Exhibit 10.12
AGREEMENT
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This AGREEMENT ("Agreement"), dated as of October 1, 2004, by
and
between VALLEY FORGE SCIENTIFIC CORP. a
Pennsylvania corporation with a business
address of 136 Green Tree Road, Oaks, PA
19456 ("Valley Forge"), and Codman &
Shurtleff, Inc. ("CODMAN") a corporation
existing under the laws of
Massachusetts with a business address of
325 Paramount Drive, Raynham, MA 02767.
WHEREAS, CODMAN develops, manufactures, and markets medical
instruments, implants and accessories for
the diagnosis and treatment of
conditions affecting the central nervous
system;
WHEREAS, Valley Forge develops, manufactures and supplies
medical
devices and related instrumentation and
accessories used for the bipolar
electrical and radio frequency surgical
treatment of bodily tissues and titanium
mesh products related to surgery;
WHEREAS, the parties desire that CODMAN distribute Valley
Forge's
Existing Products (as defined below)
through December 31, 2005 under the Valley
Forge Patents (as defined below) pursuant
to the terms of this Agreement;
WHEREAS, the parties desire to set forth certain other
agreements
regarding Valley Forge's New Product (as
defined below); and
WHEREAS, the parties desire to agree upon other matters as set
forth
herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and
agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
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As used throughout this Agreement, each of the following terms
shall
have the respective meaning set forth
below:
"Affiliate" of a party shall mean any entity or person that
directly or indirectly controls, is
controlled by or is under common control
with such party. For purposes of this
definition, "control" shall mean the
possession, directly or indirectly, of the
power to direct or cause the
direction of the management and policies of
an entity, whether through the
ownership of voting securities, by contract
or otherwise.
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"Calendar Quarter" shall mean the calendar quarter customarily
used by CODMAN for internal accounting
purposes consisting of approximately
three months in which each of the first two
months consists of four weeks and
the third month consists of five weeks.
"Valley Forge Patents" shall mean (i) all of the Patents as
defined below, (ii) all other patents and
applications for patents that cover
the manufacture, use, importation or sale
of any Existing Product, in which
Valley Forge (or any Affiliate of Valley
Forge) has any rights, any foreign
counterparts thereof, as well as all
continuations, continuations-in-part,
divisions and renewals thereof, all patents
which may be granted thereon, and
all reissues, reexaminations and
extensions.
"Field" shall mean the practice of neurocranial and
neurospinal surgery.
"Improvement" shall mean any adaptation, change, redesign,
improvement, modification of any Existing
Product (as defined below), the
Specifications (as defined below) therefor,
the Raw Materials (as defined below)
or the method or process of manufacture or
production of any Existing Product
provided, however, any adaptation, change,
redesign, improvement, or
modification of any Existing Product which
results in such Existing Product
being indicated for use in applications
other than those within the Field shall
not be considered an Improvement.
Notwithstanding anything in this Agreement to
the contrary, an Improvement shall not mean
the New Product, or any adaptation,
change, redesign, improvement, modification
of the New Product.
"Know-How" shall mean all know-how relating to the
development, manufacture, sale or use of
any Existing Product, including,
without limitation, processes, techniques,
methods, products, apparatuses,
biological materials and other materials
and compositions which are reasonably
related thereto. Notwithstanding anything
in this Agreement to the contrary,
Know-How shall not mean any know-how
relating to the development, manufacture,
sale or use of the New Product.
"Manufacturing Costs" shall mean the direct labor, direct
overhead and Raw Materials costs incurred
in the manufacture of Existing
Product.
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"Patents" shall mean the U.S. Patents set forth on Schedule C,
along with any foreign counterparts
thereof, as well as all continuations,
continuations-in-part, divisions and
renewals thereof, all patents which may be
granted thereon, and all reissues,
reexaminations, extensions, patents of
addition, and any subsequent improvement
patents or applications, such
improvement patents and applications being
those the practice of which falls
within the claims any of said patents.
"Existing Products" shall mean the medical devices,
disposables and accessory products
indicated for use in the Field as described
in Schedule A attached hereto.
"New Product" shall mean the New Product as described in
Schedule B, attached hereto.
"Accessory Products" shall have the meaning set forth in
Schedule A, attached hereto.
"Medical Device Products" shall have the meaning set forth in
Schedule A, attached hereto.
"Disposable Products" shall have the meaning set forth in
Schedule A, attached hereto.
