Document:

CONFIDENTIAL TREATMENT REQUESTED

 

Redacted Portions are indicated by [****]

 

TERM SHEET FOR LICENSE AGREEMENT (Term
Sheet)

 

This Term Sheet is not a binding contract between the parties,
but it shall be kept confidential.

 

The Term Sheet is the initial basis for an offer to license
the intellectual property rights specified below, and sets forth the primary licensing terms as agreed upon by the undersigned
parties, to be codified in a license agreement which is to be negotiated in full between the parties.

 

	Subject	 	Terms
	 	 	 
	Licensor	 	Inven2 AS (lnven2) on behalf of the University of Oslo (UiO) and Oslo University Hospital HF (OUS)
	 	 	 
	Licensee	 	Atossa Genetics, Inc
	 	 	 
	Contact name(s) and information	 	Steven Quay, CEO and President, Atossa Genetics, Inc. 4105 E Madison St, Suite 320, Seattle, WA 98112 T: 206.325.6086.
	 	 	 
	Object of license	 	IPR including know how related to DOFI B-11035 "Combining Gene Signatures Improves Prediction of Breast Cancer Survival" as well as patent/patent application(s) to be filed to protect this IPR.
	 	 	 
	Ownership to patent application(s) to be licensed	 	UiO/OUS. Inven2 is empowered to administer UiO's/OUS' intellectual property rights, including entering into license agreements
	 	 	 
	Patent filing, prosecution and defense	 	
        At national/regional filing, Inven2 will file the
        patent application in the following countries: USA. Licensee may ask Inven2 to file in additional countries regions at Licensee's
        cost.

        Licensee may choose to exclude certain countries from
        the license agreement.

        Patent defense: Licensee has first right but no obligation.
        Inven2 gets the right to defend the patent rights if Licensee does not exercise its first right.

	 	 	 
	Publication	 	Licensor has the right to publish, and use in teaching and for research purposes, the research results covered in the license agreement
	 	 	 
	Type of license granted	 	EXCLUSIVE
	 	 	 
	Geographical scope for License	 	Worldwide
	 	 	 
	Right to transfer entire license agreement	 	Yes.
	 	 	 
	Field of use	 	Breast cancer and precancerous breast lesions.
	 	 	 
	Responsible for product development, introduction on the market, advertisement	 	Licensee
	 	 	 
	Signing fee and patent costs reimbursement	 	
        USD [****]; payment due within 60 days after signing of
license agreement.

        All current and future patent costs will be paid by
        Licensee in countries chosen by Licensee.

	 	 	 
	Payments when reaching certain development steps (milestone payments)	 	
        Upon market entry in the first country USD [****]

        Upon selling the 500th test/sample in each country
USD [****]

        Milestone payments are due within 60 days after achieving
        the milestone.

	 	 	 
	Royalties from Licensee	 	
        [****] on net income with a minimum of USD [****] per
test/sample.

        Royalties are to be paid 31 of January each year,
        semi-annual reports of status

	 	 	 
	Minimum annual royalty	 	[****]

 

    	 

    	 

    

 

IN WITNESS THEREOF,

 

	/s/  Steven Quay	 	/s/  Jostein Chr Dalland
	 	 	 
	 	 	 
	Atossa Genetics, Inc.	 	Inven2 AS

 

 

	Name:  Steven Quay	 	Name:  Jostein Chr Dalland
	 	 	 
	Title:     CEO	 	Title:     CEO
	 	 	 
	Date:  06.20.2011	 	Dated:  17/6  ‘11

 

    	 

    	 

    

 

TERM SHEET FOR LICENSE OPTION AGREEMENT
(Term Sheet)

 

This Term Sheet is a non-binding contract between the parties.

 

The Term Sheet is the initial basis for a license the intellectual
property rights specified below, and sets forth the primary licensing terms as agreed upon by the undersigned parties, to be codified
in a license agreement which is to be negotiated in full between the parties.

 

	Subject	Terms
	 	 
	Licensor	Inven2 AS (Inven2) on behalf of the University of Oslo (UiO) and Oslo University Hospital HF (OUS)
	 	 
	Licensee	Atossa Genetics, Inc.
	 	 
	Contact name(s)
and information	Steven Quay, CEO and President, Atossa Genetics, Inc.
4105 E Madison
    St, Suite 320, Seattle, WA 98112
T: 206.325.6086.
	 	 
	Option IPR	IPR related to possible breast cancer and precancerous breast lesions resulting from the research by Professor Anne-Lise Børresen-Dale at OUS and Professor Ole Christian Lingjaerde at UiO within the Option Period.
	 	 
