Article I.  

This Distribution Agreement ("Agreement") is made as of October 6, 2006 ("Effective Date") by and between Boston Scientific Corporation, One Boston Scientific Place, Natick, MA 01760 ("Buyer"), and Bovie Medical Corporation, 7100 30 ^th Avenue-North, St. Petersburg, FL  33710 ("Seller") for the purpose of purchase, sale and delivery of Products (as defined in Section 1.1) in accordance with this Agreement.  Buyer and Seller are herein referred to collectively as “Parties” and individually as a “Party.”

1.1            Products .  For purposes of this Agreement, “ Product ” shall mean the medical resection device having a sintered tip, manufactured by Seller, as more particularly described in the Specifications (defined below) attached hereto as Exhibit A.  Additional products, together with specifications and pricing therefor, may be added to this Agreement by mutual agreement of the Parties in accordance herewith.

1.2            Exclusivity . Seller will manufacture, offer and sell on an exclusive, worldwide basis Products to and for Buyer during the term of this Agreement.  Seller shall not offer or sell to any third party or for itself or its Affiliates or have made, offered or sold on its behalf the Products.  Buyer shall purchase the minimum quantity of Products, as described in Sections 1.3(b) and 1.3(f), below.   For purposes of this Agreement, "Affiliate" means, as to either Party, any other person or entity that, directly or indirectly, controls, is under common control with, or is controlled by, that Party. For purposes of this definition, "control" (including, with its correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any person or entity, shall mean direct or indirect ownership of more than 50% of the stock or (partnership) shares of such person or entity.

(a)           Buyer shall place all orders with Seller for Products under this Agreement on Buyer’s form of purchase order. A copy of Buyer’s current purchase order form is attached hereto as Exhibit B and is made a part hereof.  All Buyer purchase orders shall set forth the Specifications (including relevant revision level), quantities, and delivery schedule, and shall state such additional terms and conditions as Buyer may deem appropriate.  If a Buyer purchase order conflicts with this Agreement as to Specifications, terms or conditions, the Specifications, terms and conditions of this Agreement shall control.  No other terms or conditions (including those on Buyer’s purchase order) and no modification, alteration or amendment of this Agreement shall be binding on the Seller unless accepted in writing, in advance, by an authorized officer of Seller.

(b)           Buyer will deliver to Seller **   ** binding purchase order for **   ** units for the **   ** calendar months of Product (the **   ** Purchase Order ”).  Buyer shall deliver such **   **Purchase Order to Seller with a mutually agreed lead-time prior to the first Product delivery date set forth on that **   ** Purchase Order.  The first calendar month of the **   ** Purchase Order will be deemed to be the month in which the **   ** Purchase Order is placed.  From time to time, Buyer may also place additional purchase orders for Product.  “ Contract Year ” means the one-year period beginning on the Product Launch Date and ending on the 12-month anniversary thereof, and each successive one-year period thereafter, during the term of this Agreement.  Notwithstanding anything herein to the contrary, Buyer shall purchase **   ** units of Product during the first **   ** Contract Years of the term of this Agreement as follows: during the first Contract Year, **   ** units in order quantities of at least 200 (as the **   ** Purchase Order), **   ** respectively; and during the **   ** Contract Year, a **   ** of the **   ** between **   ** and the actual number of units purchased by Buyer during Contract Year **   ** with no single order quantity being **   **.  The quantity of Product ordered by Buyer prior to the Product Launch Date (if any), subject to the minimum per-order quantities set forth above, shall accrue to the **   ** purchase requirement for the **   ** Contract Years.  “ Product Launch Date ” means the date the Seller ships to Buyer Product for commercial resale (subject to all required regulatory approvals), but no later than **   ** mutual execution of the design transfer document required under applicable law; provided , however , that Seller timely ships Product to Buyer in accordance with the **   ** Purchase Order.