"Raw Materials" shall mean the materials, components, and
packaging required to manufacture and to
package any Existing Product in
accordance with the Specifications.
"Specifications" shall mean the specifications for the design,
composition, product safety assurance,
manufacture, packaging, and/or quality
control of any Existing Products the same
may hereafter be modified by mutual
agreement of the parties in writing.
Schedule D, attached hereto, references the
document that contains the agreed upon
Specifications for the Existing Products,
which is made a part hereof.
"Exclusivity Term" shall have the meaning set forth in Section
10.01, herein.
"Extended Term" shall have the meaning set forth in Section
10.02, herein.
"Exclusivity End Date" shall mean March 31, 2005, or such
later date as may be mutually agreed to in
writing by CODMAN and Valley Forge.
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ARTICLE TWO
SUPPLY OF PRODUCT, PRICE, OTHER TERMS
-------------------------------------
2.01
Distribution Rights. Valley Forge hereby appoints CODMAN, and
CODMAN hereby accepts appointment, as
Valley Forge's exclusive worldwide
distributor of the Existing Products in the
Field for the Exclusivity Term of
this Agreement. Thereafter, Valley Forge
hereby appoints CODMAN and CODMAN
accepts appointment, as Valley Forge's
non-exclusive worldwide distributor of
the Existing Products in the Field for the
Extended Term of this Agreement.
Valley Forge understands and agrees that
during the term of this Agreement,
CODMAN may utilize its Affiliates to act as
distributors hereunder in certain
geographic areas, provided that CODMAN
shall at all times remain responsible for
performance of all of its obligations under
this Agreement.
(a) The parties acknowledge that Valley Forge develops,
manufactures
and markets through other distributors medical devices and
related
instrumentation indicated for use outside the Field, and that it
is
in the parties' mutual interest to ensure that such other
products
are not used in the Field during the Exclusivity Term. In the
event
Valley Forge becomes aware during the Exclusivity Term that any
of
its other distributors of its medical devices and related
instrumentation intended for use outside the Field are
promoting
the use of such devices and/or instrumentation in the Field,
Valley
Forge shall take all such reasonable actions as may be permitted
by
law to prevent or discourage such promotion in the Field.
(b) Valley Forge acknowledges that CODMAN and Dr. Leonard I. Malis
have
entered into a trademark/license agreement ("Trademark
Agreement")
for the "Malis" trademark ("Trademark"). On this date, Leonard
I.
Malis and CODMAN have entered into an extension of the
Trademark
Agreement coterminous with the Exclusivity Term and the
Extended
Term. Valley Forge consents to CODMAN using the "Malis"
trademark
in accordance with the terms of the Trademark Agreement as
extended, and CODMAN consents to Dr. Leonard I. Malis entering
into
an option agreement with Valley Forge and transferring to
Valley
Forge the Trademark on terms substantially similar to the form
of
option agreement, attached as Exhibit A, hereto.
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2.02 Supply of
Product. During the term of this Agreement, Valley
Forge shall supply all product quantities
of Existing Products as required by
CODMAN (and its Affiliates), subject to the
terms and conditions of this
Agreement, for distribution for use in the
Field pursuant to this Agreement.
Each such Existing Product shall be
manufactured and packaged by Valley Forge or
its suppliers in accordance with the
Specifications.
2.03 Prices.
(a) The initial price (the "Price") for each Existing Product
(other
than sample, special or prototype products) during the term of
this
Agreement is as set forth on Schedule E attached hereto. The
Prices
set forth in Schedule E include all costs of manufacturing and
packaging in accordance with the Specifications and such Prices
are
F.O.B. Valley Forge's facilities in Philadelphia, PA or Oaks,
PA.
(b) The Prices set forth on Schedule E shall remain in effect
through
December 31, 2005.
(c) Valley Forge hereby agrees that it shall use its good faith
efforts
to minimize its Manufacturing Costs of producing the Existing
Products to the extent it may do so without compromising the
quality of the Existing Products or compliance with terms of
this
Agreement.
2.04 Forecasts.
The parties understand and agree that certain
critical Existing Product components have
significant procurement lead times,
and the parties understand and acknowledge
that the prices of Existing Products
above the levels set forth in the forecasts
will be greater than the prices set
forth in Schedule E, attached hereto.
