***Text Omitted and Filed Separately with the Securities and Exchange
Commission.
Confidential Treatment Requested Under
17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

EXHIBIT 10.40
SUPPLY AGREEMENT
THIS AGREEMENT, made on this 19th day of December 2012 (the “Effective Date”),
by and between Santec Corporation, a corporation organized and existing under
the laws of Japan with its principal office at 5823 Ohkusa-Nenjozaka, Komaki,
Aichi 485-0802 Japan (hereinafter referred to as “Supplier”) and Volcano
Corporation, a corporation organized and existing under the laws of the state of
Delaware with its principal office at 3661 Valley Centre Drive Suite 200 San
Diego, CA 92130 (hereinafter referred to as “Customer”).
WITNESSETH:
WHEREAS, Supplier manufactures and sells certain 100 kHz Scanning Laser whose
Supplier’s part number is […***…] (“Products,” as more specifically defined
below);
WHEREAS, Customer desires to purchase Products from Supplier and to incorporate
the Products into the Customer Product;
WHEREAS, Products include valuable trade secrets and know-how of Supplier;
WHEREAS, a subsidiary of Customer engages in developing and manufacturing
scanning laser competitive with Products; and WHEREAS, notwithstanding the
foregoing, Supplier is willing to sell Products to Customer subject to
confidentiality obligations and purchase commitment of Products and other terms
and conditions provided herein.
NOW, THEREFORE, in consideration of the covenants and conditions contained
herein, the parties hereto agree as follows:
Article 1.Definitions
When used in this Agreement, the following terms shall have the meanings
indicated in this Article.

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“Affiliate” of a certain entity means any entity more than 50% of whose equity
interest is held or controlled directly or indirectly by such entity, or who
holds or controls directly or indirectly more than 50% of equity interest in
such entity.
“Annual Blanket Order” shall have the meaning set forth in Article 2.2.1.
“Committed Products” mean Products covered by an Annual Blanket Order to be
placed by Customer under Article 2.2.1 including Products to be purchased by
Customer under Qualified Additional Orders as defined in Article 2.2.2, which
shall be deemed as increase of the quantity of an Annual Blanket Order.
Committed Products shall include neither Initial Products nor Spot Products.
“Confidential Information” means any and all information disclosed in the course
of implementation of this Agreement by Disclosing Party to Receiving Party which
information is designated in writing as confidential by Disclosing Party at the
time of disclosure; provided, however, that Confidential Information shall not
include any information which:
(i)
is publicly known and made generally available in the public domain prior to the
time of disclosure by Disclosing Party;

(ii)
becomes publicly known and made generally available after disclosure by
Disclosing Party other than as a result of a breach of the confidentiality
obligation of Receiving Party;

(iii)
is already in the possession of Receiving Party at the time of disclosure;

(iv)
is obtained by Receiving Party from a third party without a breach of such third
party's obligations of confidentiality ; or

(v)
is independently developed by Receiving Party without use of or reference to the
Confidential Information.

In addition, design, specification, manufacturing processes and any other
similar information obtained from Products or samples or prototypes thereof
shall constitute Confidential

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Information of Supplier, regardless of whether Supplier designate such
information as confidential.
“Conflict Minerals” means columbite-tantalite (coltan), cassiterite, gold,
wolframite or their derivatives, tantalum, tin and tungsten and any other
minerals or derivatives that the United States Secretary of State determines
after the date hereof to be financing conflict in a Covered Country, and
“Conflict Mineral” shall mean any of them.
“Covered Countries” means the Democratic Republic of the Congo and its adjoining
countries, including, as of the date hereof, Angola, Burundi, Central African
Republic, the Republic of the Congo, Rwanda, South Sudan, Tanzania, Uganda and
Zambia, and “Covered Country” shall mean any of them.
“Customer Product” means Customer’s OCT (optical coherence tomography) system
for use in intracoronary imaging, including, without limitation, any
improvements, updates and upgrades to such product.
“Delivery Schedule Table” means a table setting forth quantity of Committed
Products to be delivered in each month during the applicable Fiscal Year.
“Design Files” has the meaning set forth in Section 5.7.
“Disclosing Party” referred in connection with certain Confidential Information
means the party who discloses such Confidential Information to Receiving Party.
“FDA” shall mean the United States Food and Drug Administration and any
successor agency thereto.
“Fiscal Quarter” means each three month period commencing April 1, July 1,
October 1 or January 1 of each Fiscal Year.
“Fiscal Year” means each one year period commencing on April 1 and ending on
March 31 of the following year.

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“Individual Contract” means a contract for individual sale and purchase of
specific Products to be entered by and between the parties in accordance with
the order and acceptance procedures provided in Article 2.
“Initial Products” mean the initial […***…] units of the Products to be sold by
Supplier purchased by Customer under Article 2.1 of this Agreement.
“Latent Defect” means a defect that causes a Product to not conform to the
Product Warranty, which defect is not discoverable upon reasonable physical
inspection.
“Minimum Delivery Quantity” means the minimum quantity of each delivery of
Products (other than the Initial Products) under this Agreement. The parties
hereby agree that the Minimum Delivery Quantity is […***…] units.
“Minimum Aggregate Purchase Quantity” means the minimum quantity of Products
which Customer is required to purchase from Supplier during the entire term of
this Agreement.
“Minimum Purchase Quantity” means the minimum quantity of Products which
Customer is required to purchase from Supplier during a certain Fiscal Year.
“Per-Unit Price” means per-unit price of Products purchased under a certain
Individual Contract.
“Products” mean 100 kHz Scanning Laser of Supplier sold to Customer hereunder
whose part number in Supplier is […***…]; provided that if Supplier releases new
versions of […***…] or new products with functionality similar to […***…], such
new versions or new products shall be included in Products on the condition that
the parties have reached a written agreement on the pricing and specification of
such new versions or new products.
“Qualified Additional Orders” shall have the meaning ascribed in Article 2.2.2.
“Receiving Party” referred in connection with certain Confidential Information
means the party who receives such Confidential Information from Disclosing
Party.

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“Quality Standards” means the standards and regulations related to the
implementation, conduct and maintenance of quality controls, set forth in Annex
2.
“Related Parties” of a certain party means:
(i)
Directors, officers or employees of such party;

(ii)
An Affiliate of such party;

(iii)
Directors, officers or employees, of an Affiliate of such party; and

(iv)
Lawyers, accountants or tax lawyers retained by such party or its Affiliate.

“Recycled Sources” means recycled metals, which are reclaimed end-user or
post-consumer products, or scrap processed metals created during product
manufacturing, including excess, obsolete, defective, and scrap metal materials
which contain refined or processed metals that are appropriate to recycle in the
production of tin, tantalum, tungsten and/or gold, but excluding minerals
partially processed, unprocessed or a by-product from another ore.
“Specification” means the specification of Products set forth in the Detailed
Specification attached hereto as Annex 1.
“Spot Order” shall have the meaning ascribed in Article 2.3.
“Spot Products” mean Products ordered under a Spot Order.
“Taxes” mean any value-added taxes, consumption, sales or use tax, duty or
tariff (now or hereafter enacted), excise, ad valorem, stamp, documentary and
other taxes, or other similar taxes or charges imposed by governmental
authorities (e.g., national governments, local governments, and customs)
relating to Products.
Article 2.    Order and Order Acceptance
2.1
Order for Initial Products. Customer shall submit, and Supplier shall accept, an
order for the Initial Products (i.e., […***…] units) at the Per-Unit Price of
$[…***…] upon the execution of this Agreement. The price for the Initial
Products, $1,875,300, shall be prepaid within 30 days from the date of execution
of this Agreement.

2.2
Annual Blanket Order.

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2.2.1
Placement of Annual Blanket Order. Customer shall submit an annual blanket order
for each Fiscal Year by December 31 of the previous Fiscal Year (the “Annual
Blanket Order”); provided that the quantity of Products (Committed Products) to
be ordered under such Annual Blanket Order shall be no less than the Minimum
Purchase Quantity for such Fiscal Year set forth in the following Minimum
Purchase Quantity Table (subject to reductions as set forth in this Agreement).
If Customer fails to provide an Annual Blanket Order for a certain Fiscal Year
in compliance with this Article on or prior to the end of December of the
previous Fiscal Year, Customer shall be deemed to have issued an Annual Blanket
Order in the quantity equal to the Minimum Purchase Quantity for such Fiscal
Year as of the end of December of the previous Fiscal Year. No order shall bind
Supplier unless and until finally confirmed and accepted by Supplier’s written
confirmation; provided that Supplier shall be obligated to confirm and accept
the Annual Blanket Order properly submitted by Customer pursuant to this
Article. Upon acceptance of an order by Supplier, an Individual Contract for the
Products so ordered shall be formed and become irrevocable and binding. The
Per-Unit Price shall be as set forth in the following Minimum Purchase Quantity
Table, subject to price adjustment under Article 2.2.3.

