exv10w14



 




Exhibit 10.14




21 February 2001



Mr. M. Terry Riggs, Dir. Res. & Eng./C.E.O.

Mr. Randy Thornton, President

Apollo Research Corporation

2640 North America Drive

West Seneca, N.Y. 14224



	 	 	 	 	 
	 	 	
Re:
	 	Purchase Order No. CFC/02-21-01 For 750 HDI Arterial
PulseWaveTM Sensors
(ARC Model #7013) Per ARC Quotation No. 138 (1/29/2001)




 


Dear Terry and Randy:



Reference is made to your Apollo Research Corp. (“ARC”) letter dated 26 January
2001 in which you state that “... Apollo will run out of money by the end of
April 2001 and will be forced to discontinue operations at that time.” As you
know, HDI is just launching the CVProfilorTM DO-2020 CardioVascular Profiling
System (“C-VPS”) and the HDI Arterial PulseWaveTM Sensor is a key component of
this product. Since the C-VPS products are closely regulated, a change from
having ARC (which presently is HDI’s sole vendor) fabricate the Sensor could
evoke a great deal of re-testing and re-certification activities which might
take considerable time and funding, as well as uncertainty until such is
accepted by the regulatory agencies including the FDA, TÜV Product Services,
and the Japanese M.H.& W.



I understand from our telephone discussions during the last few weeks that it
should be possible for ARC to remain in business for some time after April 2001
if it is possible for you to generate additional revenue. Further, if ARC
remained in business somewhat longer, it is possible that ongoing projects
might lead to bringing a product to market and/or purchase orders from others
which might allow ARC to avoid going out of business. At my request, you
drafted and forwarded to me ARC Quotation No. 138 dated 1/29/2001 and signed by
Dave Jaros. Toward a goal of assisting ARC to remain in business and to insure
a supply of Sensors (even though HDI has about 300 presently in inventory), HDI
has decided to place an order with ARC at this time for 750 Sensors at a price
of $395 each even though the per Sensor price for our latest purchase of 500
Sensors was only $233. However, it must be fully understood and agreed to by
you as evidenced by your signatures below that this purchase order is
contingent upon certain terms and conditions which are stated herein after.



Purchase Order No. CFC/02-21-01 for 750 HDI Arterial PulseWaveTM Sensors (that
is, ARC Model #7013 Sensors; herein after “Sensor, Sensors”) is contingent upon
the terms and conditions presented in this paragraph. In particular, Sensors
must be fabricated in accordance with the same specifications and the same
manufacturing processes as were followed for HDI’s most recent order for 500
Sensors. As was done for each Sensor previously delivered to HDI, a
calibration sheet must be included which demonstrates that the Sensor is within
the required range of specifications. At least 100 Sensors shall be forwarded
to HDI via a single AirBorne


 







 




Express overnight courier delivery service on or before the 6th day of June
2001. Thereafter, between 120 to 140 Sensors shall be forwarded to HDI via a
single AirBorne Express overnight courier delivery service on or before certain
dates as follows: 11th of July 2001; 13th of August 2001; 14th of September
2001; 16th of October 2001; and 19th of November 2001. Each AirBorne shipment
must be insured for an amount equal to the total of what it would cost ARC to
replace the Sensors being shipped should they be lost in transit. Based on
this schedule, the total of 750 Sensors should all be received at HDI on or
before 21 November 2001. Within approximately 30 days after receipt at HDI of
each shipment of Sensors from ARC, HDI shall inspect the Sensors and shall pay
ARC by check $395 for each Sensor which meets the standard acceptance criteria
and is within proper calibration. Those Sensors which fail to meet such
criteria and/or calibration shall be promptly returned to ARC for reworking
and/or replacement as required. Thus, assuming that all 750 Sensors are
received and are judged acceptable, then ARC can anticipate receiving total
revenue from HDI for this purchase of about $296,250 (that is, 750 x $395) with
HDI also paying for the shipments and insurance via AirBorne Express.



Since ARC has placed HDI on notice that there is a high likelihood that ARC may
cease operations in the near future, we are concerned about the one year
warranty period for the Sensors being purchased by this letter as well as
several related issues regarding the ongoing supply to HDI of Sensors.
Therefore, this Purchase Order is also contingent upon the following terms and
conditions:





	 	•	 	Mr. M. Terry Riggs, in the event that ARC ceases to be in business,
hereby personally agrees and guarantees that he will undertake the
repair or replacement at no charge to HDI of any Sensors which show
defects in material and/or workmanship during a one (1) year warranty
period which shall begin for each Sensor when it has been received and
accepted at HDI;
	 
	 	•	 	For an additional period of two (2) years after the end of the one
(1) year warranty period as presented above from when the last Sensor
is received and accepted by HDI as part of this purchase order, Mr.
Riggs also hereby agrees and guarantees that, for a reasonable fixed
fee per Sensor actually repaired, said fee to be based on a
commercially reasonable hourly rate for such work plus the documented
cost of materials, he will be personally responsible for undertaking
the repair of Sensors which may be forwarded to him by HDI from time to
time and which are no longer under a warranty;
	 
	 	•	 	Messrs. Riggs and Thornton hereby agree to assist HDI by
immediately identifying other vendors which they believe, and which
have demonstrable evidence that they, are capable of fabricating
Sensors to meet HDI’s specifications and requirements, and to assist
HDI by selecting two (2) of these qualified vendors and working with
them and with HDI in order to transfer whatever knowledge is necessary
and required, without limitation or additional consideration, in order
to have these vendors fabricate prototype and pilot production Sensors
for subsequent evaluation by HDI. Based on the vendors’ schedules and
their cooperation, this undertaking shall commence no later than 09
March 2001 and be completed before or during September 2001;



