Exhibit 10.1
THE CONFIDENTIAL PORTION 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.
SUPPLY AGREEMENT
SORIN/ELA AND GREATBATCH
2006 - 2010
Contents:
1.0 Definitions
2.0 Product Purchase
and Sale
3.0 Price
4.0 Orders and
Forecasts
5.0 Warranty and
Limitation of Liability
6.0 Contract Term
7.0 Business Exit
8.0
Confidentiality
9.0 Force Majeure
10.0
Intellectual Property
11.0
Miscellaneous
12.0
Exhibits
A.
General Conditions
B.
Pricing for Batteries and Capacitors
C.
Pricing for Feedthroughs and Filtered Feedthroughs
D.
Pricing for Assembled Headers
E.
Pricing for Cases
F.
Pricing for Miscellaneous Piece Parts
G.
Standard Lead Time
H.
Audit Process
I.
Enclosure Visual Inspection Criteria
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Supply Agreement
THIS
AGREEMENT is effective 31 March 2006 and is by and between
GREATBATCH,
INC., a New York corporation located at 9645 Wehrle Drive,
Clarence, New York,
14031, ("GB") and SORIN/ELA BIOMEDICA CRM and ELA MEDICAL SAS a
company located
at 13040 Saluggia (VC), Via Crescentino, Italy ("SORIN/ELA").
RECITALS: SORIN/ELA wishes to purchase Assembled Headers,
Batteries,
Capacitors, Cases, Coated Components, Feedthroughs, Filtered
Feedthroughs, and
miscellaneous machined or molded piece parts (hereinafter referred
to as
Products) for use in medical devices. GB agrees to manufacture and
sell such
Products to SORIN/ELA and/or their Affiliates in accordance with,
and subject
to, the specifications and other terms and conditions set forth in
the
Agreement.
NOW,
THEREFORE, GB and SORIN/ELA hereby agree as follows:
1.0 DEFINITIONS.
------------
As
used in this Agreement, the following defined terms shall
have
the meanings provided for in this Article 1:
1.1
"Affiliate" means:
1.1.1 "any other entity/person of which the securities or other
ownership interests representing 50% (fifty percent) or more
of the equity or 50% (fifty percent) or more of the ordinary
voting power or 50% (fifty percent)or more of the general
partnership interests are, at the time of such
determination, owned, controlled or held, directly or
indirectly, by such entity/person, or
1.1.2 any other
entity/person, which at the time of such
determination, is controlling, controlled by or under common
control with, such entity/person.
1.1.3 As used herein,
the term "control," whether used as a noun
or verb, refers to the possession, directly or indirectly,
of the power to direct, or cause the direction of, the
management or policies of a entity/person, whether through
the ownership of voting securities, by contract or
otherwise.
1.2
"Agreement" means this
Agreement and all Exhibits hereto and any other
attachments hereto.
1.3
"Assembled Headers"
means a single piece molded device header
assembly, including where the context requires all such
Products
manufactured by GB and sold to SORIN/ELA under this Agreement.
1.4
"Batteries" means
lithium iodine low-rate batteries, lithium silver
vanadium oxide high rate batteries, QHR silver vanadium
oxide/carbon
monofluoride high rate batteries and other power sources,
including
where the context requires all such Products manufactured by GB
and
sold to SORIN/ELA under this Agreement.
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1.5
"Big Four CPA Firm"
means Ernst & Young, Deloitte & Touche,
PricewaterhouseCoopers and KPMG.
1.6
"Capacitors" means wet
tantalum high voltage electrical capacitors,
including where the context requires all such Products manufactured
by
GB and sold to SORIN/ELA under this Agreement.
1.7
"Cases" means drawn
titanium or stainless steel
enclosures used in a medical device, including where the
context
requires all such Products manufactured by GB and sold to
SORIN/ELA under this Agreement.
