EXHIBIT 10.1

 

THE SYMBOL “[****]” DENOTES PLACES WHERE CERTAIN IDENTIFIED

INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE

IT IS BOTH (i) NOT MATERIAL, AND (ii) WOULD LIKELY CAUSE

COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED

 

MASTER SUPPLY AGREEMENT

 

This Master Supply Agreement is effective May 14, 2019 (the “Effective Date”)
between:

 

MEDTRONIC, INC. 

710 Medtronic Parkway

Minneapolis, MN 55432

 

and

 

INTRICON CORPORATION 

1260 Red Fox Road

Arden Hills, MN 55112

(“Supplier”)

 

BACKGROUND

 

A.Supplier manufactures and/or supplies the Products listed in an attachment to
a BUSA, and

 

B.Medtronic (as defined in Section 1 below) designs, manufactures and sells
medical devices some of which are for human implant and wishes to purchase the
Products for use in its business.

 

TERMS OF AGREEMENT

 

For good, valuable and sufficient consideration, Medtronic and Supplier agree as
follows:

 

1.DEFINITIONS; AGREEMENT STRUCTURE

 

1.1In addition to capitalized terms defined elsewhere in this Master Agreement,
when used in the Agreement the following capitalized terms have the meanings
indicated below:

 

"Agreement” means this Master Agreement and all its exhibits, the BUSAs,
purchase orders placed under a BUSA, and Other Agreements.

 

“Applicable Law” means any law, statute, code, rule, regulation, published
interpretation, ordinance, directive, regulatory bulletin or guidance,
regulatory examination or order, treaty, judgment, order, decree or injunction
of any Governmental Authority that is applicable to or binding in the situation
in which the term is used.

 

“Business Day” means any day other than Saturdays, Sundays and the following US
holidays: New Year's Day, Martin Luther King Jr. Day, Memorial Day, Independence
Day, Labor Day, Thanksgiving, the Friday after Thanksgiving and Christmas Day.

 

“Business Unit” means a Medtronic Affiliate or division thereof which elects to
participate in this Agreement by entering into a Business Unit Supply Agreement
with Supplier.

 

“Business Unit Supply Agreement” or “BUSA”, means an agreement (in substantially
the form

 

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attached as Exhibit A), executed by Supplier and a Business Unit and covering
Products to be supplied to such Business Unit by Supplier and purchase orders
placed thereunder. Each BUSA incorporates by reference the terms and conditions
of this Master Agreement.

 

“Conforming Product” means any Product that meets the Product Specifications and
the applicable Quality Requirements.

 

“Developed Intellectual Property” means Intellectual Property that comes into
existence in the course of or relating to Supplier’s performance of its
obligations under this Agreement (whether such conception occurred prior to, on
or after the Effective Date) or that is derived from Medtronic’s Confidential
Information. Notwithstanding anything in the Agreement to the contrary, Supplier
shall retain all right, title and interest in and to (a) any original ideas,
inventions, developments and improvements (“New Inventions”) conceived or
reduced to practice by Supplier alone or with others during the term of this
Agreement to the extent not derived from Medtronic Intellectual Property or
Confidential Information, (b) any original works of authorship generated by
Supplier alone or with others other than Medtronic during the term of this
Agreement, and (c) any other Intellectual Property and/or know how and/or
manufacturing processes owned or otherwise licensable by Supplier prior to the
date of this Agreement and used in creating the Products. Medtronic shall own
(x) all New Inventions conceived or reduced to practice by Supplier alone or
with others during the term of this Agreement to the extent derived from
Medtronic Intellectual Property or Confidential Information, (y) any original
works of authorship generated by Supplier with Medtronic during the term of this
Agreement, and (z) any other Intellectual Property and/or know how and/or
manufacturing processes developed after the date of this Agreement and that (i)
is an intended deliverable under this Agreement or any BUSA or (ii) is necessary
for the Manufacture of the Products as contemplated by the Specifications.

 

“FDA” means the United States Food and Drug Administration, and any successor
agency having substantially the same functions.

 

“Force Majeure” means riots, war, terrorism, invasion, acts of God, fire,
explosion, floods, and orders of a Governmental Authority that prevent such
party’s performance under this Agreement.

 

“Governmental Authority” means any government, state or political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government, including federal,
state or local.

 

“Import/Export Laws” means all laws, treaties, governmental orders and
regulations of the countries from which a Product is exported and to which a
Product is imported, including rules regarding classification, marking,
packaging, and payments of tariffs and duties.

 

“Intellectual Property” means ideas, design specifications, inventions,
proprietary information, trade secrets, research and development data,
manufacturing procedures, software, works of authorship, improvements, or
suggestions, whether or not patentable or copyrightable, conceived, created,
adapted, or reduced to practice by or for a party, whether made alone or in
conjunction with others, .

 

“Manufacture” and “Manufacturing” means all steps, processes and activities
necessary to produce Product(s), including without limitation, the design,
manufacturing, processing, quality control testing, release and storage of
Product(s) in accordance with the terms and conditions of this Agreement.

 

“Master Agreement” means this Master Supply Agreement and the exhibits attached
to it, but excludes BUSAs, purchase orders placed thereunder and Other
Agreements.

 

"Medtronic” means a Business Unit that is a party to a BUSA with respect only to
the Products purchased by such Business Unit under such BUSA.

 

"Medtronic Affiliate” means Medtronic, Inc., a Minnesota, U.S.A. company and any
corporation or other business entity directly or indirectly (through one or more
intermediaries) controlling, controlled by, or under common control with
Medtronic, Inc.  The term “controlling” (with correlative meanings for the terms
“controlled by” and “under common control with”) as used in this definition
means either (a) possession of the direct or indirect ownership of more than
fifty percent (50%) of the voting or

 

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income interest of the applicable corporation or other business entity, or (b)
the ability, by contract or otherwise, to control the management of the
applicable corporation or other business entity. 

 

“Medtronic fiscal year” or “fiscal year” means the 52 or 53-week period ending
on the last Friday in April of each calendar year.

 

“Medtronic Intellectual Property” means Intellectual Property that is owned or
controlled by any Medtronic Affiliate as of the Effective Date or comes into any
Medtronic Affiliate’s possession or control after the Effective Date.

 

“Nonconforming Product” means any Product that does not meet the Product
Specifications or all the applicable Quality Requirements.

 

"Other Agreements" means the separate written agreements, if any, between any of
the Business Units and Supplier that set forth Quality Requirements, SMI terms
and the like, applicable to the Manufacture of the Products for such Business
Unit(s).

 

"Personnel" means Supplier’s employees, agents, contractors, consultants and
subcontractors whose services are used to perform this Agreement.

 

"Product" means the goods purchased by Medtronic from or through Supplier,
including any goods listed in Attachment A to a particular BUSA.

 

“Publicly Available Software” means (a) any software that contains, or is
derived in any manner (in whole or in part) from, any software that is
distributed as free software, open source software (e.g., Linux) or similar
licensing or distribution models; and (b) any software that requires as a
condition of use, modification, and/or distribution of such software that such
software or other software incorporated into, derived from, or distributed with
such software (i) be disclosed or distributed in source code from, (ii) be
licensed for the purpose of making derivative works, or (iii) be redistributable
at no charge. Publicly Available Software includes, without limitation, software
licensed or distributed under any of the following licenses or distribution
modes, or licenses or distribution models similar to any of the following: (1)
GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (2) the
Artistic License (e.g., PERL); (3) the Mozilla Public License; (4) the Netscape
Public License; (5) the Sun Community Source License (SCSL); (6) the Sun
Industry Standard Source License (SISL); and (7) the Apache Software License.

 

“Quality Requirements” means, with respect to a Product, the requirements set
forth in this Master Agreement and in any written quality agreement covering
such Product between the applicable Business Unit and Supplier, including in any
applicable BUSA.

 

“Restricted Party” means (a) any entity or individual listed on (i) any of the
restricted party lists maintained by the U.S. Government, including the
Specially Designated Nationals List and Foreign Sanctions Evaders List
administered by the U.S. Department of Treasury’s Office of Foreign Assets
Controls (“OFAC”), the Denied Parties List, Unverified List or Entity List
maintained by the U.S. Department of Commerce Bureau of Industry and Security,
and the List of Statutorily Debarred Parties maintained by the U.S. State
Department’s Directorate of Defense Trade Controls, (ii) the consolidated list
of asset freeze targets designated by the United Nations, European Union, and
United Kingdom, and any other applicable jurisdictions, and (iii) any other
restricted party lists maintained by any governmental or non-governmental entity
or agency, or (b) any entity or individual fifty percent (50%) or more owned
(either individually or in the aggregate, directly or indirectly) by any entity
or individual described in clause (a).

 

“SMI” means Medtronic’s supplier managed inventory program, and “SMI Agreement”
means any SMI agreement between a Business Unit and Supplier covering one or
more Products.

 

“Specifications” means all applicable specifications and protocols relative to
the design, physical characteristics, function, performance, Manufacture,
packaging and quality of the Products communicated in writing by Medtronic and
which have been specifically agreed in writing by the parties.

 

"Supplier Affiliate” means IntriCon Corporation, a Pennsylvania corporation, and
any corporation or other business entity directly or indirectly (through one or
more intermediaries) controlling, controlled

 

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by, or under common control with IntriCon Corporation.  The term “controlling”
(with correlative meanings for the terms “controlled by” and “under common
control with”) as used in this definition means either (a) possession of the
direct or indirect ownership of more than fifty percent (50%) of the voting or
income interest of the applicable corporation or other business entity, or (b)
the ability, by contract or otherwise, to control the management of the
applicable corporation or other business entity. 

 

“Supplier Facility” means the manufacturing facility where Supplier will
Manufacture a Product, which facility is located as specified in the BUSA or
purchase order placed thereunder, quality agreement, or such other facility
designated in Supplier’s approved disaster recovery plan when such plan is
triggered.

 

“Supplier Intellectual Property” means Intellectual Property that is owned by or
licensed to (with the right to grant sublicenses) Supplier and exists on the
Effective Date or is thereafter developed by or licensed to Supplier independent
of Supplier’s performance of its obligations to Medtronic under the Agreement.
For clarity, Supplier Intellectual Property does not include Developed
Intellectual Property.

 

“Third Party Purchaser” means any third party or entity that purchases Products
for the benefit of Medtronic or for incorporation into any Medtronic product,
but only to the extent that such person or entity is buying Products for the
benefit of Medtronic or for incorporation into any Medtronic products.

 

“Trade Control Laws” means all applicable export control and economic sanctions
laws and regulations of the United States, the European Union and all other
applicable jurisdictions, including but not limited to the U.S. Department of
Commerce Bureau of Industry and Security’s Export Administration Regulations, 15
C.F.R. 730-774, the economic sanctions programs administered by OFAC, as set
forth in 31 C.F.R. 500-598 and certain executive orders, EU Regulation 428/2009
imposing controls on exports of dual-use items, OJ L 134, 29.5.2009, p. 1, and
economic sanctions regulations implemented by the European Council, and any
export controls or economic sanctions measures implemented by EU Member States.

 

1.2Agreement Structure. Upon execution of this Master Agreement, Supplier and
Business Units will enter into one or more written BUSAs pursuant to which
Supplier shall provide certain Products as set forth in the BUSA to the Business
Unit that is a party thereto. Each BUSA shall be binding when signed by the
Supplier and the applicable Business Unit. Any Medtronic Business Unit and
Supplier may enter into additional BUSAs during the term of the Agreement. Even
though each BUSA shall be governed by the terms of this Master Agreement, the
BUSA shall be between Supplier and the Business Unit that is a party to such
BUSA, and not any other Medtronic Affiliate. Supplier will bill each Business
Unit separately for all Products provided to such Business Unit and the
liability of each individual Business Unit will be several and not joint. Each
Business Unit will only be liable for those obligations expressly applicable to
such Business Unit set forth in this Agreement or the BUSA to which it is a
party. Throughout this Master Agreement, unless otherwise expressly indicated,
references to Medtronic apply to the Business Unit that is a party to a BUSA
with respect only to the Products purchased by such Business Unit under such
BUSA. The terms of any BUSA may modify the terms of this Master Agreement by
specific reference to the modified section(s).

 

2.PRODUCT ORDERING AND SALE

 

2.1Sale of Products. Supplier shall sell and supply the Products to Medtronic
and/or any Third Party Purchaser at the prices established pursuant to Section
3. To the extent a Product includes embedded software, the term “sell” means,
with respect to such software, the grant of a non-exclusive, fully-paid,
perpetual, worldwide license for all Medtronic Affiliates to use and to allow
the Medtronic Affiliates’ customers and end-users to use such software in
connection with the Product. Purchases by a Third Party Purchaser for use in
Products shall also receive the benefit of and be governed by the applicable
terms of the Agreement, including with respect to Quality Requirements, pricing,
supply continuity provisions, and discontinuation rights, and other applicable
terms. Supplier will invoice such Third Party Purchaser and look solely to the
Third Party Purchaser for payment. Purchases by Third Party Purchasers shall be
included in the

 

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annual revenue received by Supplier from Medtronic, including with respect to
establishing the pricing as set forth in Section 3 of this Agreement. Medtronic
retains all right, title and interest in and to any software and/or firmware
contained in the memory devices to be included in Products purchased hereunder,
which Supplier will be purchasing, preprogrammed, from Medtronic’s approved
supplier. Medtronic grants Supplier a perpetual, non-exclusive, world-wide,
royalty-free license to use such software/firmware in the Products Manufactured
for Medtronic.

 

From time to time, the parties may mutually agree to add Products to this
Agreement by executing an amended Attachment A to a BUSA. However, in the
absence of an amended Attachment A, if Supplier issues a written price quotation
to a Business Unit who has executed a BUSA, and such Business Unit places
order(s) for such Product, then such Product shall automatically be deemed added
to Addendum A at the price quoted and shall be deemed a Product under this
Agreement.

 

2.2Other Sales. Supplier will not, during the term of the Agreement, provide any
Product or any product substantially similar in form, fit and function to a
Product to any third party without the prior written approval of Medtronic. This
obligation survives the expiration or termination of the Agreement for a period
of one (1) year and indefinitely with respect to Products that utilize, are
derived from or embody any Medtronic Intellectual Property or Medtronic
Confidential Information, including any Specification. The obligations in this
Section 2.2 shall not apply with respect to Products that Supplier offered for
sale to third parties and which were developed by Supplier or a third party
without the use of Medtronic Intellectual Property or Medtronic Confidential
Information.

