provision of the Agreement or any Other Document except as
expressly set forth in Section 3.1 of this Amendment.

Section 4.               Representations and
Warranties.  To induce the Agent and
the Lenders to enter into this
Amendment, Borrower represents and warrants that:

(a)           No
Default.  After giving effect to this
Amendment, no Default or Event of Default shall have occurred and be continuing
as of the date hereof;

(b)           Representations
and Warranties.  As of the date
hereof and, after giving effect to this Amendment and the transactions
contemplated hereby, the representations and warranties of Borrower contained
in the Loan Agreements or Other Documents are true, accurate and complete in
all respects on and as of the date hereof to the same extent

 3
 

 

as though made on and as of such date except to the extent such
representations and warranties specifically relate to an earlier date; and

(c)           Corporate
Authority.  (i) The execution,
delivery and performance by Borrower to this Amendment are within its
organizational powers and have been duly authorized by all necessary
organizational action on the part of Borrower, (ii) this Amendment is the
legal, valid and binding obligation of Borrower enforceable against Borrower in
accordance with its terms and (iii) neither the execution, delivery or
performance by Borrower of this Amendment (1) violates any law or regulation,
or any other or decree of any Governmental Authority, (2) conflicts with or results in the
breach or termination of, constitutes a default under or accelerates any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Borrower is a party or by which Borrower
or any of its property is bound, (3) results in the creation or imposition of
any Lien (other than Permitted Encumbrances) upon any of the Collateral, (4)
violates or conflicts with the Organizational Documents of Borrower, or (5)
requires the consent, approval or authorization of, or declaration or filing
with, any other Person, except for those already duly obtained.

Section 5.               Conditions Precedent.  The effectiveness of this Amendment is
subject to the following
conditions precedent:

(a)           No
Default.  No Default or Event of
Default under the Loan Agreement, as amended hereby and subject to the waivers
granted pursuant hereto, shall have occurred and be continuing.

(b)           Warranties
and Representations.  After giving
effect to this Amendment and the transactions contemplated hereby, the
warranties and representations of Borrower contained in the Loan Agreement or
Other Documents shall be true and correct as of the effective date hereof, with
the same effect as though made on such date, except to the extent that such
warranties and representations expressly relate to an earlier date, and all of
such representations and warranties (except those relating to an earlier date)
are hereby remade by Borrower as of the date hereof.

(c)           Amendment
to PNC Credit Agreement.  The Agent
shall have received amendments and waivers to the Other Senior Credit
Agreement, all in form and substance satisfactory to Agent.  No event of default under the Other Senior
Credit Documents, as amended and waived thereby, shall have occurred and be
continuing.

(d)           Other
Requirements.  The Agent shall have
received such other documentation which it shall have requested pursuant to
this Amendment.

Section 6.               Reference
to and Effect on Loan Documents.

(a)           Ratification.  Except as specifically amended above, the
Loan Agreement and the Other Documents shall remain in full force and
effect.  Notwithstanding anything
contained herein, the terms of this Amendment are not intended to and do not
effect a novation of the Loan Agreement or any other Loan Document Borrower
hereby ratifies

 4
 

 

and reaffirms each of the terms and conditions of the Loan Agreement
and the Other Documents to which it is a party and all of its obligations
thereunder.

(b)           No
Waiver.  The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of the Lenders or the Agent under the Loan Agreement or any of
the Other Documents, other than to the extent expressly set forth herein.

Section 7.               Future
Waivers and Extensions.  Nothing in
this Amendment shall be construed as an agreement by Agent or any Lender to
make any further extensions or waivers of the conditions described herein or
any other conditions of the Loan Agreement. 
Any further extensions or waivers of such conditions shall be at the
sole and absolute discretion of Agent and each Lender, and each shall be free
to make or not make any such further waivers or extensions.  The foregoing waivers shall be limited
precisely as written, and nothing in this Amendment shall be deemed to
prejudice any right or remedy that Agent or any successor may now have (after
giving effect to the foregoing waivers and amendments) or may have in the
future under or in connection with the Loan Agreement or any of the Other
Documents or any other document, instrument or agreement executed and delivered
in connection with the foregoing.

Section 8.               Acknowledgement
of Guarantors.  Each Guarantor
acknowledges and consents to all of the terms and conditions of this Amendment.

Section 9.               Miscellaneous.

(a)           Successors
and Assigns.  This Amendment shall be
binding on and shall inure to the benefit of Borrower, Agent, the Lenders and
their respective successors and assigns.

(b)           ENTIRE
AGREEMENT.  THIS AGREEMENT REPRESENTS
THE ENTIRE, FINAL AGREEMENT AND UNDERSTANDING CONCERNING THE SUBJECT MATTER
HEREOF BETWEEN THE PARTIES HERETO, AND SUPERSEDES ALL OTHER PRIOR AGREEMENTS,
UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, REPRESENTATIONS, WARRANTIES,
COMMITMENTS, PROPOSALS, OFFERS AND CONTRACTS CONCERNING THE SUBJECT MATTER
HEREOF, WHETHER ORAL OR WRITTEN.  THIS
AGREEMENT, ANY SUPPLEMENTS HERETO, AND ANY INSTRUMENTS OR DOCUMENTS DELIVERED
OR TO BE DELIVERED IN CONNECTION HEREWITH MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES HERETO.

