UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K/A

(Amendment No. 3)
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported)   November 13, 2015

NVE LOGO
NVE Corporation
(Exact name of registrant as specified in its charter)

 

Minnesota

000-12196

41-1424202

(State or other jurisdiction of incorporation)

(Commission File Number)
(IRS Employer Identification No.)


11409 Valley View Road, Eden Prairie, Minnesota

55344

(Address of principal executive offices)

(Zip Code)


Registrant’s telephone number, including area code (952) 829-9217

                                                                                                                                
(Former name or former address, if changed since last report.)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note
     This Amendment Number 3 to Form 8-K is being filed to disclose a second amendment to a Supply Agreement by and between NVE Corporation and Sonova AG.


Item 1.01 Entry into a Material Definitive Agreement

General Information
     Sonova AG (formerly known as Phonak AG) develops, manufactures, and sells hearing systems using our magnetic sensors under a Supply Agreement executed May 1, 2009 and previously amended January 12, 2011.

Description of the Terms and Conditions of the Amendment
     Effective November 13, 2015 we executed an amended agreement (the “Second Amendment”), amending our May 1, 2009 Supply Agreement by and between the company and Phonak AG (now known as Sonova AG). The Second Amendment extends the Supply Agreement term through March 31, 2020, and amends pricing provisions, defines minimum purchase requirements, and amends and adds other terms and conditions.

     The foregoing descriptions of the Supply Agreement and Amendments do not purport to be complete and are qualified in their entirety by reference to the full text of the Amended Supply Agreement filed as Exhibit 10.3 and the documents incorporated by reference as Exhibits 10.1 and 10.2 to this Current Report Amendment Number 3 to Form 8-K/A and incorporated by reference into this Item 1.01.

 

 

 

2
SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date   November 16, 2015 NVE CORPORATION
(Registrant)

 /s/ CURT A. REYNDERS
Curt A. Reynders
Chief Financial Officer

 

 

 

3
INDEX TO EXHIBITS

Exhibit #
Description
 
  10.1 Supply Agreement by and between the company and Phonak AG (incorporated by reference to the Form 8-K filed May 6, 2009).
 
  10.2+ Amendment to Supply Agreement by and between the company and Phonak (incorporated by reference to the Form 8-K/A filed January 12, 2011).
 
  10.3+ Second Amendment to Supply Agreement by and between the company and Sonova AG (filed with this Current Report on Form 8-K/A).
 
 
+Confidential portions of this exhibit were deleted and filed separately with the SEC under a request for confidential treatment pursuant to Rule 24b-2 or Rule 406.






4



SUPPLY AGREEMENT




between



NVE Corporation
11409 Valley View Road
Eden Prairie, MN  55344
USA

(hereafter referred to as “ Supplier ”)



and



Sonova AG
Laubisrütistrasse 28
CH-8712 Stäfa
Switzerland
and its affiliates

(hereafter referred to as “ Sonova ”)


(Supplier or Sonova hereafter “ Party ” or “ Parties ” as the case may be)
















Supply Agreement Template v2.7 (21.01.2015)

NVE Corporation / Sonova AG Supply Agreement

CONTENT
1 PREAMBLE   3
2 PRICE   3
3 PRODUCT SPECIFICATION   3
4 FORECAST AND USAGE   4
5 STOCKS   4
6 ORDERS AND ORDER CONFIRMATIONS   4
7 DELIVERY   5
8 AVAILABILITY OF PRODUCT   5
9 KEY PERFORMANCE INDICATOR (KPI)   5
10 INVOICES AND PAYMENT CONDITIONS   6
11 QUALITY ASSURANCE AND WARRANTY   7
12 APPLICABLE STANDARDS   7
13 CORRECTIVE ACTIONS   8
14 INDEMNIFICATION AND INSURANCE   8
15 INTELLECTUAL PROPERTY RIGHTS   9
16 COMPLIANCE WITH LAWS   10
17 CONFIDENTIALITY   10
18 TERMINATION   11
19 MISCELLANEOUS   11
20 APPLICABLE LAW AND JURISDICTION   12
21 LIST OF APPENDICES   12
22 SIGNATURES   13
APPENDIX A: SONOVA GROUP SUPPLIER PRINCIPLES (“SGSP”)   14
APPENDIX B:  PRODUCT LIST AND PRICES   17
APPENDIX C:  CORRECTIVE ACTION REPORT FORM   18
APPENDIX D:  KPI VALUATION   20
APPENDIX E:  PERCEIVED SERVICE PERFORMANCE QUESTIONNAIRE   21








Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  2 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 


1
 
 
PREAMBLE
 
 
1.1 Supplier is a manufacturer of magnetic sensor products.
 
1.2 Sonova has and continues to develop, manufacture and sell hearing systems using magnetic
sensors.
 
1.3 Supplier and Sonova wish to enter in a supply agreement (the “ Agreement ”) for the supply of
the products listed in Appendix B: Product List and Prices (the “ Product(s) ”), by Supplier.
 
