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.
Table of Contents
Section Title
- ------- -----
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
-2-
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.
-3-
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.
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
-4-
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.
-5-
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 *.
-6-
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 (Columbia, MD for
feedthroughs and Carson City, NV for filtered feedthroughs) WG shall
provide written notice to CPI at least 180 days before the site change,
to allow for product qualification. WG agrees to provide CPI with
transfer plans, site specifications, on-site inspection and audit
opportunities and any reasonable documentation as requested by CPI to
ensure WG's ability to continue production of acceptable products.
Should WG manufacturing move outside the U.S., CPI reserves the right
to review and approve any additional charges that result from the move
outside the U.S. The parties acknowledge WG's QPR rating (as determined
by CPI) and delivery performance as of the effective Date of this
Agreement as the desired performance to be achieved and maintained by
WG. It is CPI's intent pursuant to this Agreement (and regardless of
the location at which feedthroughs and filtered feedthroughs are
manufactured) that WG's quality and delivery ratings shall remain
consistent with current levels. CPI will qualify each feedthrough or
filtered feedthrough before production components can be shipped to
CPI.
VII. FORECAST PLANNING:
A. By * of each Contract Year, CPI shall provide WG with a
non-binding * forecast indicating CPI's forecasted purchases
of all filtered feedthroughs from WG for the next Contract
Year. The forecast for the months remaining in 2005 shall be
provided within * of the effective date of this Agreement.
Also included in such forecasts is the required split
between WG feedthroughs and * feedthroughs. 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 WG's suppliers. Such forecasts are not legally
binding in any manner and may be revised from time to time
by CPI, as it deems appropriate, by providing notice to WG.
B. By the fifteenth day of every month, CPI will submit to WG
in writing the following information:
(i) A rolling * forecast of anticipated
needs. Such forecast shall not be
binding on CPI or WG. Only a firm
purchase order that is accepted by WG
shall create a binding commitment.
(ii) A firm purchase order for each of the
immediately following *
-7-
VIII. RAW MATERIALS SPECIFIED BY CPI:
Should a supplier of a component specified by CPI fail to meet the
applicable specifications or fail to deliver to an acceptable schedule,
and WG cannot rectify the situation, WG shall notify CPI, and a new
plan of action shall be agreed upon, to the satisfaction of both
parties.
IX. CANCELLATION CHARGES:
For those components not handled in a separate Kanban Agreement, in the
event that CPI cancels a purchase order inside WG standard lead-time
(or any other lead time separately agreed upon in writing), CPI will be
responsible for all finished product, WIP and raw material or
components. In the event that CPI cancels a purchase order outside of
agreed upon lead-time, CPI and WG will negotiate resulting costs.
X. WARRANTY, INDEMNITY AND LIABILITY LIMITATION:
See attached Warranty Form (Attachment B), which is incorporated into
and made a part of this agreement. This warranty shall include
unfiltered feedthroughs directly sold from WG to CPI.
XI. CONFIDENTIALITY:
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.
XII. FORCE MAJEURE.
A. "Force Majeure" shall mean any event or condition, not
existing as of the date of signature of this Agreement, not
reasonably foreseeable as of such date and not reasonably
within the control of either party, which prevents in whole
or in material part the performance by one of the parties of
its obligations hereunder, including, but not limited to,
(i) flood, storm, earthquake, strike, lockout, embargoes,
and acts of God, war and/or public enemy.
B. Upon giving notice to the other party, a party affected by
an event of Force Majeure shall be released without any
liability on its part from the performance of its
obligations under this Agreement, except for the obligations
under Article III hereof and to pay any amounts due and
owing hereunder, but only to the extent and only for the
period that its performance of such obligations is prevented
by the event of Force Majeure.
-8-
C. During the period that the performance by one of the parties
of its obligations under this Agreement has been suspended
by reason of an event of Force Majeure, the other party may
likewise suspend the performance of all or part of its
obligations hereunder to the extent that such suspension is
commercially reasonable.
XIII. MISCELLANEOUS:
A. This agreement sets forth the parties' entire agreement with
respect to the subject matter hereof and no provision hereof
can be amended or waived except in writing signed by both
parties. This agreement shall be interpreted, construed and
governed by and in accordance with the laws of the State of
Minnesota.
B. Either party may assign this agreement to an entity, which
acquires, directly or indirectly, substantially all of the
assets or merges with it. Except as set forth herein,
neither this agreement nor any rights here under, in whole
or in part, shall be assignable or otherwise transferable by
either party without the express written consent of the
other party. Subject to the above, this agreement shall be
binding upon and inure to the benefit of the successors and
assigns to the parties here to.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their authorized representatives.
BUYER: SELLER:
CARDIAC PACEMAKERS, INC. WILSON GREATBATCH LTD.
By:_____________________________ By:_____________________________
Title:__________________________ Title:__________________________
Date:___________________________ Date:___________________________
-9-
Attachment A
------------
* * * * * *
WG Minimum WG Minimum WG Minimum WG Minimum WG Minimum WG Minimum
Part Minumum Annual Annual Annual Annual Annual Annual
Product Number Quantity Commitment Commitment Commitment Commitment Commitment Commitment
- -------- ------- --------- ----------- ----------- ---------- ---------- ---------- -----------
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
Attachment A (cont.)