	Option To License	
        Licensee is granted a **** exclusive negotiation period starting
        from Licensor's decision to commercialize Option IPR.

         

        The Option To Licence is limited to Option IPR reported to Licensor
        as a Disclosure of Invention (DOFI) within **** after the end of the Option Period where Professor Anne-Lise Børresen-Dale
        and/or Professor Ole Christian Lingjaerde minimum has 50% inventorship.

         

        Licensor will notify Licensee about its decision to commercialize.
        Upon receiving the notification Licensee must within **** notify Licensor in writing if Licensee wants to the exercise its right
        to enter exclusive negotiations.

         

	 	 
	Ownership to IPR to be licensed	UiO/OUS. Inven2 is empowered to administer UiO's/OUS' intellectual property rights, including entering into license agreements
	 	 
	Option Period	From the signature date of the license option agreement until ****.
	 	 
	Publication	Licensor has the right to publish, and use in teaching and for research purposes, the research results covered in the license agreement.
	 	 
	Payments	
        1. ****; payment due within 60 days after signing the license
        option agreement.

         

        2. ****, payment due within ****.

         

 

 

IN WITNESS THEREOF,

 

 

	Atossa Genetics, Inc. 	 	Inven2 AS 
	 	 	 
	 	 	 
	Name:  Steven Quay	 	Name:  Olay Steinnes
	 	 	 
	Title:     /s/ Steven Quay	 	Title:     Acting
CEO
	 	 	 
	Date:  02.15.2012	 	Dated:  /s/ Olay Steinnes_14/2-12CONFIDENTIAL TREATMENT REQUESTED
Redacted Portions are indicated by [****]	 

 

FirstCyte
Ductal Lavage

Idea Center
Proposal

1020451

 

Presented to:

 

Steven Quay

Atossa Genetics

 

Presented by:

 

Gary Falwell

Technical Business Development Leader

 

Accellent Inc

100 Fordham Road

Wilmington, MA 01887

 

August 8, 2011

 

    	 	 	 

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Table of Contents

 

	Executive Summary	 	 	3
	 	 	 	 	 
	Key Assumptions	 	 	5
	 	 	 	 	 
	Cost Estimate for the Project	 	 	8
	 	 	 	 	 
	Unit Price Estimates	 	 	9
	 	 	 	 	 
	Payment Terms and Execution	 	 	10
	 	 	 	 	 
	Accellent Inc	 	 	11
	 	 	 	 	 
	Appendix I: Engineering Services Terms and Conditions	 	 	12
	 	 	 	 	 
	Appendix II: Key Personnel	 	 	15
	 	 	 	 	 
	Appendix III: Accellent Commitment to Quality	 	 	16
	 	 	 	 	 
	Appendix IV: Accellent Three Phase Design Control	 	 	17
	 	 	 	 	 
	Appendix V: Preliminary Project Gantt	 	 	18
	 	 	 	 	 
	Appendix VI: Deliverables Checklist	 	 	18
	 	 	 	 	 
	Appendix VII: Equipment and Fixture List.	 	 	18

  

    	Proposal # 1020451
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ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Executive Summary

 

	Background	 	Atossa Genetics Inc is a privately held company focused on the development and marketing of a novel cellular and molecular diagnostic risk assessment for breast cancer. Steven C. Quay, M.D., Ph.D. Chairman, President, and Chief Executive Officer is a physician scientist and biotechnology entrepreneur who has founded six companies and rebranded a seventh over a 25+ year career.
	 	 	 
	 	 	Atossa has purchased the rights to the Cytec FirstCyte Aspirator, E.Z Microcatheter, UltraSlim and tapered Dilator products previously produced by MedSource.
	 	 	 
	 	 	Atossa would like Accellent to resurrect the Cytec FirstCyte Aspirator, E.Z Microcatheter, UltraSlim and tapered Dilator products previously produced by MedSource (and subsequently by Hologic/Cytyc in its Costa Rica facility) and begin manufacturing of these devices. To do this, Accellent will need to re-establish the supply chain and a validated manufacturing process.
	 	 	 
	Project Scope	 	The objective of this project is to re-introduce into manufacturing the FirstCyte Ductal Lavage system that was previously produced by MedSource in its Newton, MA facility.
	 	 	 
	 	 	To accomplish this, Accellent proposes three project phases: Phase I: Transfer preparation
	 	 	·	Updates to design and manufacturing documents as required.
	 	 	·	Re-establish supply chain for each device.
	 	 	·	Execute Pre-DV builds and testing.
	 	 	 