(c)           Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

(d)           Severability.  Wherever possible, each provision of this
Amendment shall be interpreted in such a manner as to be effective and valid
under applicable law, but if

 5
 

 

any provision of this Amendment shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Amendment.

(e)           Counterparts.  This Amendment may be executed in any number
of separate original counterparts (or telecopied counterparts with original
execution copy to follow) and by the different parties on separate
counterparts, each of which shall be deemed to be an original, but all of such
counterparts shall together constitute one agreement.  Delivery of an executed counterpart of a
signature page to this Amendment by telecopy shall be effective as delivery of
a manually executed counterpart of this Amendment.

(f)            Incorporation
of Loan Agreement Provisions.  The
provisions contained in Section 15.1 (Governing Law) and Section 12.3
(Jury Waiver) of the Loan Agreement are incorporated herein by reference to the
same extent as if reproduced herein in their entirety.

[Signatures
follow]

 6
 

 

IN WITNESS WHEREOF, Borrower, the Loan
Parties, Agent and Lenders have caused this Amendment to be executed and
delivered by their duly authorized officers effective as of the date first
above written.

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Insight Equity A.P. X Company, LLC

  
	
   

  	
  Title:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Ted W. Beneski

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SUBSIDIARIES:

  
	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X ASIA, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ted W. Beneski

  
	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PT. VISION-EASE ASIA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ted W. Beneski

  
	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
  Title:

  	
  President Commissioner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X CANADA, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ted W. Beneski

  
	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
							

 

 7
 

 

 

	
  

  	
  INSIGHT EQUITY A.P. X CANADA

  PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Insight Equity A.P. X Canada, LLC

  
	
   

  	
  Title:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Ted W. Beneski

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VISION-EASE CANADA CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ted W. Beneski

  
	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VISION EASE LENS EUROPE LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Faber

  
	
   

  	
   

  	
  Name:

  	
  Richard Faber

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VISION-EASE LENS LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Faber

  
	
   

  	
   

  	
  Name:

  	
  Richard Faber

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GENERAL PARTNER

  
	
   

  	
   

  
	
   

  	
  INSIGHT EQUITY A.P. X COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ted W. Beneski

  
	
   

  	
   

  	
  Name:

  	
  Ted W. Beneski

  
	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ORIX FINANCE CORP., as Agent on behalf of the

  Required Lenders and as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher L. Smith

  
	
   

  	
   

  	
  Name:

  	
  Christopher L. Smith

  
	
   

  	
   

  	
  Title:

  	
  Authorized Representative

  
							

 

 8
 

 

 

	
  

  	
  COASTLEDGE AND
  CO., AS THE NOMINEE

  OF ARROW INVESTMENT PARTNERS

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin S. Buckle

  
	
   

  	
   

  	
  Name:

  	
  Kevin S. Buckle

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
  Grandview Capital Management, LLC

  
	
   

  	
   

  	
   

  	
  As Investment Manager

  

 9
 

 

 

	
  

  	
  NEWSTAR COMMERCIAL LOAN TRUST 2006-1

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  NewStar Financial, Inc., as Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Walter J. Marullo

  
	
   

  	
   

  	
  Name:

  	
  Walter J. Marullo

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
					

 

 10Exhibit 10.14

 

PLEASE NOTE THAT CERTAIN MATERIAL HAS BEEN OMITTED
FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

 

SupplyAgreement

for

Plastic
Finished Goods Lenses

by
and between

Shanghai
Conant Optical Co. Ltd.

(“SCO”)

and

Insight
Equity A.P. X, LP (dba) Vision-Ease Lens

(“VEL”)

 

 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

This Supply Agreement,
effective as of December 7, 2005, by and between the “Buyer” Insight Equity
A.P. X, LP dba Vision-Ease Lens, with its principal office located at 7000
Sunwood Drive Northwest: Ramsey, MN 55303 USA, subsequently referred to as “VEL,”
and the “Seller” Shanghai Conant Optical Co., Ltd with its principal office
located at 555 Chuan Da Rd. Pu Dong, Shanghai 201200, China, subsequently
referred to as “SCO.”

RECITALS

The parties recite and
declare:

WHEREAS, SCO is engaged
in the development and the manufacture of plastic ophthalmic lenses; and

WHEREAS, VEL is a
manufacturer and distributor of ophthalmic lenses in various materials
including polycarbonate, glass and plastic; and

WHEREAS, SCO and VEL
desire to engage in an OEM relationship for the manufacture by SCO and the
purchase by VEL of plastic ophthalmic lenses; and

NOW, THEREFORE, in consideration
of the foregoing recitals, the mutual promises set forth below and other good
and valuable consideration, the sufficiency of which is hereby acknowledged by
the parties, VEL and SCO agree as follows:

1.                                       PRODUCTS

1.1.                              Definition
of Products.  For the purpose
of this agreement products will be defined as monomer-based cast resin
ophthalmic lenses.