 

2.3Supplier Managed Inventory. Medtronic will give Supplier at least thirty (30)
days’ notice that a Product is to be covered by Medtronic’s SMI. If SMI is
utilized, the parties will execute an SMI Agreement and Medtronic will notify
Supplier of current Medtronic inventory levels electronically via the SMI
software (“SMI Software”) utilized by Medtronic.

 

2.4Firm Order and Forecasting. Medtronic will submit to Supplier the orders and
forecasts below to assist Supplier in anticipating Medtronic’s Product needs for
twelve (12)-months into the future. In addition, any Third Party Purchaser may
submit to Supplier monthly rolling twelve (12)-month forecasts covering its
anticipated purchases of Products. Except as set forth in any separate
agreements between Supplier and the Third Party Purchaser, all such Third Party
Purchaser forecasts will be informational and non-binding.

 

2.4.1Firm Orders. An order to which Medtronic is bound will be referred to in
this Section 2.4 as a “Firm Order.” Firm Orders may be rescheduled only by
mutual agreement or cancelled in accordance with Section 2.5.4 (Termination of
Orders), or in accordance with the Flexibility Table that is an Attachment to a
BUSA. Medtronic shall provide Supplier with an initial Firm Order for Product
for three (3) months.

 

2.4.2Product Order Process. Unless otherwise provided in an SMI Agreement,
Products will be ordered via standard Medtronic purchase orders, which shall, at
a minimum, identify the Product and set forth the corresponding quantities,
confirmation of price, delivery dates, shipping instructions and shipping
addresses. Medtronic may submit purchase orders via mail, fax, email or, if
mutually agreed by the parties, electronic data interchange (EDI). Orders placed
by Third Party Purchasers shall be via the normal business practices of those
Third Party Purchasers. Orders will be deemed accepted upon receipt unless
notice of non-acceptance is provided by Supplier within five (5) Business Days
thereafter.

 

2.4.3Initial Forecast. Medtronic shall also provide Supplier with a written,
non-binding, Product purchase forecast in monthly increments consisting of a
forecast for the nine (9) months after the end of the Firm Order (“Planning
Period”). The above forecasts are non-binding and Medtronic may change them at
any time by providing a new written forecast to Supplier.

 

2.4.4Subsequent Forecasts and Orders. At the start of each calendar month, the
Products forecast for the first month of the Planning Period forecast
automatically become part of

 

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an additional month at the end of the Firm Order, so that a rolling Firm Order
of three (3) months is always maintained. Within the first five (5) Business
Days after the start of each calendar month, Medtronic shall deliver a new
Planning Period forecast, revised so that forecasts for nine (9) month periods
are always maintained.

 

2.5Order Terms.

 

2.5.1Surge Capacity. Supplier shall satisfy all Medtronic orders that are
submitted in a manner consistent with the terms of this Agreement. Supplier
shall have the capacity to satisfy at least a [****] increase over the
forecasted amount.

 

2.5.2Allocation. Supplier will satisfy orders submitted by Medtronic and Third
Party Purchasers. If Supplier cannot deliver all Products when due, Supplier
shall give Medtronic and any Third Party Purchaser orders first priority to
capacity for production and delivery of Product other than only as to capacity
necessary to fulfill mandatory government contract commitments. Should any
material or component be in short supply so that Supplier's needs exceed market
availability, then Supplier agrees that, with respect to materials or components
purchased or ordered specifically for Manufacture of the Products, Supplier will
not utilize such material or components other than for the Manufacture of
Products for Medtronic. In addition, and not in lieu of the foregoing, if
Supplier fails to deliver Product on a timely basis and Medtronic is required to
procure such Product from another supplier, Supplier shall pay for qualification
costs and shall be liable for any increase over the relevant price listed in a
BUSA or purchase order submitted thereunder. In any event, if Supplier cannot
supply the full amount of the order within the time requested, Medtronic may
cancel any or all of such order.

 

2.5.3Cancellation of Orders. Medtronic may cancel, in whole or in part, any
order for Product by giving Supplier written notice. Upon receipt of such
notice, Supplier will immediately stop any Manufacturing work in process covered
by such cancellation notice. Medtronic will reimburse Supplier for the actual,
non-recoverable Manufacturing costs incurred up to such cancellation time only
for orders corresponding to the three (3) month period from the date of delivery
of Medtronic’s cancellation (but not in excess of the cancelled Product price
for up to the number of cancelled Products), provided that:

 

(i)Supplier submits a written claim, to Medtronic within thirty (30) days of
Medtronic’s notice of cancellation, detailing the reasonable and actual
additional costs directly attributable to the cancellation; and

 

(ii)Supplier transfers to Medtronic ownership of and, upon Medtronic’s request,
delivers the raw material, component and work in process inventory, and the
finished goods inventory paid for by Medtronic; and

 

(iii)Supplier uses its best efforts to mitigate the liability of Medtronic by,
for example, cancelling or returning components to Supplier’s vendors, or by
using raw material, component and work in process inventory, or finished goods
inventory in other Medtronic or Third Party Purchaser orders, or for Supplier’s
other customers.

 

2.5.4Termination of Orders. Medtronic may terminate in whole or in part an order
or orders by written notice to Supplier (i) for safety or regulatory reasons,
(ii) if, as a result of a Force Majeure event, Supplier remains unable to
deliver such Product for more than thirty (30) days, or (iii) if Supplier fails
to cure a material breach with respect to the order within thirty (30) days
after written notice.

 

2.6Delivery.

 

2.6.1Shipping Terms. Unless otherwise specified in an applicable order, delivery
of Products will be F.O.B. Supplier’s Facility, and title and risk of loss will
pass at that point. Medtronic shall pay all shipping costs.

 

2.6.2Shipment. Shipment of the Products will be freight collect via
Medtronic-designated mode and carrier. Supplier will ship Products using the
method of shipment and carrier specified on Medtronic’s purchase order, or if
none is specified, via Medtronic’s preferred

 

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carrier such that the Products will be delivered by the requested delivery dates
and to the locations specified in Medtronic’s purchase orders or as indicated by
the SMI program, if applicable. Supplier shall use the Medtronic account number,
if available, with such carriers when shipping Products. Unless the carrier is
specified on the purchase order, Supplier shall verify with Medtronic that the
carrier is a preferred Medtronic carrier before shipping Products or within
specified lead time if SMI program is utilized. If Supplier fails to comply,
shipment is FOB destination with Supplier bearing the risk of loss and cost of
delivery. Supplier shall provide Medtronic electronic notice of each Product
shipment on the shipment/delivery date.

 

2.6.3Delays. Supplier shall promptly notify Medtronic of any actual or
prospective delay in delivery and Supplier shall obtain Medtronic’s approval
prior to making any partial deliveries. If the delivery of Product is delayed
through no fault of Medtronic and without a Force Majeure event, Medtronic may,
at its option, in addition to its other rights and remedies under this
Agreement, cancel or reschedule the order in whole or in part without liability
or require Supplier to deliver Product by means of commercially reasonable
premium transport identified by Medtronic, at Supplier’s cost or take a five
percent (5%) discount on all orders delayed more than ten (10) days or a ten
percent (10%) discount on all orders delayed more than thirty (30) days. Product
shall not be delivered early without Medtronic’s prior written consent. In the
event of a rescheduled or cancelled order per this section, Medtronic still
shall be considered to have met all firm or other commitments set forth in
Section 2.3 as to the period in which such orders were originally scheduled and
any rescheduled amount shall further count toward any firm commitment for the
period in which it is actually delivered.

 

2.7Shipments to Third Parties. If requested by Medtronic, Supplier will drop
ship Product to a third party identified by Medtronic at Medtronic’s cost.

 

  3.        PRICING AND PAYMENT

 

3.1Prices.

 

3.1.1Product Pricing. Product prices shall be calculated as provided in the BUSA
placed thereunder and will be firm for the Initial Term, except as set forth
below. The pricing in the BUSA or purchase order may be amended by authorized
representatives of Supplier and Medtronic by executing an amended BUSA in the
manner set forth in Section 11.9 (Order of Precedence; Entire Agreement and
Modifications), which must include the effective date of the amended BUSA.
Thereafter such prices will be subject to review and good faith negotiation at
the request of either party, not more than once per year. Mutually agreed prices
will remain in effect until changed on the basis specified in this Section.

 

3.1.2Open Book Costing. Supplier shall provide open book costing on selected
components as requested by Medtronic. Component cost elements required by
Medtronic include, but are not limited to, the items listed in the Component
Costing Matrix below.

 

Component Costing Matrix

Medtronic Material Number Supplier Material Number Material Number Description
Raw Material Type Raw Material Content (U/M) Raw Material Cost Raw Material Mark
Up Labor Cost Machine Cost Burden Rate Process Yield Secondary Process
Description Secondary Process Cost Supplier Margin Total Component Cost        
                                                                               
 

*Note: All costs are documented per unit produced.

 

Supplier shall maintain complete and accurate accounting records, in a form in
accordance with generally accepted accounting principles, to substantiate
Supplier’s fees, charges and expenses under the Agreement. Supplier shall retain
such records for a period of three (3) years from the date of final payment or
termination or expiration of the Agreement. Medtronic may audit (or have
audited), on behalf of itself and/or any Third Party Purchasers, Supplier’s
records pertaining to the Agreement. Upon request

 

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and reasonable advance notice, Supplier shall permit Medtronic’s representatives
to enter the place where such records are kept during reasonable hours for
purposes of inspecting, copying, and auditing such records. Supplier shall
reasonably cooperate as requested with the audit. All information produced
during such audit shall not be disclosed to third parties without Supplier’s
consent, except when required by law or regulation. In the event that an audit
reveals that Supplier has overcharged Medtronic or any Third Party Purchaser,
Supplier shall refund such overpayment to Medtronic or the applicable Third
Party Purchasers within ten (10) Business Days following written demand by
Medtronic. In addition, in the event that an audit reveals that Supplier has
overcharged Medtronic or any Third Party Purchasers by more than five percent
(5%) in any given quarter, Supplier shall pay all reasonable fees and costs for
such audit.

 

3.1.3Cost Reductions. Supplier shall reduce the aggregate cost of Products by at
least [****] each year over year. The price reductions will commence on the
first day of the Medtronic fiscal year following the Effective Date and will
thereafter occur on the first day of each subsequent fiscal year. Cost reduction
efforts shall not compromise quality or reliability, and Supplier shall comply
with the Quality Requirements with respect to design and process changes.
Supplier shall give Medtronic notice of the cost reductions as soon as
practicable, but in any event within thirty (30) days of the accomplished
reduction. Thereafter, all invoices shall reflect such reduced pricing.

 

3.1.4Value Analysis Value Engineering (“VAVE”) and Productivity Improvements.
Medtronic and Supplier intend to work together throughout the term to reduce
prices. Supplier shall at the request of Medtronic or a Business Unit form a
team at its cost to work on VAVE and/or productivity improvement projects to
support any cost down initiatives. If the cost improvement opportunity is
identified by Medtronic, the savings will apply 100% to the Product associated
with the reduction. If the cost improvement is identified by the Supplier,
Supplier may apply fifty percent (50%) of the savings towards the Products
associated with the reduction in the first year and the balance in the second
year. Unless otherwise agreed upon by Medtronic, cost savings that are
identified by Medtronic are in addition to the annual price reduction while cost
savings that are identified by the Supplier can be applied towards the annual
price reduction initiative set forth above.

 

3.1.5Favored-Customer Pricing and Terms. If Supplier offers a product
substantially comparable in quality and design to any Product covered by the
Agreement to any third party at pricing or terms more favorable (based on
comparable quantities) than the prices or terms in the Agreement, Supplier will
promptly notify Medtronic and extend the more favorable pricing or terms to
Medtronic and any Third Party Purchasers.

 

3.2Volume Growth Reduction. In addition to the annual price reduction, Medtronic
shall receive a [****] price reduction for all Products for every [****]
($[****]) cumulative across all BUSAs and through a Third Party Purchaser)
increase in business from a baseline spend of $XXXXXXX. Volume growth price
reductions shall be applied on May of each subsequent year during the term of
this Master Agreement. If there is a dispute and the parties are unable to agree
on the volume growth price reduction, either party may submit the matter to the
Dispute Escalation mechanism set forth in Section 11.8 (Dispute Escalation).

 

3.3Payment Terms. Payment terms shall be NET ninety (90) after the date of
invoice or the date of delivery, whichever is longer. Invoicing requirements, if
any, will be as specified in a mutually agreed electronic format, or if there is
no such format, in the applicable order. Medtronic may pay invoices
electronically via a means that is in reasonably common commercial use, which as
of the Effective Date is by Automated Clearing House in the CTX format, or such
other means as designated by Medtronic. Following request by Medtronic, Supplier
shall submit invoices electronically via a means specified by Medtronic.
Supplier may enroll in the Supplier Program offered by CitiBank N.A.

 

4.PRODUCTION AND QUALITY

 

4.1Production.

 

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4.1.1Product Manufacturing. Supplier shall Manufacture, package and label the
Products in strict accordance with the applicable Specifications and the Quality
Requirements. Except as expressly provided for in Supplier’s approved disaster
recovery plan (in which case Medtronic shall receive notice of such change
immediately), Products shall be Manufactured only at the Supplier Facility
designated in the BUSA or purchase orders placed thereunder unless Medtronic, in
its sole discretion, provides advance written approval of an alternative
facility. Supplier shall comply with the applicable Quality Requirements when
making any changes permitted by Medtronic to Product Specifications, design,
materials, production processes or production testing.

 

4.2Risk Management.

 

4.2.1Disaster Recovery. Supplier shall practice ongoing business continuity
planning to minimize disruptions to its ability to fulfill its obligations under
the Agreement. Supplier shall maintain a written disaster recovery plan approved
by Medtronic and shall cooperate with Medtronic’s efforts to periodically review
Supplier’s plan and planning. The current plan is attached as Exhibit B.
Supplier shall notify Medtronic within twenty-four (24) hours if, in accordance
with the disaster recovery plan, Supplier plans to move the Manufacture of any
Product to a different Supplier facility.

