Exhibit 10.19*
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.
THIRD AMENDMENT
TO SUPPLY AGREEMENT
This THIRD AMENDMENT is made to the Supply Agreement between XXXXXX XXXXXXXXXX
LTD. ("WGL") and MEDTRONIC, INC. ("Medtronic") dated July 31, 1991 (the "Supply
Agreement") and to the first Amendment to that Supply Agreement dated June 3,
1996 (the "First Amendment") and to the second Amendment dated March 14, 1997
(the Second Amendment").
RECITALS
Medtronic and WGL desire to amend certain terms of the Supply Agreement, the
First Amendment to Supply Agreement, and the Second Amendment to Supply
Agreement in writing pursuant to Section 13.6 of the Supply Agreement.
The parties therefore agree as follows:
1. WGL will be provided the specifications for cells for one or more models of
Medtronic's Platform B Product family along with Medtronic's model and
parameters for testing any WGL developed product design. The specifications
established by Medtronic will be no more demanding than those specifications
Medtronic would require of the Medtronic Promeon division. However, WGL and
Medtronic agree that it would be difficult for the Medtronic Promeon division
and WGL to provide identical cells for the same Medtronic Platform B product.
Therefore, WGL will be given the opportunity to supply cells for one or more
models of the Platform B Product family subject to the terms and conditions
contained herein. WGL agrees that to the extent the Medtronic Promeon division
can reasonably demonstrate its ability to meet the established specifications,
WGL will not dispute or challenge the validity of the specifications and
testing criteria established. In no event will the fact that the specifications
are not reasonably within the existing or imminently planned for capabilities of
WGL as provided for in the Supply Agreement be submitted as a reason for WGL to
fail to meet the specifications.
2. WGL and Medtronic will mutually agree upon completion dates and development
schedule milestones. WGL will be incorporating new cell technology which will be
qualified in parallel with the Platform B product design. Qualification of the
new technology will include adequate life testing mutually agreed upon by both
Medtronic and WGL.
3. Medtronic agrees to pay nonreoccuring engineering fees to WGL in the amount
of * to design a cell for the Platform B Product line. Payment shall be made in
amounts and at times as mutually agreed upon and consistent with past
development efforts between the parties.
4. In the event WGL successfully designs a Platform B cell which meets
Medtronics specifications and modeling requirements, Medtronic would agree to
purchase a minimum of * cells at a price of * per cell. In addition, Medtronic
would agree to purchase its requirements for the cells for the specific approved
Platform B design, provided that there are no quality, regulatory or patient
safety issues which would preclude Medtronic from continuing to include WGL's
design in its Platform B product. If at any time, Medtronic determines that the
Platform B design that WGL is supplying under this Agreement is defective or
fails to meet the specifications set forth for the design or model testing of
the design, Medtronic shall be under no further obligation to purchase any cells
from WGL including the minimum set forth herein and Medtronic shall be free to
supply cells for the WGL design from the Medtronic Promeon division.
In the event the Supply Agreement expires prior to Medtronic purchasing the
cells pursuant to the above, Medtronic would agree to continue purchasing cells
up to the minimum amount of * cells beyond the term of the contact, however in
no event will the obligation to purchase the * cells be deemed a requirement to
continue any other obligations under the existing Supply Agreement beyond the
original termination date.
5. If WGL does not successfully meet the Medtronic specifications for design and
model testing, Medtronic shall be under no further obligation to purchase any
cells from WGL either under this Agreement or the original Supply Agreement. The
failure of WGL to meet milestones or delivery schedules shall also entitle
Medtronic to supply batteries from the Medtronic Promeon, division for the
Platform B cell designed by WGL.
6. Minimum purchase quotas required for under the terms of the Supply Agreement
are hereby deleted. Other than as specified in Section 4 above, Medtronic shall
be under no obligation to purchase any minimum requirements for SVO batteries
from WGL during the remaining third contract period.
7. Medtronic and WGL acknowledge that WGL is currently holding a * prepayment
made by Medtronic under the Supply Agreement. Concurrent with the payment by
Medtronic of the * referred to in Section 8 below, WGL will repay to Medtronic
the * prepayment.
8. Medtronic will release payment of * currently being held in accounts payable
at Medtronic for prior WGL product purchases.
9. The requirements under the Supply Agreement pertaining to manufacturing fees
are hereby deleted and replaced as follows:
Medtronic will pay WGL a manufacturing fee in the amount of * for each SVO
cell manufactured by the Medtronic Promeon division which is incorporated
into a finished implantable defibrillator produced by Medtronic. These
payments will be due until the end of the third contract period which is
July 31, 2001. In no event will Medtronic's agreement to purchase the
minimum cells specified in Section 4.
beyond July 31, 2001, be deemed an extension of this contract for purposes
of payment of manufacturing fees.
The parties acknowledge that the payment of manufacturing fees for the
first contract year under the third contract period are due August 1,
1999.
10. Medtronic shall have no obligation to purchase any further SVO batteries for
the Medtronic Model 7221 and 7271 Implantable Cardiac Defibrillators other than
as follows:
WGL currently has in its possession * cells that may be suitable for use
by Medtronic in its Gem DR device. To preserve the option of using these *
cells, Medtronic has agreed to buy them from WGL. The purchase price for
these * cells shall be * per cell. WGL recognizes that it is in its
interest to have Medtronic purchase the * cells. As a condition of
Medtronic's agreement to purchase, WGL agrees that Medtronic may return
any or all of the * cells to WGL at any time and for any reason, and
further agrees that Medtronic will receive credit for any of the cells
that it chooses to return.
Except as modified by this Third Amendment, all terms and provisions of the
Supply Agreement, First Amendment and Second Amendment shall remain in full
force and effect. To the extent there are any inconsistencies between the terms
of this Amendment and the Supply Agreement, First Amendment or Second Amendment,
the terms of this Third Amendment shall apply.
With their signature below, each of the parties indicated they have read,
understand and agreed to the terms of this Third Amendment
MEDTRONIC, INC.
By /s/ Xxx X. Xxxxxxx Date: 7/20/99
--------------------------------- -----------------------------------
Xxx X. Xxxxxxx, Vice President and
President Tachyarrhythmia Management
Business
XXXXXX XXXXXXXXXX LTD.
By /s/ Xxxxxx X. Xxxxxxx Date: 7/22/99
--------------------------------- -----------------------------------
Xxxxxx X. Xxxxxxx, President