1.8
"Change of Control"
means the occurrence of any of the following
events:
1.8.1 The acquisition
by any person of beneficial ownership,
directly or indirectly, of securities of GB representing
fifty percent (50%) or more of the total voting power
represented by GB's then outstanding voting securities;
1.8.2 A change in the
composition of the Board of Directors of GB
occurring within a one-year period, as a result of which
fewer than a majority of the directors are Incumbent
Directors. "Incumbent Directors" shall mean directors who
either (i) are directors of GB as of the date hereof, or
(ii) are elected, or nominated for election, to the Board of
Directors of GB with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual
not otherwise an Incumbent Director whose election or
nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to GB);
1.8.3 A merger or
consolidation of GB with any other corporation,
other than a merger or consolidation which would result in
the voting securities of GB outstanding immediately prior
thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the
total voting power represented by the voting securities of
GB or such surviving entity outstanding immediately after
such merger or consolidation, or the approval by the
stockholders of GB of a plan of complete liquidation of GB
or of an agreement for the sale or disposition by GB of all
or substantially all GB's assets;
1.8.4 The sale or
transfer of all or substantially all of the
assets of GB relating to the manufacture of any Product; or
1.8.5 The complete
liquidation or dissolution of GB.
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1.9
"Coated
Component" means low polarization electrode
coatings, including where the context requires all such
Products
manufactured by GB and sold to SORIN/ELA under this Agreement.
1.10
"Confidential
Information" means know-how, trade secrets, and
unpublished information disclosed (whether before or during the
term
of this Agreement) by one of the parties (the "disclosing party")
to
the other party (the "receiving party"), and which is marked as
proprietary or confidential as provided below.
All Confidential Information disclosed by one party to the
other
under this Agreement shall be in writing and bear a legend
"Proprietary," "Confidential" or words of similar import or, if
disclosed in any manner other than writing, shall be followed
by
confirmation that such information is confidential by the
disclosing
party within*. The following information communicated to GB by
SORIN/ELA shall be considered Confidential Information of
SORIN/ELA
for
purposes of, and subject to, Article 8 and the other provisions
of this Agreement whether or not marked "Proprietary" or
"Confidential":
1.10.1
Specifications;
1.10.2
Information regarding circuitry design or mechanical
design;
1.10.3
Information regarding product or component
qualification or verification; and
The
following information communicated to SORIN/ELA by GB shall be
considered Confidential Information of GB for purposes of, and
subject to,
Article 8 and the other provisions of this Agreement whether or not
marked
"Proprietary" or "Confidential":
1.10.4
information regarding delivery or production
schedules;
1.10.5
information regarding GB delivery and production
schedules or production capacity;
1.10.6
information regarding GB product or component
qualification or verification;
1.10.7
information related to GB manufacturing processes;
1.10.8
information related to Product technology including
GB designs and materials used for components and
assemblies; and
1.10.9
information related to Product pricing.
1.11
"Contract Year" means
each calendar year during the Term, provided
that for
clarification the initial Contract Year shall mean 2006.
1.12
"Effective Date" means
the date this Agreement is signed by the
parties hereto.
1.13
"Feedthrough" means a
subassembly consisting of: (a) an outer
electrically conductive member (usually referred to as a flange
or
ferrule), (b) an inner electrically conductive member or
members
(usually represented as a metallic wire or pin, or multiple wires
or
pins), and (c) a nonconductive material fused or brazed between
the
inner and outer members (usually a glass or ceramic material)
such
that
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they are electrically insulated and hermetically sealed;
including
where the context requires all such Products manufactured by
Seller
and sold to Buyer under this Agreement.
1.14
"Filtered Feedthrough"
means an assembly consisting of:
(a) Feedthrough and (b) feedthrough type capacitor composed of
ground
electrodes interleaved with conductive active electrodes, one
for
each active feedthrough pin; including where the context requires
all
such Products manufactured by Seller and sold to Buyer under
this
Agreement.
1.15
"Force Majeure" is
defined in Article 9.
1.16
"Intellectual
Property" means U.S. and foreign Patent Rights,
trademarks, service marks and registrations thereof and
applications
therefore, copyrights and copyright registrations and
applications,
mask works and registrations thereof, Know-How, trade secrets,
Inventions, discoveries, ideas, technology, data, information,
processes, drawings, designs, licenses, computer programs and
software, and technical information including but not limited
to
information embodied in material specifications, processing
instructions, equipment specifications, product specifications,
confidential data, electronic files, research notebooks,
invention
disclosures, research and development reports and the like
related
thereto, all amendments, modifications, and improvements to any
of
the foregoing.