Attached as Schedule F are CODMAN's
forecasts for Medical Device Products and
Accessory Products for the period from
October 1, 2004 to December 31, 2005 and
forecasts for Disposable Products for
the period from October 1, 2004 to June 30,
2005. On or before March 31, 2005,
CODMAN shall provide to Valley Forge its
forecasts for the Disposable Products
for the period from July 1, 2005 to
December 31, 2005. If CODMAN does not
provide to Valley Forge its projections for
the Disposable Products by March 31,
2005, the projections for the period from
July 1, 2005 to December 31, 2005
shall be the same as the forecasts for
quantities of Disposable Products for the
immediately preceding six (6) month period.
Valley Forge shall be under no
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obligation to supply CODMAN Disposable
Products for the period from July 1, 2005
to December 31, 2005 in quantities in
excess of 125% over the forecasted amounts
for the immediately preceding six (6) month
period. CODMAN will confirm these
projections with the issuance to Valley
Forge of its official purchase order.
2.05 Orders.
CODMAN shall place any binding orders for Existing
Products by written or electronic purchase
order (or by any other means agreed
to by the parties) to Valley Forge. Such
purchase orders shall set forth the
desired date of delivery with respect to
the Products ordered and shall be
placed at least ninety (90) days prior to
such desired date of delivery for all
Medical Device Products and at least sixty
(60) days prior to such desired date
of delivery for all Disposable Products and
Accessory Products. To the extent
there is any conflict or inconsistency
between this Agreement and any purchase
order, purchase order release,
confirmation, acceptance or any similar document,
the terms of this Agreement shall govern.
Valley Forge shall be obligated to
supply up to 110% of the quantity
forecasted pursuant to Section 2.04. Orders in
excess of such 110% shall be subject to
acceptance by Valley Forge; provided
that Valley Forge will accept such excess
orders to the extent it has, and its
suppliers have the manufacturing capacity
to supply them.
2.06 Delivery.
All charges for final packaging and transport
packaging are included in the Price. All
shipments must be accompanied by a
packing slip that describes the articles,
states the purchase order number and
shows the shipment's destination. Valley
Forge agrees to promptly forward the
original bill of lading or other shipping
receipt for each shipment in
accordance with CODMAN's instructions.
Valley Forge further agrees to promptly
render correct and complete invoices to
CODMAN, and to accept payment by check
or, at CODMAN's discretion, cash or
electronic transfer of funds. All invoices
submitted by Valley Forge shall be payable
net within thirty (30) days after the
date of such invoices. The date of invoice
with respect to any Existing Product
shall not be earlier than the date of
shipment of such Existing Product.
2.07 Shipment.
Valley Forge shall ship Existing Products, at CODMAN's
cost to the extent set forth in Section
2.03, to any location chosen by CODMAN
utilizing carriers approved by CODMAN. The
risk of loss with respect to all
Existing Products shall remain with Valley
Forge until the products to be
shipped are loaded on to the carrier
specified by CODMAN. Valley Forge will
package all Existing Products in accordance
with the packaging requirements
included in the Specifications.
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2.08 Minimum
Purchase Requirements:
(a) Existing Products. CODMAN shall purchase Existing Products
from
Valley Forge for the period from October 1, 2004 to March 31,
2005
in the minimum dollar amount of $1 million dollars per calendar
quarter ("Minimum Dollar Purchase Obligations").
(b) The Minimum Dollar Purchase Obligations shall be
proportionally
reduced on a unit-for-unit product basis to the extent (i)
Valley
Forge is for any reason unable to supply Existing Products in
accordance with the terms of this Agreement, (ii) the
particular
Existing Product is recalled or withdrawn from the market for
reasons of product safety, efficacy, reliability or deviation
from
the Specifications, or (iii) a third party infringes any of the
Patents and such infringement is deemed the cause for the
Minimum
Dollar Purchase Obligations not to be met. The Minimum Dollar
Purchase Obligations
for the particular Existing Product or
Products shall be reduced to zero in any given year in which
the
Existing Product or Products are the subject of a formal claim
filed in a proceeding in the U.S. by a third party asserting
that
the manufacture, importation, use or sale of the Existing
Product
or Products infringes the intellectual property rights of a
third
party and will be adjusted prospectively upon final resolution
of
such claim. If the claim is filed in a proceeding outside the
U.S.
for a particular product, then the Minimum Dollar Purchase
Obligations for the particular Existing Product shall be reduced
on
a proportionate basis based on sales of the particular Existing
Product in the country where the claim is filed as compared to
the
total worldwide sales of the same Existing Product.
