EXHIBIT 10.41
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
200.83 and 240.24b-2
BATTERY LAMINATE SUPPLY AGREEMENT
--------------------------------------------------------------------------------
between
ALLIANT/VALENCE, LLC
and
VALENCE TECHNOLOGY, INC.
VALENCE TECHNOLOGY CAYMAN ISLANDS INC.
on
OCTOBER 7, 1996
ALLIANT/VALENCE / VALENCE CONFIDENTIAL
CONFIDENTIAL TREATMENT REQUESTED
THIS AGREEMENT, entered into as of October 7, 1996 ("Effective Date") by and
between Valence Technology, Inc. with offices at 000 Xxxxxxxxx Xxx, Xxxxxxxxx,
Xxxxxx ("Valence US") and its wholly-owned subsidiary Valence Technology Cayman
Islands Inc. with offices at X.X. Xxx 000, Xxxxx Xxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx
Xxxx Indies ("Valence Cayman") (collectively "Valence") and Alliant/Valence,
LLC, with offices at Power Sources Center, 000 Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx
00000 ("Alliant/Valence").
WHEREAS, Valence has the knowledge, expertise and technology to design, develop,
manufacture and sell solid polymer electrolyte batteries and the components
thereof, such as battery laminate, and Valence owns or has rights to all
patents, trademarks, know-how, technology and other intellectual property
necessary to design, manufacture, and sell the laminates that are used in such
batteries;
WHEREAS, Alliant/Valence desires to obtain battery laminate from Valence.
NOW, THEREFORE, In consideration of the mutual covenants and promises herein set
forth, Alliant/Valence and Valence agree as follows:
1. DEFINITIONS
1.1 APPLICATIONS shall mean applications for use in the Joint
Venture Markets, except for those applications for which Valence has already
granted an exclusive license to another party, such as automotive, traction and
utility load leveling markets licensed to General Motors, personalized lighting
systems and uninterruptable power supplies licensed to Goldtron Ltd., and any
applications in Korea licensed to Hanil Telecom Co., Ltd.
1.2 BATTERIES (or BATTERY, singular) shall mean the advanced
rechargeable solid polymer electrolyte batteries manufactured by Alliant/Valence
utilizing Laminates based on the solid polymer electrolyte technology owned and
licensed by Valence.
1.3 FULLY-LIQUIDATED MANUFACTURING COSTS shall mean the sum of
direct material, direct labor and fully absorbed factory overhead based on an
annual average cost derived from the current year's operating plan at the
relevant range of activity. Fully-absorbed factory overhead includes the
[
] Specifically excluded from
factory overhead costs are [
]
1.4 JOINT VENTURE AGREEMENT shall mean the agreement entered into
between Alliant Techsystems Inc. and Valence on October 7 1996.
1.5 JOINT VENTURE MARKETS shall mean United States Military, foreign
military sales and United States government specialized markets, not including
Valence standard product sales into such markets.
1.6 LAMINATES shall mean cathode, separator and anode laminates, or
films, of the Battery, produced exclusively by Valence.
1.7 VALENCE shall mean Valence US and Valence Cayman jointly and
separately, provided that Valence US shall accept any rights or obligations
that arise under this agreement in the United States, Canada or Mexico, and
Valence Cayman shall accept any rights or obligations that arise under this
agreement in the remainder of the world.
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CONFIDENTIAL TREATMENT REQUESTED
2. LAMINATE SUPPLY
2.1 Valence shall sell, to Alliant/Valence, Laminate at a cost of
Valence's Fully-Liquidated Manufacturing Cost plus [ ]. This
cost may be verified or certified by an accountant nominated by both parties.
Valence shall supply laminate at a cost no higher than the cost for other
similar joint ventures.
2.2 Valence shall sell the Laminate to Alliant/Valence according to
Valence's standard Terms and Conditions of Sale, attached as the Terms and
Conditions of Sale Exhibit. Alliant/Valence shall place purchase orders with
Valence to purchase laminate. Preprinted terms on Alliant/Valence's purchase
orders and Valence's order acknowledgment forms shall have no effect and shall
not be considered part of this Agreement. In the event of any conflict between
the Terms and Conditions of Sale Exhibit and this Agreement, the terms of this
Agreement shall prevail.
