Document:

Exhibit
10.2

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Employment Agreement (this
“Agreement”) is dated as of June 10, 2009 (the “Effective Date”) between
Aon Corporation, a Delaware corporation (the “Company”) and Ted T. Devine (the “Executive”).

 

WHEREAS, the Company seeks
to employ Executive as Executive Vice President of Aon Corporation and Chief
Executive Officer of Aon Specialty; and

 

WHEREAS, Executive desires
to continue to serve and be employed upon the terms and subject to the
conditions as amended and restated herein.

 

NOW, THEREFORE, in
consideration of the premises and the mutual agreements contained herein, the
parties hereby agree as follows:

 

1.                                      Employment.    The Company hereby agrees to employ the
Executive and the Executive hereby agrees to be employed upon the terms and
subject to the conditions contained in this Agreement.  The term of employment of the Executive commenced
on May 2, 2005 (the “Employment Date”) and will continue pursuant to this
Agreement until April 30, 2013, unless earlier terminated pursuant to Section 4
hereof (the “Employment Period”).

 

2.                                      Position
and Duties; Responsibilities; Board Service.   (a)   
Position and Duties. The Company shall employ the Executive
during the Employment Period as Executive Vice President of Aon Corporation and
Chief Executive Officer of Aon Specialty, or in another Level 1A senior
executive capacity with profit and loss responsibility as may be authorized or
directed by the Chief Executive Officer of the Company (the “CEO”).  During the Employment Period, the Executive
shall perform faithfully and loyally and to the best of his abilities the
duties assigned to him hereunder and shall devote his full business time,
attention and effort to the affairs of the Company and its subsidiaries and
shall use his best efforts to promote the interests of the Company and its
subsidiaries.  The Executive may engage
in charitable, civic or community activities and, with the prior approval of
the CEO, may serve as a director of any other business corporation, provided
that (i) such activities or service do not interfere with his duties
hereunder or violate the terms of any of the covenants contained in Section 6,
7, or 8 hereof and (ii) such other business corporation provides the
Executive with director and officer insurance coverage which, in the opinion of
the CEO, is adequate under the circumstances.

 

(b)                                 Responsibilities.  The Executive will have the authority and
responsibility typically held by an Executive Vice President of a large, global
publicly-traded company.  The Executive
will also perform such other duties (not inconsistent with his positions) on
behalf of the Company and its subsidiaries as may be from time to time
authorized or directed by the CEO.  The
Executive will report to the CEO.

 

3.                                      Compensation.    (a) Base
Salary.  The Company will pay the
Executive a base salary of $950,000 per annum (“Base Salary”), payable
semi-monthly in accordance with the Company’s executive payroll policy.  Such Base Salary shall be reviewed annually
on the Company’s regular executive salary review schedule, and shall be subject
to adjustment at the discretion of the CEO and Organization and Compensation
Committee of the Board of Directors.

 

 

(b)                                 Annual Bonus.  During the Employment Period, the Executive’s
annual bonus target will be 150% of his Base Salary in effect at the end of the
year, and the maximum annual bonus payable will be three times such
target.  Except as set forth herein, the
Executive’s bonus shall be subject to the terms of the Company’s
shareholder-approved Senior Officer Incentive Compensation Plan and to the Aon
Incentive Stock Program, as those plans and programs may be amended from time
to time.

 

(c)                                  Initial Stock
Award.  On the Employment Date, the Executive
received a restricted stock unit award of 100,000 shares of common stock of the
Company.  Except as otherwise set forth
herein, such restricted stock units are subject to terms and conditions
generally applicable to restricted stock unit grants under the Aon Stock
Incentive Plan (the “Incentive Plan”). 
In the event of termination of the Executive’s employment by the Company
without Cause pursuant to Section 4(d) hereof such award shall
continue to vest in accordance with its full original vesting schedule.

 

(d)                                 Initial Stock
Option.  (i) On the Employment
Date, the Executive was granted a non-qualified option of 150,000 shares of the
common stock of the Company.  The
non-qualified stock option was granted pursuant to and, except as otherwise set
forth herein, is subject to, the terms of the Incentive Plan.  Such options shall vest in accordance with
the terms generally applicable to option grants under the Aon Stock Incentive
Plan.  In the event of termination of the
Executive’s employment by the Company without Cause pursuant to Section 4(d) hereof
such option shall continue to vest in accordance with its full original vesting
schedules.

 

(e)                                  Other Benefits.  During the Employment Period, the Executive
shall be entitled to participate in the Company’s employee benefit plans generally
available to executives of the Company (such benefits being hereinafter
referred to as the “Employee Benefits”). 
The Executive also shall be entitled to vacation (not less than 4 weeks
per year) or illness in accordance with the Company’s policy for executives and
to receive all other fringe benefits as are from time to time made generally
available to executives of the Company.

 

(f)                                    Expense
Reimbursement.  During the
Employment Period, the Company shall reimburse the Executive in accordance with
the Company’s policies and procedures, for all proper expenses incurred by him
in the performance of his duties hereunder.

 

(g)                                 2009 Award.  On or about April 27, 2009, the
Executive received an award of 25,000 restricted stock units of Aon Corporation
common stock under the Incentive Plan, as amended from time to time (the “2009
Award”).  The restricted stock units were
granted in accordance with the approval provided by the Organization and
Compensation Committee of Aon Corporation’s board of directors on January 29,
2009.  Except as otherwise set forth
herein, the award is subject to the Company’s standard terms and provisions,
including vesting provisions.  For the
avoidance of doubt, the restricted stock units will vest in equal installments
of 25% on the second through fifth anniversary of the date of grant subject to
the Executive’s continued employment.

 

(h)                                 Other Equity Awards.  Subsequent to the Employment Date and in
addition to the 2009 Award, the Executive has received additional equity awards
that except as otherwise set forth herein are governed by the terms of the
applicable award documents and by the Incentive Plan.

 

4.                                      Termination.    (a) 
Death.   Upon the death of the
Executive, this Agreement shall automatically terminate and the Executive’s executor,
administrator or designated beneficiary shall be entitled to receive the
Executive’s Base Salary which shall have accrued to the date of such

 

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death.  The Company shall pay to the Executive’s executor
or administrator of Executive’s estate a lump sum cash amount equal to the
Executive’s Base Salary at the rate in effect at the date of such death, to
which the Executive would have been entitled from the date of such death until
the end of the Employment Period, reduced by the amount of any benefit paid
under any individual or group life insurance policy maintained by the Company
for the benefit of the Executive.

 

(b)                                 Disability.  The Company may, at its option, terminate
this Agreement upon written notice to the Executive if the Executive, because
of physical or mental incapacity or disability, fails to perform the essential
functions of his position, with reasonable accommodation, if relevant, required
of him hereunder for a continuous period of 120 days or any 180 days within any
12-month period.  Upon such termination,
the Executive or his legal representative shall be entitled to receive the Base
Salary which shall have accrued to the date of termination, plus continuation
of Base Salary, at the rate in effect at the date of such termination of
employment, until the end of the Employment Period; provided, however, that the
amount of any benefit payable under any disability insurance policy maintained
by the Company for the benefit of the Executive shall be deducted from the
payments of such Base Salary.  In the
event of any dispute regarding the existence of the Executive’s incapacity or
disability hereunder, the matter shall be resolved by the determination of an
independent physician agreed to between the Executive and the Company
specializing in the claimed area of incapacity or disability.  The Executive shall submit to appropriate
medical examinations for purposes of such determination.

 

(c)                                  Cause.  (i) The Company may at any time, at its
option, terminate the Executive’s employment under this Agreement immediately
for Cause (as hereinafter defined).  The
Company’s decision in this regard shall be taken by the Governance Committee of
the Board (“Governance Committee”).  The
Executive shall be given at least seven days advance written notice of any
meeting at which the Governance Committee proposes to put forward for a vote a
decision on whether or not to terminate the Executive for Cause and the written
notice shall describe in reasonable detail the basis on which the Governance
Committee may conclude that Cause exists. 
The Executive shall have the opportunity to appear in person and to make
such written and/or oral presentation to such meeting of the Governance
Committee as the Executive thinks fit. 
If a majority of the Governance/Nominating Committee authorizes by
affirmative vote a termination for Cause at such meeting (whether or not the
Executive makes any oral or written presentations at such meeting) such
determination shall be final and binding upon the Company and the Executive
once such decision is confirmed in writing and communicated to the Executive.

 

(ii)                                  As used in this
Agreement, the term “Cause” shall mean any one or more of the following:

 

(A)  any intentional
act of fraud, embezzlement or theft by the Executive in connection with his
duties hereunder or in the course of his employment hereunder or the Executive’s
admission or conviction of, or plea of nolo contendere to, a felony or of any
crime involving moral turpitude, fraud, embezzlement, theft or
misrepresentation;

 

(B)  any gross
negligence or willful misconduct of the Executive resulting in a loss to the
Company or any of its subsidiaries, or damage to the reputation of the Company
or any of its subsidiaries;

 

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(C)  any breach by the
Executive of any one or more of the covenants contained in Section 6, 7,
or 8 hereof;

 

(D)  any violation of
any statutory or common law duty of loyalty to the Company or any of its
subsidiaries;

 

(E)  the determination
by Gregory Case, in his capacity as CEO, that the Executive has breached the
policies or procedures of the Company or engaged in any action or behavior that
is, or if allowed to continue could be, detrimental to the business or reputation
of the Company; or

 

(F)  the Executive’s
receipt of two written disciplinary notices from the Global Head of Human
Resources within any twenty-four (24) month period as a result of the Executive’s
breach of the policies or procedures of the Company or any action or behavior
by the Executive that is, or if allowed to continue could be, detrimental to
the business or reputation of the Company.

 

(iii)                               The exercise of
the right of the Company to terminate this Agreement pursuant to this Section 4(c) shall
not abrogate the rights or remedies of the Company in respect of the breach
giving rise to such termination.

 

(iv)                              If the Company
terminates the Executive’s employment for Cause, as defined in Section 4(c),
he shall be entitled to:

 

(A) accrued Base Salary
through the date of the termination of his employment; and

 

(B) other Employee
Benefits to which the Executive is entitled upon his termination of employment
with the Company, including any regular and supplemental retirement and
disability benefits required pursuant to the terms of the plans and programs of
the Company.

 

(v)                                 The definition
of “Cause” herein shall replace any other definitions of “Cause” in any prior
agreements between the Executive and the Company, including, but not limited
to, any prior equity awards, and such definition shall be used for purposes of
determining the Executive’s right to any payments or benefits under such prior
agreements in the event of his termination of employment.

 

(d)                                 Termination
Without Cause.  If, during
the Employment Period, the Company terminates the employment of the Executive
hereunder for any reason other than a reason set forth in Section 4(a), (b) or
(c), the Company will give the Executive 12 months’ prior written notice of
such termination and:

 

(i)                                     during the
notice period or thereafter, as applicable, the Executive will be entitled to
the payments and benefits specified by Sections 4(c)(iv)(A) and (B); and

 

(ii)                                  concurrent with
the last day of the notice period, the Executive will be entitled to receive a
lump sum cash payment.  The lump sum
payment will be equal to the product of (x) two

 

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and (y) the sum of the
annual Base Salary and the Executive’s target annual incentive bonus for the
Bonus Year in which the Executive’s employment terminates.

 

Notwithstanding the
foregoing provisions of this Section 4(d), if any payment specified by
this Section 4(d) would not be deductible by the Company for federal
income tax purposes by reason of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), or any similar or successor
statute (excluding Section 280G of the Code), such payment will be
deferred and the amount thereof (plus earnings thereon in accordance with the
terms of such deferral) will be paid to the Executive at the earliest time that
such payment is deductible by the Company.

 

(e)                                  Voluntary
Termination.   The
Executive may voluntarily terminate his employment with the Company prior to
the end of the Employment Period for any reason.  If the Executive voluntarily terminates his
employment pursuant to this Section 4(e), the Executive shall give the
Company 12 months prior written notice and shall be entitled to the payments
specified by Sections  4(c)(iv)(A) and(B).

