EXHIBIT 10.23
Confidential materials omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment. Asterisks
denote such omissions.
AUTOMOTIVE AND INDUSTRIAL SUPPLY CONTRACT
This Agreement is entered into this ___ day of July, 2001, by and between
Daramic, Inc. and its Affiliates ("Daramic") and Exide Corporation and its
Affiliates ("Exide").
1. Definitions
As used herein the following terms shall have the following meanings:
"Affiliates" shall mean any Person in which either Daramic or Exide,
directly or indirectly, owns or controls fifty percent (50%) or more of the
ownership indicia, as well as any Person which, directly or indirectly, owns 50%
or more of, or otherwise controls the management decisions of Exide or Daramic.
"GCS Supply Agreement" means the Golf Cart Separator Supply Contract
entered into as of the same date between Exide and Daramic.
"Industrial Price Index" shall mean the Industrial Price Index
published by the Journal of Commerce, or a reasonable substitute should that
volume cease to be published.
"North American Supply Agreement" shall mean the North American Supply
Agreement of December 15, 1999 between Exide and Daramic, as amended and
re-titled on this date as the "North American, Australian and New Zealand Supply
Agreement for Automotive Separators".
"Person" shall mean any individual, partnership, corporation, trust or
any other legal entity or any government or political subdivision.
"Prices" shall mean the prices for Qualified Products set forth in
Exhibit A attached hereto, as adjusted from time to time as set forth in Section
4 hereof.
"Qualified Products" shall mean Existing Products and Replacement
Products.
"Separator" shall mean any battery separator used by Exide for any
application whatsoever (other than those products purchased from Daramic
pursuant to the North American Supply Agreement or the GCS Supply Agreement).
"Specifications" shall mean the specifications for the Qualified
Products set forth in Exhibit B attached hereto which may be amended from time
to time only by mutual written agreement of the parties, provided that Exide
shall have the final say as to the acceptability of any modified Specification.
"Term" shall mean July ___, 2001 through December 31, 2009.
2. Existing Products
The intent of this Agreement is that Exide will offer to purchase, and
Daramic shall have the option to supply,[*****] Separators on a worldwide basis.
To partially give effect to this intent, effective immediately, Daramic agrees
to supply and Exide agrees to purchase [*****] of the products listed on the
attached Exhibit "A" (the "Existing Products"). Prices for the Existing Products
are also listed on Exhibit "A."
3. Replacement Products
For all Separators that are not listed on Exhibit A, Daramic shall have the
option of seeking to develop a comparable product or a suitable replacement for
the Separators then being used by Exide (a "Replacement Product"). [*****] To
the extent that Daramic produces or represents a competitive product comparable
to, or a suitable replacement for any Separator then in use by Exide, at a price
that is equal to or less than the price then being paid by Exide for such a
product, then Daramic may present such Replacement Product to Exide for
qualification. Exide agrees to use its best commercial efforts to fully
cooperate and support Daramic's efforts to produce or qualify such a Replacement
Product as quickly as possible. Upon qualification, such Replacement Product
shall be added to the list of Qualified Products on Exhibit A, and Exide will
purchase from Daramic [*****] of said qualification and for the remaining Term
of this Agreement. Pricing for such a Replacement Product will initially be at
the level most recently paid by Exide to its primary third party supplier for
the product being replaced. However, if such Replacement Product utilizes a
different technology such that the Replacement Product is substantially less
costly to produce than the product it replaces, then Daramic will make a fair
adjustment in the initial pricing level as described in Section 6 below. Once
the initial Price for a Replacement Product is established, then the price for
such a Replacement Product will be subject to change adjustments based on cost
reductions achieved as contemplated by Sections 6 and 7.2 below and on changes
in Daramic's Manufacturing Costs pursuant to Section 4.2 below. After initial
qualification of a Replacement Product, Daramic shall only be required to
continue to meet prices offered by third parties as described in section 4.4.
4. Prices
4.1 Initial Prices for Qualified Products supplied pursuant to this
Agreement shall be as set forth on Exhibit A attached hereto.