1.2.                              Exclusive
Supply.  SCO shall
manufacture, sell and cause to be delivered to VEL the product set forth in
Exhibit “B” pursuant to the Specifications stated in Exhibit “A” hereto (the “Product”)
in accordance with and subject to the terms and conditions of this Agreement,
in quantities sufficient to meet VEL’s requirements pursuant to VEL’s Rolling
Forecasts as provided in item 3.1 below and pursuant to the Purchase
Orders.  In North America, VEL shall be
the exclusive customer/distributor of SCO for monomer-based cast resin
ophthalmic lenses listed in Exhibit “B” with the exception of any product
actively sold to SCO customers that existed prior to November 1, 2005.  In Europe, VEL shall be the exclusive
customer/distributor of SCO for monomer-based cast resin ophthalmic lenses
listed in Exhibit “B” with the exception of: Uncoated SFSV 65mm, Uncoated SFSV
70mm, Coated SFSV 70mm, Uncoated SF-D28 70mm, Coated SF-D28 70mm, Uncoated
SF-C28 70mm, and any product actively sold to SCO customers that existed prior
to November 1, 2005.  SCO will extend
best pricing given to customers/distributors in North America and Europe on all
current and future products sold to VEL pursuant to this Agreement: provided,
however, that said best pricing shall apply only to products of equal
specifications and quality.

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.3.                              Right of
First Refusal.  During the
term of this Agreement: (a) VEL shall have the right of first refusal to
purchase any new SCO monomer-based cast resin ophthalmic product developed by
SCO (excluding products developed by a third party) offered by SCO to be sold
to a third party in North America and Europe by giving written notice to SCO of
its intent to match the terms and conditions of any bona fide offer from said
third party, which notice shall be made within thirty (30) days from its
receipt from SCO of the bona fide offer: and (b) SCO shall have the right of
first refusal to manufacture any monomer-based cast resin ophthalmic product
that VEL desires to purchase by giving written notice to VEL of its intent to
match the terms and conditions of any bona fide offer to manufacture from a
third party, which notice shall be made within thirty (30) days from its
receipt from VEL of the bona fide offer to manufacture.  Should either right of first refusal not be
exercised within the thirty (30) day period, the rights shall terminate and SCO
or VEL shall be free to sell the product to the third party or buy from another
manufacturer, as the case may be: provided, however, that should any right of
first refusal not be exercised in any instance that shall not effect the
ability to exercise the right of first refusal in any other instance.  In either event, this Agreement shall not
terminate.

1.4.                              Product
Requirements.  All Products
sold and delivered to VEL hereunder shall:

1.4.1.                     conform with the specifications
set forth in Exhibit “A” attached hereto, and with such further specifications
as shall be agreed to by SCO and VEL in writing and amended to Exhibit “A”,

1.4.2.                     be subject to the warranties set
forth in section 8 of this Agreement.

1.5.                              Product
Liability.  SCO agrees that it
shall be responsible for, and shall hold VEL harmless from all claims based on
an alleged defect in an ophthalmic lens produced by SCO due to failure to meet
the Specifications set forth in Exhibit “A” as may be amended in writing by the
parties.  SCO agrees to adhere to all
applicable laws, regulations and industrial standards for ophthalmic lenses in
the countries where the Products are being manufactured.

2.                                       PRICING
AND PAYMENT

2.1.                              Pricing.  The unit price includes all
requirements for Product listed in the specification referenced in Exhibit “A”
and is documented in Exhibit “B:’ Prices include all charges of packaging,
packing, applicable taxes for export in China and freight imposed before
passage of title.  Terms are CIF
Minneapolis St. Paul Airport (MSP) or UK to be named on purchase order
(Incoterms 2000) as agreed in advance by the parties.

2.2.                              Pricing Periods.  Pricing Periods shall be one
calendar year in length, and begin on the date of this agreement.  Sixty (60) days prior to the end of each
Pricing Period, VEL and SCO shall review the pricing for the next Pricing Period,
which 

 2
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

will be for one (1) year.  If VEL
and SCO do not agree on the price to be effective during any Pricing Period,
then this Agreement shall terminate at the expiration of the then-current
Pricing Period after receipt of items ordered but not yet shipped.

2.3.                              Price
Adjustments.  Increases to
such pricing shall be instituted upon documentation provided by SCO to VEL’s
reasonable satisfaction that SCO has incurred increases in its direct costs
associated with the Product.  Decreases
shall also occur in the event of a decrease in the direct costs associated with
the Product.  Any price adjustments will
be limited to 5% within one pricing period.

2.4.                              Effective
Date of Pricing.  All
purchased products shall be paid by VEL at the unit price and the payment terms
in effect when the purchase order is issued by VEL.

2.5.                              Payment
Terms.  Payment terms are 90
days from bill of lading date, VEL shall pay SCO in United States Dollars
(USD).

2.6.                              Invoicing.  SCO invoices shall reference the
purchase order number, VEL part number, sales price, and quantity.  Terms will begin from the date on the bill of
lading.

2.7.                              Taxes.  SCO shall bear the cost of any
taxes of any kind, nature or description whatsoever applicable to the sale of
any Products by SCO to VEL prior to the bill of lading date.

