Exhibit 10.59

 

MANUFACTURING AGREEMENT FOR CONSUMABLES

This MANUFACTURING AGREEMENT FOR CONSUMABLES (hereinafter referred to as
“Agreement”) is made and entered into as of the October 26, 2018. (hereinafter
“Effective Date”), by and between
NPI SOLUTIONS, (hereinafter “Seller”), having a principal place of business at
685 Jarvis Dr, Morgan Hill, CA 95037, and RESTORATION ROBOTICS, INC.,
(hereinafter “Buyer”), having a principal place of business at 128 Baytech
Drive, San Jose, CA 95134. Seller and Buyer are collectively referred to herein
as the “Parties” and individually as a “Party”.

WHEREAS, Buyer and Seller desire to enter into a Manufacturing Agreement for
Consumables pursuant to which Buyer wishes to engage Seller to manufacture
certain products, which include subassemblies and components; and

NOW THEREFORE, in consideration of the premises and undertakings hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:

1.

TERM

 

1.1

The term of this Agreement shall commence upon the Effective Date, and shall
continue for twenty four (24) months (“Initial Term”) and shall automatically
renew for additional twelve (12) month periods (“Renewal Term”) unless either
Party gives one hundred eighty (180) days advance notice of its intent to
terminate pursuant to Section 12. The Initial Term, together with any Renewal
Term, is referred to as the “Term”.

2.

TERMS OF SALE

 

2.1

Forecast; Orders.

 

(a)

During the Term of this Agreement, Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the products, including the subassemblies and components,
from time to time (the “Products”).

 

(b)

Buyer shall provide Seller, on a monthly basis, a rolling twelve (12) month
forecast indicating Buyer’s monthly Product requirements. The first ninety (90)
days of the forecast will constitute Buyer’s written purchase order for Products
to be delivered during such ninety (90) day period. The remainder of the
forecast beyond ninety (90) days is binding only with respect to Buyer’s
liability for materials in Section 2.4 and elsewhere in this Agreement.

 

(c)

Each purchase order shall reference this Agreement and the applicable
Specifications (defined below), specify the quantity, model number, revision
level, delivery date(s) and description of Products to be purchased. Buyer may
use its standard purchase order form for any notice to be provided under this
Agreement provided that each purchase order accepted by Seller shall constitute
a firm and binding contract, consisting of the terms of: (1) this Agreement, (2)
exhibits to this Agreement, (3) any terms conspicuously typewritten on the face
of the purchase order that are not inconsistent with the terms of this
Agreement, and (4) any terms in Seller’s written acceptance that are not
inconsistent with this Agreement and that are subsequently agreed to by Buyer in
writing. Such terms in Seller’s written acceptance are subject to review and
acceptance by Buyer.

 

(d)

Purchase orders and purchase order amendments shall normally be deemed accepted
by Seller, provided that Seller may reject any purchase order or purchase order
amendment that is outside of the flexibility parameters provided in Section 2.3
below, (b) if the fees reflected in the purchase order are inconsistent with the
Parties’ agreement with respect to the fees; (c) if the purchase order
represents a significant deviation from the forecast for the same quarterly
period in the previous year, unless such deviation is within the parameters of
Section 2.3; or (d) if a purchase order would extend Seller’s liability beyond
Buyer’s approved credit line. Seller will use commercially reasonable efforts to
notify Buyer of the acceptance or rejection of an order within five (5) business
days of its receipt. This Agreement sets forth the terms and conditions
applicable to all purchase orders issued during the term of this Agreement,
irrespective of

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whether this Agreement is referenced by the purchase orders. The terms and
conditions of this Agreement replace in their entirety any and all of the
pre-printed purchase order terms and conditions appearing on Buyer’s purchase
order forms.

 

2.2

Precedence. In the event of any conflict between the terms of this Agreement and
the terms of any exhibit or purchase order, the order of precedence is as
follows:

 

1.

The terms of this Agreement;

 

2.

The terms of any exhibits to this Agreement; and

 

3.

The terms on the face of Buyer’s purchase order.

 

4.

The terms of Seller’s written acceptance (if any) of Buyer’s purchase order, as
described in Section 2.1 above.

 

2.3

Increases, Rescheduling and Cancellation.

 

(a)

Subject to Section 2.4 below, Buyer may increase, reschedule, or cancel the
quantity of any Products specified in a purchase order by delivering to Seller,
by email, mail or facsimile, a written change order in accordance with the
provisions of this Section 2.3, or in connection with an ECO (defined below)
(hereinafter “Change Order”). No Change Order shall be effective until it is
actually received and accepted by Seller’s authorized representative.

 

(b)

Subject to Section 2.4 below, Buyer may increase the quantity of any Product
specified in a purchase order from the quantity originally set forth for the
same period in the forecast provided by Buyer by delivering to Seller a Change
Order, which is actually received and accepted by an authorized representative
of Seller, which acceptance may or may not be granted in Seller’s sole
discretion. Quantities of the Products ordered for any calendar month may not
exceed the original purchase order quantity without the prior written consent of
Seller, which consent shall not be unreasonably withheld. In any event, Seller
reserves the right to ship the increased quantities separately from the original
order quantities. In addition, Seller will use reasonable commercial efforts to
meet any quantity increases, which are subject to materials and capacity
availability. If Seller agrees to accept a reschedule to pull in a delivery date
or an increase in quantities in excess of the purchase order and if there are
extra costs to meet such reschedule or increase, Seller will inform Buyer for
its acceptance and approval in advance.

 

(c)

Subject to Section 2.4 below, Buyer may reschedule all or any portion of a
purchase order by delivering to Seller a Change Order, which is actually
received and accepted by an authorized representative of Seller, within the
number of days as specified below before the originally scheduled shipment date
for the Product; provided, however, that in no event shall Buyer reschedule any
quantities decreased or rescheduled in a manner contrary to the terms in this
Agreement.

