SUPPLY AGREEMENT
This Agreement, commencing 1st January 1998 by and between:
Courtaulds Fibres Ltd, a company incorporated under the laws of England
having its registered office at 50 George Street, London W1A 2BB, England,
hereinafter referred to as "Seller"
and
Aldila Materials Technology Corp., 1375 Union Road, Evanston, Wy. 82930, USA
hereinafter referred to as "Buyer".
WITNESSETH THAT
WHEREAS Seller is a supplier of various grades of carbon fibre precursor,
(hereinafter described as "the Products");
WHEREAS Buyer uses the Product * for its manufacture of carbon fibre on a
continuing basis and Seller is prepared to supply * or a mutually agreed
equivalent on such a basis;
WHEREAS Buyer and Seller wish to agree terms for the supply of the Products;
NOW, THEREFORE THE PARTIES HAVE AGREED AS FOLLOWS:
ARTICLE 1 - SALE AND PURCHASE
With effect from 1st January 1998 ("the Commencement Date"), Seller
agrees to sell to Buyer, *.
* Material omitted and filed separately with the SEC pursuant to a request
for confidential treatment.
ARTICLE 2 - ORDERS, SHIPMENT
2.1 Prior to the beginning of each relevant calendar year, Buyer shall
provide an estimate of the quantities of the Products it expects to
require, by product, during the forthcoming year.
Quantities will be confirmed by Buyer prior to each three month
period, commencing with the period quarter 1, 1998.
2.2 Orders will be placed monthly or quarterly by Buyer, providing at
least 14 days notice to quantities and schedule for the entire
period. Each such order shall constitute a separate contract
between the parties.
2.3 Save as provided herein, sales of the Products shall be governed
solely by Seller's standard written conditions of contract as set
out in Schedule 1.
In the event of any conflict between any such conditions and any
terms of this Agreement, the terms of this Agreement shall prevail
(notwithstanding Section 1(a) of the said standard conditions).
2.4 Accordingly, Seller warrants that the Products will comply with the
specifications mutually agreed upon by the parties from time to time
(the present specification being set out in Schedule 2), but does not
warrant that the Products are suitable for any particular purpose.
2.5 Each order shall be delivered by Seller to Buyer's factory at
Evanston Wy - USA according to the agreed delivery schedule, *.
* Material omitted and filed separately with the SEC pursuant to a request
for confidential treatment.
2
ARTICLE 3 - PRICES, PAYMENT
3.1 The prices of the Products to be delivered pursuant to this Agreement
shall be those determined in accordance with the provisions of this
Article.*
3.2 *
* Material omitted and filed separately with the SEC pursuant to a request
for confidential treatment.
3
3.3 *
3.4 *
3.5 *
* Material omitted and filed separately with the SEC pursuant to a request
for confidential treatment.
4
3.6 *
3.7 *
3.8 *
3.9 *
ARTICLE 4 - FORCE MAJEURE
4.1 Neither Seller nor Buyer shall be deemed to be in default hereunder if
prevented from performing its obligations resulting from this
Agreement by reason of any circumstance beyond its reasonable
control, occurring after the commencement date including without
limiting the generality of the foregoing: acts of God, fire,
explosion, war or acts of any government or international or
supranational authority having jurisdiction over the parties hereto.
4.2 The party prevented from performing its obligations by reasons
referred to in the preceding clause shall inform the other party to
that effect by telex or facsimile transmission immediately and shall
confirm the same by registered letter.
4.3 It is agreed that during the period of any such circumstances the
obligations of the parties shall be suspended. If, however, either
Seller or Buyer is prevented or is reasonably to be expected to be
prevented from the delivering or taking off quantities ordered
hereunder, either party may cancel such deliveries by written notice
to the other party.
4.4 Nothing in the foregoing shall relieve either party of any obligation
in relation to goods already shipped, under Article 2.
ARTICLE 5 - ASSIGNMENT
This Agreement shall not be assigned to a third party in whole or in
part by either party without the written consent of the other party
hereto, save that the Seller may, on giving notice to Buyer, assign
all its rights and obligations hereunder to Courtaulds plc or any
wholly owned subsidiary thereof, and Buyer on giving notice to Seller
may assign all its rights and obligations hereunder to Aldila Inc.,
or any of its subsidiaries.
