Manufacturing Agreement with SMTEK International, Inc.



 Exhibit 10.10 
  
 MANUFACTURING AGREEMENT 
  
 THIS MANUFACTURING AGREEMENT (the “Agreement”) is entered this 9th day of April 2004 (the “Effective
Date”) by and between NORTHSTAR NEUROSCIENCE, INC. a Washington Corporation (“Northstar”) and SMTEK International, a Delaware company. (“SMTEK”). 
  
 RECITALS 
  
 Northstar is engaged in the development and sale of certain medical devices, and SMTEK is in the business of manufacturing and supplying medical devices.
The parties desire to enter into an agreement pursuant to which SMTEK shall contract manufacture on behalf of Northstar certain of Northstar’s products for sale to Northstar under the terms set forth. 
  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the mutual covenants and undertakings expressed in this Agreement, SMTEK and Northstar
agree as follows: 
  
 1. Definitions. As used in this
Agreement, the following terms have the indicated meanings: 
  
 1.1 Commencement Date. “Commencement Date” shall be the date upon which SMTEK shall commence supplying Products to Northstar, which shall be April 9, 2004 unless changed by mutual written agreement of the parties.

  
 1.2 Confidential Information. “Confidential
Information” shall mean any information which is disclosed by one party to the other party, including but not limited to, manufacturing, financial, marketing or technical information such as specifications, manufacturing methods, price
guidelines, future product releases, trade secrets, know-how, inventions, techniques, processes, programs, schematics, data, customer lists and sales and marketing plans, which is marked or otherwise identified as confidential at the time of
disclosure, or which by its nature should reasonably be considered to be confidential. The information disclosed by Northstar in the exhibits attached hereto shall be considered Confidential Information. 
  
 1.3 Northstar Equipment. “Northstar Equipment” shall have
the meaning set forth in Section 2.4. 
  
 1.4 Intellectual
Property Rights. “Intellectual Property Rights” shall mean all patents, copyrights, rights in trademarks, trade names and service marks, trade secret rights, and all other intellectual property rights of any nature whatsoever arising
under the law of the United States or any foreign country, or any state or subdivision thereof. 
  
 1.5 Products. “Products” shall mean the Northstar products listed on Exhibit A attached to this Agreement. New products may
be added to this Agreement pursuant 

  

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to Section 2.2 and such products will be deemed included within the definition of Products upon mutual written agreement executed by the parties.

  
 1.6 Purchase Forecast. “Purchase Forecast”
shall have the meaning set forth in Section 4.1. 
  
 1.7
Northstar Technology. “Northstar Technology” shall mean all inventions, designs, drawings, specifications, manufacturing techniques, Intellectual Property Rights, and know-how related to the Products and Northstar Confidential
Information. 
  
 2. Agreement to Manufacture. 

 
 2.1 Initial Products. SMTEK agrees to manufacture and sell to
Northstar so many of the Products as Northstar shall order in accordance with this Agreement. SMTEK shall manufacture, package and ship Products according to the Specifications and Purchase Forecasts referred to in this Agreement. 
  
 2.2 Additional Products. From time to time, Northstar may develop
additional products, which it desires to have manufactured by SMTEK. In such event, if Northstar and SMTEK shall mutually agree on the development of specifications and the establishment of the price, manufacturing schedule and order quantities
applicable to such additional products, such additional products may be manufactured by SMTEK as Products pursuant to the terms of this Agreement, and any new terms applicable to such products shall be appended to this Agreement as an additional
exhibit. 
  
 2.3 Northstar shall retain ownership of the Northstar
Equipment listed on Exhibit B, which shall include other tooling and equipment acquired specifically for the performance of this Agreement at Northstar’s expense as provided in Section 6.1(b) below. SMTEK shall not use the Northstar
Equipment for any purpose other than manufacturing Products for Northstar. SMTEK shall maintain the Northstar Equipment in good working order by utilizing generally accepted preventive maintenance processes and procedures. SMTEK shall be responsible
for any damage to or loss of the Northstar Equipment while in its possession, other than normal wear and tear. Northstar is responsible for Northstar Equipment failures that result from design malfunction or normal wear. SMTEK shall be responsible
for the safekeeping and protection of the Northstar Equipment while in its possession, including protection from theft, fire, environmental or other potential means of destruction. 
  
