EXHIBIT 10.23*
THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT, WHICH
HAVE BEEN REMOVED AND REPLACED WITH AN ASTERISK,
HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
Agreement No. ______ REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 406
[LOGO]
SUPPLIER PARTNERING AGREEMENT
This agreement ("Agreement") is effective as of June 1, 2000 by and between the
following parties:
Pacesetter, Inc. (d/b/s St. Jude Medical CRMD), a St. Jude Medical
Company, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
("Buyer"); and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Ltd., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("Seller")
INTRODUCTION
The parties desire to establish a stable relationship based on a continuous
improvement process leading toward world class benchmarks in quality, cost,
inventory levels, delivery, technology, and service.
Therefore, Seller and Buyer mutually agree to the following:
1. TERM OF AGREEMENT. This Agreement begins on June 1, 2000 and will run
until December 31, 2003 ("Initial Term"); provided, however, that the
term of this Agreement may be extended pursuant to Section 9 of Exhibit
A.
2. PURCHASE ORDERS; TERMS AND CONDITIONS OF SALE. Seller will provide Buyer
products pursuant to purchase orders to be issued by Buyer's business
units, including its Swedish affiliate. The general terms and conditions
of sale for products sold by Seller to Buyer hereunder are set forth on
Exhibit A attached to and made a part of this Agreement. The parties
expressly agree that none of the terms and conditions of any standard
purchase preprinted forms used by either Seller or the Buyer in
effectuating the purchase and sale transactions contemplated by this
Agreement (including, but not limited to, purchase orders,
acknowledgements and acceptance forms, invoices, labels and shipping
documents) which are inconsistent with, or in addition to, those
contained in this Agreement shall have any force or effect.
3. PRICING. Pricing shall be as shown in Exhibit B, Attachment 1 (component
parts) and Attachment 2 (batteries).
4. INVENTORY. Seller will maintain a finished inventory for each product at
the level indicated in Exhibit B, Attachments 1 and 2. The level is a
proportion of the estimated annual usage for the product and will be
updated each quarter. If inventory drops below the indicated level at any
time or is totally consumer by Buyer, Seller will promptly replenish
inventory to the appropriate level as indicated in Exhibit B, Attachments
1 and 2. Seller will keep
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Buyer informed of the inventory level and location of each product. At
Buyer's discretion, any inventory may be consigned to Buyer's facility.
Buyer will be responsible for any resulting additional costs to Seller
(as set forth on Exhibit A).
5. QUANTITY. Subject to Section 2.6 on Exhibit A, Buyer will purchase no
less than the inventory commitment of each product indicated in Exhibit
B, Attachments 1 and 2. Buyer will purchase its annual requirement of
batteries and **** (by aggregate value) of its requirement for Component
parts from Seller. Excluded from this obligation is Buyer's need for new
or developing technologies that Seller is unable to supply at competitive
prices and in time to meet Buyer's needs.
6. QUALITY/IMPROVEMENTS. Seller will start of maintain a JIT (just in time)
program that includes the ability to measure and report on quality
control and improvement processes. The JIT will include at least:
- On time delivery,
- Cost reductions,
- Benchmarking,
- Lead time reduction to meet benchmarks,
- Statistical process controls (SPC) in critical process
areas, and
- Inventory reduction.
6.1 Seller will start and/or maintain a continuous improvement
strategy for product quality, cost, delivery, inventory reduction, and
service.
6.2 Seller will have in place goals to improve performance for:
- QUALITY to reduce Buyer's rejections of products to less
than ***** PPM by the end of the initial one-year term of
this Agreement. Beginning in the second year of this
Agreement, the goal will be less than ***** PPM. Beginning
in the third year of this Agreement, the goal will be less
than *** PPM. The benchmark performance will be no more
than *** PPM line fallout rejections found during Seller's
processing without Buyer's inspection being needed.
- DELIVERY to be 100% on time (up to three days early and
zero days later).
6.3 Time is of the essence for purposes of this Agreement.
6.4 Seller will start and/or maintain a quality system or plan that
meets the requirements of ISO-9000.
6.5 Upon request by Buyer or Seller, Seller will participate, or be
permitted to participate, in early supplier involvement with Buyer for
Buyer's new products of the typo specified in this Agreement. Buyer will
provide Seller with sufficient information and cooperation in connection
therewith to permit Seller to qualify product for sale to Buyer.
6.6 Seller will meet with Buyer on a regular basis to review programs,
performance measurements, and barriers to progress. Seller and Buyer will
mutually agree on taking actions to correct problems and eliminate
barriers.
