Document:

ex10-4.htm

Exhibit 10.4

 

FIRST AMENDMENT TO
BUSINESS AGREEMENT

 

THIS FIRST AMENDMENT TO BUSINESS AGREEMENT (the “Amendment”) is made and entered into as of the 10th day of April, 2010 (“Effective Date”) by and between MINNETRONIX, INC., a Minnesota corporation, (“Minnetronix”) and QIG GROUP, LLC., a Delaware limited liability company, (“Client”) and amends the Business Agreement between the parties dated April 30, 2009 (“Business Agreement”).

 

RECITALS

 

WHEREAS, Minnetronix and Client entered into the Business Agreement, Phase I Statement of Work, dated April 30, 2009, and the Torpedo Phase II and III Statement of Work, dated January 22, 2010 (the Phase I Statement of Work and the Torpedo Phase II and III Statement of Work collectively being the “SOW”), for the contract design and manufacturing by Minnetronix of certain Products by Minnetronix for Client;

 

WHEREAS, as part of Minnetronix’ agreement to reduce the program cost (under the SOW), Minnetronix and Client desire to modify the Business Agreement as set forth herein;

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties agree as follows:

 

1.     Definitions. All capitalized terms used in this Amendment and not defined here have the meanings given to them in the Business Agreement or the SOW. The following terms shall have the meanings set forth next to them when used in this Amendment:

 

1.1     “Bankruptcy” occurs if Client files a petition in bankruptcy, is adjudicated bankrupt, takes advantage of the insolvency laws of any state or country, or makes an assignment for the benefit of creditors, or if a receiver, trustee or other court officer is appointed for Client’s property, or if Client otherwise loses control of its business under any bankruptcy law or similar law for the relief of debtors;

 

1.2     “Buyout Fee” means Two Hundred Thousand Dollars ($200,000);

 

1.3     “Manufacturing Commitment” means the: (a) execution by the parties (or their respective successors or assigns) of a manufacturing agreement, which provides for Minnetronix to manufacture the Products and which contains provisions commonly found in most manufacturing arrangements (the “Manufacturing Addendum”), covering the terms set forth in Section 2 of this Amendment; and (b) delivery to Minnetronix by Client (or their respective successors or assigns) of a binding purchase order for Products under such Manufacturing Addendum;

 

1.4     “Trigger Date” means January 1, 2011.

 

 

 

 

 

2.     Commitment to Enter into a Manufacturing Addendum. In consideration of Minnetronix’ reduction of fees under the SOW by One Hundred Sixty Five Thousand Dollars ($165,000), Client will negotiate in good faith with Minnetronix and will use commercially reasonable efforts to enter into the Manufacturing Commitment on or before March 31, 2011 or such later date as described in Section 3.1. Minnetronix will negotiate in good faith with Client and will use commercially reasonable efforts to negotiate a Manufacturing Addendum for execution on or before March 31, 2011 or such later date as described in Section 3.1. The Manufacturing Addendum will contain terms and conditions that are standard for such an arrangement, and all of its terms and conditions will be subject to each party’s reasonable discretion. Client agrees that such Manufacturing Addendum shall include a minimum Product purchase commitment by Client and the payment of a buyout fee if minimum purchase commitments are not met. Minnetronix agrees that such Manufacturing Addendum shall include fixed pricing.

 

3.     Buyout Fee.

 

3.1     Minnetronix may invoice Client for, and Client shall be liable for, the Buyout Fee in the following circumstances: (a) if there is a Bankruptcy after the Trigger Date but on or before March 31, 2011; or (b) if there is no Manufacturing Commitment after the Trigger Date but on or before March 31, 2011 or (c) if the Agreement, this Amendment, the SOW or any of the Products covered by the SOW are terminated or expire for any reason after the Trigger Date but on or before March 31, 2011. Notwithstanding the foregoing, Client (or its successors and assigns) will not be liable for the Buyout Fee if:

 

	
 
	
●
	
Minnetronix fails to satisfy any of its obligations under Section 2 of this Agreement;

 

	 	
●
	
the Business Agreement is terminated prior to the Trigger Date under Section 8.2(a) of the Business Agreement;

 

	 	
●
	
Client terminates the Business Agreement prior to the Trigger Date under Section 8.2(b) or Section 8.2(c) of the Business Agreement; or

 

	 	
●
	
Minnetronix terminates the Business Agreement under Section 8.2(f) of the Business Agreement.

 

3.2     Any milestone under the SOW has not been satisfied, or Phases I, II or III (as identified under the SOW) have not been completed and such incompletion is not due to a change in the scope of the project by Client. The parties agree that any change in the scope of the project by Client will not result in the Trigger Date being delayed unless agreed upon by the parties in writing. In the event of any such delay of the Trigger Date, the parties will use commercially reasonable efforts to enter into a Manufacturing Addendum within 90 days after the revised Trigger Date and will negotiate the Manufacturing Addendum in accordance with Section 2 hereof. Client shall deliver payment in full to Minnetronix of the Buyout Fee within 30 days after the invoice date. A late fee will be assessed to any overdue invoice. Such late fee shall be the lesser of (a) 1.5%/month, or portion thereof, and (b) the maximum amount permitted by law. In the event that full payment is not made within 60 days after the invoice date, Minnetronix may cease all efforts on the Services and Products and refer the account to a collection agency.

 

4.     Guaranty. The payment of the Buyout Fee under Section 3 of this Amendment shall be guaranteed by Client’s parent company, Greatbatch Ltd., by separate agreement annexed to this Amendment as Exhibit B.

 

 

2

 

 

5.     Effective Date. This Amendment shall be effective from the Effective Date. This Amendment shall automatically terminate on the termination of the Agreement. The following provisions of this Amendment shall survive any termination of this Amendment: Sections 1, 3, 4, 5, 6, 8 and 9.

 

6.     Effect of Changes. The collection of, and failure to pay, the Buyout Fee under Section 3 of this Amendment, or any other buyout fee, shall be considered direct damages, and neither party shall assert that such fee is “LOST REVENUES, LOST PROFITS OR OTHER INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL, OR EXEMPLARY DAMAGES” for which liability is excluded under Section 7.4 of the Business Agreement. In addition, the Buyout Fee (or any other buyout fee) shall be included in the “TOTAL CUMULATIVE AMOUNT ACTUALLY PAID AND OWED TO MINNETRONIX BY CLIENT UNDER THIS AGREEMENT” as specified in the last sentence of Section 7.4 of the Business Agreement. The Buyout Fee (and any other buyout fee) shall be in addition to amounts due under Section 8.3(a) of the Business Agreement. In any event, the Buyout Fee (or any other buyout fee) is not subject to any restrictions or limitations from the Agreement, past, present or future. All other terms and conditions of the Agreement shall remain unchanged, including without limitation the terms of the SOW (which shall remain a fixed bid, subject only to changes in scope separately agreed upon in writing by the parties), and the terms of Section 9.5 of the Business Agreement (Assignment).