 

4.2.2Single and Sole Source Risk Management. Supplier shall practice ongoing
single- and sole-source, supplier risk management. For each BUSA, on a mutually
agreed schedule, Supplier shall provide Medtronic with written sole source
supplier information that includes an assessment of the risk associated with the
sole-sourced material and processes and a risk-mitigation plan for those
materials and processes that are determined to be high risk.

 

4.3Quality. Supplier shall comply with the Quality Requirements in its
performance of the Agreement. Supplier shall also comply with Applicable Laws,
applicable standards of the International Standards Organization (ISO) and all
other quality standards and quality assurance plans referenced in the Agreement
and the Specifications. Each set of applicable Quality Requirements for a
particular Product survive until such Quality Requirements are replaced with
other Quality Requirements, or such Products are no longer provided by this
Supplier under the Agreement or otherwise.

 

4.4Epidemic Failure Event. Upon occurrence of a suspected Epidemic Failure
Event, Medtronic shall promptly notify Supplier, and shall provide, if known and
as may exist, a description of the failure, and the suspected lot numbers,
serial numbers or other identifiers, and delivery dates, of the Nonconforming
Products. Medtronic shall make available to Supplier samples of the
Nonconforming Products for testing and analysis. Upon receipt of Product from
Medtronic, Supplier shall promptly provide its preliminary findings regarding
the cause of the nonconformance. The parties shall cooperate and work together
to determine root cause. Thereafter, Supplier shall promptly provide the results
of its root cause corrective analysis, and if it is determined to be an Epidemic
Failure Event, its proposed plan for the identification of and the repair and/or
replacement of the affected Products, and such other appropriate information.
Supplier shall recommend a corrective and preventative action program which
identifies the affected units for repair or replacement, and which minimizes
disruption to the end user and eliminates the failure going forward. Medtronic
and Supplier shall consider, evaluate and determine the corrective and
preventative action program. In the event the test equipment necessary to test
and analyze the Nonconforming Product is no longer in Supplier’s possession due
to a planned phase-out of such equipment, Medtronic and Supplier shall identify
an alternative method (including without limitation timing and cost elements) by
which to test and analyze the Epidemic Failure Event to both parties’
satisfaction.

 

In the event of an Epidemic Failure Event, Supplier shall, in addition to any
remedies related to Nonconforming Product set forth in a Quality Agreement,
reimburse all direct, reasonable, and documented labor, equipment and processing
costs incurred by Medtronic solely as a result of the implementation of the
corrective action program for such Epidemic Failure Event, including test
procedures, test equipment, the testing of Products.

 

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4.4.1For purposes of this Agreement, “Epidemic Failure Event” shall mean the
occurrence of the same nonconformance (i) attributable to the same root cause
found in five percent (5%) or more of units of a particular Product, with a
minimum of twenty (20) units, shipped by Supplier during a consecutive three (3)
month period where such nonconformance is verified by Supplier and by Medtronic,
or an independent third party determined by Medtronic subject to Supplier’s
reasonable consent, such consent not unreasonably withheld; (ii) occurring
within fifteen (15) months after the date of delivery of such Products; and
(iii) resulting from (w) defects in workmanship, including Supplier’s failure to
identify defects in any components or materials that Supplier could have
identified by following the Supplier’s documented processes (which have been
provided to Medtronic) or such other mutually agreed to processes for inspection
or testing at incoming inspection of such components and materials, or following
agreed upon testing procedures for Products during Supplier’s manufacturing
process or at final testing, but excluding Manufacturing defects that are
Medtronic’s Responsibility (as defined below), (x) the Manufacturing process,
(y) Supplier’s Manufacturing process design, or (z) Supplier’s failure to
Manufacture the Product in accordance with the Specifications in effect at the
time of production.

 

4.4.2“Medtronic’s Responsibility” shall consist of any of the following: (i) a
design defect in any aspect of the Product other than Manufacturing process
design defects that are Supplier’s responsibility as set forth above in 4.4.1 if
the design is Medtronic’s design; (ii) a Manufacturing defect in any components
Manufactured or supplied by Medtronic; (iii) misinformation from Medtronic; (iv)
Medtronic’s negligent or knowing release of any Non-conforming Products, where
such Products have caused a safety hazard, regulatory violation or Epidemic
Failure Event; or (v) any other failure of Medtronic to properly carry out
actions which are Medtronic’s responsibility under this Agreement.

 

4.5Specification Changes. Specifications may be revised from time to time as
mutually agreed in writing between the parties (either by execution of an
amended BUSA Attachment A that references the new revision level or other
writings of the parties). Supplier shall not unreasonably withhold approval to
Specifications changes proposed in writing by Medtronic (each change a “PCN”).
Supplier will use commercially reasonable efforts to evaluate the feasibility of
the PCN requested by Medtronic within ten (10) Business Days of receipt and
respond to Medtronic in writing with the potential impact of the PCN on current
on-hand or on-order component inventory, work-in-progress Products (“WIP”),
finished goods Products, and/or the delivery schedule. In addition to the
written response provided above, Supplier will use commercially reasonable
efforts to respond to Medtronic within ten (10) business days with a written
evaluation of the PCN including: (i) engineering time to implement the PCN, (ii)
the cost to modify tools or test fixtures or similar non-recurring expenses,
(iii) the quantity of components Supplier has on hand and/or on order with its
suppliers related that can no longer be used due to the PCN, (iv) the cost to
rework WIP (if applicable) and any impacts to Product price resulting from the
PCN, (v) the expected effect on the delivery schedule to include (if applicable)
the effect on all in-process work (e.g., re-workable, repairable, etc.), and
(vi) the manner in which the PCN will be implemented by Supplier. Supplier will
not proceed to implement the PCN until Medtronic has approved the charges and
Supplier actions described in the Supplier evaluation that is provided to
Medtronic. The price for a Product covered by a revised Specification shall
remain the same as before the revision, unless the revisions will result in an
increase or decrease in costs at least +/- 5% of any cost element of the
applicable quote (e.g. materials, components, labor, test); in that case, the
Supplier will notify Medtronic of the anticipated change in costs, and the
parties will negotiate a new price (based on the increase or decrease in costs)
and the BUSA Attachment A will be amended accordingly.

 

4.6Use and Return of Medtronic Property. Any equipment and tooling that
Medtronic furnishes to Supplier or Supplier purchases at Medtronic’s expense
shall be pursuant to the Terms and Conditions for Tooling attached as Exhibit D
and incorporated by reference

 

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4.7Subcontracting. Supplier may not subcontract any of its obligations under the
Agreement without Medtronic’s prior written consent signed by an authorized
representative of Medtronic. If Medtronic consents to such an arrangement, any
subcontracting will be subject to the following terms:

 

4.7.1The subcontracting must be under a written agreement which (i) obligates
the subcontractor to comply with all relevant terms and conditions of this
Agreement as though it were Supplier, (ii) names Medtronic as a third party
beneficiary with the right to enforce the rights of Supplier under such
subcontract agreement, and (iii) authorizes Supplier to disclose the terms of
the subcontract agreement to Medtronic. Supplier shall provide Medtronic with a
copy of a subcontract agreement promptly after Medtronic’s request.

 

4.7.2Supplier is responsible for all acts and omissions of its subcontractor and
guarantees the subcontractor’s performance.

 

4.8Discontinuation. Supplier shall not discontinue a Product during the Initial
Term (defined in 10.1) or as noted in a BUSA for that BUSA only. Following such
Initial Term, if Supplier desires to stop making a Product, Supplier shall give
Medtronic and any Third Party Purchasers written notice (“Discontinuation
Notice”) at least two (2) years before the date on which Supplier is planning to
stop making a Product (“Discontinuation Date”). In such case, Supplier will
provide a backup plan for Medtronic to mitigate risk to Medtronic. Medtronic is
not obligated to accept such plan. So long as Medtronic and any Third Party
Purchasers place orders at least three (3) months before the planned
Discontinuation Date, Supplier shall accept last time buy orders for the
discontinued Product(s) at the prices in effect as of the Discontinuation Notice
provided, however, that Supplier shall additionally pass on any savings that
result due to the increased volumes ordered. Unless the parties agree otherwise
in the order document, delivery of the Product in a last time buy order shall be
within one (1) year of the Discontinuation Date. Medtronic’s rights hereunder
extend to volumes of Products for Third Party Purchasers. Medtronic may invoke
the license and technology transfer specified under Section 7.3 (Failure to
Supply License) for discontinued Products by written notice to Supplier given no
more than three (3) months after receipt of the Discontinuation Notice.

 

5.REGULATORY COMPLIANCE

 

5.1Supplier Diversity.

 

5.1.1Flow Down. For all supplies, goods, materials or services provided pursuant
to the Agreement, Supplier shall comply with the requirements of the Federal
Acquisition Regulation (FAR) clause 52.219-8, entitled “Utilization of Small
Business Concerns (October 2014),” which is incorporated into this Agreement.
Supplier shall review and be familiar with all of the requirements of 52.219-8
which may be viewed at www.acquisition.gov/far/. If the value of the Agreement
is greater than $700,000, and Supplier is not a “small business” under
applicable rules of the Small Business Administration, 13 C.F.R. Part 121,
Supplier must include FAR 52.219-8 in all subcontracts that offer further
subcontracting opportunities.

 

5.1.2Policy. It is Medtronic’s policy that Diverse Subcontractors, as defined
below, shall have the maximum practicable opportunity to participate in the
performance of work and services for Medtronic and Medtronic’s subcontractors
and suppliers. If there is a conflict between FAR 52.219-8 and the following,
the requirements of FAR 52.219-8 will take precedence.

 

5.1.3Section Definitions.

 

"Diverse Subcontractors" means suppliers and subcontractors that are small,
"HUBZone small business concerns," “women-owned small business concerns,” "small
disadvantaged business concerns," “veteran-owned small business concerns”, and
“service disabled veteran-owned small business concerns,” each as defined in FAR
52.219-8.

 

“Diverse Subcontractors” also includes “Women Business Enterprise” concerns and

 

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“Minority Business Enterprise” concerns.

 

“Women Business Enterprise” concern is one that is unconditionally owned and
controlled by one or more women and certified as a woman-owned business concern
by an independent agency approved by Medtronic.

 

"Minority Business Enterprise” concern is one that is unconditionally owned and
controlled by a member or members of a group listed in 13 C.F.R. §124.103 and
certified as a minority-owned business concern by an independent agency approved
by Medtronic. Ownership and control of a Minority Business Enterprise will be
determined in accordance with the principles of ownership and control found in
13 C.F.R. §§124.105 and 124.106. See www.medtronic.com/supplierdiversity for
socio-economic category definitions and certification processes.

 

5.1.4Requirement. Supplier agrees that Diverse Subcontractors shall have the
maximum practicable opportunity to participate in performing subcontracts and in
supplying goods and services used in the performance of the Agreement.

 

5.1.5Diversity Commitment. Upon request, Supplier shall provide Medtronic with
periodic reports, identifying its Diverse Subcontractors and the total amount
paid in the subject period to each Diverse Subcontractor, and description of
Supplier’s efforts to comply with this clause. Medtronic may consider the extent
of good faith efforts by potential subcontractors and suppliers and existing
subcontractors and suppliers in carrying out the purpose of this clause in
determining whether to award or extend a subcontract or supplier agreement.
Supplier agrees to establish and update any changes to its profile and
certifications throughout the term of the Master Agreement on the Medtronic
Supplier Registration Portal (MSRP), at www.medtronic.com/supplierdiversity.

 

5.2Import/Export and Trade Control Compliance.

 

5.2.1Supplier shall comply with the applicable Import/Export Laws and Trade
Control Laws regarding the shipping, purchase, procurement, import, export, and
any other transfer of all Products and any parts, components or materials
incorporated into all Products. For purposes of Sections 5.2.1 and 5.2.2,
Products includes product-associated technology and technical data, whether
provided by Medtronic or Supplier, and the documents related to that technology
and data. Supplier represents and warrants that all provision of Products and
services by Supplier under this Agreement and all payments for such activities
comply with the Import/Export Laws and Trade Control Laws, including the terms
of any relevant authorizations issued by the U.S. or other governments. Supplier
shall immediately notify Medtronic if Supplier’s export privileges are denied,
suspended or revoked in whole or in part by any U.S. or non-U.S. government or
non-governmental entity or agency.

 

5.2.2Supplier hereby acknowledges and confirms that, unless specifically
authorized in this Agreement and under applicable Import/Export Laws or Trade
Control Laws, it will not sell, ship, export, re-export, re-transfer or divert
Products, product-associated technology or technical data that are sold or
otherwise provided hereunder (including samples), directly or indirectly through
third parties or otherwise, to any Restricted Party or to or through countries
or regions that are the target of sanctions under Trade Control Laws (presently,
Cuba, Iran, North Korea, Sudan, Syria, and the Crimea region).

 

5.2.3Supplier understands that Medtronic’s participation, directly or
indirectly, in any business under terms that would support or facilitate a
boycott against Israel or any other boycott not recognized by the U.S., is
prohibited. Notwithstanding any other provision of this Agreement, neither
Medtronic nor Supplier shall be required to take, or to refrain from taking, any
action where to do so would be inconsistent with or penalized under the laws of
the U.S. or any foreign jurisdiction, including without limitation the
anti-boycott laws administered by the U.S. Commerce and Treasury Departments.

 

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5.2.4U.S. Customs-Trade Pact Against Terrorism (C-TPAT). Supplier will: (i)
obtain certification under the U.S. C-TPAT program, as described
https://www.cbp.gov/border-security/ports-entry/cargo-security/c-tpat-customs-trade-partnership-against-terrorism
and provide evidence of such certification to Medtronic; or (ii) demonstrate to
Medtronic that it meets the criteria for such certification and has policies and
procedures in place that meet C-TPAT requirements.

 

5.2.5Notwithstanding the foregoing, Medtronic shall serve as the official
importer of record for customs purposes for Products delivered to Medtronic
under the Agreement.

