Document:

Exhibit
10.4

 

 

$750,000,000

 

CEPHALON, INC.

$375,000,000
Zero Coupon Convertible Subordinated Notes due June 15, 2033,

First Putable June 15, 2008

$375,000,000 Zero Coupon Convertible Subordinated Notes due
June 15, 2033,

First Putable June 15, 2010

 

 

REGISTRATION
RIGHTS AGREEMENT

 

 

June 11, 2003

 

	
  Credit Suisse First Boston
  LLC,

  
	
   As Representative of the Several Purchasers,

  
	
    Eleven Madison Avenue

  
	
      New York, New York 10010-3629

  

 

Ladies and Gentlemen:

 

Cephalon, Inc., a
Delaware corporation (the “Company”), proposes to issue and sell to
Credit Suisse First Boston LLC (the “Lead Purchaser”), CIBC World Markets Corp., J.P. Morgan Securities Inc., Morgan Stanley
& Co. Incorporated, SG Cowen Securities Corporation, ABN AMRO Rothschild
LLC, Citigroup Global Markets Inc. and Lehman Brothers Inc.  (collectively, the “Initial
Purchasers”), upon the terms set forth in a purchase agreement dated
as of June 6, 2003 (the “Purchase Agreement”), $300,000,000
aggregate principal amount (plus an additional $75,000,000 principal amount
pursuant to an option granted thereunder) of its Zero Coupon Convertible
Subordinated Notes due June 15, 2033, First Putable June 15, 2008, and
$300,000,000 aggregate principal amount (plus an additional $75,000,000
principal amount pursuant to an option granted thereunder) of its Zero Coupon
Convertible Subordinated Notes due June 15, 2033, First Putable June 15, 2010
(together, the “Initial Securities”). 
The Initial Securities will be convertible into shares of common stock,
par value $0.01 per share, of the Company (the “Common Stock”) at the
conversion price set forth in the Offering Circular dated June 6, 2003 (the “Offering
Circular”).  The Initial
Securities will be issued pursuant to an Indenture, dated as of June 11, 2003
(the “Indenture”),
among the Company and U.S. Bank, National Association, as trustee (the “Trustee”).  As a condition to the Initial Purchasers’
obligation to purchase the Initial Securities under the Purchase Agreement, the
Company agrees with the Initial Purchasers, for the benefit of (i) the Initial
Purchasers and (ii) the holders of the Initial Securities and the Common Stock
issuable upon conversion of the Initial Securities (collectively, the “Securities”)
from time to time until such time as such Securities have been sold pursuant to
a Shelf Registration Statement (as defined below) (each of the foregoing a “Holder”
and collectively the “Holders”), as follows:

 

1.  Shelf
Registration.  (a)  The Company shall, at its cost, prepare and,
as promptly as practicable (but in no event more than 90 days after so required
or requested pursuant to this Section 1) file with the Securities and Exchange
Commission (the “Commission”) and thereafter use all commercially reasonable
efforts to cause to be declared effective as soon as practicable, but not later
than 180 days after the latest date of original issuance of the Initial
Securities, a registration statement on Form S-3 (the “Shelf Registration  Statement”)
relating to the offer and sale of the Transfer Restricted Securities (as
defined in Section 5 hereof) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in the Shelf Registration
Statement and Rule 415 under the Securities Act of 1933, as amended (the “Securities
Act”) (hereinafter, the “Shelf Registration”); provided, however,
that no Holder (other than an Initial Purchaser) shall be entitled to have the
Securities held by it covered by

 

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such Shelf Registration Statement unless such Holder agrees in writing
to be bound by all the provisions of this Agreement applicable to such Holder.

 

(b)  The
Company shall use all commercially reasonable efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
included therein (the “Prospectus”) to be lawfully delivered by
the Holders of the relevant Securities, for a period of two years (or for such
longer period if extended pursuant to Section 2(h) below) from the date of
its effectiveness or such shorter period that will terminate when all the
Securities covered by the Shelf Registration Statement (i) have been sold
pursuant thereto or (ii) are no longer restricted securities (as defined in
Rule 144(k) under the Securities Act, or any successor rule thereof),
assuming for this purpose that the Holders thereof are not affiliates of the
Company (in any such case, such period being called the “Shelf Registration Period”).  The Company shall be deemed not to have used
all commercially reasonable efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action that
would result in Holders of Securities covered thereby not being able to offer
and sell such Securities during that period, unless such action is (i) required
by applicable law or (ii) taken by the Company in good faith and contemplated
by Section 2(b)(v) below, and the Company thereafter complies with the
requirements of Section 2(h).

 

(c) 
Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall cause the Shelf Registration Statement and the Prospectus and
any amendment or supplement thereto, as of the effective date of the Shelf
Registration Statement, amendment or supplement, (i) to comply in all material
respects with the applicable requirements of the Securities Act and the rules
and regulations of the Commission and (ii) not to contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

2.  Registration
Procedures.  In connection
with the Shelf Registration contemplated by Section 1 hereof, the
following provisions shall apply:

 

(a)  The
Company shall (i) furnish to the Lead Purchaser, (A) prior to the filing
thereof with the Commission, a copy of the Shelf Registration Statement and
each amendment thereof, (B) within one day following the filing thereof with
the Commission, each supplement, if any, to the prospectus included in the
Shelf Registration Statement, and (C) in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the original offering)
is participating in the Shelf Registration Statement, shall use its best
efforts to reflect in the Shelf Registration Statement and each amendment
thereof, when so filed with the Commission, such comments as such Initial
Purchaser reasonably may propose; and (ii) include the names of the
Holders who propose to sell Securities pursuant to the Shelf Registration
Statement as selling securityholders and who have completed and returned to the
Company the questionnaire included as Annex A to the Offering Circular (a
“Completed Questionnaire”).

 

(b)  The
Company shall give written notice to the Initial Purchasers and, in the case of
clauses (ii)-(vi) hereof, the Holders of the Securities from whom the Company
has received a Completed Questionnaire (which notice pursuant to clauses (iii)-(vi)
hereof shall be accompanied by an instruction to suspend the use of the
Prospectus until the requisite changes have been made):

 

(i) when the Shelf
Registration Statement or any amendment thereto has been filed with the
Commission;

 

(ii)  and when the Shelf Registration Statement or
any post-effective amendment thereto has become effective;

 

(iii) of any request by
the Commission for amendments or supplements to the Shelf Registration
Statement or the prospectus included therein or for additional information;

 

(iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of any proceedings for that purpose;

 

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(v) of the receipt by the
Company or its legal counsel of any notification with respect to the suspension
of the qualification of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; and

 

(vi) of the happening of
any event that requires the Company to make changes in the Shelf Registration
Statement or the Prospectus in order that the Shelf Registration Statement or
the Prospectus  does not contain an
untrue statement of a material fact nor omit to state a material fact required
to be stated therein or necessary to make the statements therein (in the case
of the Prospectus, in light of the circumstances under which they were made)
not misleading.

 

(c)  The
Company shall make every reasonable effort to obtain the withdrawal at the
earliest possible time, of any order suspending the effectiveness of the Shelf
Registration Statement.

 

(d)  The
Company shall, upon request, furnish to each Holder of Securities included as a
selling securityholder in the Shelf Registration, without charge, at least one
copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those, if any,
incorporated by reference).

 

(e)  The
Company shall, during the Shelf Registration Period, deliver to each Holder of
Securities included as a selling securityholder in the Shelf Registration,
without charge, as many copies of the Prospectus (including each preliminary prospectus)
included in the Shelf Registration Statement and any amendment or supplement
thereto as such person may reasonably request. 
The Company consents, subject to the provisions of this Agreement, to
the use of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of the Securities in connection with the offering and sale of
the Securities covered by the Prospectus, or any amendment or supplement
thereto, included in the Shelf Registration Statement.

 

(f)  Prior to
any public offering of the Securities pursuant to the Shelf Registration
Statement, the Company shall register or qualify or cooperate with the Holders
of the Securities included therein and their respective counsel in connection
with the registration or qualification of the Securities for offer and sale
under the securities or “blue sky” laws of such states of the United States as
any Holder of the Securities reasonably requests in writing and do any and all
other acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Securities covered by such Registration Statement; provided,
however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of
process or to taxation in any jurisdiction where it is not then so subject.