ARTICLE THREE
ADDITIONAL OBLIGATIONS OF THE PARTIES
-------------------------------------
3.01 Sales of
Existing Products. All business decisions relating to
the sale, price, marketing and promotion of
any Existing Product supplied under
this Agreement shall be within the sole
discretion of CODMAN. Valley Forge
further agrees that (i) payment by CODMAN
to Valley Forge of the Prices set
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forth in Section 2.03 hereof for purchased
Existing Product, and (ii) satisfying
the Minimum Dollar Purchase Obligations;
shall constitute complete satisfaction
of any duty, whether express or implied,
which could be imposed upon CODMAN to
commercially exploit its rights under this
Agreement and are accepted by Valley
Forge in lieu of any best efforts
obligations on the part of CODMAN, and the
remedies for the failure to fulfill any
such obligations shall be limited, as
applicable, to loss of exclusivity,
termination or the payment of the Price for
purchased Existing Product as expressly set
forth herein.
3.02 Package
Labeling. CODMAN shall be responsible for the text and
regulatory compliance of all package
labels, labeling and Existing Product
inserts used in connection with the
Existing Products. For purposes of this
Agreement the terms "label" and "labeling"
shall have the meanings set forth in
Sections 201(k) and 201(m) respectively of
the U.S. Federal Food, Drug and
Cosmetics Act.
3.03 Provision
of Information by Valley Forge. Valley Forge shall, at
the request of CODMAN, provide CODMAN with
the following information relating to
the Existing Products and to the extent
reasonably available to Valley Forge, at
no cost to CODMAN:
(i) provide
all relevant information on product safety, efficacy,
reliability and performance characteristics;
(ii)
the Device Master Record and Device History Record, as defined
in 21 Code of Federal Regulations, Part 820, for the Existing
Products and components thereof;
(iii)
copies of all U.S. and foreign regulatory submissions,
including any 510(k) submissions for the Existing Products;
(iv)
supply the written text of a technical service manual and user
manual for each Existing Product in "print ready" form at no
cost to CODMAN. CODMAN will supply Valley Forge with a
quantity of technical service manuals and user manuals at its
cost and Valley Forge will ship the same with each unit of
Existing Product purchased.
3.04 Changes. In
no event shall any change in form, fit or function,
safety, efficacy or reliability, or the
appearance of an Existing Product
("Significant Change") be made without the
prior written approval of CODMAN. If
the parties agree on any such change, they
shall modify the Specifications to
reflect the same. Valley Forge further
agrees that no significant changes to the
method or process of manufacture or
production of any Existing Product or the
Raw Materials shall be made without prior
written notification to and approval
of CODMAN. As used in this Section 3.04,
the term "significant change" shall
mean any change that (i) results in a
change to the Specifications (ii) affects
Existing Product performance, labeling,
physical appearance or configuration,
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software (other than debugging or other
error correction which does not
otherwise affect on the performance of the
software), packaging, or
sterilization processes, (iii) affects
Product safety, reliability or integrity
or (iv) requires a submission to or
approval from a governmental body. In the
event of any significant change, CODMAN
shall have the responsibility to
establish an appropriate qualification
protocol, if required by CODMAN, and
CODMAN and Valley Forge shall determine an
appropriate inventory level for the
pre-change Existing Product in order to
cover on-going requirements during the
qualification process. The parties will
negotiate in good faith to determine the
change in the purchase price, if any, which
may be required by the change.
3.05 Insurance.
Valley Forge agrees to procure and maintain in full
force and effect during the term of this
Agreement valid and collectible
insurance policies in connection with its
activities as contemplated hereby
which policies shall provide Comprehensive
General Liability coverage including
Existing Products and Contractual Liability
coverage in an amount not less than
$5 million per occurrence. Such policy
shall name CODMAN as an insured or an
additional insured. Upon CODMAN's request,
Valley Forge shall provide to CODMAN
certificate of coverage or other written
evidence reasonably satisfactory to
CODMAN of such insurance coverage. Such
insurance policy shall provide that in
the event such insurance coverage should be
materially adversely changed or
terminated for any reason, the insurer
thereunder will give Valley Forge and
CODMAN ten (10) days' prior notice. The
existence of such coverage shall in no
way limit Valley Forge's liability or
obligations hereunder.