(Minimum Purchase Quantity Table)
Delivery Period
Per-Unit Price*
Minimum Purchase Quantity
Fiscal Year 2013 (April 2013 – March 2014)
$[…***…]
[…***…] units**
Fiscal Year 2014 (April 2014 - March 2015)
$[…***…]
[…***…] units***
Fiscal Year 2015 (April 2015 – March 2016)
$[…***…]
[…***…] units***

* Per-Unit Price shall be adjusted based on the quantity in accordance with
Article 2.2.3.
**[…***…] units do not include Initial Products to be delivered during Fiscal
Year 2013.
***Subject to adjustment under Article 2.4.
2.2.2
Increase of Quantity of Annual Blanket Order. Customer may place additional
orders in addition to the Annual Blanket Order for each Fiscal Year. Additional
orders for a certain Fiscal Year (i) ordering up to 15% of the original purchase
quantity of such Annual Blanket Order for such Fiscal Year in cumulative total
and (ii) placed at least 3 months prior to the end of such fiscal year
(“Qualified Additional Orders”)

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shall be treated as increase of the quantity of such Annual Blanket Order. Other
additional orders shall be treated as Spot Orders under Article 2.3.
No Qualified Additional Orders shall bind Supplier unless and until finally
confirmed and accepted by Supplier’s written confirmation; provided that
Supplier shall be obligated to confirm and accept the Qualified Additional
Orders properly submitted by Customer pursuant to this Article. Upon acceptance
of an order by Supplier, an Individual Contract for the Products so ordered
shall be formed and become irrevocable and binding.
The same Per-Unit Price as Committed Products ordered under the Annual Blanket
Order shall be applied to Committed Products ordered under such Qualified
Additional Orders for the same Fiscal Year, subject to price revision in
accordance with Article 2.2.3.
2.2.3
Price Revision Reflecting Quantity of Committed Products. If (i) the quantity of
the Committed Products for a certain Fiscal Year (i.e., the total of the
quantity ordered under the Annual Blanket Order for such Fiscal Year and the
cumulative total quantity ordered under the Qualified Additional Orders for such
Fiscal Year) exceeds the Minimum Purchase Quantity for such Fiscal Year, and
(ii) the Per-Unit Price determined by applying the Volume Pricing Table below to
the quantity of Committed Products so ordered is lower than the Per-Unit Price
set forth in the Minimum Purchase Quantity Table in Article 2.2.1, the Per-Unit
Price of the Products ordered under the Annual Blanket Order (Committed
Products) for such Fiscal Year shall become the Per-Unit Price determined by
applying the Volume Pricing Table below to the quantity ordered under the Annual
Blanket Order.

If (i) Customer places Qualified Additional Orders for a certain Fiscal Year
after the commencement of such Fiscal Year, and (ii) the Per-Unit Price
determined by applying the Volume Pricing Table below to the increased quantity
of the Committed Products for such Fiscal Year is lower than the then-current
Per-Unit Price, the Per-Unit Price of all the Committed Products for such Fiscal
Year shall be retroactively revised to the Per-Unit Price determined by applying
the Volume Pricing Table below. If Customer has already paid the price for
certain Committed Products for such Fiscal Year, the difference between the
price paid by Customer and the price calculated based on the revised Per-Unit
Price shall be treated as the credit against future payments by Customer to
Supplier.
Notwithstanding the foregoing, […***…] units of the Initial Products to be
delivered during Fiscal Year 2013 shall be added to the quantity of the
Committed Products for Fiscal Year 2013 solely for the purpose of the revision
under this Article of the

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Per-Unit Price of the Committed Products for Fiscal Year 2013. For example, if
Customer places the Annual Blanket Order for the Fiscal Year 2013 in the
quantity of […***…] and a Qualified Additional Order of […***…] units, (i) the
Per-Unit Price for […***…] units of the Initial Products to be delivered during
the period from April through September 2013 shall remain unchanged, (ii) the
Per-Unit Price of (a) the […***…] units ordered under the Annual Blanket Order
and (b) the […***…] units ordered under the Qualified Additional Order shall
become $[…***…], which is the pricing for the annual purchase of […***…] units
(i.e., the total of […***…] units of the Initial Products, […***…] units ordered
under the Annual Blanket Order and […***…] units ordered under the Qualified
Additional Order) under the Volume Pricing Table below.

(Volume Pricing Table)
Purchase Quantity
Per-Unit Price
[…***…]
$[…***…]
[…***…]
$[…***…]
[…***…]
$[…***…]
[…***…]
$[…***…]
[…***…]
$[…***…]

2.3
Spot Orders. In addition to Annual Blanket Orders and Qualified Additional
Orders described in Article 2.2 above, Customer may place additional orders
(“Spot Orders”) for Products from time to time. Per-Unit Price, lead-time and
delivery schedule for each Spot Order shall be determined on a case-by-case
basis through mutual agreement between the parties, which shall be formed prior
to the placement of the Spot Order; provided that in any event, the Per-Unit
Price shall not exceed the Per-Unit Price on the Volume Pricing Table in Article
2.2.3 for the quantity of such Spot Order without taking into account any of the
Committed Products for such Fiscal Year (i.e., if Customer places a Spot Order
for […***…] units, the Per-Unit Price shall not exceed $[…***…] regardless of
the quantity of Committed Products ordered); provided further that the Per-Unit
Price for Spot Orders

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for less than […***…] units shall not exceed $[…***…]. Customer acknowledges
that lead time for a Spot Order may be longer than the standard lead time of
Supplier (i.e., 8 weeks for […***…] units, 12 weeks for […***…] units, 16 weeks
for […***…] units and 20 weeks for […***…]-). Upon acceptance of a Spot Order by
Supplier, such Spot Order shall become irrevocable, and Supplier shall become
obliged to sell, and Customer shall become obliged to purchase, the Spot
Products ordered under such accepted Spot Order at the Per-Unit Price, lead-time
and delivery schedule so agreed between the parties.
2.4
Count of Order in excess of Minimum Purchase Quantity and Spot Products against
Minimum Aggregate Purchase Quantity of […***…] Units. Notwithstanding anything
else in this Agreement, Customer shall have no obligation to purchase more than
[…***…] units of Product under this Agreement. If Customer (i) has purchased
more Committed Products for a certain Fiscal Year than the Minimum Purchase
Quantity for the same Fiscal Year or (ii) has purchased Spot Products, the
Minimum Purchase Quantity for the subsequent Fiscal Year shall be reduced by the
sum of (a) the difference between the quantity of the Committed Products so
purchased and the Minimum Purchase Quantity, plus (b) the quantity of Spot
Products so purchased.

If, as a result of decrease of the Minimum Purchase Quantity for a Fiscal Year,
the Per-Unit Price determined by applying the Volume Pricing Table of Article
2.2.3 to the quantity of the Committed Products ordered for such Fiscal Year is
higher than the Per-Unit Price for such Fiscal Year set forth in the Minimum
Purchase Quantity Table of Article 2.2.1, the Per-Unit Price of Committed
Products for such Fiscal Year shall become the Per-Unit Price determined by
applying the Volume Pricing Table of Article 2.2.3 to the decreased Minimum
Purchase Quantity.
2.5
Cancellation of Minimum Purchase Quantity for Fiscal Year 2015. Customer may
cancel its commitment to purchase the Minimum Purchase Quantity for Fiscal Year
2015 under Article 2.2.1 if a valid and enforceable court order prohibits or
delays Customer from selling its OCT systems and Customer provides a written
cancellation notice to Supplier. Terms and conditions for such cancellation
shall be as follows:

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(i)
If the cancellation notice is received by Supplier no later than September 30,
2014, Customer may cancel the Minimum Purchase Quantity for Fiscal Year 2015
without any cancellation fees;

(ii)
If the cancellation notice is received by Supplier during the period of October
2014 through March 2015, Customer may cancel the Minimum Purchase Quantity for
Fiscal Year 2015 by paying […***…]% of the price for such cancelled Minimum
Purchase Quantity to Supplier as cancellation fees; provided that and, if
cancellation notice is received by Supplier after the placement of the Annual
Blanket Order for Fiscal Year 2015, Customer may cancel the Annual Blanket Order
for Fiscal Year 2015 (and the Minimum Purchase Quantity for Fiscal Year 2015
satisfied by such Annual Blanket Order) by paying […***…]% of the price for such
cancelled Annual Blanket Order to Supplier as cancellation fees; or

(iii)
If the cancellation notice is received by Supplier after April 2015, Customer
may cancel the remaining balance of the Annual Blanket Order for Fiscal Year
2015 that has not yet been delivered (and the Minimum Purchase Quantity for
Fiscal Year 2015 satisfied by such Annual Blanket Order), by paying the total of
(a) […***…]% of the prices for Products to be delivered in the month during
which the cancellation notice is received under the then-current Delivery
Schedule Table and (b) […***…]% of the prices for those to be delivered
thereafter as cancellation fees.