3.                                       FORECASTS
AND ORDERS

3.1.                              Rolling
Forecast.  In order to assist
SCO in planning, VEL shall provide SCO with a twelve (12) month rolling
forecast of the quantities of the Products required by VEL, by month, for the
following twelve (12) months.  This
forecast will be updated on a monthly basis. 
It is understood that such forecasts are intended to be estimates only,
and shall not be binding upon VEL.

3.2.                              Reserve
Capacity.  SCO agrees to
reserve capacity to deliver forecasted quantities.

3.3.                              Notification
by SCO.  SCO shall, no later
than fifteen (15) business days after receipt of each said twelve (12) month
forecast, notify VEL in writing of any prospective problems of which it is
aware that SCO reasonably believes will prevent it from meeting VEL’s
forecasted order quantities or estimated delivery dates.

3.4.                              Purchase
Orders.  Purchase orders shall
be sent to SCO via email, facsimile, or in writing sent by appropriate courier
for delivery within three (3) days.  All
received purchase orders shall be automatically treated as confirmed orders
from VEL to SCO on the fifth (5th) business day following receipt by SCO unless
SCO 

 3
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

notifies VEL of its rejection of the purchase order and the reason for
said rejection during the five business day period sent to VEL by the same
method as the purchase order.  The
parties agree not to contest the validity or enforceability of purchase orders
transmitted electronically under the applicable law requiring that contracts be
in writing and signed by the parties to be bound.

3.5.                              Change
Notices.  Purchase orders may
be changed by VEL, subject to a written consent of SCO.  Purchase orders may be canceled in writing
with written consent of SCO, subject to payment of all reasonable charges based
upon demonstrated expenses incurred.

3.6.                              Minimum
Purchases.  During the term of
this Agreement, VEL shall purchase a minimum US Dollar ($) amount of Products
during each Pricing Period as follows:

	
  First Pricing Period:

  	
   

  	
  $

  	
  1,500,000

  	
   

  
	
  Second Pricing
  Period

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
  Third Pricing Period

  	
   

  	
  $

  	
  2,000,000

  	
   

  

 

SCO shall notify VEL of
purchasing shortfalls, if any, prior to the end of any Pricing Period and give
VEL ninety (90) days to fulfill purchasing obligations.  If VEL fails to fulfill the purchasing
obligations listed in Section 3.6 in ninety (90) days.  SCO has the right to immediately terminate
this Agreement.  Purchases made during
the ninety (90) day period to fulfill the previous Pricing Period obligation
shall not apply to the then current Pricing Period obligation.

4.                                       DELIVERY

4.1.                              Delivery
Terms.  Delivery shall be CIF
Minneapolis St. Paul Airport (MSP) or UK to be named on purchase order
(Incoterms 2000) as agreed in advance by the parties.  SCO will ship Products on the due date as
identified on the purchase order.

4.2.                              Leadtime.  Standard leadtime on purchase
orders shall not be less than thirty (30) days. 
VEL may place orders with less than thirty (30) days leadtime subject to
prior written consent of SCO.  With prior
notice, leadtime can be extended upon agreement between VEL and SCO, leadtime
is defined as the time from acceptance of order by Seller to the time that
Product is ready for dispatch, not including the transit time from Seller’s
location to the place of delivery.

4.3.                              Carrier.  In accordance with the delivery
terms in 4.1, SCO will be responsible for establishing carriers and covering
all shipping fees for Sea Freight.  If
Air Freight is required by VEL, VEL will cover the difference between Air
Freight and Sea Freight and will pay the difference to SCO thirty (30) days
after the shipment.  If Air Freight is
required because of any material failure on SCO’s part 

 4
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

that causes such a delay that Air Freight is the only practical
alternative to meet the agreed upon delivery schedule.  SCO will pay for reasonable Air Freight
costs.

4.4.                              Title and
Risk of Loss.  Title and risk
of loss of the Product shall pass to VEL upon delivery of the Products to the
carrier in accordance with the delivery terms specified in section 4.1.

4.5.                              Packing
Slips.  All shipments must be
accompanied by a packing slip documenting the purchase order number, item
number, quantity, and lot number for the shipment.

4.6.                              Penalty For
Delinquent Delivery.  Unless
otherwise agreed by VEL for a specific purchase order, VEL shall have the right
to assess a penalty against SCO of five percent (5.0%) of the invoiced price
for the Products in the event the shipment by SCO of Products pursuant to
Section 3 is not shipped within fifteen (15) days.  VEL shall have the right to assess an
additional penalty of five percent (5%) of the invoiced price of the Products,
if the product is not shipped within twenty-five (25) days: provided, however,
that in either case the delay in shipment is due to an action or inaction
within the control of SCO.  If after
thirty (30) days from the receipt date, the Products have not been delivered by
SCO.  VEL shall have the right to cancel
the purchase order provided that it cancels the purchase order in writing to
SCO .

4.7.                              Delays in
Delivery.  If at any time SCO
has reason to believe that delivery of goods will not be completed by the date
specified in VEL’s purchase order.  SCO
shall immediately notify VEL of the cause and duration of the anticipated
delay, and the action plan to resolve the delivery delay.

