ORIGINAL EQUIPMENT MANUFACTURER AGREEMENT

This Original Equipment Manufacturer Agreement (the "Agreement") is entered into as of the 25TH day of June, 2002, by and between BOVIE MEDICAL CORPORATION, a Delaware corporation with its principal place of business at 7100 30th Avenue North, St. Petersburg, FL 33710-2902 ("Bovie"), and ARTHREX, INC., a Delaware corporation having its principal place of business at 2885 South Horseshoe Drive, Naples, FL 34104 ("Arthrex").

WHEREAS, Bovie manufactures, packages and sells certain devices and components for resale and desires to manufacture and supply certain Products (as defined below);

WHEREAS, Bovie desires to invest time and resources in the development and the improvement of the Products, and in consideration therefor, Arthrex desires to purchase its Products inventory from Bovie; and

NOW, THEREFORE, in consideration of the terms and provisions of this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Bovie and Arthrex agree as follows:

1.0 DEFINITIONS.

  1.1 An "Affiliate" of a Person means any company, corporation, partnership, limited liability company, association, organization, entity, individual or other that directly or indirectly controls, is controlled by or is under common control with such Person.

1.3 "FDA" means the United States Food and Drug Administration or any successor agency or authority, the approval of which is required to market, distribute, supply and sell health care products in the United States.

1.4 "Product or Products" mean any one or more of the devices and components set forth in Appendix A, and such other devices and components as may be added, in writing, to Appendix A by Arthrex from time to time.

1.5 "Purchase Order" means a written order issued by Arthrex to Bovie with respect to purchases of Products, substantially in the form attached hereto as Appendix B, which shall be subject to, and governed exclusively by, the terms of this Agreement.

2.1           Bovie's Supply Obligations

(a)             Bovie shall use its best efforts to supply Arthrex with Product inventory. Subject to the provisions of Section 5 below, all Products sold under this Agreement shall conform in all material respects to the product specifications ("Product Specifications") and manufacturing processes ("Manufacturing Processes") as set forth in Appendix A as such Products, Product Specifications and Manufacturing Processes may be modified from time to time by Bovie's engineering and design teams; provided, however, that no changes, modifications or improvements may be made to, or implemented within, any Products delivered to Arthrex pursuant to this Agreement without Arthrex's prior written consent, such consent not to be unreasonably withheld.

(b)             Subject to Section 2.1(c), Bovie shall agree to any reasonable and lawful modification to the Product Specifications requested by Arthrex in writing, which are designed to improve the Products; provided, however, that Bovie shall have a reasonable period of time to implement such Product Specifications.

(c)             Notwithstanding anything to the contrary in Sections 2.1(a) and (b), in the event that any change or modification to the Products or the Product Specifications results in a material change to the costs incurred by Bovie in the development, production, manufacture, sterilization and/or packaging of the Products, Bovie shall so notify Arthrex prior to the implementation of the change or modification and, upon the written consent of Arthrex thereto, the purchase prices, as set forth in Section 3.1, shall be modified accordingly.

(d)             Bovie agrees, and shall cause its officers, directors, employees, advisers, agents and consultants (collectively, "Representatives") to agree, that if any Product Specification requested by Arthrex in accordance with Section 2.1(b), includes changes to the Products or to the Product Specifications ("Inventions"), that all Inventions shall be the sole property of Arthrex to the maximum extent permitted by applicable law and to the extent permitted by law shall be "works made for hire" as that term is defined in the United States Copyright Act (17 USCA, Section 101). Arthrex shall be the sole owner of all patents, copyrights, trade secret rights and other intellectual property or other rights in connection with the Inventions. Bovie shall, and shall cause its Representatives to, assign to Arthrex all right, title and interest Bovie and/or its Representatives may have or acquire in any and all Inventions. Bovie shall, and shall cause its Representatives to, assist Arthrex in every proper way to obtain, and from time to time, enforce, all patents, copyrights or other rights on said improvements in any and all countries, and to that end Bovie shall, and shall cause its Representatives to, execute all documents necessary. Arthrex shall have the sole and exclusive right to:

 (i) apply for, obtain and vest in the name of Arthrex alone (unless Arthrex otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same in its sole discretion; and

(ii) defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.