2.6
Any provisions in this Agreement concerning terms and conditions of sale and
purchase of Products (including warranty) and miscellaneous provisions in
Article 13 of this Agreement shall be incorporated into each Individual
Contract. Any general terms or standard terms stated on the order sheet,
acceptance sheet or any other transaction documents shall be excluded and deemed
null and void unless explicitly agreed otherwise in a written instrument
executed by the both parties.

2.7
Supplier will notify Customer of any of its products that are new versions of
the Products or have similar functionality as they become available. Customer
shall have the option of adding such other products and new versions of Products
as Products to this Agreement,

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subject to the parties agreeing on pricing and purchase commitments therefor,
which terms will be negotiated in good faith.
2.8
For avoidance of doubt, Supplier shall have no obligation to exclusively supply
Products to Customer. Until and unless the accumulated total of Products
purchased by Customer reaches […***…] units, Customer shall not purchase from
any third parties other than Supplier any lasers for commercial sales as part of
any Customer Products.

Article 3.    Payment Terms
3.1
Except for the price of the Initial Products that shall be prepaid under Article
2.1, the price for each Product shall be paid within 45 days from the delivery
of such Product to Customer via wire-transfer to the bank account designated by
Supplier.

3.2
If Customer fails to pay any amount when due, Customer shall pay to Supplier
delinquent charge on overdue amount at the rate of […***…]% per annum.

Article 4.    Delivery of Products
4.1
Delivery of Initial Products. The Initial Products shall be delivered in
accordance with the following schedule:

4.1.1
Customer acknowledges that Customer has already received […***…] units of the
Initial Products as of the Effective Date.

4.1.2
Supplier shall deliver […***…] additional units of the Initial Products by
January 31, 2013.

4.1.3
Supplier shall deliver […***…] additional units of the Initial Products by
February 28, 2013.

4.1.4
Supplier shall deliver […***…] additional units of the Initial Products by March
31, 2013.

4.1.5
[…***…] units of the Initial Products shall be delivered during the period from
April 2013 through September 2013 in accordance with the Delivery Schedule Table
for Fiscal Year 2013 (as may be revised in accordance with Article 4.2).

4.2
Delivery of Committed Products; Delivery Schedule Table.

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4.2.1
Committed Products and the last […***…] units of the Initial Products (referred
in Article 4.1.3) shall be delivered in accordance with the then-current
Delivery Schedule Table.

4.2.2
Customer shall submit to Supplier, on or prior to December 31 of each Fiscal
Year, the first Delivery Schedule Table for such Fiscal Year. Customer shall
submit an updated Delivery Schedule Table by the last day of each Fiscal
Quarter. If Customer does not submit an updated Delivery Schedule Table in a
certain Fiscal Quarter, Customer shall be deemed to have submitted the same
Delivery Schedule as the then-latest Delivery Schedule Table on the last day of
such Fiscal Quarter for the purpose of proviso of Article 4.2.3 below.

4.2.3
Customer may change delivery schedules of Committed Products when Customer
submits an updated Delivery Schedule Table in accordance with Article 4.2.2
above; provided that Customer may not change the delivery schedule for the
Fiscal Quarter immediately following the date of submission of the Delivery
Schedule Table from the delivery schedule for the same Fiscal Quarter set forth
in the previous Delivery Schedule Table. (In other words, the delivery schedule
for the two Fiscal Quarters immediately following the date of submission of an
updated Delivery Schedule Table shall be binding and may not be changed.) For
example, the delivery schedule for the second Fiscal Quarter of Fiscal Year 2014
set forth in the Delivery Schedule Table submitted on March 31, 2014 shall be
treated as binding so that Customer may not change the delivery schedule of such
Fiscal Quarter by the next Delivery Schedule Table to be submitted on or prior
to June 30, 2014.

4.2.4
Each Delivery Schedule Table shall satisfy the following conditions:

(i)
The total delivery quantity for each Fiscal Year scheduled in such Delivery
Schedule Table shall be equal to the quantity of the Committed Products that
have been ordered for such Fiscal Year under the Annual Blanket Order and
Qualified Additional Orders as of the submission date of such Delivery Schedule
Table; and

(ii)
Quantity of each delivery of the Committed Products scheduled in such Delivery
Schedule Table shall be no less than the Minimum Delivery Quantity.

4.2.5
Supplier shall deliver Committed Products in accordance with the then-current
Delivery Schedule Table on the condition that Customer submits and updates the
Delivery Schedule Table in accordance with this Article 4.2.

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4.3
Delivery of Spot Products.

Supplier shall deliver Spot Products in accordance with the delivery schedule to
be agreed in accordance with Article 2.3.
4.4
Delivery Terms.

4.4.1
Delivery terms of Products shall be FCA Santec’s Komaki Factory (as defined in
Incoterms 2010). Together with shipment of Products, Supplier shall provide to
Customer unit test reports showing the results of testing to confirm that such
Products were manufactured in accordance with the Product Warranty.

Article 5.    Manufacture
5.1
Materials; Inventory. Supplier shall be responsible for obtaining, and shall
store at no cost to Customer, any and all raw materials and inventory reasonably
required for the manufacture of Products in quantities and timing consistent
with the order quantities and delivery schedules herein. Without excusing any
breaches by Supplier or limiting any remedies of Customer for breach by
Supplier, Supplier shall provide Customer with as much notice as possible if
Supplier anticipates or has reason to believe that Supplier’s output of Products
will not be sufficient to meet the order quantities and delivery schedules
therefor.

5.2
Manufacture. Supplier shall manufacture and supply Products in accordance with
the Quality Standards and all applicable laws. Within sixty (60) days of the
Effective Date, Supplier and Customer shall jointly develop and enter into a
written quality plan by which they will agree on specific mechanisms and
procedures to implement, monitor and communicate with respect to quality
standards under this Agreement. In the event Customer notifies Supplier of any
new manufacturing requirements or appropriate specifications required by any
regulatory agency, or of any other new legal requirements, the parties shall
promptly confer with each other with respect to the best means to comply with
such requirements and allocate any costs of implementing such changes on an
equitable basis. Supplier represents and warrants to Customer that it has, and
will maintain during the term of this Agreement, all government permits,
including, without limitation, health, safety and environmental permits,
necessary for the conduct of the actions and procedures that it

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undertakes pursuant to this Agreement. Supplier shall be responsible for all
acts and omissions of any of its subcontractors and shall ensure that its
subcontractors comply with all of the terms of this Agreement. Supplier shall
immediately notify Customer of any change in the manufacturing process or the
equipment, facility or materials used in the manufacture of Product.
5.3
Specification. In the event Customer notifies Supplier of its desire to make
changes to the Specification, Supplier and Customer shall discuss such changes
in good faith. No changes to the Specification shall be effective unless such
changes are mutually agreed upon by the parties.

5.4
Testing. Supplier shall perform design verification, design validation, quality
control testing and quality oversight on Products to be delivered to Customer or
its designee hereunder in accordance with the Specification and any Quality
Standards.

5.5
Non-U.S. Shipment. If Supplier is directed to ship Products directly to
Customer’s facilities outside of the United States (e.g., Costa Rica), Supplier
covenants and agrees that it shall comply with all applicable import-export
laws, rules and regulations, including, without limitation, provision of
Harmonized Tariff Schedule (HTS) codes and Export Control Classification Number
(ECCN) codes for all Products so shipped.

