EXCLUSIVE DISTRIBUTION AGREEMENT

 

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                                                                    Exhibit 10.7

 

          Confidential Materials omitted and filed separately with the

         Securities and Exchange Commission. Asterisks denote omissions.

 

                         EXCLUSIVE DISTRIBUTION AGREEMENT

                         (for the Cynergy Product Line)

 

      THIS AGREEMENT is made by and between El. En. S.p.A., a company organized

under the laws of Italy whose address is Via Baldanzese 17, 50041 Calenzano,

Firenze, Italy (hereafter referred to as "El En"), and Cynosure, Inc., a

Delaware corporation whose address is 10 Elizabeth Drive, Chelmsford, MA 01824

(hereinafter referred to as "Cynosure"). This Agreement shall be effective as of

January 1, 2005 (hereinafter the "Effective Date"). (Both El En and Cynosure are

sometimes collectively referred to as the "Parties", and each may be referred to

in the singular as a "Party".)

 

      The Parties hereby agree to the following:

 

1.     DEFINITIONS

 

      The terms used in this Agreement shall have the following meaning:

 

      1.1 "Territory" shall mean worldwide.

 

      1.2 "Products" shall mean those El En products set forth in Exhibit A to

this Agreement. The term "Products" may be modified from time to time by written

agreement of the parties to include additional El En products.

 

      1.3 "Affiliate" shall mean, with respect to either party, a corporation or

entity that directly or indirectly through one or more intermediaries controls,

or is controlled by, or is under common control with such party. El En and

Cynosure shall be deemed not to be Affiliates for purposes of this Agreement.

 

2.     APPOINTMENT AND ACCEPTANCE

 

      2.1 Subject to Cynosure's compliance with all the terms of this Agreement,

El En hereby appoints Cynosure as its distributor for marketing, sales and

delivery of the Products in the Territory as long as this Agreement remains in

full force and effect, and Cynosure accepts such appointment.

 

      2.2 This appointment of Cynosure as El En's distributor for the Products

in the Territory is an exclusive appointment. During the term of this Agreement

and so long as Cynosure is not in default under this Agreement, El En shall not

appoint any other distributor for the Products in the Territory:

 

      2.3 This appointment shall automatically terminate upon the expiration or

termination of this Agreement.

 

      2.4 Cynosure shall have the right, without the prior written consent of El

En, to appoint sub-distributors or sub-dealers to sell the Products in the

Territory. Notwithstanding the foregoing, should El En reasonably object to any

such appointment, Cynosure shall refrain therefrom.

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      2.5 Neither this Agreement nor any right granted by this Agreement is a

property right. Except as provided in Section 2.4, neither this Agreement nor

any right or responsibility under this Agreement may be transferred, assigned,

delegated or sold by Cynosure or by operation of law.

 

      2.6 No rights or licenses with respect to the Products are granted or

deemed granted under this Agreement or in connection herewith, other than those

rights expressly granted in this Agreement.

 

3      OBLIGATIONS OF EL EN

 

      3.1 El En shall provide such marketing and other sales support to Cynosure

as the parties may agree from time to time Cynosure shall pay for all travel,

lodging, meals and related expenses incurred by El En in providing such support.

 

      3.2 El En reserves the right in its sole discretion to discontinue the

sale or production of any Product. El En reserves the right in its sole

discretion to modify, alter, improve or change any Product. El En shall make

reasonable efforts to provide Cynosure with one year's prior written notice of

any decision to discontinue the sale or production of any Product and ninety

(90) days prior written notice of any decision to change any Product, but any

changes made for safety reasons or to accommodate regulatory requirements shall

be effective upon notice to Cynosure.

 

      3.3 El En will provide annual training sessions (at locations to be

determined by El En) for Cynosure sales and service personnel at no cost to

Cynosure. Notwithstanding the foregoing, Cynosure shall be responsible for all

travel, lodging, meals and related expenses associated with attendance by its

personnel at these training sessions.

 

4.     SALES TO CYNOSURE

 

      4.1 Each order for the Products will be submitted by Cynosure on the

Purchase Order form set forth at Exhibit B to this Agreement (hereinafter the

"Purchase Order") and will be processed by El En in a timely fashion. Each

Purchase Order submitted by Cynosure shall specify the quantity of each Product

which Cynosure desires to purchase and the delivery date for such Product(s).

The express terms of this Agreement, including the Purchase Order, supersede any

contrary provisions in any purchase order, agreement or other document used by

Cynosure. Contracts for the sale of the Product by Cynosure to its customers

shall automatically incorporate, to the extent applicable, the terms and

conditions of this Agreement, including the Purchase Order. El En will accept or

reject the Purchase Order in writing within ten (10) working days of El En's

receipt of the Purchase Order from Cynosure. Any failure on the part of El En to

acknowledge a Purchase Order within such ten (10) working day period shall be

deemed to be a rejection of such Purchase Order.

 

      4.2 Cynosure's orders for the Products shall not be binding on El En

until

 

 

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accepted by El En and may be canceled by Cynosure only until that time. Orders

shall be deemed accepted by El En when Cynosure is so notified in writing by El

En. In the event of a shortage of any Product, El En will make reasonable

efforts to allocate such Product among its distributors and sales

representatives in a fair and equitable manner, but El En shall have no

liability to Cynosure whatsoever as the result of its inability to meet

Cynosure's orders for such Product or any allocation made by El En among its

distributors and sales representatives.