 

7.     Counterparts. This Amendment may be executed in any number of counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

8.     Interpretation. Notwithstanding the last sentence of Section 2.1(a) of the Business Agreement, this Amendment shall supersede any conflicting provisions in the Agreement.

 

9.     Governing Law. This Amendment shall be interpreted and construed in accordance with the laws of the State of New York without regard to any choice of law provisions thereof.

 

 

3

 

 

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

 

	
MINNETRONIX, INC.

 

By: /s/ Richard Nazarian                          

 

Name: Richard Nazarian

 

Title: CEO
	
QIG GROUP, LLC.

 

By: /s/ Anthony Borowicz                          

 

Name: Anthony Borowicz

 

Title: VP Finance

 

 

 

 

Exhibit A
Products

 

Pocket Programmer

 

The Pocket Programmer (PoP) is a key fob type device which provides a simplistic control interface to a neural stimulator (IPG or EPG). The PoP is used by the patient to turn stimulation on/off, select a stimulation program, and increase or decrease the stimulation amplitude. This device will provide user feedback via a small monochrome LCD screen.

 

 

Patient Programmer/Charger

 

The Patient Programmer/Charger (PPC) is a rechargeable, handheld multi-purpose device used by the patient for inductively charging the IPG’s rechargeable battery, as well as for basic and advanced programming of their IPG/EPG settings. The PPC utilizes an AC power supply and/or Charging Cradle for recharging the PPC’s internal battery. The PPC has a color touch screen display, and also includes a detachable coil assembly which is placed on the body over the implant for recharging of the IPG.

 

 

Clinician Programmer

 

The Clinician Programmer (CP) is a rechargeable, handheld device utilized by clinicians and company representatives to provide intra-operative and follow up programming capability to establish and optimize stimulation therapies provided by the IPG/EPG. The CP has a color touch screen display and utilizes an AC power supply to recharge its internal battery.

 

 

External Pulse Generator

 

The External Pulse Generator (EPG) is a small, wearable device that provides trial stimulation (with trial leads) before the implantation of the IPG. It is designed to be worn on the body in a pouch or pocket and provide identical stimulation capability as the IPGP. The EPG is powered by replaceable, commercially off the shelf batteries (e.g. AA or AAA) and has limited patient controls consisting of a couple buttons and LED indicators. All stimulation control is accomplished via the CP, PPC and/or PoP.

 

 

 

 

Exhibit B

Guaranty

 

 

 

 

GUARANTY

 

THIS GUARANTY (‘“Guaranty”), dated as of         , 2010, is made and given by Greatbatch Ltd., a New York corporation with its principal place of business at 10000 Wehrle Drive, Clarence, NY 14031, (the “Guarantor”) in favor of Minnetronix, Inc., a Minnesota corporation having its primary office at 1635 Energy Park Drive, St. Paul, MN 55108, (“Minnetronix”).

 

RECITALS

 

A.     QIG GROUP, LLC., a Delaware limited liability company, having an office at 10000 Wehrle Drive, Clarence, NY 14031 (“QIG”) and Minnetronix have entered into a Business Agreement dated April 30, 2009 (“Business Agreement”), Statement of Work dated [        ] as modified by the Project Scope Change dated [     ], and as amended by the First Amendment to Business Agreement dated as of           , 2010 (as the same may hereafter be amended, restated, or otherwise modified from time to time, the “Agreement”) pursuant to which Minnetronix has agreed to perform certain services for QIG, and in return for certain concessions on pricing agreed to by Minnetronix in the Agreement and QIG’s agreement to pay a Buyout Fee if certain events occur, QIG, among other things, has agreed to make a Manufacturing Commitment (as defined in the Agreement) prior to March 31, 2011.

 

B.     It is a condition precedent to Minnetronix’ agreement to the price concessions in the Agreement that this Guaranty be executed and delivered by the Guarantor.

 

C.     QIG is a wholly owned subsidiary of the Guarantor, and as such the Guarantor has agreed to guaranty the payment by QIG of the Buyout Fee.

 

D.     The Guarantor expects to derive benefits from the extension of credit for the Buyout Fee to QIG by Minnetronix and the Guarantor finds it advantageous, desirable and in its best interests to execute and deliver this Guaranty to Minnetronix.

 

NOW, THEREFORE, in consideration of the credit for the Buyout Fee to be extended to QIG and for other good and valuable consideration, the Guarantor hereby covenants and agrees with Minnetronix as follows:

 

Section 1.     Defined Terms. As used in this Guaranty, the following terms shall have the meaning indicated:

 

“Obligations” shall mean all indebtedness, liabilities and obligations of QIG to Minnetronix to pay the Buyout Fee under and subject to the terms and conditions of the Agreement.

 

“Person” shall mean any individual, corporation, partnership, limited partnership, limited liability company, joint venture, firm, association, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity.

 

 

 

 

Section 2.     The Guaranty. Subject always to the following Section, the Guarantor hereby absolutely and unconditionally guarantees to Minnetronix the payment when due (whether on the stated due date or earlier by reason of acceleration or otherwise) and performance of the Obligations. The Guarantor acknowledges that it has reviewed the Agreement.

 

Section 3.     Limitation; Insolvency Laws. As used in this Section: (a) the term “Applicable Insolvency Laws” means the laws of the United States of America or of any State, province, nation or other governmental unit relating to bankruptcy, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency, fraudulent transfers or conveyances or other similar laws (including, without limitation, 11 U.S.C. §547, §548, §550 and other “avoidance” provisions of Title 11 of the United Stated Code) as applicable in any proceeding in which the validity and/or enforceability of this Guaranty or any Specified Lien is in issue; and (b) “Specified Lien” means any security interest, mortgage, lien or encumbrance securing this Guaranty, in whole or in part. Notwithstanding any other provision of this Guaranty, if, in any proceeding, a court of competent jurisdiction determines that this Guaranty or any Specified Lien would, but for the operation of this Section, be subject to avoidance and/or recovery or be unenforceable by reason of Applicable Insolvency Laws, this Guaranty and each such Specified Lien shall be valid and enforceable only to the maximum extent that would not cause this Guaranty or such Specified Lien to be subject to avoidance, recovery or unenforceability. To the extent that any payment to, or realization by, Minnetronix on the guaranteed Obligations exceeds the limitations of this Section and is otherwise subject to avoidance and recovery in any such proceeding, the amount subject to avoidance shall in all events be limited to the amount by which such actual payment or realization exceeds such limitation, and this Guaranty as limited shall in all events remain in full force and effect and be fully enforceable against the Guarantor. This Section is intended solely to reserve the rights of Minnetronix hereunder against the Guarantor in such proceeding to the maximum extent permitted by Applicable Insolvency Laws and neither the Guarantor QIG, any other guarantor of the Obligations nor any Person shall have any right, claim or defense under this Section that would not otherwise be available under Applicable Insolvency Laws in such proceeding.