Number of Working Days (Calendar Days) Advance Notice

Percentage of Schedule Shipment that may be Decreased (up to)

Percentage of Schedule Shipment that may be Increased (up to)

0 - 30

0%

0%

31 - 60

0%

15%

61 - 90

15%

30%

91 - 120

50%

75%

121 or more days

100%

100%

 

(d)

 

 

2.4

Materials Procurement; Buyer Responsibility for Materials. Buyer is responsible,
under the conditions provided in this Agreement, for all materials and inventory
purchased by Seller under this Agreement in the event that Seller purchases and
receives material for purchase orders that Seller is not allowed to build and
ship to dates in purchase orders as accepted by Seller due to any Change Order

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outside of the parameters set forth in Section 2.3 above, or due to any ECR
requested by Buyer as further provided in this Agreement.

 

(a)

Buyer’s forecast and Buyer’s purchase orders accepted by Seller and the schedule
of Long Lead Materials that is set forth in Appendix A (the “Long Lead Time
Materials List”), as amended from time to time by the Parties including through
written correspondence, are authorization for Seller to purchase, without
Buyer’s prior approval (a) all inventory and materials required to manufacture
the Products covered by such purchase orders and forecast based on the lead time
to procure the materials plus the manufacturing cycle time required from the
delivery of the materials to Seller’s facility to the completion of the
manufacture, assembly and test processes (the “Lead Time”) (the “Long Lead Time
Materials”); and (b) certain special inventory and materials required to
manufacture the Products covered by Buyer’s forecast that have Lead Times
exceeding the period covered by the accepted purchase orders for the Products or
that may only be purchased in quantities that exceed the amounts covered by the
accepted purchase orders for the Products, or which are purchased in economic
order quantities required to achieve Buyer’s requested pricing (referred to
elsewhere herein as minimum order quantity materials or “MOQ”). All Long Lead
Time Materials known as of the date of this Agreement will be documented on the
Long Lead Time Materials List, which will be approved by Buyer within 10 days of
this Agreement.

 

(b)

Buyer may direct Seller to purchase certain materials from vendors specifically
identified by Buyer (“Buyer Controlled Materials”) on terms and conditions
negotiated by Buyer with such vendor (“Buyer Controlled Materials Terms”). Buyer
acknowledges that the Buyer Controlled Materials Terms will directly impact
Seller’s ability to perform under this Agreement and to provide Buyer with the
flexibility Buyer is requiring pursuant to the terms of this Agreement. In the
event that Seller reasonably believes that the Buyer Controlled Materials Terms
will create an additional cost that is not covered by this Agreement, then
Seller will notify Buyer and the Parties will agree to either (a) compensate
Seller for such additional costs, (b) amend this Agreement to conform to the
Buyer Controlled Materials Terms or

 

(c)

amend the Buyer Controlled Materials Terms to conform to this Agreement, in each
case at no additional charge to Seller. Buyer agrees to provide copies to Seller
of all Buyer Controlled Materials Terms upon the execution of this Agreement and
promptly upon execution of any new agreements with vendors for Buyer Controlled
Materials. Buyer agrees not to make any modifications or additions to the Buyer
Controlled Materials Terms or enter into new Buyer Controlled Materials supply
agreements with vendors that will negatively impact Seller’s procurement
activities under this Agreement.

 

(d)

In the event Buyer consigns components, materials, or supplies to be used by
Seller in the manufacture of the Product (“Consigned Materials”), Buyer agrees
to consign adequate quantities to timely manufacture Products and agrees to
cover any reasonable production-related attrition at Buyer’s sole expense. Title
to Consigned Materials remains at all times with Buyer and Seller has no
obligation to purchase the Consigned Materials. Seller shall ensure that such
Consigned Materials will be allocated part numbers to indicate Buyer’s
ownership. Seller will bear responsibility for any damage or loss of Consigned
Materials related to nonproduction causes such as handling or storage while they
are on Seller’s premises.

 

(e)

The rescheduling or cancellation of an order shall not affect any Products that
have been shipped by Seller prior to or on the date the Seller received the
written notice of cancellation, nor Buyer’s obligation to purchase any Products
in excess of the percentages shown in Section 2.3(c) above.

 

(f)

All reschedules to push out delivery dates that are outside of the parameters
set forth in the table in Section 2.3(c) require Seller’s prior written
approval, which, in its sole discretion, may or may not be granted. In addition,
if Seller notifies Buyer that any inventory or materials has remained in
Seller’s possession for more than ninety (90) days after an approved reschedule,
then Buyer agrees to immediately purchase any affected inventory and materials
upon receipt of the notice by paying the following costs (the “Costs”): (i) 110%
of the cost of all affected inventory and materials in Seller’s possession and
not returnable to the vendor or not usable for any other active customer,
whether in raw form or work in process, less the salvage value thereof, (ii)
105% of the cost of all affected inventory and materials on order and not

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cancelable, (iii) any vendor cancellation charges incurred with respect to the
affected inventory and materials accepted for cancellation or return by the
vendor, (iv) the then current fees for any affected Product, and (v) reasonable
expenses incurred by Seller related to labor and equipment specifically put in
place to support the purchase orders and forecasts that are affected by such
reschedule or cancellation (as applicable). In addition, any finished Products
that have already been manufactured to support the original delivery schedule
will be treated as cancelled.

 

(g)

If Seller notifies Buyer that such Product or inventory and materials has
remained in Seller’s possession for more than thirty (30) days since such
cancellation, then Buyer agrees to purchase from Seller such Product and
inventory and materials by paying the Costs. If the quantity forecasted for in
any period is less than the previous quantity forecasted over the same quarterly
period from the previous year, then that amount will be considered canceled or
rescheduled and Buyer will be responsible for any inventory or materials
purchased or ordered by Seller to support the forecast as further provided in
this Section 2.4. Products that have been ordered by Buyer and that have not
been picked up in accordance with the agreed upon shipment dates shall be
considered cancelled and Buyer will be responsible for such Products in the same
manner as set forth in this Section 2.4. For purposes of calculating the amount
of inventory and materials in the event a purchase order quantity is considered
cancelled, the lead time for the purposes of this subsection 2.4(f) shall be
calculated as the lead time at the time of (i) procurement of the inventory or
materials; (ii) cancellation of the purchase order, or (iii) termination of this
Agreement, whichever is longer.