* Material omitted and filed separately with the SEC pursuant to a request
for confidential treatment.
5
ARTICLE 6 - TERM
6.1 This Agreement shall remain in force for a minimum period of five
years from the Commencement Date, provided that either party may
terminate this Agreement by 24 months written notice given at any
time after the third anniversary of the Commencement Date.
6.2 Seller may terminate this agreement with immediate effect in the
event that the Buyer is acquired by, or acquires an acrylic fibre
manufacturing company.
ARTICLE 7 - APPLICABLE LAW, COMPETENT COURT
The present Agreement shall be governed by and construed in accordance
with the English Law, and the parties agree to submit all other
disputes to arbitration in London before the London Court of
International Arbitration, whose findings shall be binding on the
Parties, who shall waive any right of appeal.
ARTICLE 8 - SELLERS WARRANTY
8.1 In addition to the specific warranties contained in the Sellers
standard written conditions of sale, as set out in Schedule 1, the
Seller will indemnify and hold the Buyer harmless against all damages
and costs which may be be awarded against the Buyer by any court
resulting from any claim that the Products in the form sold to the
Buyer (but not any processing, conversion or use of the Products or
any downstream product resulting therefrom) infringes any valid US
patent which is published prior to the Commencement Date or which
issues from any patent application published in the USA prior to the
Commencement Date which designates the USA as a territory in which
the application is seeking patent protection, provided that:
8.2 The Buyer promptly informs the Seller of all relevant patents and
patent applications which come to its attention and of all claims
and allegations made concerning infringement or potential
infringement of any patents by the Products, to the extent that such
patent, patent application, alleged infringement or alleged potential
infringement relates to the claim regarding infringement of a third
party patent for which indemnification is being sought hereunder.
8.3 The Buyer gives the Seller care and control of any litigation
initiated against the Buyer for infringement of any patent by the
Products and signs such documents and does such things as are
necessary for the Seller to defend such litigation and counterclaim
against the validity of the patent in issue, all at the Sellers
expense, and
8.4 The Buyer gives the Seller all reasonable assistance in minimising
any liability for patent infringement as aforesaid including, if
requested, assistance in opposing grant of relevant patents, all at
the Sellers expense.
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ARTICLE 9 - MISCELLANEOUS
9.1 In the event that any provision of this Agreement is declared by any
judicial or other competent authority to be void and unenforceable,
the parties shall amend that provision in such reasonable manner as
achieves the intention of the parties without illegality, and the
remaining provisions of this Agreement shall remain in full force and
effect, unless either party, in its discretion, decides that the
effect of it is to defeat the original intention of the said party,
in which event either party shall be entitled to terminate the
Agreement forthwith.
9.2 This Agreement contains the entire agreement, between the parties in
relation to supplies of the Products by Seller or Buyer and supersedes
all previous Agreements on this and related subjects, which are
hereby agreed to be cancelled.
9.3 No amendment hereto shall be binding unless in writing and signed by
both parties.
9.4 No failure by either party to assert any right hereunder shall be
deemed to constitute any waiver thereof.
9.5 Any notice or consent to be given or served hereunder shall be in
writing and deemed duly served seven days after it has been placed
prepaid in first class airmail post or immediately upon sending by
telex or facsimile transmission to the address set out above,
provided that the recipient's answer-back code shall have been
received.
9.6 This Agreement may be terminated by either party should the other
party be in default of any such of its obligations hereunder and
have failed to rectify such default within 30 days after receipt of a
notice of default by the defaulting party, or should the other party
become insolvent or should any administration or receiver be appointed
in respect of any of its assets, or should it make any composition
with its creditors.
IN WITNESS THEREOF, the parties have caused this Agreement to be executed by
their duly authorised representatives:
COURTAULDS FIBRES LTD. ALDILA INC.
/s/ John Fagge /s/ Robert J. Cierzan
- -------------------------- ------------------------
Date: 11/9/97 Date: 11/5/97
7
SCHEDULE l
CONDITIONS OF CONTRACT
SEE ATTACHED
8
CONDITIONS OF CONTRACT
1. General
(a) These conditions supersede all prior representations or
arrangements, and contain the entire agreement between the parties
in connection with the products (unless otherwise stated on
Seller's order confirmation). All other terms and conditions,
express or implied, are excluded. None of Seller's employees or
agents has authority to modify or supplement these conditions or to
accept any order except on Seller's official sales forms.