5.                                       QUALITY

5.1.                              Inspection
and Acceptance.  SCO shall
adhere to the quality inspection procedure as documented in the specification
in Exhibit “A.”

5.2.                              Non-Conforming
Product.  If delivery lots do
not pass incoming inspection as documented in the specification referenced in
Exhibit “A;” VEL shall immediately notify SCO with:

5.2.1.                     the quantity found with such
defects,

5.2.2.                     purchase order number,

5.2.3.                     lot number,

5.2.4.                     inspection report, and

5.2.5.                     provide a sample of the defect(s)
to SCO for investigation.

 5
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.3.                              Remedy for
Non-Conforming Product.  Upon
receipt of the defect sample, SCO will promptly investigate the defect and
notify VEL in writing of its evaluation of the defect within twenty (20) days
of receipt.  If SCO agrees with the
rejection, VEL may return the defective Products to SCO for further inspection,
through SCO’s designated freight forwarder, freight collect.  SCO will credit to VEL the amount of the
original invoice price for the accepted returned defective Products, plus any
direct costs paid by VEL (i.e., freight, duty, etc) within thirty (30) days
after agreeing with the rejection.

5.4.                              Failure to
Notify.  Should VEL fail to
provide SCO with written notice of its acceptance or rejection of the Products
within thirty (30) days after delivery of the Products, the Products shall be
deemed accepted by VEL.

5.5.                              Outgoing
Inspection Report.  If
required by VEL, SCO shall provide VEL an Outgoing Inspection Report at a time
and in a form mutually agreed upon by the parties in advance.

5.6.                              Audits.  SCO shall provide and maintain a
documented quality assurance inspection system it deems appropriate for audit
covering the Products to be furnished hereunder.  VEL retains the right to conduct a Supplier
Audit of SCO’s facility with thirty (30) days written notice.  In the event that any corrective actions are
reasonably required because SCO is not complying with such inspection system
and manufacturing process in a manner that materially and adversely affects the
Products purchased by VEL, SCO agrees to document an action plan and implement
resolution to corrective actions within ninety (90) days.

6.                                       PRODUCTION
PROCEDURES

6.1.                              Advance
Notice and Approval.  SCO
shall provide VEL ninety (90) days notice of any substantive changes intended
by SCO to the process for manufacturing the Product, including but not limited
to any change in the location of the manufacture of the Product or any material
input to the manufacturing process.  Such
intended changes shall only be implemented by SCO upon approval by VEL, which
approval shall not be unreasonably withheld. 
Should VEL not approve the changes, it shall have the option to
terminate this Agreement upon written notice to SCO given within the ninety
(90) day period.  Should VEL not provide
SCO of its intention to terminate this Agreement within said ninety (90) day
period, it shall be deemed to have approved the changes.

6.2.                              Remedy for
Non-Notification.  In the
event that VEL is not notified of such change as identified in section 6.1, and
if that change results in defective product causing VEL to incur customer
penalties or any costs as a direct result of that change, SCO shall reimburse
VEL for those reasonable costs.

 6
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

7.                                       INTELLECTUAL
PROPERTY, CONFIDENTIALITY AND PUBLICITY

7.1.                              Intellectual
Property.  Intellectual
Property shall be defined as all ideas, processes, inventions (whether
patentable or not patentable), trade secrets, works of authorships, trademarks
and other proprietary materials directly associated with the manufacture of the
Products.

7.1.1.                     Pre-Existing IP.  Intellectual Property owned by each party
prior to the effective date of this Agreement shall remain owned by each party.

7.2.                              Confidential
Information.  During the
period that this Agreement is in effect and for a period of five (5) years
thereafter.  SCO and VEL shall not
disclose to anyone in any manner whatsoever or use for any purpose other than
its performance of this Agreement (except as authorized in writing by the
disclosing party) any Confidential Information it receives from the other
party.  For the purposes of this
Agreement, “Confidential Information” shall mean and include all knowledge,
data and other information of a confidential or proprietary nature which is
owned, held, or known by the Disclosing Party and relating to products,
potential products, and specifications, processes, know-how, designs, formulas,
data, inventions, customer lists and data, financial data, business plans,
marketing plans and strategies, pricing strategies and other subject matter
pertaining to any research, business, or planned or contemplated business,
which either (i) is conspicuously identified as “confidential” at the time it
is disclosed to the other party, or (ii) is verbally disclosed, is identified
as “confidential” at the time of such disclosure, and within thirty (30) days
after the later of the execution of this Agreement or the disclosure of such
information the disclosing party confirms to the recipient in writing that such
information is to be treated as Confidential Information for purposes of this
Agreement.

7.3.                              Precautions
for Disclosure.  Each party
shall limit disclosure of Confidential Information received hereunder to only
those of its employees who are directly concerned with the performance of any
activities with respect to which the Information was disclosed.  Each party agrees to advise those of its
employees who receive any other party’s Confidential Information that such
Confidential Information:

7.3.1.                     is proprietary and confidential to
such party, and

7.3.2.                     shall not be disclosed to anyone
except as authorized by this Agreement or otherwise authorized by such party in
writing.