 

(h)

Prior to invoicing Buyer for the amounts due pursuant to Section 2.4, Seller
will use reasonable commercial efforts, for a period of thirty (30) days, to
return unused inventory and materials, cancel pending orders for such inventory,
and mitigate the amounts payable by Buyer. Buyer shall pay amounts due under
this Section 2.4 within ten (10) days of receipt of an invoice. Seller will ship
the Products, inventory and materials paid for by Buyer under this Section 2.4
to Buyer promptly upon said payment by Buyer. In the event Buyer does not pay
within ten (10) days, Seller will be entitled to dispose of such Product,
inventory and materials in a commercially reasonable manner and credit to Buyer
any monies received from third parties. Seller shall then submit an invoice for
the balance of the amount due and Buyer agrees to pay said amount within ten
(10) days of its receipt of the invoice.

 

(i)

For the avoidance of doubt, Seller’s failure to invoice Buyer for any of the
charges set forth in this Section 2.4 does not constitute a waiver of Seller’s
right to charge Buyer for the same event or other similar events in the future,
unless previously agreed by an authorized representative of Seller.

3.

STATEMENT OF WORK

 

3.1

Forward Production

 

(a)

Manufacturing Standards. Products shall be manufactured and assembled in
compliance with Seller’s quality system that must comply with ISO 13485:2003,
workmanship standards IPC610 – D Class B, and Buyer’s Specifications (defined
below). If Buyer’s Specifications and Seller’s workmanship standards conflict,
Buyer’s Specifications shall take precedence. Buyer may require that Seller
purchase specific material or parts for the manufacture or assembly of the
Products, or change the manufacturing process provided Buyer agrees in advance,
in writing, to any adjustments, if any, to the price of the Products caused by
the requirement to use a specific part, material, or manufacturing process and
to purchase from Seller any Products, inventory or materials which are in excess
of Buyer’s purchase order or forecast or have been made obsolete by the change.
Seller will provide any results of FDA, FDB or ISO audits, findings and
corrective action plans directly related to Buyers products.

 

(b)

Specifications. Buyer shall provide Seller with all written specifications
necessary or useful for manufacturing the Product including the bill of
materials (“BOM”), as exhibits to this Agreement (the “Specifications”), except
where the Specifications are standards issued by a national or international
standards body.

 

(c)

Configuration Control. Seller shall not make or incorporate any change in the
specifications for the Products without prior written approval of the Buyer,
which shall be obtained through Buyer’s established Engineering Change Order
(“ECO”) process. All components used

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in production of Buyer’s Products are listed on Buyer’s Approved Vendors List
(hereinafter “AVL”), with Buyer’s part number and approved vendors for that
component. It is the responsibility of Seller to obtain an up-to-date copy of
the AVL. Seller must put procedures in place within their quality system to
ensure that all components purchased for use in production of Buyer’s Products
are purchased from vendors listed on the AVL and otherwise in compliance with
the AVL.

 

(d)

Testing and Troubleshooting

 

(e)

3.1.d.1. Seller will perform testing, troubleshooting and repair test failures
per the Buyer’s test specifications. However, for those assemblies that are
deemed as “no problem found,” the Buyer agrees to provide test engineering
assistance to the extent required to repair the assembly or to identify the
assembly as not repairable and to accept the assembly “as is” since no
manufacturing or component defect could be determined.

 

(f)

3.1.d.2. Seller does not have any responsibility whatsoever for design defects.

 

(g)

Identification and Traceability. Seller shall maintain all records for the
identification and traceability of products manufactured by Seller during all
stages of receipt, production and distribution, as applicable to the Food and
Drug Administration Code of Federal Regulations 21CFR820.60 and 21CFR820.65 for
Quality Systems and any other applicable government rules and regulations.

 

(h)

Certifications. Seller will be responsible for obtaining and maintaining in
current and good standing, at its expense, any licenses, or permits, and any
regulatory or government approvals necessary for the performance by Seller of
its obligations and exercise of its rights under this Agreement, including,
without limitation, the manufacture of Products. At Buyer’s request, Seller will
provide Buyer with reasonable copies of all such licenses, permits, and
approvals to any governmental, quasi-governmental, or other regulatory or
self-regulatory authorities.

 

(i)

Subcontracting. Seller may not subcontract or assign any of its obligations
under this Agreement to a third party without Buyer’s prior written consent,
which shall not be unreasonably withheld.

 

3.2

Reverse Logistics (consists of products meant for service and refurbishment)

 

(a)

Seller to provide end to end service for RMA process including spare parts,
field replacement units and any other need per the Buyer’s requirements. Seller
warrants and represents that all of Seller’s employees handling returned
products contaminated with blood or other potentially biohazardous materials
have been properly trained pursuant to the Occupational Safety and Health
Administration’s guidelines and any other applicable industry safety standard
for handling and disposal of medical devices, consumables, and parts thereof.

 

(b)

Reverse logistics material, labor, handling and profit costs will not be
differentiated from Forward Production.

 

3.3

Insurance. Buyer will procure and maintain at its expense comprehensive general
liability insurance with a reputable insurer in amounts of not less than $5
million per incident and $10 million annual aggregate for products liability and
completed operations coverage, and $1 million per incident and $2 million annual
aggregate for all other coverages. Such comprehensive general liability
insurance will (i) provide product liability coverage, (ii) provide broad form
contractual liability coverage extending to Buyer’s indemnification obligations
under this Agreement, (iii) contain no products or completed operations
exclusions, (iv) be an occurrence form and (v) name Seller and its affiliates as
an additional insured. Buyer will maintain such insurance at all times during
the Term of this Agreement and for a period of at least two (2) years
thereafter. Buyer will provide Seller with written evidence of such insurance
upon the request of Seller, and will provide Seller with written notice at least
thirty (30) days prior to any cancellation, non-renewal, reduction or other
material change in such insurance.

 

3.4

Seller will procure and maintain at its expense comprehensive general liability
insurance with an insurer having an A.M. Best rating of A-7 or greater in
amounts of not less than $1 million per incident and $2 million annual aggregate
for products liability and completed operations coverage, and $1 million per
incident and $2 million annual aggregate for all other coverages. Such
comprehensive general liability insurance will (i) provide product liability
coverage, (ii) provide broad form contractual liability coverage

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extending to Seller’s indemnification obligations under this Agreement, (iii)
contain no products or completed operations exclusions, (iv) be an occurrence
form and (v) name Buyer and its affiliates as an additional insured. Seller will
maintain such insurance at all times during the Term of this Agreement and for a
period of at least two (2) years thereafter. Seller will provide Buyer with
written evidence of such insurance upon the request of Buyer and will provide
Buyer with written notice at least thirty (30) days prior to any cancellation,
non-renewal, reduction or other material change in such insurance.

