Document:

ex 10-3.htm

Exhibit 10.3 

  

 

EMPLOYEE MATTERS AGREEMENT

 

 

 

between

 

 

 

GREATBATCH, INC.

 

 

 

and

 

 

 

QIG GROUP, LLC

 

(to be converted into Nuvectra Corporation)

 

 

 

 

 

 

 

 

 

dated as of March 14, 2016

 

 

 

 

 

Table of Contents

 

	 	PAGE
	 	 
	
Article I DEFINITIONS  
	1
	
Section 1.1
	
Definitions
	
1

	
Section 1.2
	
Interpretation
	
4

	 	 	 
	
Article II ASSIGNMENT OF EMPLOYEES  
	6
	
Section 2.1
	
Active Employees
	
6

	
Section 2.2
	
Former Employees
	
7

	
Section 2.3
	
Employment Law Obligations
	
7

	
Section 2.4
	
Employee Records
	
8

	 	 	 
	
Article III EQUITY AND INCENTIVE COMPENSATION PLANS  
	10
	
Section 3.1
	
General Principles
	
10

	
Section 3.2
	
Equity Incentive Programs
	
11

	
Section 3.3
	
Section 16(b) of the Exchange Act; Code Sections 162(m) and 409A
	
14

	
Section 3.4
	
Cash Incentive Awards
	
14

	 	 	 
	
Article IV GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES  
	14
	
Section 4.1
	
General Principles
	
14

	
Section 4.2
	
Sponsorship and/or Establishment of Nuvectra Plans
	
16

	
Section 4.3
	
Service Credit
	
16

	
Section 4.4
	
Plan Administration
	
17

	 	 	 
	
Article V 401(k) PLANS  
	17
	
Section 5.1
	
General Principles
	
17

	
Section 5.2
	
Transfer of Accounts
	
17

	
Section 5.3
	
Employer Securities
	
18

	
Section 5.4
	
Third-Party Vendors
	
18

	 	 	 
	
Article VI WELFARE PLANS  
	18
	
Section 6.1
	
Establishment of Nuvectra Welfare Plans
	
18

	
Section 6.2
	
Transitional Matters Under Nuvectra Welfare Plans
	
19

	
Section 6.3
	
Credit for Deductibles Under Medical and Dental Plans
	
20

	
Section 6.4
	
Insurance Contracts
	
20

	
Section 6.5
	
Third-Party Vendors
	
20

	 	 	 
	
Article VII WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION
	  21
	 	 
	
Article VIII EMPLOYMENT AGREEMENTS, SEVERANCE AND OTHER MATTERS  
	21
	
Section 8.1
	
Employment Agreements
	
21

	
Section 8.2
	
Severance
	
21

	
Section 8.3
	
Accrued Time Off
	
21

	
Section 8.4
	
Leaves of Absence
	
21

	
Section 8.5
	
Restrictive Covenants in Employment and Other Agreements
	
22

 

 

 

 

 

	
Article IX miscellaneous  
	23  
	
Section 9.1
	
Preservation of Rights to Amend
	
23

	
Section 9.2
	
Confidentiality
	
23

	
Section 9.3
	
Administrative Complaints/Litigation
	
23

	
Section 9.4
	
Reimbursement and Indemnification
	
23

	
Section 9.5
	
Costs of Compliance with Agreement
	
24

	
Section 9.6
	
Fiduciary Matters
	
24

	
Section 9.7
	
Form S-8
	
24

	
Section 9.8
	
Entire Agreement
	
24

	
Section 9.9
	
Binding Effect; No Third-Party Beneficiaries; Assignment
	
24

	
Section 9.10
	
Amendment; Waivers
	
25

	
Section 9.11
	
Remedies Cumulative
	
25

	
Section 9.12
	
Notices
	
25

	
Section 9.13
	
Counterparts; Facsimile Signatures
	
25

	
Section 9.14
	
Severability
	
25

	
Section 9.15
	
Governing Law
	
26

	
Section 9.16
	
Performance
	
26

	
Section 9.17
	
Construction
	
26

	
Section 9.18
	
Effect if Distribution Does Not Occur
	
26

 

 

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EMPLOYEE MATTERS AGREEMENT

 

This EMPLOYEE MATTERS AGREEMENT dated as of March 14, 2016 by and between Greatbatch, Inc., a Delaware corporation (“Greatbatch”), and QiG Group, LLC, a Delaware limited liability company (to be converted into Nuvectra Corporation, a Delaware corporation) (“Nuvectra”). Greatbatch and Nuvectra are sometimes referred to herein, individually, as a “Party,” and, collectively, as the “Parties.”

 

RECITALS

 

WHEREAS, Nuvectra is an indirect subsidiary of Greatbatch; and

 

WHEREAS, the Board of Directors of Greatbatch has determined that it would be appropriate and in the best interests of Greatbatch and its stockholders to effectuate the Distribution as described in the Separation and Distribution Agreement between Greatbatch and Nuvectra dated as of the date hereof (the “Separation Agreement”); and

 

WHEREAS, the Separation Agreement provides, among other things, subject to the terms and conditions thereof, for the Distribution and for the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the separation of Nuvectra and its subsidiaries from Greatbatch; and

 

WHEREAS, in order to ensure an orderly transition under the Separation Agreement, it will be necessary for the Parties to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, benefit plans and programs, and certain employment matters.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the Parties, intending to be legally bound, agree as follows:

 

Article I

DEFINITIONS

 

Section 1.1     Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:

 

“Adjusted Greatbatch Awards” means Adjusted Greatbatch Options, Adjusted Greatbatch RSAs, and Adjusted Greatbatch RSUs.

 

“Adjusted Greatbatch Options” means Greatbatch Options adjusted as set forth in Section 3.2(a)(i).

 

“Adjusted Greatbatch RSAs” means Greatbatch RSAs adjusted as set forth in Section 3.2(a)(ii).

 

“Adjusted Greatbatch RSUs” means Greatbatch RSUs adjusted as set forth in Section 3.2(a)(iii).

 

 

 

 

 

 

“Adjusted Nuvectra Stock Value” means the product obtained by multiplying (i) the Nuvectra Stock Value by (ii) the Distribution Ratio.

 

“Agreement” means this Employee Matters Agreement together with all Schedules hereto and all amendments, modifications and changes hereto and thereto entered into in accordance with Section 9.10.

 

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Part 6 of Subtitle B of Title I of ERISA and at Code Section 4980B.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Distribution Ratio” means the number of shares of Nuvectra Common Stock to be distributed for each share of Greatbatch Common Stock.

 

“Employee” means any Greatbatch Employee, Former Greatbatch Employee, Nuvectra Employee or Former Nuvectra Employee.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

“Former Greatbatch Employee” has the meaning set forth in Section 2.2(b).

 

“Former Nuvectra Employee” has the meaning set forth in Section 2.2(c).

 

“Greatbatch” has the meaning set forth in the preamble to this Agreement.

 

“Greatbatch 401(k) Plan” means the Greatbatch, Inc. 401(k) Retirement Plan.

 

“Greatbatch Employee” means any individual who is employed by a member of the Greatbatch Group on the Distribution Date other than the Nuvectra Employees and, only for purposes of Article III and any defined terms as used therein, as of the day after the Distribution Date. 

 

“Greatbatch FSA” has the meaning set forth in Section 6.3(b).

 

“Greatbatch Group” means Greatbatch and each Subsidiary of Greatbatch, collectively, other than Nuvectra and each Nuvectra Subsidiary.

 

“Greatbatch Legacy Equity Plan” means any equity plan sponsored or maintained by Greatbatch immediately prior to the Distribution Date.

 

“Greatbatch Option” means an option to purchase shares of Greatbatch Common Stock granted and outstanding immediately prior to the Distribution Date pursuant to any of the Greatbatch Legacy Equity Plans.

 

“Greatbatch Post-Distribution Stock Value” means the closing per-share price, as reported on the NYSE, of a share of Greatbatch Common Stock on the Distribution Date.

 

 

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“Greatbatch RSA” means a restricted stock award issued and outstanding immediately prior to the Distribution Date under any of the Greatbatch Legacy Equity Plans.

 

“Greatbatch RSU” means a restricted stock unit award issued and outstanding immediately prior to the Distribution Date under any of the Greatbatch Legacy Equity Plans.

 

“Greatbatch Welfare Plan” means the Greatbatch, Inc. Health and Welfare Benefit Plan sponsored or maintained by any one or more members of the Greatbatch Group on the Distribution Date.

 

“Nasdaq” means the NASDAQ Stock Market.

 

“Nuvectra” has the meaning set forth in the preamble to this Agreement.

 

“Nuvectra 401(k) Plan” has the meaning set forth in Section 5.1.

 

“Nuvectra 401(k) Plan Beneficiaries” has the meaning set forth in Section 5.1.

 

“Nuvectra Awards” means Nuvectra Options, Nuvectra RSAs, and Nuvectra RSUs.

 

“Nuvectra Employee” means any individual who is employed by a member of the Nuvectra Group on the Distribution Date or will be transferred to a member of the Nuvectra Group and is listed on Schedule II to the Separation Agreement; provided, however, that for purposes of Article III and any defined terms as used therein, “Nuvectra Employee” means any such individual who is employed by a member of the Nuvectra Group on the date immediately following the Distribution Date.

 

“Nuvectra Equity Plan” means the Nuvectra Corporation 2016 Equity Incentive Plan adopted by the board of managers of Nuvectra and approved by Nuvectra’s sole membership interest holder prior to the Distribution under which the Nuvectra equity-based awards described in Article III shall be issued.

 

“Nuvectra FSA” has the meaning set forth in Section 6.3(b).

 

“Nuvectra Group” means, collectively, Nuvectra and each Nuvectra Subsidiary.

 

“Nuvectra Option” means an option to purchase shares of Nuvectra Common Stock granted pursuant to the Nuvectra Equity Plan as described in Section 3.2(a)(i).

 

“Nuvectra RSA” means a restricted stock award for shares of Nuvectra Common Stock issued under the Nuvectra Equity Plan as described in Section 3.2(a)(ii).

 

“Nuvectra RSU” means a restricted stock unit for shares of Nuvectra Common Stock issued under the Nuvectra Equity Plan as described in Section 3.2(a)(iii). 

 

“Nuvectra Stock Value” means the closing per-share price, as reported on Nasdaq, of Nuvectra Common Stock on the Distribution Date (or, if the Distribution Date is not a Nasdaq trading day, on the first trading day following the Distribution Date).

 

 

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“Nuvectra Subsidiary” means any Subsidiary of Nuvectra on the Distribution Date.

 

“Nuvectra Welfare Plan” has the meaning set forth in Section 6.1.

 

“Nuvectra Welfare Plan Participants” has the meaning set forth in Section 6.1.

 

“NYSE” means the New York Stock Exchange.

 

“Participating Nuvectra Employers” has the meaning set forth in Section 6.1. 

 

“Participation Period” has the meaning set forth in Section 6.3(b).

 

“Party” or “Parties” has the meaning set forth in the preamble to this Agreement.

 

“Privacy Contract” means any contract entered into in connection with applicable privacy protection laws or regulations.

 

“Separation Agreement” has the meaning set forth in the recitals to this Agreement.

 

“WARN” means the Worker Adjustment and Retraining Notification Act, and any applicable state or local law equivalent.

 

“Welfare Plan” means a “welfare plan” as defined in ERISA Section 3(1) and also means a cafeteria plan under Code Section 125 and any benefits offered thereunder, including pre-tax premium conversion benefits, a dependent care assistance program, contribution funding toward a health savings account and flex or cashable credits.

 

Capitalized terms used, but not otherwise defined in this Agreement, shall have the respective meanings assigned to such terms in the Separation Agreement.

 

Section 1.2     Interpretation. In this Agreement, unless the context clearly indicates otherwise:

 

(a)     words used in the singular include the plural and words used in the plural include the singular;

 

(b)     if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

 

(c)     reference to any gender includes the other gender and the neuter;

 

(d)     the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation;”

 

(e)     the words “shall” and “will” are used interchangeably and have the same meaning;

 

(f)     the word “or” shall have the inclusive meaning represented by the phrase “and/or;”

 

 

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(g)     relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including;”

 

(h)     all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Savings Time, as applicable, on the date in question;

 

(i)     whenever this Agreement refers to a number of days, such number shall refer to calendar days unless otherwise specified;

 

(j)     accounting terms used herein shall have the meanings historically ascribed to them by Greatbatch and its Subsidiaries, including Nuvectra and the Nuvectra Subsidiaries for this purpose, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;

 

(k)     reference to any Article, Section or Schedule means such Article or Section of, or such Schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

 

(l)     the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

 

(m)     reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by this Agreement;

 

(n)     reference to any “law” (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

 

(o)     references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement, and any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

 

(p)     if there is any conflict between the provisions of the main body of this Agreement and the Schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Schedule;

 

(q)     unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the U.S.;

 

(r)     the titles to Articles and headings of Sections contained in this Agreement, in any Schedule and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

 

(s)     any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.

 

 

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Article II

ASSIGNMENT OF EMPLOYEES

 

Section 2.1     Active Employees.

 

(a)     Nuvectra Employees. Except as otherwise set forth in this Agreement, effective as of the Distribution Date, the employment of the Nuvectra Employees shall be continued by a member of the Nuvectra Group. 

 

(b)     Greatbatch Employees. Except as otherwise set forth in this Agreement, effective as of the Distribution Date, the employment of the Greatbatch Employees shall be continued by a member of the Greatbatch Group. 

 

(c)     At Will Status. Nothing in this Agreement shall create any obligation on the part of any member of the Greatbatch Group or any member of the Nuvectra Group to continue the employment of any employee for any period following the date of this Agreement or the Separation or the Distribution or to change the employment status of any employee from “at will,” to the extent such employee is an “at will” employee under applicable law.

 

(d)     Severance. The assignment, transfer or continuation of the employment of employees as contemplated by this Agreement or otherwise effected in connection with the Separation or the Distribution shall not be deemed a severance of employment of any employee for any purpose, including for purposes of any plan, policy, practice or arrangement of any member of the Greatbatch Group or any member of the Nuvectra Group.

 

(e)     Change of Control/Change in Control. No provision in this Agreement or the Separation Agreement nor any transaction undertaken by either Party in connection with the Distribution shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever, or be deemed a “change of control” or “change in control” for any purpose including for purpose of any plan, policy, practice or arrangement relating to directors, employees or consultants of any member of the Greatbatch Group or any member of the Nuvectra Group. 

 

 

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Section 2.2     Former Employees

 

(a)     General Principles. Except as otherwise provided in this Agreement, each former employee of any member of the Greatbatch Group or any member of the Nuvectra Group as of the Distribution Date will be considered a former employee of the Greatbatch Group or the Nuvectra Group based on his or her employer as of his or her last day of employment with any member of the Greatbatch Group or the Nuvectra Group.

 

(b)     Former Greatbatch Employees. Former employees of the Greatbatch Group shall be deemed to include all employees who, as of their last day of employment, were employed by a member of the Greatbatch Group and will not be either a Nuvectra Employee or a Greatbatch Employee for purposes of this Agreement (collectively, the “Former Greatbatch Employees”).

 

(c)     Former Nuvectra Employees. Former employees of the Nuvectra Group shall be deemed to include all employees who, as of their last day of employment, were employed by a member of the Nuvectra Group and will not be either a Nuvectra Employee or a Greatbatch Employee for purposes of this Agreement (collectively, the “Former Nuvectra Employees”).

 

Section 2.3     Employment Law Obligations.

 

(a)     WARN Act. After the Distribution Date, (i) Greatbatch shall be responsible for providing any necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any Greatbatch Employee and (ii) Nuvectra shall be responsible for providing any necessary WARN notice (and meeting any similar state law notice requirements) with respect to any termination of any Nuvectra Employee.

 

(b)     Compliance with Employment Laws. On and after the Distribution Date, (i) each member of the Greatbatch Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of the Greatbatch Employees and the treatment of any applicable Former Greatbatch Employees in respect of their former employment, and (ii) each member of the Nuvectra Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related laws and requirements relating to the employment of the Nuvectra Employees and the treatment of any applicable Former Nuvectra Employees in respect of their former employment.

 

 

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Section 2.4     Employee Records.

 

(a)     Records Relating to Greatbatch Employees and Former Greatbatch Employees. All records and data in any form relating to Greatbatch Employees and Former Greatbatch Employees shall be the property of the Greatbatch Group; provided, however, that records and data pertaining to such an Employee and relating to any period that such an Employee was (i) employed by any member of the Nuvectra Group or (ii) covered under any employee benefit plan sponsored by any member of the Nuvectra Group (to the extent that such records or data relate to such coverage) prior to the Distribution Date shall be shared with appropriate members of the Nuvectra Group by the Greatbatch Group to the extent such records are reasonably necessary for payroll or employee benefit plan purposes.

 

(b)     Records Relating to Nuvectra Employees and Former Nuvectra Employees. All records and data in any form relating to Nuvectra Employees and Former Nuvectra Employees shall be the property of the Nuvectra Group; provided, however that records and data pertaining to such an Employee and relating to any period that such an Employee was (i) employed by any member of the Greatbatch Group or (ii) covered under any employee benefit plan sponsored by any member of the Greatbatch Group (to the extent that such records or data relate to such coverage) prior to the Distribution Date shall be shared with appropriate members of the Greatbatch Group by the Nuvectra Group to the extent such records are reasonably necessary for payroll or employee benefit plan purposes.