(e) Bovie's and its Representatives' obligations to assist Arthrex in obtaining and enforcing patents and copyrights for the Inventions in any and all countries, as set forth above, shall continue beyond the Term, at Arthrex's cost.

2.2           Arthrex's Purchase Obligations

(a)             Subject to Section 2.11, Arthrex shall engage Bovie as the **    ** manufacturer of **    **  percent (**    **) of its Product requirements in the marketplace, including, without limitation, Products required for engineering, testing and clinical trials, if any. Except as expressly set forth herein, Arthrex agrees to purchase **    **  its Product requirements **    **  from Bovie, and from no other manufacturer, person or entity, including, without limitation, any entity belonging, in whole or in part, to Arthrex.

(b)             Subject to Section 2.2(a) above, Arthrex shall provide Bovie with firm Purchase Orders for Products in accordance with the lead-times set forth in Section 2.4(a); provided, that Arthrex shall have the right, up to the date of manufacture, and with the consent of Bovie, which shall not be unreasonably withheld, to issue binding, written change orders to increase or decrease the quantity of such Purchase Orders. Arthrex agrees to accept partial shipments of Products should it, for any commercially reasonable reason, become necessary to ship in advance of order completion. Bovie shall make all commercially reasonable efforts to comply with any revisions to Purchase Order requirements consistent with the provisions of Section 2.3. Within seven days after receipt of a Purchase Order from Arthrex, Bovie shall acknowledge such receipt and confirm whether the order can be supplied.

2.3           Estimates of Requirements

(a) (i) Upon execution and delivery of this Agreement, and upon each successive **    **  anniversary of the execution and delivery of this Agreement, Arthrex shall deliver to Bovie a rolling **    **  written commitment of Arthrex's requirements of Products for the immediately succeeding **    **  period (each, a **    **  Commitment"). Arthrex shall deliver **    **  Commitments to Bovie no later than **    **  days prior to the applicable **    **  anniversary date. Bovie shall, no later than **    **  days after receipt of each **    **  Commitment, notify Arthrex of any prospective problems, of which Bovie is aware, that might prevent Bovie from meeting Arthrex's order quantities or estimated Delivery Dates.

(ii) Upon execution and delivery of this Agreement, and upon each successive **    **  anniversary of the execution and delivery of this Agreement, Arthrex shall deliver to Bovie a written, non-binding good faith estimate of Arthrex's requirements of Products from Bovie for delivery during the immediately succeeding **    **  (each, **    **  Forecast"). Arthrex shall deliver Annual Forecasts to Bovie no later than **    ** days prior to the applicable **    **  anniversary date. Bovie shall, no later than **    **  days after receipt of each **    **  Forecast, notify Arthrex of any prospective problems, of which Bovie is aware, that might prevent Bovie from meeting Arthrex's forecasted requirements or estimated Delivery Dates.

(b) Bovie and Arthrex agree to cooperate with each other and work jointly to establish and maintain a smooth and efficient timetable for the manufacture and supply of Products to Arthrex hereunder. Bovie shall use commercially reasonable efforts to supply Arthrex with all of its Product requirements, including, but not limited to, the use of commercially reasonable efforts to accommodate "Rush" orders from Arthrex; provided, however, Bovie shall not be in breach of this Agreement for any failure to supply quantities of Products which exceed the **    **  Commitments provided by Arthrex under Section 2.3(a) by more than **    **.