1.17
"Miscellaneous Piece
Parts" means machined and molded components used
in the manufacturing of implantable medical devices, including,
but
not limited to,* and such items including where the context
requires
all such
Products manufactured by GB and sold to SORIN/ELA under this
Agreement.
1.18
"Product" means
Assembled Headers, Batteries, Capacitors, Cases,
Coated Components, Feedthroughs, Filtered Feedthroughs, and
miscellaneous piece parts, in each case identified on Exhibits B,
C,
D, E and F, as modified from time to time by mutual written
agreement.
1.19
"Qualification" means
Product performance testing conducted according
to an approved and controlled protocol to ensure that the
Products
meet Specifications. Products used to perform the qualification
must
be manufactured using validated equipment and processes per GB
procedures.
1.20
"SORIN/ELA" means
SORIN BIOMEDICA CRM and ELA MEDICAL SAS and their
Affiliates.
1.21
"Specifications" means
(i) with respect to Products listed on
Exhibits B, C, D, E and F as of the date hereof, all applicable
requirements and protocols provided to GB by SORIN/ELA prior to
the
date of this Agreement as provided hereunder, and approved by GB
in
writing, relative to the design, physical characteristics,
function,
performance, manufacture, packaging and quality of such Products,
in
each case as modified by Article 2.2. To the extent not superseded
by
the foregoing, Specifications will also include all
specifications
and protocols applicable to the Products published by GB.
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<PAGE>
1.22
"Term" means the
period of time this Agreement is in effect as
provided for in Article 6.1.
1.23
"GB" means Greatbatch,
Inc. and its Affiliates.
2.0 PRODUCT PURCHASE
AND SALE.
-------------------------
2.1
Manufacture and
Supply. GB shall supply Products to SORIN/ELA in the
quantities ordered by SORIN/ELA from time to time and in
accordance
with the Specifications agreed to by the parties and with the
schedules for deliveries thereof established pursuant to this
Agreement
2.2
Specifications. All
Products supplied by GB to SORIN/ELA shall be in
accordance with the Specifications and supplied after
Qualification
thereof. Any changes to Specifications for Products to be sold
under
this Agreement shall be agreed upon by both parties in writing.
2.3
Quality Control. GB
agrees to follow strict quality control standards
with
respect to the production and transport of Products sold under
this Agreement and consistent in all material respects with the
standard of care and science applicable at the time of
delivery.
SORIN/ELA agrees to follow strict quality control standards
with
respect to the storage, preservation and use of Products
purchased
under this Agreement and consistent in all material respects with
such
guidelines as GB may from time to time deliver to SORIN/ELA.
2.4
GB / SORIN/ELA Supply
Agreement and Extension. SORIN/ELA and GB desire
to terminate (i) the original Purchase Agreement between GBL and
Ela
Medical S.A. signed on or about November 17, 2000 by ELA Medical;
and
(ii) the Supply Agreement Pricing Amendment, signed on or about
November 16, 2001 (the "Current Supply Agreement") by Sorin and
Ela,
and the Supply Agreement Extension executed on or about 19
January
2006, which is superseded by this Agreement; provided, however,
that
any financial and other obligations owing by one party to the
other,
and any such obligations which, by their terms survive termination
of
these Agreements, shall not be terminated by virtue of this
Article
2.4.
2.5
Standard Forms Not
Applicable. The general terms and conditions of
sale for Products sold by GB to SORIN/ELA hereunder are
exclusively
set forth in this Agreement. The parties expressly agree that none
of
the terms and conditions of any written or electronic standard
or
other preprinted forms used by either GB or the SORIN/ELA 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.
2.6
*: SORIN/ELA will provide GB the*
SORIN/ELA with*.
3.0 PRICE.
-----
3.1
Pricing. The initial prices for Products
are set forth on Exhibits B,
C, D, E and F.