 

(g)  The
Company shall cooperate with the Holders of the Securities to facilitate the
timely preparation and delivery of certificates representing the Securities to
be sold pursuant to any Registration Statement free of any restrictive legends
and in such denominations and registered in such names as the Holders may
request, and with respect to the Initial Securities in accordance with the
Indenture, a reasonable period of time prior to sales of the Securities
pursuant to the Shelf Registration Statement.

 

(h)  Upon the
occurrence of any event contemplated by paragraphs (iii) through (vi) of
Section 2(b) above during the period for which the Company is required to
maintain an effective Shelf Registration Statement, the Company shall promptly
prepare and file a post-effective amendment to the Shelf Registration Statement
or an amendment or supplement to the Prospectus and any other required document
so that, as thereafter delivered to Holders or purchasers of the Securities,
the Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.  If the Company
notifies the Initial Purchasers and the Holders in accordance with paragraphs
(iii) through (vi) of Section 2(b) above to suspend the use of the
Prospectus until the requisite changes to the Prospectus have been made, then
the Initial Purchasers and the Holders shall suspend use of such prospectus,
and the period of effectiveness of the Shelf Registration Statement provided
for in Section 1(b) above shall be extended by the number of days
from and including the date of the giving of such notice to and including the
date when the Initial Purchasers and the Holders shall have received such
amended or supplemented prospectus pursuant to this Section 2(h).

 

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(i)  Not later
than the effective date of the Shelf Registration Statement, the Company will
obtain CUSIP numbers for the Initial Securities and the Common Stock registered
under the Shelf Registration Statement (and provide such CUSIP numbers to the
Depository Trust Company), and provide the Trustee with printed certificates
for the Initial Securities, in a form eligible for deposit with The Depository
Trust Company.

 

(j)  The
Company will comply with all rules and regulations of the Commission to the
extent and so long as they are applicable to the Shelf Registration and will
make generally available to its security holders (or otherwise provide in
accordance with Section 11(a) of the Securities Act), an earnings
statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or
90 days, if such period is a fiscal year) beginning with the first month
of the Company’s first fiscal quarter commencing after the effective date of
the Shelf Registration Statement, which statement shall cover such 12-month
period.

 

(k)  The
Company shall cause the Indenture to be qualified under the Trust Indenture Act
of 1939, as amended (the “Trust Indenture Act”), in a timely manner
and containing such changes, if any, as shall be necessary for such
qualification.  In the event that such
qualification would require the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to the
applicable provisions of the Indenture.

 

(l)  The
Company may require each Holder of Securities to be sold pursuant to the Shelf
Registration Statement to furnish to the Company such information regarding the
Holder and the distribution of the Securities as the Company may from time to
time reasonably require for inclusion in the Shelf Registration Statement, and
the Company may exclude from such registration the Securities of any Holder
that unreasonably fails to furnish such information within a reasonable time
after receiving such request.

 

(m)  The
Company shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other actions, if
any, as any Holder shall reasonably request in order to facilitate the
disposition of the Securities pursuant to the Shelf Registration; provided,
however, that the Company is required to facilitate no more than two
underwritten offerings.

 

(n)  The
Company shall (i) make reasonably available for inspection by the Holders,
any underwriter participating in any disposition pursuant to the Shelf
Registration Statement and any attorney, accountant or other agent retained by
the Holders or any such underwriter, all relevant financial and other records,
pertinent corporate documents and properties of the Company and (ii) cause
the Company’s officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with the Shelf
Registration Statement, in each case, as shall be reasonably necessary to
enable such persons, to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act; provided, however, that
the foregoing inspection and information gathering shall be coordinated on
behalf of the Initial Purchasers by you and on behalf of the other parties, by
one counsel designated by and on behalf of such other parties as described in
Section 3 hereof.

 

(o)  The
Company, if requested by any Holder of Securities covered by the Shelf
Registration Statement, shall (i) use all commercially reasonable efforts
to cause (A) its counsel to deliver an opinion and updates thereof relating to
the Securities (in form, scope, and substance which is reasonably satisfactory
to the managing underwriters, if any) addressed to such Holders and the
managing underwriters, if any, thereof, and dated, in the case of the initial
opinion, the effective date of such Shelf Registration Statement, and
(B) its independent public accountants to provide to the selling Holders
of the applicable Securities and any underwriter therefor a comfort letter in
customary form and covering matters of the type customarily covered in comfort
letters in connection with primary underwritten offerings, subject to receipt
of appropriate documentation as contemplated, and only if permitted, by
Statement of Auditing Standards No. 72, 
and (ii) cause its officers to execute and deliver all customary
documents and certificates and updates thereof requested by any underwriters of
the Securities.

 

(p)  In the
event that any broker-dealer registered under the Exchange Act shall underwrite
any Securities or participate as a member of an underwriting syndicate or
selling group or “assist in the distribution” (within the meaning of the
Conduct Rules (the “Rules”) of the National Association of
Securities Dealers, Inc. (“NASD”)) thereof, whether as a Holder of
such Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company will assist such
broker-dealer in complying with the requirements of

 

4

 

such Rules, including, without limitation, by (i) if such Rules,
including Rule 2720, shall so require, engaging a “qualified independent
underwriter” (as defined in Rule 2720) to participate in the preparation
of the Shelf Registration Statement relating to such Securities, to exercise
usual standards of due diligence in respect thereto and, if any portion of the
offering contemplated by such Registration Statement is an underwritten
offering or is made through a placement or sales agent, to recommend the yield
of such Securities, (ii) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided in
Section 5 hereof and (iii) providing such information to such broker-dealer
as may be required in order for such broker-dealer to comply with the
requirements of the Rules.

 

(q)  The
Company shall use commercially reasonable efforts to take all other steps
necessary to effect the registration of the Securities covered by a
Registration Statement contemplated hereby.

 

(r)  The
Company may suspend use of the Prospectus for a period not to exceed an
aggregate of 45 days in any 90-day period or an aggregate of 90 days in any
twelve-month period in the event of:

 

(i)            the issuance by the SEC of a stop
order suspending the effectiveness of the Shelf Registration Statement or the
initiation of proceedings with respect to the Shelf Registration Statement
under Section 8(d) or 8(e) of the Securities Act,

 

(ii)           the occurrence of any event or the
existence of any fact as a result of which any Registration Statement shall
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or any Prospectus shall contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or

 

(iii)          the occurrence or existence of any
pending corporate development that, in the discretion of the Company, makes it
appropriate to suspend the availability of the Shelf Registration Statement and
the related Prospectus.

 

In the event of a suspension pursuant to clause (ii)
above, subject to the next sentence, the Company shall as promptly as
practicable prepare and file a post-effective amendment to such Registration
Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document that
would be incorporated by reference into such Registration Statement and
Prospectus so that such Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
such Prospectus does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, as thereafter delivered to the purchasers of the
Securities being sold thereunder, and, in the case of a post-effective
amendment to a Registration Statement, subject to the next sentence, use all commercially
reasonable efforts to cause it to be declared effective as promptly as is
reasonably practicable, and give notice to the Holders that the availability of
the Shelf Registration Statement is suspended and, upon receipt of any such
notice, each Holder agrees not to sell any Securities pursuant to the
Registration Statement until such Holder’s receipt of copies of the
supplemented or amended Prospectus provided for above, or until it is advised
in writing by the Company that the Prospectus may be used, and has received
copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in such Prospectus.

 

The Company will use all commercially reasonable
efforts to ensure that the use of the Prospectus may be resumed (x) in the case
of clause (i) above, as promptly as is practicable, (y) in the case of clause
(ii) above, as soon as, in the sole judgment of the Company, public disclosure
of such material event would not be prejudicial to or contrary to the interests
of the Company or, if necessary to avoid unreasonable burden or expense, as
soon as reasonably practicable thereafter and (z) in the case of clause (iii)
above, as soon as, in the discretion of the Company, such suspension is no
longer appropriate.