5.6
Regulatory Support. As between the parties, Customer shall have sole control and
authority over preparation and submission of filings for approval to market
Customer Products. Supplier agrees to promptly provide to Customer such
information relating to the Products or the manufacture thereof as may be
necessary or useful in connection therewith.

5.7
QA Audits. Upon Customer’s written notice to Supplier (at least 30 days in
advance, except in the event that Customer requests an audit in response to an
adverse event, complaint or other regulatory action in which case such notice
period shall be at least one business day), Customer shall have the right to
have its relevant quality assurance representatives visit the Supplier’s
manufacturing facility to review Supplier’s manufacturing operations related to
Products and assess its compliance with Quality Standards and to discuss any
related issues with Supplier’s manufacturing and management personnel subject to
the confidentiality

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obligations as provided in Article 11 with respect to information obtained in
the course of such audit; provided that Supplier may limit access by quality
assurance representatives of Customer from Supplier’s design history files for
the Products (the “Design Files”). Quality assurance representatives of Customer
shall not take any records of such audit except for recording of status of
compliance with, or deviation from, Quality Standards, and submit to Supplier
any and all records taken in the course of such audit. Each such audit shall be
conducted during normal business hours. In the event that the audit by Customer
reveals any noncompliance issues, Supplier will use diligent and good faith
efforts to promptly correct them, which efforts shall include promptly
developing a correction plan (including timelines for corrections), working with
Customer in good faith to agree upon the correction plan, and complying with
said plan; provided that such correction efforts shall not waive any rights or
remedies of Customer with respect to such noncompliance.
5.8
Records. Supplier shall keep and maintain complete and adequate records
pertaining to the methods, facilities and materials (including the sources of
such materials) used by it for the manufacture, testing, packaging, labelling
and distribution of Products in accordance with the Quality Standards and
applicable laws and otherwise as necessary to satisfy its obligations under this
Agreement. Designated representatives of Customer shall, upon reasonable notice
to Supplier, have access to and shall be permitted to review all such records
during the term of this Agreement and during the applicable retention period
specified below, including, without limitation, for purposes of assessing
Supplier’s compliance with subsection (a) of Annex 3. Upon Customer’s request,
Supplier will provide to Customer an inventory of records pertaining to its
activities under this Article 5, Article 8 and Annex 3, and upon request, a copy
of any or all such records. Supplier shall maintain all records relating to the
performance of its obligations under this Agreement until the later of: (a) 10
years after expiration or termination of this Agreement; and (b) expiration of
the minimum retention period required by applicable laws, rules and regulations.
Supplier shall not destroy any such records unless and until it has obtained
Customer’s prior written permission to do so. At Customer’s written request,
Supplier shall continue to maintain any such records beyond the applicable
period specified above, subject to payment by Customer of reasonable storage
fees, or shall transfer such records to Customer or its designee at Customer’s
expense.

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Such records (including copies thereof) shall be considered the Confidential
Information of Supplier.
5.9
Conflict Mineral. Supplier represents and warrants that it complies with, and
shall continue to comply with, the terms of Annex 3 (Conflict Minerals).

5.10
REACH Directive. Supplier shall provide to Customer within 60 days from the
Effective Date information concerning the weights of materials and substances
used in Products in order to assist Customer in complying with the REACH
Directive (2002/95/EC). Supplier shall make the best efforts to obtain such
information from its suppliers. To the extent that such information is not
available from its said suppliers with respect to certain parts of Products
(“Unaccounted Parts”), Supplier shall utilize a combination of physical
composition analysis with qualified test equipment or by a duly certified
laboratory, typical compositions of materials (e.g. plastics, resins, metals and
alloys) obtained from reputable sources of such information to identify
substances used in Unaccounted Parts; provided that Supplier may utilize
worst-case analysis in lieu of such physical composition analysis and analysis
based on typical compositions of materials with respect to small Unaccounted
Parts, so long as the aggregated total of the weights of Unaccounted Parts plus
the weights of any known Substances of Very High Concern (SVHC) is […***…]% or
less of the total weight of Products. As and when this list of SVHCs may be
updated from time to time by the European Union, Supplier shall provide to
Customer within 30 days of such updates any new information which may assist the
Customer in maintaining compliance with the REACH Directive.

Article 6.    Warranty
6.1
Each party represents and warrants that (a) such party is duly organized,
validly existing, and in good standing under the laws of the place of its
establishment or incorporation, (b) such party has taken all action necessary to
authorize it to enter into this Agreement and perform its obligations under this
Agreement, (c) this Agreement will constitute the legal, valid and binding
obligation of such party, and (d) neither the execution of this Agreement nor
the performance of such party’s obligations hereunder will conflict with, result
in a breach of, or constitute a default under any provision of the
organizational documents of

such party, or of any law, rule, regulation, authorization or approval of any
government entity, or of any agreement to which it is a party or by which it is
bound.
6.2
Supplier has not received any written communication from any entity alleging
that the manufacture, use or sale of Products infringes or misappropriates the
intellectual property rights of such entity, and Supplier is not aware of any
intellectual property rights of an entity that would be infringed or
misappropriated by the manufacture, use, import, offer for sale or sale of
Products.

6.3
Supplier hereby warrants that each Product shall (i) meet the Specifications in
effect at the time of delivery, (ii) be free from material defects in its
materials and workmanship, (iii) meet and have been manufactured in accordance
with the Quality Standards and (iv) its labelling will not be false or
misleading (the “Product Warranty”). The duration of the foregoing warranty
shall be 1 year from the date the Customer Product with the Product is shipped
to the end user, but in no event more than eighteen (18) months after shipment
of the Product by Supplier to Customer. Notwithstanding the foregoing, the terms
of Annex 5 shall apply to certain of the Initial Products as set forth therein.
In the event that the Specifications contain any Product warranty provisions
that conflict with any terms of this Article 6.3, the terms of this Article 6.3
shall prevail.

6.4
Customer shall, within 30 days from the receipt of such Products from the
carrier, conduct incoming inspection on received Products as described in this
Article 6.4. With respect to the first […***…] units of Initial Products,
Customer shall assess shipment packaging condition, review packing list/manifest
for consistency with units included in the shipment, review of Certificate of
Analysis, review of test data report for each unit and assess each unit’s
physical condition and integrity. With respect to units of Products received
thereafter Customer will conduct the foregoing process and also conduct basic
functional testing.

6.5
Supplier shall replace the Products not conforming to the warranty at the costs
of Supplier or refund the price thereof at the choice of Customer. If Customer
chooses to receive replacement Products, Supplier will supply, within thirty
(30) days of notice of rejection, […***…] units of replacements Products (or, if
less, the number requested by Customer),

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and will make best efforts to supply the remainder of replacement Products
requested as soon as possible from the notice of rejection. Within 3 days after
receiving any notice of rejection from Customer, Supplier will respond stating
whether (a) it accepts the rejection or (b) it disputes the rejection, in which
case the parties will refer such dispute to a mutually acceptable independent
third party with the appropriate expertise to assess the conformity or
nonconformity of the rejected Product to the Product Warranty. Such independent
third party will examine or test the applicable Product and determine whether
such Product conformed or did not conform to the Product Warranty. The parties
agree that such third party’s determination shall be final and binding upon the
parties. The party against whom the independent third party rules shall bear the
costs of testing by such independent third party, and if such third party
determines that Customer’s rejection of the Product was incorrect, Customer will
purchase and pay for both the initially rejected Product and the replacement
Product. If the parties cannot agree on the determination of such independent
third party, either party may refer to the arbitration under Article 13.7 solely
the issue of promptly appointing an independent third party under this Section
6.5, and the parties will cooperate in good faith to expedite such matter.
6.6
Samples and prototypes shall carry no warranties.

6.7
Supplier represents and warrants to Customer that the Products were developed by
Supplier and have not been developed, manufactured or assembled with any advice,
assistance, information, technology, parts or other participation directly or
indirectly from Axsun Technologies, Inc.

6.8
THIS ARTICLE 6 SETS FORTH THE EXCLUSIVE WARRANTY, EXCLUSIVE LIABILITIES AND
EXCLUSIVE OBLIGATIONS OF SUPPLIER AND THE EXCLUSIVE REMEDIES AVAILABLE TO
CUSTOMER WITH RESPECT TO ANY BREACH OF ARTICLE 6.3 THE WARRANTIES IN THIS
AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

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6.9
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. FOR CLARITY, CUSTOMER MAKES NO WARRANTIES TO
SUPPLIER WITH RESPECT TO THE CUSTOMER PRODUCT.