1.4 It is the intention of the Parties to define in this Agreement the terms and conditions for the
supply of Product(s) including the processes linked to the ordering, delivery, payment of the
Product, as well as, in the case it is needed, corrective actions handling, and to describe the
precautions that will be taken to ensure quality and availability of the Product.
 
1.5 Where the context so requires a reference to “Sonova” shall include the Affiliates as defined
below. All rights available to Sonova under this Agreement shall be available to the Affiliates as
well if and to the extent these Affiliates purchase, process or distribute Products supplied under
this Agreement or are subject to a claim in relation to Products supplied under this Agreement.
 
1.6 “ Affiliate ” shall mean the parent company of Sonova, Sonova Holding AG, and any legal entity
of which at least 50% of the voting shares or similar voting rights now or hereafter are owned or
controlled, directly or indirectly by Sonova Holding AG, or in which Sonova Holding AG
otherwise has the ability to direct the management, but any such legal entity shall be considered
to be an affiliated company only for so long as such control exists (hereinafter referred to as
“ Affiliate ”).

NOW, THEREFORE THE PARTIES AGREE AS FOLLOWS :

2
 
PRICE
 
2.1 The prices of the Products are specified in Appendix B: Product List and Prices for “the
financial year 2015 until 2020” and are applicable from “August 20 2015 until 31st of March
2020”.
 
3
 
PRODUCT SPECIFICATION
 
3.1 Sonova and Supplier will agree on specifications (the “ Specification ”) defining completely the
Product to be delivered. This Specification includes but is not limited to:
 
3.1.1 Technical parameters that the product has to meet;
 
3.1.2 Reliability tests the Product has to pass;
 
3.1.3 Packaging and labeling of the Product if required; and
 
3.1.4 Quality and inspection documents required for each lot.
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  3 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
3.2 No change in the Specification and/or in the manufacturing process of the Product that could
influence the form, the fit or the function of the Product shall be executed without prior written
approval of Sonova.

3.3 Traceability: The production lots shall be identified in order to allow traceability of the final
inspection records and of process parameters for failure analysis purposes. Traceability shall be
guaranteed for 5 years after delivery of the Product.
 
 
4
 
FORECAST AND USAGE
 
4.1 Sonova will provide Supplier with monthly rolling forecasts. Rolling forecasts will extend over 10
month:
 
4.1.1 for materials with the description “Released” the first month is firm and the next 9 months are
non-binding forecasts; and
 
4.1.2 for materials without the description “Released” all quantities must be confirmed with purchase
orders. The respective forecasts are not binding.
 
4.1.3 Sonova shall purchase ** .
 
 
5
STOCKS
 
5.1 Rolling Stocks: Supplier commits to have in house the equivalent of two months of deliveries of
Products as finished goods.
 
5.2 Storage conditions : Storage conditions shall be:
  
5.2.1 Room temperature storage, 25°C +/- 15°C and Rel. Humidity 40% +/- 20% with the products
remaining in the sealed anti-static bags in which they were delivered.
 
5.3 Shelf life: Under the storage conditions described in Section 5.2, Supplier guarantees that the
Product(s) will not be affected by any significant change in aspect or performance for 24 months
after delivery.
 
 
6
 
 
ORDERS AND ORDER CONFIRMATIONS
 
6.1 Sonova will issue the purchase orders by mail, FAX or by a mutually agreed electronic data
interchange (EDI) system. Sonova will not accept invoices for orders that have been given in
any other form. Supplier shall confirm the orders within 5 calendar days upon receipt by signed
and dated return FAX of the original order or by Supplier specific documents or by mutually
agreed EDI system. Sonova is not bound if the order confirmation deviates from the order.
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  4 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
7
  		DELIVERY
 
7.1 Delivery time: Delivery time is ** from receipt of the order. Delivery time for
quantities significantly higher than the forecasted quantities have to be discussed at the time of
the order.
 
7.2 Terms of delivery: Terms of delivery are FOB Eden Prairie, MN, USA, according to Incoterms 2010.
Sonova may request Supplier to deliver the Products to any of its Affiliates.
 
7.3 Late delivery:
 
7.3.1 If, because of exceptional circumstances, a delivery schedule is in doubt Supplier shall inform
Sonova as soon as NVE is aware of the problem . Supplier shall make every effort to ensure
timely deliveries to Sonova before there is a risk of production stop at Sonova. Additionally
Supplier shall start an “Express LOT” in production and set Sonova products on 1st priority
level at test as well as in the whole supply chain to reach a dramatically shortened lead time.
 
