International Distributor Sales & Service

PHOTOELECTRON CORPORATION



INTERNATIONAL DISTRIBUTOR SALES AND SERVICE AGREEMENT







THIS AGREEMENT, effective this 13 day of December 1995, by and between Photoelectron Corporation, a Massachusetts corporation having its principle place of business at 400-1 Totten Pond Road, Waltham, Massachusetts 02154, U.S.A. (hereinafter called the " Company"), and Toshiba Medical Systems Co., Ltd., a Japanese corporation having its principal place of business at 26-5, 3- Chome, Hongo, Bunkyo-ku, Tokyo 113 Japan (hereinafter called the "Distributor").



WHEREAS, the Company has developed and desires to market its interstitial radiosurgical equipment, the Photon Radiosurgery System (hereinafter called the "PRS"), as defined in Section 1.04, all over the world.



WHEREAS, the Distributor desires to sell the PRS in Japan and the Company agrees to appoint the Distributor as an authorized exclusive distributor for the PRS in Japan.



NOW THEREFORE, The parties agree as follows:





ARTICLE I APPOINTMENT OF DISTRIBUTOR



1.01 Grant of Distributorship. The Company grants the Distributor an exclusive right to identify itself as an authorized Company distributor in the territory described in Schedule A (hereinafter called the "Territory") and to sell and

---------- service the PRS in the Territory during the term of this Agreement. During the term of this Agreement and as long as the Distributor is not in material breach of its obligations hereunder, the Company shall not itself, directly or indirectly, sell the PRS to customers in the Territory nor appoint any other distributor with the rights to sell th e PRS to customers in the Territory. The Company will consider adding additional country(s) to the Territory as may be reasonably requested from time to time by the Distributor after six months from the first commercial sale of the PRS in the Territory, an y such additions to be at the Company's sole discretion.



1.02 Sales Plan and Non-Competition



A. The Distributor agrees to prepare and submit to the Company sales plans for the PRS no less frequently than every six months during the term of this Agreement in accordance with the procedures specified in Schedule D.

---------- B. The Distributor agrees that neither the Distributor nor any parent, subsidiary or affiliate of the Distributor will se ll, market or distribute in the Territory any ionizing radiotherapeutic equipment such as interstitial x-ray therapy equipment except linear accelerators and remote-controlled automatically-driven gamma-ray afterloading equipment.



1.03 Agreement Rights. The Distributor has not paid any fee or other consideration for rights established by this Agreement. Neither this Agreement nor any right granted by this Agreement is a property right. Neither this Agreement nor any right or respo nsibility under this Agreement may be transferred, assigned, delegated or sold by the Distributor or by operation of law.



1.04 Product Definition. As used in this Agreement, the term "PRS" shall mean the products developed and manufactured by the Company which are identified in Schedule B attached to and made a part of this Agreement and also such products - ---------- hereafter developed and made by the Company as improved or successor models of or to such products.





ARTICLE II SALES TO DISTRIBUTOR



2.01 Sales of the PRS



A. Processing of the Distributor's Orders: Each order for the PRS will be submitted by the Distributor in a mutually acceptable form (see Schedule C

---------- Attachm ent 1) and processed by the Company in a timely fashion in accordance with the procedures as agreed upon by the parties hereto. Each purchase order shall specify the components of the PRS which the Distributor would like to purchase. The express terms of t his Agreement supersede any contrary provisions in either party's purchase orders or sales orders. The Company will fax acceptance of the terms and conditions of the purchase order to the Distributor within ten (10) working days of the Company's receipt o f the purchase order from the Distributor. The Company will endeavor to distribute the PRS in a fair and equitable manner.



B. The Company agrees not to unreasonably reject any order to the extent that orders for the PRS submitted by the Distributor are needed to satisfy current demand, provided that the Distributor is not then in default of this Agreement.



C. The Distributor's orders for the PRS are not binding on the Company until accepted by the Company and may be canceled by the Distributor only u ntil that time. Orders shall be deemed accepted by the Company when the Distributor is so notified in writing by the Company.



2.02 Prices and Other Terms of Sale. Prices and other terms of sale applicable to the PRS shall be those set forth in the attached Schedule C. The purchase

---------- order form set forth as Attachment I to Schedule C, the acknowledgment form,

---------- invoice and other sales forms shall be determined through mutual agreement of the parties hereto. The price applicable to the PRS or any component of the PRS may be changed by the Company only after prior consultation with the Distributor and after reasonable notice. The terms of sale appl i cable to the PRS or any component of the PRS may only be changed by agreement of the parties. Any changes in the price or terms of sale will not apply to any orders from the Distributor accepted in writing by the Company prior to the effective date of suc h change.





2.03 PRS Production and Delivery. All sales of the PRS shall be "FOB" Boston (as such term is defined by the International Chamber of Commerce, INCOTERMS (3d.ed. 1990)). The Company shall use reasonable efforts to obtain, at its own expense, an y export or other official authorization and carry out or satisfy any other formalities necessary for the transportation and exportation of the PRS from the United States. The Distributor shall use reasonable efforts to obtain, at its own expense, any aut horization necessary for importation to and sale in the Territory of the PRS.



The Company and the Distributor shall mutually cooperate to ensure that the PRS complies with all local laws, standards and regulations applicable to sale or use of the PRS in the Territory.



The Company shall use all reasonable efforts to fulfill each order for the PRS submitted by the Distributor within three (3) months of the Company's acceptance of the order from the Distributor.



The Company shall package the PRS in an approp riate manner for shipment to the Distributor in the Territory and in accordance with such packaging requirements as the Distributor may reasonably request in consideration of the laws and shipping customs of the Territory.