 

5

 

3.  Registration
Expenses.  (a) All expenses
incident to the Company’s performance of and compliance with this Agreement
will be borne by the Company, regardless of whether a Registration Statement is
ever filed or becomes effective, including without limitation;

 

(i)  all registration and filing fees and
expenses;

 

(ii) all fees and
expenses of compliance with federal securities and state “blue sky” or
securities laws;

 

(iii) all expenses
of printing (including printing certificates for the Securities to be issued
and printing of Prospectuses), messenger and delivery services and telephone;

 

(iv) all fees and
disbursements of counsel for the Company;

 

(v) all application
and filing fees in connection with listing the Securities on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and

 

(vi) all fees and
disbursements of independent certified public accountants of the Company
(including the expenses of any special audit and comfort letters required by or
incident to such performance).

 

The Company will bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any person, including special experts, retained by the Company.

 

(b)  In
connection with the Shelf Registration Statement required by this Agreement,
the Company will reimburse the Initial Purchasers and the Holders of Securities
covered by the Shelf Registration Statement, for the reasonable fees and
disbursements of not more than one counsel, designated by the Holders of a
majority in principal amount of the Securities covered by the Shelf Registration
Statement (provided that Holders of Common Stock issued upon the conversion of
the Initial Securities shall be deemed to be Holders of the aggregate principal
amount of Initial Securities from which such Common Stock was converted) to act
as counsel for the Holders in connection therewith.

 

4.  Indemnification.  (a) 
The Company agrees to indemnify and hold harmless each Holder and each
person, if any, who controls such Holder within the meaning of the Securities
Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(each Holder, and such controlling persons are referred to collectively as the
“Indemnified
Parties”)
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including, but not limited to, any losses,
claims, damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the Shelf
Registration Statement or Prospectus including any document incorporated by
reference therein, or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Shelf Registration, or arise out of, or
are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse, as incurred, the Indemnified Parties for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company
shall not be liable in any such case to the extent that such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the Shelf
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to the Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Company by or on behalf of such Holder specifically for
inclusion therein (which shall include, without limitation, the information
provided to the Company by such Indemnified Party in the Completed
Questionnaire) and (ii) with respect to any untrue statement or omission
or alleged untrue statement or omission made in any preliminary prospectus
relating to the Shelf Registration Statement, the indemnity agreement contained
in this subsection (a) shall not inure to the

 

6

 

benefit of any Holder from whom the person asserting any such losses,
claims, damages or liabilities purchased the Securities concerned, to the
extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the final prospectus if the Company had previously furnished copies thereof
to such Holder; provided  further, however, that this
indemnity agreement will be in addition to any liability which the Company may
otherwise have to such Indemnified Party. 
The Company also shall indemnify underwriters, their officers and
directors and each person who controls such underwriters within the meaning of
the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.

 

(b)  Each
Holder, severally and not jointly, will indemnify and hold harmless the
Company, its officers and directors and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act from and
against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in the Shelf Registration Statement or Prospectus or in any amendment or
supplement thereto or in any preliminary prospectus relating to the Shelf
Registration, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with written information pertaining to such
Holder and furnished to the Company by or on behalf of such Holder specifically
for inclusion therein (which shall include, without limitation, the information
provided to the Company by such Indemnified Party in the Completed
Questionnaire); and, subject to the limitation set forth immediately preceding
this clause, shall reimburse, as incurred, the Company for any legal or other
expenses reasonably incurred by the Company or any such controlling person in
connection with investigating or defending any loss, claim, damage, liability
or action in respect thereof.  This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Company or any of its controlling persons.

 

(c)  Promptly
after receipt by an indemnified party under this Section 4 of notice of
the commencement of any action or proceeding (including a governmental
investigation), such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 4, notify the
indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it
from any liability that it may have under subsection (a) or (b) above except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided further that the
failure to notify the indemnifying party shall not relieve it from any
liability that it may have to an indemnified
party otherwise than under subsection (a) or (b) above.  In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof.  No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement (i)
includes an unconditional release of such indemnified party from all liability
on any claims that are the subject matter of such action, and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.

 

(d)  If the
indemnification provided for in this Section 4 is unavailable or
insufficient to hold harmless an indemnified party under subsections (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a)
or (b) above in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and the indemnified party
on the other in connection with

 

7

 

the statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof) as well as any other
relevant equitable considerations.  The
relative fault of the parties shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or such Holder or such
other indemnified party, as the case may be, on the other, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.  The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d).  Notwithstanding any other provision of this
Section 4(d), the Holders shall not be required to contribute any amount
in excess of the amount by which the net proceeds received by such Holders from
the sale of the Securities pursuant to the Shelf Registration Statement exceeds
the amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. 
For purposes of this paragraph (d), each person, if any, who controls
such indemnified party within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as such indemnified party and
each person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act shall have the same rights to contribution
as the Company.

 

(e)  The
agreements contained in this Section 4 shall survive the sale of the
Securities pursuant to the Shelf Registration Statement and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

 

5.  Interest
Amounts Under Certain Circumstances.  (a) Interest  (the “Interest
Amounts”) with respect to the Securities shall be assessed as
follows if any of the following events occur (each such event in
clauses (i) through (iii) below being herein called a “Registration
Default”):

 

(i)  the Shelf Registration Statement has not
been filed with the Commission by the 90th day after the first date
of original issuance of the Initial Securities;

 

(ii)  the Shelf Registration Statement has not
been declared effective by the Commission by the 180th day after the
first date of original issue of the Initial Securities; or

 

(iii)  after the Shelf Registration Statement has
been declared effective, such Shelf Registration Statement ceases to be
effective, or the Prospectus ceases to be usable in connection with resales of
the Initial Securities and the Common Stock issuable upon conversion of the
Initial Securities, in accordance with 
and during the periods specified in this Agreement and (A) the Company
does not cure the Shelf Registration Statement within five business days by
post-effective amendment or report filed pursuant to the Exchange Act or (B) if
applicable, the Company does not terminate the suspension period described in
Section 2(s) above by the 45th or 90th day, as the case
may be.

 

Each of the foregoing will constitute a Registration Default whatever
the reason for any such event and whether it is voluntary or involuntary or is
beyond the control of the Company or pursuant to operation of law or as a
result of any action or inaction by the Commission.

 

Interest Amounts shall accrue on the Initial
Securities and the underlying Common Stock from and including the date on which
any such Registration Default shall occur to but excluding the date on which
all such Registration Defaults have been cured, at a rate of 0.50% per annum,
or an equivalent amount for any Common Stock issued upon conversion of the
Initial Securities (the “Interest Amount Rate”).

 

(b)  A
Registration Default referred to in Section 5(a)(iii) hereof shall be
deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment

 

8

 

is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement the
Shelf Registration Statement and related prospectus to describe such events as
required by paragraph 2(h) hereof; provided, however, that in any
case if such Registration Default occurs for a continuous period in excess of
30 days, Interest Amounts shall be payable in accordance with the above
paragraph from the day such Registration Default occurs until such
Registration Default is cured.

 

(c)  Any
Interest Amounts due pursuant to Section 5(a) will be payable in cash on
the Interest Amount payment dates, which shall be June 15 and December 15 of
each  year, to the holders of record of
the Initial Securities or the shares of Common Stock issued upon conversion of
the Initial Securities, as the case may be, on the preceding June 1 or December
1, as the case may be.  The amount of Interest
Amounts will be determined by multiplying the applicable Interest Amount Rate
by the principal amount of the Initial Securities, or an equivalent amount for
any Common Stock issued upon conversion of the Initial Securities, further
multiplied by a fraction, the numerator of which is the number of days
such Interest Amount Rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months), and the denominator
of which is 360.

 

(d)  “Transfer
Restricted Securities” means each Security until (i) the date
on which such Security has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or
(ii) the date on which such Security is distributed to the public pursuant
to Rule 144 under the Securities Act or is saleable pursuant to
Rule 144(k) under the Securities Act.

 

6.  Rules 144
and 144A.  The Company shall
use its best efforts to file the reports required to be filed by it under the
Securities Act and the Exchange Act in a timely manner and, if at any time the
Company is not required to file such reports, it will, upon the request of any
Holder, make publicly available other information so long as necessary to
permit sales of their securities pursuant to Rules 144 and 144A.  The Company covenants that it will take such
further action as any Holder may reasonably request in writing, all to the
extent required from time to time to enable such Holder to sell Transfer
Restricted Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). 
The Company will provide a copy of this Agreement to prospective
purchasers of Securities identified to the Company by the Initial Purchasers
upon written request.  Upon the written
request of any Holder, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements.  Notwithstanding the foregoing, nothing in
this Section 6 shall be deemed to require the Company to register any of
its securities pursuant to the Exchange Act.

