EXHIBIT 10.25
Confidential materials omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment. Asterisks
denote such omissions.
AMENDMENT TO SUPPLY CONTRACTS
This Agreement (the "Amendment") is entered into this __ day of July, 2001 by
and between Daramic, Inc. ("Daramic") and Exide Corporation and all of its
worldwide Affiliates ("Exide").
R E C I T A L S:
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A. On December 15, 1999, Exide and Daramic entered into a North American Supply
Agreement for the supply of Separators (the "Exide-NA Agreement"). All
capitalized terms used but not defined in this Amendment shall have the meaning
described in the Exide-NA Agreement.
B. On January 1, 1997, Daramic entered into a worldwide Purchase and Sale
Agreement with GNB Technologies, Inc. ("GNB") for the supply of certain products
to GNB and its subsidiaries (the "GNB Agreement").
C. On January 1, 1996, Daramic and Exide entered into an Agreement for the
Supply of Battery Separators for Lead Acid Starter and Industrial Batteries to
Exide's facilities located outside of North America (the "Exide-Europe
Agreement"). On December 15, 1999, Exide and Daramic entered into a First
Amendment to Supply Agreement by which they extended the term of the
Exide-Europe Agreement through December 31, 2003. The Exide-NA Agreement, GNB
Agreement and Exide-Europe Agreement may be referred to collectively as the
"Supply Contracts."
D. On or about September 29, 2000, Exide acquired substantially all of the
assets and liabilities of GNB, including, without limitation, GNB's rights and
obligations under the GNB Agreement. Because of this acquisition, Exide and
Daramic now wish to clarify and amend certain of their obligations and rights
under the Supply Contracts.
NOW, THEREFORE, the parties agree as follows:
Golf Cart Separators
1. GCS Supply Agreement. Exide and Daramic agree to enter into an
agreement, in the form attached as Attachment 1, for the supply of separators to
be used in golf cart batteries (the "GCS Supply Agreement").
GNB Agreement
2. Termination of GNB Agreement. The parties agree that the GNB Agreement
is cancelled as of the date of this Amendment. Automotive battery separator
(defined as polymeric, microporous separators) volume previously purchased under
the GNB Agreement is included in the new Minimum Purchase Requirement described
below for the amended Exide-NA Agreement.
3. GNB Rebate. Under the GNB Agreement, GNB would have been entitled to
certain rebates described in Section 4.3 of the GNB Agreement had they purchased
certain agreed volumes of separators under that Agreement in 2000. However,
GNB's actual purchases in 2000 did not reach these levels, and therefore neither
Exide nor GNB is entitled to claim any such rebate under the GNB Agreement.
Exide-Europe Agreement
4. Amendment of Exide-Europe Agreement. The parties hereby agree that the
Exide-Europe Agreement will be terminated and replaced by the execution of a
revised Automotive and Industrial Supply Contract in the form attached hereto as
Attachment 2 (the "XX Xxxxxx Agreement").
Exide-NA Agreement
5. Title. The title of the Exide-NA Agreement is hereby changed to "North
American, Australian and New Zealand Supply Agreement for Automotive
Separators".
6. 2000 Deficit Amount. The parties agree that the Deficit Amount due and
payable by Exide to Daramic under the Exide-NA Agreement for calendar year 2000
is [*****]. This amount was due and payable on or before February 15, 2001. On
February 28, 2001, Exide made a partial payment of [*****] towards satisfaction
of this Deficit Amount. The balance of the Deficit Amount will be repaid as
follows: Exide will amortize [*****](which amount includes the balance of the
2000 Deficit Amount, plus an interest charge of [*****]) by an up-charge of
[*****] per thousand lineal feet of Separators purchased in 2001, with a minimum
amortization of [*****] per month, beginning April 1, 2001. Daramic will invoice
Exide for these up-charge amounts over the balance of calendar year 2001. If for
any reason the full [*****] has not been paid on or before January 15, 2002,
Exide will make a lump sum payment to Daramic on or before that date to repay
this amount in full.
7. Exide-NA Agreement - Amendments Exide and Daramic agree to the
following amendments to the Exide-NA Agreement:
a. Definitions The following definitions and amendments are hereby added
or made to the Exide-NA Agreement:
The definition of "Contract Year" shall be revised to mean each
calendar year during the Term of the Exide-NA Agreement.
Exhibit A containing the "Prices" is amended to include the prices for
Separators previously purchased by GNB. The revised Price list is attached
to this Amendment as Attachment 3. Prior to the date of this Amendment,
Daramic has incurred Substantial Changes in its Manufacturing Costs (all as
defined in Section 4 of the Exide-NA
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Agreement) which would have otherwise resulted in Price increases under the
Exide-NA Agreement. However, as part of this Amendment, Daramic has agreed
to hold in abeyance any such price increases and to retain pricing at the
levels described in Attachment 3 until January 1, 2002. On or after January
1, 2002, Daramic may adjust all Prices as described in Sections 4.2 and 4.3
of the Exide-NA Agreement to reflect changes in its Manufacturing Costs
incurred since January 1, 2001.
