Full Press Release Details
FLEXIBLE CIRCUITS, INC.
Confidential treatment has been requested for portions of this exhibit. The
copy filed herewith omits the information subject to the confidentiality
request. Omissions are designated as [***]. A complete version of this exhibit
has been filed separately with the Securities and Exchange Commission.
| Page | ||||||||
| 1. | DEFINITIONS | 1 | ||||||
| 2. | SUPPLY OF PRODUCT; FIRM ORDERS AND REPORTS | 4 | ||||||
| 2.1 | Agreement to Supply; Prototype Support | 4 | ||||||
| 2.2 | Forecast; Firm Orders; Changes to Firm Orders; Production Capacity | 4 | ||||||
| 2.3 | Standard Forms | 6 | ||||||
| 2.4 | Quantitative Defects | 7 | ||||||
| 2.5 | Inventory | 7 | ||||||
| 2.6 | Commitment to Exclusive Purchase; Alternate Supply | 7 | ||||||
| 2.7 | Parlex Restriction on Manufacture | 9 | ||||||
| 3. | PRICE; PAYMENT; SHIPPING INSTRUCTIONS | 10 | ||||||
| 3.1 | Determination of Prices; Cost of Materials | 10 | ||||||
| 3.2 | Shipping Instructions; Risk of Loss | 10 | ||||||
| 3.3 | Invoices; Quantities; Payment | 10 | ||||||
| 3.4 | Taxes | 10 | ||||||
| 4. | SPECIFICATIONS; FACILITIES; QUALITY CONTROL | 11 | ||||||
| 4.1 | Specifications | 11 | ||||||
| 4.2 | Manufacturing Process | 11 | ||||||
| 4.3 | Facilities; Storage Requirements | 11 | ||||||
| 4.4 | Quality Plan | 12 | ||||||
| 4.5 | Rework and Scrap Costs | 12 | ||||||
| 4.6 | Quality Tests and Checks | 12 | ||||||
| 4.7 | Records | 12 | ||||||
| 4.8 | Recalls | 12 | ||||||
| 4.9 | Maintenance of Facility and Equipment | 13 | ||||||
| 4.10 | Inspections and Audits | 13 | ||||||
| 4.11 | Retention of Samples and Records | 13 | ||||||
| 4.12 | Legal and Regulatory Filings and Requests | 13 | ||||||
| 4.13 | Warranty; Rejection of Product | 14 | ||||||
| 4.14 | Health and Safety Procedure | 15 | ||||||
| 4.15 | Excused Performance | 15 | ||||||
| 5. | REPRESENTATIONS AND WARRANTIES; ADDITIONAL COVENANTS | 15 | ||||||
| 5.1 | Representations and Warranties of Parlex | 15 | ||||||
| 5.2 | Representations and Warranties of NeuroMetrix | 16 | ||||||
| 5.3 | Compliance with Laws | 16 | ||||||
| 5.4 | Notice of Material Events | 17 |
| 6. | OWNERSHIP | 17 | |||||
| 6.1 | Design and Improvements Ownership | 17 | |||||
| 6.2 | Ownership of Tools | 17 | |||||
| 7. | INDEMNIFICATION | 17 | |||||
| 7.1 | Parlex s Indemnification of NeuroMetrix | 17 | |||||
| 7.2 | NeuroMetrix s Indemnification of Parlex | 18 | |||||
| 7.3 | Procedures | 18 | |||||
| 7.4 | Net Recovery | 19 | |||||
| 7.5 | Maximum Indemnification Obligation of Parlex | 19 | |||||
| 8. | INSURANCE | 20 | |||||
| 8.1 | Coverage | 20 | |||||
| 8.2 | Certificates of Insurance | 20 | |||||
| 9. | RELATIONSHIP OF THE PARTIES | 20 | |||||
| 10. | CONFIDENTIAL INFORMATION | 20 | |||||
| 10.1 | Confidential Information | 20 | |||||
| 10.2 | Use and Disclosure of Confidential Information | 20 | |||||
| 10.3 | Exceptions | 21 | |||||
| 10.4 | Injunctive Relief | 21 | |||||
| 10.5 | Termination | 21 | |||||
| 10.6 | Publicity and Terms of this Agreement | 22 | |||||
| 10.7 | Supercession of Prior Confidentiality Agreements | 22 | |||||
| 11. | TERM; TERMINATION | 22 | |||||
| 11.1 | Term | 22 | |||||
| 11.2 | Termination | 22 | |||||
| 11.3 | Unused Materials; Return of Tooling and Device Master Record | 23 | |||||
| 12. | FORCE MAJEURE | 23 | |||||
| 13. | MISCELLANEOUS | 23 | |||||