 

(f) 
Termination for Good Reason.  (i) Upon
30 days’ prior written notice to the Company, the Executive may voluntarily
terminate his employment for Good Reason (as herein defined).  If the Executive voluntarily terminates
employment pursuant to this Section 4(f), the Executive’s entitlement to
compensation and benefits will cease immediately, except that the Executive
will be entitled to the payments and benefits specified in Section 4(d);

 

(ii)                                  As used in this
Agreement, “Good Reason” means, during the Employment Period and without the
written consent of the Executive, the following, provided that an isolated,
insubstantial or inadvertent action not taken in bad faith or a failure not
occurring in bad faith, which is reasonably remedied by the Company promptly
after receipt of notice thereof given by the Executive will not constitute Good
Reason:

 

(A)                       the assignment
to the Executive of duties, authority or responsibilities materially
inconsistent in any respect with a Level 1A senior executive position as
contemplated by this Agreement;

 

(B)                         any failure by
the Company to comply with the provisions of Section 3 hereof;

 

(C)                         any requirement
by the Company that the Executive’s principal office be located more than 50
miles outside of the greater Chicago metropolitan area; or

 

(D)                        any other
material breach by the Company of this Agreement.

 

(iii)                               The Executive
acknowledges and agrees that the performance of his duties in London in
connection with his position as Chief Executive Officer of Aon Specialty and
any travel connected with such duties will not be considered to give rise to a
Good Reason for his termination under this Agreement.

 

5.                                      Federal
and State Withholding.                       The Company
shall deduct from the amounts payable to the Executive pursuant to this
Agreement the amount of all required federal, state and local withholding taxes
in accordance with the Executive’s Form W-4 on file with the Company, and
all applicable federal employment taxes.

 

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6.                                      Noncompetition;
Nonsolicitation.              (a)  General.  The Executive acknowledges that in the course
of his employment with the Company he has and will become familiar with trade
secrets and other confidential information concerning the Company and its
subsidiaries and that his services will be of special, unique and extraordinary
value to the Company and its affiliates.

 

(b)                                 Noncompetition.  The Executive agrees that during the period
of his employment with the Company and for a period of two years thereafter
(the “Noncompetition Period”) he shall not in any manner, directly or
indirectly, through any person, firm or corporation, alone or as a member of a
partnership or as an officer, director, stockholder, investor or employee of or
consultant to any other corporation or enterprise or otherwise, engage or be
engaged, or assist any other person, firm, corporation or enterprise in
engaging or being engaged, in any business, in which the Executive was involved
or had knowledge, being conducted by, or contemplated by, the Company or any of
its subsidiaries as of the termination of the Executive’s employment in any
geographic area in which the Company or any of its subsidiaries is then
conducting such business.

 

(c)                                  Nonsolicitation.  The Executive further agrees that during the
Noncompetition Period he shall not in any manner, directly or indirectly,
induce or attempt to induce any employee of the Company or any of its
subsidiaries to terminate or abandon his or her employment for any purpose
whatsoever.

 

(d)                             Exceptions.  Nothing in this Section 6 shall prohibit
the Executive from being (i) a stockholder in a mutual fund or a
diversified investment company or (ii) a passive owner of not more than
two percent of the outstanding stock of any class of a corporation, any
securities of which are publicly traded, so long as Executive has no active
participation in the business of such corporation.

 

(e)                                  Reformation.  If, at any time of enforcement of this Section 6,
a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law. 
This Agreement shall not authorize a court to increase or broaden any of
the restrictions in this Section 6.

 

(f)                                    Consideration;
Breach.  The Company and the Executive
agree that the payments to be made, and the benefits to be provided, by the
Company to the Executive pursuant to Section 3 hereof shall be made and
provided in consideration of the Executive’s agreements contained in Section 6
hereof.  In the event that the Executive
shall commit a material breach of any provision of Section 6 hereof, the
Company shall be entitled immediately to terminate making all remaining
payments and providing all remaining benefits pursuant to Section 3 hereof
and upon such termination the Company shall have no further liability to the
Executive under this Agreement.

 

7.                                      Confidentiality.  The Executive shall not, at any time during
the Employment Period or thereafter, make use of or disclose, directly or
indirectly, any (i) trade secret or other confidential or secret
information of the Company or of any of its subsidiaries or (ii) other
technical, business, propietary or financial information of the Company or of
any of its subsidiaries not available to the public generally or to the
competitors of the Company or to the competitors of any of its subsidiaries (“Confidential

 

6

 

Information”), except to the
extent that such Confidential Information (a) becomes a matter of public
record or is published in a newspaper, magazine or other periodical available
to the general public, other than as a result of any act or omission of the
Executive, (b) is required to be disclosed by any law, regulation or order
of any court or regulatory commission, department or agency, provided that the
Executive gives prompt notice of such requirement to the Company to enable the
Company to seek an appropriate protective order, or (c) is necessary to
perform properly the Executive’s duties under this Agreement.  Promptly following the termination of the
Employment Period, the Executive shall surrender to the Company all records,
memoranda, notes, plans, reports, computer tapes and software and other
documents and data which constitute Confidential Information which he may then
possess or have under his control (together with all copies thereof).

 

8.                                      Inventions.  The Executive hereby assigns to the Company
his entire right, title and interest in and to all discoveries and
improvements, patentable or otherwise, trade secrets and ideas, writings and
copyrightable material, which may be conceived by the Executive or developed or
acquired by him during the Employment Period, which may pertain directly or
indirectly to the business of the Company or any of its subsidiaries.  The Executive agrees to disclose fully all
such developments to the Company upon its request, which disclosure shall be
made in writing promptly following any such request.  The Executive shall, upon the Company’s
request, execute, acknowledge and deliver to the Company all instruments and do
all other acts which are necessary or desirable to enable the Company or any of
its subsidiaries to file and prosecute applications for, and to acquire,
maintain and enforce, all patents, trademarks and copyrights in all countries.

 

9.                                      Enforcement.  The parties hereto agree
that the Company and its subsidiaries would be damaged irreparably in the event
that any provision of Section 6, 7, or 8 of this Agreement were not
performed in accordance with its terms or were otherwise breached and that
money damages would be an inadequate remedy for any such nonperformance or
breach.  Accordingly, the Company and its
successors and permitted assigns shall be entitled, in addition to other rights
and remedies existing in their favor, to an injunction or injunctions to
prevent any breach or threatened breach of any of such provisions and to
enforce such provisions specifically (without posting a bond or other
security).  The Executive agrees that he
will submit himself to the personal jurisdiction of the courts of the State of
Illinois in any action by the Company to enforce any provision of Section 7,
8 or 9 of this Agreement.

 

10.                               Survival.  Sections 3, 4, 6, 7, 8, 9, 10, 21, and 22 of
this Agreement shall survive and continue in full force and effect in
accordance with their respective terms, notwithstanding any termination of the
Employment Period.

 

11.                               Notices.  All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed given when (i) delivered
personally or by overnight courier to the following address of the other party
hereto (or such other facsimile number for such party as shall be specified by
notice given pursuant to this Section 12), with the confirmatory copy
delivered by overnight courier to the address of such party pursuant to this Section 12:

 

If to the Company, to:

 

Aon Corporation

200 East Randolph

Chicago, Illinois 60601

 

7

 

Attention:  President and Chief Executive Officer

 

with copies to:

 

Aon Corporation

200 East Randolph

Chicago, Illinois 60601

Attention:  General Counsel

 

If to the Executive, to the Executive’s home
address as shows on the Company’s records.

 

12.                               Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of this
Agreement or the validity, legality or enforceability of such provision in any
other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.

 

13.                               Entire
Agreement.  This Agreement and any existing equity awards referenced
herein constitute the entire agreement and understanding between the parties
with respect to the subject matter hereof, and this Agreement supersedes and
preempts any prior understandings, agreements or representations by or between
the parties, written or oral, which may be related in any manner to the subject
matter hereof.

 

15.                               No
Mitigation.   In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any
of the provisions of this Agreement, and such amounts shall not be reduced
whether or not the Executive obtains other employment.

 

16.                               Successors
and Assigns.  This Agreement shall be enforceable by the
Executive and his heirs, executors, administrators and legal representatives,
and by the Company and its successors and assigns, and shall be binding on such
successors and assigns.

 

17.                               Headings;
Inconsistency.  Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose. 
In the event of any inconsistency between the terms of this Agreement
and any form, award, plan or policy of the Company or any other agreement
between the Executive and the Company, the terms of this Agreement shall
control.

 

18.                               Governing
Law.  This
Agreement shall be governed by and construed and enforced in accordance with
the internal laws of the State of Illinois without regard to principles of
conflict of laws.

 

19.                               Amendment
and Waiver.  The provisions of this Agreement may be amended
or waived only by the written agreement of the Company and the Executive, and
no course of conduct

 

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or failure or delay in
enforcing the provisions of this Agreement shall affect the validity, binding
effect or enforceability of this Agreement.

 

20.                               Counterparts.   This Agreement may be executed in two
counterparts, each of which shall be deemed to be an original an both of which
together shall constitute one and the same instrument.

 

21.                               Code
Section 409A.  (a)  The
time or schedule of any payment or amount scheduled to be paid pursuant to the
terms of this Agreement, including but not limited to any restricted stock unit
or other equity-based award, payment, or amount that provides for the “deferral
of compensation” (as such term is described under Section 409A of the
Internal Revenue Code of 1986, as amended (“Code Section 409A”)), may not
be accelerated except as otherwise permitted under Code Section 409A and
the guidance and Treasury regulations issued thereunder.

 

(b)  The parties intend that this Agreement and the benefits
provided hereunder be interpreted and construed to comply with Code Section 409A
to the extent applicable thereto.  The
time and form of payment of incentive compensation, disability benefits,
severance payments, expense reimbursements and payments of in-kind benefits
described herein will be made in accordance with the applicable sections of
this Agreement, provided that with respect to termination of employment for
reasons other than death, the payment at such time can be characterized as a “short-term
deferral” for purposes of Code Section 409A or as otherwise exempt from
the provisions of Code Section 409A, or if any portion of the payment
cannot be so characterized, and the Executive is a “specified employee” under
Code Section 409A, such portion of the payment will be delayed until the
earlier to occur of the Executive’s death or the date that is six months and
one day following the Executive’s termination of employment (the “Delay Period”).  Upon the expiration of the Delay Period, all
payments and benefits delayed pursuant to this section will be paid or
reimbursed to the Executive in a lump sum, and any remaining payments due under
this Agreement will be payable at the same time and in the same form as such
amounts would have been paid.  Further,
if the Executive is a “specified employee” and if any equity-based awards
granted to the Executive by the Company pursuant to this Agreement or
otherwise, continue to vest upon the Executive’s termination of employment, and
are deemed a “deferral of compensation” (as such term is described under Code Section 409A),
the equity-based awards will not be settled or released until the expiration of
the Delay Period.  For purposes of applying
the provisions of Code Section 409A, each separately identifiable amount
to which the Executive is entitled will be treated as a separate payment.  In addition, the disability benefits and
severance payments will be treated as a series of separate payments.

 

(c)  Although the Company intends to administer the Agreement
so that it will comply with the requirements of Code Section 409A, the
Company does not represent or warrant that the Agreement will comply with Code Section 409A
or any other provision of federal, state, local or non-United States law.  Provided that the Company administers this
Agreement in a manner consistent with the terms of this Agreement, neither the
Company, its subsidiaries, nor their respective directors, officers, employees
or advisers will be liable to the Executive (or any other individual claiming a
benefit through the Executive) for any tax, interest, or penalties the
Executive may owe as a result of compensation paid under the Agreement, and the
Company and its subsidiaries will have no obligation to indemnify or otherwise
protect the Executive from the obligation to pay any taxes pursuant to Code Section 409A.

 

9

 

22.                               Mediation.  In the event a dispute arises in connection with
this Agreement, the Company and the Executive agree to submit the dispute to
non-binding mediation to be paid for by the Company which shall select the
mediator.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first written above.