(b) Nothing in these conditions shall restrict the statutory rights of
a buyer who deals as a consumer.
(c) References to the products include their packaging. If Seller has
not issued an order confirmation, "Seller's order confirmation"
means any document issued by Seller indicating the terms on which
the products are supplied.
(d) Subject to the provisions of this contract, terms defined in the
1990 edition of Incoterms have the same meaning when used in these
conditions.
2. Delivery
(a) Delivery or despatch dates quoted or requested, or dates when
goods will be ready for shipment, are given or accepted by Seller
in good faith but are not guaranteed.
(b) Delivery shall be made to the place(s) and by the method(s)
specified on Seller's order confirmation (or if none, FCA Free
carrier to the point specified on Seller's order confirmation).
Buyer is responsible for un-loading. Buyer's or its carrier's
receipt shall be conclusive evidence of delivery.
(c) Returnable packaging will be charged to Buyer, but if returned
empty, clean, securely closed and in good condition within 30 days
after receipt by Buyer, Seller will credit Buyer with the amount
charged. Any special packaging requirements will incur a
non-refundable additional charge.
(d) Unless otherwise specifically agreed on Seller's order
confirmation Buyer shall accept manufacturing tolerances accepted
in the trade, and weights or quantities varying by not more than
10% from the contract weight or quantity, and shall pay pro rata
for the actual weight or quantity delivered. The weight or
quantity stated on Seller's despatch note shall be conclusive
evidence of the amount delivered except in cases of manifest error.
(e) Save for the purposes of Clause 3(c), 6(b) and 7, each delivery
shall be treated as a separate contract, and partial deliveries
are permitted unless otherwise stated on Seller's order
confirmation. Accordingly, failure to make any particular
delivery, or any breach of contract by Seller relating thereto,
shall not affect any remaining deliveries.
(f) Buyer shall take delivery of the products by any date quoted by
Seller or requested by Buyer or (if none) within a reasonable
time. Seller may deliver early where reasonable. Buyer shall be
responsible for all storage, insurance and other costs relating to
Buyer's failure to comply with the contract.
(g) Buyer shall promptly supply all information and assistance required
for Seller to execute Buyer's order.
(h) Where the products are supplied under any internationally
recognised trading terms as specified in Incoterms 1990, the
provision by Seller of the usual transport document(s) or other
evidence of delivery by Seller.
(i) If Seller or its carrier is unable for any reason to place the
products on board ship upon their arrival at the port of delivery,
a warehouse receipt for the products shall be treated as
sufficient delivery.
(j) Other than for sales ex-works Seller undertakes to obtain any UK
licence(s) required for the export of the products from the UK by
Seller. Buyer undertakes to comply with any such licence(s) and
to obtain and comply with all other necessary licenses, permits
and consents (including all other export/import licenses).
3. Price
(a) Unless otherwise stated on Seller's order confirmation, prices are
FCA and exclusive of VAT and all other duties, fees or taxes. All
sums due to Seller shall be paid in the currency and to the
address stated on Seller's order confirmation, or such other
address as Seller may require.
(b) Payment is due by the date and in accordance with the payment
terms and instructions stated on the Seller's order confirmation
but Seller may require security for payment before dispatch in the
circumstances described in Clause 6(c). Where discount is granted
under the said payment terms, such discount will only be allowed
upon payment being made before the due date (or earlier date
stated on Seller's order confirmation for the purpose of obtaining
discount) and payment by such date is a condition precedent to the
allowance of discount.
(c) Where prices are quoted in currencies other than sterling, Buyer
shall compensate Seller for any currency losses suffered by Seller
as a result of Buyer's failure to pay for the products on the due
date for payment.
(d) Unless prices are stated to be fixed on Seller's order
confirmation, Seller may increase prices in accordance with
increases in Seller's costs and/or general price list increases
occurring after the date of Seller's order confirmation but before
delivery. Buyer shall pay for any increases in delivery costs
after the date of Seller's order confirmation.
(e) In the circumstances described in Clause 6(c), all unpaid balances
owing to Seller from Buyer shall become a debt immediately due and
payable to Seller, irrespective of whether property in the
products has passed to Buyer.