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4.2 Subject to the other terms of this Agreement, Prices shall remain firm
until January 1, 2002 and are subject to annual revisions thereafter by Daramic
to reflect any Substantial Change (as defined below) in Daramic's cost to
manufacture Qualified Products, including, without limitation any changes in
Daramic's Manufacturing Costs since January 1, 2001. These prices are based on
[*****](collectively, "Manufacturing Costs"). In the event there is a
Substantial Change in Daramic's Manufacturing Costs, Daramic will have the right
to make an appropriate adjustment in the Price for Qualified Products from time
to time while this Agreement is in effect (but not more often than once per year
for each type of Qualified Product) to reflect any such Substantial Changes.
Daramic shall provide Exide at least 90 days written notice prior to the
effective date of such change. During this 90 days, Daramic shall consult with
Exide to insure that Daramic's current Prices reflect prevailing economic and
market conditions for both Exide and Daramic. If Exide or Daramic believe in
good faith that any such Price adjustment does not reflect prevailing market
conditions, then the Parties shall negotiate in good faith the possibility of
deferring, retracting or accelerating all or part of the proposed Price
adjustment as the circumstances may merit. Such discussions shall not in any way
interfere with or postpone Daramic's proposed effective date for the Price
adjustment, except with the mutual consent of both Parties. Regardless of the
prevailing market conditions, such Price adjustments shall always reflect no
less than 50% of the increase in the actual change in Daramic's Manufacturing
Costs, and the cumulative effect of any such Price adjustments shall not exceed
the cumulative change in the Industrial Price Index from January 1, 2001. If an
adjustment in Price for a type of Qualified Product is implemented by Daramic
due to a Substantial Change, Daramic shall make available to Exide documentation
to substantiate the Substantial Change. The term "Substantial Change" shall mean
any change (upward or downward) exceeding [*****] of Daramic's then-current
Manufacturing Costs for any type of Qualified Product. Prices will also be
adjusted based on cost reductions achieved as contemplated by Sections 6 and 7.2
below.
4.3 During the term of this Agreement, and for a period of two (2) years
thereafter, Daramic shall keep accurate and complete records of all data
necessary for the computation of its Manufacturing Costs. From time to time,
upon reasonable notice to Daramic, Exide's designated independent public
accountants shall have the right at reasonable times during normal business
hours to examine the records of Daramic applicable to the calculation of and for
the sole purpose of verifying the Prices charged Exide hereunder; provided,
however, that before obtaining access to and examining such records, Exide shall
cause its independent public accountants to execute and deliver a
confidentiality agreement in form and substance reasonably acceptable to Daramic
regarding Daramic's records and the information contained therein. If the
records show that Daramic has failed to adjust the Prices in accordance with
Section 4.2 and such adjustment would have reduced the Prices paid by Exide
during the applicable period by more than [*****], Daramic shall pay all costs
associated with the examination of the records. Otherwise, Exide shall bear all
costs of such examination. If Daramic disputes the calculation of any such
adjustment by Exide's independent public accountants, the parties shall agree on
the appointment of an independent third party arbitrator to resolve such
dispute. If such arbitrator determines that the calculation by Exide's
independent public accountants of the required Price adjustment is accurate,
Daramic shall pay all costs associated with the work performed by the third
party arbitrator. If such arbitrator determines that Daramic has complied with
Section 4.2, Exide shall pay all costs associated with the work performed by the
third party arbitrator.
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Otherwise, the arbitrator shall determine how such costs shall be allocated
between Daramic and Exide. Daramic will promptly refund to Exide any overpayment
made by Exide plus liquidated damages in an amount equal to [*****] of such
overpayment. The parties agree that the amount of liquidated damages set forth
in the immediately preceding sentence is a fair and appropriate estimation of
the injury caused to Exide by Daramic's failure to adjust the Prices in
accordance with Section 4.2, and Daramic agrees not to contest or object to
Exide's right to such amount of liquidated damages. Conversely, if Daramic
prevails, then in addition to its fees and costs, Exide shall also pay Daramic
liquidated damages of [*****] of the alleged overcharge amount as compensation
for the business distraction incurred by Daramic.
4.4 [*****]
4.5 Notwithstanding the provisions of Sections 4.2, 4.3 and 4.4 the
ex-works prices charged to Exide and its Affiliates by Daramic or its Affiliates
for Separators will be no higher than the prices for Separators having
substantially similar attributes, standards and qualities offered by Daramic or
any of its Affiliates to any other customer purchasing volumes substantially
similar to those volumes purchased by Exide or any of its Affiliates.