 (b) Northstar retains the right to move the Northstar Equipment at any time upon written notice to SMTEK. Upon its receipt
of such notification, SMTEK shall make ready and ship the Northstar Equipment and all associated written materials in accordance with the instructions provided by Northstar. Freight costs shall be the responsibility of Northstar. SMTEK hereby waives
any and all lien rights in the Northstar Equipment, and agrees that it shall not be entitled to retain the Northstar Equipment pending the resolution of any dispute with Northstar. The parties agree that Northstar would be irreparably harmed in the
event that SMTEK failed to deliver the Northstar Equipment as required in this Section 2.4(b), and that Northstar shall be entitled to obtain injunctive relief with respect to such failure, in addition to any other remedies under applicable

  

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 3. Grant of License to SMTEK. Northstar hereby grants to SMTEK a non-exclusive license to use all
Northstar Technology and related Intellectual Property Rights related to the Products solely for the purpose of manufacturing and repairing Products at the request of Northstar and otherwise carrying out its obligations under this Agreement. Such
license shall terminate upon any termination of this Agreement. 
  
 4. Terms of Purchase. The parties agree that Northstar may purchase Products from SMTEK as needed by Northstar, in Northstar’s discretion, pursuant to the terms set forth in this Section 4. 
  
 4.1 Forecasts. Within 120 days prior to the Commencement Date,
Northstar shall provide to SMTEK, Northstar’s estimate of its monthly aggregate demand for the Products for the twelve (12) month period commencing on the Commencement Date (“Purchase Forecast”). Northstar shall provide SMTEK on
a monthly basis with an updated rolling Purchase Forecast for Northstar’s anticipated aggregate requirements for Products during the successive twelve (12) month period. SMTEK shall maintain, at its expense, an adequate inventory of raw
materials and components to produce Products in accordance with the Purchase Forecasts. 
  
 4.2 Orders. Northstar shall submit written purchase orders for Products to SMTEK. To the extent that the terms of any such purchase order conflict with the terms of this Agreement, the terms of this Agreement
shall control. The first three month of each 12-month rolling forecast shall be considered a “firm” order, and Northstar shall be required to purchase, and SMTEK shall manufacture and deliver, Products in accordance with such order. The
second and third months of each 12-month rolling forecast may be increased or decreased by Northstar by no more than ten percent (10%) and twenty five percent (25%), respectively, in the next forecast without the consent of SMTEK. The final 9
months of the 12-month rolling forecast shall not be considered a “firm” order. 
  
 4.3 Failure to Supply. SMTEK agrees that a reliable ongoing supply of Products is of critical importance to Northstar. The following provisions shall apply with respect to any failure of SMTEK to fill any
Northstar order in lieu of the notice and cure provisions set forth in Section 17.2(d). In the event that SMTEK fails to fill any Northstar order (which is submitted in accordance with Section 4.2), such failure shall constitute a material
breach of this Agreement unless SMTEK cures such breach, without the need for any notice from Northstar, within ten following such failure, unless the failure falls within one of the following exceptions: 
  
 (a) The failure of SMTEK to fill any Northstar order as and when required
shall not be considered a breach of this Agreement if: (i) SMTEK has delivered at least ninety-five percent (95%) of the quantity specified in the order on time, and (ii) and the balance is delivered to Northstar no later than thirty
(30) days following the original delivery date. 
  
 (b) The
failure of SMTEK to fill any Northstar order as and when required shall not be considered a breach of this Agreement if: (i) SMTEK has delivered at least eighty percent (80%) but less than ninety-five percent (95%) of the quantity
specified in the order on time, (ii) the balance is delivered to Northstar no later than thirty (30) days following the original delivery date, and (iii) no more than two such failures have occurred during any twelve (12) month
period during the term of this Agreement. 
  