"Separator" shall mean polymeric, microporous and/or similar battery
separators for use in automotive (starting, lighting and ignition)
batteries which were previously manufactured by Exide for its own use
utilizing the manufacturing equipment and facilities currently located at
the Corydon, Indiana facility, or by Daramic at its Owensboro, Kentucky
facility. Current products which meet these requirements are listed in
Exhibit A attached hereto and made a part hereof. New products with
different widths, thicknesses, backweb thicknesses, etc. may be added to
Exhibit A from time to time, but only upon the mutual written agreement of
the parties.
Exhibit B containing the "Specifications" is amended to include the
specifications for Separators previously purchased by GNB. The revised
Specifications are attached to this Amendment as Attachment 4. The parties
will cooperate together and will use their reasonable commercial efforts to
standardize the Specifications for both the Exide and former GNB Separators
purchased under the Exide-NA Agreement as soon as practicable, provided
that Exide shall have the final say as to the acceptability of the
standardized Specifications.
The "Term" of this Agreement shall be extended from the Effective Date
through December 31, 2009.
b. Minimum Purchase Requirement
Section 2 of the Exide-NA Agreement is amended to read as follows:
2. Purchase and Supply Commitments
2.1 Each Contract Year during the Term of this Agreement, and subject
to the terms and conditions set forth below, Exide shall purchase from
Daramic, and Daramic agrees to supply to Exide,[*****] Separators listed on
Exhibit A in Exide's North American, Australian and New Zealand
manufacturing facilities, which requirements shall be no less than [*****]
of Separators, of which no less than [*****] of such Separators will have
[*****] (for a total of approximately [*****] of Separators) (hereinafter
referred to as Exide's "Minimum Purchase Requirement"). Exide's purchases
for use in producing batteries of any type outside of North America,
Australia or New Zealand, or for producing non-automotive batteries within
North America, Australia and New Zealand, shall not
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count towards this Minimum Purchase Requirement. If, at any time during the
Term of this Agreement, Exide (a) acquires all or part ownership of any of
Daramic's Customers (as defined below) or (b) establishes a partnership or
other joint venture relationship with any of Daramic's Customers, then and
in such event(s), any purchases of Separators by Exide or these partnership
or joint venture entities up to but not in excess of the average annual
purchases by such Customers from Daramic over the two years prior to
Exide's purchase of or involvement with such entities shall not count
toward the Minimum Purchase Requirement. If, at any time during the Term of
this Agreement, Exide acquires substantially all of the assets of a battery
manufacturing facility owned by any of Daramic's Customers and such
facility, at the time of the acquisition thereof by Exide, was being
supplied with Separators purchased from Daramic, then purchases by Exide
for use at such facility shall not count toward the Minimum Purchase
Requirement. For purposes of Sections 2.1 and 2.2, Daramic's "Customers"
shall mean the customers listed on Exhibit C attached hereto or their
successors; provided, however, that such customers are purchasing
Separators from Daramic at the time of the applicable transaction with
Exide. Exide warrants that it will not cause or influence any Customer of
Daramic to stop purchasing from Daramic in anticipation of a potential
acquisition by or of Exide with the objective of avoiding the intent of
this section 2. Daramic acknowledges and agrees that Exhibit C attached
hereto contains a complete and accurate listing of Daramic's current
customers as of the date of this Amendment.
2.2 [*****]
2.3 If Exide fails to meet its Minimum Purchase Requirement in any
Contract Year, then Exide agrees to pay Daramic, (in accordance with
Section 2.8 below), an amount calculated as follows (the "Deficit Amount"):
([*****] lineal feet minus the actual lineal feet purchased in that
Contract Year)
multiplied by
[*****] (the "Base Multiplier")
equals
the Deficit Amount, provided, however, that in no event shall the
Deficit Amount exceed [*****] in any Contract Year.
2.4 The parties acknowledge and agree that the underlying intent of
Sections 2.1 and 2.2 above is that Daramic should realize at least
[*****]
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[*****] (and approximately [*****]) of incremental Separator sales volume
at contribution margins approximately equal to the Base Multiplier as a
result of this Agreement. The addition of this incremental sales volume is
an integral part of the consideration for the Purchase Agreement. This
entire Agreement, and particularly Sections 2.1 and 2.2 above, shall be
interpreted consistent with and in an effort to give effect to the parties'
intent as described in this Section 2.4.
2.5 By October 1 of each Contract Year (and April 1, 2000 for the
first Contract Year), Exide shall provide Daramic with a written annual
estimate of its Separator requirements for the next succeeding calendar
year. The estimate shall indicate Exide's estimated requirements for
Separators broken down by type for each of Exide's locations for that
calendar year. Commencing April 1, 2000, Exide shall also provide Daramic
with quarterly delivery forecasts for Separators broken down by type for
each of Exide's locations with appropriate lead times. During the Term of
this Agreement, Exide shall update such forecasts on a rolling basis at
least once every month.