2.3 Alliant/Valence may only use Laminate to manufacture Batteries
for use in Applications for Joint Venture Markets.
2.4 Alliant/Valence shall only design, manufacture, use, sell, and
distribute Batteries, using Laminate supplied by Valence,[
]
2.5 Alliant/Valence hereby covenants and warrants that it will not
design, develop, manufacture Laminate or any replacement or substitute for
Laminate. Alliant/Valence further warrants that it will not decompose or
reverse engineer Laminate.
3. COVENANTS AND WARRANTIES
3.1 The parties each covenants to the other that it shall fully
comply with any legislative and regulatory requirements (including any
regulations, statutory or otherwise, relating to environmental controls)
directly or indirectly applicable to the performance of its obligations
hereunder. Because Laminate is in part based on some technology of United
States origin, Alliant/Valence shall comply with all current and future United
States export regulations, including export embargoes and export licensing
provisions. Valence shall use its best efforts to notify Alliant/Valence of
such regulations, and any changes thereto.
3.2 Each party ("Indemnitor") shall, at its own expense, defend any
suit that is instituted against the other ("Indemnitee") to the extent such
suit alleges that any goods, information, designs, or any part thereof sold
hereunder infringe any patent, trademark, copyright, or trade secret.
Indemnitor shall not be liable to Indemnitee if such alleged infringement
arises from any modification or addition made by anyone other than the
Indemnitor, or the use as a part of or in combination with any other devices or
parts or from the use to practice any method or process, if there would have
been no infringement but for such acts. Indemnitee shall give the Indemnitor
immediate notice in writing of any such suit and permits the Indemnitor,
through counsel of its choice, to answer the charge of infringement and defend
such suit. Indemnitee shall give the Indemnitor all the needed information,
assistance and authority, at the Indemnitor's expense, to enable the Indemnitor
to defend or settle such suit. In the case of a final award of damages in any
suit the Indemnitor, shall pay such award, but shall not be responsible for any
settlement made without its prior written consent. In the event the use, lease
or sale of the goods is enjoined, the Indemnitor may at its own option and
expense (i) procure for the Indemnitee the right to use, lease or sell such
goods, (ii) replace such goods, (iii) modify such goods, or (iv) remove such
goods and refund the aggregate payments made by the Indemnitee, less a
reasonable sum for use, damage and obsolescence. THIS ABOVE STATES THE
INDEMNITOR'S TOTAL RESPONSIBILITY AND LIABILITY, AND THE INDEMNITEE'S SOLE
REMEDY, FOR ANY ACTUAL OR ALLEGED INFRINGEMENT OF ANY INTELLECTUAL PROPERTY
RIGHT
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CONFIDENTIAL TREATMENT REQUESTED
BY ANY GOODS DELIVERED HEREUNDER OR ANY PART THEREOF. THIS SECTION IS IN
LIEU OF AND REPLACES ANY OTHER EXPRESS, IMPLIED OR STATUTORY WARRANTY AGAINST
INFRINGEMENT.
3.3 The above indemnity obligation with regard intellectual property
rights is the sole and only indemnity obligation owed by each party to the
other party under this Agreement.
4. TERMINATION
4.1 A party shall be deemed to have breached or defaulted if:
4.1.1 any representation, warranty or statement by such
party in this Agreement or in any document delivered under
this Agreement is not complied with or is or proves to have
been incorrect in any material respect when made;
4.1.2 such party does not perform or comply with any one
or more of its material obligations under the Agreement and
such party in breach shall fail to rectify that breach within
sixty (60) days of written notice of breach being given to
that party in the terms of this Section; or
4.1.4 a winding up or bankruptcy petition is presented, an
order is made, an effective resolution passed or legislation
enacted for the winding-up other than for the purpose of
reconstruction or amalgamation of such party or if a receiver
and/or manager is appointed of the undertaking or part thereof
of such party; or
4.1.5 such party is unable to pay its debts as they fall
due or stops payment of its debts generally or commences
negotiations with its creditors with a view to readjustment or
re-scheduling of its debts or compounds or enters into any
arrangement with or makes any assignment for the benefit of
its creditors generally or attempts to do any of the foregoing
(except as part of or pursuant to a scheme for reconstruction
or amalgamation);
4.2 In the event a party commits a breach or default, as described
above in Section 4.1, the other party hereto shall, without prejudice to any
other rights and remedies such party may have, be entitled by notice in writing
to the party in breach or default to terminate this Agreement forthwith as
against such party.