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 5. Specifications, Production Schedule and Improvements. 
  
 5.1 Specifications. SMTEK shall manufacture each Product according to
the specifications attached as Exhibit C (the “Specifications”) to this Agreement. These Specifications include product, component and material specifications developed by Northstar and manufacturing process specifications developed
jointly by Northstar and SMTEK, in total representing the Device Master Record (DMR). Northstar shall be responsible for determining the labeling requirements for all Products, and SMTEK shall label the products as directed by Northstar, subject to
revision by Northstar upon reasonable notice to SMTEK. 
  
 5.2
Modification of Specifications. Northstar reserves the right to modify the Specifications from time to time upon written notice to SMTEK. Northstar shall use commercially reasonable efforts to give SMTEK advance notice of desired
modifications and seek input from SMTEK with respect to such modifications prior to giving SMTEK formal notice of the modifications. SMTEK shall be deemed to have accepted such modifications unless it provides Northstar written notice within ten
(10) days of its receipt of such proposed specification modifications, communicating the impact on delivery schedule or pricing, in which event the parties shall negotiate in good faith to agree upon such changes within thirty (30) days.
If the dispute is not resolved during such period, it shall be resolved pursuant to Section 18.2 below, provided that SMTEK shall implement the changes requested by Northstar pending the outcome of the resolution of the dispute. Northstar shall
bear any raw materials or component costs which result from changes initiated by Northstar, provided that SMTEK shall make good faith efforts to minimize these costs. 
  
 5.3 Improvements. If SMTEK, in the course of its manufacture and sale of the Products, develops any beneficial
modification or improvement to the Products, SMTEK shall secure approval from Northstar before applying such modifications or improvements to the Products. SMTEK will supply sufficient details of such modifications or improvements to Northstar to
permit Northstar to evaluate and incorporate them into the Products if Northstar so wishes. Any beneficial modification or improvement of a Product, including without limitation all associated Intellectual Property Rights, shall be owned by
Northstar, and SMTEK shall execute any documents requested by Northstar and take such other actions as may be reasonably requested by Northstar, at Northstar’s expense, to assign such rights to Northstar and perfect the interest of Northstar in
such rights, hi the event that SMTEK utilizes any proprietary process in connection with the production of Products pursuant to this Agreement and such process is incorporated into the design of any Product in such a manner as to render it
commercially impractical for Northstar to manufacture the Product without utilizing the process, SMTEK hereby grants to Northstar a perpetual, royalty free, non-exclusive, transferable license to utilize such process solely in connection with the
manufacture of the applicable Product or Products. In no event shall SMTEK make any modifications in any Product, or the manufacturing process for any Product, without the prior written consent of Northstar. 
  
 6. Purchase Price and Payment Terms. 
  
 6.1 Purchase Price. Northstar shall pay SMTEK for the Products and
services provided pursuant to this Agreement as set forth on Exhibit E attached hereto. Such prices shall be fixed for one year in accordance with a purchase order to be issued by Northstar. 
  

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 (a) The parties shall re-evaluate prices annually, no later than December 31st of each year. Prices
may be increased only to the extent that SMTEK can demonstrate, to the reasonable satisfaction of Northstar, that any of its associated costs, as outlined on Exhibit E, have increased. 
  
 (b) SMTEK shall use good faith efforts to achieve cost reductions during the
term of this Agreement, and Northstar agrees that SMTEK shall be entitled to fifty percent (50%) of any cost savings, which are realized as a result of such efforts (excluding any cost reductions resulting from volume increases). In the event
that it is mutually agreed that either party shall acquire capital equipment for exclusive use on Northstar product as part of such cost savings efforts, the acquiring party shall be entitled to recover its costs for such equipment from any cost
savings before the other party is entitled to share in such cost savings and shall retain ownership after recovery of its costs. Northstar shall have the option to make any such capital purchases at its expense, in which event the equipment shall be
considered to be Northstar Equipment subject to the provisions of Section 2.4 above. Equipment used for production of non-Northstar product as well as Northstar product shall be purchased by SMTEK and cost reductions shall be shared
immediately, without purchase cost recovery. Notwithstanding the foregoing, Northstar shall be entitled to retain one hundred percent (100%) of any cost savings resulting from any higher cavity tooling provided by Northstar. 
  