 

5.2.5.aSupplier Instructions. Supplier will provide, completely and accurately,
all information required in the current version of the supplier instructions,
the current version of which as of the Effective Date is attached to this
Agreement as Exhibit C, and such other information as otherwise reasonably
requested by Medtronic. Supplier will deliver the completed supplier
instructions form at the time that Medtronic places the order, and in no event
later than the date of arrival of the Product into the United States. Supplier
will provide the other information in a timely manner.

 

5.2.5.bCertificates of Origin and other Customs Information.  

 

i.No later than thirty (30) days before the first shipment of Products to
Medtronic, Supplier must provide Medtronic a statement specifying, for each
Product, the Product name and description, Medtronic and Supplier part numbers,
Harmonized Tariff Schedule (HTS) number, the country of origin under U.S. and
non-U.S. Customs laws and regulations (“Origin”), and the manufacturer name and
location. Supplier will also provide, as requested, any other documentation that
is required for the relevant customs authority and other government agency
compliance.

 

ii.If the Products provided under this Agreement qualify for preferential duty
treatment under a Free Trade Agreement such as the North American Free Trade
Agreement (NAFTA), Supplier must provide Medtronic’s Global Trade Operations
Department with a Certificate of Origin (“Certificate”) to enable Medtronic to
claim preferential duty treatment at the time of entry. Supplier acknowledges
that the Certificate will be used by Medtronic as proof of eligibility for
preferential duty treatment, and agrees to provide full cooperation to Medtronic
for any U.S. or non-U.S. Customs inquiries into preferential duty claims that
arise out of any Product furnished under this Agreement. Unless Medtronic
requests individual Certificates for each shipment, Supplier may provide annual
blanket Certificates to cover multiple shipments during the calendar year.

 

iii.Supplier shall send all Product information, Certificates, and other
documentation described in paragraphs i. and ii. of this clause to Medtronic’s
Global Trade Operations Department at the following e-mail address:
rs.originverification@medtronic.com.

 

iv.Supplier must notify Medtronic in writing of any change in the Origin of any
Product within thirty (30) days.

 

v.Medtronic will notify Supplier in writing if Supplier fails to supply
documentation required under paragraphs i. through iv. of this clause, and
Supplier agrees to provide Medtronic the relevant documentation within 30 days
of receipt of notice from Medtronic.

 

5.2.5.cTrade Remedy Proceedings.  Supplier understands that the Products it
produces may be, either now or in the future, subject to one or more trade

 

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  remedy proceedings (e.g., anti-dumping, countervailing duty, safeguard) in the
U.S. or another country, which may result in the imposition of additional duties
or other charges on the Products. If such proceedings are initiated, Supplier
agrees to notify Medtronic’s Global Trade Operations Department in writing at
the following email address: rs.globaltradeoperations@medtronic.com within seven
(7) days, and at Medtronic’s request, Supplier will cooperate fully with
Medtronic and with requests for information required from the competent
government authorities in the importing country. Supplier further understands
and agrees that such cooperation may require it to provide confidential sales
and cost information to Medtronic, and if necessary the competent authorities,
to determine whether the Products are included in the scope of a trade remedy
proceeding and/or calculate the amount of the duty or other charge on the
Products.

 

At all times before, during, or after the initiation of a trade remedy
proceeding in the U.S. or another country, Supplier agrees to take all available
steps necessary to minimize the risk that additional duties or other charges may
be imposed on its Products sold to Medtronic. Medtronic retains the right to
terminate the Agreement if additional duties or other charges are imposed on the
Products produced by Supplier.

 

5.3Conflict Minerals. For Products delivered to Medtronic or a Third Party
Purchaser under this Agreement, Supplier shall provide Medtronic, at no
additional cost, with assistance and sufficient documentation, as reasonably
determined by Medtronic, to enable Medtronic to comply with its obligations
under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act (the “Reform Act”) and the rules and regulations promulgated thereunder
relating to Conflict Minerals as defined in the Reform Act, and other similar
laws or regulations. Such assistance and documentation may include but shall not
be limited to (i) completing and submitting questionnaires or templates relating
to the origin of products, materials, parts, components, metals or any Conflict
Minerals contained in the Products (collectively, “Surveys”) within the deadline
requested by Medtronic; (ii) promptly responding to Medtronic’s questions or
request for additional information with respect to Supplier’s Survey; and (iii)
to the extent the Products contain Conflict Minerals, using diligent efforts to
ensure traceability of those metals to the smelter level, including working with
Supplier’s sub-suppliers to identify the origin of the Conflict Minerals.
Supplier agrees to maintain any documentation and data related to Supplier’s
obligations under this Section, including any traceability data, for a period of
five (5) years and agrees to provide Medtronic with a copy of such documentation
or data promptly upon request. This obligation survives termination or
expiration of this Agreement. From time to time, Medtronic has the right to
notify Supplier of changes to the requirements of this Section.

 

5.4Environmental Product Regulation Compliance. Supplier shall comply with the
following terms and conditions for all Products provided to Medtronic:

 

5.4.1Supplier shall provide full disclosure of all materials and components used
in the Products (“Materials Disclosure”) to Medtronic to enable Medtronic to
comply with all obligations regarding restrictions on certain substances in
Products as required by Environmental Regulation. Further, Supplier shall comply
with all Environmental Regulations applicable to the Products. For the purposes
of this section, “Environmental Regulations” shall include any and all laws,
regulations, directives, ordinances, orders and decrees of any kind, adopted or
implemented in any country, state, region or jurisdiction, which govern,
regulate or restrict: (i) the use of hazardous substances; (ii) restrictions on
batteries, accumulators and waste batteries and accumulators; and (iii)
materials used in packaging and packing materials in Products, including, but
not limited to, the registration, evaluation, authorization and restriction of
chemicals (REACH) and Restriction of Hazardous Substances (RoHS). Supplier shall
provide Medtronic with assistance and sufficient documentation, as reasonably
determined by Medtronic, to

 

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  enable Medtronic to verify the materials used in the Products and that
Products are in full compliance with Environmental Regulations.

 

5.4.2Upon request, Supplier shall provide Medtronic with a report on the status
of the Products’ ongoing compliance with Environmental Regulations in an
electronic format prescribed by Medtronic. Any such report shall include
Supplier’s representation and warranty that, as of the date of the report, the
Products are in full compliance with all applicable Environmental Regulations.

 

5.4.3Intentionally omitted.

 

5.4.4During the term of this Agreement, in accordance with applicable Quality
Requirements, Supplier shall promptly notify Medtronic of any changes in the
Products’ design, technical specification, composition, components, substances
or materials, or any changes in a supplier of a component, substance or
material, that may have an impact on the ongoing compliance of the Products with
Environmental Regulations.

 

5.4.5Supplier represents that it gathered the information required by this
Agreement and that all information submitted to Medtronic in connection with
this Agreement is accurate. Supplier acknowledges that Medtronic will rely on
this representation in determining the compliance of its products.

 

5.5Responsible Sourcing. Supplier shall comply with all applicable laws relating
to human rights, health/safety and ethics. Medtronic’s Global Supplier Standards
are posted in the Responsible Supply Management section of Medtronic’s website.

 

5.6Equal Opportunity. Medtronic and Supplier shall, to the extent they apply,
abide by the requirements of 41 CFR §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a).
These regulations prohibit discrimination against qualified individuals based on
their status as protected veterans or individuals with disabilities, prohibit
discrimination against all individuals based on their race, color, religion,
sex, or national origin and require affirmative action to employ and advance in
employment individuals without regard to race, color, religion, sex, national
origin, protected veteran status or disability. Supplier shall comply with all
applicable labor laws, rules, and regulations, including but not limited to, all
laws forbidding the solicitation, facilitation, or any other use of slavery or
human trafficking.

 

To the extent applicable, Medtronic incorporates by reference 29 Code of Federal
Regulations (C.F.R.) Part 471, Appendix A to Subpart A. Vendor further
understands that Medtronic is a prime contractor to the United States
Government.  Accordingly, this Agreement incorporates CFR 52.212-5(e)(1) and CFR
52.244-6 of the Federal Acquisition Regulation (“FAR”) by reference, with the
same force and effect as if it were given in full text herein.

 

If Supplier is required by federal regulations to file Employer Information
Report EEO-1 (standard form 100) or Federal Contractor Veterans Employment
Report VETS-100A, Supplier certifies that it has done so or will file such
reports in accordance with applicable instructions and will continue to file
such reports unless or until no longer required by law or regulation.

 

5.7Regulatory Support. Supplier agrees to provide Medtronic with all information
about the Products necessary, in Medtronic’s reasonable opinion, to enable
Medtronic to take the steps needed to permit the marketing and sale of Medtronic
products into which the Products are incorporated (and to permit the marketing
and sale of any other Products which are sold as accessories to any Medtronic
products) in all jurisdictions in the world in which Medtronic chooses to market
and sell the Products and such Medtronic products. Such steps include making
regulatory submissions and/or self-certifications, as applicable, and
successfully obtaining such regulatory registrations, clearances and approvals
as are needed to permit such marketing and sale. The relevant United States Food
and Drug Administration (“FDA”) reviewer guidance documents or relevant
requirements of other regulatory bodies shall be considered for the purposes of
determining what information is necessary.

 

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Where specific testing is required to comply with the laws governing such
regulatory registrations, clearances, approvals and self-certifications, then
Medtronic shall be responsible for obtaining such testing except where Supplier
specifically commits to undertake such testing. Supplier agrees to assist
Medtronic in developing test protocols for the Medtronic products that
incorporate the Products and in answering questions from FDA and other
regulatory authorities concerning Medtronic’s submissions, insofar as such
questions relate to any of the Products. Medtronic is solely responsible for
determining the intended use of the Products and for the validation of the
Products and their respective drawings and Specifications for such intended use.

 

5.8Federal Acquisition Regulation. Seller understands that Medtronic sells its
products to the United States Government. Accordingly, this Agreement
incorporates CFR 52.212-5(e)(1) and CFR 52.244-6 of the Federal Acquisition
Regulation (“FAR”) by reference, with the same force and effect as if it were
given in full text herein. Supplier agrees to comply with the aforementioned
applicable provisions of the FAR and other legal requirements applicable to a
U.S. government subcontractor.

 

6.       CONFIDENTIALITY AND PUBLICITY

 

6.1.1Medtronic Confidential Information. “Medtronic Confidential Information”
means any information or tangible item that:

 

(i)is acquired by Supplier from any Business Unit or from a Third Party
Purchaser (to the extent that such information is Medtronic information) that:

 

(a)is identified as confidential at the time of disclosure to Supplier, or
within a reasonable time after such disclosure;

 

(b)is non-public information relating to medical or diagnostic devices,
components, accessories and attachments, including Specifications and drawings,
Medtronic Intellectual Property, Developed Intellectual Property, business plans
and other financial or marketing information; or

 

(c)Supplier has a reasonable basis to believe is confidential;

 

(ii)relates to Medtronic Intellectual Property or Developed Intellectual
Property; or

 

(iii)is furnished by such party that relates to discussions regarding entering
into a BUSA.

 

All Medtronic Confidential Information remains the property of the Medtronic
Affiliates.

 

6.1.2Supplier Confidential Information. “Supplier Confidential Information”
means any information or tangible item that:

 

(i)is acquired by Medtronic or any Business Unit from any Supplier Affiliate
that:

 

(a)is identified as confidential at the time of disclosure to Medtronic or any
Business Unit, or within a reasonable time after such disclosure;

 

(b)is non-public information pertaining to Supplier Affiliates, Supplier
Intellectual Property, business plans and other financial or marketing
information; or

 

(c)Medtronic or any Business Unit has a reasonable basis to believe is
confidential;

 

(ii)relates to Supplier Intellectual Property; or

 

(iii)is furnished by such party that relates to discussions regarding entering
into a BUSA.

 

All Supplier Confidential Information remains the property of the Supplier
Affiliates.

 

6.1.3Certain Definitions. “Confidential Information” means the Medtronic
Confidential Information or the Supplier Confidential Information, as
applicable. “Disclosing Party” means the party disclosing its Confidential
Information and “Receiving Party” means the party receiving the other party’s
Confidential Information.

 

6.2Obligations. Receiving Party will keep the Confidential Information secret
and confidential and will protect the Confidential Information from disclosure,
accidental loss or unauthorized access or use. Receiving Party will not use or
exploit the Confidential Information for the benefit of Receiving Party or any
third party and may only use the Confidential Information for the conduct of
Receiving Party’s performance under the Agreement or as specifically authorized
by Disclosing

 

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 Party in writing. Any disclosure of Confidential Information by Receiving Party
to Receiving Party’s employees or contractors will be to only those who have a
need to know the Confidential Information. To the extent necessary to protect
Disclosing Party's rights, Receiving Party will have appropriate agreements with
its employees or contractors whose services it may require sufficient to enable
it to comply with all the terms of this Agreement. Receiving Party is
responsible for any disclosure or use of Confidential Information by their
employees or contractors other than pursuant to the terms of the Agreement.
Receiving Party shall notify Disclosing Party immediately upon discovery of any
unauthorized use or disclosure of Confidential Information, and will cooperate
with Disclosing Party to help Disclosing Party regain possession of the
Confidential Information, mitigate any harmful effects and prevent its further
unauthorized use or disclosure.

 

6.3Exclusions. Confidential Information does not include information that:

 

(i)is known to Receiving Party prior to receipt thereof under the Agreement, as
demonstrated by reliable evidence;

 

(ii)is disclosed without restriction or following expiration of a restriction to
Receiving Party in good faith by a third party who is in lawful possession
thereof and who has the right to make such disclosure;

 

(iii)is or becomes public knowledge, by publication or otherwise, through no
fault of Receiving Party; or

 

(iv)is independently developed by Receiving Party, without utilizing the
Confidential Information.

 

6.4[intentionally omitted].

 

6.5Required Disclosure. In the event that, on the advice of legal counsel,
Receiving Party is compelled by law to disclose Confidential Information,
Receiving Party will notify Disclosing Party in advance of such disclosure about
the need for any such disclosure so that Disclosing Party may seek a protective
order or other remedy. Receiving Party will take every reasonable action to
ensure protection of the disclosed Confidential Information to the extent
allowable by law.