4.3 [
]
4.4 The provisions of this Agreement with regard to confidential
information and intellectual property rights indemnity shall survive the
termination of this Agreement.
4.5 This Agreement shall immediately and automatically terminate
upon the termination of the Joint Venture Agreement
5. TAXES
5.1 Each party hereto shall be responsible for its own taxes,
whether present or future including income tax payable in respect of any sum
received by it, levies, goods and services tax, value added tax, impost,
deductions or withholding imposed, assessed or collected by any political
subdivision or taxing authority of any country in respect of this Agreement,
any transaction or any documents contemplated herein. In no circumstances
shall either party be obliged to gross up the amount of any payment which it is
otherwise obliged to make pursuant to this Agreement so as to ensure that the
net amount received by the recipient equals that amount which the recipient
would have been entitled to receive in the absence of any applicable
withholding tax.
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5.2 Where Alliant/Valence is obliged to withhold any tax or other
charge from payments otherwise due by Alliant/Valence under this Agreement,
Alliant/Valence shall promptly forward to Valence the original tax payment
certificates evidencing that such withholding taxes or other charges have been
paid.
6. CONFIDENTIALITY AND PUBLIC DISCLOSURE
6.1 "Confidential Information" shall mean that information of
either party which is disclosed to the other party ("Recipient") by reason of
the parties' relationship hereunder, either directly or indirectly in any
written or recorded form, orally, or by drawings or inspection of parts or
equipment, and, either in writing and marked as confidential or proprietary, or
if oral, reduced to writing similarly marked within thirty (30) days of
disclosure.
6.2 Recipient shall receive and use the Confidential Information
only for performance of Recipient's obligations hereunder, and will not use
Confidential Information for any other purpose, and shall not disclose such
Confidential Information to any person or persons who do not need to have
knowledge of such Confidential Information in the course of their employment.
6.3 It is expressly understood that Recipient shall not be liable
for disclosure of any Confidential Information if the same:
6.3.1 was in the public domain at the time it was disclosed;
6.3.2 was known to Recipient at the time of disclosure;
6.3.3 is disclosed with the prior written approval of the
other party hereto;
6.3.4 is disclosed after five (5) years from the termination
of this Agreement;
6.3.5 was independently developed by Recipient; or
6.3.6 becomes known to Recipient, on a non-confidential
basis, from a source other than the other party hereto,
without breach of this Agreement by Recipient.
6.4 Each party hereto shall not, except as authorized by the Board
of Directors of Alliant/Valence, or required by any applicable law or
regulation of the Cayman Islands or the United States of America, reveal to any
person, firm or Alliant/Valence any of the trade secrets, secret or
confidential operations, processes or dealings or confidential information of
Alliant/Valence or any information concerning the organization, business,
finances, transitions or affairs of Alliant/Valence which may come to his
knowledge hereunder and shall keep with complete secrecy all trade secrets and
other confidential information entrusted to him and shall not use or attempt to
use any such information in any manner which may injure or cause loss either
directly or indirectly to Alliant/Valence or its Business or may be likely to
do so.
6.5 Valence and Alliant/Valence agree that the terms and conditions
of this Agreement shall not be disclosed to any other party without the prior
written consent of the other, which consent should not be unreasonably
withheld. Neither Valence nor Alliant/Valence shall publish or use any
advertising, sales promotion, press release or publicity matters relating to
this Agreement, without the prior written approval of the other, which approval
shall not be unreasonably withheld. Notwithstanding the forgoing, either party
may make such disclosures and press releases as are necessary to meet its
disclosure requirements under the laws, regulation and rules of the Cayman
Islands or the United States of America.