 (c) Northstar may solicit bids for the manufacture of the Products during
the second twelve-(12) month period during the three year term of this Agreement. In the event that any such bid is more favorable to Northstar than under the terms of this Agreement, Northstar shall notify SMTEK of the relevant terms. Unless
SMTEK notifies Northstar in writing within thirty (30) days that it will match the bid, Northstar shall have the right to terminate this Agreement or, at its option, the exclusive nature of the rights granted to SMTEK under Section 14.2
below. However, in respect of the relationship, Northstar will share cost opportunities with SMTEK, steering SMTEK in the right direction to acquire cost reductions. 
  
 6.2 Payment. SMTEK may invoice Northstar only upon shipment of Products, and all correct invoices shall be payable
net thirty (30) days. SMTEK shall pay all sales, use and other taxes associated with the sale of Products pursuant to this Agreement, except for taxes measured on the revenue of Northstar. 
  
 6.3 Shipment Terms. All Products shall be shipped F.O.B. SMTEK ‘s
manufacturing facility in Moorpark, California on the carrier designated by Northstar. SMTEK shall give Northstar adequate advance notice of such delivery to the carrier. SMTEK shall bear the risk of loss to the Products at all times prior to
SMTEK’s delivery of the Products to the carrier. 
  
 7.
Acceptance. Each shipment of Products from SMTEK to Northstar shall contain such quality control certificates as reasonably requested by Northstar certifying that the Products are in conformity with the Specifications. Notwithstanding any
prior inspection or payments, all Products will be subject to final inspection and acceptance at Northstar’s location or other destination point within 30 days after delivery. Northstar shall notify SMTEK within 30 days after delivery of any
apparent defective material or workmanship or non-conformity of any Product to the Product Specifications or purchase order. If Northstar fails to so notify SMTEK, 

  

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Northstar will be deemed to have accepted the Product; provided, that the warranty set forth in Section 10 hereof shall survive acceptance of the
Product by Northstar. Without prejudice to any other right or remedy of Northstar, in case any item is defective in material or workmanship, or otherwise not in conformity with the Specifications or the requirements of Northstar’s purchase
order, Northstar will have the right to reject it. Any item that has been rejected must be replaced by and at the expense of SMTEK promptly after notice. Northstar will not be required to pay for any rejected item, or its shipping costs or any other
costs related thereto. Northstar will return all rejected Products to SMTEK at SMTEK’s expense. 
  
 8. Regulatory and Quality Compliance. 
  
 8.1 Regulatory Obligations of Northstar. Northstar shall be responsible, at its expense, for obtaining and maintaining all regulatory approvals
necessary for the sale of the Products by Northstar. Northstar agrees to help SMTEK acquire any regulations it may not provide at the time of this agreement. 
  
 8.2 Regulatory Obligations of SMTEK. SMTEK shall be responsible, at its expense, for obtaining and maintaining all regulatory approvals necessary
for a manufacturing facility for the Products. SMTEK shall ensure that the Products are manufactured in accordance with all applicable laws and regulations applied to medical devices by the FDA or other regulatory agencies. SMTEK shall provide
Northstar with any information required by Northstar in connection with its regulatory responsibilities promptly upon request by Northstar, including without limitation manufacturing level traceability information. 
  
 8.3 Quality Assurance Procedures. The parties shall each comply with
their responsibilities under the quality assurance procedures specified in Exhibit D attached hereto. 
  
 9. Product Recalls. 
  
 9.1 Initiation of Recall. If, in the judgment of Northstar, any Product defect or any government action requires a recall of, or the issuance of an
advisory letter regarding, any Product, Northstar may undertake such recall or issue such advisory letter. Northstar will consult with SMTEK with respect to any such action where the action directly affects SMTEK. The parties agree to provide
reasonable assistance to one another in the event of any recall or issuance of any advisory letter. Northstar will manage any such recall or field corrective actions. 
  