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5. Payment Terms
Invoices are to be issued by Daramic upon shipment and are payable
[*****] days after date of invoice. Any amounts due by Exide to Daramic, which
amounts are not paid when due, other than amounts disputed by Exide in good
faith, 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 and shall be sent to:
Exide Corporation
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Attention: Accounts Payable
6. Cost Reductions
Daramic and Exide will use Customer-Supplier teams as a vehicle to identify
and implement cost reduction activities by Daramic associated with Qualified
Products. Daramic will identify the implementation costs, including capital, and
cost savings associated with any proposed project. Implementation and the timing
for implementation of each project will be mutually agreed upon by the parties.
Price changes based on such projects will reflect a [*****] sharing of the cost
savings actually accomplished based on each party's inputs and risks. Both
parties agree that if any capital expense required to implement a particular
cost reduction or production expansion project does not support agreed upon
payback expectations, then the project will not be initiated.
7. Research & Development
7.1 Daramic shall continue to provide Qualified Product and battery
testing services to Exide such as are currently provided at its testing
laboratories in Owensboro, Kentucky, and Hamburg, Germany, or at such other
laboratory as may be mutually agreed upon by the parties.
7.2 The parties acknowledge that Daramic is a technology leader in the
battery separator industry, and Daramic agrees to use commercially reasonable
efforts to keep abreast of and promptly implement all technological
improvements, enhancements and/or advances in the manufacture of Qualified
Products. The parties intend to [*****] in all benefits (including cost savings)
achieved through the efforts of Daramic or of both parties.
7.3 [*****]
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8. Confidentiality
During this agreement and for a period of ten years subsequent to the
termination or expiration of this Agreement (regardless of the cause of
termination), each party shall hold as confidential and shall not disclose,
directly or indirectly, to third parties nor use (other than in the
performance of this Agreement) for its benefit or for the benefit of third
parties information disclosed by or received from the other party and
pertaining to its business affairs, including, without limitation,
information disclosed by Exide regarding Separators supplied by third
parties. It is understood that this obligation of confidentiality and
non-use shall not apply to any information known to either party which (i)
is or becomes publicly known through no fault of its own, (ii) is disclosed
to the party by a third party entitled to disclose such information, (iii)
was previously known to the other party or (iv) is independently developed
by the other party without reference to any of the other party's
confidential information.
9. Forecasts
By October 1 of each calendar year (and July 1, 2001 for the first calendar
year), Exide shall provide Daramic with a written annual estimate of its
Qualified Product requirements for the next succeeding calendar year. The
estimate shall indicate Exide's estimated requirements for Qualified Product
broken down by type for each of Exide's locations for that calendar year.
Commencing July 1, 2001, Exide shall also provide Daramic with quarterly
delivery forecasts for Qualified Products 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.
10. Delivery
10.1 Delivery terms for Qualified Products supplied under this Agreement
shall be as follows:
a. Qualified Products supplied to any Exide plant in North, South or
Central America shall be shipped [*****];
b. Qualified Products supplied to any Exide plant in the European
Community (as of April 1, 2001), plus Norway or Poland, shall be
delivered [*****];
c. Qualified Products shipped to other points shall be supplied
[*****].
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Daramic reserves the right to temporarily supply Qualified Products
from alternate manufacturing facilities should the need arise to
ensure continuity of supply.
10.2 Provided that Exide's actual orders submitted are within ten percent
(10%) above or below the quarterly forecasts provided by Exide pursuant to
Section 9, Daramic undertakes to deliver ordered Qualified Products no later
than fourteen (14) business days after the mutually agreed delivery date. The
parties agree to work together in good faith to agree on a mutually acceptable
delivery date that, for standard Qualified Products, will be no less than seven
(7) days and no more than fourteen (14) days after submission of a firm order by
Exide. For non-standard Qualified Products or unusually large orders, the
parties will work together in good faith to agree on a mutually acceptable
delivery date that is feasible based on the extended lead times needed for these
specialized orders. If Daramic is unable to deliver Qualified Products ordered
by Exide within fourteen (14) business days after the mutually agreed delivery
date, then Daramic will within 24 hours provide Exide with notice of its
inability to do so. Exide can obtain these undelivered quantities of Separators
from a third party. If Daramic notifies Exide of an ongoing inability to meet
the timely delivery requirements set forth in this section 10.2, then Exide can
make short term arrangements (not to exceed 30 days) to obtain only the affected
volume of Qualified Products from a third party. However, once Daramic is again
capable of producing and supplying the required volumes on a timely basis, Exide
shall resume its purchases from Daramic in accordance with this Agreement.
