Exhibit 10.1
EXECUTION COPY
DEVELOPMENT AND SUPPLY
AGREEMENT
THIS DEVELOPMENT AND SUPPLY AGREEMENT (this
“Agreement”), made and entered into as of this 18th day
of June, 2008 between Vision-Sciences, Inc.
(“VSI”), a Delaware, corporation, having offices at 40
Ramland Road, Orangeburg, NY, 10962, USA., and SpineView, Inc.
(“SpineView”), a Delaware corporation having offices at
48541 Warm Springs Boulevard, Suite 507, Fremont, CA
94539.
RECITALS
A.
VSI is engaged in the development, manufacturing and marketing of
advanced endoscopic technologies used for minimally invasive
diagnostic and therapeutic medical procedures, and incorporating
advanced video and other visualization technologies.
B.
SpineView is engaged in
the development and manufacturing of miniature, minimally invasive,
disposable surgical devices (the “ Product ”)
that include reusable endoscopes for visualization, together
designed initially for use in spinal surgeries.
C.
Pursuant to a Term Sheet
dated May 12, 2008, VSI and SpineView agreed that VSI will
develop and manufacture a video-base endoscope for use with the
Product (the “ Scope ”), using a small insertion
tube, containing a CCD (charge coupled device) based camera at the
tip.
D.
Upon the completion of the
development work described below, SpineView agrees to purchase
Scopes from VSI in accordance with and subject to the terms of this
Agreement.
AGREEMENT
The parties agree as
follows:
Article 1 –
Definitions
(1)
“Authorized Representative” used in this
Agreement shall mean any representative of VSI, authorized by VSI
to repair Scopes.
(2)
“Development” used in this Agreement shall mean
the development of the Scopes by VSI.
(3)
“Intellectual Property Rights” used in this
Agreement shall mean patents and all applications, continuations,
continuations-in-part and divisionals with respect thereto;
copyrights, and all other rights in works of authorship recognized
in any jurisdiction; trade secrets; trademarks, service marks,
logos and product names; all applications, registrations and
renewals with respect to any of the foregoing; moral rights;
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all other intellectual
property rights and rights in trade secrets that may be recognized
in any jurisdiction; and all rights to sue for and remedies against
past, present and future infringements or misappropriations of the
foregoing.
(4)
“Manufacture” used in this Agreement shall mean
the manufacture, assembly, quality testing, packaging and labeling
of the Scopes by VSI, or VSI’s sub-contractors.
(5)
“ Next Round of Financing ” used in this
Agreement shall mean any transaction or a series of related
transactions in which SpineView sells to one or more third-party
investors, shares of any class of its share capital.
(6)
“Scopes” used in this Agreement shall mean the
endoscope and its electronic control unit Developed or Manufactured
by VSI, as described in the Specifications, and any of their
successors, modifications or replacements.
(7)
“Specifications” used in this Agreement shall
mean with respect to the Scopes, the specifications set forth in
Exhibit A hereto.
Article 2 –
Development
(1)
VSI shall develop the Scope in accordance with the Specifications
with due care and skill and in a professional manner.
(2)
In connection with the Development, the parties anticipate that VSI
will meet the following milestones (each, a “
Milestone ”):
a. VSI shall
deliver a working prototype of the Scope on or before Sept 15, 2008
(the “ First Milestone ”); and
b. VSI shall
deliver a fully functional Scope on or before February 15,
2009 (the “ Second Milestone ”).
(3)
Upon receipt of the prototype Scope and the fully functional Scope,
SpineView shall evaluate it for conformity to the Specifications
and the absence of defects and errors. SpineView shall notify VSI
in writing of any defect or nonconformance to the Specification
within fifteen (15) days. If SpineView fails to notify VSI of its
findings within the fifteen (15) days, the Milestone shall be
considered achieved. Any defects or non-compliance will be
corrected by VSI as soon as possible but no later than thirty (30)
working days thereafter, unless otherwise agreed to in writing
between the parties.
(4)
If VSI fails to a timely achieve a Milestone, SpineView shall
automatically grant VSI an additional sixty (60) days to achieve
such Milestone. If VSI fails to meet the adjusted Milestone,
SpineView may, at its option: (i) extend the
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performance date or
time for correction, as applicable; or (ii) terminate this
Agreement by giving notice to VSI.
(5)
Upon satisfactory completion of the Second Milestone in accordance
with the terms of this Agreement SpineView shall be obligated to
complete its purchase of the Initial Order (as defined in
Article 3(1)).
(6)
SpineView shall pay VSI a non-recurring engineering fee in the
amount of U.S. $225,000 (the “NRE Fee”). SpineView
shall pay the NRE Fee upon (i) ten (10) days of the
closing of SpineView’s Next Round of Financing, and
(ii) VSI’s delivery of the first working prototype.
(7)
SpineView shall reimburse VSI for all external charges for molds,
tools and set-ups directly related to the Scope’s
development. The parties estimate that VSI’s total out of
pocket expenses shall not exceed the sum of $40,000. VSI
shall send SpineView a copy of the original invoice for each
expense. SpineView shall reimburse VSI within 30 days
following the receipt of such invoice.
Article 3 – Sale
and Purchase; Initial Order
(1)
By execution hereof, and subject to VSI’s achievement of the
Second Milestone, SpineView hereby places a firm purchase order for
fifty (50) units of the Scope for an initial purchase price of U.S.
$27,000 per Scope (the “ Initial Order ”).
(2)
SpineView shall pay U.S. $135,000 as a nonrefundable 10% deposit
against the purchase price for the Initial Order, upon the earlier
of (i) ten (10) days of the closing of SpineView’s
Next Round of Financing or (ii) VSI’s achievement of the
Second Milestone. The balance of the Initial Order purchase
price, in the amount of $1,215,000, shall be due and payable by
SpineView thirty (30) days after delivery of the Initial Order.