7.3.2 Sonova is, in case of late delivery having stopped production, entitled to challenge from
supplier best efforts to solve the delivery problem and Supplier agrees to act immediately and
provide an action plan to Sonova within one week. The action plan has to define how and
when NVE will meet the schedule.
 
7.4 Packaging, Labeling : Supplier bears the full responsibility for proper packaging.
 
7.5 Packing Slip: Every lot must bear a numbered delivery note that gives information on the
contents (description of Products) including:
7.5.1 The corresponding Sonova order number;
 
7.5.2 The Sonova part number of the units delivered; and
 
7.5.3 The lot number with the corresponding quantity.
 
 
8 AVAILABILITY OF PRODUCT
 
8.1 Supplier commits to make every effort to have Product fulfilling the Specifications available in
time and quantities planned according to Section 2. Products will be available at least 5 years
after signature of the Supply Agreement.
 
 
8.2 In case Supplier plans to discontinue the supply of the Product, Supplier will give Sonova
one (1) year written notice, before giving Sonova the opportunity to place a last call order.
 
8.3 Supplier will provide Sonova with a contingency plan that will be applied by Supplier to ensure
availability of Product in case of exceptional circumstances and force majeure.
 
 
9 KEY PERFORMANCE INDICATOR (KPI)
 
9.1 Sonova will measure the performance of the Supplier through KPI on a quarterly basis, as
defined below:
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  5 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
9.2 On Time Delivery (OTD) : The actual date of delivery will be compared to the confirmed date of
delivery and a valuation will be attributed (see Appendix D: KPI Valuation )
 
9.3 Incoming Inspection Results (IIR) : A valuation will be given based on the number of lots
accepted, accepted conditionally or refused at incoming inspection (see Appendix D: KPI
Valuation ).
 
9.4 Return Rate from Field (RRF) : A valuation based on a target value will be given for the return
rate of Hearing Instruments from the field in 90 days (see Appendix D: KPI Valuation ).
 
9.5 Perceived Service Performance (PSP) : A questionnaire will be completed by the 3 Sonova
locations to give a general evaluation of the service level of the Supplier (see Appendix
E: Perceived Service Performance Questionnaire ).
 
9.6

The valuation of each of these KPI will be made quarterly, in percent. The minimum
Performance Level required is:
 

9.6.1 Average of all KPI, for each Sonova Affiliates: > 95%; and
 
9.6.2 No KPI below 90%. 
 
9.7 Sonova will provide these results upon request supported by copies of applicable reports
showing the basis of the measurements including sufficient information from the PSP
questionnaires to allow Supplier to have the opportunity to implement corrective actions.
 
9.8 In case the performance level is not reached, Sonova is entitled to reduce the share of Product
purchased from Supplier while keeping the agreed upon prices and conditions of supply or to
terminate the Supply Agreement.
 
 
10 INVOICES AND PAYMENT CONDITIONS
 
10.1 Invoices will be issued not earlier than the date of shipment and will be sent to the following
address:
 
  Sonova AG
Laubisrütistrasse 28
CH-8712 Stäfa
 
10.2 If the order is placed by an Affiliate, unless otherwise instructed by Sonova, Supplier shall issue
the invoice to the respective Affiliate.
 
10.3 Invoices will include:
 
10.3.1 The corresponding Sonova order number;
 
10.3.2 The Sonova part number of the units delivered (one line per part number); and
 
10.3.3 The lot number with the corresponding quantity.
 
10.4 Payment conditions will be net 30 days after reception of the invoice. Sonova may withhold
payment in case of quality problem with the goods.
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  6 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
11 QUALITY ASSURANCE AND WARRANTY
 
11.1 Supplier’s control plan: Supplier will provide Sonova with a control plan that shows how Supplier
ensures that the Product will meet the Specifications.
  
11.2 Policy regarding incoming goods: Sonova expects supplier to deliver Products meeting
Specification. An incoming inspection is therefore not required and Sonova will only do sample
checks on incoming goods.
 
11.3 Sonova’s incoming inspection (if any, on a sample basis): Sonova incoming inspection
procedure and acceptance criteria will be the object of a written agreement between Supplier
and Sonova.
 
11.4 Warranty: Supplier warrants that the Products have been manufactured in accordance with the
applicable Specifications and all laws and regulations applicable and will be free from defects in
design, workmanship and materials for a period of 24 months from the date of shipment.
 
11.5 Remedies: In case of delivery of non-conforming or defective Products, Sonova may, at its
discretion require Supplier as soon as reasonably practicable to either repair or replace the
Products, whichever Sonova shall determine, or refund to Sonova the purchase cost of all
Products which do not conform with this Agreement. Alternatively, Sonova may purchase the
products elsewhere and any extra expense thus incurred shall be paid by Supplier to Sonova.
Before exercising such right to purchase the products elsewhere Sonova shall give Supplier a
reasonable opportunity to replace the defective / non-conforming Products with Products which
correspond with the Agreement. Sonova’s right to claim compensation for damages and to
terminate the Agreement remains reserved.
 