	 	 	Phase II: Design Verification
	 	 	·	Establish Master Validation Plan for the devices.
	 	 	·	Finalize design and manufacturing documentation.
	 	 	·	Execute DV builds for the devices.
	 	 	·	Execute DV testing for the devices.
	 	 	·	Complete a clinical build and provide devices to Atossa after executing Accellent’s sterile lot release process. Estimated availability of clinical devices is ~7.5-8 months after project start.
	 	 	 
	 	 	Phase III: Validation
	 	 	·	Complete all tooling / component validation activity.
	 	 	—	Conduct PQ builds and testing.
	 	 	—	Sterilization Validation.
	 	 	—	Complete and audit the DHF and DMR.
	 	 	—	Commercial release of the devices.
	 	 	 
	 	 	The detailed tasks to accomplish this are outlined in the Project Gantt located in Appendix V. The Key Deliverables from the activities included in this program are outlined in Appendix VI.

  

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ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

	Timeline & NRE	 	Phase I: 13 Weeks –	[****]	 
	Price Estimate	 	Phase II: 11 Weeks	[****]	 
	 	 	Phase III: 15 Weeks	[****]	 
	 	 	Phase I-III: 39 Weeks	[****]	 
	 	 	 
	 	 	Estimated availability of clinical devices is ~7.5-8 months after project start.
	 	 	 
	Unit Price	 	Pricing for kit containing 5 of each device.
	Estimate	 	 
	 	 	 	[****]
	 	 	Kit containing 5	[****]
	 	 	of each device	[****]
	 	 	 
	 	 	See detailed unit pricing table on page 8 for more information.
	 	 	 
	 	 	Prototype & Pre-production units are billed on a Time & Materials basis.
	 	 	 
	
        Customer Deliverables

        
	 	In order to ensure program success, Accellent requires the following Customer Deliverables prior to the project start:
		 	 
	 	 	—   Signed Proposal
	 	 	—   Purchase Order

  

    	Proposal # 1020451
	Page 4
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Key Assumptions

 

In preparing this proposal for Atossa,
Accellent has made the following assumptions:

 

	■	 	Estimates provided are based upon the released documents that were contained in MedSource’s system at the time these devices were produced in its former Newton, MA facility. Accellent cannot guarantee that its records carried over from MedSource represent the latest embodiment of the devices, especially given that the device was manufactured by Hologic/Cytyc in its Costa Rica facility after MedSource completed its production of devices. A thorough review of the device drawings and manufacturing documentation is included in the scope of this proposal. A milestone is to be established in the project for Accellent and Atossa to review and agree upon the design to be built, tested, and released into production.
	 	 	 
	■	 	The Design History File (DHF) for the devices is not available requiring that it must be rebuilt prior to releasing these devices into production. The scope of this project is based upon the initial DHF gap analysis that Accellent has executed. Based upon the results of that documentation assessment, it is assumed that the Accellent project team will have documents to be used as starting points. However, effort will be required as part of this project to update the documentation and to generate the official reports demonstrating compliance. Additionally, testing required to support those reports may be required and is included in the scope of this proposal.
	 	 	 
	■	 	It is assumed that all tooling for components is available and appropriate for production use, though re-validation may be required. If it is determined that new tooling for any component is required, the effect on cost and timing will be communicated to Atossa prior to incurring the additional cost associated with the scope change.
	 	 	 
	■	 	Included in the scope of this project is the transfer of the models and drawings into Accellent’s current system. The time estimated to complete this task is based upon an initial assessment of drawings sampled from the MedSource archive. When transferring documents of this type, compatibility issues could arise that may require creating drawings from scratch rather than a simple transfer. If it is determined during the transfer process that drawings need to be generated from scratch, this change will be communicated to Atossa and the effect on timing and cost will be reviewed prior to incurring the additional cost.
	 	 	 
	■	 	A new kit configuration consisting of 5 of each device is assumed to be required. This proposal includes the packaging design and testing required for the new shelf carton and shipper boxes required to meet this requirement.
	 	 	 
	■	 	Existing fixture designs available in Accellent’s archived project folders will be used as a baseline for fixture designs for this project. However, due to EH&S requirements some designs may need to be updated.
	 	 	 
	■	 	Maximum lead time for any given component is assumed to be 4 weeks. This will be updated when final quotes from all suppliers are received based upon the final updated drawings being released for each device.

  

    	Proposal # 1020451
	Page 5
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

	■	 	Maximum lead time for equipment and fixtures is assumed to be 4 weeks. This will be updated when final quotes from all suppliers are received based upon the final updated manufacturing procedures being released for each device.
	 	 	 
	■	 	One round of pre-DV testing is sufficient to achieve confidence in passing DV. If an additional round of build and testing is required, Accellent will review the effect on cost and timing with Atossa prior to executing the additional work.
	 	 	 