 

7.  Underwritten
Registrations.  If any of the
Transfer Restricted Securities covered by the Shelf Registration are to be sold
in an underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering (“Managing Underwriters”) will
be selected by the holders of a majority in aggregate principal amount of such
Transfer Restricted Securities to be included in such offering (provided that
holders of Common Stock issued upon conversion of the Initial Securities shall
not be deemed holders of Common Stock, but shall be deemed to be holders of the
aggregate principal amount of Initial Securities from which such Common Stock
was converted).

 

No person may participate in any underwritten
registration hereunder unless such person (i) agrees to sell such person’s
Transfer Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

 

9

 

8.  Miscellaneous.

 

(a)  Remedies.  The Company acknowledges and agrees that any
failure by the Company to comply with its obligations under Section 1
hereof may result in material irreparable injury to the Initial Purchasers or
the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Company’s obligations
under Sections 1 hereof.  The
Company further agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.

 

(b)  No
Inconsistent Agreements.  The
Company will not on or after the date of this Agreement enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.  The Company
represents that the rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders
of the Company’s securities under any agreement in effect on the date hereof.

 

(c)  Amendments
and Waivers.  The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, except by
the Company and the written consent of the holders of a majority in principal
amount of the Securities affected by such amendment, modification, supplement,
waiver or consents (provided that holders of Common Stock issued upon
conversion of Initial Securities shall not be deemed holders of Common Stock,
but shall be deemed to be holders of the aggregate principal amount of Initial
Securities from which such Common Stock was converted).  Without the consent of the Holder of each
Initial Security, however, no modification may change the provisions relating
to the payment of Interest Amounts.

 

(d)  Notices. 
All notices and other communications provided for or permitted hereunder
shall be made in writing by hand delivery, first-class mail, facsimile
transmission, or air courier which guarantees overnight delivery:

 

(1)  if to a Holder of the Securities, at the
most current address given by such Holder to the Company.

 

(2)  if to the
Initial Purchasers;

 

c/o    Credit Suisse First Boston LLC

Eleven Madison Avenue

New York, NY 10010-3629

Fax No.:  (212) 325-8278

Attention:  Transactions Advisory Group

 

with a copy to:

 

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, NY 10017

Fax No.: (212) 455-2502

Attn: Alan D. Schnitzer, Esq.

 

(3)           if
to the Company, at its address as follows:

 

Cephalon, Inc.

145 Brandywine Parkway

West Chester, PA 19380

Fax No.: (610) 344-7563

Attn: General Counsel

 

with a copy to:

 

10

 

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

Fax No.: (215) 963-5001

Attn: Richard A. Silfen, Esq.

 

All such notices and communications shall be deemed to
have been duly given:  at the time
delivered by hand, if personally delivered; three business days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by recipient’s facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.

 

(e) Third Party Beneficiaries.  The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchasers, on the other hand, and shall have the right
to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect their rights or the rights of
Holders hereunder.

 

(f)  Successors
and Assigns.  This Agreement
shall be binding upon the Company and its successors and assigns.

 

(g)  Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(h)  Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

(i)  Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

By the execution and delivery of this Agreement, the
Company submits to the nonexclusive jurisdiction of any federal or state court
in the State of New York.

 

(j)  Severability.  If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

 

(k)  Securities
Held by the Company. 
Whenever the consent or approval of Holders of a specified percentage of
principal amount of Securities is required hereunder, Securities held by the
Company or its affiliates (other than subsequent Holders of Securities if such
subsequent Holders are deemed to be affiliates solely by reason of their
holdings of such Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.

 

11

 

If the foregoing is in
accordance with your understanding of our agreement, please sign and return to
the Company a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement among the several Initial Purchasers
and the Company in accordance with its terms.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CEPHALON, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ J. KEVIN BUCHI

  
	
   

  	
   

  	
  Name: J. Kevin Buchi

  
	
   

  	
   

  	
  Title: Senior Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
  The foregoing
  Registration Rights

  	
   

  	
   

  	
   

  
	
  Agreement is hereby
  confirmed

  	
   

  	
   

  	
   

  
	
  and accepted as of the
  date first

  	
   

  	
   

  	
   

  
	
  above written.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CREDIT SUISSE FIRST
  BOSTON LLC

  	
   

  	
   

  	
   

  
	
  CIBC
  WORLD MARKETS CORP.

  	
   

  	
   

  	
   

  
	
  J.P.
  MORGAN SECURITIES INC.

  	
   

  	
   

  	
   

  
	
  MORGAN
  STANLEY & CO. INCORPORATED

  	
   

  	
   

  	
   

  
	
  SG
  COWEN SECURITIES CORPORATION

  	
   

  	
   

  	
   

  
	
  ABN
  AMRO ROTHSCHILD LLC

  	
   

  	
   

  	
   

  
	
  CITIGROUP
  GLOBAL MARKETS INC.

  	
   

  	
   

  	
   

  
	
  LEHMAN
  BROTHERS INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BY: CREDIT SUISSE FIRST
  BOSTON LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  by

  	
  /s/ PETE MEYERS

  	
   

  	
   

  	
   

  
	
   

  	
  Name: Pete A. Meyers

  	
   

  	
   

  	
   

  
	
   

  	
  Title: Director

  	
   

  	
   

  	
   

  
								

 

12Exhibit
10.1

 

Execution
Copy

 

Contract Manufacturing Agreement

 

Entered
into on this 25th day of June 2003 (the “Effective Date”)

 

 

By
and Between:

 

Vision-Sciences, Inc., a Delaware (U.S.A.) corporation, having
its principal place of business at 9 Strathmore Road, Natick, Massachusetts
01760, U.S.A., Fax No. +1-508-650-9976 (the
“Company”);

 

And

 

Three
BY Ltd., a company
duly organized under the laws of Israel and having its principal place of
business at Migdal Tefen, Israel, Fax No. + 972-4-987-2340 (the “Manufacturer”);

 

WHEREAS, the Manufacturer provides contract
manufacturing services for the medical products industry including the
manufacture of complicated and sensitive medical products; and

 

WHEREAS, the Company has developed and owns all
proprietary rights in the Products (as defined in Section 1.11 below); and

 

WHEREAS, the Company wishes that the Manufacturer shall
manufacture the Products for and on behalf of the Company (on a non-exclusive
basis); and

 

WHEREAS, the Parties desire to hereby define the terms
and conditions according to which the Manufacturer will manufacture Products
for the Company; and

 

WHEREAS, in consideration of the mutual promises and
covenants set forth below it is mutually agreed as follows:

 

1.                                       Definitions

 

1.1.                              Terms
defined in this Article 1 and/or parenthetically defined elsewhere in this
Agreement shall throughout this Agreement have the meaning here or there
provided.  Defined terms may be used in
the singular or the plural, as context shall require.

 

1.2.                              “Company Equipment”
- any off-the-shelf and/or custom-made tooling for the manufacture
of the Products which shall be provided to the Manufacturer by the Company. The
Company Equipment already provided to the Manufacturer by the Company is
detailed in Appendix “1.2” attached hereto.

 

1.3.                              “Conforming
Products” – any Product which conforms to and does not deviate from,
in any manner affecting form, fit or function, the corresponding specifications
contained in the Specifications.

 

 

1.4.                              “Delivery
Date” – the relevant delivery date pursuant to Sections 8.3 and/or
8.4 below.

 

1.5.                              “Improvements” - any
improvements, modifications or adoptions pertaining to the Products made,
created, invented, discovered or acquired by the Company and/or the
Manufacturer and/or any of its/their employees or agents.

 

1.6.                              “Intellectual
Property Rights” - means patents and all applications,
continuations, continuations-in-part and divisionals with respect thereto;
copyrights, and all other rights in works of authorship recognized in any jurisdiction;
trade secrets; trademarks, service marks, logos and product names; all
applications, registrations and renewals with respect to any of the foregoing;
proprietary manufacturing methods; moral rights; all other intellectual
property rights and rights in trade secrets, whether registered or not, that
may be recognized in any jurisdiction; and all rights to sue for and remedies
against past, present and future infringements or misappropriations of the
foregoing.