11. Warranties, Remedies and Limitations
11.1 Daramic warrants that the Qualified Products used in the construction
of lead-acid batteries hereunder do not or will not infringe any patent of the
country of original manufacture by Daramic. Daramic shall defend and hold Exide
harmless from and against any and all claims, liabilities and costs (including
reasonable attorneys' fees) incurred by Exide as a result of any breach of this
non-infringement warranty. Daramic's liability under this warranty is
conditioned upon (i) Exide giving prompt written notice of any claim of patent
infringements made against Exide, (ii) Exide making available to Daramic all
information available to Exide in respect of the claim, and (iii) Exide's
granting Daramic control of its settlement and/or litigation, provided, however,
that Daramic shall not settle or compromise any claim in a matter that affects
the rights or interests of Exide without Exide's prior written consent and
further provided that if Exide's consent is not granted, then Daramic's
obligation to defend and hold Exide harmless shall cease and be of no further
force and effect as it relates to the particular claim in question. Daramic may
discontinue delivery of Qualified Products if, in Daramic's opinion, its
manufacture would constitute patent infringement. Daramic makes no warranty
against patent infringement resulting from use of Qualified Products in
combination with other materials or in the operation of any process or resulting
from the production of Qualified Products using specifications provided or
required by Exide, and if a claim, suit or action is based thereon, Exide shall
defend, indemnify and hold Daramic harmless therefrom.
11.2 DARAMIC WARRANTS THAT IT WILL PRODUCE THE QUALIFIED PRODUCTS IN A
GOOD AND WORKMANLIKE MANNER AND THAT THE QUALIFIED PRODUCTS DELIVERED TO EXIDE
WILL CONFORM TO THE SPECIFICATIONS.
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WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE INCLUDED.
DARAMIC ALSO WARRANTS TO EXIDE THAT IT WILL CONVEY GOOD TITLE TO THE QUALIFIED
PRODUCTS SOLD AND DELIVERED HEREUNDER FREE OF ANY LIENS AND ENCUMBRANCES.
DARAMIC HEREBY EXCLUDES AND DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY SET
FORTH IN THIS SECTION 11. THE REMEDIES OF EXIDE FOR ANY BREACH OF WARRANTY
SHALL, SUBJECT TO THE OTHER TERMS OF THIS AGREEMENT, BE THE REPLACEMENT OF THE
NONCONFORMING PRODUCT OR, IN THE SOLE DISCRETION OF EXIDE, REFUND FOR THE PRICE
PAID FOR ANY NONCONFORMING PRODUCT, TO THE EXCLUSION OF ANY AND ALL OTHER
REMEDIES, INCLUDING, WITHOUT LIMITATION, SPECIAL, PUNITIVE, INDIRECT OR
CONSEQUENTIAL DAMAGES. NO AGREEMENT VARYING OR EXTENDING THE FOREGOING
WARRANTIES WILL BE BINDING UPON DARAMIC UNLESS IN WRITING, SIGNED BY AN OFFICER
OF DARAMIC.
12. Force Majeure
Daramic and Exide shall not be liable for failure to make or take, or delay
in making or taking, any delivery due to war, strikes, labor trouble, floods,
fires, shortages or interruption of transportation, unavailability of materials
through no fault of Daramic or Exide or any other cause beyond their respective
control ("Force Majeure Event"), but they shall make every effort to remove any
such cause of their failure or delay as soon as possible provided that neither
party shall be required under this section to settle strike or labor
controversies. During any period when deliveries are affected by a Force Majeure
Event Daramic shall endeavor to allocate any available Separators among all
buyers in such manner as it reasonably considers fair.
13. Taxes, Duties and Excises
In the absence of satisfactory evidence of exemption supplied to [*****],
all taxes, duties, excises or other charges for which [*****] may be responsible
for collection or payment to any government (national, state or local) upon,
measured by or relating to the importation, exportation, production, or any
phase or part of the storage, sale, transportation and/or use of the Qualified
Products.
