EXHIBIT 10.16
Letter of Intent
This letter defines ******* intent to source to U.S. Electricar, Inc. dba Enova
Systems the Traction Inverter, Charger & DC/DC Module (referred to as LVDS-30
and designed to meet the ************ Specification" dated November 5, 1999)
requirements for its Low Voltage Electric Drive System. Purchase Orders will be
issued to cover the Development and the Production supply portions of this
Agreement. A Purchase Order for production supply will be issued and Releases
against the Purchase Order will be issued periodically to cover actual customer
demand. The terms and conditions of this relationship are outlined as follows:
1) U.S. Electricar, Inc. will provide all requested Traction Inverter, Charger
& DC/DC Modules.
2) U.S. Electricar, Inc. fully warrants all parts for reliability to *******
of operation not to exceed ********* from date of sale of the parts to
********. This warranty period overrides the warranty period
***********************.
3) U.S. Electricar, Inc. will work with ******** and its suppliers to
integrate their Traction Inverter, Charger & DC/DC Module with a Motor and
Transaxle Assembly in order to provide a complete Electric Drive System for
the vehicle program.
4) In the event that U.S. Electricar, Inc. files for bankruptcy under Chapter
7 of the U.S. Bankruptcy laws or is unable to supply systems in accordance
with a reasonable delivery schedule, within the normal control of U.S.
Electricar, Inc. operations, it grants ********* the right to continue
manufacture of these assemblies with the current manufacturing operation or
any other manufacturing operation selected by *********. It further grants
********* access to tooling, manufacturing and software (including
controls, algorithms, source code, object code and binary code) information
required to manufacture these assemblies, but not explicitly paid for or
defined in this agreement.
5) ******** agrees to pay U.S. Electricar, Inc.:
a) Piece price (***** units per year)......................$******* / assembly
Piece price (***** units per year)......................$******* / assembly
b) Development/ Design Fees.................................$******* Total fee
(Fee will be paid upon completion of work in accordance with the
following "Program Schedule" see Items I-V below.)
c) Production Tooling Charges - TIM................................$*******
d) Production Tooling Charges - DC/DC............................$*******
e) Production Tooling Charges - Charger............................$*******
f) Prototype Tooling Charges- TIM....................................$*******
g) Prototype Tooling Charges- DD/DC................................$*******
h) Prototype Tooling Charges- Charger................................$*******
i) Prototype Parts - TIM...............**** $******* & *** $******* / assembly
j) Prototype Parts - DD/DC ........... **** $******* & *** $******* / assembly
k) Prototype Parts - Charger...........**** $******* & *** $******* / assembly
6) U. S. Electricar will provide ********* a BOM of the major components of
the modules. The BOM will include both cost and manufacturer information.
This information will provide ********* the required assurance that the
system will be provided within the quoted cost and to the automotive
quality required of this program.
(**)-CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.
7) Shipping costs will be passed through and billed to ******** ** *******.
The following schedule identifies the timing for completion and payment of work
required to bring this program to production:
Program Schedule
I. Design & Development, Testing & Tooling - (Lab Prototypes).......................$*******
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II. Design & Development, Testing & Tooling - (Veh Prototypes)........................$*******
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III. Design & Development - Production Ready...........................................$*******
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IV. Design & Development - Production Ready >>........................................$*******
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V. Design & Development - Production Ready...............*******.................... $*******
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VI. Production Tooling -..............................Upon Prove-out of Tool.........$*******
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The terms and conditions provided ********************* will apply to all
Production; Prototype; Facilities; Tooling; Materials; and Services purchased in
this agreement:
I. *********** Terms for Production Parts and Non-Production Goods and
Services (******,rev 4/97) excluding paragraphs 16c, d, e, and h, and
paragraph 17 a, b, c, d (as amended and attached hereto as Attachment
I).
II. The "Additional Terms and Conditions" dated 12/9/99 and included as
Attachment II.
- --------------------------------- ------------------------------
******** Carl Perry
Director, Supply Management President and CEO
******** U.S. Electricar, Inc.
******** dba Enova Systems
******** 19850 S. Magellan Drive
Torrance, CA 90502
Attachments 12/9/99
(**)-CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.
Attachment I
Terms for Production and Non-Production Goods and Services
(**)-CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.
Attachment II
12/9/99
Additional Terms and Conditions
1. DESCRIPTION OF CONTRACT SERVICES. The Seller shall provide, as
requested by the Buyer, the following services: Provide engineering, design,
prototype build and production manufacturing and delivery services to develop
Seller's existing Inverter, Charger and DC/DC Modules and required tooling in
order to meet Buyer's specifications for inclusion in a low voltage electric
vehicle. The Buyer shall, at appropriate times, provide, in more specific
detail, the work assignments to be performed by the employees provided by the
Seller. Buyer shall designate in writing the person or persons authorized to
make such work assignments on behalf of Buyer. To the extent that the Global
Terms are inconsistent with the Additional Terms and Conditions set out in this
Attachment, the Additional Terms and Conditions shall apply.
2. FEE FOR CONTRACT SERVICES. In consideration of the Contract Services
to be performed as set out in Paragraph 1, Buyer will pay Seller based on the
Design / Development fee as described in paragraph 5) of the Letter of Intent.