 

Section 4.     Continuing Guaranty. (a) This Guaranty is an unconditional, irrevocable and continuing guaranty of payment of the Obligations. No notice of the Obligations to which this Guaranty may apply, or of any renewal or extension thereof need be given to the Guarantor; provided, however, that Minnetronix shall notify Guarantor promptly of any default by QIG of the Obligations, but any delay by Minnetronix in giving such notice shall not constitute a waiver of its rights hereunder. The Guarantor hereby expressly waives (a) notice of acceptance of this Guaranty and notice of any liability to which it may apply; and (b) all other notices of any kind and description relating to creation of the Obligations now or hereafter provided for by any agreement, statute, law, rule or regulation. The Guarantor shall not be exonerated with respect to the Guarantor’s liabilities under this Guaranty except by the discharge or irrevocable payment of the Obligations, it being the purpose and intent of this Guaranty that the Obligations constitute the direct and primary obligations of the Guarantor and that the covenants, agreements and all obligations of the Guarantor hereunder be irrevocable.

 

 

2

 

 

(b)     Notwithstanding anything to the contrary set forth in Section 4(a) above, Minnetronix shall have no legal right to enforce this Guaranty if the amount of the Obligations and/or whether the Obligations are due and owing is being disputed in good faith by QIG.

 

Section 5.     Other Transactions. Minnetronix is expressly authorized (a) to exchange, surrender or release with or without consideration any or all collateral and security which may at any time be placed with it by QIG or by any other Person, or to forward or deliver any or all such collateral and security directly to QIG for collection and remittance or for credit, or to collect the same in any other manner without notice to the Guarantor and (b) to amend, modify, extend or supplement the Agreement, any note or other instrument evidencing the Obligations or any part thereof and any other agreement with respect to the Obligations, waive compliance by QIG or any other Person with the respective terms thereof and settle or compromise any of the Obligations without notice to the Guarantor and without in any manner affecting the absolute liabilities of the Guarantor hereunder. No invalidity, irregularity or unenforceability of all or any part of the Obligations or of any security therefor or other recourse with respect thereto shall affect, impair or be a defense to this Guaranty. The liabilities of the Guarantor hereunder shall not be affected or impaired by any failure, delay, neglect or omission on the part of Minnetronix to realize upon any of the Obligations of QIG to Minnetronix, or upon any collateral or security for any or all of the Obligations, nor by the taking by Minnetronix of (or the failure to take) any other guaranty or guaranties to secure the Obligations, nor by the taking by Minnetronix of (or the failure to take or the failure to perfect its security interest in or other lien on) collateral or security of any kind. No act or omission of Minnetronix, whether or not such action or failure to act varies or increases the risk of, or affects the rights or remedies of the Guarantor shall affect or impair the obligations of the Guarantor hereunder. The Guarantor acknowledges that this Guaranty is in effect and binding without reference to whether this Guaranty is signed by any other Person or Persons, that possession of this Guaranty by Minnetronix shall be conclusive evidence of due delivery hereof by the Guarantor and that this Guaranty shall continue in full force and effect, both as to the Obligations then existing and/or thereafter created, notwithstanding the release of or extension of time to any other guarantor of the Obligations or any part thereof.

 

Section 6.     Actions Not Required. The Guarantor hereby waives any and all right to cause a marshalling of the assets of QIG or any other action by any court or other governmental body with respect thereto or to cause Minnetronix to proceed against any security for the Obligations or any other recourse which Minnetronix may have with respect thereto and further waives any and all requirements that Minnetronix institute any action or proceeding at law or in equity, or obtain any judgment, against QIG or any other Person, or with respect to any collateral security for the Obligations, as a condition precedent to making demand on or bringing an action or obtaining and/or enforcing a judgment against, the Guarantor upon this Guaranty. The Guarantor further acknowledges that time is of the essence with respect to the Guarantor’s obligations under this Guaranty. Any remedy or right hereby granted which shall be found to be unenforceable as to any Person or under any circumstance, for any reason, shall in no way limit or prevent the enforcement of such remedy or right as to any other Person or circumstance, nor shall such unenforceability limit or prevent enforcement of any other remedy or right hereby granted.

 

 

3

 

 

Section 7.     Subrogation. Until the irrevocable payment in full of the Obligations, the Guarantor waives all rights of subrogation to any of the rights of Minnetronix against QIG or any other Person liable for payment of any of the Obligations or any collateral security or guaranty or right of offset held by Minnetronix for the payment of the Obligations, and the Guarantor waives all rights to seek any recourse to or contribution or reimbursement from QIG or any other Person liable for payment of any of the Obligations in respect of payments made by the Guarantor hereunder.

 

Section 8.     Application of Payments. Any and all payments upon the Obligations made by the Guarantor or by any other Person, and/or the proceeds of any or all collateral or security for any of the Obligations, may be applied by Minnetronix on such items of the Obligations as Minnetronix may elect.

 

Section 9.     Recovery of Payment. If any payment received by Minnetronix and applied to the Obligations is subsequently set aside, recovered, rescinded or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of QIG or any other obligor), the Obligations to which such payment was applied shall for the purposes of this Guaranty be deemed to have continued in existence, notwithstanding such application, and this Guaranty shall be enforceable as to such Obligations as fully as if such application had never been made. References in this Guaranty to amounts “irrevocably paid” or to “irrevocable payment” refer to payments that cannot be set aside, recovered, rescinded or required to be returned for any reason.

 

Section 10.     QIG’s Financial Condition. The Guarantor is familiar with the financial condition of QIG, and the Guarantor has executed and delivered this Guaranty based on the Guarantor’s own judgment and not in reliance upon any statement or representation of Minnetronix. Minnetronix shall have no obligation to provide the Guarantor with any advice whatsoever or to inform the Guarantor at any time of Minnetronix’s actions, evaluations or conclusions on the financial condition or any other matter concerning QIG.

 

Section 11.     Remedies. All remedies afforded to Minnetronix by reason of this Guaranty are separate and cumulative remedies and it is agreed that no one of such remedies, whether or not exercised by Minnetronix, shall be deemed to be in exclusion of any of the other remedies available to Minnetronix and no one of such remedies shall in any way limit or prejudice any other legal or equitable remedy which Minnetronix may have hereunder and with respect to the Obligations. Mere delay or failure to act shall not preclude the exercise or enforcement of any rights and remedies available to Minnetronix.

 

Section 12.     Bankruptcy of QIG. The Guarantor expressly agrees that the liabilities and obligations of the Guarantor under this Guaranty shall not in any way be impaired or otherwise affected by the institution by or against QIG or any other Person of any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or any other similar proceedings for relief under any bankruptcy law or similar law for the relief of debtors and that any discharge of any of the Obligations pursuant to any such bankruptcy or similar law or other law shall not diminish, discharge or otherwise affect in any way the obligations of the Guarantor under this Guaranty, and that upon the institution of any of the above actions, such obligations shall be enforceable against the Guarantor.