| 13.1 | Notice | 23 | |||||
| 13.2 | Entire Agreement | 25 | |||||
| 13.3 | Incorporation of Exhibits | 25 | |||||
| 13.4 | Severability | 25 | |||||
| 13.5 | Successors and Assigns | 25 | |||||
| 13.6 | Assignment | 25 | |||||
| 13.7 | Waiver | 25 | |||||
| 13.8 | Headings | 25 | |||||
| 13.9 | Counterparts | 25 | |||||
| 13.10 | Applicable Law | 25 | |||||
| 13.11 | Consequential Damages | 25 | |||||
| 13.12 | Dispute Resolution | 26 | |||||
| 13.13 | Survival | 27 |
This Manufacturing and Supply Agreement dated as of
August 2, 2006, by and between Parlex Polymer Flexible Circuits, Inc. (f/k/a
Poly-Flex Circuits, Inc.), a Rhode Island corporation having its principal
office at 28 Kenney Drive, Cranston, RI 02920 ( Parlex ), and NeuroMetrix,
Inc., a Delaware limited liability company, having its principal office at 62
Fourth Avenue, Waltham, Massachusetts 02451 ( NeuroMetrix ).
WHEREAS, NeuroMetrix desires to have Parlex
manufacture and supply to NeuroMetrix, NeuroMetrix s requirements of NC-stat
biosensors complying with the Specifications ( NeuroMetrix Biosensor Products )
for resale in the Territory (defined below) under the terms and conditions
hereinafter set forth; and
WHEREAS, Parlex is willing to do so under the terms
and conditions hereinafter set forth for the purpose of providing a stable
supply of NeuroMetrix Biosensor Products to NeuroMetrix to support the growth
NOW, THEREFORE, in consideration of these premises and
the mutual covenants, agreements, representations and warranties herein
contained, the parties hereby agree as follows:
1. Definitions
1.1 AAA shall have the meaning set forth in Section 13.12(a).
1.2 Affiliate shall mean, with respect to any Person, any other Person controlling, controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation (or other entity) if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation (or other entity), whether through the ownership of voting securities, by contract or otherwise.
1.3 Agreement shall mean this Manufacturing and Supply Agreement and all Exhibits attached hereto, as the same may be amended or otherwise modified from time to time pursuant to the terms set forth herein.
1.4 Business Day shall mean any day other than Saturday, Sunday or any day on which the banks located in Boston, Massachusetts are authorized or obligated to be closed.
1.5 cGMP shall mean Good Manufacturing Practices and shall include all applicable standards and Laws relating to manufacturing practices for products (including ingredients, intermediates, bulk and finished products) formulated by any Governmental Authority having jurisdiction in the form of Laws, regulations, guidelines, advisory opinions and compliance policy guides and current interpretations of the authority agency, as the same may be updated, supplemented or amended from time to time.
1.6 Confidential Information shall have the meaning set forth in Section 10.1.
1.7 Device Master Record for a Product means the information required to manufacture such Product, including the bill of materials (excluding material formulations), tooling, test fixtures, process flow documentation, design files, quality inspections and similar materials. The Device Master Record will not include the formulation of any proprietary materials of Parlex, including any inks, adhesives, coating or other materials, used in the manufacture of the Products.