 

6.6Copies, Return or Destruction. Receiving Party shall not copy or duplicate
any materials containing Confidential Information except as necessary to
accomplish the purposes of the Agreement. Receiving Party will, return all
materials containing Confidential Information that have been provided by any
Business Unit, including all copies, upon demand by Disclosing Party, provided
that Receiving Party may retain copies as required by Applicable Law or the
Other Agreements. Receiving Party shall continue to treat any materials
containing Disclosing Party’s Confidential Information that are not returned to
Disclosing Party in accordance with this Section 6.

 

6.7Publicity. Receiving Party shall not make any public announcement about or
advertise the existence of the Agreement or divulge its terms and conditions
without the prior written agreement of Disclosing Party. Nothing in this
Agreement shall prohibit a Party from making disclosures required by applicable
federal and state securities laws and regulations or stock exchange
requirements.

 

6.8Term of Obligation. The restrictions and obligations assumed by Receiving
Party under this section shall survive the termination or expiration of the
Agreement.

 

7.INTELLECTUAL PROPERTY RIGHTS

 

7.1License to Supplier. Medtronic hereby grants to Supplier a non-exclusive,
nontransferable, non-sublicensable, revocable, fully paid up license to use
Medtronic Intellectual Property that is used or employed to perform Supplier’s
obligations under the Agreement. Such use shall be solely to produce and have
produced the Products for supply to Medtronic or a Third Party Purchaser for the
benefit of Medtronic at the applicable Supplier Facility during the term of and
pursuant to the Agreement, and for no other purpose. No other license to any
other Medtronic Intellectual Property is granted, and none is to be implied.

 

7.2Intellectual Property Ownership.

 

7.2.1Supplier Intellectual Property. Supplier owns all Supplier Intellectual
Property. Any and all rights in Supplier Intellectual Property not explicitly
granted under this Agreement are

 

17

 

 

  expressly reserved by and to Supplier.

 

7.2.2Medtronic Intellectual Property. Medtronic owns all Medtronic Intellectual
Property.

 

7.2.3Developed Intellectual Property. The Medtronic Affiliates own all Developed
Intellectual Property, whether developed solely by Supplier or jointly by
Supplier and Medtronic or any third party. Supplier shall assign and hereby
assigns all of its rights in and to such Developed Intellectual Property
collectively to the Medtronic Affiliates. Supplier shall promptly disclose
Developed Intellectual Property to and shall execute and deliver documents
appropriate to evidence ownership of the Developed Intellectual Property to the
Medtronic Affiliates. All Product documentation, drawings, prototypes and the
like related to Developed Intellectual Property are also the property of the
Medtronic Affiliates.

 

7.2.4Supplier represents and warrants that neither it nor its personnel will
decompile, reverse engineer, or disassemble any sample, device, prototype,
hardware, software or other material, or portion thereof, made available to
Suppler by any Medtronic Affiliate, or their respective agents or consultants
without Medtronic’s prior written consent.

 

7.3Failure to Supply License.

 

7.3.1Supplier License to Medtronic. Supplier hereby grants to the Medtronic
Affiliates a non-exclusive, nontransferable, sub-licensable, worldwide, fully
paid license to Supplier Intellectual Property and any other Intellectual
Property that is used, employed or necessary to make, have made, import, export,
and to use and sell Products and replacements for Products. The scope of use of
the above license grant is to make, have made, import, export, and to use and
sell Products and replacements for Products, and for no other purpose and is
granted the right to sublicense Supplier Intellectual Property for manufacturing
purposes only.

 

7.3.2Limitation on Supplier License. Subject to the terms and conditions of the
Agreement, The Medtronic Affiliates shall not exercise the Supplier license
granted in Section 7.3.1, unless and until the occurrence of any one of the
following events (“Trigger Condition”):

(i)Supplier fails for any reason to timely deliver units of the Product ordered
by Medtronic or any Third Party Purchasers, including but not limited to a
failure to deliver Products which conform to the Specifications, which failure
is not cured within thirty (30) days after written notice from Medtronic;

(ii)Supplier fails to execute its business continuity plan upon a supply
disruption and such failure is not cured with twenty (20) days after written
notice from Medtronic;

(iii)The Medtronic Affiliate terminates a BUSA due to a Supplier breach of the
BUSA or the Agreement in accordance with Section 10.2;

(iv)Supplier wrongfully terminates the Agreement;

(v)Supplier fails to comply with the requirements of Section 4.8;

(vi)The insolvency or adjudication of bankruptcy of Supplier, other than a
debtor in possession basis;

(vii)Supplier petitions for, consents to, or becomes subject to any relief under
any bankruptcy, reorganization, or moratorium statues or similar debtor relief
laws;

(viii)Supplier is the subject of any proceedings related to its liquidation,
insolvency or the appointment of a receiver or similar officer for it, or
Supplier makes an assignment for the benefit of all or substantially all of its
creditors;

(ix)Supplier fails to continue to do business in the ordinary course, either in
general or with regard to the Products; or

(x)The sale of all or substantially all of the assets of Supplier that are used
in the design, development or Manufacture of a Product.

 

7.3.3Intentionally blank

 

7.3.4Technical Support; Technology Transfer. In the event a Medtronic Affiliate
undertakes to exercise its license rights following a Trigger Condition,
Supplier shall provide technical support and training and otherwise assist the
Medtronic Affiliate in establishing manufacturing operations equivalent to the
Manufacturing operations under this

 

18

 

 

  Agreement for the production of each Product that utilizes Supplier
Intellectual Property. Supplier shall provide the Medtronic Affiliate with a
full and enabling technology transfer (including any tooling, mask works,
foundry access, or other critical items necessary for production) relative to
each Product.

 

7.3.5Access to Supplier Intellectual Property. Upon the occurrence of a Trigger
Condition, Supplier shall promptly provide a Medtronic Affiliates or its
designee with access to all of Supplier Intellectual Property, Supplier
Confidential Information and other items used, employed or necessary for the
Manufacturing of the Product (including all specialized items, such as tooling,
molds, etc.) together with information and training reasonably necessary for the
Manufacture of the Products, as well as training for the use thereof, to the
extent possible, use of the Supplier Facility for production of the Product.

 

7.3.6Bankruptcy. In the event that a bankruptcy petition is filed by or on
behalf of Supplier and Supplier, or a custodian or trustee acting on behalf of
Supplier, rejects this Agreement, the Medtronic Affiliates may elect to retain
the license from Supplier pursuant to §365(n) of the federal bankruptcy code (11
U.S.C. § et seq.) or exercise any of its other rights or elections under the
bankruptcy code and shall be entitled to retain all of its license and use
rights granted under the Agreement.

 

7.4Notification of Intellectual Property Use. Supplier represents and warrants
that to the best of its knowledge all Supplier Intellectual Property and all
Intellectual Property licensed to Supplier by third parties that is required for
a Medtronic Affiliate to make, have made, and use and sell Products as of the
Effective Date is disclosed in an Attachment to each BUSA. Supplier shall
disclose to Medtronic in writing any additional Intellectual Property at least
ninety (90) days before Supplier uses it to provide a Product. Supplier shall
not use the additional Intellectual Property to which Medtronic objects in
writing within sixty (60) days after Medtronic receives Supplier’s written
disclosure of proposed use.

 

7.5Third Party Licenses. Supplier shall comply with and maintain in full force
and effect all license agreements with third parties pursuant to which Supplier
is licensed to use the Intellectual Property of third parties that is used or
employed for Supplier to perform its obligations under this Agreement. Supplier
shall promptly notify Medtronic in writing of any allegation that Supplier is in
breach of any such license agreement. Medtronic may, but is not obligated to,
cure any such alleged breach and recover the cost of such cure from Supplier,
including without limitation, by set-off against amounts Medtronic owes Supplier
hereunder.

 

7.6Intellectual Property Warranty and Indemnification.

 

7.6.1Non-Infringement. Supplier shall not provide the Medtronic Affiliates or
any Third Party Purchaser in connection with the work performed for benefit of
Medtronic with any designs, plans, models, samples, software, integrated
circuits, reports, or other writings or products which it either knows or has
reason to believe violate the valid patent, copyright, or other form of
Intellectual Property right of a third party. Supplier represents and warrants
that the manufacture, use, sale and provision of the Product(s) by Supplier, and
the Medtronic Affiliates’ subsequent use and sale of the Product, will not
infringe, misappropriate or otherwise violate the patent, copyright, or other
property or proprietary rights of any third party, except that the warranty in
this subsection does not apply to any infringement or violation resulting from:
(i) Specifications provided by Medtronic without any material input from
Supplier; (ii) that portion of a Product based on Specifications provided by
Medtronic without any material input from Supplier; (iii) a combination of other
products with the Product when Supplier did not supply, recommend, or procure
such other products or when Supplier objected to the combination of such other
products with the Product; or (iv) Medtronic Intellectual Property.

 

7.6.2Rights in Intellectual Property. (a) Supplier represents and warrants that,
subject to the Medtronic Affiliates’ rights under the Agreement, Supplier owns
or has the right to use the entire right, title and interest in the Intellectual
Property used or employed by Supplier to Manufacture Products, without
restriction or encumbrance. (b) Medtronic represents and

 

19

 

 

  warrants that, subject to the Supplier Affiliates’ rights under the Agreement,
Medtronic owns or has the right to use the entire right, title and interest in
the Medtronic Intellectual Property used or employed by Supplier to Manufacture
Products, without restriction or encumbrance.

 

7.6.3Indemnity by Supplier. Supplier shall give Medtronic notice of any claim or
allegation that would implicate the warranty under Sections 7.6.1 and 7.6.2 as
soon as possible but in no event more than thirty (30) days after receipt of
such claim or allegation. Supplier shall defend, indemnify and save harmless the
Medtronic Affiliates, and at Medtronic’s request in its sole discretion, any
Third Party Purchaser, from all damages, costs and expenses (including attorney
fees and any costs incurred by Medtronic on behalf of any Third Party Purchaser)
related to a claim that Product infringes or misappropriates a patent or other
Intellectual Property right (or other property or proprietary rights) of any
third party, which infringement or misappropriation constitutes a breach of
Sections 7.6.1 or 7.6.2(a), provided Medtronic provides notice to Supplier of
such claim no more than thirty (30) days after receipt of such claim. If
Medtronic fails to notify Supplier within thirty (30) days, Supplier’s
obligation to defend, indemnify and save harmless the Medtronic Affiliates (and,
as applicable, any Third Party Purchaser) shall be reduced only to the extent
Supplier is prejudiced by the delay beyond thirty (30) days. If the use of any
Products is enjoined due to an infringement or misappropriation that constitutes
a breach of Sections 7.6.1 or 7.6.2(a), at Medtronic’s option, Supplier shall at
its expense and as a first priority, work to either substitute a fully
functionally equivalent product or process (as applicable) not subject to such
injunction, modify such Product or process (as applicable) so that it is no
longer subject to such injunction, or obtain the right to continue using such
Product or process (as applicable) so long as such Product or process meets all
Medtronic and regulatory requirements.

 

7.6.4Indemnity by Medtronic. Medtronic shall defend, indemnify and save harmless
the Supplier Affiliates, and at Supplier’s request in its sole discretion, any
Third Party Purchaser, from all damages, costs and expenses (including attorney
fees and any costs incurred by Supplier on behalf of any Third Party Purchaser)
related to a claim that any of the following infringes or misappropriates a
patent or other Intellectual Property right (or other property or proprietary
rights) of any third party: (i) Specifications provided by Medtronic without any
material input from Supplier; (ii) that portion of a Product based on
Specifications provided by Medtronic without any material input from Supplier;
(iii) a combination of other products with the Product when Supplier did not
supply, recommend, or procure such other products or when Supplier objected to
the combination of such other products with the Product; or (iv) Medtronic
Intellectual Property; provided Supplier provides notice to Medtronic of such
claim no more than thirty (30) days after receipt of such claim. If Supplier
fails to notify Medtronic within thirty (30) days, Medtronic’s obligation to
defend, indemnify and save harmless the Supplier Affiliates (and, as applicable,
any Third Party Purchaser) shall be reduced only to the extent Medtronic is
prejudiced by the delay beyond thirty (30) days.

 

7.7Patent Marking. Supplier shall ensure that any patent markings it places or
causes to be placed on, about or within Products or components is accurate and
in conformance with Applicable Law at all times. Supplier agrees to indemnify
and hold harmless Medtronic and Medtronic Affiliates, and their respective
officers, directors, employees, shareholders, agents or representatives pursuant
to Section 9.1 in the event a third party asserts Claims arising out of or
related to Supplier’s patent marking.

 

8.WARRANTIES AND REPRESENTATIONS

 

8.1Compliance Covenants and Representations. Supplier represents and warrants to
Medtronic that: (i) the Products delivered to Medtronic or any Third Party
Purchaser for Medtronic’s benefit are not adulterated or misbranded within the
meaning of the United States Food, Drug, and Cosmetic Act, (ii) all Products
delivered to Medtronic or any Third Party Purchaser for Medtronic’s benefit have
been Manufactured in accordance with a quality system that is consistent with
the

 

20

 

 

 applicable Quality Requirements; and (iii) any services provided and the
Manufacture, sale and delivery of Products does not violate any, and the
Products conform to all Applicable Laws, including without limitation, the FDA
and, if applicable, equivalent non-U.S. regulatory authorities. Supplier shall
promptly notify Medtronic in writing if Supplier becomes aware that a Product or
any applicable Quality Requirements may not comply with Applicable Law.

 

8.2Product Warranty. Supplier represents and warrants that each Product fully
complies and will comply with all applicable Specifications and applicable
Quality Requirements, and is and will be free from defects in design, materials
and workmanship for a period of fifteen (15) months from date of delivery. If
Product includes software, Supplier warrants that any computer software provided
with or incorporated into a Product (i) is and will be free of viruses, worms,
and other components designed to erase, disable, or otherwise cause harm to
computer systems, and (ii) does not contain Publicly Available Software. If
Publicly Available Software is included in a Product, Supplier represents and
warrants that it has complied with all licensing requirements associated with
the use of such software in the Publicly Available Software Products and agrees
to provide information about such compliance in response to a written request
from Medtronic. Supplier shall inform Medtronic and/or any Third Party
Purchasers in writing no more than two (2) days after Supplier learns of any
actual or potential problems relating to the performance of any Product or any
similar product manufactured by Supplier for a third party. THE EXPRESS
WARRANTIES SET FORTH IN THIS SECTION 8 ARE THE SOLE AND EXCLUSIVE WARRANTY GIVEN
BY SUPPLIER WITH RESPECT TO THE PRODUCT.