 
12 APPLICABLE STANDARDS
 
12.1 EEC Medical Directive
 
12.1.1 The product shall fulfill the requirements to be implemented in a device complying to class 2A
of the 93/42/EEC Medical directive as amended from time to time.
 
12.2 EU RoHS
 
12.2.1 The European Restriction of Hazardous Substances Directive (2011/65/EU) (“ RoHS ”) in its
current form restricts the use of 6 hazardous substances in electrical and electronic equipment
sold in the EU. RoHS in its current form restricts Lead, Mercury, hexavalent Chromium, and
flame retardants PBB and PBDE, to no more than 0.1% by weight in any “homogeneous
material” in any part, and it restricts Cadmium to 0.01%. Some classes of electronic
equipment are excluded from the scope of RoHS, and RoHS also allows exemptions for some
very specific materials.
 
12.2.2 All parts, materials and products supplied to Sonova shall comply with the applicable form of
RoHS at any time.
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  7 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
12.3 EU REACH
 
12.3.1 The Regulation (EC) No. 1907/2006 concerning the Registration, Evaluation, Authorisation
and Restriction of Chemicals (“REACH”), regulates a large number of substances of very high
concern (“ SVHC’s ”). More substances are added to the SVHC’s candidate list approximately
every 6 months.
 
12.3.2 In addition, certain SVHC’s are subject to “Authorization” (Annex XIV REACH), meaning that
only certain narrowly-defined uses are authorized, or they are subject to “Restriction” (Annex
XVII REACH), meaning that they are essentially banned from use.
 
12.3.3 All parts, materials and products supplied to Sonova shall comply with the applicable form of
REACH at any time. Supplier is obliged to inform Sonova whether any SVHC constitutes
greater than 0.1% of the weight of any part, materials or product supplied to Sonova.
 
12.4 Supplier is obliged to keep up to date on these directives and regulations, to investigate and to
track the contents of any parts, materials or products supplied to Sonova accordingly, and to
inform Sonova immediately in case any changes to Supplier’s declaration have occurred as a
result of an update of the Medical directive, RoHS or the SVHC’s candidate list under REACH.
 
12.5 Supplier is obliged to inform Sonova of any exemptions, contents and deviations to Medical
directive, RoHS and REACH which apply to parts, materials or products supplied to Sonova in
written form every half year, having as reporting months January and July.
 
 
13 CORRECTIVE ACTIONS
 
13.1 Quality complaints: If Sonova detects defective Products at any production stage, Sonova will
provide a written test report to Supplier. Supplier shall immediately acknowledge receipt and
take short term corrective action independent of the cause and of the responsibility for the
problem. Supplier shall analyze the problem and provide a written report including long term
corrective action within 14 days upon receipt of the written report from Sonova and keep
Sonova informed of the progress in the meantime.
 
13.2 Corrective action procedure: Supplier shall document corrective actions using the 8D corrective
action report of Appendix C: Corrective Action Report Form or equivalent.
 
 
14 INDEMNIFICATION AND INSURANCE
 
14.1 Supplier will protect, indemnify, defend and hold Sonova, its Affiliates, and their respective
employees, agents, officers and directors (the “ Indemnified Parties ”) harmless from and
against all liability, losses, damages, cost or expenses which they may at any time suffer, incur
or be required to pay based upon the supply of non-conforming or defective Products by
Supplier to Sonova or any breach by Supplier of its obligations hereunder or of any statutory
duty or from any act or omission of Supplier’s employees, agents or subcontractors.
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  8 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
14.2 If the Supplier has entered into an agreement that constitutes an unlawful restraint of
competition affecting Products or services supplied to Sonova, it is obliged to pay 30% of the
net sales amount of this Agreement (excl. discounts and value added tax) to Sonova. The
Parties reserve the right of proof of a higher or lower damage. The payment obligation shall also
apply if this Agreement is terminated for whatever reason. Other contractual or statutory rights
of Sonova remain unaffected.
 
14.3 Supplier confirms that it has appropriate insurance coverage in place of at least US$ 2,500,000
and shall provide Sonova upon first request with a copy of Supplier’s insurance policy. Any
limitation in the insurance policy shall not be construed as a limitation on Supplier’s liability
under this Agreement.
 
 
15 INTELLECTUAL PROPERTY RIGHTS
 
15.1 Supplier hereby grants to Sonova an irrevocable, exclusive, world-wide and royalty-free license
to use Supplier’s Product in Sonova’s applications, to incorporate the Product, to sell it and to
have it sold either through Affiliates or through third parties. Supplier warrants that it has
carefully reviewed the intellectual property situation in relation to the Products and made all
necessary investigations and that the Products do not infringe upon any third party intellectual
property rights, including but not limited to patent rights, copyrights and trademarks.
 