1.8 Disclosing Party shall have the meaning set forth in Section 10.1.
1.9 Facility shall mean (a) Parlex s manufacturing facility located at 28 Kenney Drive, Cranston, RI 02920 (the Cranston Facility ), (b) upon consolidation of the Cranston Facility into such facility, Parlex s manufacturing facility located at One Parlex Place (f/k/a 145 Milk Street), Methuen, MA 01884, and (c) subject to NeuroMetrix s prior qualification and written approval, such other facilities to be used by Parlex in the manufacture, packaging and storage of the Products or materials utilized in the manufacture and packaging of the Products hereunder (other than the facilities of vendors of materials utilized for storing such materials).
1.10 FDA means the U.S. Food and Drug Administration.
1.11 Firm Order shall have the meaning set forth in Section 2.2(c).
1.12 Firm Order Period shall have the meaning set forth in Section 2.2(c).
1.13 Governmental Authority shall mean any duly authorized court, tribunal, arbitrator, agency, commission, official or other instrumentality of any federal, state, province, county, city or other political sub-division, domestic or foreign.
1.14 Indemnified Party shall have the meaning set forth in Section 7.3.
1.15 Indemnifying Party shall have the meaning set forth in Section 7.3.
1.16 Know-How means any current or future manufacturing processes and information related thereto (including, without limitation, manufacturing, and inventory ordering lead-times, and procedures and vendor and other records), trade secrets, designs, industrial models, technology, technical information or data, manufacturing, engineering, and technical drawings, know-how, methodologies, formulae, concepts, inventions, improvements, copyrights, clinical data and FDA 510(k) filings related to the registration, supply marketing, use or sale of the Products.
1.17 Laws shall mean any law, statute, rule, regulation, guideline (including cGMP), ordinance or other pronouncement of any Governmental Authority having the effect of law in the United States, any foreign country or territory, or any domestic or foreign state, province, county, city or other political sub-division.
1.18 Losses shall have the meaning set forth in Section 7.1.
1.19 Minimum Excess Capacity shall have the meaning set forth in Section 2.2(d)(i).
1.20 Neurological Biosensor Products means surface bioelectrodes that are used singularly or in an array to measure nerve conduction.
1.21 NeuroMetrix shall have the meaning set forth in preamble hereto.
1.22 NeuroMetrix Biosensor Products shall have the meaning set forth in the recitals hereto.
1.23 Non-Exclusivity Triggering Event shall have the meaning specified in Section 2.6(b).
1.24 Parlex shall have the meaning set forth in the preamble hereto.
1.25 Person shall mean any individual or corporation, company, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.
1.26 Price shall mean the price to be charged by Parlex for Products supplied hereunder, as set forth on Exhibit A , as the same may be amended or otherwise modified from time to time pursuant to the terms set forth herein.
1.27 Products shall mean NeuroMetrix Biosensor Products in finished and packaged form.
1.28 Product Supply Date shall have the meaning specified in Section 2.2(a).
1.29 Quality Plan shall have the meaning specified in Section 4.4.
1.30 Recall , with respect to any Product, shall mean a recall , correction or market withdrawal, as those terms are defined in 21 CFR 7.3, as the same may be amended from time to time.
1.31 Receiving Party shall have the meaning set forth in Section 10.1.
1.32 Receiving Point shall have the meaning set forth in Section 3.2.
1.33 Specifications shall mean the specifications for the raw materials and packaging materials used in the manufacture and/or packaging of the Product and the specifications for the manufacture, processing and packaging of the Product, including all formulae, Know-How, materials requirements, standards of quality control and quality assurance, as previously provided by NeuroMetrix to Parlex electronically or in writing on or prior to the date hereof, with such changes thereto as NeuroMetrix may from time to time provide to Parlex in writing.
1.34 Term shall have the meaning set forth in Section 11.1 hereof.
1.35 Territory shall mean the United States, its territories and possessions.
The definitions in this Section 1
shall apply equally to both the singular and plural forms of the terms defined.
The words include , includes and including shall be deemed to be followed
by the phrase without limitation . All references herein to Sections and
Exhibits shall be deemed references to Sections of this Agreement and Exhibits
to this Agreement unless the context shall otherwise require.