(f) Time of payment is of the essence of the contract. Seller may
change interest at * above Barclays Bank plc's base rate per
annum for the time being (to accrue from day to day) on any sum
owed to Seller under the contract which is not paid to the Seller
on the due date, after as well as before any judgment. Buyer may
not withhold payment or make any set-off on any account.
(g) Seller may appropriate sums received from Buyer against any debt
due to Seller from Buyer (under this or any other contract),
irrespective of any purported appropriation by Buyer.
4. Seller's Warranty
(a) Seller warrants that upon delivery the products:
(i) are sold with good title; and
(ii) comply with Seller's current published product data
sheets (or, where there are none, that they comply with
any specification appearing on Seller's order confirmation
and are made with sound materials and workmanship to
normal standards accepted in the industry), in all
material respects ("Seller's Warranty").
Seller does not warrant that the products are of satisfactory
quality or fit for any particular purpose of or intended use by
Buyer, and it is for Buyer to satisfy itself that the products are
so fit.
(b) Seller's Warranty is given on the condition that any instructions
of Seller relating to the products are strictly complied with.
(c) Buyer shall examine the products as soon as reasonably practicable
after delivery. Buyer shall immediately notify Seller of any
incomplete or failed delivery, loss or damage during carriage or
if the products fail to comply with Seller's Warranty. Unless
Buyer so notifies Seller within 30 days after the date when Buyer
became or ought reasonably to have become aware of any of the
above, and in any event before the earlier of
(i) 6 months from the date of despatch by Seller; and
(ii) 30 days after the products have been used or put into
process
Buyer shall (subject to Clauses 4(f) and 8(a)) be treated as
having waived all claims connected with the matter which should
have been notified.
(d) Subject to notification within the period required by Clause 4(c),
if it is shown to Seller's reasonable satisfaction that the
products fail materially to comply with Seller's Warranty, Seller
shall be given a reasonable opportunity to correct such failure,
and, if Seller does not or is unable to do so, Seller will at
Buyer's option either refund the contract price (or, if the
products have depreciated for reasons other than Seller's default
or have been used or put into process, a reasonable part of the
contract price), or replace the products (if reasonably
practicable) within a reasonable time, free of charge. Such
correction, refund or replacement shall, subject to clause 4(f)
and 8(a) below, be Seller's sole liability in relation to any such
failure. Replacement products are covered by these conditions
including Seller's Warranty. Products which are alleged not to
comply with the contract shall as far as possible be preserved for
inspection by Seller, and if replaced or if a refund is made
shall be returned to Seller (at Seller's cost) if Seller
reasonably so requests.
(e) Clause 4(a)(ii) does not apply to seconds, remainder stock or
samples or to goods sold as obsolete or sub-standard.
(f) Seller does not exclude any liability which cannot be excluded as
between Buyer and Seller under any United Kingdom legislation.
* Material omitted and filed separately with the SEC pursuant to a request
for confidential treatment.
5. Force Majeure
(a) Seller shall not be liable for any failure to comply with the
contract related to any circumstances whatever (whether or not
involving Seller's negligence) which are beyond Seller's
reasonable control and which prevent or restrict Seller from
complying with the contract (including but not limited to a
failure of a government or relevant authority to grant or to
delay in the grant of, any licence(s) required for the export of
the products from the UK).
(b) Seller may where reasonable in all the circumstances (whether
or not involving Seller's negligence) without liability suspend or
terminate (in whole or in part) its obligations under the contract,
if Seller's ability to manufacture, supply, deliver or acquire
materials for the production of the products by Seller's normal
means is materially impaired.
6. Termination and Suspension
(a) Except where Buyer has caused or contributed to any delay, Buyer
may (as Buyer's sole remedy, without affecting the balance of the
contract quantity) terminate the contract by notice to Seller in
respect of any installment of products which is not despatched
within 60 days after any date quoted on Seller's order
confirmation (unless the goods have been specially manufactured or
adapted for Buyer).
(b) Seller may (without prejudice to its other rights or remedies)
terminate or suspend Seller's performance of the whole or any
outstanding part of the contract in the circumstances described in
Clause 6(c). Seller may also suspend deliveries while
investigating any claim relating to prior shipments (under any
contract) of products.