15.2 Supplier will protect, indemnify, defend and hold Sonova, its Affiliates, and their respective
employees, agents, officers and directors (“ Indemnified Parties ”) harmless from and against all
liability, losses, damages, cost or expenses (including attorney fees) which they may at any time
suffer, incur or be required to pay by reason of any claim, action, suit or proceeding that may be
brought for damages or injunctive relief based upon any actual or alleged violation or
infringement of any patent, trademark, copyright or other intellectual property right by a Product
sold by Supplier to Sonova.
 
15.3 Sonova shall provide Supplier with written notice of any claim which it believes falls within the
scope of this Section 14.2 and shall provide to Supplier reasonable information and assistance
in the defense thereof. Supplier agrees at its own expense to defend against any such claims,
actions, suits or proceedings, rightfully or wrongfully instituted with legal counsel reasonably
acceptable to Sonova; provided however that Supplier shall not settle any claim, action, suit or
proceeding which imposes upon Sonova any obligation, or in any way prejudices the rights of
Sonova, without Sonova’s prior written consent. Supplier agrees to satisfy any and all
judgments which may be rendered against the Indemnified Parties with respect thereto.
Notwithstanding the foregoing, Sonova shall have the option to mandate attorneys, at the sole
cost and expense of Supplier, to defend any claim, action, suit or proceeding in the event
Supplier fails to assume such defense. 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  9 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
15.4 In the event the Product or any portion thereof is subject of a claim of infringement, Sonova
shall permit Supplier to (a) procure the right to continue using the Product; (b) replace or modify
the Product to render it non-infringing without material change in the form, the fit and the
function; (c) replace the Product with equally suitable non-infringing product; or (d) return of the
Product in exchange for full credit.
 
15.5 Supplier shall not be liable and shall have no obligation to defend under this Section 14.2 to the
extent any claim, demand or cause of action is solely based upon the combination by Sonova of
the Product with devices or equipment not sold by Supplier. Supplier shall inform Sonova if it is
aware that the combination of the Product with other devices or equipment as intended by
Sonova may infringe upon third party intellectual property rights.
 
 
16 COMPLIANCE WITH LAWS
 
16.1 Supplier shall comply with all applicable laws including but not limited to export control and
trade compliance regulations and anti-bribery laws. Supplier shall upon first request of Sonova
provide Sonova with all relevant information that Sonova reasonably requires to ensure
compliance by Sonova with worldwide export control and trade compliance regulations.
 
16.2 Supplier adheres to the Sonova Group Supplier Principles (see Appendix A: Sonova GROUP
Supplier Principles (“SGSP”)).
 
 
17 CONFIDENTIALITY
 
17.1 Each Party will keep confidential and will not disclose to any third party the details of the
collaboration under this Agreement nor any information obtained from another Party which is
designated as confidential. No Party will use any information obtained from another Party which
is designated as confidential except for the purposes of fulfilling its obligations under this
Agreement. The Parties will advise their employees and Affiliates of the confidential nature of
the collaboration under this Agreement and will ensure that such employees and Affiliates
comply with the obligations of confidentiality in this Section.
 
17.2 Information and Marketing to the Public: As a U.S. publicly-traded company, NVE may be
required to file this Agreement as a public document with the U.S. Securities and Exchange
Commission. In this case, Supplier agrees to file a Confidential Treatment Request with the
Securities and Exchange Commission to request that details relating to the volume of products
purchased by Sonova and the price of the Products be redacted from the public filing. Exclusive
of this requirement, any information to the public, such as namely advertisement or marketing,
or any reference to Sonova in oral or written presentations or technical documentation and the
like, or any other activities conducted towards the public making a reference to Sonova, shall
only take place upon prior consultation and mutual consent between the Parties.
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  10 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
18 TERMINATION
 
18.1 This Agreement shall remain in force until March 31, 2020 (the “ Initial Term ”). It shall
automatically terminate unless renewed for 5 years by written consent of both Parties at least
three (3) months before the expiry of the Initial Term or a renewal term.
 
18.2 This Agreement may be extraordinarily terminated under the following conditions:
 
18.2.1 Either Party may terminate this Agreement at any time and with immediate effect by a notice in
writing to the other Party if the other Party is in material breach in the performance of one or
more of its obligations hereunder, provided that the Agreement shall not be so terminated if
the Party in default has cured the default within thirty (30) days after the notice has been
given. In case of material breach by Supplier, the Right of Own Manufacture with Technology
Access (as per Section 16) shall continue to apply.
 