 

(c)     Sharing of Records. Each Party shall use its respective commercially reasonable efforts to provide the other Party, upon request, such employee-related records and information as necessary or appropriate to carry out their respective obligations under applicable law (including any relevant privacy protection laws or regulations in any applicable jurisdictions or Privacy Contract), this Agreement, any other Ancillary Agreement or the Separation Agreement, and for the purposes of administering their respective employee benefit plans and policies. All information and records regarding employment, personnel and employee benefit matters provided to the other Party shall be accessed, retained, held, used, copied and transmitted in accordance with all applicable laws, policies and Privacy Contracts relating to the collection, storage, retention, use, transmittal, disclosure and destruction of such records by such receiving Party.

 

(d)     Access to Records. To the extent not inconsistent with this Agreement and any applicable privacy protection laws or regulations or Privacy Contracts, access to such records and information, as described in this Section 2.4, after the Distribution Date, will be provided to members of the Greatbatch Group and members of the Nuvectra Group in accordance with the Separation Agreement. In addition, Greatbatch shall be provided reasonable access to those records necessary for its administration of any benefit plans, policies, arrangements or programs on behalf of Greatbatch Employees and Former Greatbatch Employees after the Distribution Date, as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. Greatbatch shall also be permitted to retain copies of all agreements with any Nuvectra Employee or Former Nuvectra Employee in which any member of the Greatbatch Group has a valid business interest. In addition, Nuvectra shall be provided reasonable access to those records necessary for its administration of any benefit plans, policies, arrangements or programs on behalf of Nuvectra Employees and Former Nuvectra Employees after the Distribution Date, as permitted by any applicable privacy protection laws or regulations or Privacy Contracts. Nuvectra shall also be permitted to retain copies of all agreements with any Greatbatch Employee or Former Greatbatch Employee in which any member of the Nuvectra Group has a valid business interest.

 

 

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(e)     Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all such records and information, Greatbatch and Nuvectra shall (and shall cause their respective Subsidiaries to) comply with all applicable laws, regulations, Privacy Contracts and internal policies, and shall indemnify and hold harmless each other from and against any and all liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its Subsidiaries or their respective agents) to so comply with all applicable laws, regulations, Privacy Contracts and internal policies applicable to such records and information.

 

(f)     No Access to Computer Systems or Files. Except as set forth in the Separation Agreement or any other Ancillary Agreement, no provision of this Agreement shall give (i) any member of the Greatbatch Group direct access to the computer systems or other files, records or databases of any member of the Nuvectra Group or (ii) any member of the Nuvectra Group direct access to the computer systems or other files, records or databases of any member of the Greatbatch Group, unless specifically permitted by the owner of such systems, files, records or databases.

 

(g)     Relation to Separation Agreement. The provisions of this Section 2.4 shall be in addition to, and not in derogation of, the provisions of the Separation Agreement governing Confidential Information, including Section 6.8 of the Separation Agreement.

 

(h)     Confidentiality. Except as otherwise set forth in this Agreement, all records and data relating to Employees shall, in each case, be subject to the confidentiality provisions of the Separation Agreement and any other applicable agreement and applicable law.

 

(i)     Cooperation. Each Party shall use commercially reasonable efforts to cooperate with the other Party to share, retain and maintain data and records that are necessary or appropriate to further the purposes of this Section 2.4 and for each Party to administer its respective benefit plans, policies, arrangements or programs to the extent consistent with this Agreement and applicable law, and each Party agrees to cooperate as long as is reasonably necessary to further the purposes of this Section 2.4. Except as provided under any other Ancillary Agreement, no Party shall charge another Party a fee for such cooperation.

 

 

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Article III

EQUITY AND INCENTIVE COMPENSATION PLANS

 

Section 3.1     General Principles.

 

(a)     For the avoidance of doubt, the provisions of this Article III shall not apply unless the Distribution and approval by the appropriate administrators of the applicable plans takes place. Greatbatch and Nuvectra shall take any and all reasonable action as shall be necessary and appropriate to give effect to the provisions of this Article III.

 

(b)     Where an award granted under one of the Greatbatch Legacy Equity Plans is supplemented by an award under the Nuvectra Equity Plan in accordance with the provisions of this Article III, such award generally shall be on terms which are in all material respects identical to the terms of the award which it supplements (including any requirements of continued employment) but subject to any necessary changes to take into account that (i) the award relates to Nuvectra Common Stock, (ii) the Nuvectra Equity Plan is administered by Nuvectra, (iii) if applicable, the grantee under the award is employed or affiliated with a new employer or plan sponsor and (iv) the other specific provisions described in this Article III.

 

(c)     Following the Distribution, a grantee who has outstanding awards that are supplemented with awards under the Nuvectra Equity Plan (as described in Section 3.1(b) above) shall be considered to have been employed by the applicable plan sponsor before and after the Distribution for purposes of (i) vesting and (ii) determining the date of termination of employment as it applies to any such supplemental awards under the Nuvectra Equity Plan. Following the Distribution, (i) service as an employee with Nuvectra will be deemed to be services to Greatbatch with respect to Adjusted Greatbatch Options, Adjusted Greatbatch RSAs, or Adjusted Greatbatch RSUs held by Nuvectra Employees immediately after the Distribution Date and (ii) service as an employee with Greatbatch will be deemed to be services to Nuvectra with respect to Nuvectra Options, Nuvectra RSAs, or Nuvectra RSUs held by Greatbatch Employees immediately after the Distribution Date.

 

(d)     No award described in this Article III, whether outstanding or to be issued, adjusted, substituted or cancelled by reason of or in connection with the Distribution, shall be adjusted, settled, cancelled, or exercisable, until in the judgment of the administrator of the applicable plan or program such action is consistent with all applicable law, including federal securities laws and the adjustment, settlement, cancellation or exercisability is in a manner consistent with Section 409A of the Code or other applicable law. Any period of exercisability will not be extended on account of a period during which such an award is not exercisable in accordance with the preceding sentence.

 

 

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Section 3.2     Equity Incentive Programs.

 

(a)     The Parties shall use commercially reasonable efforts to take all actions necessary or appropriate so that each outstanding Greatbatch Option, Greatbatch RSA or Greatbatch RSU award granted under a Greatbatch Legacy Equity Plan shall be adjusted as set forth in this Section 3.2.

 

(i)     Greatbatch Options and Nuvectra Options. As determined by the Greatbatch Compensation Committee pursuant to its authority under the applicable Greatbatch Legacy Equity Plan, each Greatbatch Option, regardless of by whom held, whether vested or unvested, shall be converted on the Distribution Date into both an Adjusted Greatbatch Option and a Nuvectra Option, and both the Adjusted Greatbatch Option and the Nuvectra Option shall, except as otherwise provided in this Section 3.2(a)(i), be subject to the same terms and conditions (including with respect to vesting) after the Distribution Date as applicable to such Greatbatch Option immediately prior to the Distribution Date; provided, however, that from and after the Distribution Date:

 

(A)     the number of shares of Greatbatch Common Stock subject to such Adjusted Greatbatch Option, shall be equal to the number of shares of Greatbatch Common Stock subject to such Greatbatch Option immediately prior to the Distribution Date; 

 

(B)     the number of shares of Nuvectra Common Stock subject to such Nuvectra Option, rounded down to the nearest whole share, shall be equal to the product obtained by multiplying (1) the number of shares of Greatbatch Common Stock subject to the Greatbatch Option immediately prior to the Distribution Date by (2) the Distribution Ratio;

 

(C)     the per share exercise price of such Adjusted Greatbatch Option, rounded up to the nearest hundredth of a cent, shall be equal to the product obtained by multiplying (1) the per share exercise price of such Greatbatch Option immediately prior to the Distribution Date by (2) a fraction (I) the numerator of which is the Greatbatch Post-Distribution Stock Value and (II) the denominator of which is the sum of the Greatbatch Post-Distribution Stock Value and the Adjusted Nuvectra Stock Value; and

 

(D)     the per share exercise price of such Nuvectra Option, rounded up to the nearest hundredth of a cent, shall be equal to the product obtained by multiplying (1) the per share exercise price of the Greatbatch Option immediately prior to the Distribution Date by (2) a fraction (I) the numerator of which is the Nuvectra Stock Value and (II) the denominator of which is the sum of the Greatbatch Post-Distribution Stock Value and the Adjusted Nuvectra Stock Value; 

 

provided, however, that the exercise price, the number of shares of Greatbatch Common Stock and shares of Nuvectra Common Stock subject to such options, and the terms and conditions of exercise of such options shall be determined in a manner consistent with the requirements of Code Section 409A; and provided, further, that, in the case of any Greatbatch Option to which Code Section 421 applies by reason of its qualification under Code Section 422 as of immediately prior to the Distribution Date, the exercise price, the number of shares of Greatbatch Common Stock and shares of Nuvectra Common Stock subject to such option, and the terms and conditions of exercise of such option shall be determined in a manner consistent with the requirements of Code Section 424(a).

 

(ii)     Greatbatch RSAs and Nuvectra RSAs. Each holder of a Greatbatch RSA award shall receive, as of the Distribution Date, a Nuvectra RSA for such number of shares as determined by applying the Distribution Ratio, rounded down to the nearest whole share, in the same way as if the outstanding Greatbatch RSAs were comprised of fully vested shares of Greatbatch Common Stock as of the Distribution Date. Except as set forth in this Section 3.2(a)(ii), the Greatbatch RSA and the Nuvectra RSA both shall be subject to substantially the same terms and conditions immediately following the Distribution Date as applicable to the Greatbatch RSA immediately prior to the Distribution Date. 

 

 

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(iii)     Greatbatch RSU Awards and Nuvectra RSU Awards. Each holder of an outstanding Greatbatch RSU award shall receive, as of the Distribution Date, a Nuvectra RSU award in such number of restricted stock units as determined by applying the Distribution Ratio, rounded down to the nearest whole share, in the same way as if the outstanding Greatbatch RSU award comprised fully vested shares of Greatbatch Common Stock as of the Distribution Date. Except as set forth in this Section 3.2(a)(iii), the Greatbatch RSU award and the Nuvectra RSU award both shall be subject to substantially the same terms and conditions immediately following the Distribution Date as applicable to the Greatbatch RSU award immediately prior to the Distribution Date. With respect to any Greatbatch RSU award that is subject to performance vesting requirements, which is held by either a Greatbatch Employee or Former Greatbatch Employee, the performance metric for both the Greatbatch RSU award and the corresponding Nuvectra RSU award shall continue to be total shareholder return of Greatbatch’s common stock versus Greatbatch’s peer group, but this performance metric shall be adjusted so as to treat the Distribution as a dividend of an amount of cash that is equal to the opening per-share price, as reported on Nasdaq, of a share of Nuvectra common stock on the Distribution Date that is reinvested into shares of Greatbatch Common Stock at the opening per-share price on the Distribution Date, as reported on NYSE. With respect to any Greatbatch RSU award subject to performance vesting requirements that is held by either a Nuvectra Employee or a Former Nuvectra Employee, such Nuvectra Employee or Former Nuvectra Employee shall receive, as of the Distribution Date, (A) a modified Greatbatch RSU award, which shall not be subject to any performance vesting requirement, but shall be subject to a time-based vesting requirement that would be satisfied at the end of what was the applicable performance period, for a number of shares of Greatbatch common stock based upon performance under the previously applicable performance metric for such Greatbatch RSU award up to the Distribution Date and (B) an Nuvectra RSU award, which shall not be subject to any performance vesting requirement, but shall be subject to a time-based vesting requirement that would be satisfied at the end of what was the applicable performance period of the relevant Greatbatch RSU. 

 

(b)     Miscellaneous Award Terms. After the Distribution Date, Adjusted Greatbatch Awards, regardless of by whom held, shall be settled by Greatbatch, and Nuvectra Awards, regardless of by whom held, shall be settled by Nuvectra; provided, however, that Greatbatch shall be, if applicable, responsible for any dividend equivalent payments with respect to Adjusted Greatbatch RSAs and Adjusted Greatbatch RSUs and Nuvectra RSAs and Nuvectra RSUs held by Greatbatch Employees or Former Greatbatch Employees, and Nuvectra shall be, if applicable, responsible for any dividend equivalent payments with respect to Adjusted Greatbatch RSAs and Adjusted Greatbatch RSUs and Nuvectra RSAs and Nuvectra RSUs held by Nuvectra Employees or Former Nuvectra Employees. Except as otherwise provided in this Agreement (such as in Section 3.2(d) or Section 4.3), with respect to awards adjusted pursuant to this Section 3.2, (i) employment with the Greatbatch Group shall be treated as employment with the Nuvectra Group with respect to Nuvectra Awards held by Greatbatch Employees, and (ii) employment with the Nuvectra Group shall be treated as employment with the Greatbatch Group with respect to Adjusted Greatbatch Awards held by Nuvectra Employees. In addition, none of the Separation, the Distribution, or any employment transfer described in Section 2.1 shall constitute a termination of employment for any Employee for purposes of any Greatbatch Award or any Adjusted Greatbatch Award. Following the Distribution Date, any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or Greatbatch Legacy Equity Plan (A) with respect to Adjusted Greatbatch Awards, shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the award agreement, employment agreement or Greatbatch Legacy Equity Plan applicable to such award (a “Greatbatch Change of Control”), and (B) with respect to Nuvectra Awards, shall be deemed to refer to a “Change in Control” as defined in the Nuvectra Equity Plan (a “Nuvectra Change of Control”). Without limiting the foregoing, with respect to provisions related to vesting of awards, a Greatbatch Change of Control shall be treated as a Nuvectra Change of Control for purposes of Nuvectra Awards held by Greatbatch Employees, and a Nuvectra Change of Control shall be treated as an Greatbatch Change of Control for purposes of Adjusted Greatbatch Awards held by Nuvectra Employees.

 

 

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(c)     Tax Reporting and Withholding. Following the Distribution Date, and for the duration of the applicable Transition Services Agreement provisions under which Greatbatch provides payroll services for Nuvectra, it is expected that (i) Greatbatch will be responsible for all income, payroll and other tax remittance and reporting related to income of Greatbatch Employees, Former Greatbatch Employees, including in respect of Adjusted Greatbatch Awards and Nuvectra Awards, and individuals who are or were Greatbatch non-employee directors, including in respect of Adjusted Greatbatch Awards and Nuvectra Awards, and (ii) Nuvectra will be responsible for all income, payroll and other tax remittance and reporting related to income of Nuvectra Employees and Former Nuvectra Employees in respect of Adjusted Greatbatch Awards and Nuvectra Awards. Greatbatch or Nuvectra, as applicable, shall facilitate performance by the other Party of its obligations hereunder by promptly remitting amounts or shares withheld in conjunction with a transfer of shares or cash, either (as mutually agreed by the Parties) directly to the applicable taxing authority or to the other Party for remittance to such taxing authority. The Parties will cooperate and communicate with each other and with third-party providers to effectuate withholding and remittance of taxes, as well as required tax reporting, in a timely, efficient and appropriate manner.

 

(d)     Equity-Based Awards in Certain Non-U S. Jurisdictions. Notwithstanding the foregoing provisions of this Section 3.2, the Parties may mutually agree, in their sole discretion, not to adjust certain outstanding equity-based awards under the Greatbatch Legacy Equity Plans pursuant to the foregoing provisions of this Section 3.2, where those actions would create or trigger adverse legal, accounting or tax consequences for Greatbatch, Nuvectra, or the affected non-U.S. award holders. In such circumstances, Greatbatch or Nuvectra may take any action necessary or advisable to prevent any such adverse legal, accounting or tax consequences, including, but not limited to, agreeing that the outstanding awards under the Greatbatch Legacy Equity Plan of the affected non-U.S. award holders shall terminate in accordance with the terms of the Greatbatch Legacy Equity Plan and the underlying award agreements, in which case Nuvectra or Greatbatch, as applicable, shall equitably compensate the affected non-U.S. award holders in an alternate manner determined by Nuvectra or Greatbatch, as applicable, in its sole discretion, or apply an alternate adjustment method. Where and to the extent required by applicable Law or tax considerations outside the United States, the adjustments described in this Section 3.2 shall be deemed to have been effectuated immediately prior to the Distribution Date.

 

 

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Section 3.3     Section 16(b) of the Exchange Act; Code Sections 162(m) and 409A.

 

(a)     By approving the adoption of this Agreement, the respective boards of directors of Greatbatch and Nuvectra intend to exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b-3 thereunder, all acquisitions and dispositions of equity incentive awards by directors and executive officers of each of Greatbatch and Nuvectra, and the respective boards of directors of Greatbatch and Nuvectra also intend to expressly approve, in respect of any equity-based award, the use of any method for the payment of an exercise price and the satisfaction of any applicable tax withholding (specifically including the actual or constructive tendering of shares in payment of an exercise price and the withholding of option shares from delivery in satisfaction of applicable tax withholding requirements) to the extent such method is permitted under the applicable equity incentive plan and award agreement.

 

(b)     Notwithstanding anything in this Agreement to the contrary, Greatbatch and Nuvectra agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure that (i) a federal income tax deduction for the payment of any annual incentive or long-term incentive award, or other compensation is not limited by reason of Code Section 162(m), and (ii) the treatment of such annual incentive or long-term incentive award, or other compensation does not cause the imposition of a tax under Code Section 409A.