 9.2 Payment for Recalls Caused by SMTEK. In the event that the recall or advisory letter is the result of any breach
of warranty or other obligation of SMTEK under this Agreement, SMTEK shall promptly pay or reimburse Northstar for the reasonable direct costs incurred by Northstar in effecting such recall or issuing such advisory letter. In addition, SMTEK shall,
at its cost, correct any deficiency relating to its manufacturing, packaging, testing, labeling, storing or handling of such Product, if applicable. 
  
 10. SMTEK’s Warranty. SMTEK warrants to Northstar that, for a period of one (1) year after sale to Northstar’s customer from the
date of finished Product, such Product shall: (i) conform to the Specifications; and (ii) be free from any defects in material and workmanship. SMTEK shall, in SMTEK’s reasonable discretion, repair or replace paid by Northstar for any
defective Product rejected by Northstar and shipped by Northstar to SMTEK. THE 

  

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FOREGOING WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, AND EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT, SMTEK MAKES NO ADDITIONAL WARRANTIES,
EXPRESS OR IMPLIED IN FACT BY OPERATION OF LAW, STATUTORY OR OTHERWISE AS TO ANY MATTER WHATSOEVER. IN PARTICULAR, ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. 
  
 11. Northstar’s Warranty. Northstar warrants that Northstar has
sufficient right, title and interest in all Northstar Technology to enter this Agreement and to grant the licenses herein. 
  
 12. Limitation of Liability. EXCEPT WITH RESPECT TO ANY INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF A PARTY, NEITHER PARTY SHALL BE LIABLE
TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, LOSS OF PROFITS OR REVENUE, OR INTERRUPTION OF BUSINESS IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, WHETHER IN
CONTRACT, TORT, (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY OR OTHERWISE, EVEN IF ANY REPRESENTATIVE OF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 
  
 13. Exclusivity. 
  
 13.1 SMTEK Obligations. SMTEK shall not, during the term of this Agreement, manufacture, assemble, produce, ship or in any other way make available
for use or distribution, any products: (i) utilizing any Northstar Technology or Intellectual Property Rights, or (ii) utilizing Northstar electrodes or other Northstar devices for the treatment of neurological disorders competing with
Northstar therapy applications. 
  
 13.2 Northstar
Obligations. Northstar agrees that, provided that SMTEK is fully in compliance with the terms of this Agreement, it shall purchase all of its requirements for the Products for worldwide distribution from SMTEK, except as specified in
Section 6.1(c). 
  
 14. Confidentiality. During the
term of this Agreement, and for a period of five (5) years after this Agreement expires or terminates, a party receiving Confidential Information of the other party will: (i) maintain in confidence such Confidential Information to the same
extent such party maintains its own proprietary information (but at a minimum each party shall use reasonable efforts to maintain such confidence); (ii) not disclose such Confidential Information to any third party without prior written consent
of the other party; and (iii) not use such Confidential Information for any purpose except those permitted by this Agreement. A party shall have no such obligation with respect to any portion of such Confidential Information which: 

 
 (a) Is publicly disclosed by the disclosing party, or is otherwise
publicly disclosed without the fault of the receiving party, either before or after it becomes known to the receiving party; or 
  
 (b) Was known to the receiving party prior to when it was received from the disclosing party; or 
  

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 (c) Is subsequently disclosed to the receiving party in good faith by a third party who has a right to
make such a disclosure; or 
  
 (d) Has been independently
developed by the receiving party without the aid, application or use of Confidential Information from the disclosing party; or 
  
 (e) Is required by law to be disclosed, but then only to the limited extent of such legally required disclosure. 
  
 15. Proprietary Rights. Except as expressly provided in this
agreement, neither party shall obtain any interest in the Intellectual Property Rights of the other party as a result of this Agreement. 
  
 16. Term and Termination. 
  
 16.1 Term. The term of this Agreement shall be a period of six (6) years, commencing on the Effective Date. Any purchase orders received by
SMTEK within the term of this Agreement shall be included within the term of this Agreement. 
  