 

 

4

 

 

Section 13.     Costs and Expenses. The Guarantor will pay or reimburse Minnetronix on demand for all out-of-pocket expenses (including in each case all reasonable fees and expenses of counsel) incurred by Minnetronix arising out of or in connection with the enforcement of this Guaranty against the Guarantor or arising out of or in connection with any failure of the Guarantor to fully and timely perform the obligations of the Guarantor hereunder.

 

Section 14.     Waivers and Amendments. This Guaranty can be waived, modified, amended, terminated or discharged only explicitly in a writing signed by Minnetronix. A waiver so signed shall be effective only in the specific instance and for the specific purpose given.

 

Section 15.     Notices. Any notice or other communication to any party in connection with this Guaranty shall be in writing and shall be sent by manual delivery, telegram, telex, facsimile transmission, overnight courier or United States mail (postage prepaid) addressed to such party at the address specified in the opening paragraph hereof, or at such other address as such party shall have specified to the other party hereto in writing. All periods of notice shall be measured from the date of delivery thereof if manually delivered, from the date of sending thereof if sent by telegram, telex or facsimile transmission, from the first business day after the date of sending if sent by overnight courier, or from four days after the date of mailing if mailed.

 

Section 16.     Guarantor Acknowledgements. The Guarantor hereby acknowledges that (a) counsel has advised the Guarantor in the negotiation, execution and delivery of this Guaranty, (b) Minnetronix has no fiduciary relationship to the Guarantor the relationship being solely that of debtor and creditor, and (c) no joint venture exists between the Guarantor and Minnetronix.

 

Section 17.     Representations and Warranties. The Guarantor hereby represents and warrants to Minnetronix that it is a corporation organized, validly existing and in good standing under the laws of the State of New York and has the power and authority and the legal right to own and operate its properties and to conduct the business in which it is currently engaged. The Guarantor further represents and warrants to Minnetronix that:

 

(a)     It has the power and authority and the legal right to execute and deliver, and to perform its obligations under, this Guaranty and has taken all necessary action required by its form of organization to authorize such execution, delivery and performance;

 

(b)     This Guaranty constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law);

 

 

5

 

 

(c)     The execution, delivery and performance of this Guaranty will not (i) violate any provision of any law, statute, rule or regulation or any order, writ, judgment, injunction, decree, determination or award of any court, governmental agency or arbitrator presently in effect having applicability to it, (ii) violate or contravene any provision of its organizational documents, or (iii) result in a breach of or constitute a default under any indenture, loan or credit agreement or any other agreement, lease or instrument to which it is a party or by which it or any of its properties may be bound or result in the creation of any lien thereunder. It is not in default under or in violation of any such law, statute, rule or regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, loan or credit agreement or other agreement, lease or instrument in any case in which the consequences of such default or violation could have a material adverse effect on its business, operations, properties, assets or condition (financial or otherwise);

 

(d)     No order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by, any governmental or public body or authority is required on its part to authorize, or is required in connection with the execution, delivery and performance of, or the legality, validity, binding effect or enforceability of, this Guaranty;

 

(e)     There are no actions, suits or proceedings pending or, to its knowledge, threatened against or affecting it or any of its properties before any court or arbitrator, or any governmental department, board, agency or other instrumentality which, if determined adversely to it, would have a material adverse effect on its business, operations, property or condition (financial or otherwise) or on its ability to perform its obligations hereunder; and

 

(f)     It expects to derive benefits from the transactions contemplated by the Agreement. Minnetronix may rely conclusively on the continuing warranty, hereby made, that it continues to be benefited by Minnetronix’ extension of credit accommodations to QIG and Minnetronix shall have no duty to inquire into or confirm the receipt of any such benefits, and this Guaranty shall be effective and enforceable by Minnetronix without regard to the receipt, nature or value of any such benefits.

 

Section 18.     Continuing Guaranty; Assignments under Agreement. This Guaranty shall (a) remain in full force and effect until irrevocable payment in full of the Obligations and the expiration of the obligations, if any, of Minnetronix to extend credit for the Buyout Fee to QIG, (b) be binding upon the Guarantor, its successors and assigns and (c) inure to the benefit of, and be enforceable by, Minnetronix and its successors, transferees, and assigns. Without limiting the generality of the foregoing clause (c), Minnetronix may assign or otherwise transfer all or any portion of its rights and obligations under the Agreement to any other Persons to the extent and in the manner provided in the Agreement and may similarly transfer all or any portion of its rights under this Guaranty to such Persons.

 

Section 19.     Reaffirmation. The Guarantor agrees that when so requested by Minnetronix from time to time it will promptly execute and deliver to Minnetronix a written reaffirmation of this Guaranty in such form as Minnetronix may require.

 

Section 20.     Revocation. Notwithstanding any other provision hereof, the Guarantor may revoke this Guaranty prospectively as to future transactions by written notice to that effect actually received by Minnetronix. No such revocation shall release, impair or affect in any manner any liability hereunder with respect to Obligations created, contracted, assumed or incurred prior to receipt by Minnetronix of written notice of revocation, or Obligations created, contracted, assumed or incurred after receipt of such notice pursuant to any contract entered into by Minnetronix prior to receipt of such notice, or any renewals or extensions thereof, theretofore or thereafter made, or any interest accrued or accruing on such Obligations, or all other costs, expenses and attorneys’ fees arising from such Obligations.

 

 

6

 

 

Section 21.     Governing Law and Construction. THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF. Whenever possible, each provision of this Guaranty and any other statement, instrument or transaction contemplated hereby or relating hereto shall be interpreted in such manner as to be effective and valid under such applicable law, but, if any provision of this Guaranty or any other statement, instrument or transaction contemplated hereby or relating hereto shall be held to be prohibited or invalid under such applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty or any other statement, instrument or transaction contemplated hereby or relating hereto.

 

Section 22.     Consent to Jurisdiction. THIS GUARANTY MAY BE ENFORCED IN ANY FEDERAL COURT OR STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE GUARANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.

 

Section 23.     Waiver of Jury Trial. EACH OF THE GUARANTOR AND MINNETRONIX, BY ITS ACCEPTANCE OF THIS GUARANTY, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 24.     Counterparts. This Guaranty may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.

 

Section 25.     General. All representations and warranties contained in this Guaranty or in any other agreement between the Guarantor and Minnetronix shall survive the execution, delivery and performance of this Guaranty and the creation and payment of the Obligations. Captions in this Guaranty are for reference and convenience only and shall not affect the interpretation or meaning of any provision of this Guaranty.

 

 

7

 

 

IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as of the date first above written.

 

	
 
	
GUARANTOR:

	
 
	
 

	
 
	
By: /s/ Thomas J. Mazza

	
 
	
 

	
 
	
Name: Thomas J. Mazza

	 	 
	 	Title: SVP and CFO

 

Address for Guarantor:

 

Attn:

 

Address for Minnetronix:

 

Minnetronix Inc.ex10-5.htm

Exhibit 10.5

 

MANUFACTURING AND QUALITY ADDENDUM

 

This Manufacturing and Quality Addendum (“Addendum”) is made effective as of August 1, 2013 (the “Addendum Effective Date”), between QIG Group, LLC, having an office at 10000 Wehrle Drive, Clarence, NY 14031 (“Client”) and Minnetronix, Inc., having an office at 1635 Energy Park Drive, St. Paul, MN 55108 (“Minnetronix”) and amends and supplements the Business Agreement defined below.

