EXHIBIT 10.1
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 REQUEST
FOR CONFIDENTIAL TREATMENT UNDER RULE
406 PROMULGATED UNDER THE SECURITIES ACT OF
1933 AND RULE 24b-2 UNDER THE
SECURITIES EXCHANGE ACT OF 1934.
Filtered Feedthrough Supply Agreement
Wilson Greatbatch LTD
&
Cardiac Pacemakers, Inc.
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Table of Contents
Section
Title
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I. Contract Period
II. Contract Term
III. Continuity Agreement
IV. Price
Lead Time
V. Manufacturing Location
VI. Forecast Planning
VII. Raw Materials Specified by
CPI
VIII. Cancellation Charges
IX. Warranty, Indemnity and
Liability Limitation
X. Confidentiality
XI. Force Majeure
XII. Miscellaneous
Attachments: A, B,
C
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THIS AGREEMENT, effective February 10,
2005, is between WILSON GREATBATCH LTD.,
a New York corporation located at 9645
Wehrle Drive, Clarence, New York, 14031
(`SELLER' or `WG') and Cardiac Pacemakers,
Inc., (`BUYER' or `CPI') a Minnesota
Corporation, located at 4100 Hamline Ave.
No., St. Paul, Minnesota 55112.
Whereas BUYER wishes to purchase filtered
feedthrough materials/components for
its use in medical devices; and
Whereas SELLER agrees to
manufacture/provide such filtered feedthrough
materials/components in accordance with
BUYER's specifications, delivery
schedules and other requirements referenced
in the AGREEMENT;
NOW, THEREFORE, SELLER and BUYER hereby
agree as follows:
I. CONTRACT PERIOD:
This AGREEMENT shall commence on the effective date and
terminate
December 31, 2007 with yearly extensions beyond the termination
date to
be based upon mutual written agreement
A.
Pricing shown in Attachment A is effective as of the
effective date of this Agreement and shall not be applied
retroactively to filtered feedthroughs already shipped.
B.
All filtered feedthrough units that contain a feedthrough
and a filter manufactured by WG and shipped to CPI from the
period 01 January 2005 through 31 December 2005 are included
in the 2005 quantity commitment made by CPI as outlined in
Section IV, D.
II. CONTRACT TERM:
A.
CPI may terminate this agreement at any time with * written
notice to WG.
B.
In the event of early termination by CPI, WG will invoice
CPI for all accumulated engineering and tooling on any
custom filtered feedthrough model up to the date the
termination letter is received by WG. All unique component
parts for a custom filtered feedthrough model will be
forwarded to CPI and invoiced at aggregate cost. CPI will be
responsible for paying for all work-in-process ("WIP") costs
and all finished goods inventory specific to CPI custom
designs.
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C.
In the event of early termination, WG will dispose of all
in-house tooling designed to be used by WG exclusively for
any CPI custom filtered feedthrough under the auspices of
CPI representatives. This will be done to ensure that
financially shared tooling between CPI and WG will not be
used for the manufacture of another customer's filtered
feedthrough.
D.
This agreement may not be modified, changed or terminated
orally. No change, modification, addition, or amendment
shall be valid unless in writing indicating intent to modify
this agreement and signed by an authorized officer of each
party.
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III. CONTINUITY AGREEMENT:
A.
In the event WG experiences a major catastrophe that would
prohibit the shipment of filtered feedthroughs in sufficient
quantities to meet CPI's firm purchase orders, WG will
immediately notify CPI of the nature of the problem and
begin discussions on the length of time that shipments will
be delayed.
B.
*
C.
WG must give CPI * written notice of any intent to
discontinue supply of filtered feedthroughs to CPI, but WG
shall not be bound after the expiration of this agreement to
the pricing set forth in Attachment A.
IV. PRICE:
A.
CPI will commit to take delivery of a minimum of * WG
filtered feedthroughs from 1/1/05 through 12/31/07. CPI will
use reasonable efforts to provide ample notification if
order patterns change significantly from typical order
patterns.
B.
Pricing for filtered feedthroughs is shown in Attachment A
and is effective for all deliveries scheduled from the date
of execution of this Agreement through 31 December 2007.
Adjustments under the terms of Section IV "G" of this
Agreement apply.
C.
