Exhibit 10.21*
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.
Supply Agreement
Xxxxxx Xxxxxxxxxx Ltd.
&
Guidant/CRM
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Table of Contents
Section Title
I. Contract Period
II. Contract Terms
III. Continuity of Supply
IV. Price
V. Lead Time
VI. Forecast Planning
VII. Cancellation Charges
VIII. Safety Stock
IX. Warranty, Indemnity and Liability Limitation
X. Custom Battery Development Charges
XI. Miscellaneous
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THIS AGREEMENT, effective the 1st day of February, 1999, is between Xxxxxx
Xxxxxxxxxx Ltd. (WGL) located at 10,000 Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxx, 00000,
('SELLER') and Guidant/CRM, ('BUYER') a Minnesota Corporation, located at 0000
Xxxxxxx Xxx. Xx., Xx. Xxxx, Xxxxxxxxx 00000.
Whereas BUYER wishes to purchase battery material/components for its use in
medical devices; and
Whereas SELLER agrees to manufacture/provide such battery 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 remain in effect from the effective date (February 1,
1999) through December 31, 2001. This agreement may be renewed from year
to year after the initial term with the mutual agreement of both parties.
For the purpose of calculating annual volumes during year one of this
AGREEMENT, the period is January 01, 1999 through December 31, 1999.
II. CONTRACT TERMS:
A. Guidant/CRM may terminate this agreement at any time with one (1)
year written notice to WGL. This notice of cancellation, for early
termination purposes, must occur no later than one (1) year prior to
originally scheduled expiration of agreement.
B. In the event of early termination by Guidant/CRM, WGL will invoice
Guidant/CRM for all accumulated engineering and tooling on any
custom battery model up to the date the termination letter is
received by WGL. MI unique component parts for a custom battery
model will be forwarded to Guidant/CRM and invoiced at aggregate
cost. Guidant/CRM will be responsible for paying for all
work-in-process ("WIP") costs and all finished goods inventory
specific to Guidant/CRM custom designs.
C. In the event of early termination, WGL will dispose of all in-house
tooling for any Guidant/CRM custom cell under the auspices of
Guidant/CRM representatives. This will be done to ensure that
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financially shared tooling between Guidant/CRM and WGL will not be
used for the manufacture of another customers battery and WGL custom
tool designs will not be used by any other battery manufacturer.
D. This agreement may not be modified, changed or terminated orally. No
change, modification, addition, or amendment shall be valid unless
in writing indicating an intent to modify this agreement and signed
by an authorized officer of each party.
III. CONTINUITY OF SUPPLY:
A. In the event WGL experiences a major catastrophe that would prohibit
the shipment of implantable lithium power sources, WGL will
immediately notify Guidant/CRM of the nature of the problem and
begin discussions on the length of time that shipments will be
delayed. If the delay will impact Guidant/CRM's supply of product to
the field, Guidant/CRM and WGL will immediately enter into
negotiations for the following:
1. The transfer of tooling used on Guidant/CRM models to another
lithium battery manufacturer, and
2. If a technology transfer is required, the cost for such a
technology transfer will be negotiated at the time of the
catastrophe.
B. WGL must give Guidant/CRM (2) years prior written notice of any
intent to discontinue supply of implantable power sources to
Guidant/CRM, but WGL shall not be bound after Dec. 31, 2001 to the
pricing set forth in Article IV.
IV. PRICE:
Prices per model will be as called out on the purchase order based on
anticipated annual volumes. Prices are in effect for the original contract
period, February 01, 1999 through December 31, 2001. Where pricing is
specified in B and C below on an annual forecast volume by Guidant, and
the minimum volume requirements for that pricing level are not achieved,
WGL will back-xxxx Guidant for the difference in price between the volume
levels. Payment terms are net 00, XXX Xxxxxxxx, Xxx Xxxx.
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A. - SVO Multiplate Defibrillator Batteries -- All Technologies:
* ea.
B. Lithium Iodine Pacemaker Batteries:
1 -- 39,999 per yr./per model $* ea.
40,000 -- 54,999 per yr./per model $* ea.
55,000 -- 74,999 per yr./per model $* ea.
75,000 + per yr./per model $* ea.
C. CFX Batteries -- Stainless Steel Case Versions Only:
1 -- 19,999 per yr./per model $* ea.
20,000 -- 39,999 per yr./per model $* ea.
40,000 + per yr./per model $* ea.
V. LEAD TIME:
Standard lead time for lithium iodine batteries is eight (8) weeks to ship
date.
Standard lead time for SVO batteries is eight (8) weeks to ship date.
WGL will notify Guidant/CRM, in writing, of any changes to these standard
lead times.
VI. FORECAST PLANNING:
Guidant/CRM will provide two (2) months firm orders and an additional
seven (7) months forecasts stating anticipated needs. This will provide
WGL with a total of nine (9) months projected requirements for planning
purposes at all times. A new firm order requirement and the next month
forecasted quantity will be provided each succeeding month.
VII. CANCELLATION CHARGES:
In the event that Guidant/CRM cancels a purchase order inside agreed upon
lead time, Guidant/CRM will be responsible for all finished product, WIP
and raw components. In the event that Guidant/CRM cancels a
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purchase order outside of agreed upon lead time, Guidant/CRM and WGL will
negotiate resulting costs.