2.4           Orders, Packaging and Delivery

(a)            Unless otherwise agreed to in writing by the parties, all Products purchased pursuant to this Agreement shall be effected by Arthrex's issuance of a firm written Purchase Order, consistent with Section 2.3 above. Each Purchase Order shall specify the type and quantity of the Product to be delivered, as well as requested Delivery Dates. All requested Delivery Dates shall provide for at least **    **  days lead time for the manufacture and delivery of the Products ordered (taking into consideration the production schedule established in the **    ** . After the end of the Ramp-Up Period, subject to Section 2.3(b), a failure by Bovie to deliver Products within**    **  days of a Delivery Date shall be a material breach of this Agreement and be subject to Section 7.1.

(b)            (1) Bovie shall be responsible for, in accordance with the terms, provisions and conditions set forth in this Agreement: (i) the sterilization of the Products at its facility or facilities or at any contract facility or facilities; (ii) the packaging of the Products for shipment in accordance with validated procedures; and (iii) the shipment of such Products. Arthrex, at its own expense, will provide Bovie with Arthrex's labeling for the Products bearing Arthrex's corporate name and trade dress. Bovie will print, either directly or through a third party, labels and other printed material to be included as part of the finished Products. Products manufactured by or on behalf of Bovie after Bovie's receipt of any new or altered labeling for the Products, shall bear such new labeling. Bovie shall also place other required notices and marks, such as ETL and CE (both as defined below) notices and markings, as Arthrex may hereafter prescribe from time to time as it deems appropriate, on all copies and embodiments of the Products and associated documentation and advertising. Bovie shall not remove any Arthrex approved or designated notice from any Products. As set forth in Section 3.1, **    ** will pay the costs of all private labeling by **    **.

(2) Bovie shall not hire, contract with or otherwise engage any one or more contract facilities to perform any of its obligations as set forth in this Agreement with respect to the sterilization of the Products without the prior written consent of Arthrex, which consent shall not be unreasonably withheld or delayed; provided, that any contract facility that is engaged in any way with the sterilization of the Products shall (i) perform the sterilization of the Products in accordance with specifications that have been provided or approved in writing by Arthrex and (ii) meet the same governmental and regulatory requirements, and maintain the same registrations and certifications, as applicable, that Bovie is required to meet under Section 2.5; provided, further, that Bovie shall be liable for, and shall indemnify and hold Arthrex harmless in connection with liabilities arising from, any violations of this Section 2.4(b)(2).

(c)             Unless otherwise agreed to, in writing, by the parties, all Products manufactured for Arthrex shall be delivered to Arthrex at its principal place of business in Naples, Florida. All shipments of Products to Arthrex shall be billed F.O.B. Bovie's **    **  plant in **    **  All deliveries shall be delivered in a manner as may be, intermittently, agreed to by the parties. Title to and risk of any loss and/or damage to the Products shall pass to Arthrex upon delivery of such Product by Bovie, or any agent of Bovie, to the shipping agent.

(d)             Bovie shall assist Arthrex in arranging any desired shipping insurance (in amounts that Arthrex shall determine) and shall use its best efforts to deliver all Products by their respective requested Delivery Dates (provided that in no event shall a Delivery Date be less than 30 days after the date the Purchase Order is issued, unless otherwise consented to by Bovie), using mutually agreeable carriers. All costs and expenses relating to transportation and delivery shall be at Arthrex's expense. Arthrex shall have the right to require and inspect any special or varied packing that it believes is reasonably necessary to meet the customs, regulatory or other requirements within a territory.

2.5          Quality Control and Regulatory Compliance

(a)            During the Term, Bovie shall establish and maintain a quality assurance control program to be maintained by its Quality Control Team. Bovie shall enter into Arthrex's Contract Manufacturers/Suppliers/Vendors Agreement with respect to quality assurance, a copy of which is attached hereto as Appendix C. Arthrex shall maintain its Quality Control Department, which shall provide technical and other assistance to Bovie in order for Bovie to better understand and meet the Product Specifications and manufacturing requirements. Bovie's Quality Control Team and Arthrex's Quality Control Department shall work together in an effort to establish total quality assurance.