 16.2 Early Termination. 
  
 -(Only in the event of breach of contract, otherwise contract is in tact for 6 years) 
  
 (a) Either party may terminate this Agreement in the event that the other party commits a material breach of this Agreement and fails to cure such breach
within forty-five (45) days written notice from the other party, provided that such cure period shall not apply with respect to a failure of SMTEK to deliver Products as required under this Agreement, and SMTEK shall only have a right to cure
such failure to the extent provided under Section 4.3. 
  
 16.3 Effect of Termination. 
  
 (a) Upon
termination of this Agreement for any reason the licenses granted herein shall terminate, with the exception of proprietary process licenses granted in section 5.3, and SMTEK will discontinue the manufacture of any Products not covered by a current
Northstar purchase order. 
  
 (b) Upon termination of this
Agreement, Northstar shall purchase from SMTEK, at SMTEK ‘s cost, all raw materials and component inventory conforming to its specifications maintained by SMTEK to the extent reasonably necessary to support the Purchase Forecasts, to the extent
that SMTEK is unable (after commercially reasonable efforts or 30 working days), to resell or use such materials. 
  
 16.4 Survival of Obligations. The obligations of the parties, which by their nature require performance following termination or expiration of this
Agreement, shall survive such termination or expiration. 
  

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 17. General Provisions. 
  
 17.1 Independent Contractors. The relationship between Northstar and SMTEK shall be that of independent contractors,
and nothing in this Agreement shall constitute or be deemed to constitute a joint venture, agency or partnership arrangement between the parties or constitute or be deemed to constitute either party as the agent or employee of the other party for
any purpose whatever. 
  
 17.2 Arbitration. Any controversy
or claim arising in connection with this Agreement or any modification or extension hereof, including any breach, claim for damages or rescission, shall be settled by arbitration in Seattle, Washington according to the rules of the American
Arbitration Association, and judgment upon the award rendered by the arbitrators shall be final and may be entered in any court having jurisdiction thereof. Notwithstanding this provision and the agreement between the parties to submit their
disputes to binding arbitration, nothing in this Agreement shall prevent either party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over the parties and the subject matter of their dispute.

  
 17.3 Governing Law. This Agreement shall be governed as
to all matters, including validity, construction and performance, by the laws of the State of Washington without given effect to conflict of law principles. 
  
 17.4 No Waiver. Failure by either party hereto to enforce at any time any term or condition of this Agreement shall not be a waiver of the right to
act on the failure of such term or condition and shall not impair or waive that party’s right thereafter to enforce each and every term and condition of this Agreement. 
  
 17.5 Severability. In the event that any provision of this Agreement shall be unenforceable or invalid under any
applicable law or court decision, such unenforceability or invalidity shall not render this Agreement unenforceable or invalid as a whole. In such event, such provision shall be changed and interpreted so as to best accomplish the objectives of the
parties. 
  
 17.6 Assignment. Neither party may transfer or
assign this Agreement without the prior written consent of the other party; provided, however, that SMTEK or Northstar may assign this Agreement without the consent of the other party to a subsidiary or entity controlling, controlled by or under
common control with SMTEK or Northstar or to a purchaser of all, or substantially all, of the assets of SMTEK or Northstar. Any assignment in violation of this section shall be void. The provisions hereof shall be binding upon and inure to the
benefit of the parties, their successors and permitted assigns. 
  
 17.7 Notice. Notice between the parties may be given by facsimile and the answerback or facsimile response thereto shall be conclusive evidence of delivery and receipt at the facsimile numbers specified below or such other facsimile
number as either party shall furnish to the other in writing. Notice may also be given by prepaid certified or registered air mail, return receipt requested, by prepaid telegram or prepaid cable at the addresses set forth below or such address as
either party shall furnish to the other in writing in accordance with this 

  

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Section. Notice shall be deemed to have been received upon the expiration of seven (7) business days from delivery to the postal service. 
  
