Document:

Exhibit 10.1

 

SETTLEMENT AGREEMENT

 

THIS SETTLEMENT AGREEMENT (the “Settlement
Agreement”) is made
and entered into as of February 12, 2008 by and between
Vision-Sciences, Inc. (hereinafter “VSI”) and PENTAX Corporation
(hereinafter “Pentax”).

 

WHEREAS, VSI and Pentax (formerly
known as Asahi Optical Co., Ltd.) are parties to a Supply
Agreement, dated as of March 16,
1992, (as amended by (i) the Amendment to
Supply Agreement made as of October 1, 2002 between VSI and Pentax, (ii) the
Memorandum made as of March 16, 2003 between VSI and Pentax, and (iii) the
Memorandum made as of May 23, 2006 between VSI and Pentax,  the “Supply Agreement”), the term of which will expire on March 15, 2009;

 

WHEREAS, pursuant to the Supply Agreement,
Pentax agreed to supply certain devices, subassemblies and components
(collectively, “Products”) to VSI;

 

WHEREAS, in connection with the Supply
Agreement, a dispute has arisen between the parties;

 

WHEREAS, VSI commenced an arbitration
against Pentax and PENTAX Medical Company, a Division of PENTAX of America, Inc.
(“PAMC”) with the American Arbitration Association (“AAA”) in New York (the “Arbitration”)
by filing a Demand for Arbitration dated December 11, 2007, captioned Vision-Sciences, Inc.
v. Pentax Corporation and Pentax Medical Company, a Division of Pentax of America, Inc.,
with AAA’s International Centre for Dispute Resolution;

 

WHEREAS, Pentax filed a Petition to Stay Arbitration pending in the
U.S. District Court for the Southern District of New York, captioned Pentax
Corporation v. Vision-Sciences, Inc., Civil Action No. 08 Civ.
00018 (NRB) (the “SDNY Action”);
and

 

WHEREAS, VSI and Pentax have reached terms upon which to settle their
dispute.

 

 

NOW, THEREFORE, VSI and Pentax agree as follows:

 

1.                                                               The parties agree that the chart in the Appendix A attached hereto and made
a part hereof (the “Chart”) contains the firm and final monthly delivery
schedule for the Products (including, without limitation, replacement Products
or repaired Products) to be supplied by Pentax to VSI (including its subsidiary,
Machida Incorporated (“Machida”)) up to and including February, 2009.  Pentax shall be obligated to deliver the
Products to VSI as indicated in the Chart and VSI shall be obligated to
purchase and receive delivery of the Products as indicated in the Chart and to
pay for delivered Products pursuant to Section 2.4 of the Supply
Agreement, as amended hereby.  The Chart
supersedes any and all outstanding purchase orders, written or oral, placed by
VSI with Pentax or any subsidiary of Pentax, whether confirmed by Pentax or any
such subsidiary or not.

 

2.                                                               The prices for the Products set forth in Section 1 above are the
prices as of the date of this Settlement Agreement and defined in the Chart, and
shall be the prices through the expiration or termination of the Supply
Agreement, as amended by the Settlement Agreement.

 

3.                                                               VSI hereby irrevocably waives, and causes Machida to irrevocably waive, any
and all right, if any, to place additional purchase orders  for Products under the Supply Agreement, as amended hereby,  or otherwise to place
orders for other Pentax products and acknowledge that Pentax or any subsidiary
of Pentax shall have no further obligation at any time to supply Products or
other Pentax products in excess of the quantities indicated in the Chart on the dates specified therein or to accept further or additional
purchase orders of whatsoever type or nature.

 

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4.                                                               Except as otherwise provided in the section of the Chart captioned “Note,” VSI’s right or
obligation to receive delivery of Products
from Pentax or any subsidiary of Pentax shall terminate as of February 28, 2009,
subject to Pentax fulfillment of the delivery by February 28, 2009 of the
total quantities of all Products as specified in the Chart, and any
replacements of Rejected Products which VSI shall be entitled to receive
pursuant to Section 8 of this Settlement Agreement.

 

5.                                                               The Supply Agreement, as amended hereby, shall expire as of February 28, 2009. 
Upon the expiration or earlier termination of the Supply Agreement, as
amended hereby, for any reason whatsoever, neither party (including Machida)
shall have any further right or obligation thereunder; provided, however, that (i) accrued
and/or outstanding rights and obligations existing at the time of termination
or expiration and (ii) rights and obligations arising under Section 4,
5, 9 or 10 of the Supply Agreement, as amended hereby, shall survive in
perpetuity.