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7. COMMUNICATION. Seller and Buyer will conduct quarterly reviews to
facilitate the purposes of this Agreement. Also, Buyer will inform Seller
of Buyer's planned production rates for the products to help Seller in
its planning. Until further notice, the key people who will be
responsible for routine communications between Seller and Buyer are:
For Seller: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Program Manager - Batteries
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Production Manager - Components
▇▇▇▇▇ ▇▇▇▇, Vice President - Components
For Buyer: * , Commodity Manager
* , Director of Purchasing (Sweden)
8. BUYER'S DRAWINGS AND DESIGNS. Seller will use only drawings that have
been mutually agreed upon to manufacture the products. Seller will never
make or sell any products using Buyer's designs for anyone other than
Buyer.
9. CONFIDENTIAL INFORMATION.
9.1 TREATMENT OF PROPRIETY INFORMATION. Each of WGL and Buyer (each a
"receiving party") agrees to maintain all proprietary information
disclosed by the other party to this Agreement (each a "disclosing
party") in strict secrecy and confidence, and not to disclose such
proprietary information to any third party, nor make any use of such
information and technology for its own benefit or gain other than in
carrying out its efforts under this Agreement. The receiving party agrees
to have its employees sign agreements, or to have an appropriate
corporate policy in effect, which requires them to keep confidential any
proprietary information they learn in their positions at the receiving
party; these agreements and/or policies shall require them to maintain
confidentiality of proprietary information disclosed by the disclosing
party. The receiving party further agrees that no proprietary information
or materials will be supplied to any other corporation, partnership,
laboratory, or individuals other than those approved in writing by the
disclosing party, with the exception of disclosure to the FDA and similar
regulatory agencies of information relative to obtaining regulatory
approval.
9.2 LIMITED RELEASE. The receiving party shall be released from the
obligations of Section 9.1 to the extent that any of the disclosed
information: (a) was already part of the public domain at the time of the
disclosure by the disclosing party; (b) becomes part of the public domain
through no fault of the receiving party (but only after and only to the
extent that it is published or otherwise becomes part of the public
domain); (c) was in the receiving party's possession prior to the
disclosure by the disclosing party and was not acquired, directly, or
indirectly, from the disclosing party or from a third party who was
under a continuing obligation of confidence to the disclosing party; (d)
is received (after the disclosure by the disclosing party) by the
receiving party from a third party who did not require the receiving
party to hold it in confidence and did not acquire it directly or
indirectly from the disclosing party under a continuing obligation
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of confidence; or (e) is disclosed by the receiving party pursuant to
judicial compulsion, provided that the disclosing party is notified
at the time such judicial action is initiated. In addition,
notwithstanding Section 9.1, Seller may provide proprietary
information of Buyer to its subcontractors and vendors without Buyer's
prior approval provided that WGL first requires may such subcontractor
or vendor to sign a confidentiality agreement which requires them to
keep confidential such Buyer information and not to use it except for
the purpose of performing their obligations to Seller.
9.3 TERM OF OBLIGATION. The obligation of the receiving party to
receive and hold information disclosed by the disclosing party in
confidence, as required by this Section 9, shall terminate eight (8)
years from the date of disclosure of the information hereunder and
shall survive any earlier termination of this Agreement.
9.4 DISPOSAL UPON TERMINATION. In the event this Agreement is
terminated, any samples, sketches, or other proprietary material
provided by the disclosing party to the receiving party shall be
destroyed or returned to the disclosing party, unless and to the
extent such materials are necessary to the receiving party to provide
continuing support.
10. OTHER PROVISIONS.
10.1 RELATIONSHIP OF THE PARTIES. There is no principal-agent
relationship between the parties. Neither party will have any
authority to contract, bind, or act on behalf of the other, and
neither party will try to do so.
10.2 SEPARABILITY AND WAIVER. If any part of this Agreement is not
legally enforceable, only that part will be disregarded and the rest
will stay in effect. If a party waives a particular term or condition,
it will be for one time only, it will not change the Agreement, and
the same term or condition can be enforced again later.
10.3 ENDRE AGREEMENT; CHANGES. This Agreement contains the entire
understanding of the parties regarding this subject and replaces all
previous agreements. There are no written or oral agreements,
understandings, or representations apart from this Agreement. This
Agreement cannot be changed in any way except by a written document
that both parties sign. No interference will be drawn from any
difference between this Agreement and any prior negotiations, letters
of intent, or drafts of this Agreement.
10.4 NOTICES. Notices under this Agreement must be in writing. A party
can send notice by U.S. certified or express mail, by express courier
service (e.g., Federal Express), or by telephone fax to the other
party, addressed as follows:
To Buyer at:
▇▇▇ ▇▇▇▇▇▇
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President & CEO
St. Jude Medical Cardiac Rhythm Management Division
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
To Seller at:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President & CEO
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Ltd.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to whatever other address a receiving party may specify from
time to time. The parties will consider that notice is given at
the end of two business days after it is faxed, and/or five
business days from the date it is deposited postage prepaid in
the mail or given to an express courier service. A written
receipt will be proof of delivery if it is signed by an
authorized representative of the receiving party at the address
above.