 

	
   

  	
  AON CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Jeremy G. O. Farmer

  
	
   

  	
   

  
	
   

  	
  Title:

  	
     Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ted T. Devine

  
	
   

  	
   

  	
  Ted
  T. Devine

  
				

 

10Exhibit 10.1

 

CONFIDENTIAL

CERTAIN INFORMATION HAS BEEN REDACTED

CONFIDENTIAL TREATMENT REQUESTED

 

ACCELLENT-CONCEPTUS

 

SUPPLY
AGREEMENT

 

This SUPPLY AGREEMENT (the “Agreement”) dated
as of June 1, 2009 (the “Effective Date”) is between Accellent
Inc., a Maryland company with its principal office at 100 Fordham Road,
Building C, Wilmington, MA 01887 (“Supplier”), and Conceptus Incorporated, with
its principal office at 331 East Evelyn Avenue, Mountain View, CA 94041 (the “Purchaser”).

 

WHEREAS, the Purchaser has developed and designed a
medical device and seeks to have such device manufactured for it by the
Supplier; and

 

WHEREAS, the Supplier has expertise in the
manufacture of medical devices and components and desires to provide
manufacturing services for the Purchaser.

 

NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:

 

1.                                    Definitions.  Unless otherwise defined in this Agreement,
as used herein, the following defined terms shall have the meanings given them
below.

 

1.1           Affiliate.  “Affiliate”
means any entity which directly or indirectly controls, is controlled by, or is
under common control with the referenced party.

 

1.2           Approved Supplier List.  “Approved Supplier List” has the meaning
given in Section 3.7.

 

1.3           Bankruptcy Event. 
“Bankruptcy Event” means the institution of voluntary or involuntary
proceedings by or against a person or entity in bankruptcy or under any
insolvency law, or the appointment of a receiver or custodian for such person
or entity, or the institution of proceedings by or against such person or
entity for corporate reorganization or the dissolution of such person or
entity, which proceedings, if involuntary, shall not have been dismissed within
sixty (60) days after the date of filing, or an assignment by such person or
entity for the benefit of its creditors.

 

1.4           Competitor.  “Competitor”
means any company that sells a non-surgical female tubal sterilization device
or process.

 

1.5           Components.  “Components”
has the meaning specified in Section 3.6.1.

 

1.6           Contract Year. 
“Contract Year” means one of any of the consecutive twelve (12) month
periods during the Term, the first of which begins on the Effective Date.

 

1.7           Controlled Environment Room.  “Controlled Environment Room” shall mean a
room that is used to manufacture Products having a controlled environment to
limit particulate and microorganisms.

 

 

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1.8           Change in Control. 
“Change in Control” means the direct or indirect (1) sale or other
disposition of all or substantially all of Supplier’s assets, or (ii) transfer
of more than fifty percent (50%) of the outstanding voting interests or
economic interests of Supplier, provided that an initial public offering of
stock by Supplier shall not constitute a “Change in Control.”

 

1.9           Delivery Date. 
“Delivery Date” has the meaning given in Section 3.4.

 

1.10         Delivery Schedule. 
“Delivery Schedule” has the meaning given in Section 3.4.

 

1.11         Event of Default. 
“Event of Default” has the meaning given in Section 13.

 

1.12         Forecast.  “Forecast”
has the meaning given in Section 3.3.

 

1.13         Incoming Inspection. 
“Incoming Inspection” means measuring, examining, and testing that
gauges one or more characteristics of a Product component and the comparison of
such component with the specified requirements to determine such component’s
conformity to the Specifications.

 

1.14         Intellectual Property.  “Intellectual Property” has the meaning given
in Section 10.1.

 

1.15         Intellectual Property Rights.  “Intellectual Property Rights” has the
meaning given in Section 10.1.

 

1.16         Procedures.  “Procedures”
has the meaning given in Section 2.1.

 

1.17         Process.  “Process”
means the methods and all referenced procedures used in the manufacture of the
Product.

 

1.18         Product.  “Products”
shall mean the Purchaser products listed on Exhibit A attached to this
Agreement.  New products shall be added
to Exhibit A in accordance with Section 2.2 and such products
will thereafter be deemed included within the definition of Products.

 

1.19         Product Device Master Record.  “Product Device Master Record” means the
Product Device Master Record for the Product required by the Regulatory
Authorities, as it may be revised and in effect from time to time.

 

1.20         Purchase Order. 
“Purchase Order” means a purchase order for Products in a form provided
by Purchaser.

 

1.21         Purchase Price. 
“Purchase Price” has the meaning given in Section 3.1.

 

1.22         Qualified Trainer. 
“Qualified Trainer” shall mean Manufacturer’s designated individual(s) who
can perform training on manufacturing processes, test methods and/or standard
operating procedures as developed and approved by Purchaser.

 

1.23         Regulatory Authority. 
“Regulatory Authority” means the Food and Drug Administration of the
United States (the “FDA”) or, any successor agency or, if applicable in the 

 

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context, the government agency performing the
same regulatory function as the FDA in another country.

 

1.24         Specifications. 
“Specifications” means the specifications for the Product as provided in
the Product Device Master Record.

 

1.25         Term.  “Term”
has the meaning given in Section 12.1.

 

2.                                    Supply
Rights.

 

2.1           Manufacture and Supply.  Supplier agrees, pursuant to the Delivery
Schedule, to procure inventory, which includes raw materials, components and
other supplies, and to manufacture, test, assemble, inspect and deliver the
Products pursuant to the Specifications for each such Product.  Supplier recognizes and agrees that the specific
manufacturing site employed for the production of the Products must be approved
and accepted by the Purchaser.  Supplier
agrees to provide adequate capacity to meet the volumes agreed by the parties
in accordance with Section 3.4. 
All materials for use in Products, including but not limited to raw
materials, supplies, and completed Product will be stored by Supplier in a
secure, segregated, and controlled area to prevent theft, loss, degradation or
damage of such materials.  Supplier shall
maintain lot traceability of raw materials, work in process and finished
Product.  All components used in the
Products shall be processed through Incoming Inspection.  All materials and components that do not meet
the applicable Specifications shall be quarantined and investigated through the
Supplier’s non-conformance procedure. 
Supplier’s personnel responsible for manufacturing, testing, and
inspecting Product shall be trained in the Procedures (as defined below) by a
Qualified Trainer.  Supplier’s quality
assurance personnel shall ensure Products meet Specifications.  Supplier agrees to manufacture Products in a
Controlled Environment Room (CER), which shall be monitored for particulate and
microbial control on a quarterly basis. 
The Incoming Inspection, non-conformance procedure, quality assurance procedures
and other manufacturing, testing, and inspection procedures used by Supplier in
connection with the manufacture of the Products are collectively the “Procedures.”
All Procedures, and any changes thereto, must be approved by Purchaser prior to
their use by Supplier.  Purchaser
acknowledges that Supplier is in the business of providing contract
manufacturing services to the medical device industry and, subject to the terms
of this Agreement, reserves the right to supply, develop, manufacture, sell, resell,
or carry-on similar activities to any third party, including competitors of the
Purchaser.  The Products will be produced
in Supplier’s Juarez Mexico facility.

 

2.2           Purchase Requirements.  Subject to the terms and conditions of this
Agreement, Supplier may terminate this Agreement pursuant to Section 13.1(d)
if Purchaser does not purchase a minimum quantity of [***] Products in the
first Contract Year, [***] Products in the second Contract Year, and [***]
Products in the third Contract Year.  New
Products shall be added to Exhibit A only upon mutual agreement of
pricing for such New Product.

 

[***] Confidential information in this Exhibit
has been omitted and filed separately with the Commission.  Confidential treatment has been requested
with respect to the omitted portions.

 

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2.2.1.       Purchase Requirements for Certain New
Products.  The terms set forth in
this agreement will apply to the Products listed on Exhibit A as of
the Effective Date as well as Purchaser’s ESS405 and the ESS505 products added
in accordance with Section 2.2 (“New Products”).  The parties shall use reasonable efforts to
determine the price of the ESS405 and ESS505 products within thirty (30) days
after Supplier’s receipt of new product specifications from Purchaser (“Review
Period”).  The parties expect that the
purchase price for the New Products will be the same as or similar to the
purchase price for the Products that are set forth on Exhibit A as of the
Effective Date (“Existing Products”), subject only to changes in the
Specifications, component manufacturing processes, assembly processes,
purchased materials, New Product volumes or testing procedures of the New
Products from any existing Products.

 

3.                                    Purchase
Orders, Prices, Terms, Delivery, Forecasts.

 

3.1           Purchase Price. 
The purchase price for each Product purchased from Supplier shall be as
set out on Exhibit B (“Purchase Price”) and shall be due and
payable no later than thirty (30) days from the date of the invoice for such
Product.  Invoices shall be dated the
date the applicable Products are shipped. 
The price for Products during the Term and assumptions upon which they
are predicated shall be as defined in Exhibit B and the following: (i) at
any time, in the event of increases in the amount of five percent (5%) or more
in the market price of raw materials, components or packaging materials
purchased by Supplier from vendors on the Approved Supplier List in order to
manufacture the Products (collectively, “Materials”) the Supplier shall
notify Purchaser of such increase and the parties shall discuss methods to
mitigate such increase, including the use of alternate vendors, provided that
to the extent the parties are unable to mitigate such increase Supplier may
pass the incremental increase through to Purchaser (with no markup); (ii) Supplier
shall notify Purchaser of, and pass through to Purchaser, any decreases in the
price of Materials that equal or exceed five percent (5%).  In addition to the Supplier’s other rights
and remedies, Supplier may elect to charge interest at the rate of 10% per
annum or the highest rate permitted under applicable law, whichever is lower,
on any undisputed amount of the Purchase Price not paid when due under this
Agreement:

 

3.1.1.       Gainsharing.  Supplier and Purchaser shall use best efforts
during each Contract Year to work together to put forth proposals with respect
to Changes (as defined below) that, if implemented, would reduce the price of
the Product to Purchaser.  The parties’
non-binding targeted goal is a [***] percent  Change during
such Contract Year.  The parties agree to
the following gainsharing terms: (i) if the parties share the cost of any
Product engineering changes, process improvements, and procurement or alternate
sourcing activities (collectively, “Changes”) that result in a cost
reduction, the amount of such cost reduction will be shared by the Supplier and
Purchaser, with each receiving [***] percent of such cost reduction after
implementation of the Changes, provided that mutually agreed, nonrecurring
expenses associated with such cost reductions will be retired by the party
bearing such expenses prior to sharing, and (ii) if Purchaser (A) pays
the entire cost of any Changes (including the amount of any capital expenses or
the cost of any capital equipment used in the Product assembly process), or (B) suggests
process improvements that do not have implementation costs, Purchaser shall realize
the entire amount of any cost reduction resulting from such Change in the form
of a lower Product price, and (iii) cost reductions related to
manufacturing, site, process, labor or material improvements undertaken and
paid for independently 

 

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by Supplier will benefit Supplier entirely,
where allowed by applicable regulation and quality standards.  In all cases where Purchaser is entitled to
price reductions in accordance with this Section 3.1.1, such
reductions will be realized by Purchaser in the form of a lower price
(including both the base Product price and the Product price after any rebates
are applied in accordance with Exhibit B).

 

3.1.2.       Rebates.  Purchaser may be eligible for a rebate as
detailed in Exhibit B.

 

3.2           Orders, Shipping Terms, and Inconsistencies.  Supplier shall pack all Products for shipment
in accordance with Purchaser’s Specifications and otherwise in a commercially
reasonable manner to protect against damage. 
All shipments of Products shall be F.O.B.  Supplier’s facility, and shall be accompanied
by a packing slip which describes the Products and states the Order
number.  Title to and all risk of loss or
damage concerning the Products shall pass to Purchaser immediately upon the
sooner of delivery of the Products to either (i) the Purchaser, (ii) a
common carrier or (iii) any private carrier designated by Purchaser (or
designated by Supplier and approved by Purchaser) for shipment to Purchaser’s
designated point of delivery.  Purchaser’s
rejection of any Products purchased hereunder shall not shift any risk for
those Products until they are returned to and received by Supplier pursuant to
Supplier’s written instructions.  If
there is any conflict or inconsistency between this Agreement and any Purchase
Order confirmation, acceptance or any similar document, the terms of this
Agreement shall govern and control.

 

3.3           Forecasts. 
On the first day of each calendar quarter, Purchaser shall provide
Supplier with an updated Product forecast (“Forecast”) that reflects
Purchaser’s estimated aggregate purchase requirements of Product for the
subsequent twelve (12) month period.