(c) The relevant circumstances are if:
(i) Buyer fails to take delivery of the Products by the date
required under Clause 2(f) or fails to pay for the Products
by the due date or breaches any other term of the
contract: or
(ii) Buyer becomes bankrupt or insolvent or if a receiver or
encumbrancer takes possession of any material part of
Buyer's assets, or Buyers suffers any foreign equivalent of
the foregoing; or
(iii) Seller has reasonable grounds for suspecting that an event
in Clause 6(c)(ii) has occurred or will occur, or that
Buyer will not pay for the products on the due date, and so
notifies Buyer.
(d) In addition, Seller shall have the right, by notifying Buyer, to
suspend deliveries under this and/or any other contract Seller may
have with Buyer (even though Buyer is not in arrears with any
payment) if Seller considers that the amount outstanding in the
account of Buyer (whether actually due for payment or not) has
reached the limit to which the Seller is prepared to allow credit
to Buyer, whether or not such limit has been notified to Buyer.
(c) If Buyer provides Seller with security for the contract price,
reasonably acceptable to Seller, within 3 working days after a
notice has been given under Clause 6(c)(iii) or 6(d), Seller shall
withdraw the notice.
7. Risk and Title
(a) Risk in the products shall pass to Buyer upon delivery.
(b) However, Seller shall retain ownership of the products until
(i) Seller has received payment in full for the products or
(ii) Subject to Clause 7(c) Buyer mixes or processes the
products so that they lose their identity or are
irrecoverably incorporated in or mixed with other goods,
or
(iii) Buyer sells them at arm's length in good faith to an
unrelated third party.
(c) As a separate and independent condition, Buyer agrees that in the
circumstances described in Clause 7(b)(ii), the resulting product
("the Downstream Product") shall be Seller's property until the
conditions in Clause 7(b)(i) or (iii) have been met, unless the
value of the other goods (as measured by the price charged to the
Buyer or, if none, the direct factory cost to the Buyer of their
manufacture) exceeds the invoice value for the products.
(d) Until ownership of the products or Downstream Products passes to
Buyer, Buyer shall insure them against all usual risks to full
replacement value, shall sell, use or part with possession of them
only in the ordinary course of trading and shall where reasonably
possible keep each delivery separate and clearly identified as
Seller's property. In the circumstances described in Clause 6(c),
Buyer's right to sell, use or part with possession of the
products or Downstream Products shall terminate and Seller may
recover and/or sell the products or Downstream Products and may
enter Buyer's premises for that purpose, without prejudice to
Seller's other remedies. If Seller recovers and/or sells the
Downstream Products, any excess of the value of the Downstream
Products (as reasonably estimated by Seller) over any amounts due
to Seller
under the contract plus Seller's costs of recovery and disposal
shall be paid to Buyer. This obligation shall survive termination
of the contract.
8. Intellectual Property; and Third Party Claims
(a) Seller will defend Buyer against any third party claim made
against Buyer in the United Kingdom alleging that the products as
such, in the original state sold by Seller, infringe any patent,
registered design, trademark, tradename or copyright effective in
the United Kingdom, and Seller will pay any damages and costs
finally awarded against Buyer in the United Kingdom in respect of
such a claim. Seller may modify the products so that they cease to
infringe so long as Buyer is not substantially prejudiced by the
modification.
(b) Clause 8(a) shall not apply to the extent that the products are
manufactured to Buyer's specification (or as provided in Clause
(d)(i), or in respect of any use of the products not contemplated
by Seller at the date of Seller's order confirmation.
(c) Buyer shall not use any trademarks or tradenames applied to or used
by Seller in relation to the products in any manner not approved
by Seller.
(d) Buyer shall indemnify Seller against any liability incurred by
Seller.
(i) As a result of incorporating property of Buyer in the
products or applying any trademark, tradename or design to
the products, on Buyer's instructions, or complying with
any other instructions of Buyer relating to the products;
and
(ii) In relation to any third party claims arising from the use
made of or dealings by Buyer in the products (irrespective
of whether they involve the negligence of Seller, its
agents or employees). Except as provided in clause 8(a) or
if arising from Seller's wilful default.
(c) The indemnified party shall promptly notify the other of any
relevant claim, shall comply with the other's reasonable
requirements to minimise liability and/or avoid further liability,
and shall allow the other conduct of any action and/or settlement
negotiations, on reasonable terms.