 

WHEREAS, Client and Minnetronix entered into a Business Agreement, executed by Minnetronix on April 30, 2009 and Client on May 1, 2009 (the “2009 Agreement”), as modified by letter agreement between the parties dated June 26, 2009 and executed by Client on June 29, 2009 (“Letter Agreement”) and First Amendment to Business Agreement, made and entered into as of April 10, 2010 (the “First Amendment”) and multiple Statements of Work regarding the contract design and manufacturing services rendered by Minnetronix for Client (collectively, such Statements of Work, the Letter Agreement, First Amendment and the 2009 Agreement, being the “Business Agreement”). This Addendum forms part of the Business Agreement;

 

WHEREAS, the First Amendment contemplates the parties entering into a manufacturing addendum which provides for (a) Minnetronix to supply certain products and (b) Client to pay, under certain circumstances, a buyout fee to Minnetronix in the event that a manufacturing addendum is not entered into by the parties; and

 

WHEREAS, this Addendum (a) establishes the terms on which Minnetronix will manufacture Products for Client for the term set forth herein, and (b) extinguishes the Manufacturing Commitment (as that term is defined in the First Amendment) of Client and the Guaranty (as that term is defined in the First Amendment) of Client’s parent company, Greatbatch Ltd. (“Greatbatch”), contained in the First Amendment.

 

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.          Manufacturing Terms. Subject to the terms and conditions in this Addendum, Client will purchase Products from Minnetronix and Minnetronix will supply the Products to Client as set forth below. Any specifically capitalized terms used, and otherwise not defined, in this Addendum have the same defined meanings as provided for in the Business Agreement.

 

a.     Products. A description of the Products to be manufactured by Minnetronix and purchased by Client, together with additional terms specifically applicable to such Products, such as pricing, delivery schedule, warranty period, lead time requirements and various other commercial terms, will be set forth in one or more Schedules A to this Addendum. The parties may, from time to time, add new Products by executing a new Schedule or executing addenda and/or amendments to a prior Schedule. Revision numbers for the Product may change from time to time through Seller’s Engineering Change Order (“ECO”) system.

 

 

 

 

 

b.           Specifications. Specifications for the Products will be supplied by Client or Client’s agent and agreed upon in writing by Minnetronix, or will be otherwise established and accepted by Client and Minnetronix via Minnetronix’ ECO process. Neither Minnetronix nor any Product shall be expected or required to perform outside of the Specifications.

 

c.            Purchase Orders.

 

i.     Client will order Products by issuing Minnetronix a Purchase Order. The parties shall agree in writing on the Purchase Order, and the Specifications contained thereon, as set forth above, prior to the commencement of any work related to such Purchase Order. Provided that such Purchase Order and Specifications are acceptable to Minnetronix, Minnetronix shall manufacture for Client the Products, assemblies and/or subassemblies identified in such Purchase Order.

 

ii.     Commencement of work related to this Addendum or any Purchase Order issued hereunder is done so under the terms of the Business Agreement as modified by this Addendum. Any additional or different terms sent by Client to Minnetronix in writing, either together with or apart from a Purchase Order, or sent from Minnetronix to Client in writing, shall be excluded unless signed by both parties as an amendment to the Business Agreement.

 

iii.     Client will place one or more Purchase Orders with Minnetronix representing Client’s firm commitment for Products to be delivered as specified on the respective Purchase Order. In addition, Client shall provide forecasts to Minnetronix which reflect Client’s Product volume requirements over the term, of which the first three months and all longer lead time components identified in a Schedule will be binding.

 

iv.     Minnetronix will make reasonable efforts to accommodate schedule change requests subject to Component availability and capacity at Minnetronix’ sole discretion. Aggressive schedule increases will be accommodated to the best of Minnetronix’ ability according to the terms of the Business Agreement. Minnetronix may use forecasts to purchase long lead-time items and to achieve price breaks due to order size. Forecasts (to the extent binding as set forth in subsection iii above) and Purchase Orders may be combined to make best effort purchasing decisions. Subject to the other terms of this Section 1 of this Addendum, excess or scrap Components that occur as a result of Minnetronix’ best effort purchasing decisions are Client’s responsibility in the event of an order cancellation, Product change, or production delay.

 

 

2

 

 

d.            Price. The applicable price (“Price”) for the Products, NRE fees and the downpayment terms shall be as specified in each Schedule for a Product. Any NRE fees that may be incurred by Minnetronix (e.g., development of travelers, ECO generation/approval/release, additional assembly procedures, additional assembly drawings, and parts and assembly information entry into the Minnetronix’ manufacturing system) will be recharged to Client. All required supplier NREs will be recharged to Client. Minnetronix will manage suppliers, parts specifications, and other associated documentation for the Products in Minnetronix’ internal systems. However, the pricing does not include the cost of future design changes to the Product. A G&A fee, intended to cover Minnetronix’ costs for general and administrative efforts associated with various business issues shall be applied to any third-party costs incurred by Minnetronix that are not included in the selling price for a Product but are otherwise covered by this Addendum and the Business Agreement and are being recharged to Client. Minnetronix’ standard G&A fee shall be 20% of the amount to which the fee is applied or such other amount unless the parties mutually agreed otherwise in writing with respect to a particular Product.

 

e.            Minnetronix Changes to the Specifications or Manufacturing Location. Minnetronix may not implement any change to any of the Specifications, or any of the manufacturing locations for the Products without the prior written consent of Client, except as follows: Minnetronix may make minor revisions without such consent. A minor revision is defined below. Prior to making any “major revision” to a Product assembly or sub-assembly (i.e., any change that may affect the form, fit or function of a Product), Minnetronix will request Client’s consent to such major revision by issuing an ECO to Client. At a minimum, Client’s approval of an ECO issued by Minnetronix with respect to the top level assembly of a Product will be required prior to release of the Product to production. Client’s execution of an ECO shall be deemed to constitute Client’s approval of the revision subject to such ECO, together with all Components and Specifications that are incorporated into the assembly or sub-assembly that is the subject of such ECO. Minnetronix will provide all documentation reasonably requested by Client in connection with its review of any ECO presented by Minnetronix.

 

f.             Product Documentation. With each shipment of Product, Minnetronix will provide to Client a Certificate of Compliance verifying each Product’s compliance with the applicable Specifications.

 

g.            Packaging & Delivery. Each Product will be packaged to (i) comply with the requirements of the carrier, (ii) comply with Client’s Specifications and (c) comply with all applicable laws, rules and regulations. Delivery is FOB Minnetronix manufacturing facility. Client assumes and agrees to bear all risk of damage or loss to the Products after shipment from Minnetronix’s facility (the FOB point). Costs for packaging not included in the BOM or Specifications are not included in the Price.