	■	 	1-year shelf life assumed.
	 	 	 
	■	 	Parts for Design Verification, tooling validation, OQ, PQ, and the clinical build will all be ordered concurrently.
	 	 	 
	■	 	Clinical devices will be built at risk following the DV build and made available to Atossa following sterile lot release process and successful completion of transit, aging, and biocompatibility testing.
	 	 	 
	■	 	PQ builds are set to start after successful completion of transit, aging, biocompatibility. Starting PQ at risk before test completion could reduce timeline by ~1 month.
	 	 	 
	■	 	Existing bar and tray sealer equipment in Laconia will be used for this project. If it is determined that dedicated equipment is required to support this line, the cost of this equipment will be quoted separately.
	 	 	 
	■	 	Gamma sterilization is assumed for all devices.
	 	 	 
	■	 	Accellent assumes Form-Fit-Function prototypes in Phase I require 50 units, which are NOT FOR HUMAN USE, and Design Verification in Phase II requires 100 units.
	 	 	 
	■	 	Accellent has estimated the cost of the Materials for pre-production units in our Cost Estimate Section on page 8 and has planned the timeline accordingly; any change to the number of units may affect the Materials cost and/or the project Timeline.  Estimated not included in this version of the proposal, but will be added to next revision.
	 	 	 
	■	 	Accellent assumes Design Validation requires 300 PQ units and human use Clinical trials performed by Atossa require 200 units; these units will be billed at the lowest volume Unit Price Estimate in our Cost Estimate Section on page 9. The material cost estimates on Page 8 includes the cost for the clinical devices in Phase II.
	 	 	 
	■	 	Atossa is responsible for defining product inputs and is ultimately responsible for assessing clinical efficacy; Accellent will work closely with Atossa to translate design inputs in to measurable specifications.
	 	 	 
	■	 	An approved supplier will perform sterilization services as an Outside Service. Accellent and Atossa will jointly review the sterilization protocol and report, which will include the results of the Sterilization Validation/Revalidation. Atossa will have final approval responsibility for all sterilization documentation and is ultimately responsible for verification and certification of product sterility. A Supply Agreement between Accellent and Atossa will define the product transfer and terms of sterile lot release.

 

    	Proposal # 1020451
	Page 6
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

	■	 	Atossa is responsible for the cost of Quarterly Dose Audits (Gamma), which include sterilization charges, transportation charges, test lab charges, product (destructive test units) costs and documentation costs.
	 	 	 
	■	 	Atossa is responsible for ensuring Atossa-supplied materials meet incoming inspection requirements and comply with quality requirements per the drawings.
	 	 	 
	■	 	The timeline estimated in this proposal is contingent on the timely receipt of documentation, drawings and approvals from Atossa; delays outside of Accellent’s direct control may affect the timeline and schedule provided.
	 	 	 
	■	 	Atossa will work with Accellent prior to the project start to align Accellent’s project plan with Atossa’s project plan.
	 	 	 
	■	 	Additional Terms & Conditions that apply to this proposal are located in Appendix I.

  

    	Proposal # 1020451
	Page 7
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Cost Estimate for the Project

 

		 	Phase	 	Labor	 	Materials	 	Tooling &
 Equipment	 	Travel &
 Shipping	 	Outside
 Services	 	Total
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Quoted	 	Phase I 

Preparation

 13 Weeks	 	[****]	 	[****]	 	[****]	 	[****]	 	[****]	 	[****]
	 	 	 	 			[****]		[****]		[****]		[****]		[****]
	Budgetary	 	
        Phase II

Design

Verification

11 Weeks 
	 	[****]		[****]		[****]		[****]		[****]		[****]
	 	 	 	 			[****]		[****]		[****]		[****]		[****]
		 	
        Phase III 

Design

Validation &

Transfer

15 Weeks 
	 	[****]		[****]		[****]		[****]		[****]		[****]
	 	 	 	 	[****]		[****]		[****]		[****]		[****]		[****]
	Total
 Estimate	 	Phase I-III 

39 Weeks	 	[****]		[****]		[****]		[****]		[****]		[****]

  

This is a good faith estimate based on
managing projects of similar scope and complexity. If unanticipated contingencies or changes in project scope potentially cause
the estimate to be exceeded, Atossa’s written authorization will be required prior to incurring expenses beyond this estimate.
Travel Expenses are in addition and will be billed at cost, as incurred.

 

	§	 	See Appendix VII for the equipment list that is assumed to be required to reestablish the production of these devices.
	 	 	 
	§	 	Phase II material estimate includes ~100 devices for DV and ~200 devices to be provided to Atossa for human use clinical testing.
	 	 	 