Article 7.    Taxes
7.1
Customer shall make all payments to Supplier under this Agreement without
deduction or withholding except to the extent that any such deduction or
withholding is required by applicable laws to be made on account of taxes, which
deduction or withholding shall promptly be paid by Customer on behalf of
Supplier to the appropriate governmental authority, and Customer will furnish
Supplier with proof of payment of such taxes. Supplier shall not invoice
Customer for any value-added tax incurred by Supplier in performing the
obligations under this Agreement unless approved in advance in writing by
Customer.

7.2
Except for withholding taxes provided in the preceding Article, Customer shall
bear any and all Taxes imposed by the governmental authorities in its home
country (other than Taxes imposed on the income of Supplier) on the transactions
contemplated under this Agreement.

Article 8.    Regulatory
8.1
Complaints. Customer shall be responsible for all complaint handling and
associated reporting to regulatory authorities of Medical Device Reports (MDR)
associated with the use of any Customer Product. Customer shall advise Supplier
promptly after Customer becomes aware of any complaints associated with Product.
If Supplier becomes aware of any Latent Defects or adverse events associated
with the use of Product, it shall report all information in its possession
regarding such event to Customer as soon as practicable after becoming aware of
such information, and shall cooperate with Customer as necessary to report such
event to regulatory authorities.

8.2
Regulatory Compliance. Supplier shall comply with all regulatory requirements
with respect to Product imposed by applicable law upon Supplier as the
manufacturer of Product. Customer shall comply with all regulatory requirements
with respect to Customer Products

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that are imposed by applicable law upon Customer as the manufacturer of Customer
Products or as the holder of any regulatory approval for Customer Products.
Supplier shall, on a timely basis, provide Customer with information in
Supplier’s possession relevant to its role as the manufacturer of Product that
is reasonably necessary for and relevant to Customer’s obligations hereunder in
complying with such regulatory requirements. Supplier will provide to Customer
such documentation, data and other information relating to Product as Customer
may require for submission to governmental authorities.
8.3
Recalls. In the event Customer shall be required or requested by any
governmental authority (or shall voluntarily decide in good faith) to recall any
Product that is used with or incorporated in a Customer Product, Customer shall
coordinate such recall. Supplier shall use best efforts to timely cooperate with
Customer in the investigation and conduct of such recall. If a recall arises
primarily out of a Latent Defect in a Product during the warranty period of such
Product or due to Supplier’s willful misconduct or breach of this Agreement,
Supplier shall bear costs for such recall as detailed in the following:

(i)
In case where such defective Product is repairable, Supplier and Customer shall
discuss and agree a suitable measure to repair such defective Product. Supplier
shall provide repair parts to repair such defective Product and bear
out-of-pocket expenses actually incurred by Customer for repair to be made in
accordance with such agreed measure. If it is difficult to replace such
defective component on site, an example of suitable measures for repair is that
(a) Supplier provides a Product as a replacement of the defective Product, (b) a
service engineer retained by Customer or its distributor replaces the defective
Product with such replacement Product on site at the costs of Supplier, (c) the
replaced defective Product is returned to Supplier for repair at the costs of
Supplier, and (d) Supplier repairs the defective Product and uses such repaired
Product as a replacement of another defective Product. Supplier shall provide to
Customer a timetable for repair or replacement in accordance with this
paragraph. If Supplier cannot agree to repair or replacement for any portion of
the defective Products within thirty (30) days of notice of defects from
Customer, then

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Customer may, at its option, choose to have Supplier reimburse Customer for the
price of such Products.
(ii)
In case where such defective Product is not repairable, Supplier shall (a)
provide to Customer a replacement of such defective Product and (b) reimburse
Customer’s out-of-pocket expenses actually incurred by Customer in connection
with the replacement of such defective Product (such as fees of a service
engineer retained by Customer or its distributor for replacement of Product on
site); provided that Customer shall return such replaced defective Product to
Supplier at the costs of Supplier if so requested by Supplier.

Notwithstanding the foregoing, the cumulative total of Supplier’s liabilities
(including costs incurred by Supplier to comply with the obligations under this
Section 8.3 such as supply of replacement Products and replacement parts) for
all the recalls with respect to Products supplied under this Agreement shall not
exceed the cumulative total of amounts received by Supplier from Customer under
this Agreement.
8.4
Regulatory Inspections. Supplier agrees to inform Customer within 2 business day
of notification of any regulatory inquiry, communication or inspection, which
directly or indirectly relates to the manufacture of Product. In the event
Supplier receives a notice of inspection or an inspection visit by any
governmental authority which involves Product or could impact Supplier’s ability
to produce Product, Supplier shall notify Customer within 2 business day of
notification by such governmental authority. To the extent permitted by the
governmental authority and applicable laws, Supplier shall provide information
about development and outcome of such inspection or inspection visit to Customer
and consider Customer’s comments in good faith. Customer, at its option, shall
have the right to have its representatives present at any such inspection by a
governmental authority; provided, however, that Supplier shall have no
obligation to provide Customer’s representatives with access to the Design
Files.

8.5
Incidents or Accidents. Supplier shall promptly notify Customer in writing of
any incident or accident experienced by Supplier that Supplier, in its
reasonable judgment, believes may

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affect the quality of the Product that Supplier is obligated to deliver
hereunder or its ability to meet delivery date obligations hereunder. Supplier
shall promptly investigate such incident or accident and provide a written
report within five (5) business days of the results of the investigation of such
incidence or accident to Customer.
Article 9.    Term and Termination
9.1
Term of this Agreement. This Agreement shall become effective on the date first
above written and shall be in force and effect through March 31, 2016.

9.2
Termination for Repeated Failures of Supply. In the event that (i) Customer
properly rejects 25% or more of initially-delivered (i.e., not replacement)
Products in two consecutive quarters, or (ii) Customer properly rejects 10% or
more of an order of Products and replacements more than two times (e.g.,
Customer orders […***…] units, Customer properly rejects […***…] units of such
initial delivery, Customer properly rejects […***…] units of replacements, and
Customer properly rejects such […***…] units of replacements again), Customer
may terminate this Agreement effective immediately upon receipt of notice.

9.3
Termination due to breach. Either party may, by written notice, immediately
terminate this Agreement and any of the outstanding Individual Contracts if the
other party fails to perform its obligation under this Agreement or any of
Individual Contracts, and such non-performance is not cured within sixty (60)
days after receiving written demand for performance from the non-breaching
party; provided, however, if such non-performance is related to failure to
timely deliver Product in accordance with the delivery schedule agreed to by the
parties, Volcano may terminate this Agreement if the non-performance is not
cured within forty five (45) days after receiving such written demand.
Non-breaching party may claim damages for such breach and resulting termination
against the breaching party.

9.4
Termination due to insolvency. Either party may, by written notice, immediately
terminate this Agreement and any of the outstanding Individual Contracts without
prior notice, if:

(i)
The other party ceases doing business as a going concern;

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(ii)
The other party suspends all or substantially all of its business operations;

(iii)
The other party makes an assignment for the benefit of creditors;

(iv)
The other party becomes insolvent, i.e., the other party hereto generally does
not pay its debts as they become due, or admits in writing its inability to pay
its debts;

(v)
The other party (a) petitions for or acquiesces in the appointment of any
receiver, trustee or similar officer to liquidate or conserve its business or
any substantial part of its assets, (b) commences any legal proceeding such as
bankruptcy, reorganization, readjustment of debt, dissolution, or liquidation
available for the relief of financially distressed debtors; or (c) becomes the
object of any such proceeding (which is not dismissed within 90 days); or

(vi)
Any writ of attachment or execution or any similar process (including procedures
for collection of tax delinquency) is issued or levied against the other party
in an amount equal to or greater than 10 million U.S. dollar, and the same
remains undischarged, undismissed, and unstayed for a period of 60 days.

The party terminating this Agreement under this Article may claim damages for
such termination against the party which falls under any of the foregoing Items
(i) through (vi).
9.5
Treatment of Outstanding Sale and Purchase in case of Termination or Expiration.

9.5.1
In Case of Expiration. Outstanding Individual Contracts shall survive the
expiration of this Agreement. The provisions of this Agreement shall be applied
to such Outstanding Sale and Purchase even after expiration of this Agreement.