Pricing for each calendar year is based upon the minimum
quantity commitment (hereafter, collectively the "CPI
Commitment") made by CPI for deliveries of WG filtered
feedthroughs that contain a feedthrough and a filter
manufactured by WG
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D.
For calendar year 2005 only, WG will offer CPI the pricing
shown in the * unit column of Attachment A for a minimum
commitment of * WG filtered feedthroughs that contain a
feedthrough and a filter manufactured by WG under the
following conditions:
a.
CPI demonstrates that the * unit shortfall is
solely due to the unavailability of qualified WG
Columbia feedthroughs for * and * devices
b.
CPI will continue active effort to qualify WG
Columbia
feedthroughs in * and * filtered
feedthroughs
c.
Upon successful qualification of these components,
CPI will provide a minimum blanket order for *
units (combined total) of WG * and/or * filtered
feedthroughs
E.
In the event that in response to a purchase order issued by
CPI, WG is unable to provide the requested filtered
feedthroughs in the quantity, quality or within the
timeframe requested, the CPI Commitment herein (as it
applies to each filtered feedthrough) shall be reduced
proportionately. This shall only apply if CPI has allowed WG
standard lead times on the purchase order.
F.
Additional new parts or additional quantity breaks will be
added to this agreement, as needed. *
G.
Price Adjustments for Significant Cost Impact: The price for
any filtered feedthrough may be adjusted up or down during
the term of this agreement, by mutual consent, if there is
significant impact to the final cost of the component for
these reasons:
1.
Precious Metals Price Adjustment for WG supplied
feedthroughs only: The price for any filtered
feedthrough is subject to upward or downward
modification from time to time due to an increase
or decrease, as the case may be, in the six-month
moving average cost to WG of platinum, to the
extent WG's price change is based on an increase
or decrease in the cost of platinum in an amount
greater than * of the current cost of platinum
contained in any filtered feedthrough. The
reference price of platinum will be based upon the
London Fixed as reported by Kitco. If WG
determines that a price increase or decrease under
this Section is required or permissible, WG shall
deliver written notice to CPI setting forth the
basis for such determination. The parties agree to
negotiate in good faith after delivery of such
notice with respect to an adjustment to the
pricing set forth in the pricing table of the
proposal. The cost of platinum used as the basis
to establish pricing in Attachment A of this
Agreement was $* per ounce.
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An example of this precious metals adjustment is shown below:
CPI Product *:
- Amount of platinum used per above part number - * inches
- Diameter of platinum wire used for above part
numbers - * inches
- Current cost of platinum per ounce - $*
- Current cost of platinum used per above part numbers - $*
Price adjustment trigger points under terms of Price
Adjustment language above
- Upper trigger point
- Cost of platinum > $* per above part numbers (six
month moving average cost of platinum > $* / ounce)
- Lower trigger point - Cost of platinum < $* per
above part numbers (six month moving average
cost of platinum < $* / ounce)
2.
Precious Metals Price Adjustment for * supplied
feedthroughs only: Should * provide notice to WG
that the cost of precious metals used within their
feedthroughs supplied to WG has increased or
decreased more than $* per ounce from the quoted
platinum price of $* an ounce, and the price has
held at that rate for more than *, WG shall
deliver written notice to CPI. CPI shall review
and audit information directly with *. If the
price change is deemed warranted by CPI, notice
will be provided back to WG, and the filitered
feedthrough pricing shown in Attachment A will be
adjusted by that incremental amount only, and only
on firm Purchase Orders using * feedthrus.
3.
Material Substitution: If the design of any
feedthrough or filtered feedthrough changes to
allow alternate materials and those materials are
lower or higher in cost than previous materials,
prices will be discussed and mutually agreed upon
at that time.
4.
Design changes: If the design of any feedthrough
or filtered feedthrough is altered and it affects
the manufacturing costs of the part, prices will
be discussed and mutually agreed upon at that
time.
H.
Payment terms are net *, FOB Carson City, NV for filtered
feedthroughs. There is a * minimum order per part number
unless CPI's total calendar year forecast is less than *.
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V. LEAD TIME:
Standard lead-time for production-filtered feedthroughs is *. WG
will
notify CPI, in writing, of any changes to these standard lead
times.
VI. MANUFACTURING LOCATION:
Should WG wish to manufacture CPI feedthroughs or filtered
feedthroughs
at any location other than the approved site (C