 

3.4           Purchase Orders. 
Purchaser may from time to time provide Supplier with a purchase order
that covers a three (3) month time frame with specific quantities of Product to
be delivered to Purchaser on specific Delivery Dates (as defined below), which
dates and quantities will be mutually agreed to by the parties, provided that
Supplier shall accept all Purchaser purchase orders (including the delivery
dates and quantities specified therein) that specify order quantities that are
within one hundred and ten percent (110%) of the Product quantities specified
in the Forecast for the applicable period. 
The Purchaser shall update such purchase order monthly to maintain at
all times a total of three (3) months of Product requirements under a purchase
order by including, on the first of each new month, an additional one (1) month
of Product requirements to the end of such three (3) month timeframe.  Supplier shall confirm all Product quantities
and delivery dates specified on purchase orders provided by Purchaser within
three (3) days after receipt of each such purchase order.  The schedule of agreed upon (subject to
Supplier’s obligation to accept purchase orders within one hundred and ten
percent (110%) of the applicable Forecast) Delivery Dates and quantities of
Products to be delivered on such dates shall become the delivery schedule (“Delivery
Schedule”).  Supplier shall supply
the quantities of Product meeting the Specifications on the date detailed in
the Delivery Schedule for such Products (the “Delivery Date”).

 

3.5           Notice of Anticipated Failure to Make Timely Delivery.  The Supplier will notify the Purchaser in the
event that Supplier becomes aware that the Supplier will not be able to make
delivery of Products by the dates required by Section 3.4.

 

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3.6           Purchaser-Supplied Components.  In the event Supplier has a shortage of
components for Products, Purchaser may, at its discretion, supply components to
Supplier at Supplier’s expense upon the written consent of Supplier and only in
such amounts as are necessary for firm orders then placed by Purchaser.  Such components, including provision for
failed parts, shall be delivered to Supplier not later than four (4) weeks
prior to the scheduled Delivery Date for the related Products to
Purchaser.  Should Purchaser be unable to
meet Purchaser’s requirements for delivery of Products, Purchaser may at its
option require Supplier to either: (i) ship Products to Purchaser absent
the missing components on or after seven (7) days from the scheduled Delivery
Date; or (ii) hold the Products pending receipt of such components from
Purchaser.  Under these circumstances,
Purchaser will give written notification to Supplier prior to the scheduled
Delivery Date.  Nothing in this Section relieves
Supplier of its other obligations under this Agreement.

 

3.6.1.       Supplier Component Sales.  Supplier will supply components (“Components”)
to Purchaser for use by Purchaser or Purchaser subcontractors at the prices in Exhibit B
Chart 3.  On the first day of each
calendar quarter, Purchaser shall provide Supplier with an updated Component
forecast that reflects Purchaser’s estimated aggregate purchase requirements of
Components for the subsequent twelve (12) month period.  Purchaser may from time to time provide
Supplier with a purchase order that covers a three (3) month time frame with
specific quantities of Components to be delivered to Purchaser on specific
Delivery Dates, which dates and quantities will be mutually agreed to by the
parties, provided that Supplier shall accept all Purchaser purchase orders
(including the delivery dates and quantities specified therein) that specify
order quantities that are within one hundred and ten percent (110%) of the
Product quantities specified in the Component forecast for the applicable
period.  The Purchaser shall update such
purchase order monthly to maintain at all times a total of three (3) months of
Component requirements under a purchase order by including, on the first of
each new month, an additional one (1) month of Component requirements to the
end of such three (3) month timeframe. 
Supplier shall confirm all Component quantities and delivery dates
specified on purchase orders provided by Purchaser within three (3) days after
receipt of each such purchase order. 
Component pricing will be renegotiated annually, at the end of each
Contract Year.  If the parties cannot
agree on a new price for a Component at the end of a Contract Year, the price
for such Component shall be the same as the price for such Component during the
previous Contract Year.  Quantities
available to Purchaser at these prices are subject to minimum unit volume
requirements for Products shown in Exhibit B Chart 1, Rebate
Qualification.

 

3.7           Approved Supplier List.  Purchaser shall provide a bill of materials
and approved supplier list (“Approved Supplier List” or “ASL”)
for each Product to be manufactured hereunder. 
Supplier shall manufacture the Products using components obtained solely
from vendors included on the ASL, as it may change from time to time, as
approved by Purchaser.  The ASL shall not
be amended without prior written approval of Purchaser.  If Supplier desires to use a supplier from
Supplier’s own list of approved suppliers, Supplier shall provide Purchaser
with a written proposal describing the reasons to use such supplier.  Purchaser may accept or reject the proposal,
which acceptance or rejection shall not be unreasonably withheld.  If Purchaser accepts the proposal, the
proposed supplier will be subject to evaluation and approval processes approved
by Purchaser.  Supplier will not order
any materials or components for the Products from such supplier until Purchaser
has provided written approval to make such orders.  Any increased costs associated with a
component that must be purchased from a supplier on the Approved Supplier List,
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regulated component or not, will be paid by
Purchaser (i.e.  a substandard quality
component causes increased scrap rates, inspections, and extra labor for which
Supplier will not be liable); provided that (i) Supplier documents and
reasonably demonstrates to Purchaser the cause of the increased cost and how
Supplier’s use of an alternate qualified supplier (“Alternate Supplier”)
for such component would eliminate such cost, (ii) Purchaser determines in
its reasonable discretion that the Alternate Supplier is qualified to
manufacture the component in accordance with the applicable specifications and
all regulatory requirements, and (iii) Purchaser chooses not to include
the Alternate Supplier on the Approved Supplier List for such component despite
such determination.

 

3.8           Quarterly Review. 
The parties agree to establish a quarterly business review process
pursuant to which the parties will review (either in person, by telephone,
video conference or other mutually agreeable means) Product quality, cycle
time, manufacturing capacity, delivery, market conditions, and any other
matters or concerns relevant to this Agreement. 
Each party shall bear its own costs and expenses related to the quarterly
business review.

 

3.9           Excess and Obsolete Inventory.

 

3.9.1.       If Purchaser cancels a Product order
specified in the Delivery Schedule less than thirty (30) days prior to the
applicable Delivery Date, Purchaser shall be responsible for the Purchase Price
of the Products specified in such order unless otherwise agreed by the parties.

 

3.9.2.       Purchaser shall be responsible for any
non-returnable inventory (including finished Products, work-in-process,
components, or raw material) or non-cancelable orders for components or raw
material that are rendered excess or obsolete (as determined in Supplier’s
reasonable discretion) (collectively, “Excess Inventory”) to the extent
such Excess Inventory is caused by (a) Purchaser’s cancellation of orders
with shipment dates specified in the Delivery Schedule between thirty (30) and
one-hundred and twenty (120) days from the date of cancellation, (c) engineering
change orders agreed by the parties, (d) the end of a Product’s life, or (e) the
termination or expiration of this Agreement (excluding termination of the
Agreement by Purchaser in accordance with Section 5.2 or Section 13.1,
in which case Purchaser shall not be responsible for any Excess Inventory),
provided that in each case (a) through (e) above the Excess Inventory
cannot reasonably and without material cost to the Supplier be utilized on
other Supplier products or returned to its suppliers.  The cost to Purchaser of the Excess Inventory
described above shall be the Purchase Price for finished Products and the Supplier’s
burdened cost (including labor (if expended), storage, and documented
restocking charges paid by Supplier to its suppliers, but excluding a mark-up)
for all other items Supplier shall provide Purchaser an invoice that itemizes
and describes in reasonable detail the foregoing charges with respect to Excess
Inventory and the reasons Supplier cannot avoid such charges within thirty (30)
days after the event described in subsections (a) through (e) above
that gave rise to such charges.  In no
event shall Purchaser’s responsibility for charges with respect to Excess
Inventory exceed an amount equal to the total Purchase Price for the quantity
of Products on the then current three (3) month purchase order .

 

4.                                    Changes
to Specifications.

 

4.1           Changes by Purchaser.  If the Purchaser desires to change the
Specifications, it will notify the Supplier of such proposed change in
writing.  Within thirty (30) days
following receipt of 

 

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such a notice from the Purchaser, the
Supplier shall notify the Purchaser of the cost of implementing such change and
the impact such a change would have on the Purchase Price and the manufacturing
lead-time.  The Purchaser will then notify
the Supplier in writing whether it wants to implement such change taking into
account the implementation costs and the manufacturing lead time and Purchase
Price impact.  Specifications for any
change to the Product shall be finalized by the Purchaser in a mutually agreed
to time-frame prior to the placement of the first order for each Product to be
manufactured with such changed Specifications. 
After approval by the Purchaser, such change shall then become part of
the Specifications.

 

4.2           Changes by Supplier to Specifications or Process.  No changes to the Specifications shall be
made by the Supplier without the prior written approval of the Purchaser.  Supplier shall not make any changes to the
manufacturing process which may require the submission of any amendment, filing
or other documentation with any Regulatory Authority unless such change has
been identified, reviewed and approved in writing by the Purchaser.  The Purchaser shall provide a response to any
such proposed changes as soon as is practicably possible after receipt.

 

5.                                    Quality
and Regulatory Matters.

 

5.1           Facility Reviews. 
The Purchaser or its designee shall have the right, upon reasonable
advance written notice and during regular business hours, to inspect the
facilities being used by the Supplier for production of the Products solely to
confirm that such facilities are adequate to meet the requirements of this
Agreement, the Regulatory Authority, ISO13485, and any applicable successors to
those ISO requirements.  Supplier shall
reasonably cooperate with Purchaser and its designee with respect to such
inspections.  If any such inspection
reveals that the manufacturing facilities do not satisfy such requirements,
then the Purchaser shall provide written notice of such fact, which notice shall
contain in reasonable detail the deficiencies found in the manufacturing
facilities and, if practicable, those steps the Supplier should undertake in
order to remedy such deficiencies.  Any
inspection made by the Purchaser under this section shall occur no more
frequently than once each calendar quarter (unless otherwise required by law,
including by direction of the Regulatory Authority) and shall be designed to
cause the least amount of disruption to the operations of the Supplier as is
reasonably possible.  Such inspections
shall be limited to the manufacture of Products, and shall not include any
trade secrets or other confidential information unless the Purchaser and its
designee (if applicable) has signed a confidentiality agreement reasonably satisfactory
to the Supplier.

 

5.2           Remedying Deficiencies.  The Supplier shall be responsible for
remedying any deficiencies identified by the Purchaser under Section 5.1
at Supplier’s cost and expense within sixty (60) days following written notice
from the Purchaser.  With respect to any
such inspections for which any deficiencies are not capable of being remedied
by the Supplier within sixty (60) days of the notification thereof, then the
Supplier and the Purchaser shall discuss in good faith a corrective action plan
which will enable the Products to be supplied in accordance with this Agreement
until such deficiencies are remedied.  If
the parties are unable to reach agreement after an additional sixty (60) days
as to such alternative manufacturing arrangements, then the Purchaser shall
have the right to terminate this Agreement upon written notice to the Supplier.

 

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5.3           Records.  The
Supplier will maintain its records with respect to the manufacture of the
Products for ten (10) years after the date of manufacture of the last Product
under this Agreement, after which Supplier shall transfer such records to
Purchaser.

 

5.4           Medical Device Reporting.  Purchaser shall be responsible to report
events in compliance with FDA Medical Device Reporting Regulation set forth in
21 CFR Part 803 and any applicable international regulations.  Purchaser agrees to make Medical Device
Reports available to Supplier within three (3) days of the initial receipt of
any report that reasonably suggests that one of the Products (i) may have
caused or contributed to a death or serious injury or (ii) has
malfunctioned.

 

5.5           Notices from Regulatory Authorities.  A party receiving (the “Regulatory
Receiving Party”) communications from any Regulatory Authority, including
any FDA Form 483 Report on Inspectional Observations or equivalent notice,
shall provide to the other party within twenty-four (24) hours copies of any
such communications it receives related to the Products.

 

5.6           Permits, etc. 
The Purchaser shall obtain, at the Purchaser’s sole expense, all
permits, licenses, approvals, consents, and authorizations from all
governmental authorities as may be necessary or appropriate to market, solicit
orders for, and sell the Products.