VIII. SAFETY STOCK:
WGL agrees to carry completed cells in inventory to mitigate schedule
increases inside lead time. WGL agrees to hold one months' forecast
production of selected high run battery models in the terminated and ready
to ship condition. My safety stock level beyond one months' production
will be negotiated at time of purchase order placement. The model
number/part number and quantity will be specified on a cell by cell basis
as required by Guidant/CRM and agreed upon by WGL. The model numbers and
quantities will be subject to modification based on Guidant/CRM's forecast
and called out on the purchase order and reviewed, at a minimum,
quarterly. Guidant/CRM agrees to financial responsibility for all
completed inventory levels as specified on each purchase order. In the
event of battery obsolescence due to a sudden Guidant product ramp down,
Guidant/CRM agrees to take and/or pay for safety stock inventory before
product ages six months from activation (pour date).
IX. WARRANTY. INDEMNITY AND LIABILITY LIMITATION:
See attached Warranty Form (Attachment A).
X. CUSTOM BATTERY DEVELOPMENT CHARGES:
Quoted development prices will be individually based on the relative
complexity and risk associated with each particular battery design. These
charges represent a "not to exceed" price.
A. WGL will make every effort to deliver "qualified" standard Lithium
SVO batteries to Guidant/CRM within a seven (7) month timeframe and
"qualified" standard Lithium Iodine batteries within a five (5)
month timeframe.
B. WGL will agree to deliver * mock- batteries, * production prototype
batteries and * implantable grade batteries to Guidant/CRM at "no
charge" for every new battery development completed during the time
period of this agreement.
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C. The total number of batteries purchased will be included in the
volume for any specific period to achieve the period pricing
schedule.
D. Should development work be terminated at any time during the
contract period, development charges paid up to and including the
point of termination will not be refunded.
E. Net 15 day terms will apply for all tooling and engineering charges.
F. Pricing for custom Lithium Iodine Batteries (Pacemaker
Applications):
1. Shapes with thicknesses greater than 4mm and use standard seal
technology:
$* upon submission of purchase order.
$* upon completion of a three (3) month progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
Any term or condition not covered above will be negotiated at
the time of order.
2. Shapes with thickness of less than 5mm and use non-standard
seal technology:
$* upon submission of purchase order.
$* upon completion of a three (3) month progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
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Any term or condition not covered above will be negotiated at
the time of order.
3. Solid Cathode Multiplate Batteries (High Rate Defibrillator
Applications):
$* upon submission of purchase order.
$* upon completion of three (3) month progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
Any term or condition not covered above will be negotiated at
the time of order.
4. Lithium Carbon Monofluoride (CFX) Batteries:
$* upon submission of purchase order.
$* upon completion of three (3) months progress report.
$* upon shipment of prototype batteries.
$* upon shipment of implantable grade batteries.
Development charges are not refundable.
Battery shapes will remain proprietary to Guidant/CRM.
Price per battery will be in accordance with standard pricing
in effect at time of delivery. In the event that WGL does not
meet committed delivery dates resulting in delivery in a new
calendar year, prices will remain as agreed upon for original
delivery date.
Any term or condition not covered above will be negotiated at
the time of order.
5. Batteries for Other Applications Will be Quoted on an
Individual Basis.
XI. MISCELLANEOUS:
A. This agreement shall be interpreted, construed and governed by and
in accordance with the laws of the State of Minnesota.
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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 of the parties here to.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by their authorized representatives.
BUYER: SELLER:
GUIDANT CORPORATION/CRM XXXXXX XXXXXXXXXX LTD.
By: /s/ X. X. Xxxx By: /s/ Xxxxxxx X. Xxxx
-------------------------------- -------------------------------------
X. X. Xxxx
Title: President & CEO Title: Group Vice President
----------------------------- ----------------------------------
Date: April 15, 1999 Date: April 29, 1999
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Attachment A
XXXXXX XXXXXXXXXX LTD.
PRODUCTS WARRANTY AND LIMITATION OF LIABILITY
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WARRANTY
WGL warrants that each battery product manufactured by WGL and delivered to the
user (a) shall meet the WGL specifications for such battery product and (b)
shall be free of defects in material and workmanship for a period of twelve (12)
months from the date of manufacture.
WGL's sole obligation under this Warranty is the repair or replacement, at its
election, of any battery cell or pack in place of any such product which is
found upon WGL'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 WGL shall be prepaid, and (3) any product
return sent to WGL without prior written approval will be returned to the
sender, freight collect.
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 the product without express written consent of WGL,
attempted disassembly, neglect, improper installation, or any other use
inconsistent with the specifications or warnings or recommended operating
practices specific to the battery product.
THIS WARRANTY 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.
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LIMITATION OF LIABILITY
THE REMEDIES OF THE USER IN THE WARRANTY SET FORTH ABOVE ARE EXCLUSIVE, AND THE
TOTAL LIABILITY OF WGL AND/OR ANY WGL DISTRIBUTOR WITH RESPECT TO 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 BATTERY OR
WGL BATTERY ASSEMBLY UPON WHICH SUCH LIABILITY IS PLACED.
WGL, 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 WGL 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 REVENUE,
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.
