Contents

(1)

QualiMed Innovative Medizinprodukte GmbH

(2)

Inspire MD Ltd.

(1)

QualiMed Innovative Medizinprodukte GmbH, Boschstr. 16, 21432 Winsen, Germany ("the Manufacturer"); and

(2)

Inspire MD Ltd., 4 Derech Hashalom St., Tel Aviv, Israel ("the Company").

1.1

In this Agreement, unless the context otherwise requires, the following words have the following meanings:

"this Agreement"

this Agreement (including any schedule or annexure to it and any document in agreed form);

"the Intellectual

 Property"

as defined in clause 5;

"the Know-How"

technical information, drawings, designs and other information relating to the Product and its manufacturing;

"Materials"

any materials and components required for the manufacturing of the Product;

"Order"

Purchase Order provided by the Company to the Manufacturer for a consignment of Products; Order shall specify quantity ordered, delivery address and terms, and delivery date;

"the Patent Rights"

shall be All Patent applications filed by the Company to date.

"the Price"

as defined in sub-clause 3.1;

"the Product"

the product to be manufactured by the Manufacturer for the Company, details of which are set out in the Specification in schedule B to this Agreement ;

"the Specification"

the specification of the Product and its components set out in schedule B to this Agreement in accordance with which the Product is to be manufactured; and

"the Term"

shall mean the duration of this Agreement under clause 11;

1.2

In this Agreement, unless the context otherwise requires:

 

(a)

words in the singular include the plural and vice versa and words in one gender include any other gender;

 

(b)

the table of contents and headings are for convenience only and shall not affect the interpretation of this Agreement; and

 

(c)

a reference to clauses and schedules are to clauses and schedules of this Agreement and references to sub-clauses and paragraphs are references to sub-clauses and paragraphs of the clause or schedule in which they appear.

2.

2.1

During the Term the Manufacturer shall promptly and diligently manufacture such numbers of the Products as the Company shall from time to time require in accordance with the Product Specifications and such Order as the Company shall serve on the Manufacturer. Purchase Orders may only be given in minimum quantities of 20 units per Product Type and size. The Company shall place these Orders in accordance with a monthly rolling, twelve month forecast of which the first two months should be binding and the third month should be binding with a tolerance of + / - 10 %. The first month has to be detailed in binding purchases Orders. All purchase orders delivered by the Company shall be acknowledged by Manufacturer in writing.

 

-

3 month in advance for up to 1000 units per month

 

-

6 month in advance for up to 2000 units per month

 

-

9 month in advance for up to 4000 units per month

2.2

The Manufacturer shall in addition to producing the Products to meet an Order manufacture for, and hold in stock, such quantities of components for Products as shall from time to time be agreed in writing between the Company and the Manufacturer.  The Manufacturer shall in addition hold in stock such other items as shall be agreed from time to time in writing between the Company and the Manufacturer. Initial quantities of components to be held in stock by Manufacturer are set forth in Schedule C to this Agreement.

2.3

Upon receipt of Product(s) by the Company, Company shall perform acceptance tests to the Product and shall inform Manufacturer of any defects found and manufacturer shall then proceed with the immediate ratification of such defects pursuant to Section 6.2 below.

3.1

The price of each complete unit of the Product shall be as defined in Schedule D to this Agreement.

3.2

The Company has to bear taxes and customs as well as to organise all formalities (for example customs declarations). Insurance will only be effected on the Company´s explicit request and only, if Company defrays costs.

3.3

The Price is a net price and does not include German sales tax (Umsatzsteuer, VAT). German sales taxes, if any, shall be borne by the Company. With regard to deliveries within the European Union, Manufacturer will invoice German sales tax except for the case that the Company provides Manufacturer with the required proofs according to German sales tax law (Umsatzsteuerrecht) and that the German tax office confirms these proofs.

3.4

The Price is a net price also with respect to local withholding taxes in Israel. To the extent that the Company has to pay withholding taxes on the purchase price according to his national tax law, Company is obligated to provide Manufacturer with an attestation of the paid withholding taxes.

3.5

Deduction of cash discount must be agreed upon in writing.

3.6

The purchase price becomes due within 30 calendar days upon the date of receipt of defectless Products by the Company unless otherwise agreed. Upon expiry of this period without timely payment, the Company will be in delay with payment. If the Company is in delay with payment, Manufacturer is entitled to claim interest on arrears at the rate of LIBOR + 3% per annum.

3.7

Set-offs may only be declared in writing. The Company may only exercise a right of retention, if his counterclaim results from the same contractual relationship. The Company shall have no right of retention because of partial performances pursuant to § 320 para. 2 BGB.

4.1

The delivery shall be on ex works basis.

4.2

The risk of loss to the Products shall pass to the Company upon despatch (ex works) unless otherwise agreed.

4.3

The Products remain the Property of the Manufacturer until full payment of the uncontested amounts by the Company.

5.1

The Manufacturer acknowledges the Company's right with regard to the Patent Rights, the Know-How, the Trade Name and any other intellectual property rights to the Products (including the Company's copyright in drawings, specifications, names and part numbers) ("the Intellectual Property") and the Manufacturer agrees that it will not either during the term of this Agreement or at any time thereafter (i) do or suffer to be done any act which may in any way infringe the Company's said rights or goodwill relating to the Products or the Company or its business.(ii) Directly or indirectly challenge the vailidity of the intellectual property of the Company;

6.1

Manufacturer warrants that its Products will, under its intended use comply and function in accordance with their specifications and associated documentation in all material respects for a period of twelve (12)  form the date of delivery ("Warranty Period").