Each party further agrees
to take at least such precautions as it normally takes with its own
confidential and proprietary information to prevent unauthorized disclosure of
the other party’s Information.

7.4.                              Irreparable
Harm.  Each party acknowledges
that any unauthorized disclosure of any portion of the other party’s
Confidential Information may cause irreparable injury to the other party and
that no adequate or complete remedy may be 

 7
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

available at law to such other party to compensate for such
injury.  Accordingly, each party hereby
also acknowledges that the other party shall be entitled to injunctive relief
in the event of such unauthorized disclosure by a party or any of its employees
in addition to whatever remedies it might have at law.

7.5.                              Return of
Confidential Information Upon Termination. 
Upon termination of this Agreement, each party shall return
to the other all copies of the other’s Confidential Information, and shall make
no further use of such Information.

7.6.                              Exceptions.  The obligations of section 7.2
shall not apply to Confidential Information

7.6.1.                     that is or has been in the
possession of the recipient prior to receipt of the same from the disclosing
party as evidenced by written records;

7.6.2.                     which the recipient lawfully
obtains from any third party not under an obligation to the disclosing party to
hold the same in confidence;

7.6.3.                     that is published or becomes part
of the public domain without breach of any undertakings discussed hereinabove;

7.6.4.                     that is independently developed by
personnel of the receiving party without the use of Confidential Information of
the other Party; or

7.6.5.                     that is required to be disclosed
pursuant to judicial process, court order or administrative request, or that is
otherwise required for any regulatory filing, provided that the receiving party
shall notify the other party sufficiently prior to disclosing such Information
as to permit such other party to seek a protective order.

7.7.                              Press
Releases.  SCO and VEL agree
not to issue any press release or other public statement disclosing the
existence of or relating to this Agreement without prior written consent of the
other party; provided, however, that neither SCO nor VEL shall be prevented
from complying with any duty of disclosure it may have pursuant to law subject
to notifying the other party in writing and giving such other party reasonable
time to comment on the same prior to disclosure.  Notwithstanding the foregoing, VEL and SCO
each shall have the right to disclose information regarding this Agreement to
potential investors and its financial advisors (including allowing such
investors and financial advisors to review this Agreement itself): provided,
that, the disclosing party has obtained a commercially reasonable
confidentiality agreement from each such investor and financial advisor.

 8
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

8.                                       WARRANTIES

8.1.                              Limited
Warranties.  SCO warrants that
it has good and marketable title to all Products sold to VEL hereunder and that
all Products sold shall be free from all liens and encumbrances.  SCO further warrants that all Products shall
be free from defects in material and workmanship and shall conform to the
specifications set forth in Exhibit “A’’ as may be amended by the parties.  The express warranties set forth in this
section and the liabilities of SCO hereunder are in lieu of all other
warranties including, but not limited to, any implied warranty of
merchantability or fitness for a particular purpose.

8.2.                              Disclaimer
of Warranties.  EXCEPT AS
PROVIDED IN SECTION 8.1 ABOVE.  THE
PRODUCTS UNDER THIS AGREEMENT ARE PROVIDED “AS IS” WITHOUT ANY WARRANTIES OR
REPRESENTATIONS EXPRESS, IMPLIED OR STATUTORY: INCLUDING, WITHOUT LIMITATION,
WARRANTIES OF QUALITY, PERFORMANCE, NONINFRINGEMENT, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE, NOR ARE THERE ANY WARRANTIES CREATED BY A COURSE OF
DEALING, COURSE OF PERFORMANCE OR TRADE USAGE, THE FOREGOING EXCLUSIONS AND
DISCLAIMERS ARE AN ESSENTIAL PART OF THIS AGREEMENT AND FORMED THE BASIS FOR
DETERMINING THE PRICE CHARGED FOR THE PRODUCTS.

8.3.                              Limitation
of Liability; Remedies.  NOTWITHSTANDING
ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, SCO WILL NOT BE LIABLE WITH
RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE,
TORT, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY: (i) FOR ANY AMOUNT
IN EXCESS IN THE AGGREGATE OF THE AMOUNTS PAID BY VEL TO SCO FOR THE PRODUCTS
SOLD DURING THE TWELVE MONTH PERIOD PRIOR TO THE DATE THE CAUSE OF ACTION
AROSE; OR, (ii) FOR ANY INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE
DAMAGES OF ANY KIND, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFIT, GOODWILL
TIME, SAVINGS OR REVENUE.

9.                                       TERM
AND TERMINATION

9.1.                              Term.  This Agreement shall commence on
the date hereof and shall continue in effect for three (3) years (the “Initial
Term”) unless sooner terminated as provided herein and, thereafter, shall
automatically renew for additional one (1) year periods, until terminated by
either party by written notice to the other of its intention to terminate at
least one hundred eighty (180) days prior to the end of the Initial Term or the
subsequent renewal year.

9.2.                              Termination.  In the event that either party
shall materially breach this Agreement, the other party shall give such party
written notice specifying such breach with reasonable detail.  Should the breaching party fail to cure such
breach within thirty (30) days of receipt of such notice, then the other party
may 

 9
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

terminate this Agreement, In addition, either party may terminate this
Agreement with immediate effect upon giving written notice to the other party
in the event of insolvency, assignment for the benefit of creditors, or
bankruptcy proceedings by or against the other party.