18.2.2 Either Party may terminate this Agreement at any time and with immediate effect by a notice in
writing to the other Party if the other Party files for bankruptcy, becomes insolvent, goes into
liquidation, winding up proceedings are commenced in relation to it, a receiver, administrator,
administrative receiver or manager of its assets is appointed, or any other similar appointment
is made under the laws of any jurisdiction.
 
18.2.3 If a Party shall come under the control of any third party or parties other than an Affiliate
and/or in the case of an initial public offering (IPO) and if such change of control or IPO could
affect and conflict with the other Party's business interests, then the other Party may, within
ninety (90) days of receiving notice of the change of control or IPO, terminate this Agreement
by giving thirty (30) days' notice in writing. In such case, the Right of Own Manufacture with
Technology Access (as per Section 18) shall apply.
 
18.3 Termination of this Agreement shall not release either Party from fulfilling any obligations which
it may have incurred prior to any such termination or from the obligation of confidentiality as
specified in and referred to throughout this Agreement.
 
18.4 The following Sections shall continue in full force and effect after expiry or termination of this
Agreement for any reason: Sections 2, 11, 14, 14.2, 15, 16, 17, 18, 19 and 20.
 
 
19 MISCELLANEOUS
 
19.1 This Agreement embodies the entire understanding of the Parties as it relates to the subject
matter of this Agreement, and this Agreement supersedes any prior agreement or
understanding between the Parties with regard to such subject matter.
 
19.2 No amendment or modification of this Agreement shall be valid or binding upon the Parties
unless signed by their respective duly authorized officers.
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  11 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
19.3 This Agreement cannot be assigned by any Party (except by Sonova to an Affiliate) without the
written consent of the other Party. Any assignment without the written consent of the other Party
shall be null and void.
 
19.4 The waiver by any Party of a breach or default in any of the provisions of this Agreement by
another Party shall not be construed as a waiver by such Party of any succeeding breach of the
same or other provisions nor shall any delay or omission on the part of any Party to exercise or
avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver
of any right, power or privilege by such Party.
   
19.5 If any term or provision of this Agreement shall be judged to be invalid, the validity of any other
term or provision shall not be thereby affected and such invalid term or provision shall be
deemed deleted from this Agreement and shall be replaced by a valid provision that reflects as
closely as possible the invalid provision.
   
 
20 APPLICABLE LAW AND JURISDICTION
 
20.1 This Agreement is construed in accordance with and governed by Swiss law. The
UN-Convention on Contracts for the International Sale of Goods as well as general terms of
sale of Supplier. General order terms of Sonova shall not be applicable to this Agreement.
 
20.2 Any disputes arising out of or in connection with this Agreement shall be exclusively submitted
to the Commercial Court of the Canton of Zürich.
 
 
21 LIST OF APPENDICES
 
21.1 The following Appendices are attached to and form an integral and binding part of this
Agreement:
 
21.1.1 Appendix A:  Sonova GROUP Supplier Principles (“SGSP”);
 
21.1.2 Appendix B:  Product List and Prices;
 
21.1.3 Appendix C:  Corrective Action Report Form;
 
21.1.4 Appendix D:  KPI Valuation; and
 
21.1.5 Appendix E:  Perceived Service Performance Questionnaire.
 
 
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  12 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
 
22 SIGNATURES
 
 
IN WITNESS WHEREOF , the Parties have caused this Agreement to be executed by their
respective duly authorized officers as follows:

 
For SONOVA AG: For NVE Corporation:
 
Place:  Stäfa Place:  Eden Prairie, MN
 
Date:  5.11.15 Date:  13 Nov. 2015
   
   
By:  /s/ PAUL SCHURTER    By:  /s/ DANIEL BAKER   
Paul Schurter Daniel Baker
Director Corporate Procurement President and CEO
 
 
By:  /s/ HANS MEHL    By:  /s/ JAY L. BROWN   
Hans Mehl Jay Brown
GVP Operations Vice President, Sensors











Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  13 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
 
Appendix A:   Sonova GROUP Supplier Principles (“SGSP”)  
Released by the CEO of Sonova Holding AG on April 2007 and revised on April 2014.
 
 
OBJECTIVE
At Sonova Holding AG and its affiliates (“ Sonova ”), we have set high standards for the way we
conduct business in areas from social and corporate responsibility to sound business ethics, including
compliance with all applicable laws and regulations. Sonova Group employees are bound to the
Sonova Group Code of Conduct.

We commit ourselves to behave according to accepted ethical principles when interacting with
colleagues, customers, suppliers, business partners and shareholders and equally we expect the
same commitment from our suppliers. We request our suppliers to comply with the Sonova Code of
Conduct as amended from time to time and as available in its current version on www.sonova.com
unless the supplier has implemented a code of conduct that is as strict as the Sonova Code of
Conduct.

