CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO PORTIONS OF THIS
EXHIBIT, AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN DELETED AND SEPARATELY FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OR RULE 406.
Agreement No.: ________
SUPPLIER PARTNERING AGREEMENT
-----------------------------
This agreement ("Agreement") is effective as of January 1, 2006 by and between
the following parties:
Pacesetter, Inc. (d/b/a St. Jude Medical CRMD), a St. Jude Medical
Company, 15900 Valley View Court, Sylmar, California 91392-9221
("Buyer"); and NVE Corporation, 11409 Valley View Road, Eden Prairie,
MN 55344-3617 ("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 January 1, 2006 and will run
for a period of two years.
2. Purchase orders. Seller will provide Buyer products upon the terms of
purchase orders to be issued by Buyer's business units. The terms of
Buyer's standard "Purchase Order Contract Terms And Conditions"
(substantially in the form of attached Exhibit A) will accompany each
purchase order and will apply to the order. If there is a conflict between
those P.O. terms and conditions and this Agreement, then this Agreement
will prevail. Payment terms are net 30.
3. Pricing. The firm, fixed prices for the products are shown in
Attachment 1, except as stated in Section 6.2. Supplier will not charge
**
4. Inventory. Seller will maintain a finished inventory for each product at
the level indicated in Attachment 1. 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
consumed by Buyer, Seller will promptly replenish inventory to the
appropriate level as indicated in Attachment 1. Seller will keep Buyer
informed of the inventory level and location of each product.
5. Quantity. Buyer will purchase no less than the inventory commitment of
each product indicated in Attachment 1.
6. Quality / Improvements. Seller will maintain a quality system that
includes the ability to measure and report on quality control and
improvement processes. The quality system will include monitoring of on
time delivery performance.
1
6.1. Seller will start and/or maintain a continuous improvement strategy
for product quality 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 5,000
PPM by the end of the first year of this Agreement. In the second
year of this Agreement, the goal will be less than 3,000 PPM.
* Delivery to be 100% on time (up to seven days early and zero days
late).
* **
6.3. Seller will start and/or maintain a quality system or plan that meets
the requirements of ISO-9000.
6.4. Upon request, Seller will participate in early supplier involvement
with Buyer for Buyer's new products.
6.5. 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.
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: Jay L. Brown
For Buyer: Orlando Love, Materials Department
8. Buyer's drawings and designs. Seller may use Seller's drawings for
reference or its internal use. However, only Buyer's drawings will
ultimately control the configuration and acceptance of products.
Modifications must be acceptable to Seller and will be implemented pursuant
to a mutually agreed upon schedule. Seller will never make or sell any
products, derived in any way from Buyer's drawings or designs, for anyone
other than Buyer.
9. Confidential information. Seller will keep proprietary information and
technology that Buyer discloses to Seller in strict secrecy and confidence.
Seller will not disclose it to third parties. Seller will not use it for
Seller's own benefit other than for performing Seller's duties under this
Agreement. Seller will ensure that Seller's employees sign agreements
requiring them to keep confidential the information they learned about
Buyer in their positions with Seller. These agreements will require them
to keep confidential Buyer's proprietary information about the products.
Seller will not supply proprietary information or materials relating to
products to any other person or entity without Buyer's prior written
approval, except to the FDA and similar regulatory agencies.
9.1. Seller will be excused from its confidential information duties to the
extent that any of the information: (i) was already in the public domain
when Buyer disclosed it to Seller; (ii) enters the public domain through no
fault of Seller; (iii) was in Seller's possession before Buyer disclosed it
to Seller and Seller did not receive it from Buyer or a third party who was
obligated to Buyer to keep it confidential; (iv) was
NVE-SPA 2
later received by Seller from a third party who was not obligated to Buyer
to keep it confidential; or (v) Seller discloses pursuant to a judicial
requirement, so long as Seller notifies Buyer immediately when Seller
learns of the judicial action.
9.2. Seller's confidential information duties will end four years from the
date Buyer discloses the information to Seller or from when this Agreement
terminates (whichever is later).
9.3. If this Agreement terminates, Seller will destroy or return to Buyer
any samples, sketches, or other proprietary material Buyer provided to
Seller, except for what is necessary for Seller to provide continuing
customer 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. Buyer-furnished equipment, materials, and documentation. Equipment,
materials or documentation as outlined in the respective purchase orders,
or as otherwise documented, will be provided by Buyer to Seller only for
use in the performance of this agreement. Any Buyer-furnished equipment,
material, or documentation will be fit for its intended purpose and
delivered to Seller in a timely manner. Buyer will be responsible for
schedule delay, reasonable inventory carrying charges and allocated
equipment downtime charges associated with late or non-delivery of Buyer-
furnished items. Documentation, including, but not limited to, bills of
material, drawings, artwork, program code, CAD and Gerber data will be
current and complete. Seller will be responsible for reasonable diligence
and care in the use and protection of any Buyer-furnished equipment, but
will not be liable for repair or replacement due to normal failure or wear
and tear or maintenance costs unless agreed to in writing by Seller.
10.3. Non-exclusive. This agreement is non-exclusive between the parties.
Buyer specifically retains the right to acquire similar products from third
parties, and to design and manufacture similar products on its own or
through third parties.
10.4. 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.
10.5. Entire agreement; changes. This Agreement contains the entire
understanding of the parties regarding this subject and replaces all
previous agreements, except the Indemnification Agreement by and between
Buyer and Seller first dated September 23, 2005, which remains in full
force and effect, and which is made part of and incorporated by reference
into this Agreement. 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 inference will be drawn from any difference between
this Agreement and any prior negotiations, letters of intent, or drafts of
this Agreement.
NVE-SPA 3
10.6. 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:
Orlando Love
Materials Department
St. Jude Medical Cardiac Rhythm Management Division
15900 Valley View Court
Sylmar, California 91392-9221
To Seller at:
Daniel A. Baker
President & CEO
NVE Corporation
11409 Valley View Road
Eden Prairie, MN 55344-3617
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.
10.7. 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:
PACESETTER, INC. NVE Corporation
By: /s/Orlando Love By: /s/Daniel A. Baker
---------------------------------- ----------------------------------
Orlando Love Daniel A. Baker
Title: Sr. Commodity Manager Title: President & CEO
------------------------------- -------------------------------
Date: 1-3-06 Date: 1/3/06
-------------------------------- --------------------------------
NVE-SPA 4
Attachment 1
Commodity Manager:
Planning Manager:
Sr. Planner/Buyer:
NVE CORPORATION
% Inventory 12 Mo. Purchase Unit Price
P/N Rev. Description Vendor Inventory Requirements Forecast (2006)
- ------------------------------------------------------------------------------------------------
1071000-001 GMR Sensor ** ** ** **
<FN>
Note:
Revision level determined by individual Purchase Orders.
The "Inventory Requirement" can be processed to completion and shipped within 30 calendar days.
Seller inventories will be replenished within a period of 120 calendar days.
Seller's obligation to maintain inventory is limited to the level reflected in "Inventory Requirement" column.
Upon receipt of Attachment 1 quarterly update, Supplier will report inventory quantity in "Current Supplier Inventory" column.
Buyer agrees to purchase any remaining inventory (up to 35%) from vendor if part should obsolete.
</FN>
/s/Daniel A. Baker 1/3/06
- --------------------------------------------
(Sign, date and return to Commodity Manager)
1/3/2006