 

h.            Configuration Management. Minnetronix uses a product revision format that indicates different levels of product release. All revisions have a format of [major revision]-[minor revision]. Major revisions (i.e., changes that may affect the form, fit or function of a Product) are less than “1” (e.g., .01, .02, .5, etc.) prior to production release and are “001” or greater (e.g., 001, 002, etc.) after production release. Minor revisions (i.e., changes that do not affect the form, fit or function of a Product) start with alpha characters beginning at “a” after each major revision change and are incremented for each minor revision change (e.g., a, b, c, etc.) All Products provided at a revision level of 001-a or higher (e.g., 001-a, 001-b, 002-a, etc.) shall be considered production units (“Production Units”). All Products provided at a revision less than 001-a (e.g., .01-a, .01- b, .5-a, etc.) shall be considered prototypes or pre-production units (“Engineering Units”). Any Engineering Units provided by Minnetronix may not meet regulatory standards for medical equipment or software and are not intended for human use unless specifically manufactured for that purpose and expressly indicated as such by Minnetronix to Client. ANY AND ALL ENGINEERING UNITS MANUFACTURED AND DELIVERED BY MINNETRONIX HEREUNDER ARE PROVIDED “AS IS”.

 

 

3

 

 

i.              Outsourcing. Minnetronix may not outsource or subsource any material or service used in the Products that are manufactured by Minnetronix without the prior written consent of Client. Minnetronix will be responsible for the acts and omissions of the subcontractor to the extent Minnetronix would be liable under the Business Agreement if it had committed such acts and omissions itself.

 

j.              Returned Product.

 

i.     All Products that Client deems to be non-conforming shall be returned to Minnetronix after acquiring and including a Minnetronix Return Material Authorization (“RMA”) number and paperwork indicating the details of the unit being returned with a serial or lot number and a description of the problem. An RMA number is available on request from the Minnetronix Quality Department.

 

ii.     Client shall pay for freight for Product return to Minnetronix and Minnetronix shall pay for freight for Product shipment back to Client. Minnetronix shall use a shipping method of the same or better expediency to that which Client returned Product to Minnetronix

 

iii.     Client agrees to supply Minnetronix with a Certificate of Decontamination, when applicable, along with all returned Product certifying that it is free of all toxic and biohazard materials. If no such certificate is provided, Minnetronix may perform decontamination services as needed.

 

iv.     In-warranty repairs shall be performed in accordance with Section 1.l.v. Minnetronix agrees to perform out-of-warranty depot repair, upgrade, and troubleshooting services as requested by Client. All repairs, troubleshooting, field upgrades, and field service work performed by Client will be at Client’s sole expense.

 

k.             Books, Records and Traceability. Minnetronix must keep true, accurate and complete books, records, reports and accounts in connection with the Products provided under this Addendum, and Minnetronix must keep these for such period of time as required by applicable law, rule or regulation, but in no event less than fifteen years immediately following the termination or expiration of this Addendum. Without limiting Client’s rights below, Client may send one or more of its representatives to inspect Minnetronix’s business operations, including, but not limited to, manufacturing and warehouse facilities, records, and reports at any time during regular business hours. Minnetronix will make available to Client immediately after receipt and for a period of ten years immediately following the expiration or termination of this Addendum, inspection reports, notices, claims, and audits by any regulatory or governmental authority affecting or relating to Minnetronix’s business or the Product. Traceability requirements include, but are not limited to the following:

 

	 	
(i)
	
All components are traced by lot at a minimum;

 

 

4

 

 

	 	
(ii)
	
Critical components are traced according to Client documentation as set forth at the time of qualification;

 

	 	
(iii)
	
Process information is traced to the sub-assembly. At a minimum, this includes operator performing the operation and date performed, shift (as applicable), manufacturing instructions used, identification of equipment used, BOM/design revision and configuration, resolution of any discrepancies, and record of any rework performed; and

 

	 	
(iv)
	
Raw material sourced directly by Minnetronix trace-ability to original material manufacturing lot.

 

	
 
	
l.
	
Standards: Modifications to Business Agreement.

 

	
 
	
i.
	
For the purposes of this Addendum:

 

	 	
A.
	
the representations and warranties in Section 2.4 of the Business Agreement are hereby deleted;

 

	 	
B.
	
the last sentence of Section 5.7 of the Business Agreement is hereby deleted;

 

	 	
C.
	
the terms of Section 7.1 and 7.2 of the Business Agreement are hereby deleted and replaced with the following:

 

“7.1. Indemnification by Minnetronix. Subject to Section 7.4, Minnetronix shall indemnify, defend, and hold harmless Client and its officers, directors, employees, agents, successors and assigns from and against any and all losses, liabilities, damages, and expenses, including reasonable attorneys’ fees and expenses (“Losses”), that they may suffer as a result of any claims, demands, actions or other proceedings made or instituted by any third party against any of them and arising out of or relating to (a) the material breach by Minnetronix of any covenant or other agreement of Minnetronix set forth in this Agreement or (b) the gross negligence or willful misconduct of Minnetronix in the performance of its obligations under this Agreement except relating to the manufacture of the Products (in each case, except to the extent Minnetronix has a claim against Client pursuant to Section 7.2).

 

7.2. Indemnification by Client. The following indemnification obligation is not subject to the terms of Section 7.4. Client shall indemnify, defend, and hold harmless Minnetronix and its officers, directors, employees, agents, successors and assigns from and against any and all Losses that they may suffer as a result of any claims, demands, actions or other proceedings made or instituted by any third party against any of them and arising out of or relating to (a) the material breach by Client of any covenant or other agreement of Client set forth in this Agreement, (b) any claim that the Developed Materials, the Products or any products that incorporate the Products infringes any patent, copyright, trademark, trade secret or other proprietary right of any third party or (c) any Product Liability Damages (in each case, except to the extent Client has a claim against Minnetronix pursuant to Section 7.1).”

 

 

5

 

 

	 	
D.
	
the last sentence of Section 7.4 of the Business Agreement shall be replaced with the following:

 

“EXCEPT FOR BREACH OF SECTION 6 BY CLIENT, FOR CLIENT’S INDEMNIFICATION OBLIGATIONS AND FOR AMOUNTS DUE BY CLIENT HEREUNDER, IN NO EVENT SHALL EITHER PARTY’S AGGREGATE LIABILITY HEREUNDER, WHETHER IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EXCEED THE FEES PAID BY CLIENT IN THE 12 MONTHS PRIOR TO THE FIRST CLAIM HEREUNDER.”

 

	 	
E.
	
the words “AS SET FORTH IN SECTION 2.4 AND” in Section 7.5 of the Business Agreement shall be deleted.