6.6 Alliant/Valence shall not enter into any agreement that would
require it to disclose or encumber any Valence or Alliant/Valence confidential
information or intellectual property rights.
7. RELATIONSHIP BETWEEN THE PARTIES
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Nothing in this Agreement shall be construed to imply the existence of a
partnership between the parties hereto. Valence and Alliant/Valence each
represent and warrant to the other that they have entered into no contracts,
nor are subject to any obligations, which prevent them from entering into and
performing this Agreement. It is understood and agreed that Valence and
Alliant/Valence are, and at all times shall remain, independent contractors.
At no time shall either party represent to any third party that it is the agent
of the other for any reason whatsoever. Valence and Alliant/Valence further
covenant that no authorization shall be given to any employee to act for the
other party to this Agreement. In no event shall either party at any time have
authority to make any contracts or commitments on behalf of or as an agent of
the other or otherwise make use of its relationship with the other, without the
other's express consent in each instance.
8. LIMITATION OF LIABILITY
In no event shall either party be liable for any indirect, special, incidental
or consequential damages resulting from its performance or failure to perform
under this Agreement, whether due to a breach of contract, breach of warranty,
or such party's negligence. Neither parties' liability hereunder shall exceed
the amounts paid hereunder.
9. GENERAL
9.1 Neither party may assign its rights or obligations under this
Agreement without the prior consent of the other, and any purported assignment
without such consent shall have no force or effect, except that a party may
assign this Agreement incident to the transfer of all or substantially all of
its business. Subject to the foregoing, this Agreement shall bind and inure to
the benefit of the respective parties hereto and their successors and assigns.
9.2 No failure or delay by either party to enforce or take advantage
of any provision or right under this Agreement shall constitute a subsequent
waiver of that provision or right, nor shall it be deemed to be a waiver of any
of the other terms and conditions of this Agreement.
9.3 Neither party to this Agreement shall be liable for its failure
to perform any of its obligations hereunder during any period in which such
performance is prevented by any cause beyond its reasonable control. In the
event of any such delay the date of delivery or performance hereunder shall be
extended by a period equal to the time lost by reason of such delay. In the
event Valence's production is curtailed, Valence may allocate its available
production, as reasonably equitable, among its various customers.
9.4 The validity, performance and construction of this Agreement
shall be governed by the laws of the state of Delaware (excluding its
conflict of laws provisions).
9.5 Each party hereto shall bear its own costs and expenses in
respect of the preparation, negotiation, finalize and execution of this
Agreement and the other agreements or documents contemplated herein.
9.6 All notices or communications to be given under this Agreement
shall be in writing and shall be deemed delivered upon hand delivery, upon
acknowledged telex or facsimile communication, or seven (7) days after deposit
in the mail, postage prepaid, by certified, registered or first class mail,
addressed to the parties at their addresses set forth above.
9.7 In the event that any provision of this Agreement is prohibited
by any law governing its construction, performance or enforcement, such
provision shall be ineffective to the extent of such prohibition without
invalidating thereby any of the remaining provisions of the Agreement. The
captions of sections herein are intended for convenience only, and the same
shall not be interpretive of the content of such section.
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9.8 The terms and conditions of this Agreement may not be
superseded, modified, or amended except in writing which states that it is such
a modification, and is signed by an authorized representative of each party
hereto. This Agreement shall not be modified, supplemented, qualified, or
interpreted by any trade usage or prior course of dealing not made a part of
the order by its express terms.
9.9 Section titles used herein are for reference only and shall not
be for purposes of interpretation.
9.10 This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same instrument.
9.11 This Agreement, including exhibits, constitutes the entire
Agreement between the parties as to the subject matter hereof, and supersedes
and replaces all prior or contemporaneous agreements, written or oral,
regarding such subject matter, and shall take precedence over any additional or
conflicting terms which may be contained in either party's purchase orders or
order acknowledgment forms.