 SMTEK contact name and address: 
  
 SMTEK 
 Attention: Debbie Tilbury, Vice President Sales & Marketing 
 200 Science Drive 
 Moorpark, CA 93021 
 Phone: 805-532-2800-123 
 FAX: 805-532-1769 
  
 Northstar contact name and address: 
  
 Northstar Neuroscience, Inc. 
 Attention: Richard Kuntz, VP Operations 
 2401 Fourth Avenue, Suite 300 
 Seattle, WA 98121-2329 
 Phone: 206-902-1994 
 FAX: 206-902-2018 
  
 17.8 Modification. No modification in the terms of this Agreement
shall be binding on either party unless in writing and executed by the duly authorized representative of each party. 
  
 17.9 Paragraph Headings. The headings of the several paragraphs of this Agreement are inserted solely for convenience of reference and are not a
part of and are not intended to govern, limit or aid in the construction of any term or provision of this Agreement. 
  
 17.10 Attorneys’ Fees. In the event of any arbitration or litigation to enforce the provisions of this Agreement, the prevailing party in such
litigation shall be entitled to reasonable attorneys’ fees as fixed by the arbitrator or court. 
  
 17.11 Force Majeure. Neither party will be liable hereunder by reason of any failure or delay in the performance of its obligations hereunder
(except for the payment of money) on account of riots, insurrection, fires, flood, storm, explosions, act of God, war, government regulation, labor conditions, earthquakes, or any other cause which is beyond the reasonable control of such party.

  
 17.12 Entire Agreement. This Agreement and the Exhibits
hereto, constitute the entire agreement between the parties in connection with the subject matter hereof and supersede all prior agreements, whether oral or written, explicit or implicit, which have been entered into prior to the execution of this
Agreement. 
  

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 The parties have caused this Agreement to be executed by their duly authorized
representatives as of the Effective Date. 
  

											
	 SMTEK:
	 	 	 	 	 	 NORTHSTAR NEUROSCIENCE INC

						
	 By:
	 	 /s/ Rich Fitzgerald 6/25/04

	 	 	 	 	 	 By:
	 	 /s/ Richard P. Kuntz


	 Name:
	 	 Rich Fitzgerald
	 	 	 	 	 	 Name:
	 	 Richard P. Kuntz

	 Title:
	 	 Vice President of Operations
	 	 	 	 	 	 Title:
	 	 Vice President of Operations


  

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 ADDENDUM TO MANUFACTURING AGREEMENT 
  
 THIS ADDENDUM is to the Manufacturing Agreement entered into between Northstar Neuroscience, Inc. (“Northstar”)
and SMTEK International dated April 9, 2004 (the “Agreement”). 
  
 RECITALS 
  
 The parties
modify certain terms in the Agreement to clarify the term of the Agreement in the manner set forth herein. This Addendum shall be incorporated into, and shall take precedence over any conflicting terms in, the Agreement. Terms defined in the
Agreement shall have the same meaning herein. 
  
 NOW, THEREFORE,
the parties agree as follows: 
  
 The first paragraph, “SMTEK International,
a Delaware Company, (“SMTEK”)” is hereby deleted and replaced with the following: “CTS Electronics Manufacturing Solutions, Inc., Delaware Corporation, (“CTS”)”. 
  
 The first sentence of Section 6.1(c) is hereby amended
in its entirety to read as follows: 
  
 “Northstar may solicit bids for the
manufacture of the Products once during each twelve (12) month period during the term of this Agreement.” 
  
 IN WITNESS WHEREOF, the parties have caused their authorized representatives to sign this Addendum as of the date first set forth below. 
  

									
	 Northstar Neuroscience, Inc.
	 	 	 	 CTS Electronics Manufacturing Solutions, Inc.

					
	 By:
	 	 /s/ John M. Ray

	 	 	 	 By:
	 	 /s/ Bill Lehr


	 Title:
	 	 Director for Product Quality
	 	 	 	 Title:
	 	 Operation Business Manager

	 Date:
	 	 1/30/2006
	 	 	 	 Date:
	 	 1/27/2006


  

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