6.2

The Company will report any defects to Manufacturer in writing as soon as such information becomes known to the Company. Manufacturer will then examine and analyze the defects and use its best effort to provide a rectification within a reasonable period. Manufacturer shall fix all defects in the Product(s) in accordance with the Company’s request by either: i) exchanging the Product, ii) modifying or repairing the Product or work result, or iii) reperforming the manufacturing of the defective Product to achieve the agreed work result. Manufacturer may employ subcontractors to provide warranty services provided that use of subcontractors shall not relieve Manufacturer of any of its obligations under this Agreement. Should Manufacturer refuse or fail to provide such remedy within 60 days of notice from the Company the Company is entitled at its choice to terminate this Agreement and amend amount due to Manufacturer accordingly, deducting all damages suffered by the Company limited to the value of the defect Product.

6.3

Warranty claims are excluded in cases of insignificant deviations from the agreed quality such as non-reproducible errors and of natural wear and tear. They are also excluded if the Company used the Products or work results for other than the intended use, or in particular if they are modified without the prior written consent of Manufacturer.

 

(a)

lawfully and properly proved to be known to or in the possession of the Parties at the date of this Agreement; or

 

(b)

in the public domain at the date of this Agreement or which subsequently comes into the public domain through no fault of the other Party.

9.1

The Manufacturer may totally or partially suspend manufacture of the Products and shall be under no liability whatsoever to the Company for any non-performance under this Agreement due to accidents, Acts of God, riots, civil commotions, fire, governmental action or any other circumstances beyond the control of the Manufacturer. It is however, agreed between the parties that should the Manufacturer fail to produce the Minimum Quantity or any quantity ordered by the Company during the Term for a period of more than 90 days, for whatever reason (the “Supply Short Fall), the Company shall have the right to terminate this Agreement and proceed with manufacturing of the Product using other entities. Company shall provide Manufacturer with a one month's written notice and upon expiry of such notice each party shall be released from all future obligations hereunder but such termination shall not relieve either party of any rights or from any obligations accruing before the occurrence of any such circumstances.

11.1

Termination for cause:

 

(a)

the other Party shall at any time be in breach of any of its obligations contained in this Agreement and such breach shall not be remedied within 30 days after notice from the Party of such breach;

 

(b)

the other Party shall go into liquidation other than for the purpose of reconstruction or amalgamation or be subject to an administration order or if a Receiver Administrator or Administrative Receiver be appointed in respect of the whole or any part of its assets or if the whole or any substantial part of its said assets be assigned for the benefit of its creditors;

 

(c)

In case of a supply shortfall, whereby Manufacturer has not delivered the Products to the Company for a period of over 60 days.

 

(d)

In case a any component provided by a party is claimed to be infringing on the intellectual property rights of a third party and such claim is supported by the written opinion of an independent patent attorney, then the non claimed-against party shall have the right to terminate this Agreement with a 30 days prior written notice.

 

(e)

In case the Development Agreement executed between the Parties on January 15th 2007 terminates, either party shall have the right to terminate this Agreement with a 30 days prior written notice.

12.1

12.2

12.3

12.4

12.5

 

(a)

Any party may, in whole or in part, release, compound, compromise, waive or postpone, in its absolute discretion, any liability owed to it or right granted to it in this Agreement by any other party or parties without in any way prejudicing or affecting its rights in respect of that or any other liability or right not so released, compounded, compromised, waived or postponed.

 

(b)

No single or partial exercise, or failure or delay in exercising any right, power or remedy by any party shall constitute a waiver by that party of, or impair or preclude any further exercise of, that or any right, power or remedy arising under this Agreement or otherwise.

13.1

This Agreement shall be governed by and construed in accordance with Swiss law excluding its conflict of law provisions and the UN Convention on Contracts for the International sales of Goods.

13.2

Each of the parties irrevocably submits for all purposes in connection with this Agreement to the exclusive jurisdiction of the courts of Switzerland.

13.3

All disputes arising out the performance of this agreement shall first be discussed and resolved between the parties. If such discussion do not yield positive results, the parties shall use an agreed upon mediator to solve the conflict. Mediation shall take place in the English language and be limited to a 3 hour international phone conference. Costs of mediation shall be equally borne between the parties hereto.

Wingen, 24/09/2007 (place and date)   

 

 

/s/ Manfred Guilder

Tel Aviv, Israel 11-9-07 (place and date)

 

 

/s/ Asher Holzer and /s/ Shmuel Behar

 

Represent by

 

Name: Manfred Guilder

 

Title:   Managing Director

 

 

 

Represent by

 

Name: Asher Holzer

 

Title:   President

 

 

Name: Shmuel Behar

 

Title: CFO

From

-

500

40.0

149.5

500

74,750

From

501

1,000

40.0

500

69,500

From

1,001

2,000

40.0

128.5

1,000

128,500

From

2,001

4,000

40.0

122.5

2,000

245,000

Add –ons**

From

-

6,000

40.0

109.5

149.5

6,000

897,700

From

6,001

12,000

40.0

99.0

139.0

12,000

1,668,000

From

12,001

24,000

40.0

88.5

128.5

24,000

3,084,000

From

24,001

48,000

40.0

82.5

122.5

48,000

5,880,,000