3.06 Training.
CODMAN shall develop and implement training programs
for its sales representatives and customers
with respect to the operation and
maintenance of the Existing Products.
Valley Forge shall be responsible for the
technical accuracy of all training
materials and shall assist CODMAN in
preparing the technical aspects of such
training programs. Valley Forge shall
actively participate in training CODMAN
trainers, who will in turn train CODMAN
sales representatives and customers.
3.07
Governmental Registrations. CODMAN shall apply, in its name and
at its cost, for all governmental
registrations required for CODMAN to market
Existing Products during the Exclusivity
Term as a distributor in those
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countries where CODMAN desires to market
Existing Products during the
Exclusivity Term, unless the applicable
laws of a particular country require
that such registrations be obtained by and
in the name of the manufacturer of
the applicable product, in which event
Valley Forge shall apply for such
approvals at CODMAN's cost. Valley Forge
shall reasonably cooperate with CODMAN
in its efforts to obtain such approvals.
Valley Forge agrees that CODMAN shall
have access to all of Valley Forge
regulatory submissions and technical files
for the Existing Products to the extent
necessary to exercise its rights or
fulfill its obligations hereunder.
3.08 CODMAN
will:
i.
advertise the Existing Products in those medical journals
and/or
Direct Mail which in its judgment are best
suited for sale of the Existing
Products, a copy of such advertisement will
be reviewed by Valley Forge prior to
its release. In disagreements as to
marketing or sales content, CODMAN shall
prevail. On matters of technical
description or medical use or practice, Valley
Forge shall prevail.
ii. show
the Existing Products at the AANS and CNS and such other
trade shows as mutually agreed upon by
CODMAN and Valley Forge.
iii. CODMAN will
review its marketing plan for the Existing Products
with Valley Forge on a semi-annual basis,
commencing within forty-five (45) days
of the signing of this Agreement.
3.09 Valley
Forge shall:
(a) during the Exclusivity Term provide CODMAN with field
testing units of the New Product for CODMAN's evaluation and
testing;
provided, however, notwithstanding anything in this Agreement to
the
contrary, except as set forth in Section 3.11, below, CODMAN shall
have
no rights regarding New Product (including without limitation
distribution or sales rights), except as agreed by Valley Forge
in
writing in Valley Forge's sole and absolute discretion.
(b) use commercially reasonable efforts (i) to enter into a
lease for a new facility to consolidate its existing Philadelphia
and
Oaks facilities into a single facility; and (ii) to occupy that
facility by December 31, 2004. During the Exclusivity Term,
Valley
Forge will review with CODMAN from time-to-time the plans to
consolidate its operations into a single facility, including
its
efforts to sell its existing Philadelphia facility.
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3.10 During the
Exclusivity Term, Valley Forge and CODMAN will
cooperate with each other in good faith to
develop mutually agreeable project
plans and schedules for the review and
evaluation of the New Product and will
conduct project reviews no less frequently
than monthly in order to enable
Valley Forge to complete field testing
units for the New Product by the November
30, 2004 target date. CODMAN will conduct
its field testing and evaluation of
New Product within ninety (90) days after
the date that the field testing units
of the New Product are delivered by Valley
Forge to CODMAN, but in no event
later than the end of the Exclusivity
Period ("Evaluation Period").
3.11 Limited
Right of First Refusal for New Product During the
Exclusivity Term
(a) During the Exclusivity Term, prior to offering the New Product
to a
third party distributor to distribute or
sell the New Product for use in the
Field, Valley Forge shall offer CODMAN the
right of first refusal to market the
New Product in the Field by giving CODMAN a
written notice ("New Product
Notice") of the minimum purchase
requirements CODMAN's purchase price for the
New Product, and other terms, after which
CODMAN shall have a period of thirty
(30) days or until the end to the
Exclusivity Term, whichever is earlier, ("New
Product Decision Period") to enter into a
distribution agreement for the New
Product under the terms set forth in the
New Product Notice or other terms
mutually agreed upon in writing by Valley
Forge and CODMAN ("New Distribution
Agreement").
