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Supply Agreement

Supply Agreement

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 This Supply Agreement involves

Daramic, LLC

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Title: SUPPLY AGREEMENT
Date: 6/2/2010
Industry: Electronic Instr. and Controls     Sector: Technology

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Exhibit 10.57

CONFIDENTIAL TREATMENT REQUESTED BY EXIDE TECHNOLOGIES —
CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND
HAVE BEEN SEPARATELY FILED WITH THE COMMISSION

SUPPLY AGREEMENT

               This Supply Agreement (“ Agreement ”) is between Daramic, LLC (together with all of its Affiliates, “ Daramic ” or “Supplier ”) and Exide Technologies (together with its Affiliates, “ Buyer ”). In Buyer’s case “ Affiliates ” shall mean any person or entity that manufactures lead acid batteries and in which Buyer owns greater than a 50% share or ownership interest. In Supplier’s case, “ Affiliates ” shall mean any person or entity that manufactures lead acid battery separators and in which Supplier owns greater than a 50% share or ownership interest. In consideration of the mutual promises, covenants, and obligations in this Agreement, the receipt and sufficiency of which are hereby acknowledged, and with full authority to enter into the Agreement, the parties agree as follows:

1.

 

Headings : The captions and headings herein are for convenience and reference only and in no way define or limit the scope or content of this Agreement or in any way affect its provisions.

 

2.

 

Term : The term of this Agreement shall commence on January 1, 2010 (the “ Effective Date ”) and shall continue until December 31, 2012, unless terminated pursuant to the terms of this Agreement. This contract shall automatically be extended thereafter, one year at a time, for subsequent Contract Years unless Buyer or Daramic gives *** months prior written notice of termination by non-renewal to the other party not later than *** in the first instance (to avoid a Contract Year 2013) and thereafter by *** of each successive year. “ Contract Year ” means each calendar year that this Agreement is in effect. At least *** months prior to expiration of this Agreement, the parties will meet to discuss *** any contract extension. ***.

 

3.

 

Supply of products : Buyer agrees to purchase from Supplier, subject to the terms of this Agreement, and Supplier agrees to sell to Buyer, the following:

 

a)

 

Transportation PE Separators : During each Contract Year, a Volume of *** % of Buyer’s global demand for polyethylene separators for use in the manufacture of automotive / SLI lead acid batteries (hereinafter, “ Transportation PE Separators ”).

 

 

b)

 

Industrial PE Separators : During each Contract Year, a Volume of *** % of Buyer’s global demand for polyethylene separators for use in the manufacture of lead acid batteries for industrial applications (hereinafter, “ Industrial PE Separators ”). For extra clarification, purchases of *** separators are considered to be Industrial PE Separators for purposes of this Agreement and will count toward Volumes as defined in this Agreement.

 

 

c)

 

Other Separators : During each Contract Year, a Volume of *** % of Buyer’s global demand for *** separators (hereinafter, “ Other Separators ”).

 

 

d)

 

Excluded Products : *** are specifically excluded from the Volumes required to be purchased or supplied under this Agreement.

 

 

e)

 

Volumes: Buyer will purchase from Daramic in each Contract Year the above-stated Volumes (“Volumes”). These Volumes represent a percentage of Buyer’s global demand, if any, and do not constitute minimum purchase Volumes or a guarantee of Buyer’s global demand levels. Buyer will have the option of purchasing up to *** percent of the Volumes as inventory of Separators in any Contract Year.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION ***

1


 

 

f)

 

Regional Allocation of Purchases: Buyer agrees to purchase no less than *** % of its Regional demand Volumes for Transportation and Industrial PE Separators in each of three Regions. “Regions” are defined as (1) The Americas; (2) Europe / Middle East and Africa; and (3) Asia Pacific.

 

 

g)

 

Manufacturing Relocation

 

i)

 

If Daramic elects to relocate manufacturing of a separator product during the term of this Agreement, Daramic’s costs associated with such manufacturing relocation shall be borne by ***.