	§	 	Saleable PQ devices will be built in Phase III and will be billed at the lowest volume Unit Price Estimate in our Cost Estimate Section on page 9.

  

    	Proposal # 1020451
	Page 8
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

	Part Number	[****]	[****]	[****]	[****]	[****]
	 					
	160-08427-00
 FirstCyte Microcatheter	[****]	[****]	[****]	[****]	[****]
	 					
	160-08417-00
 FirstCyte Aspirator	[****]	[****]	[****]	[****]	[****]
	 					
	160-08788-00
 FirstCyte UltraSlim Dilator	[****]	[****]	[****]	[****]	[****]
	 					
	160-08782-00
 FirstCyte Tapered Dilator	[****]	[****]	[****]	[****]	[****]
	 					

 

						
	Kit containing 5
 of each device 	[****]	[****]	[****]	[****]	[****]

   

	§	 	Accellent reserves the right to revise the Unit Price Estimates; the above pricing reflects Accellent’s best estimate based on the current product concept and/or Bill of Materials (BOM) received from Atossa and assumes lot purchasing for optimum supply chain management. Any changes to the BOM, component material selection or quantities per may require Accellent to re-estimate the Unit Price.
	 	 	 
	§	 	As design and development progress and annual volumes are established, a more accurate Unit Price Estimate can be determined. A Manufacturing Agreement will establish final Unit Price and Volume Breaks.
	 	 	 
	§	 	Aspirator cup and f-adaptor in MicroCatheter are assumed to be made from RX2530 Macrolon, which is what the supplier stated was used when parts were supplied to Cytyc.  MedSource prints state Lexan, which must be an old revision.
	 	 	 
	§	 	MicroCatheter: Sheath 110-08987-00 shall be manufactured from LDPE and not HDPE as the drawing states.

  

    	Proposal # 1020451
	Page 9
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Payment Terms and Execution

 

To initiate this proposed project, we require
an authorization of $296,000 for Engineering Services and related expenses, which may include tooling, travel, materials, outside
services and other items allocated to this project. A deposit of $50,000, which will be credited against final invoices, is also
required prior to the project start.

 

Prior to the end of each phase of the project,
Accellent will provide Atossa with an updated cost estimate for the following phase. A purchase order will then be required to
continue into the next phase of this project.

 

Invoices will be sent monthly on a Time
& Materials basis; a final invoice for final expenses will be sent upon completion of this work.

 

Payment Terms are Net 30; past due invoices
will incur interest charges at the rate of 1.5% per month.

 

A full set of Terms & Conditions related
to Accellent’s Engineering Services is provided in Appendix I of this proposal and shall have full force and effect over
the content of this proposal. Terms & Conditions for production components and assemblies developed under this agreement shall
be subject to Accellent’s standard Terms & Conditions. A copy of this document can be provided upon request.

 

This proposal is valid for 30 days.

 

To proceed, please return this proposal with:

 

1) The required signature acknowledging your acceptance.

 

2) A Phase I Purchase Order for [****] referencing Proposal
No. 1020451.

 

3) A deposit/retainer for [****] prior
to the project kick-off meeting.

 

This program may be canceled at any time and by either party
with 10 days written notice. Atossa will be responsible only for charges incurred up to the termination date (including material,
tooling purchases and cancellation charges).

 

	Accepted For	 	Accepted For
	Accellent Inc	 	Atossa
	 	 	 
	Signature:	 	 	Signature:	 
	 	 	 	 	 
	 	/s/ Gary Falwell	 	 	 
	 	 	 	 	 
	Name:	Gary Falwell	 	Name:	Steven Quay
	 	 	 	 	 
	Title:	Technical Business Development Leader	 	Title:	President
	 	 	 	 	 
	Date:	August 8, 2011	 	Date:	 

  

    	Proposal # 1020451
	Page 10
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Accellent Inc

 

Accellent is the established leader in the field of medical
device outsourcing. We have over 3,000 employees and focus the breadth of our expertise on:

 

·Increased
speed to market

 

·Lower
total delivered cost

 

·Continuous
improvement

 

Accellent provides complete design to assembly services of custom
precision components and completed devices on a global basis. We have manufacturing facilities in the United States, Mexico and
Europe. Our Integrated OutsourcingSM model provides supply chain management to companies looking to bring new products to market
quickly and cost-effectively.