 

Section 3.4     Cash Incentive Awards. Nuvectra shall assume and perform all liabilities with respect to the participation of each Nuvectra Employee in any cash-based annual bonus or other cash incentive compensation plan of Greatbatch (including, for avoidance of doubt, any cash-based transition bonus agreement or arrangement entered into in connection with the Distribution) with respect to performance periods that are ongoing as of the Distribution Date. Greatbatch shall, as it determines in its sole discretion, (i) pay each Nuvectra Employee directly for any amount owed or (ii) reimburse Nuvectra in full after Nuvectra’s payment in full of each amount owed to a Nuvectra Employee, in either case, that was earned for fiscal year 2015 performance under Greatbatch’s cash incentive compensation plan.

 

Article IV

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

 

Section 4.1     General Principles.

 

(a)     Except as otherwise provided in this Agreement, each member of the Greatbatch Group and each member of the Nuvectra Group shall take any and all reasonable action as shall be necessary or appropriate so that active participation in the Greatbatch 401(k) Plan and Greatbatch Welfare Plans by all Nuvectra Employees and Former Nuvectra Employees shall terminate in connection with the Distribution effective as of 11:59 p.m. on the day immediately preceding the Distribution Date, and each member of the Nuvectra Group shall cease to be a participating employer under the terms of such Greatbatch 401(k) Plan and Greatbatch Welfare Plans as of such time. Except as otherwise provided in this Agreement, one or more members of the Nuvectra Group (as designated by Nuvectra) shall assume, effective as of the Distribution Date, all employee benefits liabilities for Nuvectra Employees and Former Nuvectra Employees, and the assets relating to such employee benefits for Nuvectra Employees and Former Nuvectra Employees, if any, shall be transferred to one or more members of the Nuvectra Group (as designated by Nuvectra); and one or more members of the Greatbatch Group (as designated by Greatbatch) shall continue to be responsible for or assume all employee benefits liabilities for Greatbatch Employees and Former Greatbatch Employees and the assets relating to such employee benefits for Greatbatch Employees and Former Greatbatch Employees shall be transferred to or continue to be held by one or more members of the Greatbatch Group (as designated by Greatbatch).

 

 

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(b)     Except as otherwise provided in this Agreement, effective as of the day after the Distribution Date, one or more members of the Nuvectra Group (as determined by Nuvectra) shall assume or continue the sponsorship of, and no member of the Greatbatch Group shall have any further liability for or under, the following agreements, obligations and liabilities, and Nuvectra shall indemnify each member of the Greatbatch Group, and the officers, directors, and employees of each member of the Greatbatch Group, and hold them harmless with respect to such agreements, obligations or liabilities:

 

(i)     any and all individual agreements entered into between any member of the Greatbatch Group and any Nuvectra Employee or Former Nuvectra Employee;

 

(ii)     any and all agreements entered into between any member of the Greatbatch Group and any individual who is an independent contractor providing services primarily for the business activities of the Nuvectra Group;

 

(iii)     any and all wages, salaries, incentive compensation (as the same may be modified by this Agreement), commissions and bonuses payable to any Nuvectra Employees or Former Nuvectra Employees after the Distribution Date, without regard to when such wages, salaries, incentive compensation, commissions and bonuses are or may have been earned;

 

(iv)     any and all moving expenses and obligations related to relocation, repatriation, transfers or similar items incurred by or owed to any Nuvectra Employees or Former Nuvectra Employees, whether or not accrued as of the Distribution Date (other than such expenses and obligations incurred by Greatbatch on or prior to the Distribution Date as a result of which there is an existing liability as of the Distribution Date);

 

(v)     any and all immigration-related, visa, work application or similar rights, obligations and liabilities related to any Nuvectra Employees or Former Nuvectra Employees; and

 

(vi)     any and all liabilities and obligations whatsoever with respect to claims made by or with respect to any Nuvectra Employees or Former Nuvectra Employees in connection with any employee benefit plan, program or policy not otherwise retained or assumed by any member of the Greatbatch Group pursuant to this Agreement, including such liabilities relating to actions or omissions of or by any member of the Nuvectra Group or any officer, director, employee or agent thereof on or prior to the Distribution Date.

 

 

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(c)     Except as otherwise provided in this Agreement, effective as of the day after the Distribution Date, no member of the Nuvectra Group shall have any further liability for, and Greatbatch shall indemnify each member of the Nuvectra Group, and the officers, directors, and employees of each member of the Nuvectra Group, and hold them harmless with respect to any and all liabilities and obligations whatsoever with respect to, claims made by or with respect to any Greatbatch Employees or Former Greatbatch Employees in connection with any employee benefit plan, program or policy not otherwise retained or assumed by any member of the Nuvectra Group pursuant to this Agreement, including such liabilities relating to actions or omissions of or by any member of the Greatbatch Group or any officer, director, employee or agent thereof on or prior to the Distribution Date.

 

(d)     This Agreement is not intended and shall not create any third party rights or provide any Nuvectra Employee, Former Nuvectra Employee, Greatbatch Employee or Former Greatbatch Employee (or any beneficiary or dependent thereof) with any rights to any specific benefits or, in the case of active employees, continued employment.

 

Section 4.2     Sponsorship and/or Establishment of Nuvectra Plans. Except as otherwise provided in this Agreement, sponsorship of benefit plans that cover solely Nuvectra Employees, and to the extent applicable, Former Nuvectra Employees, shall become effective on the Distribution Date by the member of the Nuvectra Group as identified in this Agreement, and to the extent necessary to achieve such sponsorship, each member of the Greatbatch Group and each member of the Nuvectra Group shall take appropriate action, including transfer of sponsorship of each such plan.

 

Section 4.3     Service Credit.

 

(a)     Service for Eligibility and Vesting Purposes. Except as otherwise provided in any other provision of this Agreement, for purposes of eligibility and vesting under the Nuvectra 401(k) Plan and Nuvectra Welfare Plans, Nuvectra shall, and shall cause each member of the Nuvectra Group to, credit each Nuvectra Employee and Former Nuvectra Employee with service for any period of employment with any member of the Greatbatch Group on or prior to the Distribution Date to the same extent that such service would be credited for the same purpose if it had been performed for a member of the Nuvectra Group.

 

(b)     Service for Benefit Purposes. Except as otherwise provided in any other provision of this Agreement, for purposes of benefit levels and accruals and benefit commencement entitlements under the Nuvectra 401(k) Plan, Nuvectra shall, and shall cause each member of the Nuvectra Group to, credit each Nuvectra Employee and Former Nuvectra Employee with service for any period of employment with any member of the Greatbatch Group on or prior to the Distribution Date to the same extent that such service is taken into account for the same purpose pursuant to the terms of the Greatbatch 401(k) Plan.

 

(c)     Evidence of Prior Service. Notwithstanding anything to the contrary, but subject to applicable law, upon reasonable request by one Party to the other Party, the first Party will provide to the other Party information relating to and confirming service for purposes of seniority (or seniority date) and service date for such Employees for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any Employee.

 

 

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Section 4.4     Plan Administration.

 

(a)     Transition Services. The Parties acknowledge that the Greatbatch Group may provide administrative services for certain of the Nuvectra Group’s benefit programs for a transitional period under the terms of the Transition Services Agreement. The Parties agree to enter into a business associate agreement (if required by applicable health information privacy laws) in connection with such administrative services.

 

(b)     Administration. Nuvectra shall use commercially reasonable efforts to, and shall cause each member of the Nuvectra Group to use commercially reasonable efforts to, administer its benefit plans in a manner that does not jeopardize the tax-favored status of the tax-favored benefit plans maintained by any member of the Greatbatch Group. Greatbatch shall use commercially reasonable efforts to, and shall cause each member of the Greatbatch Group to use commercially reasonable efforts to, administer its benefit plans in a manner that does not jeopardize the tax-favored status of the tax-favored benefit plans maintained by any member of the Nuvectra Group.

 

Article V

401(k) PLANS

 

Section 5.1     General Principles. Effective on or before the Distribution Date or as soon as administratively practicable after the Distribution Date, Nuvectra (or another member of the Nuvectra Group) shall establish and adopt a qualified employee cash or deferred arrangement under Code Section 401(k) (the “Nuvectra 401(k) Plan”) intended to be qualified under Code Section 401(a) for the benefit of Nuvectra Employees and Former Nuvectra Employees who were participants (or former participants with a remaining account balance) in the Greatbatch 401(k) Plan as of the Distribution Date (and each beneficiary and alternate payee of such person) (the “Nuvectra 401(k) Plan Beneficiaries”). Each Nuvectra Employee who was an active participant in the Greatbatch 401(k) Plan on the Distribution Date shall participate in the Nuvectra 401(k) Plan in accordance with the terms of the Nuvectra 401(k) Plan. Nuvectra Employees and Former Nuvectra Employees shall not make or receive additional contributions under the Greatbatch 401(k) Plan for payroll periods commencing on or after the Distribution Date. A Greatbatch Employee or Former Greatbatch Employee shall not participate in the Nuvectra 401(k) Plan.

 

Section 5.2     Transfer of Accounts. On or as soon as practicable after the Distribution Date (or such later time as mutually agreeable to Greatbatch and Nuvectra), Greatbatch shall cause to be transferred from the trust under the Greatbatch 401(k) Plan to the trust under the Nuvectra 401(k) Plan the aggregate amount that was credited to the accounts of the Nuvectra 401(k) Plan Beneficiaries as of such transfer date. The transfer may, to the extent reasonably possible, be an in-kind transfer, subject to the reasonable consent of the trustee of the Nuvectra 401(k) Plan trust and shall include the transfer of the aggregate value of assets held in the accounts relating to each Nuvectra 401(k) Plan Beneficiary under the Greatbatch 401(k) Plan and any participant loan notes held under such plans. The transfer of assets shall be conducted in accordance with Code Section 414(l), Treasury Regulation Section 1.414(l)-1 and ERISA Section 208. During the period after the Distribution Date and before such transfer of assets, with respect to any Nuvectra Employee or Former Nuvectra Employee who has an outstanding loan balance under the Greatbatch 401(k) Plan, Greatbatch shall provide that any amount received as payment on any such loan, in accordance with its terms, is timely remitted as directed by the administrator of the Greatbatch 401(k) Plan for crediting under the Greatbatch 401(k) Plan in respect of such loan, and Greatbatch shall cause the administrator of the Greatbatch 401(k) Plan to apply such amounts in satisfaction of such loan.

 

 

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Section 5.3     Employer Securities. Greatbatch presently intends to preserve the right, for a period of time, of Greatbatch Employees to receive distributions in kind from the Greatbatch 401(k) Plan if, and to the extent, investments under such plan is comprised of Greatbatch Common Stock or Nuvectra Common Stock. Greatbatch shall determine the extent to which and when Nuvectra Common Stock shall cease to be an investment alternative under the Greatbatch 401(k) Plan.

 

Section 5.4     Third-Party Vendors. Except as provided below, to the extent the Greatbatch 401(k) Plan is administered by a third-party vendor, Greatbatch and Nuvectra will cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for Nuvectra and to maintain any pricing discounts or other preferential terms for both Greatbatch and Nuvectra for a reasonable term with respect to such vendor. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party with respect to any third-party vendors. Each Party shall be responsible for any additional charges or administrative fees that such Party may incur pursuant to this Section 5.4.

 

Article VI

WELFARE PLANS

 

Section 6.1     Establishment of Nuvectra Welfare Plans. 

 

(a)     The members of the Nuvectra Group who are participating employers under the Greatbatch Welfare Plan on the day immediately preceding the Distribution Date (“Participating Nuvectra Employers”) shall, on or before 11:59 p.m. on that date, withdraw from such participation. Nuvectra and/or the Participating Nuvectra Employers (with Nuvectra included in the definition of Participating Nuvectra Employers for purposes of this Article VI) shall establish a comprehensive welfare benefit program (“Nuvectra Welfare Plan”) for the benefit of Nuvectra Employees and Former Nuvectra Employees who were eligible for coverage under the Greatbatch Welfare Plan as of the Distribution Date (“Nuvectra Welfare Plan Participants”). The Nuvectra Welfare Plan shall be effective as of the Distribution Date, except for the health and dependent care flexible spending accounts, which shall be effective as soon as administratively practicable following the Distribution Date. The Nuvectra Welfare Plan shall include the following benefits:

 

(i)     A high deductible health plan within the meaning of Code § 223(c)(2)(A) and related Internal Revenue Service guidance;

 

 

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(ii)     A cafeteria plan that meets the requirements of Code § 125 that includes a premium conversion feature, general purpose and limited purpose health flexible spending accounts, health savings account contributions, and a dependent care flexible spending account;

 

(iii)     Dental benefits;

 

(iv)     Vision benefits;

 

(v)     Short term and long term disability benefits;

 

(vi)     Life and accidental death and dismemberment insurance, including basic employer paid life and accidental death and dismemberment insurance, supplemental employee life insurance, and optional dependent life insurance; and

 

(vii)     Employee assistance program benefits.

 

Any benefits in addition to those specified above shall be at the option of the members of the Nuvectra Group.

 

The benefits that comprise the Nuvectra Welfare Plan (and the nonelective employer contributions towards those benefits) need not be substantially similar in all material respects to the similar benefits (and nonelective employer contributions) provided under the Greatbatch Welfare Plan as of the Distribution Date.

 

(b)     As a result of withdrawal from participation in the Greatbatch Welfare Plans by the Participating Nuvectra Employers, the Nuvectra Welfare Plan Participants will cease to be eligible for coverage as active Employees under the Greatbatch Welfare Plans at 11:59 p.m. on the day immediately preceding the Distribution Date, and Nuvectra Welfare Plan Participants shall not participate in any Greatbatch Welfare Plans after 11:59 p.m. on that date.

 

Section 6.2     Transitional Matters Under Nuvectra Welfare Plans.

 

(a)     Treatment of Incurred Claims.

 

(i)     Insured Benefits. With respect to benefits that, prior to the Distribution Date, were provided for under the Greatbatch Welfare Plans through the purchase of insurance, Greatbatch shall cause the Greatbatch Welfare Plans to fully perform, pay and discharge all claims of Nuvectra Welfare Plan Participants that were incurred prior to the Distribution Date.

 

(ii)     Uninsured/Self-Insured Benefits. Except as otherwise specifically provided in this Agreement, Greatbatch shall retain all Liabilities relating to Incurred Claims under the Greatbatch Welfare Plans, and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, and similar items) associated with such Incurred Claims. Nuvectra shall be responsible for all Liabilities relating to Incurred Claims under any Nuvectra Welfare Plan and shall also retain Assets (including, without limitation, Medicare reimbursements, pharmaceutical rebates, and similar items) associated with such Incurred Claims. 

 

 

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(iii)     Incurred Claims. For purposes of this Section 6.2(a), an “Incurred Claim” is deemed to be incurred (A) with respect to medical, dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or liability; (B) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or liability; and (C) with respect to long-term disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier, giving rise to such claim or liability. 

 

(b)     COBRA. Notwithstanding any other provision of this Agreement to the contrary, for the avoidance of doubt, and other than for individuals (and their qualified beneficiaries) identified on Schedule 6.2(b), the Nuvectra Group (which, for this purpose, is the “Buying Group” as defined in Treas. Reg. section 54.4980B-9) will be responsible for providing any required COBRA notices, and for providing COBRA continuation coverage, to all individuals who are “M&A qualified beneficiaries” (as defined in Treas. Reg. section 54.4980B-9) with respect to the transactions contemplated by this Agreement and the group health plans maintained by the Greatbatch Group (which, for this purpose is the “Selling Group” as defined in Treas. Reg. section 54.4980B-9). If and to the extent that the Buying Group fails to comply with its obligations under this paragraph, each member of the Buying Group will be jointly and severally liable to the Selling Group for all costs, expenses, and liabilities incurred by any member of the Selling Group however characterized (including benefits paid to M&A qualified beneficiaries which the Selling Group’s group health plans would not otherwise have been required to pay). 

 

Section 6.3     Credit for Deductibles Under Medical and Dental Plans. Individuals enrolled in the Greatbatch medical and dental plans during the 2016 calendar year, will receive credit under the deductible provisions of the Nuvectra medical and dental plan for out-of-pocket expenses incurred while covered under the Greatbatch Welfare Plan provided the expenses would have been paid by both the Greatbatch Welfare Plan and the Nuvectra Welfare Plan but for the application of their deductible limits.

 

Section 6.4     Insurance Contracts. To the extent any Greatbatch Welfare Plan is funded through the purchase of an insurance contract or is subject to any stop loss contract, Greatbatch and Nuvectra will cooperate and use their commercially reasonable efforts to replicate such insurance contracts for Nuvectra (except to the extent changes are required under applicable state insurance laws) and to maintain any pricing discounts or other preferential terms for both Greatbatch and Nuvectra for a reasonable term under such contracts. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party under any insurance contracts. Each Party shall be responsible for any additional premiums, charges or administrative fees that such Party may incur pursuant to this Section 6.4.

 

Section 6.5     Third-Party Vendors. Except as provided below, to the extent any Greatbatch Welfare Plan is administered by a third-party vendor, Greatbatch and Nuvectra will cooperate and use their commercially reasonable efforts to replicate any contract with such third-party vendor for Nuvectra and to maintain any pricing discounts or other preferential terms for both Greatbatch and Nuvectra for a reasonable term with respect to such vendor. Neither Party shall be liable for failure to obtain such pricing discounts or other preferential terms for the other Party with respect to any third-party vendors. Each Party shall be responsible for any additional premiums, charges or administrative fees that such Party may incur pursuant to this Section 6.5.