10.5 EFFECT OF TERMINATION. Expiration or termination of this
Agreement shall not affect or cause the release of monetary
obligation which shall have accrued prior to such termination,
and the parties obligations under Sections 9 and 10 and
Sections 3 and 6 of Exhibit A shall continue in effect until
fully satisfied.
10.6 PUBLIC ANNOUNCEMENTS. Notwithstanding anything to the contrary
contained in this Agreement, neither party may initiate or make any
public announcement or other disclosure concerning the terms and
conditions or the subject matter of this Agreement to any third party
without the prior written approval of the other party except as may be
required by law. In those circumstances where either party believes
that any such disclosure is required by law, it shall (a) notify the
other party on a timely basis in advance and (b) use its best efforts
to seek confidential treatment of the material provisions of this
Agreement to the greatest extent permitted by law.
10.7 LAW. California law will govern this Agreement and its
interpretation, as well as the rights and duties of the parties.
IN WITNESS OF THIS AGREEMENT, the parties have signed below by their
authorized officers:
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PACESETTER, INC. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------- -------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, Materials Title: President and CEO
-------------------------- ----------------------------
Date: 5-24-2000 Date: 5-24-2000
-------------------------- -----------------------------
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EXHIBIT A
TO
SUPPLIER PARTNERING AGREEMENT
This Exhibit A sets forth the general terms and conditions of sale for all
products sold by Seller to Buyer pursuant to the Agreement to which it is
attached.
1. DEFINITIONS. For purposes hereof, the following terms shall have the
defined meanings set forth below:
1.1 "AGREEMENT" means the Supplier Partnering Agreement to which
this "Exhibit A" is attached.
1.2 "BATTERIES" means all batteries and other power sources sold by
Seller under this Agreement.
1.3 "COMPONENTS" means all other products sold by Seller to Buyer
under this Agreement.
1.4 "CONSIGNMENT PRODUCTS" means all Batteries and Components
consigned by Seller under this Agreement.
2. ORDER, DELIVERY, PAYMENT, INSPECTION.
2.1 ORDERS. All products shall be ordered by Buyer using Buyer's
standard purchase order form which shall set forth, at a minimum, the
quantity of products ordered, the address of the facility of Buyer (or
its affiliate) to which product should be shipped and requested
delivery dates.
2.2 PAYMENT TERMS. Payment terms are as follows: (a) for
Consignment Products purchased by Buyer, by the thirtieth (30th) day
after the day on which Consignment Products shall have been withdrawn
by Buyer or (b) for all other Batteries and Components purchased by
Buyer, net 30 days from the date of the invoice, F.O.B. Clarence, NY
or point of shipment, whichever is applicable. Payment terms for
tooling and engineering charges are net 30 days from the date of the
invoice.
2.3 DELIVERY. Except for any Consignment Products, Seller shall
deliver Products to Buyer's facility at Valley View Court in Sylmar,
California, and/or to such other location(s) as Buyer may designate.
Unless Buyer gives Seller written instructions as to the method of
shipment and carrier, Seller shall select the methods of shipment and
the carrier for the respective purchase order. Seller shall prepay
transportation and similar charges upon shipment. Except for
Consignment Products, title to all Products conforming to Buyer's
purchase order shall pass, free and clear of all encumbrances, at the
FOB shipping point, which shall be Seller's facility. Buyer
7
assumes and agrees to bear all risk of damage or loss to the goods
after delivery by Seller to the carrier at the FOB shipping point.
Buyer hereby releases Seller from any and all claims and liability
with respect to any such in-transit damages or losses to the goods.
Buyer shall be responsible for securing insurance coverage to cover
shipments and deliveries hereunder.
2.4 INSPECTION. Seller shall perform testing to ensure that
Products delivered by Buyer meet all applicable specifications. Buyer
inspection of incoming Products will rely upon Seller testing and may
consist of an examination of Seller's testing documentation as well as
independent testing by Buyer. Notwithstanding the foregoing, Buyer
shall attempt to inspect all products (including the Consignment
Products) within thirty (30) days, but not to exceed sixty (60) days,
and notify Seller if any of the products fail to meet Buyer's
specifications and quality standards for such products.
2.5 ACCEPTANCE. Buyer may reject any shipments or deliveries of
products which are short, nonconforming, defective or deficient and
may request correction and/or replacement. Rejected shipments or
deliveries of products shall at the request of Seller be set aside for
Seller inspection, or at the request of Seller shipped freight prepaid
to Seller. All products returned to Seller shall be accompanied by a
copy of their original shipping documents and the name and phone
number of the person at Buyer to be contacted regarding such return.
Promptly upon receipt of notice of such shortage, non-conformance,
defect or deficiency, Seller shall immediately notify Buyer:
(a) as to how Seller will replace the defective or deficient
products upon return to Seller, ship replacement products, or
otherwise promptly correct such shortage, non-conformance, or
deficiency; and/or
(b) whether such shipment of products shall be set aside and
held by Buyer or returned to Seller and the address to which
such affected products should be returned, or whether such
products should otherwise be disposed of.