 

6.                                                               In the event that payment by VSI or Machida, as the case may be, shall not
be made within two (2) business days after Pentax provides written notice
to VSI or Machida, as the case may be, that payment is overdue pursuant to Section 2.4
of the Supply Agreement, as amended hereby, Pentax shall have the right to terminate
the Supply Agreement, as amended hereby, by sending written notice of
termination to VSI, such termination to be effective on the date specified in
such notice.  In the event of any such
termination, Pentax or any subsidiary of Pentax shall have no further
obligation whatsoever to make any further deliveries of Products as
contemplated by the Chart.

 

7.                                                               As a condition precedent to Pentax’s obligation to make deliveries of
Products in January, February and March, 2009, VSI shall post an irrevocable
letter of credit no later than December 31, 2008 to guarantee payment in
full by VSI for such Products.

 

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8.                                                               Anything contained in the Supply Agreement, as amended hereby, to the
contrary notwithstanding, VSI may reject Products received from Pentax only for
the reasons of either being defective/damaged, or in the case of fiber bundles,
for non-compliance with the applicable specifications (the “Specifications”) as
indicated in Appendix B attached hereto and made a part hereof (the “Rejected
Products”).  VSI shall notify Pentax in writing of the
Rejected Products within five (5) business days of receipt thereof by VSI,
and Pentax shall issue to VSI in writing a return goods authorization (“RGA”) with
reference to the specific delivery of such Rejected Products within two (2) business
days of Pentax receipt of VSI’s written notification.  VSI shall then return the Rejected Products
to Pentax within two (2) business days of VSI’s receipt of the relevant
RGA and Pentax shall inspect such returned Rejected Products to verify defects/damage,
(or, in the case of fiber bundles, non-compliance with the Specifications)
within three (3) business days of Pentax’s receipt of the Rejected
Products.  If the alleged defects/damage (or,
in the case of fiber bundles, non-compliance with the Specifications) of the
Rejected Products is verified by Pentax, then VSI may, in its discretion,
require Pentax to either issue a credit to VSI for such Rejected Products, or
replace them as soon as practically possible but no later than sixty (60) days
from the date of receipt by Pentax of such returned Rejected Products.  If defects/ damage (or, in the case of fiber
bundles, non-compliance with the Specifications of the Rejected Products) is
not verified by Pentax, Pentax shall inform VSI in writing of such result and
VSI shall, in its discretion and in writing, either request Pentax to redeliver
to VSI, or to dispose of, such Rejected Products at the expense of VSI.

 

9.                                                               VSI acknowledges that all of VSI’s claims and Machida’s claims with respect
to the failure of any previously delivered Products to conform 

 

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to
the Specifications applicable to such Products have been resolved to its
satisfaction.

 

10.                                                         Article 10.3 of the Supply Agreement shall be amended to revise the
notice addresses of the parties as follows:

 

	
  “To VSI:

  	
   

  	
  Vision-Sciences, Inc.

  
	
   

  	
   

  	
  40 Ramland Road South

  
	
   

  	
   

  	
  Orangeburg, New York 10962

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn: Mr. Ron Hadani, President & CEO

  
	
   

  	
   

  	
   

  
	
  To Pentax:

  	
   

  	
  PENTAX Corporation

  
	
   

  	
   

  	
  c/o PENTAX Medical Company

  
	
   

  	
   

  	
  102 Chestnut Ridge Road

  
	
   

  	
   

  	
  Montvale, New Jersey 07645

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attn: Mr. David Woods, President

  

 

11.                                                         Promptly after execution and delivery of this Settlement Agreement by both
parties, counsel for VSI and Pentax shall jointly cause the Arbitration and the
SDNY Action to be withdrawn and terminated in their entirety.

 

12.                                                      This Settlement Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective officers, directors, shareholders,
employees, agents, attorneys, predecessors, successors, parents, affiliates,
subsidiaries (including, without limitation, in the case of VSI, Machida, and
in the case of Pentax, PENTAX of
America, Inc.), related companies, licensees, transferees, assigns,
administrators, heirs, servants, and representatives, each of whom shall be
entitled to enforce said provisions.

 

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13.                                                         This Settlement
Agreement shall be construed in accordance
with and governed by the laws of Japan.

 

14.                                                         This Settlement
Agreement together with the Supply Agreement, as amended
hereby, constitutes the entire agreement between
the parties hereto with respect to the
subject matter hereof and thereof and cancels, terminates, and
supersedes any prior agreement,
written or oral, entered into by Pentax or any subsidiary of Pentax  (including, without limitation, all outstanding purchase orders placed by
VSI or Machida with Pentax or any subsidiary of Pentax, whether confirmed by
Pentax or any such subsidiary or not) relating to the subject
matter hereof or to the dispute which this Settlement Agreement is intended to settle. 
Each of the parties hereto further acknowledges and agrees that it has
been represented and advised throughout all of the negotiations that preceded
the execution of this Settlement Agreement by counsel of such party’s own
choice, and that in entering into this Settlement Agreement, it is  not
relying on any representations or warranties except those expressly stated in this Settlement Agreement. Except as specifically amended
hereby, the Supply Agreement remains in full force and effect.