 

 

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Article VII

WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION

 

Effective as of the Distribution Date, Nuvectra shall have (and, to the extent it has not previously had such obligations, assume) the obligations for all claims and liabilities relating to workers’ compensation and unemployment compensation benefits for all Nuvectra Employees and Former Nuvectra Employees. Nuvectra shall use commercially reasonable efforts to provide that workers’ compensation and unemployment insurance costs are not adversely affected for either Party by reason of the Distribution.

 

Article VIII

EMPLOYMENT AGREEMENTS, SEVERANCE AND OTHER MATTERS

 

Section 8.1     Employment Agreements. Effective as of the Distribution Date, Nuvectra hereby assumes Greatbatch’s rights and obligations arising under the employment agreements described in Schedule 8.l and agrees to honor the terms and conditions of those agreements applicable to Nuvectra as a successor under the terms of such agreements. The terms of the employment agreements shall in all other respects be unaffected. The Parties agree that the Nuvectra Employees who are covered by employment agreements described above are express third party beneficiaries of this Section 8.1.

 

Section 8.2     Severance.

 

(a)     Except as otherwise provided in this Agreement, immediately following the Distribution, Greatbatch shall have no liability or obligation under any Greatbatch severance plan, program, or policy with respect to Nuvectra Employees or Former Nuvectra Employees.

 

(b)     Except as otherwise provided in this Agreement, effective after the Distribution Date, Nuvectra shall assume and shall be responsible for administering all payments and benefits under the applicable Greatbatch severance policies or any termination agreements with Former Nuvectra Employees whose employment terminated prior to the Distribution Date for an eligible reason under such policies or in accordance with such agreements.

 

Section 8.3     Accrued Time Off. Nuvectra shall recognize and assume all liability for all vacation, holiday, sick leave, flex days, personal days and paid-time off with respect to Nuvectra Employees, and Nuvectra shall credit each Nuvectra Employee with such accrual.

 

Section 8.4     Leaves of Absence. Nuvectra will continue to apply leave of absence policies applicable to inactive Nuvectra Employees who are on an approved leave of absence as of the Distribution Date that are substantially similar in all material respects to those that were applied by Greatbatch prior to the Distribution Date. Leaves of absence taken by Nuvectra Employees prior to the Distribution Date shall be deemed to have been taken as employees of a member of the Nuvectra Group.

 

 

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Section 8.5     Restrictive Covenants in Employment and Other Agreements.

 

(a)     To the fullest extent permitted by the agreements described in this Section 8.5(a) and applicable law, Greatbatch shall assign, or cause any member of the Greatbatch Group to assign, to Nuvectra or a member of the Nuvectra Group, as designated by Nuvectra, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the Greatbatch Group and a Nuvectra Employee or Former Nuvectra Employee, with such assignment effective as of the Distribution Date. To the extent that assignment of such agreements is not permitted, effective as of the Distribution Date, each member of the Nuvectra Group shall be considered to be a successor to each member of the Greatbatch Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the Greatbatch Group and a Nuvectra Employee or Former Nuvectra Employee whom Nuvectra reasonably determines have substantial knowledge of the business activities of the Nuvectra Group, such that each member of the Nuvectra Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the Nuvectra Group; provided, however, that in no event shall Greatbatch be permitted to enforce such restrictive covenant agreements against Nuvectra Employees or Former Nuvectra Employees for action taken in their capacity as employees of a member of the Nuvectra Group.

 

(b)     To the fullest extent permitted by the agreements described in this Section 8.5(b) and applicable law, Nuvectra shall assign, or cause any member of the Nuvectra Group to assign, to Greatbatch or a member of the Greatbatch Group, as designated by Greatbatch, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the Nuvectra Group and a Greatbatch Employee or Former Greatbatch Employee, with such assignment effective as of the Distribution Date. To the extent that assignment of such agreements is not permitted, effective as of the Distribution Date, each member of the Greatbatch Group shall be considered to be a successor to each member of the Nuvectra Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality and non-competition provisions) between a member of the Nuvectra Group and a Greatbatch Employee or Former Greatbatch Employee whom Greatbatch reasonably determines have substantial knowledge of the business activities of the Greatbatch Group, such that Greatbatch and each member of the Greatbatch Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the Greatbatch Group; provided, however, that in no event shall Nuvectra be permitted to enforce such restrictive covenant agreements against Greatbatch Employees or Former Greatbatch Employees for action taken in their capacity as employees of a member of the Greatbatch Group.

 

 

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Article IX

miscellaneous

 

Section 9.1     Preservation of Rights to Amend. The rights of each member of the Greatbatch Group and each member of the Nuvectra Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement.

 

Section 9.2     Confidentiality. Each Party agrees that any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith that is not otherwise public through no fault of such Party is confidential and is subject to the terms of the confidentiality provisions set forth in the Separation Agreement.

 

Section 9.3     Administrative Complaints/Litigation. Except as otherwise provided in this Agreement, on and after the Distribution Date, Nuvectra shall assume, and be solely liable for, the handling, administration, investigation and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights and unemployment compensation claims asserted at any time against Greatbatch or any member of the Greatbatch Group by any Nuvectra Employee or Former Nuvectra Employee (including any dependent or beneficiary of any such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant or otherwise) to or with respect to the business activities of any member of the Nuvectra Group, whether or not such employment or services were performed before or after the Distribution. To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both Greatbatch Employees (or Former Greatbatch Employees) and Nuvectra Employees (or Former Nuvectra Employees) and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Employees included in or represented by the putative or certified plaintiff class. The procedures contained in the indemnification and related litigation cooperation provisions of the Separation Agreement shall apply with respect to each Party’s indemnification obligations under this Section 9.3.

 

Section 9.4     Reimbursement and Indemnification. Greatbatch and Nuvectra each agree to reimburse the other Party, within 30 days of receipt from the other Party of reasonable verification, for all costs and expenses which the other Party may incur on its behalf as a result of any of the respective Greatbatch and Nuvectra Welfare Plans (including, but not limited to, Nuvectra’s reimbursement of Greatbatch for all COBRA liabilities for Nuvectra Employees and Former Nuvectra Employees), 401(k) Plan and, as contemplated by Section 8.2, any termination or severance payments or benefits. All liabilities retained, assumed or indemnified against by Nuvectra pursuant to this Agreement, and all liabilities retained, assumed or indemnified against by Greatbatch pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the Separation Agreement. Notwithstanding anything to the contrary, (i) no provision of this Agreement shall require any member of the Nuvectra Group to pay or reimburse to any member of the Greatbatch Group any benefit-related cost item that a member of the Nuvectra Group has previously paid or reimbursed to any member of the Greatbatch Group; and (ii) no provision of this Agreement shall require any member of the Greatbatch Group to pay or reimburse to any member of the Nuvectra Group any benefit-related cost item that a member of the Greatbatch Group has previously paid or reimbursed to any member of the Nuvectra Group.

 

 

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Section 9.5     Costs of Compliance with Agreement. Except as otherwise provided in this Agreement or any other Ancillary Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement.

 

Section 9.6     Fiduciary Matters. Greatbatch and Nuvectra each acknowledge that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any liabilities caused by the failure to satisfy any such responsibility.

 

Section 9.7     Form S-8. Before the Distribution or as soon as reasonably practicable thereafter and subject to applicable law, Nuvectra shall prepare and file with the SEC a registration statement on Form S-8 (or another appropriate form) registering under the Securities Act of 1933, as amended, the offering of a number of shares of Nuvectra Common Stock at a minimum equal to the number of shares subject to the Nuvectra Options, the Nuvectra RSAs and the Nuvectra RSUs. Nuvectra shall use commercially reasonable efforts to cause any such registration statement to be kept effective (and the current status of the prospectus or prospectuses required thereby shall be maintained) as long as any Nuvectra Options, Nuvectra RSAs, or Nuvectra RSUs may remain outstanding.

 

Section 9.8     Entire Agreement. This Agreement, together with the documents referenced herein (including the Separation Agreement, any other Ancillary Agreements and the plans and agreements referenced herein), constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Separation Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof.

 

Section 9.9     Binding Effect; No Third-Party Beneficiaries; Assignment. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as otherwise expressly provided in this Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon any third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any employee benefit plan or affect the applicable plan sponsor’s right to amend or terminate any employee benefit plan pursuant to the terms of such plan. Except as otherwise provided in Section 8.1, the provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned by any Party, except with the prior written consent of the other Party.

 

 

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Section 9.10     Amendment; Waivers. No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of each of the Parties. Any Party may, at any time, (a) extend the time for the performance of any of the obligations or other acts of another Party, (b) waive any inaccuracies in the representations and warranties of another Party contained herein or in any document delivered pursuant hereto, and (c) waive compliance by another Party with any of the agreements, covenants or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound thereby. No failure or delay on the part of any Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercises thereof or of any other right.

 

Section 9.11     Remedies Cumulative. All rights and remedies existing under this Agreement or the Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

Section 9.12     Notices. Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given: (a) when personally delivered, (b) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent, (c) if sent by overnight courier which delivers only upon the executed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent, or (d) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (d) shall also be sent pursuant to clause (a), (b) or (c)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

 

Section 9.13     Counterparts; Facsimile Signatures. This Agreement, including the Schedules hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement. Delivery of an executed signature page to this Agreement, and any of the other agreements, documents and instruments contemplated hereby, by facsimile transmission shall be as effective as delivery of a manually signed counterpart hereof or thereof.

 

Section 9.14     Severability. If any term or other provision of this Agreement or the Schedules attached hereto is determined by a non-appealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

 

 

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Section 9.15     Governing Law. To the extent not preempted by applicable federal law, this Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

 

Section 9.16     Performance. Each of Greatbatch and Nuvectra shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any member of the Greatbatch Group and any member of the Nuvectra Group, respectively. The Parties each agree to take such further actions and to execute, acknowledge and deliver, or to cause to be executed, acknowledged and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement.

 

Section 9.17     Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against any Party.

 

Section 9.18     Effect if Distribution Does Not Occur. Notwithstanding anything in this Agreement to the contrary, if the Separation Agreement is terminated prior to the Distribution Date, this Agreement shall be of no further force and effect.

 

 

 

[signature page follows]

 

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a duly authorized officer as of the date first written above.

 

 

 

	
 
	
GREATBATCH, INC.

	 	 
	 	 
	 	By:	/s/ Thomas J. Hook	 
	 	Name: 	Thomas J. Hook	 
	 	Title: 	President and Chief Executive Officer	 
	 	 	 	 
	 	 
	 	
QIG GROUP, LLC

	 	(to be converted into Nuvectra Corporation)
	 	 
	 	 
	 	By:	/s/ Scott F. Drees	 
	 	Name: 	Scott F. Drees
	 	Title: 	Chief Executive Officer

 

 

27ex10-4.htm

Exhibit 10.4

 

Confidential Treatment Requested

 

SUPPLY AGREEMENT

 

This SUPPLY AGREEMENT (the “Agreement”), effective the 14th day of March, 2016 (the “Effective Date”) is between Greatbatch Ltd., located at 10000 Wehrle Drive, Clarence, New York 14031, (“Greatbatch”) and QiG Group, LLC, a Delaware limited liability company, located at 5700 Granite Parkway, Suite 960, Plano, Texas, 75024 (“QiG Group”). Greatbatch and QiG Group are referred to collectively as the “Parties” and individually as a “Party”.

 

RECITALS:

 

WHEREAS, QiG Group desires to purchase the Relevant Project Components (as defined below) exclusively from Greatbatch;

 

WHEREAS, Greatbatch is in the business of supplying Relevant Project Components; and

 

WHEREAS, the Parties desire to terminate, replace and supersede the Umbrella Agreement between Greatbatch and QiG Group, dated August 28, 2009 and hereby establish the new terms and conditions that shall apply to QiG Group’s exclusive purchase of Relevant Project Components from Greatbatch.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, Greatbatch and QiG Group hereby agree as follows:

 

	
I.
	
DEFINITIONS

 

As used in this Agreement, the following capitalized terms, whether used in the singular or plural, shall have the meanings set forth in this Article I:

 

	
A.
	
“Acknowledged Order” has the meaning set forth in Section VIII.A.

 

	
B.
	
“Affiliate” means, with respect to any Person, any other Person which controls, is controlled by or is under common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, a Person shall be deemed to control another Person if any of the following conditions is met: (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities. For purposes of this Agreement, in no event shall QiG Group or any of its Affiliates be deemed Affiliates of Greatbatch (or any of its Affiliates) nor shall Greatbatch or any of its Affiliates be deemed Affiliates of QiG Group (or any of its Affiliates).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

 

	
C.
	
“Agreement” has the meaning as described in the Preamble.

 

	
D.
	
“Change of Control” means (i) a consolidation or merger of a Party or other change of control transaction (other than a merger to reincorporate a party in a different jurisdiction) in which the shareholders or members, as applicable, of a Party immediately prior to such transaction do not continue to hold a greater than 50% interest in the successor or survivor entity immediately following such transaction, (ii) a transaction or series of transactions that results in the transfer of more than 50% of the voting power of a Party to an unaffiliated Person or (iii) the sale, lease, transfer or other disposition of all or substantially all of the assets of a Party (which shall include any effective transfer of such assets regardless of the structure of any such transaction as a license or otherwise).

 

	
E.
	
“Confidential Information” of a Party means any and all information of a confidential or proprietary nature disclosed by a Party under this License Agreement, whether in oral, written, graphic or electronic format, which includes, but is not limited to, Trade Secrets, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, diagrams, data, business activities and operations, customer lists, reports, studies and other technical and business information. 

 

	
F.
	
“Consigned Products” has the meaning set forth in Section VIII.A.

 

	
G.
	
“Consignment Inventory” has the meaning set forth in Section VIII.B.

 

	
H.
	
“Consignment Orders” has the meaning set forth in Section VIII.A.

 

	
I.
	
“Exercise Period” has the meaning set forth in Section II.C.

 

	
J.
	
“Effective Date” has the meaning as described in the Preamble.

 

	
K
	
“Facility Approval Notice” has the meaning set forth in Section IV.B.

 

	
L.
	
“FDA” means the U.S. Food & Drug Administration or any successor entity thereto.

 

	
M.
	
“Field of Use” means spinal cord stimulation.

 

	
N.
	
“Force Majeure” has the meaning set forth in Section V.N.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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O.
	
“Greatbatch” has the meaning as described in the Preamble.

 

	
P.
	
“Greatbatch Indemnitees” has the meaning set forth in Section X.C.

 

	
Q.
	
“Improvements” has the meaning set forth in Section XII.B.

 

	
R.
	
“Initial Term” has the meaning set forth in Section II.B.

 

	
S.
	
“Intellectual Property” means all rights held by a Party in its technology, products and business information, all or some of which may constitute Confidential Information, and including but not limited to: patent rights, copyrights, trademark rights, goodwill, inventions, improvements, discoveries, designs, modifications, data, business information, financial information, clinical information and data, regulatory information, trade secret rights, mask work, know how rights and other intellectual property and proprietary rights. 

 

	
T.
	
“Joint IP” has the meaning set forth in Section XII.B.

 

	
U.
	
“Legal Requirements” means any federal, state, local, provincial, foreign, international, multinational or other statute, law, treaty, rule, regulation, guideline, administrative order, directives, ordinance, constitution or principle of common law (or any interpretation thereof by a governmental entity).

 

	
V.
	
“Licensed IP” has the meaning set forth in the Restricted License Agreement and the Unrestricted License Agreement. 

 

	
W.
	
“Manufacturing Request” has the meaning set forth in Section II.C.

 

	
Y.
	
“Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof).

 

	
Z.
	
“Product” means QiG Group’s Algovita spinal cord stimulation system and its related parts and components that are based on, use or incorporate the Licensed IP (the “Algovita System”) and such other products, parts and components, including replacement parts and components, that may be incorporated within, used in conjunction with or sold as part of the Algovita System as may be mutually agreed upon by the parties from time to time.

 

	
AA.
	
“QiG Group” has the meaning as described in the Preamble. For purposes of this Agreement, unless the context requires otherwise, any reference herein to QiG Group shall mean QiG Group, LLC and each of its Affiliates

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 3 -

 

 

	
BB.
	
“QiG Group Indemnitees” has the meaning set forth in Section X.D.

 

	
CC.
	
“Relevant Project Components” means the parts and components for the Product set forth in Appendix A, which may be amended by the Parties from time-to-time in accordance with this Agreement to incorporate additional Relevant Project Components.

 

	
DD.
	
“Renewal Term” has the meaning set forth in Section II.B.

 

	
EE.
	
“Restricted License Agreement” means that certain Restricted License Agreement, dated March 14, 2016, by and between Greatbatch and QiG Group whereby QiG Group has licensed certain of its intellectual property to Greatbatch.

 

	
FF. 
	
“Restricted Period” has the meaning set forth in Section XI.B(iv).

 

	
GG.
	
“Resultant Patents” means any rights under United States and foreign patents and patent applications, including, but not limited to, divisions, continuations, continuations-in-part, reissues, and reexaminations thereof that arise from any Joint IP (as defined below).

 

	
HH.
	
“ROFR Notice” has the meaning set forth in Section II.C.

 

	
II.
	
“ROFR Period” has the meaning set forth in Section II.C.

 

	
JJ.
	
“Safety Stock” has the meaning set forth in Section VII.

 

	
KK.
	
“Specifications” has the meaning set forth in Section IV.A.

 

	
LL.
	