If Buyer elects to cancel or rescind such purchase, Seller shall
promptly refund and reimburse Buyer the price paid by Buyer for such
purchase, including freight and shipping costs incurred by Buyer in
such purchase, prior to the return of the same to Seller. If Buyer
elects to have the product replaced, Seller shall bear or shall
reimburse Buyer for all costs and expenses incurred by Buyer to
repackage, ship and return affected products to Seller and shall issue
a credit memo for the amount of the purchase price of the returned
products.
2.6 FORCE MAJEURE. In the event of fire, explosion, strikes, war,
act of any governmental agency, material or labor shortage,
transportation contingency, act of God or any other causes beyond the
control of Seller ("Force Majeure"), Seller shall not be liable for
any delay in shipment or non-delivery of Batteries or Components
covered by this Agreement arising from Force Majeure, and Buyer shall
be bound to accept the delayed shipment or delivery made within a
reasonable time. In the event of Force Majeure, Buyer shall be excused
for the failure to take and pay for Batteries or Components ordered
under this
8
Agreement, until such Force Majeure condition is removed. In the event
such conditions cannot be corrected by the party affected within six
(6) months of the occurrence of a Force Majeure event, then the other
party shall have the option to terminate this Agreement upon one (1)
month prior notice.
3. WARRANTY. LIMITATION OF LIABILITY.
3.1 Battery Warranty. Seller warrants that the Batteries delivered
to Buyer will be free from defects in materials and workmanship at the
time of sale. Seller's sole obligation under this warranty is the
replacement of any Battery which is defective without charge. SELLER
MAKES NO OTHER WARRANTY WITH RESPECT TO THE BATTERIES, WRITTEN OR
ORAL, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. BUYER EXPRESSLY
ASSUMES ALL LIABILITY ARISING FROM OR IN CONNECTION WITH THE USE OF
THE BATTERIES PURCHASED HEREUNDER, WHETHER BASED ON CONTRACT,
WARRANTY, TORT OR OTHERWISE AND AGREES TO HOLD SELLER HARMLESS FROM
SUCH CLAIMS.
3.2 COMPONENT WARRANTY.
(a) Seller warrants that each of the Components delivered to
Buyer will meet all applicable specifications and will be free from
defects in materials and workmanship at the time of sale. Seller's
sole obligation under this Warranty is the repair or replacement, at
its election, of any Component which is found, upon Seller's
inspection not to meet such warranty. Such product will be repaired or
replaced without charge provided that, (1) prior written approval is
required before returning any product, and (2) any product return sent
to Seller without prior written approval will be returned to the
sender, freight collect.
(b) This Warranty does not apply to depletion, wear and/or any
failure occurring as a result of any of the following: normal use,
abuse, misuse, any alteration or modification made to any Component
without the express written consent of Seller, attempted disassembly,
neglect, improper installation, of any other use inconsistent with any
applicable law, rule, regulation or governmental directive, or any use
inconsistent with the specifications or warning or recommended
operating practices specific to the Component.
(c) THE WARRANTY SET FORTH IN THIS SECTION 3.2 IS IN LIEU OF
ALL OTHER WARRANTIES (EXCEPT OF TITLE), EXPRESSED, IMPLIED OR
STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR
A PARTICULAR PURPOSE.
3.3 LIMITATION OF LIABILITY. THE REMEDIES OF BUYER IN THE WARRANTY
SET FORTH IN SECTION 3.1 WITH RESPECT TO BATTERIES AND IN THE WARRANTY
SET FORTH IN SECTION 3.2 WITH RESPECT TO COMPONENTS ARE EXCLUSIVE, AND
THE TOTAL LIABILITY OF SELLER WITH RESPECT TO ANY BATTERY OR ANY
COMPONENT SOLD TO BUYER UNDER THIS
9
AGREEMENT, OR FROM DELIVERY, INSTALLATION OR REPAIR COVERED BY OR
FURNISHED UNDER ANY SALE TO BUYER, WHETHER BASED ON CONTRACT,
WARRANTY, NEGLIGENCE, INDEMNITY, STRICT LIABILITY, OR OTHERWISE, SHALL
NOT EXCEED THE PURCHASE PRICE OF THE PRODUCT UPON WHICH SUCH LIABILITY
IS PLACED. SELLER SHALL IN NO EVENT BE LIABLE TO BUYER OR TO ANY
SUCCESSOR IN INTEREST OR ANY BENEFICIARY OR ASSIGNEE THEREOF RELATING
TO THE SALE OF ANY BATTERY OR ANY COMPONENT FOR ANY CONSEQUENTIAL,
INCIDENTAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES ARISING OUT OF SUCH
SALE OR ANY DEFECTS IN, OR FAILURE OF, OR MALFUNCTION OF THE PRODUCT
UNDER SUCH SALE, INCLUDING BUT NOT LIMITED TO, DAMAGES BASED UPON LOSS
OF USE, LOST PROFITS OR REVENUE, INTEREST, LOST GOODWILL, INCREASED
EXPENSES AND/OR CLAIMS OF CUSTOMERS OF BUYER, WHETHER OR NOT SUCH LOSS
OR DAMAGE IS BASED ON CONTRACT, WARRANTY, NEGLIGENCE, INDEMNITY,
STRICT LIABILITY OR OTHERWISE.