(c)           Within five (5) Business Days after receipt of a purchase order from Buyer, Seller shall acknowledge receipt and confirm whether the order can be supplied within the delivery dates set forth therein.  Unless Seller advises Buyer to the contrary, in writing and within **   **Business Days of the date Seller receives Buyer’s sent purchase order, Seller shall be conclusively presumed to have accepted the Specifications, quantities, due dates, and other terms of such purchase order. For purposes of this Agreement a “ Business Day ” means any day, other than Saturday, Sunday, or a legal holiday in Massachusetts or Florida.

(d)           Due dates on the purchase orders are the dates that the Products must be received at Buyer’s facility indicated on that purchase order. Orders arriving up to**   ** Business Days early or     **   ** Business Days late will be considered on time.  As soon as it becomes apparent to Seller that it cannot meet a due date on a purchase order, Seller shall notify Buyer in writing of the expected delivery delay.

(e)             Seller shall invoice Buyer and Buyer shall pay all shipping, insurance and related charges.  Seller shall pay premium freight charges in excess of normal shipping charges to ensure timely deliver of Products ordered pursuant to a purchase order if Seller is responsible for a delay in shipment unexcused by Force Majeure (as set forth in Section 7.3).

(f)           In the **   **Contract Years, Buyer shall purchase **   ** quantity of Product as set forth in Section 1.3(b), above, at the unit transfer price set forth in Exhibit E (Transfer Pricing) for that period.  Thereafter, during each of the next **   ** Contract Years during the term of this Agreement, if Buyer orders any Product, Buyer shall issue a binding purchase order for **   ** units of Product, with a **   **per-shipment quantity of **   ** units, for delivery during the subsequent 12-month period.

“ Pricing Period ” means the six **   **period beginning on the commencement date of the first Contract Year, and each successive **   ** period thereafter during the term of this Agreement.

As set forth in Exhibit E, for Products purchased during Contract Years **   **and **   **, the price per unit of Product purchased during such twenty-four (24) month period shall be (a) **  ** for the first **   ** units purchased, and (b) **   ** for all Product **   ** the first **   ** purchased (whether purchased in Contract Year **   **).

The initial pricing set forth in Exhibit E is based on the Specifications Revision “A-1,” as set forth in Exhibit A.  Seller reserves the right to amend the pricing in Exhibit E for the Product in accordance with changes to the Specifications requested by Buyer; provided, that (i) Seller will provide Buyer advance notice of any such price change, (ii) Seller will implement such changes to the Specifications and amend such pricing, **   ** upon Seller’s receipt of the **   ** Oncology division’s president’s written approval thereof.

During each of Contract Years **   ** through **   **, for each Pricing Period, Buyer will initially pay the Product transfer price (set forth in Exhibit E) that corresponds to the forecasted quantity of Products to be ordered for that Pricing Period as set forth in the**   ** rolling forecast delivered by Buyer in accordance with Section 1.6 of the Agreement on the **   ** day of the **   ** month immediately preceding the commencement of such Pricing Period.  Within**   ** days following the end of each of Pricing Period during Contract Years **   ** through **   **, the Parties will compare the total amount actually paid for Products by Buyer during that Pricing Period with the total amount which should have been paid based upon the actual purchases of Products in such Pricing Period using the applicable Product prices set forth in Exhibit E, as amended.  Any difference will be paid to the appropriate Party within forty-five (45) days following the end of the applicable Pricing Period.

(g)           Buyer shall timely place and Seller shall timely fulfill binding purchase orders as required under this Agreement.  However, if (i) Seller is unable to fulfill such binding purchase orders, (ii) Product is recalled as permitted under Section 3.11 (Product Recalls), or (iii) Buyer rejects or returns all or any part of a shipment of Product as permitted under Section 3.4 (Product Acceptance) or 3.12 (Product Returns), as applicable, Seller shall suspend Buyer’s **   **obligations set forth in this Section 1.3 until **   ** days after either (x) Seller is able to fulfill such binding purchase orders, or (y) Seller satisfies its applicable obligations under Section 3.4, 3.11, or 3.12.