2. Supply of Product; Firm Orders and Reports .
2.1 Agreement to Supply; Prototype Support .
(a) During the Term of this Agreement Parlex shall manufacture, package and supply the Products to NeuroMetrix in accordance with the terms of this Agreement.
(b) Parlex agrees to continue providing engineering and prototype development support for the manufacturability of potential new NeuroMetrix Biosensor Products, as requested by NeuroMetrix and in accordance with past practice. Support will include initial design files for review and iteration, prototype sensors, suggestions for design improvements and cost reductions, provided, however, that the parties agree and acknowledge that the final design of any Product is NeuroMetrix s sole responsibility. Parlex will provide a quotation for these engineering and prototype development activities. NeuroMetrix will generate a purchase order for these activities.
2.2 Forecast; Firm Orders; Changes to Firm Orders; Production Capacity .
(a) Parlex will first deliver Products to NeuroMetrix under this Agreement on or before the end of the first month contained in the initial forecast provided by NeuroMetrix pursuant to Section 2.2(b) below (the Product Supply Date ).
(b) Within thirty (30) days after the date of this Agreement and every six months thereafter during the Term, NeuroMetrix will provide Parlex with a written forecast of its estimated monthly purchases of the Products for the twelve (12) month period commencing with the calendar month following the month in which such forecast is delivered to Parlex. Additionally, during the first five (5) Business Days of each calendar month after NeuroMetrix has delivered its initial forecast during the Term, NeuroMetrix will provide Parlex with a written update of its forecast of its estimated monthly purchases of the Products for the six (6) month period commencing with the calendar month following the month in which such update is delivered to Parlex. Such forecasts and updates will represent NeuroMetrix s commercially reasonable, good-faith estimate of its requirements of the Products from Parlex for such twelve (12) and six (6) month periods, respectively, in light of then existing conditions. Notwithstanding anything contained herein to the contrary, except as expressly provided in Section 2.2(c) and (f), such forecasts are for the convenience of Parlex only, shall not constitute firm purchase or shipping orders and shall not be binding upon, or create any obligation or liability with respect to, NeuroMetrix or Parlex.
(c) Beginning with the initial forecast delivered within thirty (30) days after the date of this Agreement, unless otherwise agreed to by Parlex, at the time each written forecast is delivered by NeuroMetrix to Parlex pursuant to Section 2.2(b), the first two (2) months of such forecast (the Firm Order Period ) shall be deemed a firm, non-cancelable and binding order (a Firm Order ) for the Products. Each month Parlex will ship the quantity of the Products specified in the relevant Firm Order to NeuroMetrix on or before the last day of such month. NeuroMetrix shall be obligated to pay Parlex, in accordance with Article 3 hereof, for quantities of the Products produced and delivered by Parlex in accordance with NeuroMetrix s Firm Orders, subject to any exceptions to NeuroMetrix s obligation to pay for such Product contained in this Agreement.
(d) (i) Parlex covenants and agrees that it shall exert its commercially reasonable best efforts to maintain, in the third month of the rolling six (6) month forecast described in Section 2.2(b), excess production capacity of not less than *** of the estimated purchases of the Products in such month as set forth in the forecast ( Minimum Excess Capacity ). Furthermore, in the event that Parlex did not have the Minimum Excess Capacity available during any month or believes, in its commercially reasonable good faith judgment, that it shall not have the Minimum Excess Capacity available in any month on the six (6) month forecast, then it shall promptly inform NeuroMetrix of the same. The parties hereto agree that in the event Parlex provides such notice, they shall meet, as promptly as possible after NeuroMetrix s receipt of such notice, but no later than two weeks after such notice, in order to agree upon a production schedule, such meeting to include discussion regarding the Product production forecasts, any potential requirement for Parlex to increase production capacity and any related commitments from NeuroMetrix with respect to such increased production capacity, and the feasibility of Parlex s use of a third party supplier in accordance with the following clauses, in order to reach a mutually agreed upon forecast that will supercede NeuroMetrix s rolling forecast(s) until such time as the Minimum Excess Capacity is reestablished. The plan for meeting the Minimum Excess Capacity shall be presented to NeuroMetrix within thirty (30) days of the meeting and the Minimum Excess Capacity shall be in place within ninety (90) days of the meeting.