9.5.2
In Case of Termination. If this Agreement is terminated under Articles 9.2, 9.3
or 9.4, all the outstanding Individual Contracts shall be deemed terminated upon
the termination of this Agreement.

Article 10.    Survival
The provisions of Articles 1, 5.8 and 6 through 13 shall survive the termination
or expiration of this Agreement. In addition, any monetary claims and
liabilities accrued under this

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Agreement prior to the termination or expiration of this Agreement survive the
termination or expiration of this Agreement.
Article 11.    Confidentiality
11.1
Receiving Party (including its Related Parties) shall use Confidential
Information solely for the purposes of this Agreement. Without limiting the
generality of the foregoing, except for development of Customer Products
incorporating Products (specifically excluding development of laser modules) as
contemplated by this Agreement, Customer (including its Related Parties) shall
not use any Confidential Information of Supplier for development or
manufacturing of any products.

11.2
Any Confidential Information shall be treated as confidential by Receiving Party
and may be disclosed to Related Parties of Receiving Party only to the extent
necessary for achievement of the purposes of disclosure; provided, however, that
Receiving Party shall cause such Related Parties to be bound by substantially
the same confidentiality obligations as those provided hereunder, and shall be
held liable for breach of confidentiality obligations by such Related Parties.

11.3
The terms of this Agreement shall be treated as Confidential Information;
provided, however, that: (i) nothing in this Agreement shall preclude a Party
from publicly disclosing the existence of the Agreement or the fact that it
involves the purchase of 100kHz Scanning Lasers by Customer from Supplier; (ii)
Customer may file a copy of this Agreement (with appropriate redactions) in
litigation currently pending in Delaware Chancery Court, Civil Action Nos.
5250-CS and/or No. 6517-CS, provided that the Agreement is designated HIGHLY
CONFIDENTIAL – ATTORNEYS EYES’ ONLY and filed under seal pursuant to the
Stipulation and Order Governing the Production and Exchange of Confidential
Information in effect in those actions; and (iii) a Party may disclose this
Agreement to banks, acquirers, potential acquirers, investors, potential
investors, lenders, potential lenders and other financing sources, and their
advisors, in connection with an actual or prospective financing, merger,
acquisition or similar transaction, provided that such entities have entered

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into a written agreement with the Receiving Party to keep such information
confidential in a manner consistent with this Agreement.
11.4
If any Confidential Information is disclosed by Receiving Party pursuant to a
requirement or request of a governmental or judicial agency of appropriate
jurisdiction or if the disclosure is required by operation of law, such
disclosure will not constitute a breach of this Agreement, provided that
Receiving Party shall promptly notify Disclosing Party of such fact, and upon
request of Disclosing Party, shall seek a protective order with respect to the
Confidential Information disclosed hereunder to the extent available under
applicable law or assist Disclosing Party in seeking such order.

11.5
If either party breaches any of the provisions of this Article, then the
non-breaching party shall have, in addition to any other remedy, the right to
injunctive relief.

11.6
In the event of any termination or expiration of this Agreement, each party
shall return to the other party all Confidential Information of the other party
(including all copies thereof) in such party’s possession; provided, however,
that, each party may retain one copy of the other party’s Confidential
Information in such party’s legal archives for the sole purpose of ensuring
compliance with its obligations hereunder and complying with applicable laws and
regulations.

11.7
Notwithstanding anything else, Customer shall maintain a complete separation of
Supplier’s Confidential Information and any and all personnel of Axsun
Technologies, Inc.

11.8
Customer shall not intentionally open, unseal or otherwise break hermetic seal
package of any Product.

11.9
Confidentiality obligations under this Article 11 shall remain valid and
outstanding for the period of five (5) years from the termination or expiration
of this Agreement.

11.10
Each party shall deliver to the other party a copy of any press release related
to this Agreement at least ten (10) business days prior to its release.

Article 12.    Indemnification; Insurance.

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12.1
Indemnification by Customer. Customer hereby agrees to save, defend, indemnify
and hold harmless Supplier and its officers, directors, employees, consultants
and agents (“Supplier Indemnitees”) from and against any and all losses,
damages, settlements, liabilities, expenses and costs, including reasonable
legal expense and attorneys’ fees (“Losses”), to which any such Supplier
Indemnitee may become subject as a result of any claim, demand, action or other
proceeding by any third party to the extent such Losses arise out of: (a) the
gross negligence or willful misconduct of any of the Customer Indemnitees (as
defined below); or (b) the development, manufacture, use, handling, storage,
sale or other disposition by or on behalf of Customer of Customer Products;
except, in each case, to the extent such Losses result from (i) the material
breach by Supplier of any representation, warranty, covenant or agreement made
by it under this Agreement, (ii) design defects of the Products, (iii) the gross
negligence or willful misconduct of any Supplier Indemnitee, or (iv) any claim
by a third party that the manufacture, use, importation, or sale of any Product
infringes or misappropriates any patents or other intellectual property rights
of such third party.

12.2
Indemnification by Supplier. Supplier hereby agrees to save, defend, indemnify
and hold harmless Customer and its officers, directors, employees, consultants,
contractors and agents (“Customer Indemnitees”) from and against any and all
Losses to which any such Customer Indemnitee may become subject as a result of
any claim, demand, action or other proceeding by any third party to the extent
such Losses arise out of: (a) the gross negligence or willful misconduct of any
Supplier Indemnitee; (b) any design defects of the Products; or (c) any claim by
a third party that the manufacture, use, importation, or sale of any Product
infringes or misappropriates any patents or other intellectual property rights
of such third party; except, in each case, to the extent such Losses result from
the material breach by Customer of any representation, warranty, covenant or
agreement made by it under this Agreement or the gross negligence or willful
misconduct of any Customer Indemnitee.

12.3
General Conditions of Indemnification. Each party’s agreement to indemnify,
defend and hold the other party harmless is conditioned on the indemnified party
(a) providing written notice to the indemnifying party of any claim for which it
is seeking indemnification

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hereunder promptly after the indemnified party has knowledge of such claim; (b)
permitting the indemnifying party to assume full responsibility to investigate,
prepare for and defend against any such claim or demand; (c) assisting the
indemnifying party, at the indemnifying party’s reasonable expense, in the
investigation of, preparation for and defense of any such claim or demand; and
(d) not compromising or settling such claim or demand without the indemnifying
party’s written consent.
12.4
Insurance. Supplier shall at all times during the term of this Agreement, at its
own expense, maintain business automobile liability insurance for owned,
scheduled, non-owned and hired automobiles, with a combined single limit of no
less than $1,000,000 per accident, workers compensation insurance for all
employees as statutorily defined by the applicable law and any other coverage,
in type and amount, as are customarily carried by companies engaged in similar
business in localities where Supplier operates. Supplier shall provide a
certificate of insurance evidencing such coverage to Customer upon request.

Article 13.    Miscellaneous
13.1
Notice. Any notices, consents, reports or other communications required or
permitted to be given or made under this Agreement by one party to the other
party shall be in writing, in the English language, delivered in person or by
facsimile, e-mail, registered airmail with advice of delivery, international
overnight courier or EMS, and addressed to such other party at its address
indicated below, or to such other address as the addressee shall have furnished
in writing to the addressor in accordance with this Article, and (except as
otherwise provided in this Agreement) shall be effective upon receipt by the
addressee.

If to Supplier:    Santec Corporation
Address: 5823 Ohkusa-Nenjozaka, Komaki, Aichi 485-0802 Japan
Attention: Changho Chong
Telephone: +81-568-79-1959
Facsimile: +81-568-79-3896
e-mail: tei3@santec-net.co.jp

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If to Customer:    Volcano Corporation
Address: 3661 Valley Centre Drive, Suite 200
San Diego, CA 92130
Attention: Darin Lippoldt, General Counsel
Telephone: 858-720-4113
Facsimile: 858-720-0325
e-mail: dlippoldt@volcanocorp.com
13.2
Force Majeure. None of the parties is liable for non-performance of an
obligation under this Agreement or any Individual Contract if performance of
such obligation is prevented by an Act of God, which shall include fire,
epidemic disease, explosion, war, riot, civil war, enactment, governmental
ordinance, order or guidance, labour dispute of a third party (other than the
parties or their respective Affiliates), unavailability of requisite materials
or parts through no fault of Supplier, transport disruption, or such other
causes beyond its control. If any of such events prevent performance of an
obligation of the affected party, the affected party shall be permitted to defer
its performance during the affected period by promptly notifying to the other
party (a) details of the event occurred and (b) an estimate of the length of the
affected period and (c) using good faith and diligent efforts to remove the
condition constituting the force majeure or to avoid its affects so as to remove
performance as soon as practicable. Notwithstanding the foregoing, in the event
that such event prevents performance of Supplier’s obligations under this
Agreement or any Individual Contact for more than 120 days, Customer shall be
permitted to terminate this Agreement, including any outstanding Individual
Contracts, immediately upon written notice to Supplier.