 

5.7           Product Complaints. 
In reviewing customer complaints concerning the Products, the Purchaser
shall be considered the “manufacturer” for regulatory purposes, and shall receive
and log all complaints from customers using the Products.  If after evaluation by the Purchaser of the
complaints, the Purchaser reasonably believes that a complaint relates to a
breach by the Supplier of the warranty contained in Section 6.1,
the Purchaser will forward the complaint and the related Product to the
Supplier.  The Supplier will then
evaluate the complaint.  If the Product
does not comply with the warranty contained in Section 6.1, then
the Supplier shall be responsible to remedy the noncompliance as provided in Section 6.2.  If the Product complies with the warranty
contained in Section 6.1, then (i) the Supplier will return
the Product to the Purchaser with the Supplier’s evaluation, and the costs of
shipping the Product between the Purchaser, the Supplier, and the customer
shall be the Purchaser’s responsibility; and (ii) to the extent the
Supplier’s investigations of the complaints repeatedly result in Products that
do not breach the warranty and impose an unreasonable financial burden on the
Supplier, then the parties will review the circumstances and attempt to make
the Supplier whole with respect to such burden.

 

5.8           Sterilization services.  Sterilization services with respect to any
Product will be provided only if requested by Purchaser and will only be
performed by a third-party supplier approved by Purchaser and solely at
Purchaser’s expense.  With respect to any
such sterilization services, Supplier and Purchaser will jointly review the
sterilization protocol and report, which will include the results of the
sterilization validation/revalidation. 
Purchaser will have final approval responsibility for all sterilization
documentation (and the services provided thereunder) and is ultimately responsible
for verification and certification of product sterility.  Supplier and Purchaser will define the terms
of the product transfer and mutually agree to the terms of sterile lot release.

 

5.9           Certain Quality Requirements.  Without limiting its other obligations under
this Agreement, Supplier shall comply with the quality requirements set forth
in Exhibit C.

 

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6.                                      Product
Warranty and Limited Remedies; Customer Complaints.

 

6.1                                 Warranty.  The Supplier warrants that each Product and
each Component shall materially comply with the Specifications for a period of
two (2) years following the date of its shipment, provided that this
warranty shall not apply to non-conformities and shall be void to the extent
such non-conformities are not caused by Supplier’s or Supplier’s agents’ acts or
omissions.

 

6.2                                 Remedies.  If any Product does not conform to the
warranty stated in Section 6.1 above, the Supplier shall, at Purchaser’s
option, within ninety (90) days repair or replace such Product or Component at
the Supplier’s own expense, and ship such repaired or replacement Product or
Component back to either the Purchaser or the applicable customer at the
Supplier’s own expense, or credit to the Purchaser the Purchase Price for the
Product or Component.  The foregoing
warranty, and the remedies provided for in this Section 6.2, are
expressly conditioned upon (i) Purchaser providing Supplier with prompt
written notice of any nonconforming Product or Component prior to the
expiration of the warranty period, which notice must identify with particularity
the non-conformity, and (ii) Purchaser’s full cooperation with Supplier in
all reasonable respects relating thereto. 
All defective Products or Components which are covered by the foregoing
warranty shall be shipped to the Supplier at its expense for such repair or
replacement.

 

6.3                                 Exclusions From
Warranty.  The
warranty set forth in Section 6.1 above does not include Products
that have defects or failures resulting from Purchaser’s design of the Products
(as such design is described in the design history record of the Product).  Purchaser bears all design responsibility for
the Product.

 

6.4                                 Product Recalls.  In the event of a Product or Component recall
caused by Supplier’s breach of the warranty provided in Section 6.1,
Supplier shall at its cost and expense replace all Product or Component lots
recalled (regardless of the number of nonconforming Products or Components, if
any, in such lots), and pay any associated transportation costs with respect to
such lots.  Without limiting Supplier’s
liability under Sections 7.1(i) and 7.1(ii), the foregoing
represents Supplier’s sole obligation with respect to Product or Component
recalls.

 

6.5                                 LIMITATIONS.  THE WARRANTY PROVIDED IN SECTION 6.1
ABOVE IS THE ONLY WARRANTY APPLICABLE TO THE PRODUCTS.  ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED.  EXCEPT WITH RESPECT TO EACH PARTY’S
CONFIDENTIALITY OBLIGATIONS UNDER SECTION 11, NEITHER PARTY WILL UNDER ANY
CIRCUMSTANCES BE LIABLE FOR ANY PUNITIVE, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES, INCLUDING LOST PROFITS OR REVENUES; AND EXCEPT WITH RESPECT TO EACH
PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 7, NEITHER PARTY’S
AGGREGATE LIABILITY UNDER THIS AGREEMENT, WHETHER BASED UPON CONTRACT, TORT, OR
OTHERWISE, SHALL EXCEED THE ACTUAL AMOUNTS PAID BY PURCHASER FOR PRODUCTS
DURING THE IMMEDIATELY PRECEDING TWELVE (12) MONTH PERIOD FROM WHEN THE CLAIM
FOR LIABILITY AROSE, REGARDLESS OF WHETHER THE PRODUCTS WERE PURCHASED DURING
SUCH PERIOD UNDER THIS AGREEMENT..

 

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6.6                                 Disputes.  If the Supplier disagrees with a claim that a
Product does not conform to the warranty provided in Section 6.1,
then the parties agree to submit the disputed Product to an independent party
which has the capability of testing the Product to determine whether or not it
does so conform.  In the event the
parties cannot agree upon such independent party, or in the event it is not
possible to acquire the services of such an independent party, then such
dispute shall be resolved pursuant to Section 14.11.  The cost of the independent testing party
shall be borne by the party against whom the testing party finds, as directed
by the testing party.

 

7.                                      Indemnification.  In order to distribute between themselves the
responsibility for third party claims arising out of this Agreement, and except
as otherwise specifically limited or provided for herein, the parties agree as
set forth in Sections 7.1  through 7.3
below:

 

7.1                                 By Supplier.  The Supplier agrees to indemnify, defend and
hold the Purchaser harmless against any and all claims, suits, proceedings,
expenses, recoveries and damages of or by third parties, including court costs
and reasonable attorneys fees and expenses, to the extent they arise out of,
are based on, or are caused by (i) any material breach by the Supplier of
its warranty provided in Section 6.1, which breach causes bodily
harm, death, or property damage, (ii) the willful misconduct or gross
negligence of the Supplier, or (iii) any claim of infringement of any
Intellectual Property Right of any third party based upon or arising out of the
Supplier’s manufacturing processes with respect to the Products except for any
such processes that were provided to Supplier by Purchaser and which Purchaser
required Supplier to use in writing.  The
Purchaser will promptly notify the Supplier of any such claim or demand which
comes to its attention.

 

7.2                                 The Purchaser.  The Purchaser agrees to indemnify, defend and
hold the Supplier harmless against any and all claims, suits, proceedings,
expenses, recoveries, and damages of or by third parties, including court costs
and reasonable attorneys fees and expenses, to the extent they arise out of,
are based on, or are caused by (i) defects or alleged defects in the
design of the Products, (ii) any allegation or claim that the design for
the Products infringes upon the Intellectual Property Rights of third parties, (iii) statements,
whether written or oral, made or alleged to be made by the Purchaser or its
Affiliates or any other party on the packaging or labeling of any of the
Products, or in the advertising, publicity, promotion, or sale of any of the
Products, (iv) the storage, sale, shipment, promotion, or distribution of
the Products (except to the extent that such claims are covered by Supplier’s
indemnity in Section 7.1), (v) the use or operation of the
Products (except to the extent that such claims are covered by Supplier’s
indemnity in Section 7.1), or (vi) any allegation or claim
that the Products are not sterile.  The
Supplier will promptly notify the Purchaser of any such claim or demand which
comes to its attention.

 

7.3                                 General.  The party claiming indemnity (the “Indemnified
Party”) shall provide the party from whom indemnity is being sought (the “Indemnifying
Party”) with reasonable assistance, at the Indemnifying Party’s expense, in
connection with the defense of the claim for which indemnity is being
sought.  The Indemnified Party may
participate in and monitor such defense with counsel of its own choosing, at
the Indemnified Party’s cost; however, the Indemnifying Party shall have the
right to assume and conduct the defense of the claim with counsel of its choice
and shall retain final decision-making authority with respect to the conduct of
the defense.  The Indemnifying 

 

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Party shall not settle any claim without the
prior written consent of the Indemnified Party, not to be unreasonably
withheld, unless the settlement involves only the payment of money by the
Indemnifying Party.  So long as the
Indemnifying Party is actively defending the claim in good faith, the
Indemnified Party shall not settle any such claim without the prior written
consent of the Indemnifying Party.  If
the Indemnifying Party does not assume and conduct the defense of the claim as
provided above, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to the
claim in any manner the Indemnified Party may deem reasonably appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith) and (ii) the Indemnifying
Party will remain responsible to indemnify the Indemnified Party as provided in
this Section 7.

 

8.                                      Insurance.

 

8.1                                 Each party
agrees to procure and maintain in full force and effect during the term of this
Agreement and for three years thereafter valid and collectible insurance
policies in connection with the supply and sale of Products pursuant to this
Agreement and provide; (i) for commercial general liability coverage in
the amount of $1,000,000 each occurrence and $2,000,000 general aggregate
excluding Products and Completed Operations coverage and written on an
occurrence basis and, (ii) Products and Completed Operations coverage in
the amount of $5,000,000 per occurrence, $10,000,000 in the aggregate and
written on a claims made basis.  Such
policies shall endeavor to provide for thirty (30) days written notice of
cancellation to the other party.  Upon
either party’s request, the other party shall provide to the requesting party a
certificate of insurance coverage.

 

9.                                      Trademarks;
Use of Supplier Name.

 

9.1                                 Trademarks.  For purposes of this Section 9.1,
“Trademark” shall mean the Purchaser’s trademarks that are associated
with the Products and which are approved by Purchaser for use by Supplier in
the manufacture of the Products.  In
consideration of the fees set forth herein, Purchaser further grants to
Supplier a non-exclusive license during the Term to use the Trademarks on and
solely in connection with the manufacture of the Products, and for this purpose
to affix, subject to Purchaser’s prior written approval, the Trademarks to or
on the Products and to or on any packaging materials used in connection with
the Products.  Any and all uses of the
Trademarks shall be subject to the prior written approval of Purchaser.  Supplier shall not remove trademark notices
from any Product or component thereof without the prior written consent of
Purchaser.  Supplier shall not use the
name, Trademarks or logos associated with the Products in its business name or
in any manner other than as specified in this Section.  Purchase shall have and retain ownership of
all Trademarks.  The Purchaser acknowledges
that such trademark ownership rights do not extend to the Supplier’s
proprietary formulae, processes, or other written proprietary information that
Supplier has trademark ownership or rights to as of the Effective Date.

 

9.2                                 Use of Name.  Unless legally required by applicable law,
neither party shall use the other party’s name in its advertising or elsewhere,
without the prior written approval of the other party.

 

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10.                               Intellectual
Property; Tooling.

 

10.1                           Intellectual
Property Rights Generally.  Each
party shall retain sole ownership of, and all Intellectual Property Rights to,
any Intellectual Property of any kind owned by that party as of the Effective
Date.

 

10.2                           Supplier
Technology.  “Supplier
Technology” shall mean all Intellectual Property Rights, assembly techniques
and related know-how developed or otherwise owned by Supplier and used in the
assembly of the Products.  For the
avoidance of doubt, “Supplier Technology” shall not include—and this Agreement
shall not confer upon Purchaser any right or license to use—any techniques and
related know-how associated with any component manufacturing processes that precede
the assembly of the Products.  For the
further avoidance of doubt, and by way of example and not of limitation, “Supplier
Technology” shall not include—and this Agreement shall not confer upon
Purchaser any right or license to use—the following confidential manufacturing
techniques, which shall remain the sole and exclusive property of Supplier:

 

·                  Nitinol Coil
Winding process

·                  Stainless Steel
Coil Winding process

·                  Nitinol etching

·                  Core wire
(delivery wire) tapering

 

10.3                           Purchaser
Technology.  “Purchaser
Technology” shall mean Confidential Information that is the property of
Purchaser and also all inventions, designs, drawings, specifications, and
know-how related to the Products, all improvements to the Products (whether
developed by Purchaser or Supplier, or jointly by the parties), and all
Intellectual Property Rights related to any of the foregoing.  Notwithstanding the foregoing provisions of
this Section 10.3, Purchaser Technology shall not include any
techniques and related know-how developed or otherwise owned by Supplier and
associated with any component manufacturing processes that precede the assembly
of the Products.