“Term” has the meaning set forth in Section II.B.

 

	
MM.
	
“Third Party Supply Agreement” has the meaning set forth in Section II.C.

 

	
NN.
	
“Trade Secrets” means trade secrets as they are defined in the Uniform Trade Secrets Act, as amended (UTSA).

 

	
OO.
	
“Unrestricted License Agreement” means that certain Unrestricted License Agreement, dated March 14, 2016, by and between Greatbatch and QiG Group whereby QiG Group has licensed certain of its intellectual property to Greatbatch.

 

	
PP.
	
“Transfer Date” has the meaning set forth in Section VIII.D.

 

	
QQ.
	
“Validation Documentation” has the meaning set forth in Section IV.B.

 

	
RR.
	
“Warranty Period” has the meaning set forth in Section X.A(i).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 4 -

 

 

	
SS.
	
“WIP” has the meaning set forth in Section III.B.

 

	
II.
	
SUPPLY AND CONTRACT PERIOD: 

 

A.            Sale and Purchase Obligations. Subject to all of the terms and conditions of this Agreement:

 

	 	
(i)
	
Greatbatch agrees that during the Term, it shall have the exclusive right to manufacture and sell to QiG Group all Relevant Project Components (as described in or added to Appendix A) that may be ordered by QiG Group in accordance with the terms of this Agreement; and

 

	 	
(ii)
	
QiG Group agrees to purchase exclusively from Greatbatch during the Term its requirements for Relevant Project Components to be used by QiG Group in the Products.

 

During the Term, if QiG Group desires to have an item manufactured that replaces or is intended to replace a Relevant Project Component and such item is based on, or that incorporates, Licensed IP and such item falls within the Field of Use, and if Greatbatch elects to be the manufacturer of such item, then such item shall be included as a “Relevant Project Component” under this Agreement and Appendix A will be amended to include such item.

 

Subject to the immediately preceding paragraph, during the Term, if QiG Group desires to have an item manufactured that is based on, or that incorporates, Licensed IP and such item falls within the Field of Use, and if Greatbatch elects to be the manufacturer of such item, then QiG Group and Greatbatch each agree to negotiate exclusively, reasonably and in good faith with each other for up to [***] days regarding the terms of a manufacturing and supply agreement including, but not limited to, pricing, acceptable margins for each party and any other unique manufacturing or quality requirements related to such item. In the event that the parties are unable to agree on terms within [***] days, QiG Group shall be free to negotiate a manufacturing and supply agreement with any other third party suppliers for such item. QiG Group agrees that prior to executing any such third party manufacturing and supply agreement, it will notify Greatbatch of the key terms of such manufacturing and supply agreement and will, for a period of at least [***] days after Greatbatch’s receipt of such terms, give Greatbatch the opportunity to enter into a manufacturing and supply agreement with QiG Group for such item on terms substantially consistent with such third party manufacturing and supply agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 5 -

 

 

During the Term, if QiG Group desires to have an item manufactured that is not based on or does not incorporate any Licensed IP but QiG Group intends that such item will be used within the Field of Use, then QiG Group will be permitted to negotiate a manufacturing and supply agreement with any third party with respect to such item. QiG Group agrees that prior to executing any such third party manufacturing and supply agreement, it will notify Greatbatch of the key terms of such manufacturing and supply agreement and will, for a period of at least [***] days after Greatbatch’s receipt of such terms, give Greatbatch the opportunity to enter into a manufacturing and supply agreement with QiG Group on terms substantially consistent with such third party manufacturing and supply agreement. Further, if at the time QiG Group is initially seeking to have such item manufactured, (a) Greatbatch is unable to manufacture the item so that the item and its manufacture are at least equivalent in terms of technology, quality, ramp-up times, lead times and capacity to manufacture in accordance with this Agreement, (b) Greatbatch is unable to provide at least equivalent in terms of price to manufacture as an offering made by a third party, or (c) the Parties otherwise agree in writing, QiG Group will be free to enter into or negotiate with any other third party supplier for the manufacture of such item(s).

 

Notwithstanding Greatbatch’s exclusive right to manufacture and sell to QiG Group all Relevant Project Components, the parties hereby agree that QiG Group shall have the right to have a third party manufacture the external devices that are currently manufactured by Minnetronix, Inc. and that are listed under the heading “External Devices” on Appendix A; provided, that in the event that QiG Group elects to have a third party manufacture the external devices, QiG Group shall (i) provide Greatbatch [***] ([***]) months’ written notice prior to any purchase of such external devices from such third party, (ii) purchase 100% of its requirements for such external devices from a party other than Greatbatch after the completion of the [***] ([***]) month notice period and Greatbatch shall have no obligation to sell any external devices to QiG Group; and (iii) purchase from Greatbatch, and be responsible for, all finished product, WIP, raw material, components, all Safety Stock held in accordance with Section VII, all Consignment Products, and any non-cancelable purchase orders outstanding with suppliers related to such external devices. 

 

B.     Term of Agreement. This Agreement will be in full force and effect from the date of its execution until the earliest to occur of (i) the fifth anniversary of the date of FDA approval that permits QiG Group to sell the Products in the United States (the “Initial Term”), (ii) termination by the mutual agreement of the Parties, or (iii) termination in accordance with the following terms of this Agreement. This Agreement shall automatically be renewed after the Initial Term for successive terms of one (1) year each (each a “Renewal Term”) unless either Party gives written notice of non-renewal or termination not less than three (3) months prior to the expiration of the Initial Term or any such Renewal Term (the Initial Term and all Renewal Terms being collectively the “Term”).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 6 -

 

 

C.     Right of First Refusal. During the period beginning one hundred eighty (180) days prior to the expiration of the Term and ending on the date that is six (6) months after the expiration of the Term (the “ROFR Period”), in the event that QiG Group determines to seek to purchase its requirements for any Relevant Project Components from a third party (a “Manufacturing Request”), QiG Group shall promptly, and prior to taking any material steps towards engaging any third party with respect to such Manufacturing Request, notify Greatbatch of such Manufacturing Request (the “ROFR Notice”). During the ninety (90) day period following Greatbatch’s receipt of the ROFR Notice (the “Exercise Period”), (A) QiG Group and Greatbatch shall negotiate reasonably and in good faith, on an exclusive basis, regarding entry into a definitive manufacturing and supply agreement with respect to such Manufacturing Request and (B) QiG Group shall not initiate any negotiations regarding a definitive manufacturing and supply agreement with any third party regarding such Manufacturing Request.

 

If Greatbatch and QiG Group do not execute and deliver a definitive manufacturing and supply agreement prior to the expiration of the Exercise Period, QiG Group shall be free to negotiate a manufacturing and supply agreement with any third party with respect to such Manufacturing Request (a “Third Party Supply Agreement”) during the [***] ([***]) month period following the expiration of the Exercise Period; provided that QiG Group, prior to execution of any such Third Party Supply Agreement, provides Greatbatch with the key terms of such Third Party Supply Agreement and offers it, for a period lasting at least [***] ([***]) days after receipt of the Third Party Supply Agreement by Greatbatch, the opportunity to enter into a manufacturing and supply agreement with QiG Group on terms substantially consistent with such Third Party Supply Agreement before executing such Third Party Supply Agreement.

 

For the avoidance of the doubt, the Parties hereby acknowledge that each Manufacturing Request that occurs during the ROFR Period separately triggers QiG Group’s right of first refusal obligations pursuant to this Section II.C; provided that in the event that this Agreement has been terminated by QiG Group pursuant to Section III.A(i) or Section III.A(ii), Greatbatch’s right of first refusal under this Section II.C will be void and QiG Group may freely negotiate with any third party to enter into a Third Party Supply Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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III.          TERMINATION:

 

	 	
A.
	
Termination. Notwithstanding the provisions of Section II.B above, this Agreement may be terminated in accordance with the following provisions: 

 

	 	
(i)
	
Either Party may terminate this Agreement for cause by giving the other Party thirty (30) days’ prior written notice of such termination if the other Party materially breaches or defaults under any of the material terms or conditions of this Agreement and fails to cure such material breach or default within sixty (60) days after receiving notice thereof. 

 

	 	
(ii)
	
Either Party shall have the right to terminate this Agreement in its entirety if, at any time, (i) the other Party shall file in any court or agency pursuant to any Legal Requirement of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets, (ii) if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after the filing thereof, (iii) if the other Party shall propose or be a party to any dissolution or liquidation, or (iv) if the other Party shall make an assignment for the benefit of creditors. In the event that this Agreement is terminated or rejected by a Party or its receiver or trustee under applicable bankruptcy or other Legal Requirements due to such Party’s bankruptcy, then all rights and licenses granted under or pursuant to this Agreement by such Party to the other Party are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code and any similar state or foreign Legal Requirements, licenses of rights to “intellectual property” as defined under Section 101(52) of the U.S. Bankruptcy Code. The Parties agree that all intellectual property rights licensed hereunder, including, without limitation, any patents or patent applications in any country of a Party covered by the license grants under this Agreement, are part of the “intellectual property” as defined under Section 101(52) of the Bankruptcy Code subject to the protections afforded the non-terminating Party under Section 365(n) of the Bankruptcy Code, any similar law or regulation in any other country; or

 

	 	
(iii)
	
A Party may terminate this Agreement by giving written notice to the other Party if such other Party has given notice as to an event of Force Majeure and such other Party has suspended its performance hereunder for more than [***] ([***]) consecutive days.

 

Nothing herein shall be construed to allow either Party the right to terminate this Agreement for any inadvertent error or minor violation of any law or regulation by the other Party; provided that such error or violation does not have a material adverse effect on the other Party.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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B.
	
Effect of Termination. In the event of termination by Greatbatch under Section III.A, QiG Group will be responsible for paying for (i) raw materials and other items subject to existing non-cancellable purchase orders that cannot otherwise be reasonably used by Greatbatch, (ii) all work-in-process (“WIP”) costs specific to QiG Group custom designs, (iii) all Safety Stock held in accordance with Section VII, and (iv) all Consignment Products. 

 

In the event of termination by QiG Group under Section III.A, QiG Group will be responsible for paying for (i) all Safety Stock held in accordance with Article VII and (ii) all Consignment Products. Greatbatch agrees to cooperate in good faith to return, in a timely manner, any and all materials, documentation, tooling, masks, capital and/or other equipment due to QiG Group. Any and all expenses and/or shipping arrangements will be borne or made by the receiving Party. Further, for the avoidance of doubt, the Parties agree that in the event QiG Group terminates this Agreement under Section III.A(i) or Section III.A(ii), QiG Group will have the right to have the Relevant Product Components manufactured by another third party supplier and all right of first refusal obligations of QiG Group under this Agreement will be void and not applicable.

 

	 	
C.
	
Amendment to Agreement. This Agreement may not be modified, changed or terminated orally. No change, modification, addition, or amendment shall be valid unless in writing indicating an intent to modify this Agreement and signed by an authorized officer of each Party.

 

IV.           SUPPLY

 

	 	
A.
	
The Relevant Project Components shall be manufactured in accordance with the specifications attached hereto as Appendix A (the “Specifications”) and in accordance with the terms of the Quality Agreement between the parties, effective as of September 22, 2015, as may be amended from time to time by the mutual written agreement of the parties (the “Quality Agreement”). 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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B.
	
During the Term, Greatbatch will manufacture the Relevant Project Components at its Plymouth, Minnesota facility and then likely transfer the manufacturing to another Greatbatch facility. If Greatbatch desires to relocate the manufacturing of the Relevant Project Components to another Greatbatch facility, Greatbatch shall provide written notice to QiG Group at least [***] months prior to Greatbatch’s proposed date of such relocation, and shall provide such other information reasonably required by QiG Group with respect to such proposed new location. Following the notice, Greatbatch shall deliver to QiG Group a final qualification report and final qualification parts in connection with the relocation indicating Relevant Project Component equivalence at the new location (“Validation Documentation”). Greatbatch shall not ship any Relevant Project Component manufactured at the new facility until Greatbatch’s receipt of a written notice from QiG Group that it is ready to receive Relevant Project Components manufactured at the new facility (the “Facility Approval Notice”). QiG Group will use best efforts to achieve all necessary regulatory approvals as soon as possible after QiG Group’s approval of the Validation Documentation. If QiG Group does not issue the Facility Approval Notice within [***] days after all regulatory approvals necessary to manufacture the Relevant Project Component at the new location have been obtained and Greatbatch has reasonably demonstrated that it can manufacture the Relevant Project Components in accordance with this Agreement at such new location, then all prices for the Relevant Project Components will automatically increase by [***] percent ([***]%) unless and until QiG Group issues the Facility Approval Notice. QiG Group shall provide reasonable cooperation to Greatbatch in connection with the qualification of such new facility. Notwithstanding anything in this Agreement to the contrary, QiG Group understands and agrees that the relocation of the manufacturing facility from the Plymouth, Minnesota facility is accounted for in the pricing in Appendix B, and therefore, no pricing adjustments will be made as result of such relocation.

 

V.             PRICE; ORDERS, DELIVERY, PAYMENT, INSPECTION:

 

	 	
A.
	
The prices for the Relevant Project Components shall be as set forth in Appendix B of this Agreement and such prices will be fixed for the Initial Term unless otherwise mutually agreed upon by the Parties in writing, or as may be adjusted in accordance with this Section V, or as may be reduced in accordance with Section V.P below. Notwithstanding anything in this Agreement to the contrary, the price for any Relevant Project Component may be increased from time-to-time during the Term if Greatbatch’s cost for any individual material or all of the materials used in the manufacture of such Relevant Project Component increases by [***]% or more.  If Greatbatch determines that there has been such a change to its cost, it will provide QiG Group with at least 30 days’ written notice before adjusting the price for such Relevant Project Component; provided, that the change in price shall not exceed the increased cost to Greatbatch. 

 

	 	
B.
	
Simultaneous with the execution of this Agreement, and on each January 1st thereafter, QiG Group will deliver to Greatbatch a blanket purchase order by product category described on Exhibit B for the Relevant Project Components to be purchased by QiG Group for the remaining calendar year (a “Firm Purchase Order”). 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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C.
	
To the extent that the price for a Relevant Project Component is based on a volume pricing table set forth in Appendix B (a “Volume Priced Component”), the price for such Volume Priced Component shall be based on the amount of such Volume Priced Components ordered pursuant to the Firm Purchase Order. In the event that QiG Group has not, in any calendar year, purchased and accepted delivery of a Volume Priced Component in such an amount that equals or exceeds the amount of such Volume Priced Components ordered pursuant to the Firm Purchase Order for such calendar year, then QiG Group shall, within [***] days after the end of such calendar year, pay to Greatbatch an amount equal to (i)(A) the number of such Volume Priced Components ordered pursuant to the Firm Purchase Order, minus (B) the actual number of such Volume Priced Components purchased and accepted by QiG Group during such calendar year, multiplied by (ii) the price of such Volume Priced Component. For illustrative purposes only, if QiG Group ordered [***] IPGs pursuant to the Firm Purchase Order for 2016, but only purchased and accepted [***] IPGs in 2016, QiG Group would pay $[***] to Greatbatch by [***] (i.e. [***] – [***] x $[***] = $[***]). 

 

	 	
D.
	
In the event that QiG Group, in any calendar year, purchases and accepts delivery of a Volume Priced Component in an amount that exceeds the amount of such Volume Priced Components ordered pursuant to the Firm Purchase Order for such calendar year, and the purchased and accepted amount would have caused a different price to be applicable if such amount would have been included in the Firm Purchase Order for such calendar year, then Greatbatch shall, within [***] days after the end of such calendar year, issue a rebate to QiG Group in an amount equal to (i)(A) the actual number of such Volume Priced Components purchased and accepted by QiG Group during such calendar year, multiplied by (B) the price of such Volume Priced Component as dictated by the amount set forth in the Firm Purchase Order, minus (ii)(A) the actual number of such Volume Priced Components purchased and accepted by QiG Group during such calendar year, multiplied by (B) what the price of such Volume Priced Component would have been if the actual number of such Volume Priced Components purchased and accepted by QiG Group would have been included in the Firm Purchase Order. For illustrative purposes only, if QiG Group ordered [***] IPGs pursuant to the Firm Purchase Order for 2016, but purchased and accepted [***] IPGs in 2016, Greatbatch would issue a rebate of $[***] to QiG Group by [***] (i.e. [[***] x $[***]] – [[***] x $[***]] = $[***]).

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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E.
	
QiG Group may lock in the price for a precious metal used in a Relevant Project Component as follows:

 

	 	
(i)
	
QiG Group will provide written notification to its Greatbatch Account Manager and customer service representative when it wants to lock in the price for a precious metal used in a Relevant Project Component.  In addition, forecast information and duration of the “price-lock” needs to be specified.

 

	 	
(ii)
	
Within 48 hours of receiving such notification, Greatbatch will lock in the price of the precious metal.  Upon locking in the price, Greatbatch will notify QiG Group of the locked-in price.

 

	 	
(iii)
	
A locked-in price will become effective for the Relevant Project Component beginning the following January 1 (unless the notice provided by QiG Group under Section V.E.(ii) above is given on December 31, then the locked-in price will not become effective until the following January 2).  If QiG Group does not notify Greatbatch to lock in the price for a precious metal, the cost of the precious metal will be the market price of the precious metal at the time of Greatbatch’s receipt of the applicable purchase order.