1.4            Shipping; Freight Terms .  Subject to the terms set forth in Section 1.3, above, Seller shall deliver Products that meet the Specifications in accordance with the quantities, timing and shipping destination specified in Buyer’s purchase orders utilizing Buyer’s appointed carriers and Buyer’s contracted rates.  Seller shall deliver all Products to Buyer free and clear of all liens and encumbrances or other defects in title.  All Products shall be shipped **   **.

(a)    Except as expressly set forth herein, during the term of this Agreement, Buyer shall purchase its Product requirements **   ** from Seller (including Products required for engineering, testing, and clinical trials, if any) and from **   ** manufacturer, person or entity, including, without limitation, any division or Affiliate of Buyer.

(b)    Buyer shall provide Seller with firm purchase orders for Products in accordance with the procedures and requirements set forth in Section 1.3; provided , however , that Buyer shall have the right, exercisable only **   ** per any **   **, up to **   ** prior to the date of shipment, and with the prior written consent of Seller, which shall not be unreasonably withheld, to issue binding, written change orders to delay up to**   ** of the quantity of Products on such purchase orders by no more than **   **) calendar days from their originally scheduled shipment date. Buyer agrees to accept partial shipments of Products from Seller should it, for any commercially reasonable reason, become necessary to ship in advance of Seller’s ability to complete each order. Seller shall make all commercially reasonable efforts to comply with any revisions to a purchase order consistent with the provisions of this Agreement.

(c)           Seller shall maintain its production capacity with respect to finished products and raw materials at **   **Percent **   ** of all undelivered Product quantities on open purchase orders for the then-current month. Seller will immediately notify Buyer in the event of any material obsolescence, supply shortage, or other interruption or potential interruption, in supply of any Products, or component or sub-assembly thereof, as soon as Seller becomes aware of such.

(d)           Within the mutually agreed lead-time for the Initial Purchase Order set forth in Section 1.3(b), above, Seller shall accumulate a finished goods inventory of Products to be held in reserve equal to the average monthly quantity, based on the **   **Purchase Order.  Thereafter, for each subsequent month, Seller will hold in inventory an amount of finished Products equal to the average monthly quantity of the then-current **   ** (defined below).  All Products **   **pursuant to this Section shall be referred to herein as **   **  Seller may only deplete Shelf Inventory when Buyer’s orders **   ** the applicable **   **.  Seller will at all times throughout the term of this Agreement maintain the agreed upon **   **, except that Seller will replace any **   ** taken from **   ** in accordance with previous sentence within **   ** days of the date Seller takes such **   ** from **   **.

1.6            Estimates of Requirements .

(a)            At the same time Buyer issues its **   ** Purchase Order, and by the last day of each calendar month thereafter, Buyer shall deliver to Seller a written, **   **forecast of Buyer's requirements for Products.  The first **   ** of each such **   ** forecast shall be **   ** upon Buyer (the “ Binding Forecast ”) and the remaining nine (9) months of each such forecast will be **   ** and subject to adjustment. Seller shall, no later than **   ** days after receipt of each **   ** forecast delivered pursuant to this Section, notify Buyer of any prospective problems of which Seller is aware that might prevent Seller from meeting Buyer ^’ s forecasted requirements or estimated delivery dates.  In the event Seller so notifies Buyer of any issues in meeting quantities, Seller shall state in writing the quantity of Products it estimates it can deliver and Buyer shall only be required to purchase such revised quantity.

(b)           In addition to the forecasts delivered pursuant to Section 1.6(a), above, Buyer will create a **   ** forecast for Products, the **   ** of which will be **   ** this Agreement is signed and delivered and which will be attached hereto as Exhibit C.  For the avoidance of doubt, Exhibit C is being delivered for planning purposes only and no portion of Exhibit C will be binding on either Party hereto.

(c)    Seller and Buyer 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 Buyer hereunder. Seller shall use commercially reasonable efforts to supply Buyer with **   ** Product requirements, including, but not limited to, the use of commercially reasonable efforts to accommodate "Rush" orders from Buyer; provided , however , Seller shall not be in breach of this Agreement for any failure or delay to supply quantities of Products which exceed the**   ** Forecast for the **   ** by more than **   **.