(b)            During the Term, Bovie shall manufacture the Products in a manner that is in compliance with all federal and state governmental and regulatory requirements in the United States of which Bovie is legally required to comply, including, but not limited to, the FDA's Quality System Regulations ("QSR"), including Good Manufacturing Practices ("GMP"), as well as ISO-9001 registrations (provided and for such time that such standards remain valid) and EN 46001 certification, and with the laws and regulations of each jurisdiction located outside of the United States. Bovie, at its sole expense, shall have ETL Semko's medical devices group ("ETL") test and evaluate each of the Products and maintain the eligibility of the Products for ETL Certification and for ETL's Certification Mark. Boyle shall also comply with the essential requirements of the European health, safety and environmental protections legislations set forth in the European Union Council Medical Device Directives (the "EU Medical Device Directives") and declare such compliance by affixing the "CE Marking" to the Products shipped to Arthrex.

(c)             Bovie shall maintain all documents and records necessary for regulatory compliance and such documents and records shall be maintained for a period of no less than seven years from creation. Upon request and within a reasonable period of time, Bovie shall make such documents and records completely available for inspection by Arthrex, at any reasonable time during normal business hours. All such documents and records reviewed by Arthrex shall be subject to the confidentiality provisions of Section 8 herein.

(d)             Bovie hereby covenants, after reasonable input from Arthrex, to implement a failure investigation mode that is reasonably satisfactory to Arthrex and to establish a formal complaint system as required by the United States Food, Drug & Cosmetic Act, as amended, including all regulations promulgated pursuant thereto (the "Act"), including, without limitation, the time requirements set forth in the Medical Device Reporting regulations. Each party shall maintain a record of all complaints received with respect to any Product in each jurisdiction in which the Products are sold, and shall promptly notify the other party of such complaints, in order to allow the responsible party to comply with any and all regulatory requirements imposed upon it, by any country. Further, Bovie agrees to assist Arthrex in analyzing and responding to such complaints and to make all records readily accessible to Arthrex. Arthrex shall, upon receipt, notify Bovie, in writing, of all warnings, disclaimers or informed consent statements relating or affixed to any Products, or required to be acknowledged as a condition to use of such Products.

(e)             In the event of a regulatory audit at Arthrex, which involves any Products, Arthrex shall notify Bovie of such audit within **    **  thereof. Pursuant to such notice of audit, Bovie shall supply Arthrex with documents from the Quality Control Team, related to the Products, within three business days from a request by Arthrex.

(f)             Bovie shall promptly notify Arthrex whenever a request for a plant inspection is received from the FDA and shall promptly advise Arthrex of any scheduled FDA inspection and the results thereof A copy of Form 483 observation or other applicable report, which applies to the Products, shall be supplied to Arthrex upon request. Bovie shall promptly take steps to remedy any valid deficiencies found by the FDA inspectors relating to the manufacture, sterilization and packaging of the Products.

2.6            Plant Inspection

Arthrex shall have the right to have qualified Arthrex employees, contractors or agents present at Bovie's manufacturing facility, at mutually agreeable times during normal business hours to (i) observe Bovie's manufacture of Products; (ii) inspect Bovie's facility and manufacturing procedures, as such relate to Products manufactured hereunder, and quality assurance/control procedures for compliance with (A) QSR, including GMP, as well as ISO-9001 registrations (provided and for such time that such standards remain valid) and EN 46001 certification, (B) ETL standards for testing and evaluation of each of the Products and (C) compliance with the EU Medical Device Directives in connection with the CE Marking; and (iii) inspect Bovie's inventory, work-in-process, raw materials, QSR records and such other matters as may be pertinent to proper quality assurance of Products to be delivered under the tea's of this Agreement.