 

8.3Government Watch List. Supplier represents and warrants that neither
Supplier, nor any parent, subsidiary, or affiliate of Supplier, nor any of their
officers, directors, or Personnel, nor any sub-supplier of Supplier or any other
third parties, is: (i) a Restricted Party; (ii) included on the List of Excluded
Individuals/Entities maintained by the HHS Office of Inspector General pursuant
to 42 U.S.C. Sections 1320a-7, 13955ccc, 1320c-5 and regulations promulgated
thereunder, which, as of the Effective Date, can be searched at the internet
website of http://exclusions.oig.hhs.gov/ (“OIG List”); or (iii) listed as
excluded on the list maintained by the United States General Services
Administration which, as of the Effective Date, can be searched at the internet
website of System for Award Management https://www.sam.gov (the “SAM List”). 
Supplier shall immediately notify Medtronic if Supplier, any parent, subsidiary,
or affiliate of Supplier, or their officers, directors, or Personnel, or any
sub-supplier of Supplier or any other third parties, should come to be (a) a
Restricted Party, (b) included on the OIG List, or (c) listed as excluded on the
SAM List

 

8.4Compliance with Agreement. Supplier represents and warrants that all of its
employees, agents, contractors and consultants whose services may be used to
fulfill the obligations under the Agreement are or will be informed of the terms
of the Agreement to the extent necessary to comply with its terms, and that all
such persons are sufficiently obligated to Supplier, by contract or otherwise,
to fully comply with all provisions of the Agreement.

 

8.5Conflicts. Supplier represents and warrants to Medtronic that the execution
of this Master Agreement, any BUSA or purchase order placed thereunder and the
Other Agreements and Supplier's performance thereunder is within its duly
authorized powers and does not conflict with any other contract or obligation of
Supplier. Supplier shall not enter into any agreement or understanding whether
written or oral, during the term of the Agreement which conflicts or is
inconsistent with the terms of this Master Agreement.

 

8.6Disclaimer. SUPPLIER MAKES NO OTHER REPRESENTATION OR WARRANTY AND HEREBY
EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED. NO IMPLIED WARRANTY OF MERCHANTABILITY, NO IMPLIED WARRANTY OF
FITNESS FOR ANY PARTICULAR PURPOSE, AND NO IMPLIED WARRANTY ARISING BY USAGE OF
TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE IS MADE BY SUPPLIER. NO
REPRESENTATIVE OR SUPPLIER IS AUTHORIZED TO GIVE OR MAKE ANY OTHER
REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING WARRANTY IN ANY WAY.

 

21

 

 

9.INDEMNIFICATION

 

9.1Indemnification by Supplier. Supplier shall indemnify, defend and hold
harmless the Medtronic Affiliates, and their respective officers, directors,
employees, shareholders, agents and representatives, and, at Medtronic’s request
in its sole discretion, any Third Party Purchasers, from and against and in
respect of any and all alleged or actual demands, claims, actions or causes of
action, alleged or actual claims of negligence, assessments, losses, damages,
liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection
therewith and any costs incurred by Medtronic on behalf of any Third Party
Purchaser) (“Medtronic Claims”) resulting from, arising out of, imposed upon or
incurred by any person or entity to be indemnified hereunder by reason of (i)
Supplier’s negligence or breach of the Agreement, or (ii) death or bodily injury
caused by a Nonconforming Product. Medtronic will notify Supplier promptly after
Medtronic becomes aware of any claim by any third party with respect to which a
Medtronic Affiliate or a Third Party Purchaser would be entitled to
indemnification hereunder. Supplier shall, at no cost to Medtronic, cooperate as
requested by Medtronic in the defense of any Medtronic Claim for which indemnity
may be sought.

 

9.2Indemnification by Medtronic. Medtronic shall indemnify, defend and hold
harmless the Supplier Affiliates, and their respective officers, directors,
employees, shareholders, agents and representatives, and, at Supplier’s request
in its sole discretion, any Third Party Purchasers, from and against and in
respect of any and all alleged or actual demands, claims, actions or causes of
action, alleged or actual claims of negligence, assessments, losses, damages,
liabilities, interest and penalties, costs and expenses (including, without
limitation, reasonable legal fees and disbursements incurred in connection
therewith and any costs incurred by Medtronic on behalf of any Third Party
Purchaser) (“Supplier Claims”) resulting from, arising out of, imposed upon or
incurred by any person or entity to be indemnified hereunder by reason of (i)
Medtronic’s negligence or breach of the Agreement, or (ii) death or bodily
injury caused by a Conforming Product. Supplier will notify Medtronic promptly
after Supplier becomes aware of any claim by any third party with respect to
which a Supplier Affiliate or a Third Party Purchaser would be entitled to
indemnification hereunder. Medtronic shall, at no cost to Supplier, cooperate as
requested by Supplier in the defense of any Supplier Claim for which indemnity
may be sought.

 

9.3Limitation of Remedies. Except for breaches of their obligations under
Sections 6 (Confidentiality and Publicity) and 7.6 (Intellectual Property
Warranty and Indemnification), or for willful misconduct. IN NO EVENT WILL A
PARTY BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES FOR ANY CONSEQUENTIAL,
INDIRECT, INCIDENTAL, EXEMPLARY OR SPECIAL DAMAGES OF ANY KIND.

 

9.4.Insurance. Supplier shall, at its sole cost and expense, obtain and at all
times during the term of this Agreement maintain insurance with the following
minimum coverage and limits: (a) workers' compensation insurance in accordance
with all applicable federal, state and local statutory requirements; (b)
commercial general liability insurance on an occurrence basis with minimum
combined single limit coverage of $1,000,000 per occurrence and $2,000,000
general aggregate for bodily injury and property damage liability; (c)
automobile liability with a combined single limit of $1,000,000 for bodily
injury and property damage liability (coverage will apply to non-owned and hired
automobiles); (d) product liability of $2,000,000 per occurrence covering all
Products; (e) employer’s liability insurance with limits of $1,000,000 by
accident each accident, $1,000,000 by disease each employee, $1,000,000 by
disease policy limit; (f) excess or umbrella insurance with limits of $5,000,000
per occurrence in excess of the limits specified above for employer’s liability
and commercial general liability insurance; and (g) errors and omissions
liability insurance (including technology errors and omissions, network and
information security liability and communications and media liability) with a
limit of $5,000,000 per occurrence and $5,000,000 aggregate.  Supplier will name
“Medtronic, Inc., its subsidiaries and affiliates” as “Additional Insured”, with
primary, non-contributory coverage, under Supplier’s insurance policies.
Supplier shall furnish Medtronic written evidence of such insurance and shall
provide at least thirty (30) days prior written notice of reduction in coverage
levels or termination of such insurance.

 

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10.TERM AND TERMINATION

 

10.1Term. The Master Agreement will become effective on the Effective Date for
an initial term of three (3) years and, with respect to any BUSA or purchase
order placed thereunder, the number of years designated therein as any initial
set of years (the “Initial Term”). Unless earlier terminated, the Master
Agreement will thereafter automatically renew for up to three (3) additional
periods of one (1) year each, unless either party provides the other with notice
of non-renewal at least one (1) year before the end of the then-current term.

 

10.2Termination. BUSAs and Other Agreements may be terminated only in accordance
with their own terms. In the event all BUSAs have been terminated or are
expired, either party may terminate the Master Agreement upon written notice to
the other of no less than ninety (90) days.

 

10.3Effect of Expiration or Termination:

 

10.3.1Master Agreement. The parties acknowledge and agree that the termination
or expiration of any individual BUSA shall not in itself terminate this Master
Agreement or have any effect on the rights and obligations of third parties or
any other BUSA or purchase order placed thereunder. If this Master Agreement
expires or is terminated under Section 10, no further BUSAs may be entered into
by the parties under the Master Agreement.

 

10.3.2Orders. Unless otherwise provided in a BUSA, upon termination or
expiration of the Master Agreement or any BUSA, all then outstanding accepted
orders thereunder for Products shall survive.

 

10.3.3License. In the event of a non-renewal or termination by Supplier of the
Master Agreement or any BUSA with less notice than required by Section 4.8
(Discontinuation), the Medtronic Affiliates will have the rights accorded to it
under Section 7.3 (Failure to Supply License), as though Supplier had elected to
exit the business.

 

10.3.4Last Time Buy. In event of termination or expiration of the Master
Agreement or any BUSA, Medtronic shall have a right to place an order for a last
time buy pursuant to Section 4.8 (Discontinuation) during the remainder of the
term of the Master Agreement or the BUSA and for thirty (30) days thereafter, as
though Supplier had elected to exit the business.

 

10.3.5Return to Medtronic. At the earlier of the Business Unit’s written request
or Product delivery to fulfill the last order placed under a BUSA that has been
terminated or has expired, Supplier shall promptly return all applicable
Business Unit’s property, return or securely destroy the records in Supplier’s
possession as directed by the applicable Business Unit, and execute such
documents and take other action as reasonably requested by such Business Unit in
connection therewith.

 

10.4Survival. All provisions which are continuing in nature, including but not
limited to Sections 4.1.2 (Production/Compliance with Law, Indemnity), 4.3
(Quality), 4.4 (Use and Return of Medtronic Property), 5.4 (Conflict Minerals),
6 (Confidentiality and Publicity), 7 (Intellectual Property Rights), 8
(Warranties and Representations), 9 (Indemnification) and 10 (Term and
Termination), will survive termination of this Master Agreement and each BUSA.

 

11.MISCELLANEOUS

 

11.1Force Majeure. A party’s obligations under a BUSA, including any delays in
Product deliveries, will be excused by a Force Majeure event as to such BUSA
only to the degree affected, provided that the party affected by the Force
Majeure event makes reasonable efforts to avoid being so affected and promptly
delivers written notice to the other party upon learning of the Force Majeure
event, which notice must include a detailed description of the event and its
anticipated effect on the party’s ability to perform its obligations. Upon
giving notice to the other party, the affected party is excused from the
performance of its obligations under the BUSA only to the extent and only for
the period that its performance of such obligations is prevented by the Force
Majeure event, except that this clause does not apply to a party’s obligation to
perform its disaster recovery plan. During the period that the performance by a
party has been suspended by reason

 

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 of a Force Majeure event, the other party may suspend the performance of all or
part of its obligations to the extent that such suspension is commercially
reasonable.

 

11.2Assignment. This Agreement and/or any portion thereof is assignable by
Medtronic, provided that beginning as of the date of such assignment the
assignee assumes the rights and obligations of Medtronic corresponding to the
entire Agreement or the assigned portions thereof. The Agreement or any portion
of it may not be assigned by Supplier, without at least ninety (90) days prior
written notice to and the written consent of Medtronic, which shall not be
unreasonably withheld. If the proposed assignment, in Medtronic’s good faith
opinion may impact quality or continuity of supply, Medtronic may implement
license in Section 7.3 (Failure to Supply License) and/or trigger the last time
purchase as set forth in Section 4.8 (Discontinuation) as a condition of its
consent. Assignment does not relieve the assigning party of its obligations
hereunder. If Supplier experiences a change of control or sells substantially
all of its assets associated with any of the Products, and the Agreement is not
assigned, then the Medtronic Affiliates may implement the license in Section 7.3
and/or trigger the last time purchase as set forth in Section 4.8
(Discontinuation) so long as Medtronic places its order within ninety (90) days
of the later of the effective date of the change in control or sale or
Medtronic’s receipt of written notice by Supplier of such change in control or
sale which will be honored by the successor in interest to Supplier.

 

11.3Notices. Notices given under the Agreement must be in writing and must be
either delivered in person (including express courier, such as Federal Express)
or sent by United States certified or registered mail, postage and certification
prepaid, to the other party, at the address at the beginning of this Agreement
and, with respect to each BUSA or purchase order placed thereunder, the address
noted therein. Notices are effective upon delivery. A party may change its
address for notice by giving the other party notice in accordance with this
section.

 

11.4Consents. Any approval, authorization or consent required by the Agreement
must be in writing, duly signed by an authorized representative of the granting
party. The withholding of an approval, authorization or consent for regulatory,
quality, or competitive reasons shall not be deemed unreasonable.

 

11.5Business Reviews. Business Reviews will be held by Medtronic and Supplier at
the Business Unit and corporate levels (including participation of appropriate
level decision makers from both Parties to address both tactical and strategic
business initiatives and objectives), on a periodic basis agreed to by the
parties, to discuss topics of interest, including but not limited to the
following issues:

 

(i)General business update.

 

(ii)Quality Performance and any open corrective actions.

 

(iii)Delivery performance and any open corrective actions.

 

(iv)Forecast and capacity Review.

 

(v)Other existing and planned projects

 

(vi)Cost reduction activities.

 

(vii)Litigation/Intellectual Property update

 

Failure to hold a Business Review will not relieve Supplier or Medtronic from
its obligations under this Agreement.

 

11.6Relationship of the Parties. Nothing contained in the Agreement creates a
joint venture, partnership, agency or similar endeavor between the parties. Each
party is acting solely as an independent contractor and neither party has any
power or authority to direct or indirectly bind or act on behalf of the other.
It is understood that except as expressly provided in the Agreement, nothing
prevents the Medtronic Affiliates from developing products similar to the
Products or from sourcing Products, other products or services from another
vendor.

 

11.7Governing Law and Venue. The Agreement will be construed in accordance with
and governed by the laws of the State of Minnesota, USA, and federal law that
applies in Minnesota, without

 

24

 

 

 giving effect to any choice of law rule that would cause the application of the
laws of any other jurisdiction. The exclusive venue for actions relating to the
Agreement is the federal and state courts for Hennepin County, Minnesota.

 

11.8Dispute Escalation. The parties will in good faith endeavor to resolve any
disputes or differences of interpretation of the Agreement amicably, through
dialog and cooperation. In the event a dispute or difference is not promptly
resolved at operational levels of the two organizations, the parties shall
escalate it for a good faith effort to achieve an amicable resolution at a
senior business management level.