(a)           **   ** **   ** weeks (“ Long Lead Time Components ”) upon the Parties’ mutual finalizations of and approvals for, the Product requirements, Specifications, design, and bill of materials, which list shall be set forth as Exhibit D and attached hereto.  Seller shall use its best efforts to reduce and minimize the number of Long Lead Time Components.  Seller shall use reasonable efforts to update the list of Long Lead Time Components every **   ** and to present an updated list of Long Lead Time Components to Buyer.  Each revised list of Long Lead Time Components shall be deemed an amendment to Exhibit D.  In the event that Seller fails to present an updated list of Long Lead Time Components, (i) the Parties shall continue to rely on the preceding list (as updated in writing by the Parties) and (ii) Buyer will accept responsibility for Long Lead Time Components ordered outside the lead times set forth in the list provided that Seller can demonstrate to Buyer’s reasonable satisfaction that such components were ordered in accordance with the then-current vendor lead times. (Buyer acknowledges that lead times constantly change and the Seller might not always be able to present Buyer with a current list of Long Lead Time Components.)

(b)           Buyer shall be financially liable for all Long Lead Time Components when ordered in accordance with this Section 1.7 if Buyer terminates this Agreement without cause or Seller terminates this Agreement pursuant to Section 7.1(a) or (d).  Seller shall otherwise be financially liable for all Long Lead Time Components. Specifically, Buyer’s  component  liability for Long Lead Time Components shall be equal to Seller’s **   ** (**   ** is the **   ** paid by Seller for the components, net of all credits and discounts, plus a materials margin equal to **   **) of all components ordered in support of any **   ** Forecast.  At Buyer’s request, Seller shall use commercially reasonable efforts to minimize Buyer’s component liability by attempting to return components to the vendor; provided , however , that  Seller shall not be obligated to attempt to return to a vendor components that are, in the aggregate, worth less than **   **.

2.1            Pricing; Escalation .  Prices for the Products are set forth in Exhibit E attached hereto, and include packaging (as set forth in the then-applicable Specifications) and taxes.  Subject to the provisions of Section 1.3(f), such prices shall be fixed for the **   ** of this Agreement.  Thereafter, Seller may adjust prices for each successive **   ** period of this Agreement, according to the annual Producer Price Index for Finished Goods (“ PPIFG ”) or its replacement if so identified by the publisher, published by the United States Department of Labor, Bureau of Labor Statistics (“ BLS ” ) ; provided , that such increases or decreases will be capped **   ** of the previous **   ** Product transfer price.  Such PPIFG shall not be seasonally adjusted. The frequency for periodic adjustments hereunder shall be annual, using the first publication of the annual value in the month following the anniversary month of each **   ** period of this Agreement.  The adjustments shall be calculated using the “simple percentage method” as set forth by the BLS.  Such PPIFG-based price changes shall be in addition to price changes (if any) permitted under Section 1.3(f).

           2.2            Payment .  Payment will be due forty five (45) days from Buyer’s receipt of Seller’s invoice, except to the extent Buyer in good faith disputes each invoice.  Seller shall invoice Buyer at the time of shipment of the applicable Product and as otherwise provided for hereunder.

2.3            Continuous Improvement; Seller Performance Business Reviews .  During the term of this Agreement, Seller shall use commercially reasonable efforts (including reasonable engineering support) to improve and enhance Product design, quality, performance and manufacturing processes  (collectively, “ Improvements ”) so as to maintain or increase the competitive advantage of the Products as compared to similar products in the marketplace.  Improvements may result from Seller’s own initiative (“ Bovie Improvements ”) or the request or suggestion of Buyer (“ BSC Improvements ”) but, if a proposed BSC Improvement or Bovie Improvement changes the Specifications or requirements of a purchase order the proposed Improvement must be approved in writing by Buyer prior to implementation as described in Section 3.1 hereof.  Buyer sh