4. COMPLIANCE WITH LAW.
4.1 VIOLATION OF LAW. Buyer and Seller shall each strictly observe
and comply with all federal and local laws and regulations which may
govern the manufacture, sale, handling and disposal of any products
herein specified. Violation of any such law or regulation may be
viewed as a breach of the Agreement, and may be cause for termination
or suspension of sales thereunder. Nothing herein shall be construed
to allow either party the right to cancel this Agreement for any
inadvertent error or minor violation of any law or regulation by the
other party.
4.2 GOOD MANUFACTURING PRACTICES. Products shall be manufactured
and tested by Seller in accordance with all applicable U.S. laws and
United States Food and Drug Administration (FDA) regulations,
including but not limited to the FDA's current Good Manufacturing
Practice regulations in effect at the time of such manufacture or
testing. Seller shall notify Buyer of any FDA inspection of its
production facilities used to manufacture any products and shall
furnish Buyer with copies of any Form 483 report and Establishment.
Inspection Reports to the extent that they apply to any product.
4.3 FDA COMPLIANCE. During the term of this Agreement Buyer shall
have responsibility for obtaining at its expense, in its name and at
its discretion any necessary device regulatory approvals from the U.S.
Food and Drug Administration (i.e. PMA's or 501 (k)'s as the case may
be), and applicable regulatory agencies of such other countries in
which product incorporating the Batteries or Components will be sold.
Seller shall supply Buyer will all documents, instruments,
information, reports and advice and general assistance as is necessary
to complete, and as is reasonable requested by Buyer in connection
with such regulatory approval efforts.
4.4 SELLER COMPLIANCE. Upon not less than three (3) business days'
notice, Seller will provide such Buyer personnel as Buyer reasonably
deems appropriate with reasonable
10
access from time to time to Seller's facilities and records for the
purpose of confirming Seller's compliance with requirement as noted in
this Section 4, and for the further purpose of confirming, if
reasonably deemed necessary by Buyer, Seller's compliance with
applicable specification for Batteries and Components.
5. CONSIGNMENT. If Buyer requests Seller to consign any products to
Buyer, the following terms and conditions shall apply:
(a) Consignment Products shall be delivered to Buyer locations at
which Buyer will use the products, based upon information supplied by
Buyer to Seller. However, Seller shall have the option not to make any
such shipment unless Buyer shall have paid all sums owing with respect
to all previous quantities of products purchased by Buyer.
(b) Seller shall use Federal Express or UPS or other recognized
courier services to ship Consignment Products, as directed by Buyer,
and shall charge Buyer's account with such courier service.
Consignment Products shall be received by Buyer and stored by Buyer as
Seller's property. All charges and expenses for receiving, handling,
and storing such material shall be paid by Buyer. The Consignment
Products in all cases shall be carefully segregated from other goods
either of the same or different character belonging either to Buyer or
to any third person, shall be marked as Seller's property, and shall
be stored in an area in Buyer's facilities separate from and not
mingled with other goods of Buyer or of any third person.
(c) Buyer shall inspect all Products (including the Consignment
Products) and notify Seller within one month if any of the Products
fail to meet Buyer's specifications and quality standards for such
Products.
(d) Buyer shall comply with all laws which might in any way affect
Seller's ownership of the Consignment Products from time to time
stored in Buyer's facility(s) and shall indemnify and hold harmless
Seller from and against all loss, damage, and expense arising out of
any levy, attachment, lien or process involving the Consignment
Products. Buyer shall be responsible for, and shall indemnify Seller
against, any loss or shrinkage in the quantity of the Consignment
Products while so stored, whether such loss or shrinkage is caused by
theft or pilferage or by fire, flood, tornado or other similar
catastrophe. Buyer shall purchase and maintain insurance covering all
such losses and naming Seller as additional insured.
(e) Buyer shall keep at all times a complete list or inventory of
the Consignment Products so stored, copies of which list shall be
furnished to Seller upon request. Upon not less than three (3)
business days prior notice, Seller's representatives shall have
reasonable access to the Consignment Products at Buyer's facilities
for the purpose of verifying such lists or inspecting the condition of
Consignment Products.
(f) All public charges, whether in the nature of sales,
occupational or other taxes or assessment or license fee, which shall
be levied or assessed against the Consignment Products
11
at Buyer's facilities, or against Buyer or Seller by reason hereof, by
any federal, state or municipal authority, shall be paid by Buyer.