 

11.9Order of Precedence, Entire Agreement and Modifications.

 

11.9.1Order of Precedence. In the event of a conflict in the terms of the
documents governing an order placed pursuant to the Agreement, the terms of the
documents will control in the following order of precedence (from higher to
lower): (a) the applicable BUSA for additional or expressly conflicting terms
(but only with respect to Products supplied under such BUSA), (b) this Master
Agreement, (c) the Other Agreements, (d) the typed portions of Medtronic’s
purchase order, and (e) the pre-printed terms of Medtronic’s order; provided,
that Supplier shall not be bound by typed or pre-printed purchase orders unless
it expressly accepts such orders. Each BUSA shall be subject to and shall
incorporate by reference the terms and conditions of this Master Agreement,
provided, however, the express terms and conditions of a BUSA shall prevail over
any inconsistent or conflicting terms in this Master Agreement with respect to
the Product(s) governed by such BUSA only.

 

11.9.2Entire Agreement, Modifications. The Agreement (including the Other
Agreements, the BUSAs and purchase orders placed thereunder) sets forth the
entire agreement between the parties and supersedes all prior agreements,
understandings and discussions regarding the subject matter hereof. The parties
intend that this clause does not supersede any other written agreements that are
in existence as of the Effective Date between Supplier and a Business Unit other
than the one signing this Master Agreement unless and until such Business Unit
enters into its own BUSA. No amendment, change, modification of any provision of
this Agreement will be binding unless set forth in a written document signed by
the parties.

 

11.10Waiver. No waiver by either party of any default of the other party will be
held to be a waiver of any other or subsequent default. Additionally, a Party’s
failure on any occasion to insist on strict performance of any term or condition
hereof shall not constitute a waiver of compliance with such term or condition
on any other occasion or a waiver of default. No waiver shall be effective
unless it is in writing and is signed by the party against which it is asserted.

 

11.11Severability. If a provision contained or referred to in the Agreement is
determined to be legally invalid or unenforceable, that provision will be
ineffective to the extent of the invalidity or unenforceability without
affecting the remaining provisions of the Agreement, which will continue to be
valid and enforceable to the fullest extent permitted by law.

 

11.12Counterparts. This Master Agreement and any BUSA may be executed in
counterparts, each of which shall be an original as against either party whose
signature appears thereon, but all of which taken together shall constitute but
one and the same instrument upon delivery.

 

11.13.Signature. This Master Agreement and any BUSA may be signed in any manner
that clearly evidences the parties’ intent to be bound, including via faxed,
imaged, electronic or digital signatures.

 

The parties have caused this Master Agreement to be executed as of the Effective
Date.

          MEDTRONIC   INTRICON CORPORATION       By /s/ Kenneth A. Patterson  
By /s/ Michael P. Geraci

 

25

 

 

  Ken Patterson         Sr. Director, Strategic Sourcing   Michael P. Geraci  
Diabetes   (print name)

 

Date  12 July 2019   Title Sr. Vice President Sales & Marketing                
Date  May 14, 2019

 

By /s/ Leonel Peralta     Leonel Peralta     Vice President, Global Operations  
  Diabetes  

 

Date  July 11th, 2019  

 

LIST OF EXHIBITS

 

●Exhibit A: Form BUSA and Product and Price List

 

●Exhibit B: Disaster Recovery Plan

 

●Exhibit C: Supplier Instructions

 

●Exhibit D: Terms and Conditions for Tooling

 

Exhibits B-D are omitted pursuant to Item 601(a)(5) of Regulation S-K. Intricon
agrees to furnish supplementally to the SEC, upon request, a copy of any omitted
exhibit.

 

26

 

 

BUSINESS UNIT SUPPLY AGREEMENT

 

This Business Unit Supply Agreement (“BUSA”) is made by and between the
Medtronic Business Units set forth below (“Medtronic”) and IntriCon Corporation
on behalf of itself, its subsidiaries and Affiliated Companies performing
services under the Master Agreement (“Supplier”) under the terms and conditions
of the Master Supply Agreement (the “Master Agreement”) dated May 14, 2019
between Medtronic Inc. and Supplier.

 

MEDTRONIC BUSINESS UNITS: Medtronic MiniMed, Inc.       EFFECTIVE DATE: June 15,
2019 

 

This BUSA sets forth certain terms applicable only to the sale by Supplier and
purchase by the above referenced Business Units of Products (as defined below).
This BUSA is between Supplier and the specific Business Units that are a party
to this BUSA only and not any other Business Unit. For purposes of this BUSA
only, when the term “Medtronic” is used in the Master Agreement, it means the
specific Business Units that are a party to this BUSA.

 

All terms and conditions of the Master Agreement are incorporated by reference
into this BUSA except as may be expressly and directly modified by, or conflict
with, the terms of this BUSA or the attachments hereto. Nothing in the contents
of this BUSA amends the Master Agreement in applications other than to this
BUSA. In the event of any conflict between the terms of this BUSA, the terms of
the Master Agreement, and/or the terms of the Automation Agreement, the terms of
the agreements shall control in the following order of priority: (a) first, the
Automation Agreement, (b) second, this BUSA and (c) third, the Master Agreement.

 

1.BUSA SPECIFIC DEFINITIONS

 

Terms capitalized but undefined in this BUSA have the meaning given to such
terms in the Master Agreement, except that the following terms shall have the
following meanings when used in this BUSA only:

 

“Automation Agreement” means the Automation Agreement to Business Unit Supply
Agreement attached hereto as Attachment C.

 

Business Unit” means the above referenced Medtronic facilities, subsidiaries,
business units or entities.

 

“Product” means the goods listed in Attachment A to this BUSA, all of which are
Components as defined in the Master Agreement in that they are not Manufactured
by Supplier.

 

“System” shall have the meaning given to it in the Automation Agreement.

 

2.BUSA PRODUCT ORDERING AND SALE REQUIREMENTS

 

The provisions of the Product Ordering and Sale section of the Master Agreement
shall govern the order and sale of Products under this BUSA except as follows:

 

Capacity

 

a.Normal Capacity: Supplier Arden Hills/Singapore plants will manufacture to
forecast at 5 days a week, 2 shifts. Vadnais Heights plant will manufacture to
forecasts at 5 days a week, 3 shifts. Supplier shall develop build plan to
support forecasted demand from Medtronic with the normal capacity supporting the
build.

 

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b.Capital Equipment for Capacity Ramp: Supplier will be responsible for
identifying, and implementing capital equipment needed to expand capacity.
Supplier and Medtronic shall jointly review, approve and procure the needed
additional capital equipment to meet the forecasted demand. Supplier shall not
purchase capital equipment solely for use on the Products without first
consulting with Medtronic. This section (b) shall not apply to the equipment
covered by the Automation Agreement (as hereinafter defined).

 

c.Surge Capacity: Surge capacity available will be [****] above regular capacity
and this covers materials, resources and equipment availability to support this
surge in the same timeframe of the normal forecast.

 

d.Capacity Planning: Supplier shall make every effort to model the capacity plan
to the forecast provided by Medtronic. Supplier shall communicate performance to
capacity plans and will make every effort to adhere to meeting the capacity plan
communicated.

 

e.Raw Material: Supplier shall maintain sufficient raw material and/or
production capacity to support the 90 day demand plus [****] of production
relative to the current month. Both parties in good faith shall work on ways to
reduce component inventory holding cost at Supplier facilities. Both parties
shall meet bi-annually on lead-time reduction projects to reduce component level
inventory holding, while maintaining sufficient inventory to meet Product(s)
demand.

 

f.End Of Life [EOL] Components: Supplier will drive and assist Medtronic in end
of life component strategy. Based on Medtronic forecasts and Product strategy,
supplier will drive and manage the procurement strategy to ensure continuity of
supply. Procurement of the EOL components will be made by either Medtronic or
Supplier as appropriate and agreed upon. Supplier will notify Medtronic in
writing at least one hundred eighty days (180) days or as soon as practical (in
case of exceptions) prior to the discontinuation of any Component(s). Medtronic
will have the option as an end-of-life buy to purchase an unlimited quantity of
the Component(s) prior to its discontinuation, with Supplier using its
commercially reasonable efforts to ensure availability of any sub-supplier
components. Supplier will hold as inventory any Component(s) purchased as an
end-of-life buy pursuant to the terms of the raw materials program in section
2.e in the BUSA. If a Component is discontinued, Medtronic has the option to
select an alternate Component. This Section 2.f shall replace and supersede
Section 4.8 of the Master Agreement.

 

g.Materials with Shelf Life: Supplier will assist in identifying, procuring and
managing materials with shelf life impact based on Medtronic forecasts provided.
Supplier shall use commercially reasonable efforts to notify customer should
forecasts change and material expiration should become an issue ensuring no
interruption in supply to forecasted demand. Supplier and customer will
negotiate in good faith based on situation.

 

h.Re-cycled Shipping Supplies: Custom customer / Product specific shipping
containers are to be re-used and re-cycled back to Supplier. In the event more
are needed by Supplier or Medtronic fails to re-cycle then Supplier will
purchase and charge Medtronic.

 

i.Buffer Inventory: Supplier shall maintain a previously agreed upon buffer
stock for agreed upon products as described in Attachment A.

 

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j.Minimum Purchase Requirements. The parties agree that Medtronic shall purchase
and take ownership of a minimum of an aggregate of [****] Needle Assembly Units
during the Initial Term based on two Systems and manually assembly units built
within IntriCon.

 

k.Orders will be deemed accepted upon receipt unless notice of non-acceptance is
provided by Supplier within five (5) Business Days thereafter

 

l.Certain Changes: Sections 2.5.2, 2.5.3, 2.5.4, 2.6.1 and 2.6.3 of the Master
Agreement shall be amended and restated for the purposes of this BUSA as
follows:

 

“2.5.2       Allocation. Supplier will satisfy orders submitted by Medtronic and
Third Party Purchasers. If Supplier cannot deliver all Products when due,
Supplier shall use commercially reasonable efforts to prioritize supply to
Medtronic.

 

2.5.3       Cancellation of Orders. Medtronic may cancel, in whole or in part,
any order for Product by giving Supplier written notice. Upon receipt of such
notice, Supplier will immediately stop any Manufacturing work in process covered
by such cancellation notice. Medtronic will reimburse Supplier for the actual,
non-recoverable Manufacturing costs incurred up to such cancellation time only
for orders corresponding to the three (3) month period (or, if greater, the
amount of safety stock the parties have agreed upon in writing) from the date of
delivery of Medtronic’s cancellation (but not in excess of the cancelled Product
price for up to the number of cancelled Products), provided that:

 

(i)     Supplier submits a written claim, to Medtronic within thirty (30) days
of Medtronic’s notice of cancellation, detailing the reasonable and actual
additional costs directly attributable to the cancellation; and

 

(ii)    Supplier transfers to Medtronic ownership of and, upon Medtronic’s
request, delivers the raw material, component and work in process inventory, and
the finished goods inventory paid for by Medtronic; and

 

(iii)   Supplier uses its commercially reasonable efforts to mitigate the
liability of Medtronic by, for example, cancelling or returning components to
Supplier’s vendors, or by using raw material, component and work in process
inventory, or finished goods inventory in other Medtronic or Third Party
Purchaser orders, or for Supplier’s other customers.

 

(iv)   Supplier and Medtronic will work together in good faith to address
cancellation of components, parts and sub-assemblies for any long lead time, End
of life, and shelf life items to be mutually agreed upon.

 

2.5.4       Termination of Orders. Medtronic may terminate in whole or in part
an order or orders by written notice to Supplier (i) for safety or regulatory
reasons, (ii) if, as a result of a Force Majeure event, Supplier remains unable
to deliver such Product for more than thirty (30) days, or (iii) if Supplier
fails to cure a material breach with respect to the order within thirty (30)
days after written notice. Any termination of any order will be subject to the
provisions of Section 2.5.3, provided that if Medtronic terminates pursuant to
(ii) or (iii), Medtronic shall not be obligated to pay for any non-conforming
raw material, component, work in process, or finished goods inventory.

 

2.6.1       Shipping Terms. Unless other agreed to by Supplier in writing,
delivery of Products will be F.O.B. Supplier’s Facility, and title and risk of
loss will pass at that point.

 

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2.6.3        Delays. Supplier shall promptly notify Medtronic of any actual or
prospective delay in delivery and Supplier shall obtain Medtronic’s approval
prior to making any partial deliveries. If the delivery of Product is delayed,
the parties shall mutually agree to a course of action.The MSA section of 2.6.3
will not apply at this time, when Medtronic mechanism is capable of being put in
place we will re-visit this section of the agreement and mutually agree upon any
changes.

 

3.BUSA PRICING AND PAYMENT REQUIREMENTS

 

The provisions of the Pricing and Payment section of the Master Agreement shall
govern the pricing and payment of Products under this BUSA except as follows:

 

a.The pricing Terms are shown in Attachment A. Prices under the column heading
“New Part Price” will be effective immediately following the execution of the
agreement. Supplier agrees to provide to Medtronic reduced prices for certain
Products sold to Medtronic as set forth under the column heading “New Part
Price” set forth on Attachment A [with respect to those Products which have been
manufactured using the System.].

 

b.Cost reductions. On an ongoing basis, Supplier shall use reasonable commercial
efforts to reduce the cost of Products (subject to the provisions of this
Agreement) and all attachments thereto including without limitation, Section
1.2.8 of the Quality Agreement (relative to design and process changes) and
shall in good faith negotiate price reductions to share savings with Medtronic
on a 50-50 basis, which reductions will be implemented immediately as agreed
upon. Medtronic shall use reasonable efforts to process Supplier Change
Notifications in a timely manner related to cost savings initiatives (SCN delays
by Medtronic will still be credited to Supplier to achieve annual target cost
reduction expectations). Target expectations are to provide [****] reductions
per year based on conditions, volumes, locations and tool status, contingent
upon Medtronic support and implementation. Section 3.1.2, 3.1.3, Section 3.1.4
and Section 3.2 of the Master Agreement shall not apply to this BUSA.

 

c.Payment Terms for Items other than Products. Notwithstanding Section 3.3 of
the Master Agreement, payment terms for items other than Products (for example,
tooling and other non-Products) shall be as set forth in the quotation provided
by Supplier as accepted by Medtronic’s purchase order.