 

 

ii)

 

Daramic must give Buyer *** days advance written notice of any manufacturing relocation pursuant to 3(g)(i) above; and *** days advance written notice if the products to be transitioned are not qualified at the new location. Buyer and Daramic agree to work together in good faith to transition to the new manufacturing location as soon as reasonably possible.

 

4.

 

Pricing : Buyer agrees to pay prices for the separator products and Supplier agrees to sell the separator products at the prices set forth in Exhibit A . The following special pricing conditions are applicable during the term of this Agreement: (a) a *** will apply to all orders of Industrial PE Separators and Other Separators (but not Transportation PE Separators) at quantities ordered in greater than *** square meters by part number / Stock Keeping Unit or “SKU”. To qualify for this ***, the entire order must be shipped complete unless otherwise mutually agreed (i.e., no blanket PO’s). This *** does not apply for products withdrawn from or orders into consigned inventory. (b) (i) in ***, a *** will apply to incremental orders of Transportation PE Separators for incremental volumes greater than *** pure square meters once Buyer purchases a total of at least *** pure square meters of Transportation PE and Industrial PE Separators in ***; (ii) in *** and thereafter, a *** will apply to incremental orders of Transportation PE Separators for incremental volumes greater than *** pure square meters once Buyer purchases a total of at least *** pure square meters of Transportation PE and Industrial PE Separators in a ***; and (c) a = ***. New separator products with different widths, thicknesses, backweb thicknesses, etc. may be added to Exhibit A from time to time by mutual written agreement of the parties. ***. After = ***, any price adjustments will be according to the Raw Materials Adjustment (“RMA”) set forth in Exhibit A hereto. By *** of each Contract year, Daramic will provide ***. Prior to *** of each Contract Year, Buyer shall have the right to ***. Any price adjustments implemented on ***.

 

5.

 

Terms of Payment: Invoices are to be issued by Supplier upon shipment. All invoices must reference applicable Buyer purchase order/contract release numbers and be sent to the Buyer’s designated address. Payment terms shall be *** days after the date of invoice by electronic funds transfer. Payments not received by Daramic within *** calendar days (not counting holidays) after the due date shall incur a monthly fee of *** % for any month they are past due.

 

6.

 

Credit: If Buyer fails to pay invoices timely pursuant to Paragraph 5 above, then Daramic may require Buyer to make cash payment(s) within *** business days after receipt of written notice from Daramic to resolve the outstanding balance owed to Daramic. If Buyer’s Corporate Credit Rating drops to *** or below, or liquidity (defined as cash on hand, plus unused credit facilities, including then existing factoring) level drops below $***, then Daramic has the right to request credit enhancement reasonably acceptable to Daramic. If Buyer is more than *** for undisputed amounts in excess of $***, and fails to cure such delinquency within *** business days after receipt of formal written notice under this Agreement, then Daramic has the right to ***.

 

7.

 

Operations & Logistics:

 

a)

 

Forecasts: Buyer shall provide written forecasts, updated monthly, for future shipments *** days and *** months in advance for separator products. All forecasts provided by Buyer are estimates only and do not constitute a representation or guarantee of purchases to be made by Buyer. However, to the extent

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION ***

2


 

 

 

 

that Daramic produces products in reasonable reliance on those forecasts, then Buyer agrees to purchase this inventory within *** of its production, within the terms of this Agreement.

 

 

b)

 

Delivery and Lead-times: Average lead times for shipment by Daramic for forecasted orders shall be no more than *** days (not counting holidays) from the date of acknowledgement. Daramic will send acknowledgement of orders within *** business days after receipt. Specialty products and orders exceeding forecasts will be handled on a case by case basis.