(b) In the event CODMAN (i) gives written notice to Valley Forge of
its
decision not to exercise its right of first
refusal during the First New Product
Decision Period, or (ii) if CODMAN fails to
enter into a New Distribution
Agreement with Valley Forge during the New
Product Decision Period, then,
notwithstanding anything in this Agreement
to the contrary, Valley Forge may
pursue other distribution opportunities for
the New Product in the Field, on
terms that are, in the aggregate, not less
favorable to Valley Forge than the
terms specified by Valley Forge in the New
Product Notice or contained in the
last subsequent proposal by Valley Forge to
CODMAN, if any, and, in the event
that Valley Forge desires to pursue such
less favorable distribution
opportunities, then Valley Forge shall be
required (each time such situation
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arises during the Exclusivity Term) to give
a new notice to CODMAN pursuant to
this Section 3.11 and comply with the right
of first refusal set forth herein.
(c) Notwithstanding anything in this Agreement to the contrary,
the
right of first refusal set forth in Section
3.11(a) and (b), above shall
terminate at the end of the Exclusivity
Term.
(d) Furthermore, notwithstanding anything in this Agreement to
the
contrary, the right of first refusal in
Section 3.11(a) and (b), above shall not
apply to Valley Forge or any wholly-owned
subsidiary marketing or selling the
New Product through its own sales force or
through independent sales
representatives. Valley Forge (including
any wholly-owned subsidiaries),
however, agrees not to market or sell the
New Product in the Field through its
own sales force or through independent
sales representatives until the earlier
of the expiration of the Evaluation Period
or the end of the Exclusivity Term.
ARTICLE FOUR
QUALITY/DEFECTIVE PRODUCT/INSPECTIONS/TESTING
---------------------------------------------
4.01
Inspections. CODMAN shall have the right, upon reasonable
notice
to Valley Forge and during regular business
hours, to inspect and audit the
facilities being used by Valley Forge (or
any third party) for production and
storage of Existing Products to assure
compliance by Valley Forge (and its
suppliers) with (i) all applicable
statutes, laws and regulations, including,
without limitation, Quality System
Regulations ("QSRs") enforced by the United
States Food and Drug Administration (the
"FDA"), (ii) CODMAN Quality Assurance
Policies, (iii) Johnson & Johnson
Corporate Quality Assurance Requirements, and
(iv) the terms and provisions of this
Agreement. Valley Forge shall within
fourteen days remedy or cause the remedy of
any deficiencies which may be noted
in any such audit or, if any such
deficiencies can not reasonably be remedied
within such fourteen day period, present to
CODMAN a written plan to remedy such
deficiencies as soon as possible; and the
failure by Valley Forge to remedy or
cause the remedy of any such deficiencies
within such fourteen day period or to
present such a plan within such fourteen
day period and then use its best
efforts to remedy or cause the remedy of
such deficiencies in accordance with
such written plan, as the case may be,
shall be deemed a material breach of this
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Agreement. Valley Forge acknowledges that
the provisions of this Section 4.01
granting CODMAN certain audit rights shall
in no way relieve Valley Forge of any
of its obligations under this Agreement,
nor shall such provisions require
CODMAN to conduct any such audits.
4.02 Acceptance;
Disposition of Non-Compliant Product. CODMAN shall
have no obligation to pay for any Existing
Product that is subject to such a
claim of non-compliance with the
specifications; provided CODMAN shall pay for
Product within 30 days of receipt unless
such Existing Product has been rejected
within such 30-day period. Valley Forge
shall replace at its own cost and
expense, including reimbursement of freight
costs incurred by CODMAN, Existing
Product that fails to comply with the
Specifications or other warranties made in
Article Five, which replacement shall
constitute CODMAN's sole and exclusive
remedy therefor (but in no way limiting
Valley Forge's indemnity obligations
under Section 6.01). CODMAN shall notify
Valley Forge of the existence and
nature of any non-compliance with the
specifications that comes to its attention
and shall return such non-compliant
Existing Product to Valley Forge within
fifteen (15) days after it is rejected by
CODMAN. Valley Forge shall have a
reasonable opportunity, not to exceed ten
(10) days from receipt of such
Existing Product, to inspect such
non-compliant product and provide CODMAN an
explanation of the non-compliance and
proposed course of action (i.e. repair
(including the nature of the repair) or
replacement of the Existing Product).
The acceptance (or non-rejection) of any
Existing Products shall in no way limit
CODMAN's rights under Valley Forge product
warranty or for indemnification
hereunder; provided however that Valley
Forge shall replace non-compliant
product (i) under this Section 4.02 if
found to be non-compliant within