13.3
Limitation of Liabilities. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY
SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES (INCLUDING WITHOUT
LIMITATION LOSS OF USE, LOSS OF OPPORTUNITY, MARKET POTENTIAL, GOODWILL AND/OR
LOSS OF REPUTATION AND OTHER SIMILAR ECONOMIC LOSS) ARISING OUT OF THIS
AGREEMENT WHETHER BASED ON CONTRACT, TORT, THIRD PARTY CLAIMS OR OTHERWISE, EVEN
IF

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THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
EXCEPT WITH RESPECT TO WILLFUL MISCONDUCT, THE AGGREGATE AMOUNT OF THE
LIABILITIES OF EACH PARTY ARISING UNDER ARTICLES 6, 8 AND 12 SHALL NOT EXCEED
THE CUMULATIVE TOTAL OF AMOUNTS RECEIVED BY SUPPLIER FROM CUSTOMER UNDER THIS
AGREEMENT.
13.4
Assignment. The rights and obligations conferred by this Agreement are neither
assignable nor transferable (through change of control, reverse triangular
merger or otherwise) by any party without first obtaining the written consent of
the other party, except that either party may assign this Agreement, without
obtaining consent of the other party, to an entity that acquires all or
substantially all of its assets or business, whether through merger,
reorganization or otherwise; provided, however, if Supplier, or the assets of
Supplier required to fulfill its obligations under this Agreement, is acquired
by St. Jude Medical, Inc., or any of its affiliates, then Customer shall have
the right, but not the obligation, to terminate this Agreement upon 90 days'
written notice .

13.5
Entire Agreement. This Agreement, together with any Individual Contracts,
constitutes the entire agreement between both of the parties and supersedes all
prior provisions, negotiations, agreements and commitments in respect thereto.
Any amendment or supplement to this Agreement shall be valid only when agreed in
writing and signed by duly authorised representatives of both of the parties.

13.6
Severability. If a part of this Agreement is shown to be in conflict with the
applicable laws, or void for any reason, this shall not impair the validity of
the remaining terms and conditions of this Agreement.

13.7
Arbitration. Any and all disputes arising out of or in connection with (a) this
Agreement or Individual Contracts or (b) any transaction contemplated or
conducted under this Agreement or Individual Contracts shall be settled by
mutual consultation between the parties in good faith as promptly as possible,
but failing an amicable settlement, shall be settled by arbitration. The
arbitration shall take place in Los Angeles, California U.S.A. in

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accordance with the then-current Rules of Conciliation and Arbitration of the
International Chamber of Commerce if initiated by Supplier, or in Tokyo, Japan
in accordance with the then-current Commercial Arbitration Rules of Japan
Commercial Arbitration Association if initiated by Customer. The award of the
arbitration shall be final and binding upon the parties. Judgement upon such
award may be entered in any court having jurisdiction thereof. The language to
be used in the arbitral proceedings shall be English.
13.8
Governing Law. This Agreement shall be governed by and construed in accordance
with Delaware law.

13.9
Export Control. The parties shall abide by the export control rules and
regulations issued by the competent governmental authorities, including the
International Traffic in Arms Regulations (ITAR) and the Export Administration
Regulations. Supplier shall cooperate fully with Customer and provide the
necessary information needed by Customer to submit an application for any
required export license, if applicable. To the extent previously received by
Supplier, Supplier agrees to provide Customer with the Product's most current
technology classification as determined by the EAR or, if applicable ITAR.

IN WITNESS THEREOF, the duly authorised representatives of the parties hereto
have caused this Agreement to be executed as of the day and year first above
written.

Supplier:
By:/s/ Daikou Tei    
Printed Name: Daikou Tei    
Title: President & CEO    
Customer:
By: /s/ John Dahldorf    
Printed Name: John Dahldorf    
Title: CFO    

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Annex 1
Detailed Specifications

[…***…]

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Annex 2
Quality Standards

1.REGULATORY AND ACCREDITATION
a)
Supplier shall maintain accreditation under ISO 9001 with the scope of
accreditation covering all activities pertaining to Products.

Supplier must maintain compliance to the relevant aspects of the following
international safety and test standards:
•
IEC 61010-1

•
IEC 60825-1

•
IEC 60068-2-14, -27 and -64

And all applicable related IEC collateral standards.
Supplier shall maintain compliance with IEC 62304, IEC 12207 or a substantially
equivalent set of software development lifecycle processes, unless Supplier
declares, and represents and warrants to Customer, that Products contain no
software, meaning a set of program instructions intended to be executed by a
shared set of interpretation and execution resources including but not limited
to embedded software, microprocessor programs and microcontroller programs,
regardless of whether:
•
The processor which executes the program instructions is implemented in an
integrated circuit (IC), application-specific IC (ASIC), or programmable logic
device such as an FPGA; OR

•
The program instructions are embodied in the same chip as the processor or in
different chips; OR

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•
The program instructions are embodied in a writable memory (e.g. RAM, flash or
PROM), in a read-only memory (ROM), or in a RAM or ROM implemented by a
programmable logic device such as an FPGA.

The above definition of software is understood to be distinct from hardware such
as analog electronics circuits, digital electronics circuits, or digital or
mixed-signal electronics implemented in programmable logic devices such as
FPGAs.
b)
Material Regulations. Supplier shall maintain compliance to the RoHS directive
2002/95/EC and all future revisions to the regulations. Supplier shall maintain
compliance with the Conflict Minerals regulation.

c)
General Product Standards. Supplier shall maintain compliance to the relevant
sections of the following additional product standards:

•
EN 61000-4-2

•
UL1581 or IEC 60332

•
UL94 or IEC 60695

•
ASTM Standard D4169 DC 13

•
IEC 60601-1 ed3.0 Clause 15.3.4.2

And such product standards as may be included in or referenced by the Product
specification in Annex 1.
d)
EMC Standards. The Products shall not perform worse than the EMC Sample Unit
with respect to the following EMC standards:

•
EN 55011 or EN 61000-6-4

•
EN 61000-4-2

•
EN 61000-4-3                     

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•
EN 61000-4-4

•
EN 61000-4-6

•
EN 61000-4-8

•
EN 61000-4-11

The performance of the EMC Sample Unit is set forth in the following reports:
11/11/2012 – EMC Findings for […***…], Serial Number […***…], and 11/14/2012 –
EMC Immunity Findings for […***…], Serial Number […***…].
e)
Supplier shall provide a Certificate of Analysis indicating key parameters
certification documentation meets agreed parameters of Product specifications.

2.    AUDIT
Customer shall conduct QA audits in accordance with Section 5.7 of the main body
of this Agreement after the execution of this Agreement to check that Supplier
has adopted and established a quality management system conforming to ISO 9001
quality management system and appropriate international standards. The first QA
audit is estimated to occur in January 2013.
If Customer finds that the activities and documentation of Supplier do not
comply with Supplier’s manufacturing processes and quality management system or
the provisions of this Agreement (including this Annex), Customer shall
communicate such non-compliances to Supplier. Within 15 calendar days of such
notice, Supplier shall provide Customer with either (1) objective evidence of
having corrected said non-compliances, or (2) a written corrective action plan
including a schedule (with reasonable timeframes) to correct said
non-compliances as well as objective evidence of controls having been
implemented to mitigate the effects of such non-compliances. Customer shall
promptly review such objective evidence and plans to determine whether they
ensure timely delivery of Products which determinably conform to Supplier’s
manufacturing processes, quality management system and this Agreement.    