 

10.4                           Intellectual
Property.  For the
purposes of this Agreement, the term “Intellectual Property” means
inventions, works of authorship, improvements, developments, or innovations and
other creative works (whether or not patentable or copyrightable, conceived or
made or reduced to practice), know-how, technical information, pending patent
applications, registrations, divisions and continuations thereof, registered
and unregistered copyrights, and all associated goodwill, designs, drawings,
specifications, manufacturing methods and processes.

 

10.5                           Intellectual
Property Rights.  The term “Intellectual
Property Rights” shall mean all patent rights, 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.

 

10.6                           Grant of
License to Supplier.  Purchaser
hereby grants to Supplier a non-exclusive license to use all of Purchaser’s
Intellectual Property Rights related to the Products solely for the purpose of
Supplier’s manufacture and repair of Products at the request of Purchaser and
otherwise carrying out its obligations under this Agreement.  For clarity, nothing in this Agreement
prohibits 

 

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Supplier from using in its business general
concepts, techniques and ideas that are not eligible for protection under any
Intellectual Property Rights whether or not in connection with this Agreement.

 

10.7                           Grant of
License to Purchaser.  To the
extent that any Supplier Technology or related Intellectual Property Rights are
necessary or useful for the development or assembly of Purchaser products,
Supplier hereby grants to Purchaser a non-exclusive, perpetual, irrevocable,
royalty free license to use such Supplier Technology and related Intellectual
Property Rights solely for the purpose of assembling and repairing Products and
successor Purchaser products, which license includes the right to sublicense
the foregoing rights to third parties to enable such third parties to assemble
and repair such products on behalf of Purchaser.  Further, for the avoidance of doubt, such
license shall not include any right or license to use and this Agreement shall
not confer upon Purchaser any rights whatsoever regarding pre-assembly component
manufacturing techniques, as further described in the definition of Supplier
Technology above.

 

10.8                           Retention of
Intellectual Property Rights.  The parties agree that Supplier shall be
entitled to retain sole and exclusive ownership rights to the Supplier
Technology, and Purchaser shall be entitled to retain sole and exclusive
ownership rights to the Purchaser Technology. 
Supplier hereby assigns all Intellectual Property Rights it may have or
acquire in any Purchaser Technology to Purchaser and shall execute any
documents reasonably requested by Purchaser and take such other actions as may
be reasonably requested by Purchaser, at Purchaser’s expense, to assign such
rights to Purchaser to perfect Purchaser’s interest in such rights.  Purchaser hereby assigns all Intellectual
Property Rights it may have or acquire in any Supplier Technology (if any) to
Supplier and shall execute any documents reasonably requested by Supplier and
take such other actions as may be reasonably requested by Supplier, at Supplier’s
expense, to assign such rights to Supplier to perfect Supplier’s interest in
such rights.

 

10.9                           Future
Development of Finished Goods or Component Processes.  Purchaser may request that Supplier provide
development services for Supplier to create new pre-assembly component
manufacturing techniques (“Pre-Assembly Manufacturing Technology”).  If the parties mutually agree to undertake
such new development project then Purchaser upon full payment of the agreed to
fees shall be granted a non-exclusive, royalty free, perpetual license to use
such new Pre-Assembly Manufacturing Technology. 
For clarity, the term “Pre-Assembly Manufacturing Technology” does not
include any Supplier Technology. 
Purchaser obtains a limited, restricted license to Supplier Technology
without payment of any fees in accordance with, and subject to the limitations
and restrictions of Section 10.7.

 

10.10                     General Skills.  Subject to Section 11 of this
Agreement and all of Purchaser’s Intellectual Property Rights, Purchaser
acknowledges and agrees that: (i) Supplier is in the business of
designing, developing, manufacturing, prototyping and assembling metal and
plastic components for specialized medical devices, and that Supplier may
develop products, devices, instruments or other items for other persons which
are identical or similar in functionality to the Products; (ii) Supplier,
its employees and agents shall be free to use and employ their general skills,
know-how, and expertise, and to use, disclose, and employ any generalized
ideas, concepts, know-how, methods, techniques, processes or skills gained or
learned during the course of this Agreement; and 

 

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(iii) Supplier may perform similar services
for third parties using the same personnel that Supplier may utilize for
rendering services for Purchaser hereunder.

 

10.11                     Tooling and
Equipment.  Supplier
shall provide tooling that is not specific to the Product at its own
expense.  Purchaser shall pay for or
obtain and consign to Supplier for its use any Product-specific tooling and
other reasonably necessary non-recurring expenses specific to the Product, as
such tooling and expenses are described on Exhibit B (as updated by
the parties) or otherwise approved in writing by Purchaser (“Set-Up Property”).  Purchaser shall own title to all Set-Up
Property.  Supplier shall hold and
maintain all Set-Up Property for Purchaser and shall exercise reasonable care
in the use and custody of such property and shall use such property only in
performing its obligations under this Agreement.  Purchaser will bear responsibility for repair
to Set-Up Property resulting from normal wear and tear.  Supplier will bear responsibility for loss of
or damage to Set-Up Property resulting from Supplier’s negligence.  Supplier will mark all Set-Up Property to
clearly identify it as being the property of Purchaser.  Supplier shall not grant any security
interest, incur any liens or any other encumbrances on said Set-Up Property.  Upon any termination or expiration of this
Agreement or upon Purchaser’s written request, Supplier will promptly return
all Set-Up Property in good and workable condition, with the exception of
normal wear and tear, to a location identified by Purchaser at Purchaser’s
cost.  Supplier agrees that equipment
used to manufacture Product shall be calibrated and traceable to NIST
standards, and be validated as appropriate.

 

11.                               Confidentiality;
Press Releases.

 

11.1                           Confidentiality.  The Purchaser and the Supplier will be
exchanging Confidential Information (as defined herein) relating to the
Products and their manufacture, and relating to the services provided by
Supplier pursuant to Exhibit C, at the inception of and from time
to time during the term of this Agreement and the Purchaser may have access to
or observe the Confidential Information of Supplier.  For the purposes of this Agreement, “Confidential
Information” means any and all information or proprietary materials (in
every form and media) not generally known in the relevant trade or industry
made available by either party (in such case, the “Disclosing Party”) to
the other (in such case, the “Receiving Party”) in connection with the
efforts contemplated hereunder and which is marked or otherwise identified as
confidential or which by its nature would reasonably be considered to be
confidential, including (i) all Intellectual Property, (ii) existing
or contemplated products, services, designs, inventions, technology, processes,
technical data, engineering, techniques, methodologies and concepts and any
information related thereto, information relating to business plans, sales or
customer lists or requirements, 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 or methods. 
Notwithstanding the foregoing, each party acknowledges that any and all
information concerning the other party’s Intellectual Property is confidential
and that no further writing designating it as such is necessary.  The Receiving Party will maintain the
information in confidence using the same standard of care it uses to maintain
its own information in confidence, but in any case, no less than reasonable
commercial diligence, and will not use such information for itself or disclose
it to others except as necessary to fulfill its obligations or exercise its rights
under this Agreement; provided 

 

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that the Receiving Party shall not disclose
the Disclosing Party’s Confidential Information to any employee or third party
unless such employee or third party is under a duty of confidentiality with
respect to such information at least as protective as the duty set forth in
this section, except as provided in Exhibit C.  Such obligation of confidentiality and
non-use shall not apply to information which (i) is known to the Receiving
Party prior to the disclosure as demonstrated by documentary evidence, (ii) is
publicly known as of the date of the disclosure, (iii) becomes publicly
known after the date of disclosure through no fault of the Receiving Party, (iv) is
received from a third party who has, to the Receiving Party’s knowledge, no
obligation of confidentiality to the Disclosing Party or (v) is developed
independently by the Receiving Party as demonstrated by documentary
evidence.  Such obligation of
confidentiality and non-use shall survive any expiration or termination of this
Agreement.  The restrictions on
disclosure contained in this Section 11.1 shall not apply to any
information which is required to be disclosed by court rule or
governmental law or regulation, provided that the Receiving Party gives the
Disclosing Party prompt notice of any such requirement and cooperates with the
Disclosing Party, at the Disclosing Party’s expense, in attempting to limit
such disclosure.

 

11.2                           Intentionally
Deleted

 

11.3                           Publicity.  Unless required by law, neither party will
originate any publicity, news release, or other public announcement, written or
oral, whether to the public, press or otherwise, relating to this Agreement or
any amendment hereto or to performance hereunder or the existence of an
arrangement between the parties, without the prior written approval of the
other party, such approval not to be unreasonably withheld.

 

11.4                           Use of Names in
Promotions.  Neither
party shall use the name of the other for advertising or promotional claims
without the prior written consent of the other party.

 

11.5                           Damages
Inadequate.  The parties
acknowledge that monetary damages may be an inadequate remedy for any breach by
a party of its obligations under Section 10.1 and Sections 11.1
through 11.3 and that the non-breaching party shall be entitled to seek
injunctive relief and specific performance to enforce the breaching party’s
obligations, in addition to whatever remedies the non-breaching party may be
entitled to.

 

11.6                           Return.  Each party shall return all Confidential
Information of the other party in its possession within ten (10) days
after any expiration or termination of this Agreement or otherwise upon the
other party’s request.

 

12.                               Term
and Termination.

 

12.1                           Term; Renewal.  Unless sooner terminated as provided in Section 12.2
below, this Agreement shall have a term commencing on the Effective Date and
expiring on May 31, 2012, and the term of this Agreement shall be
automatically renewed for successive one (1) year terms thereafter.  The initial term together with any renewal
terms are the “Term.”

 

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12.2                           Termination.  This Agreement may be terminated:

 

(a)                                  upon written
notice by a party to the other party, if the other party becomes subject to a
Bankruptcy Event or commits an Event of Default (as defined in Section 13
below); or

 

(b)                                 by written
notice from the Purchaser to the Supplier in accordance with Section 5.2.

 

(c)                                  by 12 months
written notice by either party on or after June 1, 2011.

 

12.3                           Effect of
Termination.  Upon any
expiration or termination of this Agreement the provisions of Sections  1,
5.3, 5.4, 5.5, 6, 7, 8, 10, 11,
12.3, and 14 shall survive such termination and expiration.

 

13.                               Default.

 

13.1                           Rights Upon an
Event of Default.  Upon the
occurrence of an Event of Default (as defined below) under this Agreement, in
addition to whatever other remedies the non-defaulting party may be entitled
to, the non-defaulting party may terminate this Agreement upon written notice
to the defaulting party stating the grounds for such default.  The occurrence of any one or more of the
following acts, events or occurrences shall constitute an “Event of Default”
under this Agreement:

 

(a)                                  either party
becomes the subject of a Bankruptcy Event; or

 

(b)                                 the Purchaser
fails to make undisputed payments of the Purchase Price when due and such
failure continues for ninety (90) days; provided that Supplier may suspend
performance under this Agreement in the event Purchaser fails to make
undisputed payment of the Purchase Price when due and such failure continue for
thirty (30) days; or

 

(c)                                  either party
breaches any other material provision of this Agreement and fails to remedy
such default within sixty (60) days after receipt of written notice thereof,
which notice shall state, with particularity, the grounds for such claimed
default.

 

(d)                                 Purchaser fails
to purchase the annual minimum Product volumes as detailed in Section 2.2
of this Agreement and does not, within thirty (30) days after Purchaser’s
receipt of written notice from Supplier that Purchaser has failed to make such
purchases, order the number of Products necessary to remedy such failure.