4.

CHANGES

 

4.1

Changes Generally. All documentation, approved ECOs, configuration histories,
inspection data, and acceptance test reports related to changes made pursuant to
this Section 4 must be periodically archived and Restoration Robotics reserves
the right to audit Supplier’s records and technical documentation to verify
compliance (for example, in the event of an FDA compliance audit). Upon
termination of the Agreement, for any reason, Supplier agrees to and shall
provide Restoration Robotics with a complete technical documentation package
within thirty (30) days from the date of termination.

 

4.2

Seller Changes.

 

(a)

Seller shall not incorporate any engineering change to the Products without
Buyer’s prior written consent in accordance with Buyer’s established ECO
process. Seller shall notify Buyer of any engineering change proposed by Seller
to the Products, and shall supply a written description of the expected effect
of the engineering change on the Products, including the possible effect on
price, performance, safety, reliability and serviceability as part of the
proposed engineering change. Buyer, at its discretion, may elect to incorporate
or not to incorporate any Seller-proposed engineering change to the Product
design. If any Seller-proposed engineering change is accepted by Buyer and is
incorporated into the Product design resulting in reduced Product price, Seller
and Buyer will share in the resulting cost savings, based on the following
schedule:

0-60 days

 

100% to Seller

61-120 days

 

50% to Seller: 50% to Buyer

after 120 days

 

100% to Buyer

 

(b)

If a Seller-proposed engineering change is accepted by Buyer, the Parties agree
to amend the unit price and purchase order accordingly, and the new product
price shall apply to all Products delivered hereunder which include the
Seller-proposed engineering change. Seller agrees that any and all
Seller-proposed engineering changes shall belong to and be the exclusive
property of the Buyer. Once the proposed engineering change is accepted by
Buyer, Buyer assumes all liabilities for excess and obsolete inventory and
materials resulting from such change that cannot be re-purposed by Seller as if
such change had been proposed and adopted by the Buyer.

 

(c)

Buyer owns all the intellectual property rights related to the Products and all
such rights in any enhancements, improvements, derivatives thereof and changes
thereto. Seller hereby assigns to Buyer any and all intellectual property rights
in and to Seller-proposed engineering changes to the Products. Seller reserves
all rights not expressly granted to Buyer hereunder.

 

4.3

Buyer Changes.

 

(a)

Buyer may make engineering changes to the Products from time to time during the
Term of this Agreement by written notification to Seller describing the details
of the engineering change. Drawings, designs, and/or specifications required for
the change shall also be supplied by Buyer. Buyer shall assume all liability for
obsolete materials and products as if they were canceled pursuant to Section 2.3
as a result of an engineering change. Once the Parties have agreed upon any
resulting unit price change as determined in Section 4.2(b), Seller shall
incorporate the proposed engineering change into the Products on a schedule to
be agreed to

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by the Parties. Seller shall not proceed to implement any proposed engineering
change without Buyer’s written authorization.

 

(b)

Within five (5) business days of Buyer’s notification of a proposed engineering
change, Seller shall provide Buyer with a written quotation, which includes any
proposed increase or decrease in the unit price of the Products and excess and
obsolete material. The Parties shall make a good faith effort to agree upon any
change, which may apply to the unit price of the Product within thirty (30) days
from the date of Buyer’s notification of the proposed engineering change, and
this Agreement shall be amended accordingly. Buyer assumes all liabilities for
excess and obsolete inventory and materials resulting from such change. Upon
relief of all existing inventory, the associated cost savings will be provided
to the Buyer.

 

(c)

Buyer owns all the intellectual property rights related to the Products and all
such rights in any enhancements, improvements, derivatives thereof and changes
thereto. Buyer reserves all rights not expressly granted to Seller hereunder.

5.

TOOLING AND TEST FIXTURES

Seller shall order and purchase all of the process tooling, assembly tools and
test fixtures necessary or appropriate to manufacture the Products, except for
tools consigned by Buyer and listed in Exhibit B. Seller must obtain Buyer’s
approval before purchase of all tooling and fixtures necessary to manufacture
the Products. Upon obtaining such approval from Buyer, Seller’s receipt and use
of Buyer-approved tooling and test fixtures shall be deemed as Buyer’s
acceptance of the process tooling, assembly tools and test fixtures. Upon
termination of this Agreement and no later than 10 days after the date that
Seller completes any agreed transition services pursuant to this Agreement,
Seller shall ship to Buyer, FOB, Seller’s Manufacturing Plant, and at the
expense of Buyer, all of the process tooling and test fixtures paid for by the
Buyer or consigned to Seller. The tools must be packaged such that they will not
be damaged during transport back to the Buyer.

6.

PURCHASE PRICE AND PAYMENT TERMS

 

(a)

Purchase Price. The prices for the Products shall be mutually agreed upon by
both Parties. If, during the Term of this Agreement, changed prices are put into
effect by mutual written agreement of the Parties, such prices shall apply only
to all purchase orders issued by Buyer after the effective date of the changed
prices.

 

(b)

Payment Terms. The purchase price for the Products, and all other related
charges contemplated by this Agreement shall be due and payable thirty (30) days
after the date of Seller’s invoice. All nonrecurring engineering (“NRE”) charges
approved by Buyer shall be due and payable thirty (30) days after date of
Seller’s invoice.

 

(c)

Credit Line. Seller, in its sole discretion, shall determine the amount of
credit line to be granted to Buyer.

7.

PACKAGING. SHIPPING AND DELIVERY

 

7.1

Packaging. All Products shall be packaged for shipment per Buyer specifications,
government regulations and other applicable standards.

 

7.2

Shipping.

 

(a)

All shipments shall be made FOB FCA shipping point at Seller’s Manufacturing
Plant. Title to Products and risk of loss, damage or destruction shall pass from
Seller to Buyer upon Seller’s delivery of the Products to the common carrier
specified by the Buyer, or, if no instructions are given, Seller shall select
the most appropriate carrier. Any such loss, injury or destruction shall not
release Buyer from any obligation under this Agreement.