 

      4.3 The prices applicable to the Products are set forth in Exhibit C to

this Agreement. The price applicable to each Product may be changed by El En

only upon reasonable notice (not less than thirty (30) days) to Cynosure. Any

change in the price of a Product will not apply to any orders for such Product

from Cynosure accepted in writing by El En prior to the effective date of such

change. All amounts under this Agreement shall be calculated and paid in U.S.

Dollars.

 

      4.4 Cynosure will deliver to El En, not later than the first day of each

March, June, September and December in each year during the term of this

Agreement, a forecast of Cynosure's anticipated requirements for each Product

during the following calendar quarter, specifying quantities and shipment dates

therefore. The forecast shall not be binding upon Cynosure. Upon acceptance in

writing of such forecast by El En, El En shall make reasonable commercial

efforts to maintain sufficient inventory to fill Cynosure's requirements based

on such forecasts. Product shall, however, only be shipped against purchase

orders accepted by El En.

 

      4.5 Cynosure shall examine each shipment of the Products to determine

whether any item or items included in the shipment are in short supply,

defective or damaged. Within five (5) business days of receipt of the shipment,

Cynosure shall notify El En in writing of any shortages, defects or damage which

Cynosure claims existed at the time of delivery and are not a result of

shipping. Within twenty (20) days of receipt of such notice, El En will

investigate the claim of shortage, defects or damage, and inform Cynosure of its

findings. If El En determines that a shortage, defect or damages existed at the

time of delivery and was not a result of shipping, El En will promptly deliver

replacement Product to Cynosure. Unless notice is given as provided in this

Section 4.5, Cynosure shall be deemed to have accepted each shipment of the

Products and to have waived all claims for shortages, defects or damage.

 

5.     DISTRIBUTORSHIP OPERATIONS

 

      5.1 Cynosure agrees to use best efforts to sell the Products in the

Territory and to promote, through Cynosure's own advertising and sales

promotion activities, the purchase and use of the Products by customers located

in the Territory. Cynosure agrees to establish a sales program for the Products

that will include the following responsibilities:

 

            5.1.1 Cynosure shall maintain one or more sales offices in the

Territory and shall use best efforts and devote such time as necessary to sell

and promote the sale of the

 

 

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Products in the Territory. Cynosure shall solely determine its hours of

operation, its staffing for its offices, its employment policies and benefits

and where and when to make sales calls.

 

            5.1.2 Cynosure shall ensure that all personnel whom Cynosure assigns

to sell the Products are adequately trained on the Product to provide a

satisfactory level of sales service to customers and provide effective sales

presentations and training in the use of the Products to customers.

 

      5.3 As security for the payment by Cynosure of the purchase price for

Products ordered under this Agreement, Cynosure hereby grants to El En a

purchase money security interest in all Products sold or delivered by El En to

Cynosure or to third parties on Cynosure's behalf, whether presently or

after-acquired, in any and all purchase contracts for Products entered into

between Cynosure and a customer, in any and all payments for Products due and

payable from Cynosure's customers, and in any and all proceeds from the sale or

delivery of such Products collected by Cynosure. Cynosure agrees to execute all

necessary documents and financing statements requested by El En in order to

perfect and enforce such security interest.

 

6.     ADDITIONAL CYNOSURE OBLIGATIONS

 

      6.1 Cynosure shall promptly report to El En all complaints and product

problems communicated by customers with respect to the Products. Cynosure shall

be responsible for providing El En with a written report of all Product

complaints and problems. Cynosure shall assist El En in complying with the then

current Medical Device Reporting/Adverse Event/Product Problem Regulations

promulgated and amended by the U.S. Food and Drug Administration ("FDA"). To the

extent applicable to relationships of this nature and required by applicable

law, Cynosure shall be responsible for maintaining traceability of all Products

purchased and resold by Cynosure.

 

      6.2 Cynosure shall make no warranties or representations, whether oral or

written, with respect to the Products, including without limitation, sales

literature, without the prior written consent of El En. Cynosure shall

accurately and completely represent the Products, and promote the Products in a

manner consistent with its labeling, FDA cleared or approved indications, and

FDA regulations.

 

      6.3 Cynosure shall, at its sole expense, comply with all the laws and

regulations applicable to its operations and to its performance of its

obligations under this Agreement.

 

      6.4 Except as provided in this Section 6.4, El En does not grant to

Cynosure any license or rights to any intellectual property of El En. El En

hereby grants Cynosure the non-exclusive and non-transferable right to display

trade names and trademarks associated with the Products in the Territory solely

in connection with the performance of its obligations under this Agreement. Upon

termination of this Agreement, Cynosure shall terminate all use of such trade

names and trademarks. Cynosure shall not, directly or indirectly, infringe or

contest the validity of or the title to any patents, copyrights, trademarks or

trade names owned by El En or under which El En is licensed, or otherwise

 

 

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impair the interests of El En in such intellectual property.

 

      6.5 Cynosure will conduct all of its business in its own name and in a

manner consistent with its obligations under this Agreement. Cynosure will be

solely responsible for the payment of all the e