EXHIBIT 10.68
DEVELOPMENT AGREEMENT AND
AGREEMENT FOR PURCHASE OF
MACHINERY AND SUPPLIES
This Agreement is made this 1st day of November, 1995
by and between Electrosource, Inc. ("XXXX") and Xxxxxxx X.
Xxxxxxx ("Contractor").
Whereas, XXXX produces lead-acid batteries ("Horizon")
with patented technology developed in part by Contractor,
and XXXX wishes to arrange for the supply of certain
equipment and supplies from Contractor for its facilities
and potentially for its licensees and affiliates, and
Whereas, contractor wishes to develop and supply such
equipment and materials to XXXX,
Now, therefore, for good and valuable consideration,
the adequacy which is acknowledged, XXXX and Contractor
agree:
1. Contractor agrees to sell to XXXX and XXXX agrees
to purchase from Contractor, machines to make co-
extruded wire ("Co-extruders"), with necessary
attachments. The Co-extruders will be for use in
present and anticipated XXXX production facilities and
will be purchased as and when deemed necessary by XXXX.
Alternatively, Contractor and XXXX may agree to a lease
arrangement for the Co-extruders in addition to or
instead of sales.
2. XXXX hereby grants rights to manufacture the Co-
extruders to Contractor for the term of this Agreement,
so long as the supply of Co-extruders is not
interrupted and the Co-extruders meet ELSI's
requirements for quality, quantity and timely delivery,
as specified in writing in advance by XXXX and
Contractor.
3. Quantities, prices and payment terms for Co-
extruders shall be agreed upon for the following year
at least two (2) months before the end of each calendar
year, or at such other time or times as the parties can
best determine, and shall be evidenced by a detailed
purchase order. XXXX will advance 50% of the purchase
price to Contractor for each such Co-extruder it agrees
to purchase, with the advance to be made at the time or
times necessary to maintain delivery schedules. Prices
shall be negotiated in good-faith, based upon the
actual cost of the Co-extruders and the availability
and price of competing products. Currently, the price
to the Company from Contractor for a single head Co-
extruder is expected to be $110,000.
4. Contractor shall warrant the Co-extruders against
defects in materials and workmanship for at least one
year. The machines and components shall be new, of
good quality and fit for the particular purpose
intended, with guaranteed rates of thru-put by
Contractor. Finished wire specifications will be as
agreed upon in advance from time to time.
5. Contractor shall also continue development work on
Co-extruders and such other equipment, processes and
methods as XXXX shall reasonably request hereunder.
Contractor shall review the substance and direction of
his work hereunder with the President of XXXX on at
least quarterly intervals.
6. XXXX also agrees to pay contractor for the
development of an automated billet maker, which shall
belong exclusively to XXXX as will all intellectual
property rights thereto. The billet maker may be
located on Contractor's premises for the term of the
agreement or at such other location as XXXX may direct.
Contractor shall have the right to manufacture and use
such billet makers for supply of billets exclusively to
XXXX, provided the Contractor remains ready and able to
make billet makers and billets of acceptable quality
and quantity on a timely basis at a cost which is
reasonable and competitive. XXXX shall pay Contractor
$65,000 hereunder for development of the billet maker
and other development work hereunder, to be paid at the
rate of $3,611 per month for eighteen (18) months,
payments to be made on the 1st and 15th day of each
month. The development cost of $65,000 shall include
all related costs, including taxes, labor, engineering,
drawings, etc. The price of the first billet maker
shall be an additional $60,000 as will be detailed in a
purchase order to be issued at the discretion of
Electrosource. The development work and billet maker
price shall include:
a. A new fully automatic lead billet maker.
b. An automatic shear mechanism integrated
with the billet maker to make billets, shear the
ends and place the billets on a pallet.
c. All engineering drawings.
XXXX shall pay $30,000 as a down payment for the billet
maker upon issuance of a purchase order, and the
balance in monthly installments, as detailed therein
and agreed upon by Contractor. After development of
the initial automated billet maker, Contractor agrees
to manufacture and sell additional billet makers to
XXXX at a price $60,000 each, including, without
limitation, installation and taxes.
7. Contractor shall also supply lead billets to XXXX
in the quantities and on the dates as required by XXXX,
provided that the supply of lead billets by Contractor
is not interrupted and the specifications as agreed in
writing in advance are met. Purchases from Contractor
shall begin as soon as reasonable after the date hereof
based upon a trial program to begin as soon as
possible. The price for the lead billets shall be
competitive with other sources of supply, with the
current pricing being the cost of lead plus $.30 per
pound, which shall be reduced to the price of lead plus
$.24 per pound, or market rates as adjusted at least
yearly, after development of the automated billet maker
provided for above. It is anticipated that XXXX will
continue to purchase the lead directly and supply it to
Contractor for the making of billets, in which case the
cost of lead would not be included in Contractor's
xxxxxxxx.
8. The term of this Agreement shall begin upon the
date hereof and continue for a period of two (2) years,
unless sooner terminated in accordance with its terms.
The Agreement may be extended by mutual consent.
Neither party may terminate this Agreement except for
cause, and after thirty (30) days written notice of
default, provided the default is not cured during such
thirty (30) day period.
9. XXXX shall own all inventions or improvements to
inventions made by Contractor pursuant to this
Agreement. At termination, and otherwise upon the
request of XXXX, Contractor will assign to XXXX any
such inventions or improvements and shall cooperate
fully with XXXX on any patent applications.
10. Each party shall hold all confidential information
disclosed to it by the other during the term of this
Agreement in confidence and not disclose it or use it
(except for this Agreement) without the prior written
consent of the other.
11. This Agreement may not be assigned by either party
without the prior written approval of the other, which
may be withheld for any reason.
12. Contractor is an independent contractor, and not
the employee or agent of XXXX. Contractor is
responsible for his own insurance and taxes.
13. Contractor hereby agrees to indemnify and hold
XXXX harmless from and against any and all claims or
litigation, damages, costs or attorney fees resulting
from Contractor's negligence or willful misconduct in
the performance of this contract.
14. Notices may be given to Contractor at: Xxxxxxx X.
Xxxxxxx, 000 Xxxxxxxx Xxxxx, Xxxx, Xxxxx 00000, and to
XXXX at: Electrosource, Inc., 0000-X Xxxxxxxx Xxxxx,
Xxxxxx, Xxxxx 00000-0000.
15. This Agreement shall be construed, interpreted and
enforced under the laws of Texas.
IN WITNESS WHEREOF, the Parties have executed this
Agreement as of this 1st day of November, 1995.
CONTRACTOR ELECTROSOURCE, INC.
By: /S/ By: /S/
Xxxxxxx X. Xxxxxxx Xxxxx X. Xxxxx
Vice President, General Counsel