 

The comprehensive scope of our services includes product development,
functional design and analysis, complete project management, thin wall plastic and metal tubing, precision machining, metal stamping
and wire forming, metal and plastic injection molding, grinding and coiling, laser processing, radiopaque markers, assembly, packaging,
labeling, contract sterilization and order fulfillment. Accellent has the capability to accommodate a product anywhere in its lifecycle
- from rapid prototyping of early designs to pilot production, to large scale, off-shore manufacturing in a QSR-compliant operation.
Our product experience is very broad within the three core market segments we serve; endoscopy, cardiology and orthopaedics.

 

The Engineering Services group in our Boston Technical Center
numbers more than 35 professionals with backgrounds in mechanical engineering, material science, manufacturing and quality engineering
and project management. Dedicated teams handle your project from initiation through validation ensuring a seamless transition from
design to manufacturing. Our Project Manager is accountable to you until the successful transition of the project to production
manufacturing.

 

Accellent is ISO 13485 certified and registered with the FDA
and is committed to continuous improvement of its business processes. Additional information can be found on our web site, www.Accellent.com.

 

Integrated Outsourcing is a service mark
of Accellent, Inc.

 

    	Proposal # 1020451
	Page 11
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Appendix I: Engineering Services Terms and Conditions

 

To effectively execute the Project Scope
outlined in this proposal, Accellent establishes the following terms and conditions for Services it provides.

 

Services. “Services”
means all work performed by Accellent as detailed in this proposal.

 

Statement of Confidential Intent

Accellent is providing this proposal at
the request of Atossa. The project goals and product details are as described to us by Atossa. The development process and techniques
presented herein for accomplishing those goals are the property of Accellent and are intended exclusively for our use while under
contract to Atossa.

 

Purchase Orders; Payment Terms; Inconsistencies.
Accellent’s Services will be performed according to this Proposal. Atossa shall make payment to Accellent for the Services
in accordance with the terms of this Proposal. Any payment not made when due shall at Accellent’s option accrue interest
at the rate of 18% per annum until paid in full. To the extent that the terms of the purchase orders or any other documents related
to the Services differ from or are inconsistent with the terms of this Proposal, the terms of this Proposal will control.

 

Accellent may discontinue Services for
any Purchase Order if the Company has failed to make timely payment in full as agreed by the parties with respect to those or any
other Services

 

Force Majeure. Neither Accellent
nor Atossa shall be liable to the other for any loss or damage suffered because of the impossibility of either party performing
any of its obligations to the other by reason of any fire, strike, riot, sabotage, war delay, damage by the elements, act of God,
act of the public enemy, or any other unavoidable casualty of like nature beyond the control of the party in default. There shall
be no liability for interruptions or delays in the making of any delivery or the performance of any act provided such interruption
or delay results from any legally enforceable order of a State or Federal Government or any agency thereof. The foregoing shall
not apply to any obligation of Atossa to make timely payment for Services.

 

The Services, or the result of any Services,
produced under this Proposal shall become the property of Atossa after full payment for all Services and expenses have been received
by Accellent.

 

Responsibilities for Accepted Services.

 

Accellent.
With respect to any Services accepted by Atossa, Accellent shall be responsible for its warranty and indemnity obligations as provided
below.

 

Atossa.
Subject to Accellent’s warranty and indemnity obligations below, upon acceptance by Atossa of any Services, (i) Atossa shall
be fully and solely responsible for such Services and the consequences of any implementation or use by Atossa or others of such
Services, including without limitation, compliance with applicable laws and regulations and claims of any third parties arising
from such implementation and use and, (ii) Accellent will work closely with Atossa to translate design inputs into measurable specifications
however, Atossa is responsible for defining product inputs and is solely responsible for assessing clinical efficacy, or for transfers
to production (iii) Accellent will work closely with Atossa to transfer the product design into production processes however, Atossa
is responsible for defining product inputs and is solely responsible for assessing clinical efficacy.

 

Sterilization Services. Sterilization services
with respect to any Product will be provided only if requested by Atossa and will only be performed as an outside service by a
supplier approved by Atossa.

 

With respect to any such sterilization
services, Accellent and Atossa will jointly review the sterilization protocol and report, which will include the results of the
Sterilization Validation/Revalidation. Atossa will have final approval responsibility for all sterilization documentation (and
the services provided thereunder) and is ultimately responsible for verification and certification of product sterility. Accellent
and Atossa will define the product transfer and mutually agree to the terms of sterile lot release.

  

    	Proposal # 1020451
	Page 12
ACCELLENT CONFIDENTIAL	August 8, 2011

    	 

    

 

	Development and Manufacturing Transfer for Atossa	 

 

Warranty

 

Accellent Warranty. Accellent warrants
that the Services hereunder shall be performed in a manner consistent with prevailing industry standards. If any Services do not
comply with this warranty, Accellent shall be obligated, as Atossa’s sole and exclusive remedy, to make commercially diligent
efforts to bring the non-complying Services into compliance at Accellent’s expense.