 

13.2                           Rights Upon
Certain Supplier Defaults.  Purchaser’s
obligation to make the minimum purchase requirements specified in Section 2.2
for each Contract Year is subject to Supplier meeting the following criteria:

 

Supplier has no more than one (I) Delivery Failure (as defined
below) during 

 

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any rolling twelve (12) month period and no such failure during the six
(6) months prior to the beginning of the next Contract Year.  A “Delivery  Failure” occurs
when Supplier delivers less than ninety five (95%) of the Product quantity
specified on a purchase order provided by Purchaser on the Delivery Date
specified on such purchase order with the remaining quantity not delivered
within fifteen (15) days after such Delivery Date.

 

If a Delivery Failure occurs
more then one (1) time in any rolling twelve (12) month period, or if a
Delivery Failure occurs during the three (3) months prior to the beginning
of the next Contract Year, such occurrence will be a “Delivery Default.”
In the event of a Delivery Default, and without limiting Purchaser’s other
rights and remedies under this Agreement or at law, the minimum purchase
requirements specified in Section 2.2 shall, on a go forward basis after
the occurrence of a Delivery Default, be reduced on a one-for-one basis by the
number of Products not delivered by Supplier in accordance with Purchaser’s
Purchase Orders during the remainder of the Term, including the Purchaser
Orders associated with the Delivery Default. 
Notwithstanding the foregoing, any Delivery Failure caused by (i) Force
Majeure events per Section 14.6 or (ii) Supplier’s continued
use of an Approved Supplier at the direction of Purchaser, provided that (x) Supplier
had notified Purchaser in accordance with Section 14.7 during the
six (6) month period immediately prior to the applicable Delivery Failure
that such Approved Supplier was not performing adequately and (y) Supplier
sought approval from Purchaser to begin the process of seeking an Alternate
Supplier, then such Delivery Failure shall not be included in any determination
of whether a Delivery Default has occurred.

 

14.                               Miscellaneous.

 

14.1                           Independent
Contractor Status.  The
relationship between the Supplier and the Purchaser established hereby is that
of independent contractors, and nothing contained herein shall be deemed to
create a relationship of employer and employee, principal and agent, partners,
or otherwise.  Neither party shall have
any authority to obligate the other in any respect nor hold itself out as
having any such authority.  All personnel
of the Supplier shall be solely employees of the Supplier and shall not
represent themselves as employees of the Purchaser, and all personnel of the
Purchaser shall be solely employees of the Purchaser and shall not represent
themselves as employees of the Supplier.

 

14.2                           Binding Effect;
Benefits; Assignment This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective permitted successors and
assigns.  Nothing contained herein shall
give to any other person any benefit or any legal or equitable right, remedy or
claim.  Any assignment of this Agreement
by either party shall require the prior written consent of the other party
which shall not be unreasonably withheld; provided that (i) a change in
ownership of a party’s stock or other ownership interest, or of any stock or
ownership interest in any entity which, directly or through one or more
intermediaries, controls the party, shall not constitute an assignment of this
Agreement or require the other party’s consent, and (ii) either party may
assign this Agreement to a purchaser of such party’s business (whether through
a sale of all or substantially all of such party’s assets, merger,
consolidation, reorganization, or similar transaction) upon written notice to
the other party; provided further that, in each case, if any such change in 

 

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ownership interests would result in Supplier
being owned or controlled by a Competitor, Purchaser may elect to terminate
this Agreement in connection with such change in Supplier’s ownership as of the
date specified in Purchaser’s notice of termination.  Any assignment of this Agreement shall be
subject to the assignee agreeing in writing to assume the benefits and
obligations of this Agreement.  Any
attempt to assign this Agreement in violation of this section shall be null and
void.

 

14.3                           Entire
Agreement; Amendments.  The
parties hereto acknowledge that this Agreement sets forth the entire agreement
and understanding of the parties hereto as to the subject matter hereof, and
shall not be subject to any change or modification except by the execution of a
written instrument signed by the parties hereto.  To the extent of any conflict or
inconsistency between this Agreement and any Purchase Order, confirmation,
acceptance or any similar document, the terms of this Agreement shall govern.  The parties agree that this Agreement
supersedes the November 7, 2005 Agreement and that any claims arising with
respect to the Products, regardless of when such Products were purchased by
Purchaser, including warranty claims and claims for indemnification, shall be
subject to the terms and conditions of this Agreement and shall not be subject
to the terms and conditions of the November 7, 2005 Agreement.

 

14.4                           Severability.  In the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.  Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.

 

14.5                           Remedies.  Unless otherwise expressly provided, all
remedies hereunder are cumulative, are in addition to any other remedies
provided for by law and may, to the extent permitted by law, be exercised
concurrently or separately, and the exercise of any one remedy shall not be
deemed to be an election of such remedy or to preclude the exercise of any
other remedy.

 

14.6                           Force Majeure.  The obligations of the Supplier and the
Purchaser hereunder (except for the Purchaser’s obligations to make payment in
fill] for Products when due) shall be subject to any delays or non-performance
caused in whole or part by any act of God; extraordinary acts of any government
or any agency or subdivision thereof; fire; strikes (excluding strikes by
Supplier’s workforce); war; transportation delays affecting the general public;
riots or acts of a public enemy; terrorist acts; and similar events; in each
case that are not caused by any act or omission of the affected party and that
are beyond the reasonable control of such party.  The party which is not performing its
obligations under this Agreement as a result of an event of force majeure shall
use diligent efforts to resume compliance with this Agreement as soon as
possible.  Should the event of force
majeure continue unabated for a period of sixty (60) days or more, the parties
shall enter into good faith discussions with a view to alleviating its affects
or to agreeing upon such alternative arrangements as may be fair and reasonable
having regard to the circumstances prevailing at that time, provided that
Purchaser may at any time after such sixty (60) day period terminate this 

 

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CONFIDENTIAL TREATMENT REQUESTED

 

Agreement, without liability to Supplier,
provided that upon such termination Conceptus shall purchase all completed
Product inventory and Product components that exist at the time of termination
and that meet the Specifications.  For
clarity, Conceptus shall not be obligated to purchase an amount of Products (or
components thereof) that exceeds the amount of the Product Purchase
Requirement.

 

14.7                           Notices.  Any notice, request, consent or communication
(collectively, a “Notice”) under this Agreement shall be effective if it
is in writing and (i) personally delivered, (ii) sent by certified or
registered mail, postage prepaid, return receipt requested, (iii) sent by
an internationally recognized overnight delivery service, with delivery
confirmed, or (iv) telexed or telecopied, with receipt confirmed,
addressed as set forth in this Section or to such address as shall be
furnished by either party hereto to the other party hereto.  A Notice shall be deemed to have been given
as of (i) the date when personally delivered, (ii) when received if
delivered by the United States Postal Service, certified or registered mail,
properly addressed, return receipt requested, postage prepaid, or by overnight
delivery service, or (iii) immediately, upon confirmation of receipt of
the telex or telecopy, as the case may be. 
All Notices shall specifically state: the provision (or provisions) of
this Agreement with respect to which such Notice is given and shall be addressed
as follows:

 

	
  If to the Supplier to:

   

  Accellent Inc. 

  100 Fordham Road 

  Wilmington, MA 01887 

  ATTN: Executive VP
  Sales & Marketing

  	
   

  	
  If to the Purchaser to:
  

   

  Conceptus, Inc. 

  331 East Evelyn Avenue
  Building C 

  Mountain View, CA 94041

  
	
   

  	
   

  	
   

  
	
  with a copy to:

   

  Accellent Inc. 

  100 Fordham Road 

  Building C 

  Wilmington, MA 01887 

  ATTN: General Counsel

  	
   

  	
  with a copy to: 

   

  J.D. Marple, Esq. 

  Latham &
  Watkins LLP 

  140 Scott Drive 

  Menlo Park, CA 94025

  

 

14.8                           Waivers.  The failure of either party to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition by the other party.

 

14.9                           Counterparts.  This Agreement may be executed in any number
of counterparts, and execution by each of the parties of any one of such
counterparts will constitute due execution of this Agreement.  Each such counterpart hereof shall be deemed to
be an original instrument, and all such counterparts together shall constitute
but one agreement.

 

20

 

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14.10                     Headings.  The article and section headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.

 

14.11                     Governing Law;
Dispute Resolution.  This
Agreement shall be construed, governed, interpreted and applied in accordance
with the laws of the State of Delaware, without regard to the conflict of law
principles of such State.  Any
controversy or claim arising out of or relating to this Agreement or the
validity, inducement, or breach thereof (each such controversy or claim is
hereinafter referred to as a “Dispute”), shall be settled as follows:

 

(e)                                  Officers at or above the
Vice President level of each party shall attempt to resolve any Dispute prior
to commencing the procedures set forth in below.

 

(f)                                    If after 14 calendar days
the officers are unable to resolve the Dispute, the Chief Executive Officer and
for the highest ranking officer of each party shall submit to non-binding
mediation which shall take place for a period of one day in San Carlos, CA
before a mediator that is knowledgeable about the subject matter of the Dispute
and that is mutually acceptable to the parties. 
If the parties are unable to agree on the selection of a mediator, a
mediator will be chosen by an arbitrator selected pursuant to the rules of
the American Arbitration Association (AAA) who will then select such mediator
from a list of distinguished neutral mediators maintained by the AAA.  The mediator shall confer with the parties to
design procedures to conclude the mediation within no more than 30 days after
initiation.  Under no circumstances shall
the commencement of arbitration under paragraph (c) below be delayed more
than 30 days from the initial notice of a Dispute by the mediation process
specified in this paragraph (b).  Each
party has the right to pursue any provisional relief from the appropriate
court, such as attachment, preliminary injunction, replevin, etc.  to avoid irreparable harm, maintain the
status quo, or preserve the subject matter of the mediation or arbitration,
even though mediation or arbitration has not been commenced or completed.  Disputes with respect to a party’s
obligations or rights under Section 10 or Section 11
shall not be subject to this Section 14.

 

(g)                                 If during such one-day
mediation the parties are unable to resolve the Dispute, the Dispute shall be
settled by arbitration before a single arbitrator in accordance with the
Commercial Arbitration Rules of the AAA then pertaining, except where
those rules conflict with this Section 14.11, in which case
this Section 14.11 controls. 
The parties hereby consent to the jurisdiction of the Federal District
Court in San Francisco, CA and the state courts of California for the
enforcement of these provisions and the entry of judgment on any award rendered
hereunder.  Should such court for any
reason lack jurisdiction, any court with jurisdiction shall enforce this clause
and enter judgment on any award.  The
arbitrator shall be an attorney specializing in business litigation who has at
least 15 years of experience with a law firm or corporation of over 25 lawyers
or was a judge of a court of general jurisdiction.  The arbitration shall be held in San Carlos,
CA and the arbitrator shall apply the substantive law of Delaware, except that
the interpretation and enforcement of this arbitration provision shall be
governed by the Federal Arbitration Act. 
Within 30 days of initiation of arbitration, the parties shall reach
agreement upon and thereafter follow procedures assuring that the arbitration
will be concluded and the award rendered within no more than three (3) months
from selection of the arbitrator. 
Failing such agreement, the AAA will design 

 

21

 

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CONFIDENTIAL TREATMENT REQUESTED

 

and the parties will follow such procedures.  Consistent with the limitations on liability
provided in Section 6.3, the parties agree neither to request or
seek to enforce any punitive, exemplary or consequential damages from the
arbitrator and the arbitrator shall not be empowered to grant any such
damages.  The arbitrator shall issue
written findings of fact and conclusions of law.

 

(h)                                 The arbitrator shall be
bound by the express terms of this Agreement and may not amend or modify such
terms in any matter.  Any award rendered
by the arbitrator shall be binding on the parties and shall be consistent with
the terms of this Agreement, and such terms shall control the rights and
obligations of the parties.  The
proceedings shall be confidential and the arbitrators shall issue appropriate
protective orders to safeguard both parties’ confidential information.  The fees of the arbitrator shall be split
equally between the parties, unless the arbitrator determines that either party’s
positions in the dispute were frivolous or based in bad faith, in which case
such party shall pay the entire arbitrator’s fee.

 

IN WITNESS WHEREOF, duly authorized representatives
of the parties hereto have duly executed this Supply Agreement as of the date
first above written.

 

	
  SUPPLIER  

  	
   

  	
  PURCHASER  

  
	
   

  	
   

  	
   

  
	
  Accellent, Inc. 

  	
   

  	
  Conceptus, Inc. 