 

ii.     Unless otherwise specifically agreed in writing by Client, all Products supplied under this Addendum will be manufactured in accordance with (i) all applicable standards of the International Standards Organization (“ISO”) and applicable ISO-certified processes, including, but not limited to, any applicable certification for sterilization; and (ii) all other quality standards and quality assurance plans referenced in the Specifications; provided, however that Minnetronix sole liability and Client’s exclusive remedies for breach of the foregoing shall be as set forth in Section 1.l.v. below. Minnetronix must comply with any quality requirements included within the Specifications. Minnetronix must ensure the compliance with this Section by any third party that supplies Minnetronix with raw materials or components used in the manufacture of any Product. Minnetronix must provide written notice to Client immediately after becoming aware of any non-conformance with this Section.

 

iii.     Client shall be solely responsible for the design of the Products and for the Products’ safety and efficacy for their indications and intended uses. Client shall bear any financial or other responsibility for Product deficiencies discovered by Client or Minnetronix. It is Client’s sole responsibility to review, validate, and approve the Product design, any Engineering Units Minnetronix provides, and to ensure that any resulting Product is tested, manufactured, packaged, labeled (including adequate warnings), sold and/or used in a safe, careful, and effective manner. Client is also responsible for obtaining and maintaining any necessary approvals, including any FDA, UL, CE, CSA, FCC or other approvals. Notwithstanding the foregoing, nothing in this Section is intended to limit, and in no event shall this Section be deemed to modify, the express indemnification obligations of Minnetronix set forth in Section 7.1 of the Business Agreement (as modified herein) and the express Product warranty provisions set forth in Section 1.l.v. of this Addendum, respectively.

 

 

6

 

 

iv.     Minnetronix’ procurement, assembly and test responsibility is limited to providing a Product that is “built to print” according to written Specifications provided to Minnetronix by Client and agreed upon by Minnetronix, or as otherwise agreed to by Client via Minnetronix’ ECO process.

 

v.     Minnetronix warrants to Client that each Production Unit, for a period to be specified in the respective Schedule (“Warranty Period”), shall: (a) conform in all respects to all of the Product Specifications to the extent verified by Minnetronix through the testing and inspection procedures defined in the Device Master Record for such Product or otherwise established and agreed to by Client via Seller’s ECO system as of the date of shipment of such Production Unit; and (b) be free from all defects in materials and workmanship. The foregoing warranties are contingent upon proper use of the Product in the applications for which the Product was intended. Minnetronix shall have no responsibility or obligation to Client under warranty claims with respect to Products that have been subjected to abuse, misuse, accident, alteration or neglect. In addition, the foregoing warranties do not apply to any third party software or any other third party Components or Client components that are embedded or incorporated into the Products, provided that Minnetronix shall assign to Client any warranties received from such third parties to the extent that Minnetronix is permitted to make such assignments. During the Warranty Period and only during the Warranty Period, Minnetronix’ responsibility shall be limited to the labor costs for work performed by Minnetronix at Minnetronix’ facility, Component replacement, and domestic ground shipment of Products from Minnetronix’ facility. In all cases, costs not related to warranty repair or replacement shall be borne by Client. Client is obligated to train and instruct its employees and any potential users of the Products with regard to their safe and proper use. Minnetronix shall have no liability for any injury to the operator or subject of the Products’ application regardless of the reason for the injury (including, but not limited to, inappropriate therapy, use, or Product malfunction). Client’s sole remedy and Minnetronix’ exclusive liability under the Business Agreement and this Addendum for any Products that breach the foregoing warranty shall be the repair or replacement of the Products subject to the preceding limits or a refund of the amount actually paid to Minnetronix by Client for such Products.

 

m.           Quality System. Minnetronix must (i) have a documented quality system and (ii) notify Client in the event of an initiation, an implementation or a change in the status of any major quality system at any of Minnetronix’s facilities, including, but not limited to, ISO 13485.

 

n.            Audits. Upon reasonable prior written notice and during normal business hours, Client, any of its duly authorized representatives and any regulatory or governmental agency, including, but not limited to, the U.S. Food and Drug Administration and any Competent Authority or Notification Body of Client, will have access to and the right to inspect or audit any Product’s design and any manufacturing, packaging, labeling, testing, shipping or quality processes and associated documentation. In addition, Client may audit Minnetronix’s manufacturing and quality systems. Such audits may include examination of Minnetronix’s manufacturing and quality control processes, and manufacturing and quality control records to ensure compliance. Further, Client requires a 30-day response to all audit findings, a 60-day closure timeline for major findings, and a one (1) year closure timeline for all minor findings.

 

 

7

 

 

	
 
	
o.
	
Quality or Performance Issues.

 

	 	
(i)
	
Minnetronix will use commercially reasonable efforts to resolve at Client’s request any Product quality or performance issues that arise during the Term at Client’s sole expense (except to the extent the warranty remedies apply). These efforts will be tracked in a quality system such as Corrective Action and Preventive Action framework that is compliant with industry standards including, but not limited to, ISO-9001. Upon request by Client, such efforts may include making appropriate Minnetronix personnel available (at Minnetronix’s expense) at the Minnetronix and/or Client facilities where such Product quality or performance issues are identified and/or need to be addressed. Upon request by Client, Minnetronix will promptly provide Client with all information requested by Client on the quality or performance issue and Minnetronix’s corrective actions.

 

	 	
(ii)
	
Each party must provide the other party with written notification within ten business days after such party obtains knowledge of any actual or potential problems relating to the performance of any Product or any Components used in the Product so that Client may explore whether investigation into the experienced problem as it may relate to Product already shipped or in process is necessary. Minnetronix will fully cooperate with all reasonable requests made by Client as to any such investigation, which will be at Client’s sole expense.

 

p.            Discontinuance of Supply & Last Time Purchase. If either party chooses to discontinue this Addendum or the supply of any Product, Client will have the right to a last time purchase from Minnetronix of the Product in a quantity ordered by Client but which may not exceed the aggregate amount for the next six months as set forth in the most recent forecast.

 

q.            Component Scheduling. Minnetronix shall maintain scheduling control over Components ordering and their delivery scheduling according to Minnetronix’ production scheduling processes. Minnetronix will issue purchase orders, or otherwise place orders, for all Components to support Client’s Purchase Orders throughout the term of this Addendum. Minnetronix will commit to longer-term buys on an exception basis as reasonably requested by Client provided that all such requests are issued in writing to Minnetronix by Client, all such buys shall be deemed a binding forecast.

 

 

8

 

 

r.        Production Delays.

 

i.     In the event of production delays requested or caused by Client in excess of 30 days, Client shall, at Minnetronix’ sole discretion, pay to Minnetronix during the delay period either (i) an inventory deposit and a 1.25%/month Storage Fee (as defined below), (ii) a 2.5%/month Maintenance Fee (as defined below), or (iii) the inventory deposit and fee, if any, specified in a Schedule.