 

(b)

All shipments made to Seller for Buyer’s consigned or supplied material shall be
made FOB FCA shipping point at Seller’s factory.

 

7.3

Delivery.

 

(a)

All orders shall be shipped complete. Seller shall immediately give Buyer oral
and written advice of any prospective failure to ship the specified quantity of
Products in time to meet the scheduled delivery date. Should only a portion of
the Products be available for shipment by the delivery date, Seller shall
consult with Buyer to obtain delivery instructions. Where Buyer

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allows Seller to make partial shipments, the shipments shall be applied against
completion of the oldest open purchase order first.

 

(b)

If Seller ships any Product by a method other than as specified in the
corresponding purchase order, Seller shall pay any resulting increase in the
cost of freight incurred over the cost of freight which would have been incurred
had Seller complied with Buyer’s shipping instructions.

 

(c)

If, due to Seller’s failure to make a timely shipment, the specified method of
transportation would not permit Seller to meet the scheduled delivery date, the
Products affected shall be shipped by air transportation or other expedient
means acceptable to Buyer. Seller shall pay for any resulting increase in the
freight cost over that which Buyer would have been required to pay if the
specified method of transportation was used.

 

(d)

If Seller ships more Products than ordered in the purchase order, the amount of
over-shipment may, at Buyer’s option, either be kept by Buyer for credit against
future shipments or returned to Seller at Seller’s expense.

 

(e)

Seller shall obtain Buyer’s approval before making any delivery more than five
(5) working days prior to the scheduled delivery date. If Seller ships more than
five (5) working days in advance of the scheduled delivery date without Buyer’s
approval, Buyer may return the Products to Seller at Seller’s expense.

8.

ACCEPTANCE

 

8.1

Acceptance. Acceptance of the Products shall be based upon the Product
specifications. The Products shall be deemed irrevocably accepted unless Buyer
gives Seller written notice of the failure to conform to the Product
specifications within fifteen (15) working days of receiving the Products from
Seller.

 

8.2

Rejection. Buyer shall give Seller written notice of any rejection based upon
the condition, quality, quantity or grade of the Products. Failure to give such
written notice within fifteen (15) working days of receipt shall constitute
irrevocable acceptance of the Products. If Buyer provides the written notice
specified in Section 8.1 and rejects Products within the fifteen (15) working
day acceptance period, Seller, at its sole option, shall either repair or
replace any Products, which fail to meet the Product Specifications. Seller
agrees to pay all reasonable shipping costs related to the return of such
Products to Seller and the shipping costs related to redelivering the
replacement Products to Buyer and/or Buyer’s customers. The mode of shipment
shall be via a standard commercial carrier.

9.

WARRANTIES, REMEDIES AND LIMITATION OF LIABILITY

 

9.1

Warranty.

 

(a)

Seller warrants to Buyer and any end users of the Product that, for a period of
twelve (12) months from the date of delivery to the Buyer FOB Destination, each
Product shall be free from defects, latent or otherwise, in materials and
workmanship and shall have been produced in accordance with the manufacturing
processes specified by Buyer and shall (a) conform, in all material respects, to
the Specifications, standards, drawings, samples, descriptions, quality
requirements, statements of work, and fit, form, and function requirements
furnished, specified or approved by Buyer for the Products, (b) conform with
Seller’s quality standards, (c) comply with all applicable laws. Seller also
warrants that each of the Products shall be new and conveyed by Seller to Buyer
with good title, free and clear of all encumbrances. “Encumbrance” means any
charge, claim, community property interest, pledge, condition, equitable
interest, lien (statutory or other), option, security interest, mortgage,
easement, encroachment, right of way, right of first refusal, or restriction of
any kind, including any restriction on use, voting, transfer, receipt of income
or exercise of any other attribute of ownership. During such warranty period,
Seller shall, at its sole discretion and at its expense, repair or replace the
defective Products. Buyer’s exclusive remedy for breach of warranty shall be as
set forth in this Section 9.1; provided that Seller shall repair or replace any
affected Products for any recall of Products that results from any
workmanship-related cause that could have been identified at the time of
manufacture through the Buyer specified inspection and test procedures. Seller
will use commercially reasonable efforts to obtain and pass through to Buyer a
warranty with regard to the materials that the materials conform to the vendor’s
specifications and/or with the Specifications and that the materials are free
from defects in workmanship.

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(b)

An “Epidemic Failure” will be considered to exist when return rate data
indicates that five percent (5%) of Products shipped during any twelve (12)
consecutive months has been proven to exhibit the substantially same major
functional, mechanical, or appearance defect. Seller and Buyer will agree to a
reasonable plan and allocation of costs to carry out the repair or replacement
of affected Products shipped during said twelve-month period. Upon agreement,
Seller will pay any claims for such costs by Seller if the problem is a result
of a breach by Seller of its express limited warranty set forth in Section
9.1(a).

 

9.2

LIMITATION OF WARRANTY. EXCEPT AS EXPRESSLY STATED IN SECTION 8.1 AND 9.1,
SELLER HEREBY DISCLAIMS ANY OTHER WARRANTIES OR CONDITIONS ON THE PERFORMANCE OF
THE WORK OR THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY OTHER PROVISION
OF THIS AGREEMENT OR COMMUNICATION WITH BUYER, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR
NON-INFRINGEMENT. SELLER SHALL NOT BE RESPONSIBLE FOR ANY DEFECT CAUSED BY
PRODUCT MISUSE.

 

9.3

NO OTHER LIABILITY. EXCEPT WITH REGARD TO A BREACH OF SECTION 14 BELOW, IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY “COVER” DAMAGES
(INCLUDING INTERNAL COVER DAMAGES WHICH THE PARTIES AGREE MAY NOT BE CONSIDERED
“DIRECT” DAMAGES), OR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES
OF ANY KIND OR NATURE ARISING OUT OF THIS AGREEMENT OR THE SALE OF PRODUCTS,
WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE
POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY
HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY
OF THE LIMITED REMEDIES IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE.