 

	 	
(iv)
	
In the event that any precious metal that is part of such “price-lock” is unused during the applicable “price-lock” period (“Unused Precious Metal”), the cost of such Unused Precious Metal will remain the “price-lock” price until the inventory of such Unused Precious Metal is fully depleted. In the event that QiG Group elects to lock the price for a precious metal that is the same metal as the Unused Precious Metal, such requested “price-lock” price will not be effective until the inventory of such Unused Precious Metal is fully depleted. Notwithstanding anything in this Section V.E.(iv) to the contrary, all Unused Precious Metals will be purchased by QiG Group within ninety (90) days of the end of the applicable “price-lock” period at Greatbatch’s cost for such Unused Precious Metals.

 

	 	
(v)
	
In the event that Greatbatch’s inventory of any precious metal that is part of such “price-lock” is fully depleted prior to the completion of the applicable “price-lock” period, the “price-lock” shall be terminated and the cost of the precious metal will be the market price of the precious metal at the time of Greatbatch’s next purchase of such precious metal. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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F.
	
Greatbatch will provide Relevant Project Components to QiG Group pursuant to purchase orders to be issued by QiG Group. The general terms and conditions of sale for Relevant Project Components sold by Greatbatch to QiG Group hereunder are set forth in this Agreement. The Parties expressly agree that none of the terms and conditions of any standard purchase preprinted forms used by either Greatbatch or the QiG Group in effectuating the purchase and sale transactions contemplated by this Agreement (including, but not limited to, purchase orders, acknowledgements and acceptance forms, invoices, labels and shipping documents) will apply, except insofar as a purchase order or acknowledgement establishes the quantity, destination, shipping information and the desired delivery date (which must satisfy the standard lead times identified for the applicable Relevant Project Component). 

 

	 	
G.
	
QiG Group’s purchase order form shall set forth, at a minimum, the quantity of Relevant Project Components ordered, the address of the facility of QiG Group (or its affiliate) to which the Relevant Project Components should be shipped and requested delivery dates (which shall be no less than the lead time set forth in Section VI below).

 

	 	
H.
	
Unless QiG Group gives Greatbatch written instructions as to the method of shipment and carrier, Greatbatch shall select the methods of shipment and the carrier for the respective purchase order. Greatbatch shall prepay transportation and similar charges upon shipment. Title to all Relevant Project Components conforming to QiG Group’s purchase order shall pass, free and clear of all encumbrances, at the EXW shipping point, which shall be Greatbatch’s facility. QiG Group assumes and agrees to bear all risk of damage or loss to the Relevant Project Components after delivery by Greatbatch to the carrier at the EXW shipping point. QiG Group hereby releases Greatbatch from any and all claims and liability with respect to any such in-transit damages or losses to the goods. QiG Group shall be responsible for securing insurance coverage to cover shipments and deliveries hereunder.

 

	 	
I.
	
Greatbatch shall perform testing to ensure that certain Relevant Project Components delivered to QiG Group meet all applicable Specifications and such testing will be at Greatbatch’s cost, except as set forth below.  QiG Group inspection of incoming Relevant Project Components will rely upon Greatbatch testing and may consist of an examination of Greatbatch’s testing documentation as well as independent testing by QiG Group.  Notwithstanding the foregoing, QiG Group shall attempt to inspect all Relevant Project Components within thirty (30) days, but not to exceed sixty (60) days, and notify Greatbatch if any of the Relevant Project Components fail to meet the Specifications and quality standards for such Relevant Project Components.  Prior to the Effective Date, QiG Group has provided, at no cost to Greatbatch, one (1) IPG board level testing station, one (1) IPG Charging 6 Bay station, one (1) IPG Fine Tune station, one (1) IPG final functional testing station and one (1) EPG board level testing station (the “Generation 1 Stations”). On or prior to March 31, 2016, QiG Group shall provide, to Greatbatch, one (1) IPG board level testing station and one (1) IPG final functional testing station (the “Generation 1A Stations”).  To the extent that Greatbatch requests QiG Group to provide new or additional testing stations in addition to the Generation 1 or Generation 1A Stations (the “New Testing Stations”), QiG Group will use commercially reasonable efforts to develop, design and provide such New Testing Stations on the delivery schedule requested by Greatbatch. Greatbatch will be responsible for the hardware costs of the Generation 1A Stations and New Testing Stations and such costs shall be negotiated in good faith between the parties. Greatbatch will be responsible for its costs to validate and implement the Generation 1A Stations and New Testing Stations. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 13 -

 

 

If QiG Group provides (i) periodic revisions or improvements, both software related and mechanical/structural, to any testing stations or (ii) new testing stations as a result of a QiG Group initiated redesign or modification, including, without limitation the Generation 2 Testing Stations expected to be delivered by QiG Group to Greatbatch in the first quarter of 2017 (collectively, the “QiG Initiated Stations”), QiG Group will be solely responsible for the cost of such revisions or improvements or such QiG Initiated Stations and QiG Group will reimburse Greatbatch for Greatbatch’s costs to validate and implement such revisions or improvements or QiG Initiated Stations. QiG Group will be responsible for all labor costs associated with developing, designing and providing the Generation 1A Stations, New Testing Stations, and QiG Initiated Stations. QiG Group agrees that it will provide, at no cost to Greatbatch, reasonable and necessary training, technical support and troubleshooting assistance for the Generation 1A Stations, New Testing Stations, and QiG Initiated Stations until such time that the Generation 1A Stations, New Testing Stations or QiG Initiated Stations, as applicable, perform to a mutually agreed upon level that is to be negotiated in good faith between the Parties.  Within thirty (30) days of the expiration or termination of this Agreement, QiG Group shall purchase from Greatbatch all testing stations provided to, or purchased by, Greatbatch under this Section V.I. and the purchase price shall be the net book value of all such testing stations at the date of expiration or termination of this Agreement. 

 

	 	
J.
	
QiG Group and Greatbatch agree to use their best efforts to mutually agree on (i) a testing protocol for the Relevant Project Components and (ii) a resolution with the suppliers of the [***] to reduce the “[***]” rate of the applicable [***], in order to achieve a “[***]” for the Relevant Project Components (including, all underlying [***]) of at least [***]% as soon as possible. Greatbatch and QiG Group hereby appoint Mauricio Arellano and Norbert Kaula as their respective representatives to achieve such agreement. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 14 -

 

 

	 	
K.
	
Commencing on [***], QiG Group shall pay to Greatbatch, in addition to the price for the IPGs and EPGs set forth in Appendix B of this Agreement, a surcharge for each IPG and EPG purchased by QiG Group during the next [***] ([***]) months (the “[***] Surcharge”). Greatbatch and QiG Group agree to calculate the [***] Surcharge on [***] and [***] (each the “[***] Surcharge Calculation Date”), and such [***] Surcharge shall remain in effect for [***] ([***]) months after the applicable [***] Surcharge Calculation Date. The [***] Surcharge for each IPG and EPG, as applicable, shall be calculated as follows (i)(A)(I) [***]% minus (II) the IPG or EPG [***] before final assembly, as applicable, multiplied by (B) the cost of the IPG or EPG [***], as applicable, multiplied by (ii) [***] percent ([***]%). For purposes of calculating the [***], Greatbatch (i) will not include [***] that failed the Greatbatch incoming inspection process, that were returned to the [***] supplier, and for which Greatbatch was issued a refund, and (ii) will include [***] that failed the [***] testing in calculating previous [***] Surcharges but that pass the [***] testing in calculating the current [***] Surcharge and that Greatbatch will use in the production of the IPGs and EPGs, as determined in its sole reasonable discretion. For purposes of calculating the [***] Surcharge, the cost of the IPG [***] is $[***] and the cost of the EPG [***] is $[***]. For illustrative purposes only, if an IPG has a [***] of [***]%, then QiG Group will pay a [***] Surcharge of $[***] to Greatbatch for each IPG purchased by QiG Group during the next [***] ([***]) month period (i.e. ([[***]% - [***]%) * $[***]] * [***]% = $[***]). For illustrative purposes only, if an EPG has a [***] of [***]%, then QiG Group will pay a [***] Surcharge of $[***] to Greatbatch for each EPG purchased by QiG Group during the next [***] ([***]) month period (i.e. ([[***]% - [***]%) * $[***]] * [***]% = $[***]). The [***] Surcharge for the IPG will be discontinued once the IPG [***] before final assembly and the IPG [***] after final assembly each achieve [***]% or [***], whichever occurs first. The [***] Surcharge for the EPG will be discontinued once the EPG [***] before final assembly and the EPG [***] after final assembly each achieve [***]% or [***], whichever occurs first. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 15 -

 

 

	 	
L.
	
Commencing on [***], QiG Group shall pay to Greatbatch, in addition to the price for the IPGs and EPGs set forth in Appendix B of this Agreement, a surcharge for each IPG and EPG purchased by QiG Group during the next [***] ([***]) months (the “IPG/EPG Level Surcharge”); provided, that in the event that an IPG/EPG Level Surcharge is payable with regards to the EPGs and the manufacturing of the EPGs has not yet been moved to Greatbatch’s Tijuana, Mexico facility, then the [***] Surcharge for the EPGs shall be paid in lieu of the IPG/EPG Level Surcharge. Greatbatch and QiG Group agree to calculate the IPG/EPG Level Surcharge on [***] and every [***] ([***]) months thereafter (each calculation date, the “IPG/EPG Level Surcharge Calculation Date”), and such IPG/EPG Level Surcharge shall remain in effect until the next IPG/EPG Level Surcharge Calculation Date. The IPG/EPG Level Surcharge for each IPG and EPG, as applicable, shall be calculated as follows (i)(A)(I)(x) [***]% minus (y) the IPG or EPG [***] before final assembly, as applicable, multiplied by (II) the cost of the IPG or EPG [***], as applicable, multiplied by (B) [***] percent ([***]%), plus (ii)(A)(I) [***]% minus (II) the IPG or EPG [***] after final assembly, as applicable, multiplied by (B) the price of the IPG or EPG, as applicable. For purposes of calculating the [***], Greatbatch (i) will not include [***] that failed the Greatbatch incoming inspection process, that were returned to the [***] supplier, and for which Greatbatch was issued a refund, and (ii) will include [***] that failed the [***] testing in calculating previous [***] Surcharges or IPG/EPG Level Surcharges but that pass the [***] testing in calculating the current IPG/EPG Level Surcharge and that Greatbatch will use in the production of the IPGs and EPGs, as determined in its sole reasonable discretion. For purposes of calculating the IPG/EPG Level Surcharge, the cost of the IPG [***] is $[***], the cost of the EPG [***] is $[***], the price of the IPG is $[***], and the price of the EPG is $[***]. For illustrative purposes only, if an IPG has a [***] of [***]%, and a [***] of [***]%, then QiG Group will pay an IPG/EPG Level Surcharge of $[***] to Greatbatch for each IPG purchased by QiG Group during the next [***] ([***]) month period (i.e. [([***]% - [***]%) * $[***] * [***]%] + [([***]% - [***]%) * $[***]] = $[***]). For illustrative purposes only, if an EPG has a [***] of [***]%, and a [***] of [***]%, then QiG Group will pay an IPG/EPG Level Surcharge of $[***] to Greatbatch for each EPG purchased by QiG Group during the next [***] ([***]) month period (i.e. [([***]% - [***]%) * $[***] * [***]%] + [([***]% - [***]%) * $[***]] = $[***]).The IPG/EPG Level Surcharge for the IPG will be discontinued once the IPG [***] before final assembly and the IPG [***] after final assembly each achieve [***]%. The IPG/EPG Level Surcharge for the EPG will be discontinued once the EPG [***] before final assembly and the EPG [***] after final assembly each achieve [***]%. In the event that QiG Group is paying an IPG/EPG Level Surcharge on [***], QiG Group and Greatbatch agree to use their best efforts to reduce the effects of a “[***]” for the Relevant Project Components (including, all underlying [***]) of less than [***]%. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 16 -

 

 

	 	
M.
	
QiG Group may reject any shipments or deliveries of Relevant Project Components, which are short, nonconforming, defective or deficient and may request correction and/or replacement. Rejected shipments or deliveries of Relevant Project Components shall at the request of Greatbatch be set aside for Greatbatch inspection, or at the request of Greatbatch shipped freight prepaid to Greatbatch. Within 48 hours of receiving returns of Relevant Project Components, Greatbatch will host a joint call with QiG Group to discuss the return, product history and investigational plan. All Relevant Project Components returned to Greatbatch shall be accompanied by a copy of their original shipping documents and the name and phone number of the person at QiG Group to be contacted regarding such return. Promptly upon receipt of notice of such shortage, non-conformance, defect or deficiency, Greatbatch shall immediately notify QiG Group:

 

	 	
(i)
	
as to how Greatbatch will replace the defective or deficient Relevant Project Components upon return to Greatbatch, ship replacement Relevant Project Components, or otherwise promptly correct such shortage, non-conformance, or deficiency; and/or

 

	 	
(ii)
	
whether such shipment of Relevant Project Components shall be set aside and held by QiG Group or returned to Greatbatch and the address to which such affected Relevant Project Components should be returned, or whether such Relevant Project Components should otherwise be disposed of.

 

If QiG Group elects to cancel or rescind such purchase, Greatbatch shall promptly refund and reimburse QiG Group the price paid by QiG Group for such purchase, including freight and shipping costs incurred by QiG Group in connection with such purchase, prior to the return of the same to Greatbatch. If QiG Group elects to have the Relevant Project Component replaced, Greatbatch shall bear or shall reimburse QiG Group for all costs and expenses incurred by QiG Group to repackage, ship and return affected Relevant Project Components to Greatbatch and shall issue a credit memo for the amount of the purchase price of the returned Relevant Project Components.

 

	 	
N.
	
In the event of any act of God or any other causes beyond the control of Greatbatch, including, but not limited to, fire, explosion, strikes, war, act of any governmental agency, material or labor shortage (excluding those related to Greatbatch’s workforce), or a delay or default caused by a common carrier (“Force Majeure”), Greatbatch shall not be liable for any delay in shipment or non-delivery of Relevant Project Components covered by this Agreement arising from Force Majeure, and QiG Group shall be bound to accept the delayed shipment or delivery made within a reasonable time. In the event of Force Majeure, QiG Group shall be excused for the failure to take and pay for Relevant Project Components ordered under this Agreement, until such Force Majeure condition is removed. In the event such conditions cannot be corrected by the Party affected within [***] days of the date of the occurrence of a Force Majeure event, then the other Party shall have the option to terminate this Agreement upon one (1) month prior notice.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 17 -

 

 

	 	
O.
	
For the three year period commencing upon the Effective Date, payment terms are net [***], EXW Greatbatch’s shipping point. Commencing upon the three year anniversary of the Effective Date through the end of the Term, payment terms will become net [***], EXW Greatbatch’s shipping point. 

 

	 	
P.
	
The Parties will collaborate to identify cost reduction initiatives relating to the supply of the Relevant Project Components under this Agreement. Subject to Section IV.B. above, all savings and cost reductions (other than those recognized in connection with any relocation of a manufacturing facility, including, without limitation, a relocation of the manufacturing facility from the Plymouth, Minnesota facility), regardless of whether identified collaboratively or independently by either party, will be shared by the parties as set forth below and each party will disclose to the other any such savings that it acquires or generates. Subject to Section IV.B. above, in the event that Greatbatch and QiG Group are willing to share the expenses associated with the implementation of any such cost proposal (other than any relocation of a manufacturing facility, including, without limitation, a relocation of the manufacturing facility from the Plymouth, Minnesota facility), cost savings shall be split [***] percent ([***]%) to Greatbatch and [***] percent ([***]%) to QiG Group; provided, that any such cost savings shall not be split until each Party has fully recovered its expenses associated with any such cost proposal. The Parties will recover their expenses [***] (e.g. if Greatbatch invests $[***] and QiG Group invests $[***] in the cost proposal, Greatbatch will receive $[***] for every $[***] recovered by QiG Group prior to the split of the cost savings). Greatbatch shall give QiG Group notice of the implementation of cost reductions as soon as practicable, but in any event within thirty (30) days of the accomplished reduction. Thereafter, all invoices shall reflect the applicable reduced pricing and the Parties shall work to update Appendix B accordingly.

 

VI.           LEAD TIME:

 

Standard lead time for the manufacturing of the Relevant Project Components is twelve (12) weeks unless the Parties otherwise agree in writing. Greatbatch will use commercially reasonable efforts to deliver the Relevant Project Components in accordance with the foregoing lead time.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 18 -

 

 

VII.          FORECAST PLANNING:

 

On a monthly basis, QiG Group will provide [***] ([***]) months firm orders and an additional [***] ([***]) months forecasts stating its anticipated needs for Relevant Project Components. This will provide Greatbatch with a total of [***] months projected requirements for planning purposes at all times. A new firm order requirement and the next month forecasted quantity will be provided each succeeding month. Forecasts covering QiG Group’s [***]-month anticipated needs are non-binding and are for planning purposes only.

 

Greatbatch will hold at least [***] ([***]) weeks of supply of the Relevant Project Components, [***] ([***]) of which will be in the form of finished goods and [***] ([***]) of which will be in the form of WIP (collectively, the “Safety Stock”). This [***] ([***]) week amount will be determined based on the rolling [***] ([***]) month forecast described in the preceding paragraph. The Safety Stock will satisfy any purchase order according to FIFO (First In First Out) unless otherwise agreed to by the Parties in writing. QiG Group will be responsible for purchasing any Relevant Project Component that remains in Safety Stock for at least [***] ([***]) months. 