2.6 When and if Exide begins purchasing a polymer based battery
separator for golf cart batteries ("Golf Cart Separators") from Daramic
pursuant to the GCS Supply Agreement, such purchases of Golf Cart
Separators shall not count toward satisfaction of Exide's Minimum Purchase
Requirement. However, [*****] of the actual, final net invoiced and
collected sales price for all Golf Cart Separators purchased by Exide from
Daramic under the GCS Supply Agreement at a minimum average price of
[*****], will be treated as a credit to offset any Deficit Amount otherwise
payable by Exide under this Agreement, up to a maximum setoff of [*****] in
any calendar year (the "GCS Credit"). Exide will not receive any GCS Credit
for Golf Cart Separators purchased at an average price less than [*****] or
that are priced to match "Lower Priced Offers" as defined in section 3.4 of
the GCS Supply Agreement. The GCS Credit is nonrefundable and must be used
to offset Deficit Amounts that accrue within the same calendar year during
which the Golf Cart Separators are purchased. It cannot be carried forward
nor can it be carried back to offset previous Deficit Amounts. In no event
will the GCS Credit have any cash value. Further, the GCS Credit is
nonrefundable and results in no other cash benefit other than for use as a
setoff against any Deficit Amount which might otherwise be payable by Exide
under this Agreement that may have accrued during the same calendar year.
If GCS Credits are unused because there is not a resulting Deficit Amount
sufficient to absorb the credit amount, the credit is lost. The GCS Credit
is only accrued for sales by Daramic to Exide of polymer based Golf Cart
Separators.
2.7 In addition to the GCS Credit, Exide shall receive an additional
credit of [*****] for calendar year 2001, and a credit of [*****] per
calendar year for 2002 through 2009 to offset any Deficit Amount otherwise
payable by Exide under this Agreement ("Lump Sum Credits"). These Lump Sum
Credits are nonrefundable and must be used to offset Deficit Amounts that
accrue within the same calendar year during which the Lump Sum Credits
accrue. They cannot be carried
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forward nor can they be carried back to offset previous Deficit Amounts. In
no event will these credits have any cash value. They are nonrefundable and
result in no other cash benefit other than for use as a setoff against any
Deficit Amount which might otherwise be payable by Exide under this
Agreement that may have accrued during the same calendar year. If Lump Sum
Credits are unused because there is not a resulting Deficit Amount
sufficient to absorb the credit amount, the credit is lost.
2.8 After application of the GCS and Lump Sum Credits, if there is a
remaining Deficit Amount, this amount, up to a maximum of [*****], can be
paid in arrears via an up-charge on Separator purchases in the subsequent
Contract Year. Any Deficit Amount in excess of [*****] due after
application of the GCS and Lump Sum Credits must be paid by Exide within
[*****] after the close of the applicable Contract Year. Any Deficit Amount
less than [*****], plus a [*****] installment fee, will be repaid ratably
over Separator purchases in the next Contract Year. The actual up-charge
will be ratably applied on the lower of: (i) Exide's actual purchases; or
(ii) the first [*****] lineal feet of Separators purchased in the
subsequent Contract Year. If Exide's actual purchases fall below the
amounts necessary to fully amortize the remaining Deficit Amount plus the
[*****] installment fee, then Exide must make whole this amount with a
lump-sum payment within [*****] after the end of that same Contract Year in
which payments were to be fully amortized. Upon expiration or termination
of this Agreement, any Deficit Amounts then outstanding must be paid in
full within [*****] after such termination or expiration. Any Deficit
Amount payment that is not paid when due, other than amounts disputed by
Exide in good faith, shall accrue interest at the rate of [*****] per
month.
c. Payment Terms. Section 5 of the Exide-NA Agreement is amended to read as
follows:
5. Payment Terms
Invoices are to be issued by Daramic upon shipment and are due and payable
[*****] days after date of invoice. Any amounts due by Exide to Daramic,
which amounts are not paid when due shall accrue interest at a rate of
[*****] per month, or portion thereof, from the due date until the date
paid. All invoices must reference applicable Exide purchase order/contract
release numbers or the special terms of this Agreement, and shall be sent
to:
Exide Corporation
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Accounts Payable
d. Research and Development. Section 7.4 of the Exide-NA Agreement is
amended to read as follows:
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7.4 [*****]
8. Miscellaneous Except as modified by this Amendment, the Exide-NA
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and date first above mentioned.
Exide Corporation, for itself, and on behalf of all of its present and
future, direct and indirect, parent, subsidiary, and affiliated entities on
a worldwide basis.
By: [ILLEGIBLE SIGNATURE]
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Title:
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Daramic, Inc.
By: [ILLEGIBLE SIGNATURE]
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Title:
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