9.3.                              Post-Termination
Obligations.  Upon the
expiration or termination of this Agreement for any reason: (a) SCO shall
immediately return all copies of the Specifications, Intellectual Property, and
any other property to VEL at the address set forth in Section 12 below within
fifteen (15) days, (b) VEL shall return to SCO any copies of SCO’s Intellectual
Property, and any other property, to SCO at the address set forth in Section 12
below, (c) Unless otherwise agreed by the parties, SCO shall manufacture all
Product pursuant to purchase orders accepted prior to termination, and (d) VEL
shall pay for all Product manufactured by SCO pursuant to the terms and
conditions herein.

9.4.                              Purchase by
a VEL Competitor.  In the
event SCO receives a bona fide offer from a third party optical lens
manufacturer and/or distributor that sells products competitive with those
products sold by VEL in North America and Europe that involves the purchase of
a controlling interest of SCO or the disposition of those SCO assets (including
know-how) associated with the manufacturing of Product under this Agreement,
then VEL shall have the right of first refusal to purchase the controlling
interest or the assets, as the case may be, by giving written notice to SCO of
its intent to match the terms and conditions of any bona fide offer from said
third party optical lens manufacturer, which notice shall be made within thirty
(30) days from its receipt from SCO of the bona fide offer upon the same terms
and conditions as negotiated between SCO and the third party lens
manufacturer.  Should the right of first
refusal not be exercised by VEL within the thirty (30) day period, the right
shall terminate and SCO shall be free to sell as contemplated.

10.                                 APPLICABLE
LAWS

10.1.                        Compliance with Laws.

10.1.1.               SCO represents and warrants, and shall
take all actions reasonably necessary to ensure, that all facilities, equipment
and practices used to perform its responsibilities under this Agreement will be
during the term of this Agreement, in full compliance with the health, safety
and environmental laws, statutes, ordinances, regulations, rules, permits and
pronouncements of national, state, and local laws in the country of
manufacture.  SCO assumes responsibility
for disposing of any and all waste generated during the performance of its
responsibilities under this Agreement in accordance with legal standards of
national, state, and local laws in the country of manufacture.

 10
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

10.1.2.               VEL represents and warrants that its
Specifications provided to SCO and its use of the Products will be in full
compliance with all health, safety and environmental laws, statutes,
ordinances, regulations, rules, permits and pronouncements of national, state,
and local laws in the country of the Products use.

10.2.                        Indemnity by
SCO.  If SCO fails to comply
with the obligations set forth in Section 10.1.1.  SCO will indemnify and hold VEL harmless from
any and all liability, expenses, costs, damages and/or losses of any kind
arising out of any third party claim against VEL.

10.3.                        Indemnity by
VEL.  If VEL fails to comply
with the obligations set forth in Section 10.1.2, VEL will indemnify and hold
SCO harmless from any and all liability, expenses, costs, damages and/or losses
of any kind arising out of any third party claim against SCO.

11.                                 DISPUTES
AND GOVERNING LAW

11.1.                        Arbitration.  Any dispute arising out of or in
connection with this Agreement, including any question regarding its existence,
validity or termination, shall be referred to and finally resolved by
arbitration under the American Arbitration Association (AAA), with such
arbitration proceedings to take place in Minneapolis, Minnesota.

11.2.                        Governing
Law.  This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Minnesota, U.S.A., as though made and to be fully performed in said State.  The Parties agree to exclude application of
the U.N. Convention on Contracts for the International Sales of Goods, 2000 (or
such other more recent or earlier version that may be in existence as of the
Effective Date).

12.                                 MISCELLANEOUS

12.1.                        Governing
Document.  The parties
recognize that, during the term of this Agreement, a purchase order,
acknowledgment form or similar routine document (collectively, “Forms”) may be
used to implement or administer provisions of this Agreement.  Therefore, the parties agree that the terms
of this Agreement shall prevail in the event of any conflict between this
Agreement and the printed provisions of such Forms, or typed provisions of
Forms that add to, vary, modify or are at conflict with the provisions of this
Agreement unless said Form specifically states that it shall control in the
event of a conflict and is signed by both parties.

12.2.                        Headings.  The captions of each section of
this Agreement are inserted only as a matter of convenience and for reference
and in no way shall be deemed to define, limit, enlarge, or describe the scope
of this Agreement and the relationship of the 

 11
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

parties hereto, and shall not in any way affect this Agreement or the
construction of any provisions herein.

12.3.                        Severability.  If and to the extent that any
provision of this Agreement is determined by any legislature, court or
administrative agency to be, in whole or in part, invalid or unenforceable,
such provision or part thereof shall be deemed to be surplusage and, to the
extent not so determined to be invalid or unenforceable, each provision hereof
shall remain in full force and effect unless the purposes of this Agreement
cannot be achieved.  In the event any
provisions shall be held invalid, illegal or unenforceable the parties shall
use commercially reasonable efforts to substitute a valid, legal and
enforceable provision which insofar as practical implements the purposes
hereof.