 

 

c)

 

Inventory/Security of Supply: Daramic agrees to maintain minimum inventory quantities capable of meeting Buyer’s forecasted demand. Upon the expiration or termination of this Agreement for any reason, Buyer shall purchase up to a *** day supply of all separator products Daramic has in stock for Buyer pursuant to this Section.

 

 

d)

 

Consignment Inventory in Europe: Daramic shall provide inventory on a consignment basis for Buyer’s European facilities listed on Schedule B-1 pursuant to the consignment terms and conditions attached as Exhibit B. A fee of $*** will be paid by *** representing the *** of such consigned inventory over the life of this Agreement. Buyer shall also have the option to place direct orders (non-consignment) in Europe for Industrial PE and Other Separators. These European direct orders will be shipped ***.

 

 

e)

 

Quality: All materials are to be compliant with agreed specifications and drawings (the “ Specifications ”). The Specifications will be kept in a mutually-agreeable location and format, and can be modified and amended only by mutual written agreement of the parties.

 

 

f)

 

Freight Terms: *** for all worldwide Buyer sites, except for consignment shipments in 7(d) above. Title to the separator products purchased hereunder and risk of loss shall pass to Buyer upon delivery to the carrier. Daramic agrees to use Buyer’s designated carrier.

 

 

g)

 

Electronic Transactions: Supplier and Buyer shall endeavor to implement electronic transactional and communication tools to improve efficiencies and reduce costs. These tools may include EDI, electronic invoicing, email, efax and the like.

 

8.

 

Product Discontinuation : If Daramic intends to cease production of a particular type of separator product supplied under this Agreement, Daramic agrees as follows:

 

a)

 

To give Buyer at least *** advance written notice of its intent to cease production; and

 

 

b)

 

Buyer has the right to submit a final order for quantities of the discontinued separator product up to the total of Buyer’s orders of this separator type in the *** prior to the announcement; and

 

 

c)

 

If Daramic has available an alternate separator product that could serve as a substitute for the discontinued product, Daramic agrees to make such alternate separator product available to Buyer for a period no shorter than *** on terms to be negotiated by both parties in good faith.

 

9.

 

Product Enhancements / Cost Reductions:

 

a)

 

Product Enhancements: Unless restricted by contractual or confidentiality obligations, Daramic will offer Buyer access to any new lead acid battery separator technology developed by Daramic during the term of this Agreement.

 

 

b)

 

Cost Reductions: Buyer and Daramic will *** identify and implement cost reduction opportunities associated with the procurement, manufacture and delivery of separator products, including the creation of an ***.

 

 

c)

 

***.

 

10.

 

Acquisition of New Entity / Sale of Business: ***.

*** CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE COMMISSION ***

3


 

11.

 

Limited Warranty and Remedies : DARAMIC WARRANTS THAT IT WILL PRODUCE THE SEPARATORS IN A GOOD AND WORKMANLIKE MANNER AND THAT THE SEPARATORS DELIVERED TO BUYER WILL CONFORM TO THE SPECIFICATIONS. ***. DARAMIC ALSO WARRANTS TO BUYER THAT IT WILL CONVEY GOOD TITLE TO THE SEPARATOR 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. THE REMEDIES OF BUYER FOR ANY BREACH OF THE WARRANTIES SET FORTH IN THIS SECTION SHALL, SUBJECT TO THE OTHER TERMS OF THIS AGREEMENT, BE THE REPLACEMENT OF THE NONCONFORMING PRODUCT OR, IN THE SOLE DISCRETION OF BUYER, 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.

 

Insurance :

 

 

 

Daramic shall, at its own expense, provide satisfactory evidence of the following valid and in-force policies of insurance with the terms and at least the coverage limits set forth below:

     (i) Commercial General Liability Insurance with limits of liability for bodily injury and property damage (combined single limit) not less than $***.

     (ii) Workers’ Compensation Insurance, in an amount as required by law.

     (iii) Business Auto Liability Insurance, including coverage for all owned, non-owned and leased or hired vehicles, with coverage limits of liability for bodily inju


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