3. PLACE OF PERFORMANCE OF CONTRACT SERVICES; TRAVEL EXPENSES. The
contract services shall be performed at a place or places designated by the
Buyer. Except as otherwise provided, the Buyer shall not be responsible for
travel expenses incurred by the Seller in the performance of Contract Services.
In the case of exceptional travel expenses incurred by Seller at Buyers request,
Buyer and Seller will consult upon responsibility for such expenses.
4. STATEMENTS; PAYMENT. Between the first and tenth day of each month,
Seller shall furnish a statement, in a form agreed by Buyer, covering Contract
Services rendered and travel expenses incurred during the preceding month.
Seller shall include on each such statement Seller's purchase order number, date
of invoice and invoice number. Buyer shall pay statements in good order within
30 days from receipt. Buyer shall have the right to audit Seller's records at
any time prior to two years after final payment to verify payment obligation.
The total fee payable to Seller for all Contract Services and expenses requested
and provided under this Agreement, shall not exceed the fees identified in
paragraph 5) of the Letter of Intent, and Seller shall not perform Contract
Services or incur any expenses that causes the aggregate amount payable under
this Agreement to exceed such amount without a written modification of this
Agreement.
(**)-CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.
5. RELATIONSHIP. Seller's relationship to Buyer under this Agreement
shall be that of an independent contractor and not an employee or agent. Seller
shall not represent or hold itself out as having any relationship with Buyer
other than that of an independent contractor. No new assignments will be
undertaken by Seller without securing prior written approval from Buyer's
designated representative. Buyer shall not be responsible for any tax levied on
Seller or Seller's employees or representatives by any governmental authority,
relating to this Agreement or income attributed to Seller's employees or
representatives.
6. TITLE TO WORK PRODUCT. All information and data Seller develops or
acquires in performing contract services relating specifically to the LVDS-30
shall belong to Buyer, without further consideration, and shall be delivered to
Buyer upon completion of this Agreement or earlier if requested. Buyer shall be
free to use and disclose to others all information and data delivered in
performing contract services.
7. WORK MADE FOR HIRE. Any work of authorship created by Seller in
performing the services relating specifically to the LVDS-30 hereunder shall be
considered as a specially ordered or commissioned "Work for Hire" and all
copyrights for such works of authorship shall belong to Buyer. All such works of
authorship shall bear a valid copyright notice designating ********* as the
copyright owner. In the event any portion of the work of authorship created by
the Seller in performing the services relating specifically to the LVDS-30
hereunder does not qualify as "Work for Hire," Seller shall acquire title to the
copyright for such portion, and assign all acquired title and interest to Buyer.
8. TITLE TO INVENTIONS. Every invention, discovery and improvement
made, conceived or reduced to practice in performing contract services relating
specifically to the LVDS-30 belong to Buyer, without further consideration, and
shall be reported to Buyer promptly. Upon request, Seller shall execute all
documents and papers, and shall furnish all reasonable assistance required (i)
to establish in Buyer title to such inventions, discoveries and improvements and
(ii) to enable Buyer to apply for United States and foreign patents thereon.
Seller grants to Buyer a fully-paid, irrevocable, non-exclusive license under
all Intellectual Property of Seller necessary for Buyer to exercise such rights.
Seller also agrees to grant to Buyer a non-exclusive license on reasonable terms
and conditions under any other Intellectual Property of Seller embodied in
supplies or services delivered hereinunder, to make, have made, use and sell
articles and to use and have used processes.
(**)-CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.
9. COPYRIGHT LICENSE. Seller hereby grants to Buyer and to its domestic
and foreign subsidiaries a permanent, nonexclusive, paid-up worldwide license
under each copyright owned or controlled or have the right to license for such
purposes, in each work of authorship fixed in any tangible medium of expression
furnished to Buyer or its designee in performing contract services, to use such
work for Buyer's internal purposes, to reproduce such work, to prepare
derivative works solely for use in connection with the incorporation of the
LVDS-30 into electric vehicles and the sale, lease, repair and maintenance of
such vehicles but for no other purpose, distribute copies of such work to the
public, and perform and display such work publicly.
10. CONFIDENTIALITY. Seller and its employees shall use the information
and data acquired from Buyer or third parties under this Agreement only in
performing the Contract Services, and shall not disclose to any third party,
during the period of this Agreement and thereafter, any such information and
data that is not in the public domain.
11. LIABILITY FOR PERSONAL INJURIES AND PROPERTY DAMAGE. Seller shall
be responsible for and shall hold Buyer harmless from all expenses, including
legal fees, which arise from its performance hereunder and which are for actual
or alleged injury to any person or damage to any property, including Buyer's
property, except to the extent that such expenses are attributable to Buyer's
negligence or willful misconduct.
12. EMPLOYMENT; THIRD PARTIES. Seller shall exercise reasonable care in
the employment of personnel and third party contractors. Seller shall require
each employee and third party to execute and deliver to Buyer an agreement under
which the third party is bound to the terms set fourth in Paragraph 5 through 13
hereof.
13. COMPLIANCE WITH LAW AND GOVERNING LAW. Seller and its employees
shall comply with all applicable laws and regulations in performing the services
under this Agreement. This Agreement shall be construed and enforced in
accordance with the laws of the State of********. Litigation on contractual
causes arising from this agreement shall be brought only in a federal District
Court located in******** or in a court of the State of********.
(**)-CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN RQUESTED WITH RESPECT TO
THE OMITTED PORTION.