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	 	•	 	Messrs. Riggs and Thornton shall personally be responsible for and
hereby agree to submit to HDI as quickly as possible, but in no event
later than 13 April 2001, all current
and detailed documentation and information, which is complete and
legible, required for HDI and/or a vendor contracted by HDI to fabricate
Sensors which meet HDI’s specifications and calibration requirements.
Such documentation and information is generally described in Section 6.3
entitled “Master File” in that certain Manufacturing Services Agreement
by and between HDI and ARC dated 14 May 1998 and shall include, but not
necessarily be limited to, the following: Bill of Materials, Lead Time
Information, Component Specifications, Assembly Drawings, Unique and/or
Special Manufacturing Processes, Capital Equipment List, Calibration
Procedures, Calibration Intervals, Vendor/Supplier List with the name +
complete address + telephone and fax numbers for the Contact Person(s),
ReWork Procedures, Test Procedures, Test Equipment List, Special
Tooling/Fixtures/Jigs used and Manufacturing Yield Information;
	 
	 	•	 	Messrs. Riggs and Thornton shall personally be responsible for and
hereby agree to submit to HDI, initially during July 2001, and then
again when the last Sensor as part of this purchase has been received
and accepted by HDI during November 2001, but in no event later than 03
December 2001, complete and legible copies of all Sensor production
records, Sensor history files, Sensor environmental (shock, vibration,
temperature, humidity and electro-magnetic compatibility) testing
reports, and Sensor failure analysis and failure resolution records as
well as whatever other detailed documentation and information may be
required to enable HDI to demonstrate to regulatory agencies that the
Sensors incorporated as part of a complete C-VPS were manufactured,
tested, calibrated, maintained and shipped to HDI in such a manner as
to meet the basic regulatory standards in the markets where the Sensors
as part of the C-VPS are being marketed by HDI and/or its agents; and
	 
	 	•	 	Messrs. Riggs and Thornton shall personally be responsible and
hereby agree to submit to HDI during June 2001 the so-called “know how”
of the technology, procedures and techniques utilized by them and
others at ARC to fabricate and manufacture Sensors including, for
example, what has been tried but which did not work and why it didn’t
work, a listing of critical design parameters and when such parameters
are not carefully met what the consequences are of same, the degree or
margin of error which can be tolerated in such critical parameters,
etc. Further, for example, the Bill of Materials defines the parts and
materials currently used by ARC, but HDI should also be provided by ARC
in written detail the answers to questions such as, but not necessarily
limited to, what alternate materials have been considered and/or tried,
how these alternates would be evaluated, and a copy of same if there is
a historical record of the Sensor’s overall development.



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Everyone at HDI is quite concerned regarding the quality and availability of
Sensors from ARC in view of the current status of your business and its future
operation. Therefore, in order to insure as much continuity and consistency as
possible regarding the future fabrication and manufacture of Sensors and their
critical availability for use with HDI’s products in the event that ARC does
cease to be in business, it is mandatory that we request the additional
information and documentation listed above as a strict condition of our
offering this purchase order to ARC and of your accepting same.



This purchase order will only be valid and effective if it is signed below by
both of you, individually, and in behalf of ARC, and promptly returned to me at
HDI. Enclosed are three (3) original copies of this letter signed by me
representing HDI. Please very carefully review and consider all aspects of
what is being required and requested of you, individually, and as well as
officers and principals of ARC. If you accept and agree to all terms and
conditions stated in this letter, and if you wish to proceed with accepting
this purchase order under such terms and conditions, then kindly sign your
names in both locations as shown below. Please retain one (1) copy of this
letter for your records and return the other two (2) signed copies to me by
overnight express courier service so that I receive same on or before Tuesday,
27 February 2001. Please be aware that since time is of the essence regarding
this matter, it is essential that I receive at HDI two fully executed copies of
this letter on or before Tuesday, 27 February 2001, if you intend to proceed
with this purchase order.



We very much appreciate your interactions with HDI during the last several
years, and we anxiously look forward to your cooperation during the next
several months as both ARC and HDI proceed with this matter. As I have
expressed to you, we are disappointed to learn that ARC may be ceasing
operations and going out of business, and we are sympathetic as to the overall
consequences of such an action.



We are indeed very hopeful that this purchase order for 750 Sensors, albeit
with the extensive terms and conditions described herein, will potentially
ameliorate your severe predicament and provide you and your fellow ARC
employees some additional time which may influence ARC’s long term survival as
a business.



If you have any questions, whatsoever, regarding this purchase order or any
other matter which relates to it, please do not hesitate to discuss same with
me via telephone at your very earliest convenience. Otherwise, I will assume
that both of you intend to execute this letter and return two copies of it to
me on or before 27 February 2001.



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With my very best regards.



Sincerely yours,



HYPERTENSION DIAGNOSTICS, INC.



/s/ Charles F. Chesney



Charles F. Chesney, D.V.M., Ph.D., R.A.C.

Executive Vice President and Chief Technology Officer



CFC: pas



 




The terms and conditions presented in this purchase order letter are fully
understood, accepted and agreed to:




	 	 	 	 	 	 	 
	By:	 	
/s/ M. Terry Riggs


M. Terry Riggs,

Individually
	 	By:
	 	/s/ Randy Thornton



Randy Thornton,

Individually
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	APOLLO RESEARCH CORP.	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	By:	 	
/s/ M. Terry Riggs


M. Terry Riggs
	 	By:
	 	/s/ Randy Thornton



Randy Thornton
	 	 	 	 	 	 	 
	Its:	 	
Director of Research &

Engineering / C.E.O.
	 	Its:
	 	President





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