ACCEPTED AND AGREED:
VALENCE TECHNOLOGY, INC. ALLIANT/VALENCE, LLC
By: By:
----------------------------------- -----------------------------------
signature of authorized representative signature of authorized representative
Xxxxxx X. Xxxx
-------------------------------------- --------------------------------------
printed name printed name
President
-------------------------------------- --------------------------------------
title title
-------------------------------------- --------------------------------------
date date
VALENCE TECHNOLOGY CAYMAN ISLANDS INC.
By:
-----------------------------------
signature of authorized representative
Xxxxxxx Xxxxxx
--------------------------------------
printed name
General Manager
--------------------------------------
title
--------------------------------------
date
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Terms and Conditions of Sale Exhibit
1. ACCEPTANCE
This acknowledgment is an acceptance of the Customer's purchase order only for
those goods and services with a Valence scheduled date attached hereto.
Acceptance is conditional upon the Customer's consent to the terms and
conditions set forth herein which will be in lieu of and replace any and all
terms and conditions set forth on Customer's purchase order if they are in
conflict with any terms and conditions set forth in this Terms and Conditions
of Sale Exhibit, or the Agreement itself. No waiver or amendment of any of the
provisions hereof shall be binding on Valence unless made in a writing
expressly stating that it is such a waiver or amendment and signed by an
authorized representative of Valence.
2 . TERMS OF PAYMENT
Unless otherwise stated on the face hereof (or otherwise agreed upon as, for
instance, a letter of credit) all payments are due and payable forty-five (45)
days from the date of invoice. All payments shall be made to Valence at 000
Xxxxxxxxx Xxx, Xxxxxxxxx, Xxxxxx or such other address as Valence may request.
If all the goods or services covered hereby are not delivered or performed at
one time, the Customer shall pay the unit prices considered applicable to the
goods delivered or services performed. Each shipment shall be considered a
separate and independent transaction. All shipments, deliveries and
performance of work covered hereby shall at all times be subject to the credit
approval of Valence, and Valence may at any time decline to make any shipments
or deliveries, or perform any work, except upon receipt of payment or upon
terms and conditions or security arrangement satisfactory to Valence.
3. PRICES
The prices for the goods covered hereby shall be those shown on the face
hereof, provided, however, that if such prices are based on the purchase of a
particular quantity of goods and Customer fails to purchase such quantity,
Valence shall have the right (in addition to any other rights and remedies
Valence may have) to collect from Customer the difference between the price
paid by Customer for the goods purchased and Valence's standard price for such
goods in the quantity purchased by Customer. Unless otherwise stated on the
face thereof, the prices for the goods covered hereby do not include costs of
special packaging or shipping.
4. TAXES
Unless otherwise stated on the face hereof, the prices for the goods covered
hereby do not include customs duties or sales, use, excise, or other similar
taxes. The Customer shall pay, in addition to the prices quoted, the amount of
any present or future customs duties or sales, use, excise or other similar tax
applicable to the sale of goods or performance of services covered by this
acknowledgment, or in lieu thereof the Customer shall supply Valence with an
appropriate tax exemption certificate.
5. DELIVERY
Delivery shall be F.O.B. Valence's factory. The delivery dates set forth on
this acknowledgment are approximate only, and Valence shall not be liable for,
nor shall Valence be in breach of its obligations to the Customer because of,
any delivery made within a reasonable time before or after the stated delivery
date. Valence may, by written notice to Customer, change any delivery date, and
such date shall become the agreed upon delivery date unless Customer objects to
such date in writing delivered to Valence within ten (10) days of receipt of
Valence's notice.
6. INSPECTION AND ACCEPTANCE
All Material ordered by Buyer hereunder shall be subject to inspection and
acceptance of Buyer at its facility. Material which fails to conform to the
mutually agreed upon specifications and/or descriptions provided or
incorporated herein, may be rejected by Buyer and returned to Valence for
credit, rebate of purchase price or replacement at Valence's option. Valence
shall bear all cost of transportation for the return of all non-conforming
Material. Valence shall issue a Return Material Authorization (RMA) number on
defective Material that has been dispositioned to be returned to Valence.