The Sonova Group Supplier Principles (“ SGSP ”) supplement the Sonova Code of Conduct and define
the standards of governance and practice that must be adhered to by all suppliers conducting
business with Sonova.
 
 
SCOPE
The Sonova Code of Conduct to the extent as set out above and the SGSP apply to all suppliers with
whom Sonova have a contractual relationship, including contractors, suppliers of goods and services,
co-packers and joint-venture partners (“ Suppliers ”). It is a prerequisite for doing business
with Sonova that any Supplier complies with these SGSP.

Even though Sonova acknowledges that legislation and cultural patterns vary across the world and
that Suppliers consequently operate under different circumstances, these SGSP set out the basic
requirements any Supplier must comply with. In cases where the law in question is more
comprehensive than these SGSP, current law applies. In cases where these SGSP are more
comprehensive than the law in question, these SGSP apply.
 
 
PRINCIPLES
The Working Environment
The Supplier shall ensure a healthy and safe working environment where the sources of
noise and air pollution are under control. Applicable laws and regulations for a good
working environment, including the safety and health of the employees, must be
complied with. Factory facilities must be well maintained and kept in clean condition.

The Supplier shall especially:

    •    Ensure that indoor production and work areas have adequate air circulation.
 
• Constantly increase safety in production by ensuring sufficient light in the areas used for – as
an example – moulding, printing and finishing activities.
 
• Protect the employees against noise and air pollution by mandatory use of protective
equipment against damages to hearing, sight, respiratory passages etc. The protective
equipment should be made available by the Supplier free of charge.
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  14 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
• Ensure the health of the employees by protecting the employees against the risks involved in
performing their work.
 
• Give reasonable access to drinking water and toilet facilities. Sanitary conditions should be
satisfactory and kept clean.
 
• Keep well-stocked first-aid kit available in each production unit for medical reasons.
 
• Make it possible to exit the facility from inside.
 
• Place well-functioning fire alarms and fire extinguishers in each production unit.
 
• Store dangerous and/or toxic substances safely in locations that are adequately ventilated and
ensure that handling of these materials is safe. Waste from use of dangerous and/or toxic
substances should be treated in accordance with applicable law.
 
Basic Working Conditions
The Supplier shall treat all his employees with respect and dignity and shall ensure all applicable laws
and regulations.
 
The Supplier shall especially:
 
    •    Not use child labor. The term “child” refers to any person employed under the age of 15, or
under the age for completing compulsory education, or under the minimum age for
employment in the country, whichever is greatest. The use of legitimate workplace
apprenticeship programs, however, is supported by us.
 
    • Not use forced labor, regardless of its form, or involuntary prison labor. Physically abusive
disciplinary practices will not be tolerated.
 
• Not use illegal workers.
 
• Not tolerate harassment or discrimination on the basis of sex, race, color, religion, age, ethnic
or national origin, marital/parental status or sexual orientation.
 
•    Respect the legal rights of employees to join or to refrain from joining worker organizations,
including trade unions.
 
• Comply with applicable law regulating hours of work. If no current law applies, Sonova
stipulates max. standard working hours of 10 hours per day and 50 hours per week. Working
hours must be organized in such a way that the employee can plan his own leisure time. In
each 7-day cycle the employee is entitled to at least one day off.
 
• Comply with the current law concerning wages, compensation for overtime and payment
procedures. The employees are entitled to at least a statutory minimum wage or the standard
rate in the industry.
 
Environmental Friendly Production
The Supplier shall operate in a manner that is protective of the environment. At a minimum, the
Supplier shall follow all environmental laws and regulations. The Supplier shall gradually promote
environmentally friendly production. Waste, wastewater and energy consumption are important
elements in environmentally friendly production. The Supplier must therefore be able to handle his
waste, including waste from toxic substances, in a satisfactory way. The Supplier is recommended to
use the international standard ISO 14001 as a starting point and a basis for his work.

Subcontractors
If the Supplier retains subcontractors to perform work on the goods or their component parts, the
Supplier will only use subcontractors that will adhere to the requirements of these SGSP.
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  15 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
 
Ethical Dealings
The Supplier shall conduct his business in accordance with the highest ethical standards. Suppliers
must strictly comply with all laws and regulations on bribery, corruption and prohibited business
practices.

Communications and Record Keeping
The Supplier must make the SGSP and other relevant information available to employees in the local
language in an accessible way. The Supplier shall maintain documentation necessary to demonstrate
compliance with these SGSP and must provide Sonova with access to that documentation upon
Sonova’s request.








Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  16 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
Appendix B:   Product List and Prices

   
 Phonak Part number   NVE Description 
** **

  Sonova Business year
 April 1st until March 31st  		  Deviation  Aug. 22nd 2015 til 
March 31st 2016 		 April 1st 2016 til 
March 31st 2017 		 April 1st 2017 til 
March 31st 2018 		 April 1st 2018 til 
March 31st 2019 		 April 1st 2019 til 
March 31st 2020
             
 Case 1 Sonova Demand   +10% / -15%  ** ** ** ** **
 Case 1 Price US$/Pc   ** ** ** ** **

















Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  17 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
 
 
Appendix C:   Corrective Action Report Form
 
 
 CAR Number:
 Supplier:
 Concern Title:
 1. Device information:
 Date:
 Product type:
 Lot(s):
 Quantity:
 Date(s) delivered:
 Other identification:
 
 2. Contact persons:
 Date:
 Name
 Phone  Email address





   
 3. Problem description:
 Date:
 What
 Should be  Is  Percentage





     
 4. Interim containment actions:
 Date:
 What
 Who  When  % found



 Next information on founding:

   
 5. Root cause definition:
 Date:
 5.1. Action to find out (if not already known)  Who  When



   
 5.2. Result: Root cause description
 Date:





 
 
 
 
Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  18 / 21
 
NVE Corporation / Sonova AG Supply Agreement
   
 6. Permanent Corrective action:  Date
 What  Who  When





   
 7:Verification of corrective actions:
 Date:
 What  Who  When  Result





 
 8. Prevention of reoccurrence:  Date:
 What  Who  When





   






Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  19 / 21
 
NVE Corporation / Sonova AG Supply Agreement
   
 
Appendix D:   KPI Valuation
 
 
INCOMING INSPECTION
Na= Number of lots accepted
Nc= Number of of lots accepted with concession
Nr= Number of lots rejected 		Valuation: 
Valuation:
Valuation:
100 pts.
50 pts.
1 pt .
         
 
Valuation for period: IIR= (100*Na+50*Nc+Nr)/(Na+Nc+Nr)


ON TIME DELIVERY

DELTA = (Actual delivery date)-(Delivery date on order confirmation)

T 1 = Nber of lots where DELTA = -3 to +2 days
T 2 = Nber of lots where DELTA = -3 to -10 days or DELTA = +2 to +10 days
T 3 = Nber of lots where DELTA = -10 to -n days or DELTA = +10 to +n days 		Valuation: 
Valuation:
Valuation:
100 pts.
50 pts.
1 pt .
         
 
Valuation for period: OTD=(100*T 1 +50*T 2 +T 3 )/(T 1 +T 2 +T 3 )


RETURN FROM FIELD

Valuation for period: RFF= 1-(Total number of units returned/Total number shipped)






Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  20 / 21
 
NVE Corporation / Sonova AG Supply Agreement
 
 
 
APPENDIX E: PERCEIVED SERVICE PERFORMANCE QUESTIONNAIRE
 
 
Period : _______________
 
Performance Level Scale:
  		      Supplier Name:______________________________
 
      5________ 4________3________2________1
Excellent       Good    Satisfactory    Fair         Poor

  1. Purchasing and Finance
 

  
Score

Prior
Score
 1.1  Supplier provides adequate confirmations and advance shipping notices.
   
 1.2  Degree of ease with switchboard, voicemail, routing of calls & faxes.    
 1.3. Responses to any questions are timely and effective.
   
 1.4  Helpfulness and willingness to resolve problems.    
 1.5  Ability to hold or reduce costs or add value without increasing costs.
   
 1.6  Ability of this supplier to react to changes in requirements within lead-time.
   
 1.7  Supplier invoice accuracy.    

 2. Incoming Receiving and Stockroom Processes Prior
 
 
 
Score

Prior
Score
 2.1  Supplier labels all goods with Sonova part number and quantity.
        Add a bonus point for bar-coded labels.
   
 2.2  Supplier packaging adequacy, quality and ease of handling. Add a bonus
        point if the supplier packaging is recyclable / re-usable in another
        application. 		   
 2.3  Accuracy of quantities on received goods.
   
 2.4  Shipping documents - accuracy of purchase order lines and release
        numbers. 		   

 3. Engineering, Documentation & Product Development
 
  

Score

Prior
Score
 3.1  Supplier shows evidence of investment in current technology
   
 3.2  Adequacy of catalogues or documentation regarding products or services    
 3.3  Technical competency of supplier representatives    
 3.4  Cycle time to provide samples and answers to technical requests    
 3.5  Time to solve technical problems
   

 4. Quality Audit
       (Score 5 if there were no quality related problems during the review period)
 4.1  Supplier provides timely response to quality problems or inquiries.    
 4.2  Supplier provides timely documentation for corrective action.    
 4.3  Supplier solutions provide adequate long term fixes for quality problems.    
 
 Totals
  		   
 
 Score = 100*Total/76    
  		   
 








Phonak Supplier Agreement Final 20151102.docx Template v2.8 Page  21 / 21