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Customer shall make reasonable good-faith efforts to assist Supplier in solving
such non-compliances by providing advice and guidance as appropriate.
Supplier shall comply with the terms and schedules of any corrective action
plans agreed as described above, and shall provide status updates to Customer as
and when requested. Customer shall promptly review objective evidence provided
by Supplier, and if necessary conduct QA Audits in accordance with Section 5.7
of the main body of this Agreement, to verify that Supplier’s manufacturing
processes and quality management system address any non-compliances identified
as described above.
3.    INTERNAL PROCESSES
a)
Inspection System Requirement. Supplier shall develop and implement an
inspection system capable of inspecting all finished Product dimensions and
features to associated tolerances and requirements prior to shipment. Supplier
to provide documentation, in the form of a Certificate of Analysis, to Customer
certifying that all inspections carried out are in compliance with Product
Specification.

b)
Record Retention. Supplier must retain all quality records associated with
Products for the life of the Product (but a minimum of 15 years beyond the life
of the finished device of which the Product is incorporated), unless otherwise
specified by Customer, and at Customer’s cost provide copies of all applicable
production and quality control related records related to Products upon
Customer’s request. Upon or before expiration of such stated shelf-life,
Customer shall notify Supplier of such expiration. Supplier will offer to
deliver all such records to Customer prior to destruction.

c)
Device History Record. Supplier shall create and maintain the device history
record and make it available to Customer, upon request.

d)
Inspection Sampling Plan. Supplier’s sampling procedures shall be on each
individual product, i.e. 100%.

e)
Qualification Plan. Supplier shall qualify their manufacturing process(es)
including all test equipment in order to assure compliance with product
specifications.

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f)
Calibration System. Supplier must maintain a calibration system that is
compliant with ANSI/NCSL Z 540-1-1994. If Supplier uses an outside organization
for calibration then this entity must be ISO-17025 registered and the items
being calibrated must be within the scope of its accreditation. Calibration
ranges must extend beyond any measurements made on Product parts or features.

4.    PART/LOT TRACEABILITY
Serial Numbers. Each Product will be marked with a serial number. Supplier’s
processing records shall be maintained at all times by serial number.
Traceability must be maintained to all raw materials used, testing performed,
employee performing activities and dates of performance of activities either on
a lot by lot basis or individually with respect to all parts except for minor
parts of limited importance listed in Schedule 1 to Annex 2. Supplier must
maintain a system to ensure that serial numbers are unique. Supplier must
maintain compliance to the Conflict Minerals requirement for these and all other
raw materials used.
a)
Inspection Data. Verifiable inspection data must be furnished with each Product
furnished. The inspection data must be signed for by a member of the Quality
Assurance Group at the Supplier facility. This data shall be attached to the
Certificate of Analysis.

5.    QUALITY ASSURANCE
a)
First Article inspection. Supplier to inspect the first three (3) Products
produced. First Article inspection data must be submitted to Customer for review
and approval prior to continuing with the production run.

b)
Certification of Analysis (CoA). A certification of analysis, signed by
Supplier’s quality representative (who must have sufficient authority to bind
Supplier on such matters), must accompany each shipment of parts to Customer.
This CoA is a statement of compliance to all specifications of the order
including results as identified and any associated drawings, specifications, or
purchase order

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requirements. Supplier must similarly obtain and retain CoA from its suppliers
for all raw materials used in manufacture of Customer parts.
6.    PROCESS CHANGE CONTROL
All processes used to manufacture Customer parts require process approval and
are to remain frozen upon approval. Any change in procedure, equipment,
material, tooling, handling, etc. shall require written change approval from
Customer prior to further processing.
7.    NONCONFORMING PRODUCT
a)
Supplier shall notify Customer immediately if Supplier has determined that
non-conforming Products may have been shipped. Customer requires direct
involvement in the disposition of some non-conforming material decisions
affecting a purchase order. These details will be described in the Quality
Agreement. Customer reserves the right to refuse all nonconforming Product.

8.    PACKAGING
Finished goods to be individually packaged appropriately and labeled as required
and provided in Certification of Analysis.

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Schedule 1 to Annex 2.
List of Parts without Traceability
Screws, Spacers, Rubber Clamps.

 

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Annex 3
Conflict Minerals
(a)    Supplier shall ensure that all Conflict Minerals used in the Products, if
any: (i) originate in countries other than the Covered Countries, (ii) are
processed in smelters or refineries that are, as of the date such Conflict
Minerals are transferred from such smelter or refinery to Supplier (or to
Supplier’s supplier, if applicable), designated as “conflict-free” or a similar
designation (A) by a third party recognized in the industry for providing such
designations (such as the Electronic Industry Citizenship Coalition and Global
e-Sustainability Initiative Conflict Free Smelter Program) or (B) pursuant to an
independent third-party audit, the results of which are made publicly available
by such smelter or refinery, or (iii) come from Recycled Sources. Within thirty
(30) days following the end of each calendar year during the term of this
Agreement, Supplier shall provide Customer with a certificate, signed by a
responsible officer of Supplier, certifying that either (i) no Conflict Minerals
were used in any Products manufactured for Customer during the immediately
preceding calendar year or (ii) in the event any Conflict Minerals were used in
Products manufactured for Customer during the immediately preceding calendar
year, Supplier was, at all times during such calendar year, in full compliance
with its obligations set forth in this Annex 3. In addition, Supplier shall, at
Customer’s request at any time during the term of this Agreement (but not more
than once in any calendar quarter), promptly provide Customer with a
certificate, signed by a responsible officer of Supplier, certifying as to
Supplier’s then-current compliance with its obligations set forth in this Annex
3. Supplier shall include identical provisions to those set forth in this Annex
3, subsection (a) (including a requirement to provide officers’ certificates as
evidence of compliance with such provisions) in any supply agreements pursuant
to which Supplier obtains Conflict Minerals, or materials containing Conflict
Minerals, that are used in the Products, and Supplier shall diligently monitor
its suppliers’ compliance with such provisions (including by obtaining the
applicable officers’ certificates when required) and obtain certificates of
origin or other written assurances from its suppliers, if applicable, regarding
the origin of any Conflict Minerals used in the Products. Supplier shall
promptly notify Customer in writing of any breach of

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this paragraph (including any failure of Supplier to ensure that all Conflict
Minerals used in the Products satisfy at least one of clauses (i), (ii) or (iii)
of the first sentence of this paragraph) and shall take all actions reasonably
requested by Customer to remedy such breach.
(b)    Schedule 1 to this Annex 3 sets forth, as of the date hereof, all
Conflict Minerals that are used in, or that Supplier expects to be used in, the
Products and, with respect to each such Conflict Mineral, (i) the facility in
which such Conflict Mineral is processed, and whether such facility has been
designated as “conflict-free” (and the source of such designation, if any), (ii)
whether such Conflict Mineral comes from Recycled Sources and (iii) the country
of origin of such Conflict Mineral, if such Conflict Mineral does not come from
Recycled Sources. In furtherance and not in limitation of Supplier’s obligations
under subsection (a) of this Annex 3 above, Supplier shall not incorporate into
a Product any Conflict Minerals from any source other than those set forth in
Schedule 1 to this Annex 3 without the prior written approval of Customer. In
the event that Supplier becomes aware of any inaccuracy in Schedule 1 to this
Annex 3, Supplier shall promptly (but in any event within thirty (30) days of
the date that Supplier has knowledge thereof) notify Customer of such inaccuracy
and provide Customer with updated information.
(c)    Supplier agrees to promptly provide Customer with such documentation and
other information relating to the Products or the manufacture thereof, and to
cause its suppliers, if applicable, to provide such documentation or other
information (including by exercising any audit or similar rights of Supplier
pursuant to its agreements with its suppliers), in each case as Customer may
reasonably request in connection with fulfilling its reporting obligations under
Section 13(p) of the Securities Exchange Act of 1934, as amended, relating to
Conflict Minerals (including any country of origin inquiry or due diligence
conducted in connection therewith).

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Schedule 1 to Annex 3.
List of Conflict Minerals Used
None.

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Annex 4
Warranty Exceptions
With respect to up to […***…] units of the Initial Products, the Specifications
for […***…] shall be relaxed, such that the following shall apply with respect
to such specifications solely for such […***…] units (the “Sub-Spec Units”):
(i)
[…***…];

(ii)
[…***…].

For avoidance of doubt, all of the other Specifications shall apply to the
Sub-Spec Units to the same extent as they apply to other units of Products.
Supplier shall clearly designate to Customer at the time of delivery each such
Sub-Spec Unit. Supplier may not designate as Sub-Spec Units more than 50% of any
shipment of Initial Products delivered to Customer (for example, if there is a
delivery of […***…] units, no more than […***…] may be Sub-Spec Units).

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