(g) All Consignment Products shall remain the property of Seller
and shall be held by Buyer as such until withdrawn from the consigned
stock and purchased by Buyer pursuant to this Agreement. Buyer will
withdraw products from the inventory of Consignment Products on a
first-in-first-out basis for each product model.
(h) From time to time, as Buyer shall purchase Consignment Products
from Seller, it may withdraw the Consignment Products so purchased
from Seller's consigned stock of the products at Buyer's facility(s).
Upon each such withdrawal for purchase by Buyer pursuant to this
Agreement, title to the Consignment Products so withdrawn shall pass
to Buyer.
6. OBLIGATIONS UPON TERMINATION.
(a) Upon expiration of this Agreement for any reason whatsoever or
if Buyer changes the model mix of, or discontinues, any Batteries or
Components which it requires, Buyer shall purchase, or be deemed to
have purchased from Seller, all of the remaining Consignment Products
located at a Company facility, which met Buyer's specifications and
quality standards at the time of receipt, as of the date of expiration
or termination, at the prices in effect at such time. Payment shall be
made in accordance with Section 2.2.
(b) Upon expiration or termination of this Agreement for any reason
whatsoever or if Buyer changes the model mix of, or discontinues, any
Batteries or Components which it requires, Buyer agrees to purchase,
within six (6) months, all Batteries and Components that Seller then
holds either (i) as finished inventory or (ii) work-in-progress
("WIP") up to the maximum amount of inventory that Seller is required
to maintain under Section 4 of the Agreement (provided, however that,
for any WIP, Buyer shall only be required to reimburse Seller for the
cost of any such material that Seller cannot reasonably use for other
products).
7. NEW TECHNOLOGY.
7.1 During the Initial Term of this Agreement and any extension
thereof, Seller agrees, subject to Section 7.2 and 7.3 below, to
offer, develop and manufacture for, and to sell to, Buyer new
Batteries and Components for Buyer's products incorporating any
technology or intellectual property (collectively, "Technology") for
such Batteries and Components which Seller now possesses or may
hereafter develop or acquire, provided that Seller is not otherwise
restricted by law or contract (due to intellectual property rights
owned by third parties or designs the development of which were paid
for in whole or in part by a customer) from selling products
incorporating such Technology to Buyer ("New Products"). All New
Products shall be subject to and covered by this Agreement (subject to
Sections 7.2 and 7.3).
7.2 With respect to any new Battery for a defibrillator product of
Buyer (each, a "New Defibrillator Battery"), the parties agree that
the pricing for any such New Defibrillator Battery shall be set by
Seller as follows:
12
7.2.1 for non-SVO technology, Seller's pricing to Buyer for such
a New Defibrillator Battery will not exceed ****, which price will be
reduced by **** ******* ************ in which Seller shall have
delivered such a New Defibrillator Battery.
7.2.2 for SVO technology, Seller's pricing to Buyer for such a
New Defibrillator Battery will not exceed ****, which price will be
reduced by ********* *********** in which Seller shall have delivered
such a New Defibrillator Battery.
7.3 For any new Product developed under this Section 7 for Buyer
other than a New Defibrillator Battery, the parties agree to negotiate
pricing for such New Product in good faith.
8. CONTINUITY OF SUPPLY. Seller acknowledges that Buyer has certain
concerns regarding the continuity of its supply source for Batteries
and Components in the event that a change of control occurs with
respect to Seller. In that regard, Seller agrees as follows:
8.1 This agreement is binding on Seller's successor and assigns.
8.2 In the event that Seller sells all or substantially all of its
assets to any third party, Seller shall require any such purchaser to
assume and agree to perform all of Seller's obligations under and for
the term of this Agreement.
8.3 In addition, Seller agrees that, in connection with any sale of
a controlling interest of Seller to any direct competitor of Buyer
("Acquiror"). Seller will notify any such potential Acquiror of its
obligations under this Agreement.
8.4 "Controlling interest" means:
8.4.1 The acquisition by a competitor of Buyer of twenty-five
percent (25%) or more of any class of securities of Seller;
8.4.2 The acquisition by a competitor of Buyer of a right
(whether by means of warrants, options, or otherwise) to acquire
twenty-five percent (25%) or more of any class of securities of
Seller;
8.4.3 The granting of a right to representation of the Seller's
board of directors to a competitor of Buyer (or a director,
officer, employee, or agent of a competitor of Buyer) or the
election to Seller's board of directors by a competitor of
Buyer (or director, officer, employee or agent of a competitor
of Buyer); or
8.4.4 The establishment by the Seller of a joint venture in
which a competitor of Buyer owns ten percent (10%) or more of
any class of securities or has a right to ten percent (10%) or
more of the profits of the venture.