 

1.7.                              “Manufacturing
Equipment - the equipment that shall be used by the Manufacturer for
the Manufacture of the Products.

 

1.8.                              “Manufacture”
– the manufacture, assembly, quality testing, packaging, sterilizing
and labeling of the Products.

 

1.9.                              “Materials” –
the materials required for the Manufacture, which are detailed in Appendix
“1.9”  attached hereto, and any amendments thereto provided to
the Manufacturer by the Company and/or initiated by the Manufacturer and
approved in writing by the Company.

 

1.10.                        “Non-Conforming
Products –
any Product which does not conform to or which deviates from, in any manner
affecting form, fit or function, the corresponding specifications contained in
the Specifications, either during the Company’s pre-delivery inspection or at
any later time, unless such deviation or non-conformity has been approved in
writing by the Company.

 

1.11.                        “Products” –
the products set forth in Appendix “1.11” attached hereto as same
may be amended from time to time by a written instrument signed by the Parties.

 

1.12.                        “Proprietary
Information” – shall mean and include any and all know-how, data and
information relating to the Products and/or the Company, disclosed, made
available to and/or prepared and/or generated by the Manufacturer or on its
behalf, including, without limitation: (i) technical, engineering and
manufacture information, packaging, designs, manufacture processes and
development, quality control techniques and other know-how relating to or used,
from time to time, in the Manufacture of the Products; (ii) sales, manufacturing
and marketing information; and (iii) information contained in documents marked
“Confidential”.

 

2

 

1.13.                        “Specifications”
– the specifications of the Products and the Materials which are set
forth in Appendix 1.13” attached hereto, including all relevant
drawings pertaining to the Products and the Materials, as may be amended from
time to time pursuant to the provisions of Section 3.3 of this Agreement.

 

2.                                       Representations
of the Manufacturer

 

The Manufacturer hereby warrants and
represents that at all times during which this Agreement is in effect:

 

2.1.                              It
will continue to have all adequate working capital, facilities and
highly-qualified personnel to accomplish all of its undertakings pursuant to
this Agreement.

 

2.2.                              It
and the sterilization facilities it utilizes will maintain the certifications
set forth in Appendix “2.2” attached hereto and fully meet all the
requirements pertaining thereto.

 

2.3.                              It
will not be involved, during the term of this Agreement and for three years
thereafter, in any way, directly or indirectly, in the manufacturing of sheaths
for the use in medical imaging applications or in the manufacturing of products
related to the Products, for any person or entity other than the Company,
except with the prior written consent of the Company, which consent shall not
be unreasonably withheld.

 

3.                                       General
Obligation of the Manufacturer

 

3.1.                              The
Manufacturer undertakes to Manufacture all Products for the Company in
accordance with the terms and conditions of this Agreement.

 

3.2.                              The
Manufacturer undertakes to Manufacture the Products on a regular and on-going
basis, according to the highest quality standards, in strict conformity with
the Specifications and with the terms and conditions of this Agreement and the
Manufacturer shall not deviate from nor change the Specifications, the
Manufacture process or the Materials without the prior written approval of the
Company. The Manufacturer shall control all environmental conditions to assure
that there is no adverse effect to the Products.

 

3.3.                              The
Specifications may be modified by the Company upon reasonable advance written
notice to the Manufacturer. The Company shall not be liable to pay any sum to
the Manufacturer as a result of any such modifications, provided however, that
if any such modification shall directly affect the cost of production of the
Products, then the Parties shall renegotiate, in good faith, the Purchase Price
(as defined in Section 10.1 below) of the relevant modified Products. All
changes to the Specifications will be communicated to the Manufacturer in
writing and the Manufacturer shall promptly confirm in writing the receipt
thereof.

 

3

 

3.4.                              All
Materials shall be procured by the Manufacturer at its own cost and expense.
The Company may provide the Manufacturer with sample quantities of Materials
for validation and testing purposes.

 

3.5.                              The
Manufacturer undertakes to make on-going efforts to reduce the manufacturing
costs, including but not limited to cost reduction of the materials and/or the
labor, by suggesting Improvements and modifications to the Products and/or the
manufacturing processes.  Any such cost
reduction shall reduce the Purchase Price by the same amount. The Company shall
reimburse the Manufacturer for pre-approved out-of-pocket expenses incurred by
it in reducing the aforementioned manufacturing costs.

 

4.                                       Company
Equipment

 

4.1.                              Title
of any Company Equipment shall, at all times, be vested solely with the Company
and the Manufacturer shall have no right with respect thereto, including lien
in accordance with any applicable law, and until return of same to the Company
in accordance with the terms of this Agreement, the Manufacturer shall ensure
that the Company Equipment is always maintained in good working order and
condition, free and clear of any liens, charges, attachments, encumbrances or
other third party rights. 
Notwithstanding the above, Company Equipment financed by the Company,
but purchased by the Manufacturer, shall be the property of the
Manufacturer.  The Company shall have
the sole right to move and lease such Company Equipment that the Company
financed.

 

4.2.                              Upon
termination of this Agreement, for any reason whatsoever, the Manufacturer
shall forthwith return all Company Equipment to the Company, at its own risk
and expense, in good working order and condition.

 

4.3.                              The
Manufacturer shall insure the Company Equipment, at its own expense, in an
appropriate amount, which shall not be less than the full replacement value
thereof, under a valid and enforceable insurance policy issued by a reputable
insurer (the “Policy”).  The terms
of the Policy shall be subject to the approval of the Company which shall be
included as a loss payee and an additional insured party in said Policy, and
the Manufacturer shall deliver to the Company a certificate from the insurance
company evidencing the addition of the Company as such additional insured party
to the Policy, and confirming that the insurance company undertakes not to
terminate the Policy or to let it expire or change its terms, without giving
the Company a written notice of at least 60 days. The Policy shall further
stipulate that any monies payable thereunder shall be remitted directly to the Company.
The Manufacturer shall furnish the Company with a copy of the relevant Policy
together with a copy of each receipt issued, from time to time, by the insurer
in respect of the payment of premium thereon.

 

4

 

5.                                       Manufacturing
Equipment

 

5.1.                              The
Manufacturer shall work with the Company to prepare a protocol setting forth
the procedures for testing and validating the quality of the Manufacturing
Equipment (the “Equipment Validation Protocol”). The Manufacturer shall then
perform the testing outlined in the Equipment Validation Protocol as well as
record the test data and provide the Company with a detailed report.

 

5.2.                              The
Equipment Validation Protocol shall be subject to the approval of the Company.
The Manufacturer shall promptly implement all changes in the Equipment
Validation Protocol required by the Company in accordance with the Company’s
instructions.

 

5.3.                              Prior
to using the Manufacturing Equipment for the Manufacture pursuant to this
Agreement, the Company shall be entitled to inspect same, in accordance with
the Equipment Validation Protocol, and the Manufacturer shall not commence any
manufacturing activities, save for testing and validation purposes, without the
prior written approval of the Company.

 

6.                                       Sub-Contracting  

 

The Parties recognize that the Manufacturer
may need to use sub-contractors for the Manufacture of the Products, however,
the Manufacturer shall not have the right to subcontract the Manufacture or any
portion thereof to any third party, without the prior written consent of the
Company and subject to the terms and conditions to be mutually agreed upon with
respect to any subcontract.

 

7.                                       Quality
and Regulatory Procedures

 

7.1.                              The
Company shall have the right to observe the Products in the process of
Manufacture and to inspect finished Products at any time during normal business
hours, either at the manufacturing facilities or at the storage facilities of
the Manufacturer, and to inspect the Manufacturer’s subcontractors. Any such
inspection or the lack of it shall not derogate from any undertaking or
obligation of the Manufacturer contained herein.

 

7.2.                              The
Manufacturer agrees that the Company, for the purpose of maintaining the
Company’s status as meeting the requirements under ISO 9001, EN46001 and ISO
13485 or any other purpose, or a third party on its behalf, shall be entitled,
during normal business hours and upon reasonable advance notice, to perform a
quality audit of the Manufacturer’s manufacturing operations (including its
subcontractors) and the Manufacturer shall respond to all audit findings in a
timely manner.