9. ADVICE AND ASSISTANCE
Seller shall not be liable in contract, tort or otherwise, and
irrespective of the negligence of Seller, its agents or employees
for any representations, advice or assistance given (under this
contract or otherwise, and whether before or after the date of the
contract) by or on behalf of Seller in connection with the
products or the contract, unless and then only to the extent that
Seller has made such representation, and/or agreed to provide such
advice or assistance for a fee under a separate written contract
with Buyer.
10. LIMITATION OF LIABILITY
(a) Without prejudice to any other limitation of Seller's liability
(whether effective or not):
(i) In no circumstances whatever shall Seller be liable (in
contract, tort or otherwise, and irrespective of any
negligence or other act, default or omission of Seller or
its employees or agents) for any indirect or consequential
losses (including loss of goodwill, business or anticipated
savings), loss of profits or use, or (subject to clause
8(a)) any third party claims, in connection with the
products or the contract.
(ii) Except as provided under clause 8(a) Seller's total
aggregate liability in connection with the products or the
contract (in contract, tort or otherwise and whether or not
related to any negligence or other act, default or omission
of Seller or its employees or agents), is limited to the
contract price, ex-works and ex-VAT.
(b) Without prejudice to Seller's warranty, Buyer's sole remedy shall
be in damages.
(c) Seller's warranty and Buyer's remedies under clause 8(a) are in
substitution for any other warranties, obligations,
representations, liabilities, terms or conditions (whether they
are expressed or implied, or arise in contract, tort, or
otherwise, and irrespective of the negligence of Seller, its
employees or agents) in connection with the products (including
without limitation, any relating to satisfactory quality, fitness
for purpose, conformity with description or sample, care and skill
or compliance with representations, but excluding implied
statutory warranties relating to title), and all such warranties,
obligations, representations, liabilities, terms of conditions are
hereby expressly excluded.
(d) Without prejudice to clause 4(c), no action may be brought against
Seller in connection with the Products or the contract unless
proceedings are issued against Seller within two
years after Buyer became or ought to have become aware of the
circumstances giving rise thereto.
(e) This clause 10 applies notwithstanding any fundamental breach or
breach of a fundamental term of the contract by Seller.
11. Health and Safety At Work
(a) Buyer shall ensure that all products are safely and lawfully
received, stored, maintained, used or applied by Buyer, and that
Buyer obtains relevant information in Seller's possession relating
thereto.
(b) Buyer shall ensure that all appropriate safety information
(whether supplied by Seller, Buyer or others) is distributed and
drawn to the attention of customers and all others (including
Buyer's employees) who require if for the safe handling or use of
the products.
12. Miscellaneous
(a) The contract may not be assigned by Buyer without Seller's prior
written consent.
(b) Notices must be in writing to Seller's or Buyer's address and are
deemed delivered on the first working day after sending by hand or
(subject to confirmation of transmission) by telex or facsimile,
or, within the UK, on the third working day after being placed
prepaid in the first class post to Buyer's or Seller's UK address.
Qualified acceptances by Buyer on delivery notes shall not
constitute notice of any claim or acceptance by Seller of any such
qualification.
(c) No failure by Seller to enforce any provision of this contract
shall be construed as a release of its rights relating thereto or
to sanction any further breach.
(d) If any provision of the contract is found to be invalid or
unenforceable it shall have effect to the maximum extent permitted
by law, or, if not so permitted, shall be deemed deleted.
13. Law
This contract shall be governed by and construed in accordance
with the law of England. Buyer hereby agrees, for Seller's
exclusive benefit, that the English courts shall have sole
jurisdiction to hear all claims or proceedings connected with the
products or the contract. Seller may nevertheless bring claims in
any other courts of competent jurisdiction.
SCHEDULE 2
CARBON FIBRE PRECURSOR
PRODUCT SPECIFICATIONS
See attached:
ALDILA INC.,
*
* Material omitted and filed separately with the SEC pursuant to a request
for confidential treatment.
This page: Material omitted and filed separately with the SEC pursuant to a
request for confidential treatment.
Schedule 3
PRICE DIFFERENTIALS:
This page: Material omitted and filed separately with the SEC pursuant to a
request for confidential treatment.