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3.2
*
3.3
Payment Terms. Payment
terms are net* from date of invoice and terms
are* or the location of such other* facility that manufactures
the
Product ("FCA" per INCOTERMS 2000). Remittances are to be made per
the
following:
Please direct all Wire Transfer Payments to:
-------------------------------------------
Account Name: *
Account Number: *
ABA: *
Bank Name: *
Swift Code (if needed): *
3.4
Price Adjustments for
Significant Cost Impact. The price for any
product 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 Product:
3.4.1 In
the case of * the price of any Product is subject
to *modification from time to time due to *. The
reference price of * will be based upon the *
3.4.1.1 *shall be
executed (reflecting revised SORIN/ELA
pricing) on an agreed upon volume and timing basis.
Specifically, GB agrees to *with SORIN/ELA's formal
agreement on pricing, volume, and delivery
requirements.
3.4.1.2 The cost of *
used as the basis to establish pricing
in Exhibit C of this Agreement was *.
3.4.2 In
the case of *, the price of any Product is subject
*modification from time to time due to *. The
reference price of * will be based upon the * as
reported by the * The cost of * used as the basis to
establish pricing in Exhibits E, F and G of this
Agreement was *
3.4.3 In
the case of *, the price of any Product is subject
to *modification from time to time due to *. The
reference price of *will be based upon the "*" as
reported by the *. The cost of *used as the basis to
establish pricing in Exhibits E, F and G of this
Agreement was *.
3.4.4 If
GB determines that a price *under this Article is
required or permissible, GB shall deliver written
notice to SORIN/ELA setting forth the basis for such
determination. The new price(s) shall be in effect *
of GB's notification to SORIN/ELA.
3.5
Price Adjustments for
*.
3.5.1 The
price for a Product from time to time as set
forth on Exhibits B, C, D, E and F is subject to *
modification in the event that a redesign of a
Product results in *of the Product.
3.5.2 If
SORIN/ELA determines that it is necessary or
desirable to make a change to the applicable
Specifications for any Product, then SORIN/ELA will
so notify GB in writing. GB will respond to SORIN/ELA
in writing as soon as practicable, but in no event
later than *, after the date of any such notice,
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specifying (i) GB's suggestions, if any, for
modifying SORIN/ELA'S Specifications change; (ii) the
lead time necessary to implement such change; and
(iii) the amount and nature of any *, if any,
estimated to result from implementing such change.
The parties agree to negotiate in good faith after
delivery of such notice with respect to an adjustment
to the Specifications *. If the Specification changes
requested by SORIN/ELA for a Product are agreed to by
GB, SORIN/ELA will be responsible for all finished
product, WIP raw components, and any non-cancelable
purchase orders outstanding with GB's suppliers
*requirements for the Product (as listed in Exhibit
G), that do not meet the revised Specifications.
3.6
Non-Recurring Charges.
GB and SORIN/ELA agree to *, for Products that
are developed by GB for SORIN/ELA, including, but not limited
to,
Products included in this Agreement in Exhibits B, C, D, E and
F.
3.7
U.S. Funds. All
amounts referenced in or to be paid under this
Agreement shall be in U.S. funds.
3.8
*. During the Term of
the Agreement, GB and SORIN/ELA agree to explore
the opportunity for GB to *.
4.0 ORDERS AND
FORECASTS.
--------------------
4.1
Firm Purchase Orders
for Products and Forecasts.
4.1.1 By
*of each Contract Year, SORIN/ELA shall provide GB
with a non-binding *forecast indicating SORIN/ELA'S
forecasted purchases of Products from GB for the next
Contract Year. The forecast for the months remaining
in 2006 shall be provided within *of the effective
date of this Agreement. The forecast shall be used
for purposes of facilitating each party's planning
and in order to meet the lead times required by
certain of GB's suppliers. Such forecasts are not
legally
binding in any manner and may be revised from
time to time by SORIN/ELA, as it deems appropriate,
by providing notice to GB.
4.1.2 By
the *day of every month, SORIN/ELA will submit to
GB in writing the following information:
4.1.2.1 A rolling
*forecast of anticipated needs. Such
forecast shall not be binding on SORIN/ELA or GB.
Only a firm purchase order that is accepted by GB
shall create a binding commitment.
4.1.2.2 A firm
purchase order for each of the immediately
following *
4.1.3 Upon
completion of any Specifications for and
Qualification of new models of Products by the
parties, SORIN/ELA agrees to provide GB with an
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initial *forecast indicating SORIN/ELA'S forecast
purchases of Products from GB during that period *
4.1.4 All
Firm Purchase Orders shall set forth at a
minimum: (i) an identification of Products ordered,
(ii) quantities ordered, (iii) proposed delivery
dates, and (iv) shipping instructions.