 

7.3.                              The
Manufacturer shall Manufacture the Products solely with the Materials and shall
not use any substitute materials without the prior

 

5

 

written
approval of the Company. The Manufacturer shall purchase the Materials solely
from suppliers approved by the Company.

 

7.4.                              Each
Product lot shall be identified during all phases of Manufacture and finished
Products permanently identified by a control number to facilitate full
traceability of its Manufacture and field placement.

 

7.5.                              The
Manufacturer shall carefully document the Manufacture of each Product lot in
the Device
History Record (“DHR”).  The
DHR shall document, inter alia, the lot control number, the
date of manufacture, the quantity manufactured for the lot, identification of
the individual(s) performing the manufacturing operations, identification of
the individual(s) performing the quality testing procedures, acceptance records
including results of the quality testing procedures, the quantity released for
distribution, a sample of the labeling, and identification of the individual(s)
responsible for verification of the DHR and final release of the Product. The
manufacturing operations and quality testing procedures shall be carried out in
accordance with the written procedures prepared by the Parties, as aforesaid.
For each Product lot, the Manufacturer shall provide the Company with a
hard-copy of the DHR, appropriately signed by all manufacturing and quality
personnel.  All records generated by the
Manufacturer and related to the Manufacture of the Product, shall be maintained
for a period of at least 2 years following the expiration of the shelf life of
each lot of the Product. In the event that the Company receives information of
any failure of a Product purchased from the Manufacturer, the Manufacturer
shall, within 72 hours of receiving any request from the Company, furnish the
Company with a copy of the DHR pertaining to such Product.

 

7.6.                              The
Manufacturer shall certify that all of the Manufacturer’s personnel, and any
sub-contractor, who engage in the Manufacture hereunder, shall receive all
necessary and appropriate training.

 

7.7.                              The
Manufacturer agrees at no additional cost to the Company, to fully cooperate as
required to prepare for and participate in quality audits of the Manufacturer’s
facility by all applicable regulatory agencies.  The Manufacturer agrees to make all appropriate personnel
available as necessary for this purpose. The Manufacturer agrees to notify the
Company of all observations made by regulatory agencies, which perform audits
of the Manufacturer’s facility from time to time in relation to the Products as
well as to any products other than the Products. For the sake of clarity, the
Manufacturer shall not charge the Company for said audits. To further clarify,
the Manufacturer shall not be responsible to pay the out-of-pocket cost,
including travel related expenses, for audits of the Manufacturer performed by
an agent of the Company as part of the agent’s audit of the Company.

 

7.8.                              The
Manufacturer shall immediately report to the Company any problems, difficulties
or deviations from the Specifications, which it encounters during the
Manufacture of the Products.

 

6

 

7.9.                              The
Manufacturer shall supply to the Company, free of charge, at least one complete
set of documentation for each Product, including the documentation detailed in Appendix
“7.9”  attached hereto.

 

8.                                       Orders
and Delivery

 

8.1.                              Within
30 days of the Effective Date, the Company shall furnish the Manufacturer with
a non-binding forecast, estimating the quantity of each Product that the
Company intends to purchase from the Manufacturer during the following 6-month
period (the “Forecast”). The Forecast will be revolving and updated, from
time to time, by the Company prior to the expiration of each month covered by
the Forecast, so that the Forecast shall at any given time cover a period of 6
months.

 

8.2.                              Upon
submission of the Forecast to the Manufacturer, the Company shall furnish the
Manufacturer with a binding purchase order for Products for the ensuing 3-month
period and shall, 30 days prior to the expiration of the aforementioned 3-month
period and of each consecutive 3-month period furnish the Manufacturer with a
binding purchase order for Products for the respective following 3-month
period(s) (the “Binding Purchase Orders”).

 

8.3.                              Any
Products covered by a Binding Purchase Order shall be Manufactured by the
Manufacturer and delivered to the Company, or to a destination specified by the
Company, within 5 days, earlier or after, of the date specified in the Binding
Purchase Order, provided however that with respect to any Additional Increased
Products (as defined in Section 8.4.1 below), the delivery period shall be
within 30 days of submission by the Company of the notice requiring the
relevant increase.

 

8.4.                              Notwithstanding
anything else to the contrary contained herein, the Company shall be entitled
to (by giving written notice to the Manufacturer):

 

8.4.1.                     Increase
the number of Products covered by any Binding Purchase Order (the “Additional
Increased Products”), provided that the aggregate Products ordered
by the Company during any given 6-month period shall not exceed by more than
35% the respective Forecast, unless accepted by the Manufacturer in writing; or

 

8.4.2.                     Require
the Manufacturer to postpone delivery of any Product covered by a Binding
Purchase Order (including any Additional Increased Products) by up to 60 days,
provided that such requirement is submitted to the Manufacturer not later than
30 days prior to the specified Delivery Date; or

 

8.4.3.                     Cancel
any Binding Purchase Order, in whole or in part, provided that a notice with
respect thereto is submitted to the Manufacturer not later than 45 days prior
to the specified Delivery Date and that the Company shall reimburse the

 

7

 

Manufacturer for all costs actually spent in the purchase of the
Materials pertaining thereto, as evidenced by proper documentation, against
delivery of such Materials to the Company.

 

8.5.                              Delivery
of Products shall be made on a FCA (as such term is defined in Incoterms 2000,
publication 560 of the International Chamber of Commerce) Ben-Gurion airport
basis. The Company shall have the right to designate one or more destinations
for the Products of each Binding Purchase Order 10 days prior to the shipment
by the Manufacturer.

 

8.6.                              If
the Manufacturer discovers at any time that, using best efforts, it is unable
to deliver a Binding Purchase Order on a respective Delivery Date, the
Manufacturer shall immediately so notify the Company and inform the Company of
the earliest possible alternative delivery date. Upon the Company’s receipt of
such notice or if the Manufacturer has failed to so notify the Company at least
30 days prior to the relevant Delivery Date, the Company may, at its sole
option (without derogating from any additional or other remedy or right that
may be available to it pursuant to this Agreement and/or the applicable law):

 

8.6.1.                     Cancel,
in whole or in part, the Binding Purchase Order, refuse to accept delivery and
return the cancelled Products, as aforesaid, to the Manufacturer, freight
collect, at the Manufacturer’s risk; or

 

8.6.2.                     Reschedule
the delivery date to a date agreeable to the Manufacturer, which date shall
become the Delivery Date.

 

8.7.                              The
Manufacturer may make delivery of less than the full number of Products
included in a Binding Purchase Order only with the prior written approval of
the Company.

 

8.8.                              The
Manufacturer warrants that it has obtained all standard government, health,
consumer protection and safety approvals required by the applicable law, if
any, in Israel, Europe and in the U.S.A., with respect to the Manufacture, sale
and delivery of the Products.

 

9.                                       Inventory

 

Within 90 days following the Manufacture of
the first Products by the Manufacturer pursuant to this Agreement and during
the entire term of this Agreement, the Manufacturer shall maintain, at its
warehouse in New Jersey, U.S.A., a rolling inventory of Products in such
quantity that meets the amount of Products set forth in the Forecast for at
least a 3 month period.

 

10.                                 Payment
Terms

 

10.1.                        In
consideration for the fulfillment of all of the Manufacturer’s undertakings and
obligations hereunder, the Company undertakes to pay the Manufacturer for each
Product delivered to it pursuant to the terms of

 

8

 

this Agreement
the price set forth in Appendix “10.1” attached hereto (the “Purchase
Price”).

 

10.2.                        The
Company shall pay the Purchase Price for each Product within 30 days following
the expiration of the calendar month during which such Product shall have been
delivered to the Company in accordance with the terms of this Agreement.

 

10.3.                        The
Parties shall evaluate the costs of production of the Products on an annual
basis and any change of the Purchase Price shall not be effected, except with
the prior written consent of the Parties, who shall negotiate any required
change in good faith. For the sake of clarity, any Binding Purchase Orders
placed by the Company prior to agreeing in writing with the Manufacturer on any
change in the Purchase Price, shall not be affected by any such change and be
supplied to the Company at the price specified in the Binding Purchase Orders .

 

11.                                 Acceptance
of Products

 

11.1.                        The
Company shall be entitled to reject any Non-Conforming Products delivered to it
within 30 days of delivery of the relevant Product to the Company.