 

THE WARRANTY EXPRESSLY STATED ABOVE IS THE ONLY WARRANTY APPLICABLE
TO THE SERVICES. ACCELLENT MAKES NO REPRESENTATION OR WARRANTY IN THIS AGREEMENT TO Atossa CONCERNING ANY PRODUCTS CONTEMPLATED
BY ANY SERVICES, INCLUDING TITLE TO ANY INTELLECTUAL PROPERTY INVOLVED IN THE DESIGN OR MANUFACTURE OF SUCH PRODUCTS, THE PERFORMANCE
OF ANY SUCH PRODUCTS, OR THEIR SAFETY OR THEIR FUNCTIONALITY. ALL WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED
TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. ACCELLENT SHALL NOT BE LIABLE UNDER
THIS AGREEMENT FOR ANY PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, PERSONAL INJURY
AND PROPERTY DAMAGE, EQUIPMENT DAMAGE, LOSS OF PROFITS OR REVENUES OR BUSINESS, COST OF CAPITAL, COST OF PURCHASE, COST OF RECALL,
OR COST OF REPLACEMENT GOODS. EXCEPT WITH RESPECT TO ACCELLENT’S INDEMNIFICATION OBLIGATIONS BELOW, IN NO EVENT SHALL ACCELLENT’S
LIABILITY UNDER THIS AGREEMENT, WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE EXCEED THE ACTUAL AMOUNTS PAID BY Atossa HEREUNDER
DURING THE IMMEDIATELY PRECEDING TWELVE (12) MONTH PERIOD FROM WHEN THE CLAIM FOR LIABILITY AROSE.

 

Indemnities

 

Accellent. Accellent agrees
to defend and indemnify and hold Atossa and its officers, directors, employees, and agents harmless against any and all claims,
suits, proceedings, expenses, recoveries, and damages, including court costs and reasonable attorneys fees and expenses, by third
parties against Atossa to the extent they arise out of, are based on, or are caused by Accellent’s negligence in the performance
of Services, except to the extent that such arise from or are aggravated by acts of or failure to act by Atossa. Atossa will promptly
notify Accellent of any such claim or demand that comes to its attention.

 

Atossa. Atossa agrees to
defend and indemnify and hold Accellent and its officers, directors, employees, and agents, harmless against any and all claims,
suits, proceedings, expenses, recoveries, and damages, including court costs and reasonable attorneys fees and expenses, by third
parties against Accellent to the extent they arise out of, are based on, or are caused by (i) alleged defects in the design of
any products which are the subject of the Services, (ii) any claim that any such product or its design infringes upon the intellectual
property rights of third parties, (iii) statements, whether written or oral, made or alleged to be made by Atossa or its Affiliates
or others on the packaging or labeling on any of such products, or in the advertising, publicity, promotion, or sale of any of
such products, (iv) the storage, sale, shipment, promotion, or distribution of such products, , or (v) the implementation or use
of the Design; in each case except to the extent that such arise from or are aggravated by acts of or failure to act by Accellent.
Accellent will promptly notify Atossa if any such claim or demand that comes to its attention.

 

Benefits; Assignment; Binding Notice.
This agreement is not intended to confer upon any person other than the parties, any rights or remedies hereunder and may not be
assigned by either party without the prior written consent of the other party provided however, either party may assign this agreement
without the prior written consent of the other, to any of its Affiliates or in connection with the sale by such party of substantially
all of its assets or the business to which this agreement relates. A sale of the shares of a party or a public offering of its
shares, or its merger, consolidation, or reorganization, shall not constitute an assignment of this agreement requiring the consent
of the other party. Any attempted assignment in violation of the terms hereof will be null and void and of no force or effect.
This agreement will be binding upon and inure to the benefit of the parties and their respective successors and assigns.

 

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	Development and Manufacturing Transfer for Atossa	 

 

Severability. If any term or provision
of this agreement is deemed to be invalid or unenforceable, the remainder of this agreement will be unaffected thereby and each
other term or provision of this agreement will be valid and enforced to the fullest extent permitted by law.

 

Governing Law. The validity and
interpretation of this agreement and the legal relations of the parties to it shall be governed by the internal laws of the State
of Massachusetts.

  

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	Development and Manufacturing Transfer for Atossa	 

 

Appendix II: Key Personnel

 

TBD – contingent upon receipt date
of P.O. to initiate the project.

 

For consistency, Accellent will
make every effort to use the team members that executed the DHF audit as part of the team for this project.