 

4.BUSA PRODUCTION, QUALITY and REGULATORY COMPLIANCE

 

The provisions of the Production and Quality is set forth as the quality
agreement attached in Exhibit C.

 

a.Non-Conforming Product.

 

a.Right to Reject. Medtronic shall have the right to reject any Products which
do not meet the applicable Specifications, within ninety (90) days after actual
delivery for all parameters that can be tested at the time of receipt. For
parameters that cannot be tested at that time, such as shelf life, Supplier's
warranty shall extend for the stated shelf life.

 

b.Replacement. In the event that any Products do not meet applicable
Specifications and Medtronic has notified Supplier, Supplier shall replace such
Products free of charge and Supplier shall cover expenses (including freight and
customs clearance, if any) incurred by Medtronic in connection with (a) shipment
of replacement Products to the same location; and (b) shipment of the
nonconforming Products to Supplier (if so requested by Supplier). In the event
of a rejection of a defective Product, Supplier

 

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Page 4 of 13

 

 

  shall ship replacement Products within thirty (30) days of its receipt of a
proper rejection notice from Medtronic.

 

b.Approvals. Medtronic shall be responsible for obtaining any regulatory and
agency approvals for any Medtronic device which contains the Products. Supplier
shall provide reasonably necessary assistance to Medtronic in obtaining those
approvals with documentation and supporting evidence as required.

 

c.Risk Management. Attached as Attachment D is Supplier’s Business Continuity
Plan which shall satisfy the requirement of Section 4.2.1 of the Master
Agreement. In lieu of the requirements of Section 4.2.2 of the Master Agreement,
Supplier shall address any risks arising from single and sole source suppliers.

 

d.With regard to provisions of the Master Agreement:

i.With regard to section 5.4.1, Medtronic will use reasonable efforts to provide
Supplier with information on Environmental Regulations known to Medtronic to be
applicable to the Products, to assist Supplier in complying with its
obligations.

ii.With regard to section 5.7, Medtronic will use reasonable efforts to provide
Supplier with information on regulatory submissions and/or self-certifications,
clearances and approvals, where Medtronic may require additional information
from Supplier to complete and/or submit same.

iii.The parties will cooperate in good faith to ensure regulatory compliance,
and Medtronic will use good faith, reasonable efforts to provide Supplier with
advance notice, where possible, and other guidance Medtronic has, with regard to
new or different regulatory requirements applicable to the Products. It is
understood that notwithstanding the foregoing, Supplier remains responsible for
using its independent judgment to comply with its obligations under the Master
Agreement.

 

5.BUSA TERM AND TERMINATION

 

5.1The term of this BUSA shall be as set forth in the Automation Agreement.

 

5.2This BUSA may be terminated as follows:

 

5.2.1By a party for a material breach by the other party of the BUSA. Written
notice of default must be given, including specific charges of default and
reasonable requirements to cure. The party in default will have thirty (30) days
after notice to cure. If the defaulting part fails to cure within that time, the
party giving notice may terminate the BUSA immediately upon written notice to
the other party.

 

5.2.2By Medtronic upon written notice of termination to Supplier if Product
purchased under such BUSA is delivered late or is defective, as agreed to by
both parties, more than twelve (12) times in any twelve (12) month period.

 

5.2.3By Medtronic if Supplier fails to perform its Disaster Recovery Plan as
required by Section 4.2.1 of the Master Agreement, and such failure to enact the
Disaster Recovery Plan within twenty (60) days after written notice by Medtronic
of such failure.

 

5.2.4By either party upon written notice to the other party if a Force Majeure
event of such part with respect to this BUSA continues for more than one hundred
eighty (180) consecutive days.

 

5.2.5By either party upon written notice to the other party following
bankruptcy, liquidation, or dissolution of the other party.

 

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this BUSA may be terminated in accordance within Section 10.2, Termination, and
10.3, Effect of Expiration or Termination, of the Master Agreement shall apply.

 

6.BUSA MEDTRONIC PROPERTY

 

All tooling, patterns, dies, gauges, jobs, fixtures, and all specifications,
drawings, samples, designs, software, firmware, programs, formulae, and other
items and information, including, without limitations, improvements to the
Products furnished by Medtronic to Supplier in connection with this Agreement
shall be used only in the performance of work for Medtronic; and shall remain
the property of Medtronic; and, together with all copies thereof shall be
disposed of or returned in good repair, normal wear and tear excepted, by
Supplier to Medtronic, at Medtronic's direction and expense, upon Medtronic's
request. Supplier assumes risk of loss and damage to said items while in its
possession or under its control. Supplier shall notify Medtronic promptly
whenever any items of Medtronic's tangible property are in need of repair or
replacement. Medtronic's property shall be marked or otherwise adequately
identified by Supplier as property of Medtronic for use only under this
Agreement and shall be safely stored. Supplier waives any right it may have in
law or equity to withhold Medtronic's property.

 

A.Medtronic Tooling and Components: Medtronic, at its discretion, may provide to
Supplier certain Product-specific tooling for use in the production of Products.
All molds, tooling and related components delivered to Supplier for use in the
production of Products shall be the property of Medtronic and Supplier shall not
use them for any purposes, except as expressly authorized in writing by
Medtronic. Supplier shall take no action that could result in a lien on or other
encumbrance of, or that could otherwise compromise Medtronic's ownership of,
such molds, tooling or components. Upon the termination or expiration of this
Agreement or the earlier request of Medtronic, all such molds, tooling and
components shall be returned to Medtronic in good condition, except in the case
of molds and tooling for reasonable wear and tear. Supplier shall at all times
during the Term (as defined in Section 8 herein) maintain adequate insurance to
cover any damage or loss with respect to such molds, tooling and components,
and, upon request by Medtronic, deliver a certificate of insurance evidencing
such coverage. The ownership and coverage clauses for the automation equipment
for building the automated needle carrier assemblies is covered separately in
Attachment C.

 

B.Maintenance of Tooling: Supplier shall maintain all of Medtronic's molds and
tooling in good working condition at all times while in Supplier's possession.
Routine maintenance of molds and tooling shall be carried out at Supplier's
expense. "Routine Maintenance" shall include cleaning standard components and
repairing any damage caused by neglect or negligence. Subject to Medtronic's
prior written authorization, Medtronic shall be responsible for the cost of
replacing molds and tooling, except to the extent that such replacement is
necessary due to Supplier's failure to maintain the molds and tooling or thru
Supplier's negligence or intentional acts.

 

C.Records: Supplier shall at all times maintain, and make available to Medtronic
upon request, a complete list of all Medtronic molds, tooling and components in
Supplier's possession. Supplier shall evaluate in writing the condition of all
molds and tooling upon receipt from Medtronic and shall submit such evaluations
to Medtronic for its review. Upon request by Medtronic, Supplier shall prepare
and deliver to Medtronic a written report of the condition, maintenance, and
usage history for all Medtronic molds and tooling.

 

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The parties have caused this BUSA to be executed as of the Effective Date.

          MEDTRONIC MINIMED, INC. INTRICON CORPORATION     By /s/ Kenneth A.
Patterson   By /s/ Michael P. Geraci   Ken Patterson         Sr. Director,
Strategic Sourcing   Michael P. Geraci   Diabetes   (print name)

 

Date  12 July 2019   Title Sr. Vice President Sales & Marketing                
Date  June 12, 2019

 

By /s/ Leonel Peralta     Leonel Peralta     Vice President, Global Operations  
  Diabetes  

 

Date  July 11th, 2019  

 

LIST OF BUSA ATTACHMENTS

 

●Attachment A: Product and Price List

●Attachment B: Quality Agreement

●Attachment C: Automation Agreement

●Attachment D: Business Continuity Plan

 

Attachments A, B and D are omitted pursuant to Item 601(a)(5) of Regulation S-K.
Intricon agrees to furnish supplementally to the SEC, upon request, a copy of
any omitted attachment.

 

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BUSINESS UNIT SUPPLY AGREEMENT - ATTACHMENT A

PRODUCT AND PRICE LIST

 

Omitted pursuant to Item 601(a)(5) of Regulation S-K

 

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BUSINESS UNIT SUPPLY AGREEMENT - ATTACHMENT B__

Quality Agreement

 

Omitted pursuant to Item 601(a)(5) of Regulation S-K

 

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BUSINESS UNIT SUPPLY AGREEMENT – ATTACHMENT C

Automation Agreement

 

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ATTACHMENT C – AUTOMATION AGREEMENT TO

BUSINESS UNIT SUPPLY AGREEMENT

 

This Automation Agreement (“Automation Agreement”) is made by and between the
Medtronic Business Units set forth below and IntriCon Corporation on behalf of
itself, its subsidiaries and Affiliated Companies (“Supplier”) under the terms
and conditions of the Master Supply Agreement (the “Master Agreement”) dated May
14, 2019 between Medtronic Inc. and Supplier and the Business Unit Supply
Agreement (“BUSA”) dated May 14, 2019 between the Medtronic Business Units set
forth below and Supplier. In the event of any conflict between or among the
terms of this Automation Agreement and the terms of the Master Agreement and/or
the BUSA, the terms of this Automation Agreement shall control. Terms
capitalized but undefined in this Automation Agreement shall have the meaning
given to such terms in the Master Agreement, except that terms “Business Unit”
and “Product” shall have the meanings given to them in the BUSA.

 

MEDTRONIC BUSINESS UNITS: Medtronic MiniMed, Inc. (“Medtronic”)       EFFECTIVE
DATE: June 15, 2019   

 

1.PURCHASE OF SYSTEMS

 

Pursuant to the BUSA and at the request of Medtronic, Supplier has purchased two
(2) Enlite Needle Automation Assembly Equipment Systems (each a “System” and
collectively, the “Systems”; also referred to as “ANH 2” and “ANH3”,
respectively) for a total purchase price of $[****], which amount includes the
cost of IPARC, ovens and tray re-packaging system but does not include the cost
of reusable items such as metal pins and trays and other manufacturing
consumables (which shall be charged to Medtronic as separate costs).

 

2.PAYMENT FOR AND OWNERSHIP OF SYSTEMS

 

Medtronic shall purchase the first System (ANH2) and deliver to Supplier for the
purchase price of $[****]. Upon signing of the Master Agreement and BUSA,
Supplier shall purchase the second System (ANH3) for the purchase price of
$[****], (which amount includes IPARC systems and tray handler). Supplier shall
assign to Medtronic a 50% undivided ownership interest in the two Systems;
Medtronic and supplier each shall have the right to file a UCC financing
statement evidencing their respective 50% undivided ownership interest in the
Systems. The interest of the parties in the Systems shall be as joint owners but
neither party shall sell, transfer, assign, pledge or otherwise encumber its
interest in the Systems. Section 4.6 of the Master Agreement shall not apply
with respect to the Systems.

 

3.MAINTENANCE OF SYSTEMS

 

Supplier shall be responsible for routine and repair maintenance of the Systems;
provided, that any repairs in excess of $50,000.00 in any twelve (12) month
period shall be shared one-half by each party.

 

4.FINAL ACCEPTANCE TESTING

 

Medtronic and IntriCon will collaborate and be responsible for completing final
acceptance testing (“FAT”) on the ANH3. This will include all mechanical and
software functional testing, software code review and sustaining runs to prove
each System’s performance fit for production. Upon completion of the FAT,
Medtronic will provide Supplier with a signed FAT Report as per MPROC’s CSV
policy. IntriCon’s quality system allows linkage for IIN software validation in
the IQ. Initially the automation will be qualified without the IPARC, Oven and
tray re-package system.

 

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5.TERM OF AGREEMENT; DISPOSITION OF SYSTEMS

 

The term of this Automation Agreement and the BUSA shall begin on the Effective
Date and continue for a period of 48 months after the Final Approval Date (as
hereinafter defined) (the “Initial Term”). Unless earlier terminated, this
Automation Agreement and the BUSA will thereafter automatically renew for one
additional period of twelve (12) months (the “Renewal Period”), unless either
party provides the other with notice of non-renewal at least ninety (90) days
before the end of the Initial Term. Upon the end of the Initial Term (or the end
of the Renewal Period, if applicable), [****], and Supplier shall remove and
ship the Systems at Medtronic’s expense to Medtronic’s facility. “Final Approval
Date” means that date on which the last of the two Systems has been installed at
Supplier’s facility and has received all required government and Medtronic
approvals.

 

6.PRICING AND MINIMUM PURCHASE REQUIREMENTS

 

In consideration of the mutual agreements of the parties set forth herein:

 

a. Supplier agrees to provide to Medtronic reduced prices for certain Products
sold to Medtronic as set forth in Attachment A – Product and Price List to the
BUSA with respect to those Products which have been manufactured using the
System.

 

b. The parties agree that Medtronic shall purchase and take ownership of a
minimum of an aggregate of [****] Needle Assembly Units during the Initial Term
based on two Systems and manually assembly units built within IntriCon.

 

The parties have caused this Automation Agreement to be executed as of the
Effective Date.

          MEDTRONIC MINIMED, INC.   INTRICON CORPORATION       By /s/ Kenneth A.
Patterson   By /s/ Michael P. Geraci   Ken Patterson         Sr. Director,
Strategic Sourcing   Michael P. Geraci   Diabetes   (print name)

 

Date  12 July 2019   Title Sr. Vice President Sales & Marketing                
Date  June 12, 2019

 

By /s/ Leonel Peralta     Leonel Peralta     Vice President, Global Operations  
  Diabetes  

 

Date  July 11th, 2019  

 

CONFIDENTIAL

 

Page 2 of 2

 

 

BUSINESS UNIT SUPPLY AGREEMENT – ATTACHMENT D

BuSINESS CONTINUITY PLAN

 

Omitted pursuant to Item 601(a)(5) of Regulation S-K

 

CONFIDENTIAL

 

Page 11 of 13

 

 

BUSINESS UNIT SUPPLY AGREEMENT – ATTACHMENT E

Additional Product Quality Requirements

 

Nothing Follows

 

CONFIDENTIAL

 

Page 12 of 13

 

 

BUSINESS UNIT SUPPLY AGREEMENT – ATTACHMENT F

Supplier Instructions

 

Nothing Follows

 

CONFIDENTIAL

 

Page 13 of 13