Buyer shall accept Material included in each shipment within thirty (30) days
from Buyer's receipt of such shipment. If Buyer fails to notify Valence in
writing of its rejection and the reasons therefor within such time period,
Buyer will be deemed to have accepted such Material. Valence shall notify Buyer
of major process changes (as defined by Valence) incurred by Valence in the
manufacturing of Material to be purchased under this Agreement, if such changes
affect form, fit, or function of Material. If deemed necessary by Buyer,
requalification procedures for said Material may then be required. Valence may
implement manufacturing improvements which do not affect form, fit or function
of Material. Any such improvements shall be implemented only upon the
successful completion of reasonable qualification testing. Additionally,
Valence shall determine which of it's qualified manufacturing sites shall be
used to manufacture Material. Valence shall have no obligation to notify Buyer
of such manufacturing improvements or manufacturing site selection.
7. WARRANTY
Valence warrants that goods delivered hereunder shall be free from defects in
material and workmanship under normal use and service for a period of one (1)
year from the date of shipment from Valence's facility. If during such one
year period: (i) Valence is notified promptly in writing upon discovery of any
defect in the goods, including a detailed description of such defect; (ii) such
goods are returned to Valence, F.O.B. Valence's facility; and (iii) Valence's
examination of such goods discloses to Valence's satisfaction that such goods
are defective and such defects are not caused by accident, abuse, misuse,
neglect, alteration, improper installation, repair or alteration by someone
other than Valence, improper testing, or use contrary to any instructions
issued by
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Valence; then within a reasonable time Valence shall (at its sole option)
either repair, replace, or credit the Customer for, such goods. Valence shall
return any goods repaired or replaced under this warranty to customer
transportation prepaid, and reimburse Customer for the transportation charges
paid by Customer for such goods. The performance of this warranty does not
extend the warranty period for any goods beyond the period applicable to the
goods originally delivered. Prior to any return of goods by the Customer
pursuant to this Section, the Customer shall afford Valence the opportunity to
inspect such goods at the Customer's location at the cost of the default party,
or on a cost-sharing basis if no fault is found with either party, and any such
goods so inspected shall not be returned to Valence without its prior written
consent. The foregoing warranty constitutes Valence's exclusive liability, and
the exclusive remedy of the Customer, for any breach of any warranty or other
nonconformity of the goods covered by this acknowledgment. THIS WARRANTY IS
EXCLUSIVE, AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
A PARTICULAR PURPOSE, WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
8. BREACH
Any one of the following acts by Customer shall constitute a breach of
Customer's obligation hereunder: (i) failure to make payment for any goods or
services from Valence when due; (ii) failure to accept conforming goods or
services supplied hereunder; (iii) the return of any goods shipped to Customer
hereunder without the prior written consent of Valence; (iv) the filing of a
voluntary or involuntary petition in bankruptcy against Customer, the
institution of any proceedings in insolvency or bankruptcy (including
reorganization) against Customer, the appointment of a trustee or receiver of
Customer, or an assignment for the benefit of creditors of Customer; or (v) any
other act by Customer in violation of any of the provisions hereof. In the
event that Customer breaches in any manner set forth above, Valence may, by
written notice to Customer, terminate the order covered hereby, or any part
thereof, without any liability whatsoever. Customer shall pay all costs,
including reasonable attorney's fees, incurred by Valence in any action brought
by Valence to collect payments owing or otherwise enforces its rights hereunder.
9. CUSTOM PRODUCT ORDER CANCELLATION
If an order for any design unique to Customer ("Custom Products") is cancelled,
in addition to the actual cost of any buyer specific materials, Customer shall
pay the following charges for orders scheduled for delivery within ninety (90)
days of Valence's receipt of cancellation notice: (i) for finished laminate at
time of receipt of cancellation - full purchase price; (ii) for partially
coated at time of receipt of cancellation - fifty percent of full purchase
price; or (iii) for custom current collector material at time of receipt of
cancellation - fifty percent of full purchase price.
10. USE IN LIFE SUPPORT APPLICATIONS
Buyer is not authorized to use any goods supplied under this Agreement in any
Life Support Application without the express written consent of Valence. Life
Support Applications include: (i) a device to be implanted in a human body; or
(ii) a system or device which supports or monitors a human life, such that its
failure could cause serious injury or death.
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