4.1.5
Items
4.1.5.1 GB shall cause
Products to be delivered to
SORIN/ELA'S facilities per SORIN/ELA'S delivery
instructions;
4.1.5.2 unless
SORIN/ELA gives GB written instructions as to
the method of shipment and carrier, GB shall select
the methods of shipment and the carrier for the
respective purchase order, and GB shall prepay
transportation
and similar charges upon shipment
(which payments shall be added to the invoice); and
4.1.5.3 title to all
Products conforming to SORIN/ELA'S
purchase order shall pass, free and clear of all
encumbrances, at the FCA shipping point, which shall
be *, and SORIN/ELA assumes and agrees to bear all
risk of damage or loss to the goods after delivery by
GB to the carrier at the FCA shipping point, and
SORIN/ELA hereby releases GB from any and all claims
and liability with respect to any such in-transit
damages or losses to the goods. SORIN/ELA shall also
be responsible for securing insurance coverage to
cover shipments and deliveries thereunder.
4.2
Modification of
Orders. No Firm Purchase Order by SORIN/ELA
shall be modified or canceled except upon the written mutual
agreement of the parties. Mutually agreed change orders
shall be subject to all provisions of this Agreement,
whether or not the change order so states. Notwithstanding
the foregoing, *.
4.3
Order Limitations. In
the event that:
4.3.1 Firm
Purchase Orders placed by SORIN/ELA for any
Product(s) for delivery within any *for such Product
ordered by SORIN/ELA under the most recent prior
period of *of SORIN/ELA Firm Purchase Orders by more
than *, and
4.3.2 The
Firm Purchase Orders *then GB shall not be
obligated to supply any such excess above such *,
however, GB shall use all reasonable commercial
efforts to supply amounts requested for delivery
which are in excess of such overage, it being
understood that in the supply of any such excess
beyond the permitted overage GB may take into account
delivery commitments to other customers.
4.3.3
Should such order increases by SORIN/ELA result in *
due to the need by *the right to make *for the
product volume that * to account for *, not
withstanding the terms of Articles 3.3 and 3.4.
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4.4
Failure to Ship.
Subject to Article 6.3 of this Agreement, if GB fails
for any reason, other than Force Majeure or breach of this
Agreement
by SORIN/ELA, to ship to SORIN/ELA *of Products meeting SORIN/ELA'S
*
(as contemplated by Articles 4.1, 4.2 and 4.3), GB agrees to
provide
SORIN/ELA with *.
4.5
Standard Lead Time.
Standard lead-time for the Products is listed in
Exhibit G. GB will notify SORIN/ELA, in writing, of any changes
to
these standard lead times. In the event that SORIN/ELA cancels a
firm
purchase order inside agreed upon lead-time, SORIN/ELA *.
SORIN/ELA
will also be responsible for *. In the event that SORIN/ELA cancels
a
firm purchase order outside of agreed upon lead-time, SORIN/ELA and
GB
*.
4.6
Testing and
Inspection.
4.6.1 GB shall
perform testing to ensure that Products delivered
to SORIN/ELA meet all applicable Specifications. SORIN/ELA
inspection of incoming Products will rely upon GB testing
and may consist of an examination of GB's testing
documentation as well as independent testing by SORIN/ELA.
4.6.2 SORIN/ELA
shall conduct any incoming inspection tests not
later than * from the date of * Products. Products not
rejected by SORIN/ELA by written notice to GB within such
period shall be deemed accepted.
4.6.2.1 In the event of any shortage, damage or discrepancy in
or
to a
shipment of Products or in the event any Products fail
to comply with the then current specifications for
Products, SORIN/ELA shall promptly report the same to GB
and furnish such written evidence or other documentation as
GB reasonably may deem appropriate.
4.6.2.2 If evidence indicates that such shortage, damage or
discrepancy or nonconformity with specifications existed at
the time of delivery of the Products at the FCA shipping
point, SORIN/ELA may return the Products to GB at GB's
expense, and at SORIN/ELA'S request, GB s