2.7           License

Subject to the provisions of this Agreement, during the Term, Arthrex grants to Bovie a limited non-exclusive, non-transferable license to any intellectual property that may be provided from time to time by Arthrex to Bovie in accordance with Section 2.1, solely to manufacture, sterilize and package the Products. Such license is personal to Bovie and shall not be sublicensed to, transferred to or used for the benefit of, any person or entity not authorized in writing by Arthrex except to a Back-up Supplier as set forth in Section 2.11. No other licenses of any rights of Arthrex, except those expressly granted by this Agreement, shall be construed to be extended to Bovie or its affiliates, foreign divisions, licensees or customers, expressly or by implication, whether pertaining to the subject matter of this Agreement or otherwise. To the extent reasonable and practical, Bovie shall place all notices, including, but not limited to, intellectual property notices such as patent notices or confidentiality notices, and legends and other notices as Arthrex may hereafter prescribe from time to time as it deems appropriate, on all copies and embodiments of the Products and associated documentation and advertising. Bovie shall not remove any Arthrex approved or designated notice from any Products.

2.8           Acceptance and Rejection

(a)            Except as provided herein, Arthrex shall accept all Products delivered in accordance with the terms and conditions of this Agreement. Arthrex may reject any portion of any shipment of Products if such shipment does not conform in any material respect with (i) the Product Specifications or (ii) subject to Section 2.3(b), the quantities requested in the Purchase Order. In order to reject a shipment, Arthrex must give Bovie a reasonably detailed statement of its reasons for rejection and, where appropriate, Product samples demonstrating the proposed nonconformance and requesting that Bovie either remedy or provide a reasonable plan to promptly remedy such nonconformance within a reasonable time which shall not to exceed **    **  days. If no such statement is received by Bovie, then Arthrex shall be deemed to have accepted the shipment of Product. In the event of proper rejection by Arthrex, Bovie shall, within five days, notify Arthrex of whether it accepts Arthrex's notice of nonconformity or it shall be deemed to accept such notice.

(b)            If Bovie disagrees with any proposed nonconformity by Arthrex, then both parties agree to cooperate and make every reasonable effort to resolve the disagreement. If Bovie confirms Arthrex's rejection, Bovie shall, at its sole option, and in a reasonably prompt manner, either (i) replace (if it has not already done so) the nonconforming Product with conforming Product or (ii) credit to Arthrex the purchase price therefor.

(c)            Any replacement shipments shall be subject to the provisions and procedures contained in this Agreement. Whether or not Bovie accepts Arthrex's basis for rejection, upon receipt of a notice of rejection and at Arthrex's request, Bovie shall use its reasonable commercial efforts to promptly provide replacement Product, which shall be purchased by Arthrex pursuant to this Agreement.

2.9           Product Recalls

(a)             In the event that either Bovie or Arthrex determines that a recall of any one or more Products is necessary for any reason, Bovie and Arthrex, as applicable, shall so notify each other in writing. Arthrex shall, immediately upon receipt of such notice, give notice of the recall to each customer to which it has sold any Products, along with the instructions, if any, delivered by Bovie or prepared by Arthrex and/or Bovie relating to the recall.

(b)             Arthrex and Bovie shall assist each other in giving effect to the recall. Bovie shall bear all costs and expenses of any recall caused by its manufacturing, packaging, misbranding or other issues caused by acts of Bovie that potentially affect the safety, use or efficacy of the Products including, without limitation, obligations to third parties, costs of notifying customers and costs associated with the shipment of recalled Products from customers to Arthrex or Bovie, and replacement of such products. Arthrex shall, however, bear all costs of any recall caused by its misrepresentations or other acts causing a recall to occur.

2.10 Arthrex's Right of First Refusal/Offer of Additional Manufacturing

(a)            In the event that, at any time and from time to time, Bovie desires on its own behalf, and not in connection with any contract, agreement or arrangement with any third party, to manufacture, develop or produce any products which are compa