12.4.                        Entire
Agreement.  This Agreement
constitutes the entire agreement of sales and purchase of the Product named in
this contract between the parties hereto, superceding and replacing any and all
prior or contemporaneous discussions, agreements and understandings regarding
such subject matter, warranties, understandings, or agreements between the
parties specifically including, but not limited to, the Letter of Intent dated
November 9, 2005.

12.5.                        Amendment.  This Agreement shall not be
subject to change or modification except by the execution of a writing
specified to be an explicit amendment to this Agreement duly executed by all
parties hereto.

12.6.                        Force
Majeure.  Neither party shall
be liable to the other party for any delay in performance or failure to
perform, in whole or in part, due to war or act of war (whether an actual
declaration is made or not), riot, civil commotion, act of public enemy, fire,
flood, or other act of God, act of any governmental authority, or similar causes
beyond the reasonable control of such party which could not have been foreseen
or prevented.  If any event of force
majeure occurs, the party affected by such event shall promptly notify the
other party of such event in writing and take all reasonable actions to avoid
the effect of such event.

12.7.                        Joint Work
Product.  This Agreement was
negotiated jointly by authorized representatives of each party; accordingly, no
Article, Section, clause, or subclause shall be interpreted against a party on
the basis of such party drafting any particular Article, Section, clause, or
subclause.

12.8.                        Authority.  Each party represents and warrants
to the other that it has the requisite power and authority or has obtained such
requisite power and authority to enter into this Agreement and perform the
obligations required of it therein, and this Agreement has been signed by an
authorized representative of such party.

12.9.                        Waiver.  Each party acknowledges and agrees
that any failure on the part of the other party to enforce at any time, or for
any period of time, any of the provisions of this Agreement shall not be deemed
or construed to be a waiver of such 

 12
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

 

provisions or of the right of such other party thereafter to enforce
each and every such provision.

12.10.                  Relationship of
Parties.  The parties are each
independent contractors.  No agency
relationship between SCO and VEL is made by this Agreement.  Neither party shall have any right or
authority to act on behalf of the other and neither party will represent that
it has such right or authority.

12.11.                  Assignment.  Neither this Agreement, nor any
right or obligation hereunder, is assignable or transferable by either party,
in whole or in part, without the prior consent of the other, which consent will
not be unreasonably withheld.

12.12.                  Notices.  All notices required or permitted
hereunder shall be given in writing and sent by facsimile transmission,
emailed, or mailed postage prepaid by first-class certified or registered mail,
or sent by a nationally recognized express courier service, or hand-delivered
to the following addressees:

	
  

  	
  12.12.1.

  	
  VEL:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mr. David
  Latvala

  
	
   

  	
   

  	
  Purchasing Agent

  
	
   

  	
   

  	
  Vision-Ease Lens

  
	
   

  	
   

  	
  7000 Sunwood
  Drive Northwest

  
	
   

  	
   

  	
  Ramsey, MN 55303
  USA

  
	
   

  	
   

  	
  dave.latvala@vision-ease.com

  
	
   

  	
   

  	
   

  
	
   

  	
  12.12.2.

  	
  SCO:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mr. Frank Z. Fei

  
	
   

  	
   

  	
  Chairman of the
  Board

  
	
   

  	
   

  	
  Shanghai Conant
  Optics Co., Ltd

  
	
   

  	
   

  	
  555 Chuan Da Rd,
  Pu Dong

  
	
   

  	
   

  	
  Shanghai 201200,
  China

  
	
   

  	
   

  	
  frank@conant-optical.com

  

 

Or to such other address
as may be specified in a notice given to the other party in accordance with
this Section.  Any notice, if sent
properly addressed, postage prepaid, shall be deemed made five (5) days after
the date of mailing as indicated on the certified or registered mail receipt,
or on the next three business days if sent by express courier service or on the
date of hand delivered or on the next business day if sent by facsimile or
email transmission.

[Signature page directly follows]

 13
 

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

IN WITNESS WHEREOF, the
undersigned are duly authorized and directed to sign this Agreement as of the
day and year first above written.

	
  SHANGHAI CONANT OPTICAL CO. LTD.

  	
   

  	
  INSIGHT EQUITY A.P. X, LP

  DBA VISION-EASE LENS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
  /s/ Frank Z. Fei

  	
   

  	
  BY:

  	
  /s/ Douglas Hepper

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PRINTED

  	
   

  	
  PRINTED

  
	
  NAME:

  	
  Frank Z. Fei

  	
   

  	
  NAME:

  	
  Douglas Hepper

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
  Chairman of the Board

  	
   

  	
  TITLE:

  	
  President & CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
  12/23/05

  	
   

  	
  DATE:

  	
  12/28/05

  
										

 

 

 14

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

EXHIBIT
“A” - PRODUCT SPECIFICATION

[*REDACTED*]

 

PLEASE NOTE THAT CERTAIN MATERIAL
HAS BEEN OMITTED FROM THIS AGREEMENT AND NOTED AS “*REDACTED*” PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT AND THAT MATERIAL HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

EXHIBIT
“B” - PRICING

[*REDACTED*]

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