 

 

VIII.          CONSIGNMENT

 

	 	
A.
	
Simultaneous with the execution of the Agreement, and on a monthly basis thereafter, QiG Group will provide Greatbatch with a [***] ([***]) month rolling forecast of QiG Group’s reasonably expected monthly order volume for the Relevant Project Components to be consigned at QiG Group’s Blaine, Minnesota location (the “Consigned Products”) for the forthcoming [***] ([***]) month period. QiG Group will update the forecast monthly. QiG Group shall order Consignment Product by issuance of a purchase and/or blanket order (each, a “Consignment Order”) to Greatbatch. Consignment Orders which conform to the terms of this Agreement shall be deemed to be accepted by Greatbatch and Greatbatch will acknowledge receipt of such Consignment Order by written notice to QiG Group, (“Acknowledged Order”). Greatbatch will use commercially reasonable efforts to accept any orders or blanket orders that do not conform to the terms of this Agreement. Greatbatch shall deliver such Consignment Products in accordance with the delivery schedule specified by QiG Group in the Consignment Order. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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B.
	
Upon receipt of a Consigned Product, QiG Group shall track the Consignment Products received (“Consignment Inventory”) and copies of the tracking reports shall be furnished to Greatbatch upon request. Consignment Inventory shall be identified as the property of Greatbatch. The Consignment Products shall be segregated from other goods either of the same or different character belonging either to QiG Group or to any third party and shall be stored in an area in QiG Group’s (or its designee’s) facility separate from and not mingled with other goods of QiG Group or of any third party. Upon reasonable advance written notice and no more than once in any calendar quarter, Greatbatch shall have reasonable access to the Consignment Products at QiG Group’s facility for the purposes of verifying tracking reports or inspecting the condition of the Consignment Products. In the event of a threatened or actual breach of the Agreement by QiG Group, Greatbatch shall have immediate access to the Consignment Products for the purposes of verifying tracking reports or inspecting the condition of the Consignment Products. The Parties agree that the volume of Consignment Inventory will be taken into account when calculating the amount of Greatbatch’s Safety Stock. Notwithstanding anything in this Agreement to the contrary, in no event will the Consignment Inventory exceed [***] ([***]) weeks of supply of the Relevant Project Components and Greatbatch shall have no obligation to deliver any Relevant Project Components to QiG Group for so long as the Consignment Inventory equals or exceeds [***] ([***]) weeks of supply of the Relevant Project Components. This [***] ([***]) week amount will be determined based on the rolling [***] ([***]) month forecast described in Section VIII.A. above. 

 

	 	
C.
	
If QiG Group receives any Consignment Products which do not meet the applicable Specifications, QiG Group shall notify Greatbatch within two weeks of discovery or determination that the Consignment Products do not meet Specifications, and Greatbatch shall retrieve such Consignment Products from QiG Group at Greatbatch’s sole expense, and QiG Group shall not be required to pay for any such Consignment Products. Notwithstanding the immediately preceding sentence, QiG Group may not return, and QiG Group will be responsible for paying the applicable price for, any Consignment Product if any repair, alteration, modification or work has been performed on such Consignment Product, or if the alleged defect is the result of abuse, misuse, improper maintenance or storage, accident, action or inaction on the part of any QiG Group, its agents or representatives or any third party after delivery of the Consignment Products to QiG Group or its designee. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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D.
	
Upon QiG Group transferring any Consignment Product out of Consignment Inventory and (i) into QiG Group’s or its designee’s manufacturing area or (ii) out of QiG Group’s Blaine, Minnesota facility (“Transfer Date”) such Consignment Product shall become the property of QiG Group and title to such Consignment Product shall pass to QiG Group. QiG Group shall notify Greatbatch every Monday (or the next business day, if Monday is not a business day) of the quantity of components and part numbers of Consignment Products transferred the prior week via a consignment reconciliation document, and Greatbatch shall send QiG Group an invoice for the transferred Consignment Products. QiG Group shall pay such invoice within [***] days for invoices issued during the three year period commencing upon the Effective Date and within [***] days for invoices issued during the period commencing upon the three year anniversary of the Effective Date through the end of the Term. All reconciliations and payments will be in US dollars. 

 

	 	
E.
	
All Consignment Products stored on QiG Group’s or its designee’s premises shall be Greatbatch’s property until the Transfer Date, and QiG Group may return Consignment Product to Greatbatch at any time prior to such Transfer Date. QiG Group shall withdraw the Consignment Products on a FIFO (First In First Out)basis for each type of Consignment Product. QiG Group will be responsible for purchasing any Consignment Product that remains in Consignment Inventory for at least six (6) months. QiG Group shall be responsible for, and shall indemnify and hold harmless Greatbatch against, any loss, damage, shrinkage or spoilage, to the Consignment Products while at QiG Group’s or its designee’s facility. QiG Group shall maintain insurance, which may include a program of self insurance, covering such losses.

 

	 	
F.
	
QiG Group will not sell, transfer, assign, pledge, grant a security interest in or otherwise encumber or allow any third party to obtain an interest in any Consignment Products in Consignment Inventory. QiG Group shall comply with all Legal Requirement which might in any way affect Greatbatch’s ownership of the Consignment Products and shall defend, indemnify and hold harmless Greatbatch from and against all losses, damages and expenses arising out of any levy, attachment, lien or process involving the Consignment Products to the extent caused by QiG Group, its agents or representatives.

 

	 	
G.
	
If the quantity of any Consignment Product ordered by QiG Group for any month is collectively less than [***] percent ([***]%) of the quantity ordered for the preceding month, the Parties shall participate in a telephone conference to discuss the reason for QiG Group’s decrease in consumption of such Consignment Product. If in the month immediately following such decrease in consumption of such Consignment Product, the quantity ordered is collectively less than or equal to the quantity ordered for the preceding month, Greatbatch and QiG Group may agree on a new level of Consignment Inventory for such Consignment Product.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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H.
	
Subject to the first sentence of Section VIII.C, all charges and expenses for shipping, receiving, handling and storing the Consignment Products shall be paid by QiG Group. All public charges, whether in the nature of sales, occupational or other taxes (excluding taxes levied on the income of Greatbatch) or assessment or license fees, which shall be levied or assessed against the Consignment Products at QiG Group’s or its designee’s facility, or against QiG Group or Greatbatch by reason hereof, by any federal, state or municipal authority, shall be paid by QiG Group.

 

	 	
I.
	
QiG Group shall provide Greatbatch with at least [***] ([***]) days’ written notice if any Consignment Product shall be discontinued or replaced. The Parties shall discuss in good faith any needed adjustment in the rolling forecast and in any Consignment Order for such Product or Products as a result of such planned discontinuance or replacement.

 

IX.           CANCELLATION CHARGES:

 

In the event that QiG Group cancels a purchase order inside the agreed upon lead time, QiG Group will be responsible for all finished Relevant Project Components, WIP and raw materials and components. In the event that QiG Group cancels a purchase order outside of agreed upon lead time, QiG Group and Greatbatch will negotiate resulting costs.

 

X.            WARRANTY, INDEMNITY AND LIABILITY LIMITATION:

 

A.     Limited Warranty:

 

	 	
(i)
	
Greatbatch warrants that all of the Relevant Project Components sold to QiG Group under this Agreement shall be in conformance with the Specifications and the Quality Agreement applicable to such Relevant Project Components and shall be free from defects in material and workmanship for a period of eighteen (18) months from the date of delivery (the “Warranty Period”). Subject to the limitations set forth in the following sentence, if any Relevant Project Components do not meet the applicable Specifications and QiG Group shall have timely notified Greatbatch, Greatbatch will replace such Relevant Project Components free of charge and will reimburse QiG Group for reasonable out-of-pocket expenses (including freight and customs clearance, if any) incurred by QiG Group in connection with (a) shipment of replacement Relevant Project Components to the same location and (b) shipment of the nonconforming Relevant Project Components back to Greatbatch (if so requested by Greatbatch). 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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The warranty provided in this Section X.A. shall not apply to any Relevant Project Component failure occurring as a result of any of the following: (x) any abuse, misuse, neglect or attempted disassembly of a Relevant Project Component, or any alteration or modification of a Relevant Project Component without the express written consent of Greatbatch; (y) any improper operation, improper installation, or any other use inconsistent with any applicable law, rule, regulation or governmental directive; or (z) any use inconsistent with the then current specifications of Greatbatch for the Relevant Project Components or with any warning or recommended operating practice specific to the Relevant Project Components that may be provided to QiG Group from time to time by Greatbatch in writing.

 

	 	
(ii)
	
THE WARRANTY PROVIDED IN SECTION X.A(i) ABOVE IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY GREATBATCH WITH RESPECT TO THE RELEVANT PROJECT COMPONENTS. GREATBATCH MAKES NO OTHER WARRANTY AND HEREBY EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND NO IMPLIED WARRANTY SHALL ARISE BY USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE. NO REPRESENTATIVE OF GREATBATCH IS AUTHORIZED TO GIVE OR MAKE ANY OTHER REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING WARRANTY IN ANY WAY.

 

	 	
B.
	
LIMITATION OF LIABILITY.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL GREATBATCH BE LIABLE TO QIG GROUP (X) FOR BREACH OF WARRANTY OR BASED UPON ANY OTHER THEORY UNDER THIS AGREEMENT FOR AN AMOUNT IN EXCESS OF THE TOTAL AMOUNT THAT QIG GROUP HAS PAID OR THAT IS PAYABLE TO GREATBATCH UNDER THIS AGREEMENT FOR THE IMMEDIATELY PRECEDING 12 MONTH PERIOD, BUT IN NO EVENT MORE THAN $10 MILLION, BUT SUCH LIMITATION WILL NOT APPLY TO GREATBATCH’S INDEMNIFICATION OBLIGATIONS UNDER SECTION X.D OR (Y) FOR ANY LOST PROFITS OR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, EXEMPLARY OR SPECIAL DAMAGES OF ANY KIND.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 23 -

 

 

	 	
C.
	
QiG Group hereby agrees to indemnify and hold harmless Greatbatch and any officer, director, employee, or stockholder of Greatbatch (the “Greatbatch Indemnitees”) from and against any and all losses, damages, liabilities, expenses, costs or damages arising out of or related to any claim or lawsuit against any Greatbatch Indemnitees:

 

	 	
(i)
	
on account of personal injury or death to any person, resulting from the use of any Product of QiG Group in which any Relevant Project Components are used, unless both of the following facts are present:  (a) one of the Relevant Project Components was not manufactured by Greatbatch within the Specifications for such Relevant Project Components provided for in this Agreement, and (b) such Relevant Project Components was the sole and direct cause in the failure of any Product that gives rise to any such personal injury or death; 

 

	 	
(ii)
	
for infringement of any patent or intellectual property rights of any third party as a result of Greatbatch’s use of a QiG Group design for the Relevant Project Component or Product;

 

	 	
(iii)
	
for any violation of law by QiG Group; and

 

	 	
(iv)
	
for the gross negligence or willful misconduct of QiG Group.

 

QiG Group will defend, manage and assume all costs of any lawsuit or claim related to the indemnification provided for in this Section X.C.  Greatbatch will notify QiG Group promptly after Greatbatch becomes aware of any claim by any third party with respect to which Greatbatch would be entitled to indemnification hereunder.  Greatbatch will not settle or offer to settle any such claim or lawsuit without QiG Group’s prior written approval.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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D.
	
Greatbatch hereby agrees to indemnify and hold harmless QiG Group from and against any and all losses, damages, liabilities, expenses, costs or damages arising out of or related to any claim or lawsuit against QiG Group or any officer, director, employee, stockholder or agent of QiG Group (the “QiG Group Indemnitees”): 

 

	 	
(i)
	
on account of personal injury or death to any person, resulting from the use of any Relevant Project Components in any Product of QiG Group, unless either of the following facts are present: (a) the Relevant Project Component(s) were manufactured by Greatbatch within the Specifications for such Relevant Project Components provided by QiG Group, and (b) the Relevant Project Component(s) was not the sole and direct cause in the failure of the Product that gives rise to any such personal injury or death; 

 

	 	
(ii)
	
for infringement of any patent or intellectual property rights of any third party as a result of QiG Group’s use of a Greatbatch design for a Relevant Project Component;

 

	 	
(iii)
	
for any violation of law by Greatbatch; and

 

	 	
(iv)
	
for the gross negligence or willful misconduct of Greatbatch.

 

Greatbatch will defend, manage and assume all costs of any lawsuit or claim related to the indemnification provided for in this Section X.D. QiG Group will notify Greatbatch promptly after QiG Group becomes aware of any claim by any third party with respect to which QiG Group would be entitled to indemnification hereunder. QiG Group will not settle or offer to settle any such claim or lawsuit without Greatbatch’s prior written approval

 

E.     Insurance.

 

	 	
(i)
	
Each Party shall procure and maintain products liability and completed products insurance and cause each of its insurers to issue an endorsement to the following insurance policies adding the other Party as an additional insured.  The insurance required under this Section X.E. must include the following coverage limits:

 

(a)           Bodily Injury:

 

$[***]  Each Occurrence

$[***]  General Aggregate

 

(b)           Property Damage:

 

$[***]  Each Occurrence

$[***]  General Aggregate.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 25 -

 

 

	 	
(ii)
	
The insurance must be maintained at all times during this Agreement and for a minimum period of two years after this Agreement is terminated, and each Party must continue to provide evidence of such coverage to the other Party on an annual basis during that period. In addition:

 

	 	
(a)
	
The coverage afforded under any insurance policy a Party obtains must be primary to any valid and collectible insurance that the other Party may carry; any insurance policies issued to the other Party shall only apply, if at all, as excess insurance.  

 

	 	
(b)
	
Any insurance policy a Party obtains must provide that at least 30 days prior written notice shall be given to the other Party in the event of any material change, cancellation or expiration of the coverage under the policy.

 

	 	
(c)
	
A Party must deliver to the other Party, within 10 days after the date the Party executes this Agreement, copies of all insurance policies required to be procured by the Party under this Agreement.  If any insurance required under this Agreement expires or is replaced, the Party must supply the other Party with declarations pages, mandatory riders and endorsements listing the other Party as an additional insured and evidencing the continuation of all required coverages.  The other Party’s failure to receive copies of the insurance policies required under Section X.E(ii) above, or to demand such copies before the other Party begins work, shall not be construed as the other Party’s waiver of the first Party’s obligations to obtain the required insurance. 

 

	 	
(d)
	
If a Party or its insurer(s) make(s) any payment toward any loss covered under any policy of insurance that the other Party is required to procure under this Agreement, the Party’s insurer(s) shall be subrogated to all of the other Party’s rights of recovery against any person or organization including, but not limited to, the other Party’s insurer(s), and the other Party must execute and deliver all papers and anything else that is necessary to secure those rights.

 

	 	
F.
	
The Parties will cooperate fully with each other with respect to any mandatory safety related formal recall of any Product ordered by, or in consultation with, any regulatory authority. In the event of any such recall, replacement or field corrective action resulting from a product defect in any Related Project Component, Greatbatch will repair or replace such defective Related Project Component at its own cost and expense. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

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XI.           CONFIDENTIALITY

 

	 	
A.
	
Identification of Confidential Information. Confidential Information provided by one Party (as applicable, the “disclosing party”) to any other Party (as applicable, the “receiving party”) and entitled to protection under this Agreement shall be identified as such by appropriate markings on any documents exchanged. If the disclosing party provides information other than in written form, such information shall be considered Confidential Information only if (i) the information by its nature would reasonably be considered of a confidential nature or if the receiving party, due to the context in which the information was disclosed, should have reasonably known it to be confidential, and (ii) either the disclosing party gives written notice within thirty (30) days of disclosure that such information is to remain confidential or the disclosing party had previously confirmed in writing that such information was confidential.

 

	 	
B.
	
Protection of Confidential Information. Each Party acknowledges that the other Party claims its Trade Secrets and other Confidential Information as special, valuable and unique assets. During the Restricted Period (as defined below) for itself and on behalf of its officers, directors, agents, and employees, each Party agrees to the following:

 

	 	
(i)
	
The receiving party will not disclose any Confidential Information to any third party or disclose to an employee unless such third party or employee has a need to know such Confidential Information in order to enable the disclosing party to exercise its rights or perform its obligations under this Agreement and such third party or employee is subject in writing to substantially the same confidentiality obligations as the Parties. The receiving party will use the Confidential Information only for the purposes of exercising its rights or fulfilling its obligations under this Agreement and will not otherwise use it for its own benefit. In no event shall the receiving party use less than the same degree of care to protect the Confidential Information as it would employ with respect to its own information of like importance which it does not desire to have published or disseminated.

 

	 	
(ii)
	
If the receiving party faces legal action or is subject to legal proceedings requiring disclosure of Confidential Information, then, prior to disclosing any such Confidential Information, the receiving party shall promptly notify the disclosing party and, upon the disclosing party’s request, shall cooperate with the disclosing party in contesting such request or in obtaining a protective order or other similar injunctive relief.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 27 -

 

 

	 	
(iii)
	
The Parties acknowledge that monetary damages may not be sufficient remedy for a breach of obligation of confidentiality in this Agreement and agree that each Party shall be entitled to seek appropriate equitable remedies, including injunctive relief, to prevent the unauthorized use or disclosure of any Confidential Information.

 

	 	
(iv)
	
For purposes hereof, the term “Restricted Period” means (a) in the case of the Trade Secrets of a disclosing party, in perpetuity; and (b) in the case of other Confidential Information of a disclosing party, during the term of this Agreement and for five years thereafter.