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ R. Scott Laneve 

  	
   

  	
  By: 

  	
  /s/ Gregory E.
  Lichtwardt 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  R. Scott Laneve 

  	
   

  	
  Name: 

  	
  Gregory E. Lichtwardt 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title: 

  	
  Sup., Sales &
  Marketing 

  	
   

  	
  Title: 

  	
  Executive Vice President
  

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: 

  	
  June 1, 2009

  	
   

  	
  Date: 

  	
  June 1, 2009

  

 

22

 

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EXHIBIT
A

PRODUCTS

 

ESS305
With Solder Ball Anchor

 

23

 

CONFIDENTIAL

CERTAIN INFORMATION HAS
BEEN REDACTED

CONFIDENTIAL TREATMENT
REQUESTED

 

EXHIBIT
B

 

PRODUCT
PRICES

 

Pricing: Pricing will
be set at a base price of $[***] per Product as of the Effective Date and will
be further discounted (through a rebate at the end of each Contract Year) based
on purchase volume and share in accordance with this Exhibit B.

 

Cost Savings.  As of the Effective Date and during the Term,
with respect to any gainsharing projects that result in a cost savings, such
cost saving will be applied as detailed in Section 3.1.1.  Any such cost reduction implemented shall be
applied to the $[***] base price as well as to the Product price after the
implementation of any rebate in accordance with Chart 2.  (For example, if it is expected that a
gainsharing program may result in a total cost reduction of $[***] per Product
and both parties have funded such gainsharing program, each will see a benefit
of $[***].  When such a cost reduction is
implemented, the $[***] base price will be adjusted to $[***] and the Year 1
rebate price will be adjusted to $[***]. 
This is an example only.  Actual
cost savings will always be used to adjust the applicable base price or rebate
price.)

 

Rebate Qualification: In order to
qualify for a rebate, Purchaser must meet the minimum unit volumes (#)described
in Chart 1, Rebate Qualification, as follows:

 

Chart
1: Rebate Qualification

 

	
  Criteria

  	
   

  	
  Contract

  Year 1

  	
   

  	
  Contract

  Year 2

  	
   

  	
  Contract

  Year 3

  
	
  a. Minimum Units (#)

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

Rebate to Price: If qualified
for a rebate based on meeting the criteria described above, Purchaser will be
eligible for a rebate in accordance with chart below based on the volume of
Products purchased during a Contract Year, The rebate will apply to the entire
volume of Products purchased during the applicable Contract Year, based on the
total number of Products purchased within such Contract Year, and will yield
the net prices described in Chart 2, Net Pricing, as follows:

 

Chart
2: Net Pricing

Accellent
Base Price/Product Price after Rebate

 

	
  Volume Purchased

  	
   

  	
  Year 1

  	
   

  	
   

  
	
  < 85,000 Base Price

  	
   

  	
  $

  	
  [***]

  	
   

  	
   

  
	
  > 85,001

  	
   

  	
  $

  	
  [***]

  	
   

  	
   

  

 

	
  Volume Purchased

  	
   

  	
  Year 2

  	
   

  	
  Year 3

  
	
  < 93,000 Base
  Price

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  
	
  93,001-120,000

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  
	
  > 120,001

  	
   

  	
  $

  	
  [***]

  	
   

  	
  $

  	
  [***]

  

 

24

 

CONFIDENTIAL

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CONFIDENTIAL TREATMENT
REQUESTED

 

Payment
of Rebate.  Supplier
shall pay to Purchaser the amount of the rebate owed to Purchaser (i.e., the
difference between (i) the amount Purchaser paid for Products during such
Contract Year and (ii) the amount that is equal to the sum of the number
of Products purchased during such Contract Year and the net price of such
Products after the rebate for such Contract Year has been applied) within
thirty (30) days after the end of the Contract Year for which such rebate is
applicable.

 

Chart
3: Component Prices

 

	
  Part

  Number

  	
   

  	
  Description

  	
   

  	
  Price

  	
   

  
	
  101466-02

  	
   

  	
  Inner Coil

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  101484

  	
   

  	
  Outer Coil (etched)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  101484

  	
   

  	
  Outer Coil (unetched)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  101468

  	
   

  	
  Delivery Wire

  	
   

  	
  $

  	
  [***]

  	
   

  

 

25

 

CONFIDENTIAL

CERTAIN INFORMATION HAS
BEEN REDACTED

CONFIDENTIAL TREATMENT
REQUESTED

 

EXHIBIT
C

 

QUALITY
ASSURANCE PROCEDURES

 

Supplier shall manufacture
Products per the requirements specified in the Purchase Orders, the
Specifications, the Agreement, and any inspection and process control criteria
provided by Purchaser to Supplier.

 

Supplier shall obtain
Purchaser’s written approval of all materials, processes, methods, and
equipment used to manufacture Products, and shall not deviate from such use
without Purchaser’s prior written approval. 
At all times Purchaser shall be required to maintain such information in
the strictest confidence per Section 11, except that the clause in Section 11
which would otherwise permit certain disclosures to third parties who are under
a duty of confidentiality shall not apply with regard to any Confidential
Information related to Supplier’s component manufacturing processes or
techniques (“Component Manufacturing Information”).  By way of example and not of limitation, for
the avoidance of doubt, Purchaser shall not, at any time or for any reason,
communicate any Component Manufacturing Information to any third party manufacturer
(or its agents, affiliates or contractors), without the prior written approval
of Supplier.  For clarity, Component
Manufacturing Information does not include any Supplier Technology and nothing
in this Exhibit C limits Purchaser’s right to exercise its license
to Supplier Technology set forth in Section 10.7 of the Agreement.

 

Supplier’s manufacturing
processes shall at all times conform to the current good manufacturing
practices of the Regulatory Authority, as well as all other regulatory
requirements and guidelines of the Regulatory Authority.  Supplier shall maintain an FDA site
registration number during the term of the Agreement.

 

Without limiting Supplier’s
other obligations under the Agreement, Supplier shall perform the following
functions in connection with its manufacture of the Products:

 

2.             Supplier shall ensure component and material
traceability for Products by establishing and maintaining documented procedures
for identifying materials from receipt through all stages of production and delivery.

 

3.             Supplier shall ensure that production processes are
carried out under controlled conditions that include:

 

·                  Documented procedures defining the manner of
production,

·                  Use of production equipment and a controlled
working environment that meet or exceed industry standards,

·                  Compliance with the Food and Drug
Administration (“FDA”) Quality System Regulations and all applicable
international Quality Management System Standards,

·                  Monitoring and control of process parameters
and Product characteristics,

·                  Approval of all processes and equipment prior
to use,

·                  Assignment of only trained, qualified
personnel to perform manufacturing operations,

 

26

 

CONFIDENTIAL

CERTAIN INFORMATION HAS
BEEN REDACTED

CONFIDENTIAL TREATMENT
REQUESTED

 

·                  Specification of workmanship criteria that
meet or exceed written standards from Purchaser, which criteria shall be
specified and communicated to workers clearly (e.g.  written standards, representative samples, or
illustrations),

·                  Maintenance of equipment in a manner that
meets or exceeds industry standards and ensures continuing process capability.

·                  The inspection and test status of materials
shall be clearly identified, which status shall indicate the conformance or
non-conformance of materials with regard to inspections and tests
performed.  Records of the identification
of inspection and test status shall be maintained as defined in documented
procedures and the Agreement.

 

4.             Supplier shall establish and maintain documented
procedures for inspection and testing activities in order to verify that the
specified requirements for the materials are met.  The required inspection and testing, and the
records to be established, shall be detailed in a quality plan or documented
procedures.

 

5.             Supplier shall ensure that incoming material is not used
or processed until it has been inspected or otherwise verified as conforming to
specified requirements.  Verification of
the specified requirements shall be in accordance with documented procedures.

 

6.             Supplier shall inspect and test the Products as required
by the Quality Requirements Specification and documented procedures.

 

7.             Supplier shall not ship completed Products until the
required inspection and tests have been completed or necessary reports have
been received and verified.

 

8.             Supplier shall carry out all final inspection and
testing in accordance with the Quality Requirements Specification and
documented procedures to complete the evidence of conformance of the finished
materials to the Specifications and other requirements.

 

9.             The documented procedures for final inspection and
testing shall require that all inspections and tests, including those specified
either upon completion of Product or in-process, have been carried out and that
the results meet the Specifications and other requirements.

 

10.           No Products shall be shipped to Purchaser until all the
activities specified in this Exhibit C and the documented procedures have
been satisfactorily completed and the associated data and documentation are
available and have been reviewed for compliance with the Specifications and
other requirements and authorized.

 

11.           Supplier shall establish and maintain records that provide
evidence that the Product has been inspected and tested.  These records shall clearly identify whether
a Product has passed or failed the inspections and tests according to defined
acceptance criteria.  Where the Product
fails to pass any inspection or test, the procedure for control of
non-conforming Product shall apply.  The
responsibility for release of Products for shipment shall be identified and
recorded.

 

12.           Supplier shall establish and maintain
documented procedures to control, calibrate, and maintain inspection, measuring
and test equipment used by Supplier’s subcontractors (which subcontractors must
be approved in writing by Purchaser prior to their use by Supplier) to 

 

27

 

CONFIDENTIAL

CERTAIN INFORMATION HAS
BEEN REDACTED

CONFIDENTIAL TREATMENT
REQUESTED

 

demonstrate
the conformance of Products or Product components to the specified
requirements.  Inspection, measuring and
test equipment shall be used in a manner which ensures that the measurement
uncertainty is known and is consistent with the required measurement
capability.

 

13.           Supplier shall specify, subject to Purchaser’s approval,
the measurements to be made and the accuracy required with respect to
inspections and testing and shall select, subject to Purchaser’s approval, the
appropriate inspections and tests. 
Supplier shall ensure that all measuring and test equipment is capable
of the necessary accuracy and precision. 
Supplier shall also calibrate all inspection, measuring and test
equipment at prescribed intervals as necessary to ensure such equipment can
accurately and correctly inspect, measure and test Products and Product
components.

 

14.           Supplier shall establish and maintain documented
procedures to ensure that Products that do not conform to specified
requirements, including the Specifications, are not shipped to Purchaser.  This procedure shall provide for identification,
documentation, evaluation, segregation, disposition of non-conforming Product,
and for notification of Purchaser with respect to such Products.  The responsibility for review and authority
for the disposition of non-conforming Product shall be defined in the
Procedures.  Non-conforming Products may
be disposed of in accordance with the following procedures:

 

·                  They may be, upon Purchaser’s prior written
approval, (a) reworked to meet specified requirements, including the
Specifications, (b) accepted with or without report by concession, (c) regarded
for alternative applications (e.g., DEMO), or (d) scrapped.

·                  Reworked Products shall be re-inspected to
original Specifications and in accordance with the documented procedures.

 

15.           Supplier shall adhere to requirements of Purchaser’s Corrective
and Preventive Action Program (CAPA) of identified non-conformances affecting
Product and/or processes under control of Supplier.

 

16.           All procedures, processes, and functions described above
in this Exhibit C (collectively, “Processes”) shall be subject to
Purchaser’s review, approval and audit (as described in Section 5.1).  In the event Purchaser discovers a deficiency
in a Process, Purchaser shall provide notice of such deficiency and shall
suggest measures to remedy such deficiency to Supplier in writing.  Supplier shall provide Purchaser with a plan
to remedy such deficiency within five (5) days after Purchaser’s notice,
and Supplier shall remedy such deficiency within fifteen (15) days after
Purchaser’s approval of such plan, such approval not to be unreasonably
withheld, unless another time period is agreed by the parties.

 

17.           Supplier shall provide Purchaser access to the following
in connection with Purchaser’s review of the Processes:

 

·                  Assembly Processes (including Supplier
Technology)

·                  Inspection Procedures

·                  Traceability Records

·                  Test/Inspection Records

 

28

 

CONFIDENTIAL

CERTAIN INFORMATION HAS
BEEN REDACTED

CONFIDENTIAL TREATMENT REQUESTED

 

·                  Calibration Records

·                  Non-Conformance Records

 

18.           Supplier shall provide the required certifications with
all Products and services stating conformance to all applicable specifications
and standards, including the Specifications.

 

29

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