Article 4 –
Purchase Forecast; Sales Terms
(1)
From and after VSI’s fulfillment of the Initial Order, VSI
shall, during the terms of this Agreement, Manufacture and sell to
SpineView and SpineView shall purchase from VSI the Scopes on the
terms and conditions set forth in this Agreement.
(2)
VSI undertakes to Manufacture the Scopes for SpineView on a regular
and ongoing basis, according to quality standards, in conformity
with the Specifications and with the terms and conditions of this
Agreement.
(3)
SpineView shall have the right to observe the Scopes in the process
of Manufacture and to inspect finished Scopes at any time during
normal business hours, either at the manufacturing facilities or at
the storage facilities of VSI.
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(4)
VSI agrees that SpineView, or a third party on its behalf, shall be
entitled, during normal business hours and upon reasonable advance
notice, to perform a quality audit of VSI’s Scope
manufacturing operations and VSI shall respond to all reasonable
audit findings in a timely manner.
(5)
SpineView shall advise VSI, within thirty (30) days after the
delivery of the Initial Order, of SpineView’s estimate of its
monthly aggregate demand for the Scopes for the twelve (12) month
period commencing on such date (“ Purchase Forecast
”). On a monthly basis, SpineView shall provide VSI
with an updated rolling Purchase Forecast for SpineView’s
anticipated aggregate requirements for Scopes during the successive
twelve (12) month period. The first six (6) months of
each Purchase Forecast shall be considered a “firm”
order, and SpineView shall be required to purchase, and VSI shall
manufacture and deliver, Scopes in accordance with such order. The
final six (6) months of the Purchase forecast shall not be
considered a “firm” order. VSI shall maintain, at
its expense, an adequate inventory of raw materials and components
to produce Scopes sufficient to fulfill each firm order.
SpineView may
increase or decrease the fourth, fifth and sixth months of each
Purchase Forecast by up to ten percent (10%), without the consent
of VSI. If SpineView anticipates ordering more than 1,000 Scopes in
any one year period, SpineView agrees to provide VSI with, to the
extent possible, at least six months advance notice to enable VSI
to take any necessary action to supply the increasing quantities,
including further expanding its manufacturing facility.
(6)
Payment terms shall be net 30 days from the date of VSI’s
invoice; all payments shall be made in U.S. dollars. Any
amount payable to VSI which is not paid within thirty (30) days of
the due date shall bear interest at the rate of 1.5% per month from
the invoice date.
(7)
All prices shown are exclusive of any applicable tax. Any tax
that VSI is required to collect in connection with the sale of
Scopes shall be in addition to the price and shall be entirely for
VSI’s account. VSI shall retain a purchase money
security interest in the Products until all payments have been
received in full by VSI.
(8)
Return of Scopes shall require prior consent of VSI and the
provision of a return goods authorization (“ RGA
”) to SpineView. An RGA is required for any return
request.
(9)
All shipments of Scopes are made F.O.B. Orangeburg or VSI’s
manufacturing facility. Title shall pass to SpineView upon delivery
to the Carrier.
(10)
SpineView will not divert any shipment that would be
(i) contrary to any applicable law; (ii) for resale
and/or transfer to any party unless approved in writing by VSI; or
(iii) for shipment or use outside of the U.S., unless approved
by VSI in writing. If so approved, SpineView warrants it will
comply with all applicable laws as then in effect, including
without limitation, the Export Administration Regulations, as
amended, the
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U.S. Foreign Corrupt
Practices Act of 1977, as amended, and the Office of Foreign Asset
Control Regulations. SpineView warrants that no Scope or part
of any Scope shall be utilized in any non-medical type application,
including but not limited to (x) nuclear application or use;
(y) weapons systems or other similar military use; or
(z) medical or other FDA-regulated applications (other than
medical procedures consistent with the Scope’s and the
Product’s approved use).
(11)
SpineView shall inspect all Scopes for conformance to the
Specifications and shall notify VSI of any non-conformance not
later than the earlier of (i) fifteen (15) days from date of
receipt by SpineView; or (ii) the date of use of the
Scope(s) by SpineView.
Article 5 –
Price
Other than the
Initial Order, the purchase price for Scopes during the twelve
month period after the Initial Order shall be $23,500 per
Scope.
Article 6 –
Shipment
The Scopes
specified in a Purchase Forecast shall be shipped by VSI to
SpineView according to the shipping schedule under the Purchase
Forecast. VSI will provide adequate packing for the Scopes in
such method as VSI may consider sufficient to protect the quality
of the Scope in transit under normal conditions.
Article 7 –
Exclusivity
In recognition of
VSI’s technological, financial and logistical contributions
to the Development, VSI shall be SpineView’s sole and
exclusive supplier of visualization means for use with the Product
and any additional products developed by SpineView, and SpineView
undertakes to purchase the Scope and any successor scope
exclusively from VSI.
Article 8 –
Warranty
(1)
VSI warrants, that each of the Scopes sold by it shall:
(i) conform to the Specifications in all respects,
(ii) be manufactured and inspected in accordance with ISO
9001:2000 quality requirements or more recent ISO quality system
standards for which VSI is certified, and (iii) be
manufactured in a good and workmanlike manner and be free from any
defects in material and workmanship, for a period of twelve (12)
months from the invoice date of such Scopes (the “Warranty
Period”). VSI’s liability under the provisions of
this Article shall be limited to the repair or replacement of
defective Scopes, to be performed at the expense of VSI or its
Authorized Representative as set forth in Sections (1) through
(3) hereof.
(2)
SpineView shall inspect the Scopes upon receipt as described in
Article 4(11)
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