THE FOREGOING SECTION 9 STATES THE ENTIRE LIABILITY OF THE PARTIES TO EACH OTHER
CONCERNING INFRINGEMENT OF PATENT, COPYRIGHT, TRADE SECRET OR OTHER INTELLECTUAL
PROPERTY RIGHTS.

10.

INDEMNIFICATION

 

10.1

Seller shall defend, indemnify and hold harmless Buyer, Buyer’s officers,
directors, employees, and Buyer’s Affiliates, subsidiaries, successors and
assigns from and against all claims, demands, liabilities, losses, costs, fees,
expenses (including reasonable attorney fees), damages and injuries of any kind
or nature suffered or incurred as a result of a third party claim arising in
connection with or resulting from: (i) personal injury, death or property
damages to the extent it is incurred due to defects (other than defects caused
by a Restoration Robotics design of the Products) in the Products Manufactured
by Supplier pursuant to this Agreement, including Supplier’s failure to comply
with the Specifications, (ii) breach by Supplier of representations and
warranties provided in this Agreement, or Supplier’ failure to comply with
federal, state or local laws, (ii) gross negligence or wrongful intentional act
of Supplier or its representatives, employees or agents.

 

10.2

Buyer shall defend, indemnify and hold harmless Seller, Seller’s officers,
directors, employees, and Seller’s Affiliates, subsidiaries, successors and
assigns from and against all claims, demands, liabilities, losses, costs, fees,
expenses (including reasonable attorney fees), damages and injuries of any kind
or nature suffered or incurred as a result of a third party claim arising in
connection with or resulting from: (i) personal injury, death or property
damages to the extent it is incurred due to defects caused by a Restoration
Robotics design of the Products, (ii) Buyer’s failure to comply with federal,
state or local laws, (iii) gross negligence or wrongful intentional act of Buyer
or its representatives, employees or agents, or (iv) infringement of United
States patent but only to the extent such infringement is caused by the
Restoration Robotics design. Notwithstanding the above, under no circumstances
will Buyer have any indemnification obligations under this Section 10.2(iv) for
any patent infringement claim based on any off-the-shelf Products, components or
a la carte items supplied by Supplier to Buyer, or for any third-party claims
under this subsection 10.2 to the extent such claims result from 1) use or
combination of the Products with other items such as other equipment, processes,
programming applications or materials not furnished by Buyer, 2) use of any
Products not in accordance with Buyer’s written Specifications; or 3)
modifications to Products not made by or at the express written direction of
Buyer.

 

10.3

If Seller’s rights to Manufacture the Products under the terms of this Agreement
are, or in Buyer’s opinion are likely to be, enjoined due to the type of claim
specified in Section 10.2(iv) (infringement of

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United States patent), then Buyer may, at its sole option and expense: (i)
obtain for Supplier the right to continue to Manufacture such Product under the
terms of this Agreement; (ii) replace or modify an infringing Product or portion
thereof with a substantially functional equivalent so that it is no longer
infringes; or (iii) if neither option (i) nor (ii) above cannot be accomplished
despite Buyer’s reasonable efforts, then Buyer may terminate this Agreement in
whole or, if practicable, with respect to the infringing Product or component.
THE FOREGOING PROVISIONS OF THIS SECTION 10.3 SET FORTH BUYER’S SOLE AND
EXCLUSIVE LIABILITY AND SUPPLIER’S SOLE AND EXCLUSIVE REMEDY FOR ANY THIRD-PARTY
CLAIMS OF INFRINGEMENT.

 

10.4

10.4. A Party (the “Indemnitee”) that intends to claim indemnification under
this Section 10 shall promptly notify in writing the other Party (the
“Indemnitor”) of any loss, claim, damage, liability or action in respect of
which the Indemnitee intends to claim such indemnification, and provide
Indemnitor an opportunity to elect to take over, settle or defend the same
through counsel of the Indemnitor’s own choice (but reasonably acceptable to the
Indemnitee) and under the Indemnitor’s sole discretion and at the Indemnitor’s
own expense, and will make available to the Indemnitor in the event of such
election, all defenses against such claims or actions, known or available to the
Indemnitee. However, the Indemnitee shall have the right to participate in the
defense against the indemnified claims with counsel of its choice at its own
expense. The Indemnitor and the Indemnitee shall cooperate fully in all aspects
of any investigation, defense, pre-trial activities, trial, compromise,
settlement, or discharge of any claim in respect of which indemnity is sought
pursuant to this Agreement, including, without limitation, providing the other
Party with reasonable access to employees and officers (including, without
limitation, as witnesses) and other information.

 

10.5

The indemnity obligations in this Section 10 shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement is
affected without the consent of the Indemnitor. However, if the Indemnitor
receives a settlement offer that the Indemnitor rejects, the Indemnitor shall be
responsible for any damages finally awarded or settlement amounts entered into
to the extent based upon such claim. In no event shall the Indemnitor be
entitled to settle any of the above-mentioned claims that could materially
adversely affect the Indemnitee without the Indemnitee’s consent, provided
however, that the Indemnitor may settle or compromise any such claim without a
written consent of the Indemnitee only when such settlement or compromise
includes an unconditional release of the Indemnitee.

 

10.6

In the event a claim is based partially on an indemnified claim described in
this Section 10 and partially on a non-indemnified claim, or is based partially
on a claim indemnified by Buyer and partially on a claim indemnified by
Supplier, any payments and reasonable attorney fees incurred in connection with
such claims are to be apportioned between the Parties in accordance with the
degree of cause attributable to each Party. In the event either Party is
adjudged to have been grossly negligent or to have acted with willful misconduct
in connection with such claim, such Party will not be entitled to be indemnified
and held harmless under this Section 10.

11.

STOP WORK

In the event that Buyer fails to make timely payment at least sixty (60) days
after the due date on any undisputed purchase order according to its payment
terms and for as long as such payment remains overdue and payable, Seller shall
be permitted to stop work on any and all outstanding purchase orders issued by
Buyer, without penalty to Seller. Except in the event of termination by Seller
pursuant to Section 12.1 or Section 12.2 below, Seller shall be obligated to
re-commence work on outstanding purchase orders upon Buyer bringing overdue
payment(s) current.

12.