  

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	Development and Manufacturing Transfer for Atossa	 

 

Appendix III: Accellent Commitment to Quality

 

ONESOURCE FOR QUALITY -- Accellent recognizes that quality is
among the most important factors for medical device companies. Consequently, we have chosen to focus our business exclusively on
manufacturing for medical device companies.

 

Accellent Quality Policy

As A Medical Device Engineering, Product
Development and Manufacturing Services Provider,

Accellent Is Committed To:

Exceeding Our Customers’ Expectations
By:

Accelerating Time to Market

Reducing Total Delivered Cost

Providing Superior Customer Product Acceptance
Through:

Business Excellence

Continuous Improvement

Teamwork

 

Accellent utilizes an enterprise-wide common Quality System,
which ensures our customers consistent and repeatable quality from each and every Accellent facility worldwide.

 

The Accellent Quality System outlined in the Quality Manual
complies with the following standards:

·International
Standard ISO 13485

·International
Standard ISO 9001

·FDA
Quality System Regulation (QSRs) 21 CFR 820

·European
Community Medical Device Directive (MDD) 93/42/EEC

 

The Accellent Quality System
ensures customers receive the same high standards with respect to quality results, regulatory compliance, systematic monitoring
and continuous improvement throughout Accellent. While remaining in compliance with FDA and ISO requirements, we maintain flexibility
within our system to accommodate our customer’s quality needs.

 

		TÜV Product Service is the world leader in medical device certification and is the Quality System registrar for Accellent. All Accellent facilities are registered under one certificate with TUV Product Services; this integration allows Accellent to standardize design procedures, reduce inspection cost and minimize auditing activities for our customers.

 

Accellent and all of its employees are committed to the highest
standards of quality, delivery, and service of our products to all of our customers.

  

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	Development and Manufacturing Transfer for Atossa	 

 

Appendix IV: Accellent Three Phase Design Control

 

Accellent has a Three Phase Design Control Procedure fully compliant
with the current FDA QSR’s and ISO 9001 / ISO 13485. Each project is assigned an experienced Program Manager with direct
responsibility in meeting customer expectations, project plan integrity, budget management, team member selection (Quality Assurance
Engineer, Manufacturing Engineer, Designer, Technicians, etc.), overall coordination of activities both internal to Accellent as
well as with outside suppliers and service providers.

 

Phase I and II are the concept development and design for manufacturing
phases. Phase I consists of taking customer inputs and product specifications and transferring them into preliminary engineering
drawings or prototypes. Phase II consists of design verification testing, Design Failure Modes Effects Analysis (FMEA), Design
Review and may include builds for clinical or animal trials.

 

Phase III consists of the transfer to manufacturing and supply
chain development. Production tooling is designed and procured, critical suppliers are identified and audited, manufacturing validations
are carried out (including sterilization), a process FMEA is developed, all manufacturing documentation is formally introduced,
operator training is conducted and all required process validations (accelerated age, transit, bioburden, etc...) are completed.
Then, final unit pricing is determined. This phase ends with an extensive design review with all parties present for approval to
release product.

 

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	Development and Manufacturing Transfer for Atossa	 

 

Appendix V: Preliminary Project Gantt

 

(Please see the next inserted page.)

 

Appendix VI: Deliverables Checklist

 

(Inserted after Gantt.)

 

Appendix VII: Equipment and Fixture List

 

(Inserted after Deliverables Checklist.)

 

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Appendix VII

 

	FirstCyte Equipment and Fixture List
	MicroCatheter DV fixtures
	Aspirator DV fixtures
	Dilator DV fixtures
	Seal Cutting Block
	EFOS Acticure, Serial # A4000-01772
	EFOS Acticure, Serial # A4000-01774
	HYPO-TUBE PUNCH
	Side Leg Tensile Fixture
	Luer Tensile Fixture
	Probe Tensile Fixture
	Razor Blade Holder
	Seal Punch Guide Block
	Seal Slicing Fixture
	Dilator Necking Die
	Slicer Blade Holder
	Catheter Cutter
	Aspirator Gauge
	Foam Alignment Gauge
	Catheter Tipping Mold
	Tipping Mold and Clamp
	Snap Gauge, Mitutoyo
	UV Curing Station
	EFOS Ultracure 100SS - 5833
	EFOS Ultracure 100SS - 8830
	EFOS Ultracure 100SS - P1001-00017
	EFOS Acticure A4000 - 00770
	EFD Adhesive Dispenser #1
	EFD Adhesive Dispenser #2
	EFD Adhesive Dispenser #3
	Test Gauge 0 - 200
	Test Gauge 0 - 30
	Vaccum Test Gauge 30 -0 inHg
	Scale, 6" Stainless Steel
	Tray sealing die
	Benches

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