 

11.2.                        The
Manufacturer shall, at its sole cost and expense, replace any rejected
Non-Conforming Products and supply the Company with replaced new Conforming
Products, at its own risk and expense, within 15 days following receipt by the
Manufacturer of the rejected Non-Conforming Products.

 

11.3.                        For the
sake of clarity, the Company’s rights under this Section are in addition to,
and not in lieu of, any other rights or remedies that the Company may have
under this Agreement or at law.

 

12.                                 Insurance

 

12.1.                        The
Manufacturer shall assume full liability regarding, and hold harmless and
immediately defend and indemnify the Company, its customers, officers,
directors, agents, employees, shareholders, successors and assignees, and each
of them, from and against, any and all claims, actions and suits, whether
groundless or otherwise, and from and against any and all liabilities,
judgments, losses, damages, costs, charges, attorney’s fees and other expenses
of every nature or character regarding any death or personal injury, of any
nature whatsoever, or property damages, of any nature whatsoever, caused by or
resulting from the Products, including, without limiting, from the Manufacture,
or otherwise, arising out of or resulting from any act or omission attributable
to the Manufacturer, its permitted sub-contractors, if any, or anybody else for
which the Manufacturer is responsible.

 

12.2.                        The
Manufacturer shall, at its own expense, keep itself insured, as long as any of
the aforementioned risks exist, in an appropriate amount, which

 

9

 

shall not be
less than $1,000,000 against any third party claims, and shall effect such
insurance under a valid and enforceable insurance policy issued by a reputable
insurer. The Manufacturer shall procure that the Company shall be included as
an additional insured party in said policy, and shall deliver to the Company,
within 7 (seven) days after the signature of this Agreement, a certificate from
the insurance company evidencing the addition of the Company as such additional
insured party to the policy, and confirming that the insurance company
undertakes not to terminate the policy or to let it expire, without giving the
Company a written notice of at least 60 (sixty) days, prior to the termination
or expiration of said policy.  The
Manufacturer shall furnish the Company with a copy of the relevant policy
together with a copy of each receipt issued, from time to time, by the insurer
in respect of the payment of premium thereon.

 

13.                                 Warranty

 

13.1.                        The
Manufacturer represents, warrants and covenants that each Product Manufactured
for the Company hereunder shall be a Conforming Product for a period of the
applicable shelf life of such Product as set forth in the Specifications (the “Warranty
Period”).

 

13.2.                        The
Manufacturer undertakes to assume full liability towards the Company and each
person who purchase the Products from the Company or from the Company’s
distributors or dealers, and at the request of the Company replace, free of
charge, any Non-Conforming Product with a new Conforming Product, and supply
such new Conforming Product to the Company or its designee(s), within 15 days
after the receipt by the Manufacturer of the relevant returned Non-Conforming
Product. The Manufacturer shall immediately reimburse the Company for all
expenses incurred in the return of such Non-Conforming Products to the
Manufacturer, and shall deliver the replacement Conforming Products to the
Company or its designee(s), within the aforementioned period, at its own risk
and expense.

 

13.3.                        All
requests with respect to the Manufacturer’s warranty hereunder should be
submitted to the Manufacturer within the Warranty Period.

 

14.                                 Confidential
Information

 

14.1.                        The
Manufacturer agrees and declares that all Proprietary Information and any
rights in connection therewith shall be the sole property of the Company and
its assignees at all times.

 

14.2.                        The
Manufacturer will keep in strictest confidence and trust all Proprietary
Information and will not directly or indirectly, communicate, publish,
describe, or divulge any Proprietary Information or anything relating thereto
to any person or body, except to its employees and sub-contractors on a “need-to-know”
basis and solely for the purpose of discharging its obligations pursuant to
this Agreement (the “Purpose”) and provided that any such
employee or sub-contractor has executed an

 

10

 

undertaking prohibiting
the use and disclosure of Proprietary Information in accordance with the terms
of this Agreement.

 

14.3.                        The
Manufacturer undertakes to take all necessary steps to ensure that the
Proprietary Information will not reach the hands of any third party and that
the aforementioned employees and sub-contractors will maintain absolute secrecy
with regards to the Proprietary Information. It is agreed and understood that
the disclosure or use of Proprietary Information by any such employee or
sub-contractor, in violation of the provisions of this Agreement, shall be
deemed for all intents and purposes as disclosure or use by the Manufacturer
itself, contrary to the terms and conditions of this Agreement.

 

14.4.                        The
Manufacturer undertakes not to, directly or indirectly, use or apply the
Proprietary Information in any way whatsoever, except for the Purpose.

 

14.5.                        All
drawings, prints, print-outs, calculations, computations, documents, reports,
written and other records, discs, magnetic and other tapes and all other forms
or methods of storage of information (all of the above shall hereinafter be
referred to as “ISD”) given, delivered or made available to or prepared or
generated by or on behalf of the Manufacturer in connection with the
Proprietary Information hereunder shall remain at all times and for all intents
and purposes the property of the Company and shall be deemed loaned to the
Manufacturer for the Purpose.

 

14.6.                        Upon
termination of this Agreement the Manufacturer shall return to the Company any
and all Proprietary Information, whether contained in ISD or otherwise,
including all copies thereof, if any.

 

14.7.                        All
Intellectual Property Rights and any other rights of whatsoever kind and nature
in, to and in connection with the Proprietary Information and the use,
application, utilization, and commercialization thereof are and shall be vested
exclusively in the Company. This Agreement and the performance thereof do not
grant to or confer upon and shall not be construed or interpreted as granting
to or conferring upon the Manufacturer any right, license or privilege in, to
or in connection with the Proprietary Information or the use, application,
utilization or commercialization thereof, except for the Purpose.

 

14.8.                        Nothing in
this Agreement shall be construed or deemed as derogating from any right or
remedy available to the Company by reason of any Intellectual Property Right
which is or may be available to or registered in the name of the Company in any
jurisdiction, nor from any additional right or remedy available to the Company
under the relevant laws of any applicable jurisdiction.

 

15.                                 Intellectual
Property Rights and Improvements

 

15.1.                        The
Manufacturer acknowledges the Company’s exclusive right, title and interest in
any and all Intellectual Property Rights pertaining to Company

 

11

 

and/or the
Products and/or the Proprietary Information, and the Manufacturer undertakes
that it shall not do, or cause to be done, any acts or things contesting or in
any way impairing or tending to impair any portion of Company’s right, title
and interest in and to the Intellectual Property Rights or represent in any
manner that it possesses any ownership interest in the Intellectual Property
Rights or the registration thereof.

 

15.2.                        All Improvements and all
Intellectual Proprietary Rights therein, shall be and remain at all times the
property of the Company and the Manufacturer shall not have any right, title or
interest therein.

 

15.3.                        The Manufacturer shall forthwith
communicate to the Company the details of any such Improvement, and, upon the
request of the Company, execute or cause any of its employees or agents to
execute, any and all documents required by the Company in order to properly
effect the title of any such Improvement in the name of the Company.

 

15.4.                        Without derogating from the
generality of the aforesaid, all the provisions of this Agreement, shall apply,
mutatis
mutandis,
also with respect to all Improvements.

 

15.5.                        The Manufacturer shall not be
entitled to Manufacture, sell or distribute the Products, except to the Company
and in accordance with the terms and conditions of this Agreement.

 

16.                                 Trademarks

 

The Manufacturer shall affix to the Products
such trademarks, brand names, copyright symbols or other intellectual property
rights notices, as shall be required by the Company, from time to time. The
Manufacturer expressly recognizes and agrees that it shall acquire no right,
title or interest in or to the aforementioned by the terms of this Agreement or
by performance of its obligations hereunder.

 

17.                                 Term
and Termination

 

17.1.                        This
Agreement shall enter into force upon the date of signature hereof by both
Parties and shall remain in force and affect for an indefinite period, unless
and until terminated by either Party in accordance with the provisions of this
Agreement.

 

17.2.                        Either
Party shall be entitled to terminate this Agreement at any time by giving the
other Party a prior written notice of at least 180 days.