TERMINATION

 

12.1

This Agreement may be terminated at any time upon the mutual written agreement
of both Parties hereto.

 

(a)

Either Buyer or Seller may terminate this Agreement at any time upon one hundred
twenty (120) days’ notice consistent with the terms in Section 1.1; provided,
that either Buyer or Seller may terminate this Agreement at any time upon one
hundred eighty (180) days’ notice during the Initial Term if Buyer’s quarterly
forecasted demand for Products with substantially the same mix of products and
SKUs as the preceding period falls below 75% of Buyer’s historical forecasted
demand for the same period in the previous year.

 

(b)

Buyer may terminate this Agreement at any time upon one hundred eighty (180)
days’ notice to Seller in the event of a change of control of Restoration
Robotics. For purposes of this

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Agreement, “Change of Control”, with respect to a Party, means the occurrence of
any of the following events: (a) any consolidation or merger of the Party with
or into any other entity in which holders of the Party’s outstanding equity
interests immediately before such consolidation or merger do not, immediately
after such consolidation or merger, retain equity interests representing a
majority of the voting power of the surviving entity or equity interests
representing a majority of the voting power of an entity that wholly owns,
directly or indirectly, the surviving entity, (b) the sale, transfer or
assignment of securities of the Party representing a majority of the voting
power of all of Party’s outstanding voting securities to an acquiring party or
group, or (c) the sale of all or substantially all of Party’s assets. For the
avoidance of doubt, an initial public offering of Buyer’s equity interests is
not considered a Change of Control for the purposes of this Section 12 or the
Agreement.

 

(c)

If Seller terminates, such termination must include the following: (a) formal
written notification of intent to terminate and (b) a transition plan that
provides for a period of one hundred eighty (180) days from Buyer’s receipt of
the written notification of termination from Seller which includes (i) Product
coverage for Buyer, and (ii) reasonable assistance to Buyer to transition
Product manufacturing to Buyer or a third party.

 

(d)

Upon termination by either Party for any reason (including pursuant to Sections
12.2 and 12.3 below, Buyer agrees to purchase, and Seller agrees to sell, all
materials, components and work-in-process, including Inventory and Products,
provided that Products to be purchased shall not exceed a maximum of three
months future build quantities, plus long lead components and/or components that
Buyer authorized Seller to purchase as follows:

 

1.

Purchase all finished Products produced for valid purchase orders at the stated
unit price; and

 

2.

Purchase any work-in-process materials mutually agreed upon by both Parties
during the Term of the Agreement; and

 

3.

Purchase all materials at actual cost, including MOQ and excess inventory,
procured by Seller or which are not cancelable or returnable (NCNR) to the
vendor; and

 

4.

Reimburse Seller for any reasonable cancellation and/or related costs from its
vendors as a result of Buyer’s cancellation; and

 

5.

Reimburse Seller for any verifiable and actual charges incurred because the
cancellation caused Seller to not attain the annual usage supplied by Seller’s
vendor and utilized in establishing material prices quoted under this Agreement.
Seller must obtain written approval from an authorized representative of the
Buyer before Seller agrees to a termination or cancellation fee if (i) Buyer is
obligated to pay any cancellation or termination fee and (ii) such fee exceeds
$1,000 per vendor.

 

6.

MOQ and NCNR Purchases: For certain Products removed from production due to
Buyer’s request to cease production of such Products, Buyer is responsible for
the cost of any excess inventory required to be purchased by Seller to MOQ or
NCNR requirements. MOQs are the result of procurement processes where Seller
must buy full reels, tubed and packaged components. MOQ will be designated as
such in advance and excess liability exposure will be shared with Buyer on a
regular basis. If a MOQ or NCNR is to exceed $1,000 in excess cost, written
approval must be obtained from Buyer.

 

7.

All MOQ and NCNR purchase orders placed by Seller must be approved in writing by
Buyer or Buyer’s authorized parties.

Seller agrees not to begin new production, or purchase more materials or
components, without receiving written approval from Buyer, following receipt of
a written notice of termination from Buyer. The cost for Products will be in
accordance with the established pricing in effect at the time of termination.
The cost of components will be limited to the actual purchase price paid by
Seller for the components, plus mutually agreed upon material handling charges
or supplier related charges, if any.

 

12.2

Termination for Cause by Seller. Seller shall have the right to cancel this
Agreement and/or any active purchase orders:

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(a)

Upon Buyer’s failure to pay outstanding invoices within ninety (90) days from
the date of the invoice according to the payment terms set forth in Section
6(b); or

 

(b)

Upon thirty (30) days advance written notice to Buyer regarding Buyer’s material
nonperformance or repudiation of any other substantive obligations of this
Agreement (other than failure to pay any invoice) and Buyer’s failure to cure
such nonperformance or repudiation within ninety (90) days after the written
notice is received, or such additional cure period as the Seller may authorize
in writing; or

 

(c)

Upon written notice from the Seller in the event Buyer has elected to close or
dissolve its operation or is wound up and dissolved, becomes insolvent, or
repeatedly fails to pay its debts as they become due, makes an assignment for
the benefit of creditors, files a voluntary petition in bankruptcy or for
reorganization or is adjudicated as bankrupt or insolvent, or has a liquidator
or trustee appointed over its affairs and such appointment shall not have been
terminated and discharged within thirty (30) days thereof.

 

12.3

Termination for Cause by Buyer. Buyer shall have the right to cancel this
Agreement and/or any active purchase orders:

 

(a)

Upon thirty (30) days advance written notice to Seller regarding Seller’s
material nonperformance or repudiation of any substantive obligations of this
Agreement and Seller’s failure to cure such nonperformance or repudiation within
thirty (30) days after the written notice is received or such additional cure
period as Buyer may authorize in writing; or

 

(b)

Upon written notice from Buyer in the event Seller has elected to close or
dissolve its operation or is wound up and dissolved, becomes insolvent, or
repeatedly fails to pay its debts as they become due, makes an assignment for
the benefit of creditors, files a voluntary petition in bankruptcy or for
reorganization, or is adjudicated as bankrupt or insolvent, or has a liquidator
or trustee appointed over its affairs and such appointment shall not have been
terminated and discharged within thirty (30) days thereof.

13.