13
9. OPTION TO EXTEND THE AGREEMENT. Buyer shall have the option to extend the
term of this Agreement beyond the Initial Term for a period of two (2)
years ("Option Extension Period") by delivering written notice to Seller
not less than sixty (60) days prior to the extension date. The Option
Extension Period, however, is subject to all of the following conditions:
9.1 The prices for Batteries (see Attachment 2 to Exhibit B) and for
Components (see Attachment 1 to Exhibit B) during the Option Extension
Period shall be, at the option of * either: (a) the * for each such
product * , or (b) prices for Batteries and Components * for all
Batteries (in the aggregate) and for all Components (in the aggregate)
sold to Buyer in each year of the Option Extension Period which is
equal to * obtained by Seller for all Batteries (in the aggregate) and
all Components ( in the aggregate), respectively, * ; and
9.2 If * elects pricing under Section 9.1(b) above, Seller will notify
Buyer as soon as is reasonably possible, * as to the amount of the *
that * with respect to Batteries (in the aggregate) and with respect
to Components (in the aggregate). Seller will cooperate with the *
within thirty (30) days * by Buyer. If the * of the price quoted by
Seller, then Buyer will be solely responsible * . If the price quoted
by Seller is more than * , then Seller will be solely responsible for
* .
9.3 " * " under Section 9.1(b) above shall: (a) * and in a manner
consistent with Seller's previous practices; and (b) * .
9.4 Seller, Buyer, and * will cooperate in good faith to establish the
relevant * to be included in the * . If Seller and Buyer have not
agreed to the composition of the relevant * within thirty (30) days,
then the relevant * will be finally * .
9.5 Seller and Buyer will cooperate and negotiate in good faith in
connection with allocating the aggregate price increases permitted by
Buyer under Section 9.1(b) among individual Batteries and Components
to be purchased by Buyer during the Option Extension Period.
14
EXHIBIT B
PRICING AND INVENTORY LEVEL
The firm, fixed prices for Components are set forth on Attachment 1 to this
Exhibit B and for Batteries are set forth on Attachment 2.
At least * prior to each
* , the parties will review the product quantity forecasts
and * for *
that * for *
and * .
15
EXHIBIT B - ATTACHMENT 1
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & GREATBATCH HITTMAN
COMPONENT PARTS
--------------------------------------------------------------------------------
UNIT PRICE
6/1/00 THRU % INVENTORY
P/N DESCRIPTION 12 MO EAU 12/30/01 REQUIREMENT
--------------------------------------------------------------------------------
6041534-099 *********** ******* $ ******* 25%
--------------------------------------------------------------------------------
5015435-001 ***************** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041701-001 ******************* ******* $ ******* 25%
--------------------------------------------------------------------------------
6041702-001 **************** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041700-002 ****************** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041641-003 ******************** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041641-004 *********************** ******* $ ******* 25%
--------------------------------------------------------------------------------
7001630-001 ********************* ******* $ ******* 25%
--------------------------------------------------------------------------------
7001441-012 ****************** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041696-002 ******** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041504-099 ********** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041697-001 ***** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041556-001 ************** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041266-002 ************ ******* $ ******* 25%
--------------------------------------------------------------------------------
3000909 ******************* ******* $ ******* 25%
--------------------------------------------------------------------------------
3000881 ********************* ******* $ ******* 25%
--------------------------------------------------------------------------------
3000885 ******** ******* $ ******* 25%
--------------------------------------------------------------------------------
3000899 **************** ******* $ ******* 25%
--------------------------------------------------------------------------------
3000622 ************** ******* $ ******* 25%
--------------------------------------------------------------------------------
3000884 ************ ******* $ ******* 25%
--------------------------------------------------------------------------------
3000621 ************** ******* $ ******* 25%
--------------------------------------------------------------------------------
8001512 ***************** ******* $ ******* 25%
--------------------------------------------------------------------------------
3001242 ********* ******* $ ******* 25%
--------------------------------------------------------------------------------
3001193 ********** ******* $ ******* 25%
--------------------------------------------------------------------------------
8000831 ************ ******* $ ******* 25%
--------------------------------------------------------------------------------
8008873 **************** ******* $ ******* 25%
--------------------------------------------------------------------------------
8008556 ********************* ******* $ ******* 25%
--------------------------------------------------------------------------------
1
EXHIBIT B - ATTACHMENT 2
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & GREATBATCH HITTMAN
BATTERIES
--------------------------------------------------------------------------------------------------------------------
PART NUMBER DESCRIPTION 12 MO EAU UNIT PRICE 6/1/00 THRU % INVENTORY
12/30/01 REQUIREMENT
--------------------------------------------------------------------------------------------------------------------
PACER BATTERIES
--------------------------------------------------------------------------------------------------------------------
1120009-001 ****BATTERY ****** $ ****** 0
--------------------------------------------------------------------------------------------------------------------
1120036-001 ****BATTERY ****** $ ****** 0