 

ii.     Unless otherwise specified in an applicable Schedule, the standard inventory deposit shall be in the amount of the value of the Component inventory, Component purchase orders, or other written commitments from Minnetronix to Minnetronix’ suppliers purchased by or otherwise committed to by Minnetronix as a result of Purchase Orders or the binding portion of the forecasts (“Committed Inventory”) including Components received, or on non-cancelable, non-returnable or limited change purchase orders from Minnetronix to Minnetronix’ suppliers for Components that will be received by Minnetronix during the delay period. Unless otherwise specified in an applicable Schedule, the fee calculation shall be made using the applicable percentage from above, multiplied by the average monthly value of the Committed Inventory held by Minnetronix during the period to which the fee applies. This fee will be charged with respect to each month, or any portion thereof, during the delay.

 

iii.     In the event that Minnetronix is holding Client-supplied or Client-owned inventory during the delay period, Client shall pay a 1.25%/month Storage Fee for those materials.

 

iv.     In the event of production delays requested or caused by Client in excess of 90 days, Client shall purchase from Minnetronix all Committed Inventory held at Minnetronix during the period and pay a 1.25%/month Storage Fee until delivery of all Products or Committed Inventory from Minnetronix to Client is made.

 

v.     The “Storage Fee” covers Minnetronix’ costs for the storage, maintenance, warranty, material handling, shrinkage, cycle counting, storage space, floor space and other overhead associated with the inventory as well as supplier management, discrepant material handling, purchasing efforts, reporting, tracking, and rescheduling associated with storing and managing inventory during a delay in production. The Storage Fee shall be 1.25% per month of actual costs associated with the Committed Inventory.

 

vi.     The “Maintenance Fee” covers Minnetronix’ costs for the storage, maintenance, warranty extension, material handling, cost of capital, shrinkage, cycle counting, floor space, storage space and other overhead associated with the inventory as well as the supplier management, discrepant material handling, purchasing efforts, reporting, tracking and rescheduling associated with storing, owning, and managing inventory during a delay in production. The Maintenance Fee shall be 2.5%/month of actual costs associated with the Committed Inventory.

 

 

9

 

 

s.           Cancellations. In the event that Client cancels a Purchase Order or terminates the Business Agreement or this Addendum in accordance with its terms, the following terms shall apply to Committed Inventory purchased or committed to as a result of the Purchase Order or the binding portion of the product forecasts delivered by Client to Minnetronix:

 

i.     Minnetronix will make reasonable good faith efforts to return unneeded Components to its suppliers; and

 

ii.     Client will be responsible for the following costs arising from Client’s Purchase Order and subsequent cancellation: (A) Minnetronix’ actual costs associated with non-returnable or non-cancelable Committed Inventory including Committed Inventory that has been rendered non-returnable due to work performed in accordance with this Addendum and associated Purchase Orders, provided that any such materials cannot be used by Minnetronix in connection with the production of other items for Client or any other customer of Minnetronix within 1 month from the date of cancellation; and (B) Minnetronix’ actual costs associated with returnable or cancelable Committed Inventory; and (C) Minnetronix’ cancellation fee of 20 percent of the remaining Purchase Order value at the time of cancellation; and

 

iii.     Upon payment by Client of the amounts set forth above, Client shall own the Committed Inventory and Components, and Minnetronix shall deliver such Committed Inventory and Components to Client in accordance herewith.

 

iv.     A Purchase Order shall be deemed cancelled if Client expressly cancels such Purchase Order or causes a delay in production thereunder for one or more successive periods in excess of six (6) months in the aggregate.

 

v.     Minnetronix’ “actual costs” include labor, overhead and other out-of-pocket expenses incurred in the purchasing, receiving, inspecting, testing, assembling, storing, counting, shipping, handling, canceling, returning, or otherwise managing or processing the Components and their suppliers.

 

t.            Excess/Scrap Components. The costs of scrap and/or non-conforming material incurred during normal production activities shall be borne by Minnetronix. The cost of scrapped and/or excess Components up to 10% over the order quantity or other preapproved purchase quantities shall be borne by Client in the event of part obsolescence, or the end of Product life at Minnetronix. This is intended, for example, to cover Components that are no longer needed for the Product due to ECOs, or end of the Product manufacturing at Minnetronix. Additionally, Client is responsible for excess Components that are purchased due to minimum buy quantities from the Product Component suppliers. Excess parts may be transferred to Client upon completion of the production orders.

 

 

10

 

 

2.            Waiver. Minnetronix hereby: (a) acknowledges that this Addendum is a Manufacturing Commitment as contemplated by the First Amendment, (b) waives all of its rights with respect to the Manufacturing Commitment, Buyout Fee and the Guaranty as set forth in the First Amendment, and (c) acknowledges and agrees that (i) Minnetronix shall have no further rights with respect to the Manufacturing Commitment, Buyout Fee or Guaranty and (ii) neither Client nor Greatbatch (or any of its affiliates) owes any manufacturing commitment or any other manufacturing/purchase obligation to Minnetronix, except as set forth in this Addendum.

 

3.            Term and Termination.

 

a.     Term. The term of this Addendum will commence on the Addendum Effective Date and, unless terminated earlier in accordance with this Addendum or the Business Agreement, will continue in full force and effect for a period of four years. Thereafter, this Addendum will renew for successive three-year periods unless either party delivers written notice of non-renewal to the other party no less than ninety days prior to the effective date of renewal. As agreed by the parties, Minnetronix will continue to fulfill any outstanding Purchase Orders issued by Client prior to the expiration or termination of this Addendum, and the delivery of any Product pursuant to such Purchase Orders will be governed by all of the terms and conditions of this Addendum.

 

b.     Termination. This Addendum may be terminated by either party upon a material breach of this Addendum by the other party after giving such other party written notice specifying the nature of and the basis for the material breach and providing such other party a 30 day opportunity to cure the material breach.

 

4.            Effect of Addendum. When signed by both parties, this Addendum shall be attached to and deemed a part of the Business Agreement. Except to the extent specifically supplemented and/or modified by this Addendum, all terms and conditions set forth in the Business Agreement shall remain in full force and effect. The last sentence of Section 2.1(a) of the Business Agreement is hereby deleted for the purposes of this Addendum and in the event of any inconsistency or conflict between any of the documents described above and/or Purchase Orders issued pursuant to the Agreement, the following order of priority, listed here from the highest priority (a) to the lowest priority (f), in interpretation shall apply

 

a.     Amendments or other modifications made to the Business Agreement and this Addendum in writing.

 

b.     Product Specifications, if any, agreed to via Minnetronix’ ECO process.

 

c.     Product Specifications, if any, provided to and agreed upon by Minnetronix with a Purchase Order.

 

d.     Purchase Order (exclusive of any boilerplate terms and conditions).

 

e.     Addendum.

 

f.     Business Agreement.

 

 

11

 

 

IN WITNESS WHEREOF, the parties have executed this Addendum as of the Effective Date.

 

	QIG GROUP, LLC	MINNETRONIX, INC.
	 	 
	 	 
	By: /s/ Thomas J. Mazza	By: /s/ Jeremy Maniak
	 	 
	
Name: Thomas J. Mazza
	
Name: Jeremy Maniak

	 	 
	Title: VP and Corporate Controller	Title: COO

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00265-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00265-of-00352.parquet"}]]