OTHER

Notwithstanding any provisions to the contrary, Sections 5, 6, 9, 10, 12.1(c),
and 14 shall survive the termination of this Agreement. Except for a termination
as described in Sections 12.2, the provisions of this Agreement will continue to
apply to purchase orders accepted by Seller prior to the effective date of such
termination or expiration. This Agreement shall constitute the entire agreement
of the Parties with respect to the subject matter herein, supersedes any prior
agreement or understanding, whether written or oral, relating thereto, and can
be amended only by a writing that is executed and delivered by both Parties
hereto. This Agreement shall be governed by the laws of the State of California
notwithstanding the conflict of laws provisions of the State of California.
Further, to the extent that either Party waives any right hereunder, it shall
not be deemed to have waived any other right hereunder. Finally, this Agreement
shall be binding upon successors and assigns of each Party hereto and may only
be assigned with the prior written consent of the other Party.

14.

CONFIDENTIALITY

. “Confidential Information” means information or material, whether of technical
nature, business nature or otherwise, including trade secrets, pertaining to any
aspects of Buyer’s business which is commercially valuable to Buyer and not
generally known or readily ascertainable. Confidential Information includes,
without limitation, any and all technical and non-technical information
including techniques, sketches, designs, drawings, models, inventions, know-how,
processes, apparatus, equipment, algorithms, software programs, software source
documents, and formulae; information related to the current, existing or
contemplated or proposed Buyer’s products and services; information concerning
research, experimental work, development, design details and specifications,
engineering, financial information, procurement requirements, purchasing,
manufacturing, customer lists and information, business forecasts, sales and
merchandising, pricing, marketing plans and information, as well as the terms of
this Agreement; and any information or data developed pursuant to the
performance of the Services. Confidential Information shall not include
information which: (a) is or becomes public knowledge without any action by, or
involvement of, Seller, as evidenced by written records of Seller; (b) is
disclosed by Seller with the specific, prior written approval of Buyer; (c) is
independently developed by Seller without use of Buyer’s Confidential
Information; (d) is rightfully received by Seller from a third party who is
authorized to make such disclosure without requiring confidentiality treatment;
or (e) is disclosed publicly pursuant to any judicial or

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governmental order, provided that Seller gives Buyer sufficient prior notice to
contest such order. All Confidential Information provided pursuant to this
Agreement shall not be distributed, disclosed or disseminated in any way or form
by Seller to anyone except its own employees who have a reasonable need to know
such Confidential Information and who have been advised of the confidential
nature and required to observe the terms and conditions hereof; nor shall
Confidential Information be used by Seller for its own purpose, except for the
purposes of exercising its rights or fulfilling its obligations under the
Agreement. Neither Party shall communicate or otherwise disclose to the other
Party, during the Term of this Agreement, confidential or proprietary
information of third parties. Upon request of Buyer, copies and embodiments of
all Confidential Information shall be promptly returned to Buyer by Seller,
unless such copies are required to support existing Buyer’s purchase orders
under the terms of this Agreement. Upon termination of this Agreement for any
reason, Seller shall promptly return or deliver to Buyer all Confidential
Information provided by Buyer, including all copies thereof, unless such copies
are required to support existing Buyer’s purchase orders under the terms of this
Agreement. Both Parties agree and acknowledge the existence of a confidentiality
agreement entered into on April 24, 2015 between Buyer and Seller
(“Confidentiality Agreement”). To the extent any terms in this Section 14
conflicts with the provisions in the Confidentiality Agreement, the terms of the
Confidentiality Agreement shall control.

15.

RECORD RETENTION; AUDIT.

 

15.1

Seller shall keep adequate and current records of any development and content of
all work product under this Agreement. Seller shall deliver all such records and
other information, papers, manuals, drawings and documents coming into Seller’s
possession or created by Seller in connection with providing services under this
Agreement, as well as all tangible Restoration Robotics property (including, but
not limited to, computer hardware and software, samples, prototypes, Tools,
equipment, descriptions or video presentations, records and notebooks) to Buyer
promptly upon termination of this Agreement. Seller shall establish and maintain
complete and accurate books, records and a reasonable accounting system that
readily identifies Seller’s assets, financial health, costs of goods, and the
ability for Seller to comply and fulfill Seller’s obligations under this
Agreement. Supplier shall keep such books and records available for inspection
during the Term of this Agreement and for a period of three (3) years following
termination of this Agreement.

 

15.2

During the Term of this Agreement, Buyer’s employees or independent auditors
selected by Buyer and reasonably acceptable to Seller shall be provided
reasonable access to facilities at which Products are manufactured and packaged
to enable such employees or independent auditors to audit manufacturing and
packaging performance, including an analysis of Seller’s conformity with
manufacturing, packaging and quality requirements, including those mandated by
the applicable regulatory authorities and Seller’s compliance with this
Agreement. Such audits will be conducted during normal business hours and in a
manner so as not to unreasonably disrupt Seller’s operations. Buyer will provide
Seller with reasonable prior written notice of an audit. Seller will cooperate
in the audit, will provide the information reasonably required to conduct the
audit available on a timely basis and will assist the designated employees of
Buyer or its independent auditors as reasonably necessary.

16.

ASSIGNMENT AND CHANGE OF CONTROL

Buyer and Seller hereby agree that neither Party may assign or transfer this
Agreement or any interest herein or any rights or obligations hereunder without
the prior written consent of the other Party, which consent will not be
unreasonably withheld or delayed; provided, however, that Buyer may assign its
rights and obligations to an entity controlling, controlled by or under common
control with Buyer, or to Buyer’s successor in interest, or to any party to
which Buyer sells the portion of its business which relates to the Products.

17.

COUNTERPARTS

This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.

IN WITNESS WHEREOF, the duly authorized representatives of Buyer and Seller have
executed this Agreement on the dates shown below:

SELLER: NPI SOLUTIONS_____________________

BUYER: RESTORATION ROBOTICS, INC.

By:          /s/ Kevin Andersen____________________

By:/s/ Gabe Zingaretti_____________

Name:Kevin Andersen_______________________

Name:Gabe Zingaretti________________

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Title:President____________________________

Title:COO________________________

Date:      November 19, 2018____________________

Date:November 20, 2018_____________

 

 

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