14. Notices
Notices, demands and communications hereunder to Exide or to Daramic shall
be deemed to have been duly given if in writing and delivered by overnight
delivery service or sent by registered or certified mail (postage prepaid) or by
facsimile (confirmed by delivery of the notice by mail or overnight delivery
service) as follows:
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If to Daramic:
Daramic, Inc.
00 Xxxxxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile No: 617/273-1112
Attention: General Manager or Director Sales & Marketing
with a copy to:
Xxxxx Xxxxxx or Xxxxx X. Xxxx
Daramic, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Exide:
Exide Corporation
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No:
Attention: Vice President - Purchasing and Vice President - Manufacturing.
with a copy to:
Exide Corporation
Princeton, New Jersey
Facsimile No.:
Attention: General Counsel
Any party may designate by notice in writing a new address to which any
notice, demand or communication may hereafter be given or sent.
15. Orders
Order releases for Qualified Products will be provided in writing (or if
by telephone subsequently confirmed in writing) by Exide to the respective
Daramic manufacturing plant. Exide may use its standard release or purchase
order form to specify quantity, destination, requested delivery date and, for
f.o.b. sales, desired mode of transportation, of Qualified Products; however,
all terms and conditions of sale shall be as specified in this Agreement and
only amended or supplemented by a written agreement signed by senior officers of
both parties. To the extent inconsistent with the terms of this Agreement, the
terms of sale stated in either
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party's invoice, purchase order, order acknowledgment, or similar document shall
not apply to sales of Qualified Products under this Agreement.
16. Applicable Law and Effect of Partial Invalidity of This Agreement
If any covenant, agreement, term or provision of this Agreement, as from
time to time amended, or the application thereof to any situation or
circumstance, shall be invalid or unenforceable, the remainder of this
Agreement, as from time to time amended, or the application of such covenant,
agreement, term or provision to situations or circumstances other than those as
to which it is invalid or unenforceable, shall not be affected and each other
covenant, agreement, term or provision of this Agreement, as from time to time
amended, shall be valid and enforceable to the fullest extent permitted by
applicable law. This Agreement shall be governed by, under and construed in
accordance with the laws of the State of Delaware (USA) applicable to contracts
entered into and wholly to be performed therein.
17. General
17.1 If Daramic is in breach or violation of any term or condition
contained in this Agreement, and, if within thirty (30) days after Exide has
given written notice thereof, such breach or violation is not cured, then Exide
shall have the right to acquire Separators from any available source in such
quantities as are necessary to meet the current manufacturing requirements of
Exide. Once Daramic is able to cure such breach or violation, Exide shall resume
its purchases from Daramic in accordance with this Agreement.
17.2 This Agreement and the Exhibits hereto shall be substituted for the
"Agreement for the Supply of Battery Separators for Lead Acid Starter and
Industrial Batteries" of January 1, 1996, and amended on December 15, 1999, by
and between Exide and Daramic. This Agreement now sets forth the entire
Agreement and understanding of the parties with respect to the transactions
contemplated hereby and supersedes all prior agreements or understandings
between the parties with respect thereto. However, this Agreement does not
replace or affect the GCS Supply Agreement or the North American Supply
Agreement.
17.3 This Agreement is not assignable or transferable by either party
without the prior written consent of the other party. [*****].
17.4 In the event of any conflict between the terms of this document and
those contained in any Exhibits hereto, the terms of this document shall
control.
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17.5 This Agreement may be amended, modified, superseded or canceled, and
the terms or conditions hereof may be waived only by a written instrument
executed by authorized representatives of Exide and Daramic, or in the case of a
waiver by or on behalf of the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
either party of any condition or breach of any term contained in this Agreement
in any one or more circumstances shall be deemed to be or be construed as
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of any breach of any other term of this Agreement.
17.6 The headings used in this Agreement are for reference only and shall
not in any way affect the meaning or interpretation of this Agreement. This
Agreement may be executed simultaneously in multiple counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
17.7 Each party will cause its Affiliates to abide by the terms and
conditions of this Agreement.
17.8 [*****]
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]
-----------------------------------------
Title:
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Daramic, Inc.
By: [ILLEGIBLE]
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Title:
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