--------------------------------------------------------------------------------------------------------------------
1120043-001 ****BATTERY ****** $ ****** 0
--------------------------------------------------------------------------------------------------------------------
1120065-001 ****BATTERY ****** $ ****** 0
--------------------------------------------------------------------------------------------------------------------
1120052-001 ****BATTERY ****** $ ****** 25
--------------------------------------------------------------------------------------------------------------------
1120052-001 *****BATTERY ****** $ ****** 25
(price effective**)
--------------------------------------------------------------------------------------------------------------------
TBD ******BATTERY ****** $ ****** 0
(price effective**)
--------------------------------------------------------------------------------------------------------------------
1120055-001 **********BATTERY ****** $ ****** 10% (4 WKS. CONSIGNMENT
STOCK AT VEDDESTA)
---------------------------------------------------------------------------------------------------------------------
1120056-001 **********BATTERY ****** $ ****** 10% (4 WKS. CONSIGNMENT
STOCK AT VEDDESTA)
---------------------------------------------------------------------------------------------------------------------
ICD BATTERIES
---------------------------------------------------------------------------------------------------------------------
3001015 ********BATTERY ****** $ ****** 25
---------------------------------------------------------------------------------------------------------------------
8001556 ********BATTERY ****** $ ****** 0
---------------------------------------------------------------------------------------------------------------------
8006260 ************** ****** $ ****** 25
---------------------------------------------------------------------------------------------------------------------
1120503-001 ************** ****** $ ****** 0
---------------------------------------------------------------------------------------------------------------------
TBD ************ ****** $ ****** 0
----------------------------------------------------------------------------------------------------------------------
10003678 ********* ****** $ ****** 0
----------------------------------------------------------------------------------------------------------------------
CFX BATTERIES
----------------------------------------------------------------------------------------------------------------------
TBD CFX BATTERY $ ****** 0
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
1
EXHIBIT B - ATTACHMENT 1
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & GREATBATCH HITTMAN
COMPONENT PARTS
--------------------------------------------------------------------------------
UNIT PRICE
6/1/00 THRU % INVENTORY
P/N DESCRIPTION 12 MO EAU 12/30/01 REQUIREMENT
--------------------------------------------------------------------------------
8008555 ******************** ******* $ ******* 25%
--------------------------------------------------------------------------------
8008554 ********************** ******* $ ******* 25%
--------------------------------------------------------------------------------
3001236 ********* ******* $ ******* 25%
--------------------------------------------------------------------------------
7001630-003 ******************* ******* $ ******* 25%
--------------------------------------------------------------------------------
1080357-002 ********** ******* $ ******* 0%
--------------------------------------------------------------------------------
8001713 ********* ******* $ ******* 0%
--------------------------------------------------------------------------------
1080376-001 ****************** ******* $ ******* 0%
--------------------------------------------------------------------------------
1080438-001 ********************** ******* $ ******* 8%
--------------------------------------------------------------------------------
TBD ******************** ******* $ ******* 25%
--------------------------------------------------------------------------------
▇▇-▇▇-▇▇▇ ***************** ******* $ ******* 10%
--------------------------------------------------------------------------------
▇▇-▇▇-▇▇▇ ******************* ******* $ ******* 10%
--------------------------------------------------------------------------------
6041783-097 **************** ******* $ ******* 25%
--------------------------------------------------------------------------------
6041706-002 ************** ******* $ ******* 25%
--------------------------------------------------------------------------------
▇▇-▇▇-▇▇▇ ********** ******* $ ******* 0
--------------------------------------------------------------------------------
▇▇-▇▇-▇▇▇ ************ ******* $ ******* 0
--------------------------------------------------------------------------------
▇▇-▇▇-▇▇▇ ********************* ******* $ ******* 10%
--------------------------------------------------------------------------------
▇▇-▇▇-▇▇▇ ********************* ******* $ ******* 10%
--------------------------------------------------------------------------------
▇▇-▇▇-▇▇▇ ************ ******* $ ******* 10%
--------------------------------------------------------------------------------
Note: Revision level determined by individual Purchase Orders
The "Inventory Requirement" can be processed to completion and shipped
within 5 calendar days.
Seller inventories will be replenished within a period of 40 calendar
days.
Seller's obligation to maintain inventory is limited to the level
reflected in "Inventory Requirement" column.
-------------------------------------
2
Note: Revision level determined by individual Purchase Orders
The "Inventory Requirement" can be processed to completion and shipped
with 5 calendar days.
Seller inventories will be replenished within a period of 40 calendar
days.
Seller's obligation to maintain inventory is limited to the level
reflected in the "Inventory Requirement" column.
'CFX pricing - Stainless steel case:
Quantity Unit Price
********* ********
********* ********
********* ********
********* ********
********* ********
If annual requirements for a particular "Pacer Batter" falls below ****
units the firm fixed price for that battery will become ********
****** Battery is a reduced size version of the ******
Battery.
______________________
2