 

15.                                                         None of the
provisions of this Settlement Agreement may be waived or modified except by a
writing signed by all parties hereto.

 

16.                                                         Failure of any
party to require the performance of any term in this Settlement Agreement, or
the waiver by any party of any breach thereof shall not prevent subsequent
enforcement of such term nor be deemed a waiver of any subsequent breach.

 

17.                                                         VSI shall cause Machida, and Pentax shall cause PAMC, to comply with this
Settlement Agreement.

 

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18.                                                         Each individual
executing this Settlement Agreement on behalf of any party hereto, whether
corporate or otherwise, covenants and warrants that he or she has the right,
power, and authority to execute this Settlement
Agreement on behalf of, and to bind, such party.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  VISION-SCIENCES,
  INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   /s/ Ron Hadani

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Ron
  Hadani

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President &
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PENTAX
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   /s/ Nobuaki Tauishima

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Nobuaki Tanishima

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
									

 

7Exhibit 10.2

 

TERMINATION AGREEMENT

 

THIS TERMINATION AGREEMENT (this “Agreement”) entered into as of the
12th day of February, 2008 by and between PENTAX Corporation, a corporation
organized and existing under the laws of Japan, having its registered office at
2-36-9, Maeno-cho, Itabashi-ku, Tokyo 174-8639, Japan (“PENTAX”) and
Vision-Sciences, Inc., a Delaware corporation, having its principal place
of business at 40 Ramland Road South, Orangeburg, New York 10962, U.S.A.
(“VSI”).

 

WHEREAS, PENTAX
and VSI entered into the agreement on the 10th day of November, 2004 in
connection with the CMOS patents with respect to, among others, transfer of
responsibility for certain activities and costs from VSI to PENTAX (the “Letter
Agreement”); and

 

WHEREAS, the parties
hereto desire to terminate the Letter Agreement.

 

NOW, THEREFORE,
the parties hereto agree as follows:

 

	
  Article 1

  	
   

  	
  Early
  Termination.

  

 

The parties hereby agree to terminate the Letter Agreement as of the
12th day of February, 2008.

 

	
  Article 2

  	
   

  	
  Rights and
  Obligations.

  

 

Upon the termination of the Letter Agreement, each party shall neither
be entitled to any rights nor have any obligation under the Letter Agreement.
Further, each party shall waive any claim against the other party which has
arisen or might arise out of, or in connection with, the Letter Agreement, or
the early termination of the Letter Agreement; provided, however, that any and
all obligations already accrued under the Letter Agreement at the time of
termination of the Letter Agreement shall be valid and effective until both

 

1

 

parties fully
perform their obligations thereunder.

 

	
  Article 3

  	
   

  	
  Binding Effect.

  

 

Any and all of the terms, provisions and conditions of this Agreement
shall be binding upon and inure to the benefit of and the detriment of the
parties hereto and their successors and assigns.

 

	
  Article 4

  	
   

  	
  Severability.

  

 

If any term, provision or condition of this Agreement shall for any
reason be held by a legislature or a court of competent jurisdiction to be
invalid, the remaining terms, provisions or conditions hereof shall
nevertheless remain in full force and effect as if such unenforceable term,
provision or condition had never been a part hereof.

 

	
  Article 5

  	
   

  	
  Prior Agreement.

  

 

This Agreement contains the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes any prior such
agreements, including the Letter Agreement.

 

	
  Article 6

  	
   

  	
  Waiver.

  

 

No waiver of any provisions of this Agreement shall be implied and no
affirmative waiver shall be valid unless in writing and signed by the party to
be charged. No waiver of any breach of any of the terms, provisions or
conditions of this Agreement shall be construed as, or held to be a waiver of,
any other breach or a waiver of, acquiescence in, or consent to, any future or
succeeding breach hereof.

 

	
  Article 7

  	
   

  	
  Counterparts.

  

 

This Agreement may be executed in two counter parts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same Agreement.

 

2

 

	
  Article 8

  	
   

  	
  Section Headings.

  

 

The section headings contained herein are for reference purposes only
and shall not in any way affect the meaning or interpretation of this
Agreement.

 

	
  Article 9

  	
   

  	
  Governing Law
  and Jurisdiction.

  

 

This Agreement shall be governed by the laws of the State of
Massachusetts without regard to conflict of law provisions.

 

 

	
   

  	
   

  	
  PENTAX
  CORPORATION

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   /s/ Nobuaki Tanishima

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Nobuaki
  Tanishima

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VISION-SCIENCES,
  INC.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   /s/ Ron Hadani

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Ron Hadani

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President &
  Chief Executive Officer

  
										

 

3

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