 

17.3.                        Either
Party shall have the right to terminate this Agreement without notice (without
prejudice to other rights or remedies to which it may be entitled pursuant to
this Agreement and/or to the applicable law) by writing to the other in any of
the following events:

 

12

 

17.3.1.               The
other Party enters into liquidation or is declared insolvent or bankrupt, or
has a liquidator or an interim liquidator or a receiver or an interim receiver
of its assets or a material part thereof appointed, and such appointment is not
removed within a period of 60 (sixty) days, or seeks or is subject to any other
similar relief or procedure under any bankruptcy laws, insolvency laws or
similar statutes;

 

17.3.2.               The
other Party commits any irremediable breach of this Agreement or fails in any
other respect which is not remediable to comply with the terms of this
Agreement;

 

17.3.3.               The
other Party commits any material breach of this Agreement or fails in any other
respect to comply with any material term of this Agreement and shall fail to
remedy such breach or failure to comply with this Agreement within a period of
14 days from the service on it of a notice from the other Party, specifying the
breach or failure and requiring it to be remedied.

 

17.4.                        The Company
may, upon thirty (30) days advance written notice to the Manufacturer,
terminate this Agreement if there is any change in the ownership or effective
control of the Manufacturer or the Company. Either party shall promptly advise
the other party on any such envisaged or actual change.

 

18.                                 Effects
of Termination

 

18.1.                        All
Binding Purchase Orders placed by the Company prior to the termination of this
Agreement shall be honored by the Manufacturer in accordance with the terms of
this Agreement, unless the Parties agree to different terms in writing.
Provided that, in the event that this Agreement is terminated by the Company in
pursuant to the provisions of Section 17.3 above, the Company shall be entitled
to cancel all outstanding orders not yet delivered.

 

18.2.                        For the
sake of clarity, it is hereby agreed and understood that the termination of
this Agreement for any reason whatsoever, will not release either party from
any:

 

18.2.1.               
Obligations, duties or liabilities that have been incurred prior to such
termination;

 

18.2.2.               
Obligations, duties or liabilities which, from the context hereof or the nature
thereof, are intended to survive the termination of this Agreement, including
those contained in Sections 4.3, 13, 14 and 15 above.

 

13

 

19.                                 General
Representations

 

Either Party hereby warrants, confirms and
undertakes that:

 

19.1.                        It has the
corporate power and authority to enter into this Agreement and to consummate
the transactions contemplated therein;

 

19.2.                        The
execution, delivery and performance of this Agreement have been duly authorized
by all necessary corporate action and this Agreement constitutes a valid, legal
and binding agreement of such Party, enforceable against it in accordance with
its terms;

 

19.3.                        Neither
the execution and delivery of this Agreement by it nor the consummation of the
transactions contemplated hereby will (i) violate, or result in a default under
any note, agreement, contract, understanding, arrangement, restriction or other
instrument or obligation to which it is a party or by which it may be bound; or
(ii) violate any order, award, injunction, judgment or decree to which it is
subject;

 

19.4.                        Upon the
signature hereof, it shall submit to the other Party a letter from its legal
counsel confirming its due establishment, powers and authority to enter into
this Agreement and to perform its obligations thereunder, and that the person
who signed this Agreement on its behalf is duly authorized and empowered to
sign this Agreement on its behalf.

 

20.                                 Right
of First Refusal

 

As long as the business of the Company with
the Manufacturer exceeds 10% of the Manufacturer’s revenues during the
immediately preceding 12-month period, the Company shall have a right of first
refusal with respect to: (i) the sale of all or substantially all of the assets
of the Manufacturer; and/or (ii) the sale of all or substantially all of the
shares of the Manufacturer; and/or (iii) the sale by Lily Baranes and/or
S.P.R.A. Trustee Ltd. (or any successors thereof) of all or substantially all
of their shares in the Manufacturer. The Manufacturer shall promptly advise the
Company in writing on any such envisaged sale, including all the terms and
conditions pertaining thereto (the “Offer”), and including the price and the
identity of the envisaged purchaser (the “Purchaser”). If the Company shall not
advise the Manufacturer within 90 days of receipt of the Offer that it accepts
the Offer, then the Manufacturer or its shareholders, as the case may be, shall
be entitled to consummate the relevant sale with the Purchaser, within a period
of 90 days following the expiration of said 90-day period, on terms not more
favorable to the Purchaser than those contained in the Offer. Any sale
following the expiration of said 90-day period shall be subject to the
aforementioned right of first refusal, mutatis mutandis.  It is agreed and understood that the right
set forth in (iii) above is subject to the right of first refusal granted to
Ilan Brandt under the Articles of Association of the Manufacturer. In the event
that the Company shall desire to exercise its right of first refusal, as
aforesaid, and such exercise shall be prevented due to Ilan Brandt’s desire to
exercise his right of first refusal, then Lily Baranes and/or

 

14

 

S.P.R.A. shall use best efforts to cause Ilan
Brandt to waive his right of first refusal or purchase his shares in the
Company. Concurrently with the signature hereof the Manufacturer shall furnish
the Company with an undertaking from Lily Baranes and/or S.P.R.A., in a form
acceptable to the Company, to comply with the terms of this Section 20.

 

21.                                 Miscellaneous

 

21.1.                        The
Company may, without obtaining the consent of the Manufacturer, assign or transfer
this Agreement or any part thereof, to any third party. The Manufacturer shall
not be entitled to assign or transfer this Agreement or any of its rights or
obligations hereunder, in whole or in part, to any third party, without the
prior written consent of the Company.

 

21.2.                        The
relationship between the Parties is that of independent contractors. Nothing in
this Agreement shall be deemed or construed to constitute or create between the
Parties hereto, a partnership or a joint venture, or to create a relationship
of employer-employee between the Parties and no employee of either Party shall
be considered to be an employee of the other Party for any purpose whatsoever.

 

21.3.                        The
Manufacturer undertakes not to incur any liability on behalf of Company or in
any way pledge or purport to pledge the credit of Company or accept any order
or enter into any obligation or any contract on behalf of Company and/or which
may bind Company, unless so instructed by Company in writing and in advance.

 

21.4.                        Failure of
either Party to enforce any right hereunder shall not waive any right in
respect of the same or other future occurrences.

 

21.5.                        In case
any one or more of the provisions of this Agreement shall be held invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions contained herein,
including the affected provision to the extent valid, legal and enforceable,
shall not in any way be affected or impaired thereby.

 

21.6.                        The headings
of this Agreement are for ease of reference only and shall not govern or affect
the construction hereof.

 

21.7.                        The terms
and conditions herein contained, constitute the entire and only agreement
between the Parties hereto with respect to the subject matter hereof and shall
supersede all previous communications, representations and/or agreement, either
written or oral, between the Parties in respect of such subject matter.  No modification of said terms and conditions
shall be binding unless agreed upon in writing and signed by both Parties.

 

21.8.                        The
Preamble to this Agreement and all the Appendices attached thereto shall be
deemed incorporated by reference herein and shall form an integral part hereof.

 

15

 

21.9.                        This
Agreement shall be governed by and construed in accordance with the laws of the
State of Israel and the Parties hereby submit to the exclusive jurisdiction of
the competent courts of the city of Tel-Aviv, to the exclusion of any other
jurisdiction.

 

21.10.                  Any notice
and/or documents required or permitted to be submitted by either Party to the
other under this Agreement, shall be in writing to the Party’s respective
addresses set forth in the Preamble of this Agreement, or to any other address,
as either Party may designate by giving a written notice to the other, and be
deemed effectively delivered:

 

21.10.1.         If
delivered personally, upon the date of delivery;

 

21.10.2.         If
registered mailed, within 4 (four) working days from the dispatch thereof;

 

21.10.3.         If
delivered by facsimile, within 24 (twenty four) working hours from the dispatch
thereof.

 

IN
WITNESS WHEREOF,
the Parties have signed this Agreement on the date first hereinabove written.

 

 

	
  Vision-Sciences,
  Inc.

  	
  Three BY
  Ltd.

  	
  [SEAL]

  
	
   

  	
   

  
	
  By:

  	
  /s/Ron Hadani

  	
   

  	
  By:

  	
  Nahum Silvio, Adv. and /s/Zvi Haim

  	
   

  
	
   

  	
   

  
	
  Title: President and CEO

  	
  Titles: Director and General Manager

  
							

 

16

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