ATTACHMENT B
* * * * * *
WG Minimum WG Minimum WG Minimum WG Minimum WG Minimum WG Minimum
Part Minumum Annual Annual Annual Annual Annual Annual
Product Number Quantity Commitment Commitment Commitment Commitment Commitment Commitment
- -------- ------- --------- ----------- ----------- ---------- ---------- ---------- -----------
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
Wilson Greatbatch LTD
PRODUCTS WARRANTY AND LIMITATION OF LIABILITY
----------------------------------
WARRANTY
WG warrants that product manufactured by WG and delivered to the user (a) shall
meet the WG specifications for such product and (b) shall be free of defects in
material and workmanship for a period of * from the date of manufacture.
WG's sole obligation under this Warranty is the repair or replacement, at its
election, of any product in place of any such product that is found upon WG's
inspection, to be defective in material or workmanship during the period
prescribed above. Such product will be repaired or replaced without charge to
the user provided that, (1) prior written approval is required before returning
any product, (2) freight to WG shall be prepaid, and (3) any product return sent
to WG without prior written approval will be returned to sender, freight
collect.
This Warranty does not extend to malfunction and/or failure occurring as a
result of any of the following: normal use, abuse, misuse, any alteration or
modification made to the product without express written consent of WG,
attempted disassembly, neglect, improper installation, or any other use
inconsistent with the specifications or warninWG or recommended operating
practices specific to the product.
THIS WARRANTY IS IN LIEU OF ALL OTHER WARRANTIED (EXCEPT OF TITLE), EXPRESSED,
IMPLIED, OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS
FOR A PARTICULAR PURPOSE.
Attachment C
LIMITATION OF LIABILITY
THE REMEDIES OF THE USER IN THE WARRANTY SET FORTH ABOVE ARE EXCLUSIVE, AND THE
TOTAL LIABILITY OF WG WITH RESPECT TO THE PRODUCT SOLD TO THE USER, IN
CONNECTION WITH THE PERFORMANCE THEREOF, OR FROM THE SALE, DELIVERY,
INSTALLATION OR REPAIR COVERED BY OR FURNISHED UNDER ANY SALE TO THE USER
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. WG, ITS SUPPLIERS, AND ITS DISTRIBUTORS SHALL IN NO EVENT
BE LIABLE TO THE USER, OR TO ANY SUCCESSOR IN INTEREST OR ANY BENEFICIARY OR
ASSIGNEE THEREOF, RELATING TO THE SALE OF ANY WG PRODUCT 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
REVENUES, INTEREST, LOST GOODWILL, INCREASED EXPENSES AND/OR CLAIMS OF CUSTOMERS
OF THE USER, WHETHER OR NOT SUCH LOSS OR DAMAGE IS BASED ON CONTRACT, WARRANTY,
NEGLIGENCE, INDEMNITY, STRICT LIABILITY OR OTHERWISE.
FIRST AMENDMENT TO FILTERED FEEDTHROUGH SUPPLY
AGREEMENT BETWEEN WILSON GREATBATCH LTD. AND
CARDIAC PACEMAKERS, INC.
This First Amendment (the "Amendment") to the Filtered Feedthrough
Supply Agreement between WILSON GREATBATCH LTD, a New York corporation ("SELLER"
or "WG"), and Cardiac Pacemakers, Inc. d/b/a "Guidant", a Minnesota corporation
("BUYER" or "CPI"). SELLER and BUYER are collectively referred to herein as the
"Parties." This Amendment is entered into effective as of March 8, 2005 (the
"Effective Date").
BACKGROUND
A. The Parties entered into a Filtered Feedthrough Supply Agreement (the
"Agreement") effective February 10, 2005.
B. The Parties to the Agreement desire to replace the (i) original
Attachment A with a new Attachment A-1.
AGREEMENT
The Parties hereby agree as follows:
1. As of the Effective Date, Attachment A to the Agreement is hereby
amended and restated in its entirety by Attachment A-1 which is
attached hereto.
2. Except as provided herein, the Agreement shall remain unchanged and in
full force and effect.
The Parties have caused this Amendment to be executed by their respective duly
authorized representatives as of the Effective Date.
BUYER: SELLER:
CARDIAC PACEMAKERS, INC. WILSON GREATBATCH LTD.
By:___________________________ By:___________________________
Title:________________________ Title:________________________
Date:_________________________ Date:_________________________
WG FFT Pricing Proposal 2005-2007
March 8, 2005
--------- ------------- -------------- -------------- ------------- -------------- -------------
* * * * * *
WG Minimum WG Minimum WG Minimum WG Minimum WG Minimum WG Minimum
Guidant Part Minimum Annual Annual Annual Annual Annual Annual
Product Number Quantity Commitment Commitment Commitment Commitment Commitment Commitment
------------- --------- ------------- -------------- -------------- ------------- -------------- -------------
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* $* $* $* $* $* $*
* * $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * $* $* $* $* $* $*
* $* $* $* $* $* $*
* * $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* * * $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
* $* $* $* $* $* $*
--------- ------------- -------------- -------------- ------------- -------------- -------------
* These platinum values are subject to the same platinum adjustment as called
out in Section IV, Paragraph G of this agreement.