2.04 Inspection



A. The Distributor shall promptly inspect and test the ordered PRS at all reasonable times and places in accordance with the Incoming Inspection Specifications to be mutually agreed upon between the parties hereto, and shall, immediately after such ins pection and test, notify the Company of the result thereof in writing.



B. The Company shall provide the Distributor with all test data of the PRS together with the PRS to be delivered.



C. If such inspection discloses any defects or non-conformity to the Incoming Inspection Specifications in the PRS, the Distributor may, with a written notice to the Company reject such PRS and return the PRS at the cost of the Company. Promptly after receipt of such notice, the Company shall deliver to the Distributo r the replacements of such PRS, if it is not repairable at the site.



D. The approval or acceptance of the PRS provided for in this Section 2.04 shall not relieve the Company from responsibility for defects or failures to meet the Specifications or other requirements of the PRS. 2.05 Sale of Parts and Accessories to the Distributor



A. The Company is the sole authorized source for new or remanufactured parts or accessories for the PRS listed in Schedule F, which is to be supplemented by

---------- the Company from time to time and hereinafter called "Parts and Accessories".



B. Orders for Parts and Accessories will be submitted by the Distributor in accordance with the procedures to be mutually agreed upon.



C. Prices and others terms of sale applicable to Parts and Accessories marketed by the Company shall be those set forth in Schedule C and the attachments thereto. Prices and other terms of sale for Parts and Accessories applicable to the Distributor may b e changed by the Company only after consultation with the Distributor and after reasonable notice. Any such change will not apply to any order from the Distributor accepted in writing by the Company prior to the effective date of such changes.



2.06 Warranties on Products. The Company warrants the PRS and Parts and Accessories (hereinafter called "Products") to the Distributor and its customers in accordance with the attached Schedule E (such warranty is hereinafter

---------- referred to as the "Company Limited Warranty"). The Company Limited Warranty is the only warranty applicable to the Products.



2.07 Product Liability/Patent Indemnification



A. The Company agrees to indemnify and defend the Distributor, its parent co mpany, subsidiaries and affiliates, and their respective agents, representatives, employees and customers (the "Distributor Group") from and against any and all claims, proceedings, causes of action and suits (hereinafter, collectively "Claims") (i) arisi n g out of personal injury, death and/or property damage in connection with the use of a Product (excluding any uses of Products for purposes other than those approved), or (ii) which is based on any claim that any part of the Products or the sale or use th e reof by the Distributor Group under this Agreement infringes any patent, any copyright, trade secret, any trade name, any trademark or intellectual property of any third party; subject to the Distributor giving the Company prompt written notice upon disco v ery of each Claim and except to the extent such Claims occur as a result of the negligent or willfull acts or omissions of any member of the Distributor Group. The Company shall control the defense of any such Claim and shall pay all costs of any such def e nse (including the attorney's fees required to be incurred by the Distributor Group in such action) and all judgments, awards and settlement amounts incurred as a result of such Claims. The Distributor shall give the Company reasonable assistance in the d efense or settlement of the Claims. It is understood that the Company shall have the sole discretion to determine the terms of settlement of any Claim.



Notwithstanding the foregoing, the Company shall have no liability under this Section 2.06 for any claim by a third party that the manufacture, sale or use of a Product caused personal injury, death or property damage or infringes any patent, copyright, trade secret or other intellectual property right in any of the following circumstances: (i) the Product w as altered or modified by any member of the Distributor Group or any third party without prior authorization of the Company and such alteration or modification resulted in or is the basis for the third party claim; (ii) the Distributor or its customers f a iled to use the most current version of the Product when and if available and offered to the Distributor by the Company if the use of such current model would have avoided such claim, except the case the Product has been already installed at the customer' s site; (iii) the Distributor or any third party used the Product in combination with any component, apparatus or software not furnished or authorized by the Company and such combination resulted in or is the basis for the third party claim; (iv) the Produ ct was used in a manner for which it was not designed or specified; or (v) any member of the Distributor Group owns an intellectual property right or has a license which precludes it from being held responsible for the claim of infringement.



2.08 Force Ma jeure. Neither party shall be liable in any manner for failure or delay to fulfill all or part of this Agreement directly or indirectly, owing to an act of God, governmental orders or restriction, war, threat of war, warlike conditions, hostilities, sanct ions, mobilization, blockade, embargo, detention, revolution, riot, looting, strike, lockout, labor action, accident, or any other causes or circumstances beyond its reasonable control.



2.09 Limit on Liability. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED IN THIS ARTICLE II, IN NO EVENT SHALL THE COMPANY BE LIABLE TO ANY MEMBER OF THE DISTRIBUTOR GROUP FOR SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING, BUT NOT LIMITED TO , LOSS OF PROFIT, LOSS OF BUSINESS OPPORTUNITY, LOSS OF REVENUE OR GOODWILL ARISING FROM ANY BREACH OR OTHER FAILURE BY THE COMPANY UNDER THIS AGREEMENT.



2.10 Discontinuance of and Changes in Products. In the event it becomes necessary to discontinue any l ine of Product, the Company shall notify the Distributor in writing ninety (90) days in advance of such discontinuation. The Company shall continue to supply service parts for the discontinued product line for a period of seven (7) years from the date of d iscontinuation. The Company can, at its discretion, supply a replacement for the discontinued product line, such replacement being of equal or better quality and at the same price to the Distributor as would have been the service part for the discontinued product line. ARTICLE III DISTRIBUT ...