 

	 	
C.
	
Return of Confidential Information. All information furnished under this Agreement shall remain the property of the disclosing party and shall be returned to it or destroyed or purged promptly as its request upon termination of this Agreement; provided, however, that (i) QiG Group may retain Confidential Information of Greatbatch as reasonably necessary for QiG Group to be able to complete the use of Relevant Project Components on order or in inventory at the time of termination and to support Relevant Project Components already used by QiG Group in the Products, and (ii) Greatbatch may retain Confidential Information of QiG Group as reasonably necessary to fulfill its obligations under this Agreement. All documents, memoranda, notes and other tangible embodiments whatsoever prepared by the receiving party based on or which includes Confidential Information shall be destroyed to the extent necessary to remove all such Confidential Information upon the disclosing party’s request. An authorized officer of the receiving party shall, upon written request of the disclosing party, certify all destruction under this Section XI.C in writing to the disclosing party.

 

	 	
D. 
	
Limitations. The confidentiality obligations in this Article XI shall not apply to disclosed information which the receiving party can prove: (a) was already part of the public domain at the time of the disclosure by the disclosing party; (b) becomes part of the public domain through no fault of the receiving party (but only after and only to the extent that it is published or otherwise becomes part of the public domain); (c) was in the receiving party’s possession prior to the disclosure by the disclosing party and was not acquired, directly, or indirectly, from the disclosing party or from a third party who was under a continuing obligation of confidence to the disclosing party; (d) is received (after the disclosure by the disclosing party) by the receiving party from a third party who did not require the receiving party to hold it in confidence and did not acquire it directly or indirectly, from the disclosing party under a continuing obligation of confidence; or (e) is disclosed by the receiving party pursuant to judicial compulsion, provided that the receiving party uses reasonable effort to notify the disclosing party at the time such judicial action is initiated. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 28 -

 

 

	 	
E.
	
Public Announcements. Notwithstanding anything to the contrary contained in this Agreement, neither Party may initiate or make any public announcement or other disclosure concerning the terms and conditions or the subject matter of this Agreement to any third party without the prior written approval of the other Party except as may be required by law. In those circumstances where either Party believes that any such disclosure is required by law, it shall (i) notify the other Party on a timely basis in advance, and (ii) use its best efforts to seek confidential treatment of the material provisions of this Agreement to the greatest extent permitted by law.

 

XII.          INTELLECTUAL PROPERTY

 

	 	
A.
	
Background Intellectual Property. All Intellectual Property of QiG Group first conceived and reduced to practice either prior to the Effective Date or independent of performance of this Agreement will remain the exclusive property of QiG Group. All Intellectual Property of Greatbatch first conceived and reduced to practice either prior to the Effective Date or independent of performance of this Agreement will remain the exclusive property of Greatbatch. 

 

	 	
B.
	
Ownership of Newly Created Intellectual Property. 

 

	 	
(i)
	
All Intellectual Property developed solely by a Party or acquired from a third party by a Party during the Term, whether in connection with this Agreement or otherwise, (“Improvements”) will be owned solely by such Party.

 

	 	
(ii)
	
The Parties agree that:

 

	 	
(a)
	
Any Intellectual Property resulting from the joint contributions of Greatbatch and QiG Group personnel or contractors during the Term will be “Joint IP”. For purposes hereof, the sole standard for establishing whether or not any Intellectual Property is Joint IP will be that if the Intellectual Property in question were going to be patented under the laws of the United States (whether patentable or not), an employee of each Party would be required to be named as an inventor in order for the patent to be legally valid and enforceable. All Joint IP will be owned jointly by the Parties. Joint IP will be subject to all of the terms and conditions of this Agreement. There will be no duty to account to the other Party for any use, sale or license of any Joint IP owned jointly by the Parties. Each Party will execute, and will cause its employees and contractors and its Affiliates’ employees and contractors to execute, such assignments as may be necessary or advisable under law to effectuate the intent of this Section XII.B.(ii). 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 29 -

 

 

	 	
(b)
	
To the extent that any right, title or interest in or to any Intellectual Property vests in a Party, by operation of Legal Requirement or otherwise, in a manner contrary to the agreed upon ownership as set forth in this Agreement, such Party shall, and hereby does, irrevocably assign to the other Party any and all such right, title and interest in and to such Intellectual Property to the other Party, in a manner consistent with this Agreement without the need for any further action by any Party.

 

	 	
(c)
	
Each Party will be solely responsible for determining whether to file and prosecute any patent application for any of its exclusively owned Intellectual Property, including, but not limited to, existing Intellectual Property, in any jurisdiction, paying all legal expenses, filing fees and maintenance fees relating thereto, and for determining whether and when to enforce its rights in any such Intellectual Property..

 

	 	
(d)
	
The Parties shall jointly determine whether or not to file and prosecute a patent application for any Resultant Patents covering Joint IP, and, if so, in which jurisdictions and for how long. Greatbatch shall be entitled to propose patent counsel for any such application and patent prosecution, subject to QiG Group’s approval which shall not be unreasonably withheld. All legal expenses, filing fees and maintenance fees for all Resultant Patents shall be shared equally both during the Term and after the termination of this Agreement for Joint IP. After termination of this Agreement, if a Party no longer desires to contribute to the fees or expenses for any Resultant Patent that is jointly owned, it shall notify the other Party on a timely basis, who shall have the option to elect to maintain such patent. In such event, the Party desiring not to pay fees or expenses shall assign such patent to the other Party and have no right to make, use or sell a product covered by a Resultant Patent. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 30 -

 

 

	 	
(e)
	
Each Party shall promptly notify the other Party of any infringement or threatened infringement of any Joint IP, including, but not limited to, a Resultant Patent. During the Term, the Parties shall determine what enforcement actions are appropriate with respect to jointly owned, Joint IP and shall cooperate with respect thereto. After the termination of this Agreement, each Party may enforce its rights to any jointly owned, Joint IP, and agrees and consents to be named by the other Party as a nominal party plaintiff in connection therewith.

 

	 	
(f)
	
The provisions governing Joint IP set forth in this Article XII shall survive the expiration or termination of this Agreement.

 

XIII.         MISCELLANEOUS:

 

	 	
A.
	
No Waiver. The failure of any Party to enforce at any time or for any period any of the provisions of this Agreement shall not be construed to be waiver of those provisions or of the right of that Party thereafter to enforce each and every provision hereof.

 

	 	
B. 
	
Assignment. This Agreement shall be binding upon, and shall inure to the benefit of, the Parties’ respective successors and permitted assigns. This Agreement shall not be assignable by any Party without the prior written consent of the other Party; provided, however, that, upon thirty (30) days’ prior written notice to the other Party but without the other Party’s prior consent, a Party (i) may assign this Agreement, in whole or in part, to any of its Affiliates provided that the assigning Party shall remain primarily liable under this Agreement and/or (ii) shall assign this Agreement to the successor to such Party in connection with a Change of Control of such Party provided that such successor, in the reasonable judgment of the other Party, is able to perform the assigning Party’s obligations under this Agreement.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 31 -

 

 

	 	
C. 
	
Notices. Unless otherwise provided in this Agreement, any notice to be given hereunder shall be in writing and (a) delivered personally (to be effective when so delivered), (b) mailed by registered or certified mail, return receipt requested (to be effective four days after the date it is mailed) or (c) sent by Federal Express or other overnight courier service (to be effective when received by the addressee), to the following addresses (or to such other addresses which any Party shall designate in writing to the other Party):

 

	
If to Greatbatch:

 

   Greatbatch Ltd.

   10000 Wehrle Drive

   Clarence, NY 14031

   Attention: General Counsel

	 
	
If to QiG Group:

 

   QiG Group LLC

  5830 Granite Parkway, Suite 1100

   Plano, Texas, 75024

   Attention: Chief Executive Officer

	 

	 	
D. 
	
Routine Communication. Notwithstanding the provisions of Section XIII.C, routine communications may be sent by first-class mail, postage prepaid.

 

	 	
E. 
	
Successors and Assigns. This Agreement is binding on and inures to the benefit of the Parties and their respective permitted successors and permitted assigns.

 

	 	
F. 
	
Injunctive Relief. The Parties hereto agree that irreparable harm would occur in the event that any of the agreements or provisions of this Agreement were not performed fully by the Parties hereto in accordance with their specific terms or conditions or were otherwise breached, and that money damages are an inadequate remedy for breach of the Agreement because of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the Parties hereto in the event that this Agreement is not performed in accordance with its terms or conditions or is otherwise breached. It is accordingly hereby agreed that the Parties hereto shall be entitled to seek an injunction or injunctions, without the necessity of proving actual damages, to restrain, enjoin and prevent breaches of this Agreement by the other Parties and to enforce specifically the terms and provisions of this Agreement in any court of the United States or any state having jurisdiction, such remedy being in addition to, and not in lieu of, any other rights and remedies to which the other Parties are entitled to at law or in equity. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 32 -

 

 

	 	
G. 
	
Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to the provisions, policies or principles thereof relating to choice or conflict of laws.

 

	 	
H. 
	
Waiver of Jury Trial. Each Party acknowledges and agrees that any controversy that may arise under this Agreement, including any appendices attached to this Agreement, is likely to involve complicated and difficult issues and, therefore, each such Party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement, including any appendices attached to this Agreement, or the transactions contemplated hereby.

 

	 	
I.
	
No Third-Party Beneficiaries. This Agreement benefits solely the Parties to this Agreement and their respective permitted successors and permitted assigns and nothing in this Agreement, express or implied, confers on any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

	 	
J.
	
Titles of Sections. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 

 

	 	
K. 
	
Entire Agreement. This Agreement constitutes the entire agreement among the Parties hereto with respect to the subject matter hereof, and supersedes any prior agreement or understanding among the Parties hereto with respect to the subject matter hereof. Except as provided otherwise herein, this Agreement may not be amended nor may any rights hereunder be waived except by an instrument in writing signed by the Party sought to be charged with such amendment or waiver. The recitals hereto are true and correct, and are part of this Agreement.

 

	 	
L. 
	
Counterparts. This Agreement may be executed either directly or by an attorney-in-fact, in any number of counterparts of the signature pages, each of which shall be considered an original. Facsimile or pdf transmission of an executed counterpart of this Agreement shall be deemed to constitute due and sufficient delivery of such counterpart, and such facsimile or pdf signatures shall be deemed original signatures for purposes of enforcement and construction of this Agreement.

 

	 	
M.
	
Separability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 33 -

 

 

	 	
N.
	
Purchases Prior to Effective Date. While this Agreement is being executed as of the Effective Date, the Parties agree that the terms of this Agreement, including, without limitation, Article X hereof, shall apply to all Relevant Project Components sold by Greatbatch to QiG Group prior to the Effective Date.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

- 34 -

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their authorized representatives.

 

 

	
QiG Group, LLC
	
Greatbatch Ltd.

	
 
	
 

	
 
	
 

	By: 	/s/ Scott F. Drees	 	By: 	/s/ Thomas J. Hook	 
	Title:	CEO	 	Title: 	CEO	 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

LIST OF APPENDICES

 

 

 

Appendix A     -     Description of Relevant Project Components and Specifications

 

Appendix B     -     Prices

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

APPENDIX A

TO SUPPLY AGREEMENT

 

Description of Relevant Project Components and Specifications

 

Implantables

 

	
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US Number
	
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OUS 

Number
	
QiG 

Model 

Number
	
QiG 

Catalogue 

Number
	
Specification
	
Specification 

Revision
	
Device Description
	
Geography

	
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

	
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

	
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

Accessories

 

	
Greatbatch 

US Number
	
Greatbatch 

OUS 

Number
	
QiG 

Model 

Number
	
QiG 

Catalogue 

Number
	
Specification
	
Specification 

Revision
	
Device 

Description
	
Geography

	
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CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

	
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* Models 5600, 5410, 5301, 5311, 5401, 5420, 5530, 5501, 5511, 5520-45, 5520-60, 5520-75, 5520-90, 5526-45, and 5526-60  have not transferred from Development (QiG) to Production (PLY)

 

** Catalogue rev 1.9 indicates models 5410 and 5500 are Obsolete, but items have forecasted volumes in forecast dated 11NOV2015                                   

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

External Devices***

 

	
Greatbatch 

US 

Number
	
Greatbatch 

OUS 

Number
	
QiG 

Model 

Number
	
QiG 

Catalogue 

Number
	
Specification
	
Specification 

Revision
	
Device 

Description
	
Geography

	
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[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]

	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]
	
[***]

***External Devices are currently manufactured by Minnetronix               

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

APPENDIX B

TO SUPPLY AGREEMENT

 

Prices

 

IPG Pricing

 

	
Annual Volume
	
2016
	
2017
	
2018
	
2019
	
2020

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
 [***]+ 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

 

The parties hereby acknowledge and agree that they will be negotiating in good faith an amendment to this Agreement to add the Pelvistim product line to this Agreement (the “Pelvistim Amendment”). The parties hereby agree that so long as the specifications of the Pelvistim IPG are materially and substantially similar to the Specifications of the Algovita IPG (with the exception of the firmware), the price for the Pelvistim IPG will be [***] as the Algovita IPG pricing set forth above; provided, that in the event that the specifications of the Pelvistim IPG are not materially and substantially similar to the Specifications of the Algovita IPG (with the exception of the firmware), the parties will negotiate in good faith an adjustment to the price of the Pelvistim IPG. For purposes of calculating the annual volumes above, the total quantities of the Algovita IPGs and the Pelvistim IPGs purchased and delivered in the relevant calendar year shall be combined. 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

Leads/Extensions Pricing

  

	
Annual Volume
	
2016
	
2017
	
2018
	
2019
	
2020

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]+
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

 

The parties hereby agree that the price for the Pelvistim Leads/Extensions with the specifications set forth in that certain [***] (the “Pelvistim Lead/Extension Specifications”) will [***] the Algovita Leads/Extensions pricing set forth above; provided, that in the event that the Pelvistim Lead/Extension Specifications materially change prior to the execution of the Pelvistim Amendment, the parties will negotiate in good faith an adjustment to the price of the Pelvistim Leads/Extensions. For purposes of calculating the annual volumes above, the total quantities of the Algovita Leads/Extensions and the Pelvistim Leads/Extensions purchased and delivered in the relevant calendar year shall be combined.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

Minnetronix Externals Pricing

 

	
ALL VOLUMES/ALL YEARS

	
PPC
	
$[***] 

	
POP
	
$[***] 

	
Clinician Programmers
	
$[***] 

	
Patient Feedback Tool
	
$[***] 

	
EPG
	
$[***] 

	
Charging Paddle
	
$[***] 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

GMM Externals Pricing

 

	  	
PPC

	
Annual Volume
	
2016
	
2017
	
2018
	
2019
	
2020

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]+
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

 

	  	
POP

	
Annual Volume
	
2016
	
2017
	
2018
	
2019
	
2020

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

	
[***]+
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 
	
$[***] 

 

	
ALL VOLUMES/ALL YEARS

	
Clinician Programmers
	
$[***] 

	
Patient Feedback Tool
	
$[***] 

	
EPG
	
$[***] 

	
Charging Paddle
	
$[***] 

 

The parties hereby agree that so long as the specifications of the Pelvistim EPG are materially and substantially similar to the Specifications of the Algovita EPG (with the exception of the firmware), the price for the Pelvistim EPG will be [***] as the Algovita EPG pricing set forth above; provided, that in the event that the specifications of the Pelvistim EPG are not materially and substantially similar to the Specifications of the Algovita EPG (with the exception of the firmware), the parties will negotiate in good faith an adjustment to the price of the Pelvistim EPG. The parties hereby agree that so long as the specifications of the Pelvistim externals (other than the Pelvistim EPG) are materially and substantially similar to the Specifications of the Algovita externals (with the exception of the software for such externals), the price for the Pelvistim externals will be [***] as the Algovita externals pricing set forth above; provided, that in the event that the specifications of the Pelvistim externals (other than the Pelvistim EPG) are not materially and substantially similar to the Specifications of the Algovita externals (with the exception of the software for such externals), the parties will negotiate in good faith an adjustment to the price of the Pelvistim externals. For purposes of calculating the annual volumes above, the total quantities of the Algovita externals and the Pelvistim externals purchased and delivered in the relevant calendar year shall be combined.

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

 

 

 

Purchased Components Pricing

 

	
ALL VOLUMES/ALL YEARS

	
Cable 
	
$[***] 

	
Tunneling Tool
	
$[***] 

	
 
	
 

	
Accessories
	
Price

	
Anchor (Box of [***]) 5400
	
$[***] 

	
Torque Wrench(Box [***]) 5500
	
$[***] 

	
Port Plug(Box [***]) 5510
	
$[***] 

	
Needle (St) [***] ea 5300
	
$[***] 

	
Needle (Lng) [***] ea 5310
	
$[***] 

	
Passing Elevator 5600
	
$[***] 

	
Adhesive Anchor 5410
	
$[***] 

	
Magnet 4900
	
$[***] 

	
Adhesive Patches 4240
	
$[***] 

	
Adjustable Belt 4220
	
$[***] 

	
Prog. Power Cord 4010
	
$[***] 

	
Trial Stim Pouch 4320
	
$[***] 

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO A CONFIDENTIALITY REQUEST. OMISSIONS ARE DESIGNATED WITH [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00256-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00256-of-00352.parquet"}]]