(ii) In connection with Parlex s obligations hereunder, including with respect to clause (i) above, and notwithstanding the exclusivity provisions of Section 2.6(a) hereof, Parlex may, at its sole option, (a) procure from a third party quantities of such Product sufficient to replace any quantities of Product that Parlex cannot or will not supply, or (b) otherwise provide for an alternative source of such Product; provided that Parlex may not procure Product from a third party, or use an alternative source, without the prior written
approval of NeuroMetrix, in its sole discretion. NeuroMetrix may condition such approval on the third party or alternative source entering into confidentiality, non-competition or other manufacturing agreements satisfactory to NeuroMetrix, in its sole discretion, or any other condition.
(iii) In the event Parlex procures Product from a third party, then Parlex shall cooperate with, and supply all reasonable technical assistance, including, without limitation, technical personnel, at Parlex s expense, to any such alternate supplier, and shall assist in the disclosure of any intellectual property Parlex or its Affiliates own relating to the manufacture of the Products to such supplier; provided, however, that Parlex may require that any such alternate supplier execute a confidentiality agreement and/or non-competition agreement prior to such disclosure.
(e) Once a Firm Order is submitted to Parlex with respect to any given Firm Order Period, NeuroMetrix may seek to vary that Firm Order by providing at least five (5) days written notice to Parlex prior to the beginning of the month for which such Firm Order is to be varied during such Firm Order Period. Parlex shall use its commercially reasonable best efforts to accommodate such requested variance.
(f) If NeuroMetrix decreases the production volumes set forth in NeuroMetrix s six (6) month rolling forecast (including the Firm Orders), NeuroMetrix shall be responsible and make timely payment for (a) all finished Products covered by the Firm Orders, except to the extent that such Products may be used by Parlex to fill subsequent Firm Orders of Products submitted by NeuroMetrix, (b) the reasonable cost of materials (at the latest agreed upon cost) for the Products purchased by Parlex in support of such six (6) month rolling forecast; provided , however , that NeuroMetrix shall not be responsible for the reasonable cost of materials for (i) any materials in excess of the supply necessary to support such six (6) month rolling forecast unless such excess supply was specifically authorized in writing by NeuroMetrix, (ii) any materials that are returnable to the supplier or are damaged or (iii) any materials that are or will be subsequently used by Parlex to fill subsequent Firm Orders of Products submitted by NeuroMetrix or otherwise and (c) any cancellation charges, restocking charges and any other non-cancelable commitments incurred by Parlex in support of such six (6) month rolling forecast. At NeuroMetrix s option, NeuroMetrix may instruct Parlex to utilize such materials in the future supply of the Products. In addition, Parlex shall use reasonable commercial efforts to utilize such materials in the supply of the Products so as to minimize the amount of such materials that remain unused.
Forms. In ordering and delivering the Products, NeuroMetrix
and Parlex may employ their standard forms, but nothing in those forms shall be
construed to modify or amend the terms of this Agreement, and, in the case of
any conflict herewith, the terms of this Agreement shall control.
Defects. NeuroMetrix shall inform Parlex in writing of any
claim relating to quantitative defects in shipments of Product within thirty
(30) days following actual receipt of such shipments by NeuroMetrix, and
NeuroMetrix shall provide to Parlex copies of any appropriate documents
relating to such defects that NeuroMetrix may have in its possession. Parlex
shall, at its own expense, provide NeuroMetrix with any missing quantities of
such Product as soon as reasonably possible after receipt of notice from
NeuroMetrix. NeuroMetrix shall only be obligated to pay for actual quantities
of Product received by NeuroMetrix. Any claim for a quantitative defect which
is not made within such thirty (30) day period shall be deemed to have been
waived by NeuroMetrix.
2.5 Inventory. At all times during the Term, Parlex will maintain inventory of all
materials necessary to produce the Products either at its vendors facilities
or its own facilities in quantities sufficient to produce at least a two (2)
months supply of the Products based on the number of Products set forth in the
then current Firm Orders. NeuroMetrix at