Exhibit 10.25
ENGINE DEVELOPMENT AGREEMENT
THIS ENGINE DEVELOPMENT AGREEMENT (the "Agreement") is made and entered
into effective as of the 31st day of December 1999, by and between REDLINE
PERFORMANCE PRODUCTS, INC., a Minnesota corporation with its principal place of
business located at 0000 Xxxxxxxx Xxx, Xxxxx X, Xxxxx, Xxxxxxxxxx 00000 (the
"Company"), and XXXX XXXXXXXX, an individual residing in the State of California
("Xxxxxxxx") doing business as RM HOLDINGS, with its principal place of business
located at 0000 Xxxxxxxx Xxx, Xxxxx X, Xxxxx, Xxxxxxxxxx 00000 ("RM"). RM and
Xxxxxxxx are collectively referred to herein as the "Developer."
RECITALS
WHEREAS, the Company is in the business of designing, manufacturing and
selling powersports products such as snowmobiles and ATVs;
WHEREAS, the Developer is knowledgeable and experienced in the design,
development and manufacture of engines for powersports products;
WHEREAS, the Company and the Developer previously reached an oral
agreement in December 1999, pursuant to which the Developer agreed, in exchange
for compensation from the Company: (1) design and develop an engine for the
Company's use in its snowmobiles and other powersports products; (2) keep all of
the Company's proprietary information confidential; (3) assign to the Company
any and all right, title and interest in and to all such work done for or on
behalf of the Company with respect to the Engine, as well as the products
resulting from such work, upon payment of $250,000 in cash and stock; and (4);
and, until such time as the Company paid the $250,000 and acquired the engine
and related technology, the Developer granted an exclusive license to the
Company to use the engine and related technology.
WHEREAS, the Company and the Developer desire to document and clarify
their prior understanding and oral agreement regarding the Company's engagement
of the Developer to design and develop an engine for the Company, pursuant to
and in accordance with the terms and conditions contained in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises and covenants contained herein and the mutual benefits to be gained by
performance hereof, the parties hereto agree as follows:
1.) Definitions.
(a) Engine. The term "Engine" means a 135 horsepower, 800cc,
liquid-cooled, two cylinder, two-cycle combustion engine designed and
developed for production.
(b) Technology. The term "Technology" means all of the documentation,
production tooling, designs, drawings, notes, prototypes, and other
documents and materials, whether in written or another form, which are
required to produce and manufacture the design and development of the
Engine.
(c) Developer. The term "Developer" shall mean RM and Xxxxxxxx,
collectively.
2.) Engagement. The Company hereby engages the Developer as an
independent contractor, and not as an employee, to design and develop the Engine
for use in the Company's snowmobiles and possibly other powersports products,
and the Developer hereby accepts such engagement upon the terms and conditions
hereinafter set forth. The Company and the Developer hereby acknowledge and
agree that as of the date of this Agreement the design and development of the
Engine is complete and that Developer will not undertake or perform any
additional design or development activities related to the Engine under, or
pursuant to, this Agreement following the date hereof. The Company shall also
engage and compensate the Developer for the provision of certain general
engineering, consulting and advisory services to the Company pursuant to, and in
accordance with, the terms and conditions of that certain Consulting Agreement
attached hereto as Exhibit A and incorporated herein by reference.
3.) Compensation for Design and Development of Engine and Technology.
The total amount of compensation due and payable from the Company to the
Developer in connection with the design and development of the Engine and
Technology shall be Two Hundred Fifty Thousand Dollars ($250,000) (the
"Compensation"), of which Two Hundred Thousand Dollars ($200,000) of the
Compensation shall be payable in cash and the remainder shall be payable by
issuance of that number of shares of the Company's common stock having a fair
market value equal to Fifty Thousand Dollars ($50,000). As of the date of this
Agreement, the Company and the Developer acknowledge and agree that the Company
has paid to the Developer cash in the amount of One Hundred Fifty Thousand
Dollars ($150,000) and has issued to the Developer 50,000 shares of common stock
(pre-split) in an amount equal to Fifty Thousand Dollars ($50,000), as set forth
in Subsection 3(a) below. As further described in Section 5 below, upon payment
in full of the Compensation, the Company shall own all of the rights, interest
and title in and to the Engine and Technology.
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(a) Amounts Already Paid as of January 14, 2003.
(1) The Company paid the Developer cash in the amount of Forty
Thousand Dollars ($40,000) on June 30, 2000.
(2) The Company paid the Developer cash in the amount of Twenty
Thousand Dollars ($20,000) on July 24, 2000.
(3) The Company paid the Developer cash in the amount of Fifteen
Thousand Dollars ($15,000) on August 15, 2000.
(4) The Company paid the Developer cash in the amount of Thirteen
Thousand Dollars ($13,000) on April 19, 2001.
(5) The Company paid the Developer cash in the amount of Twelve
Thousand Dollars ($12,000) on May 16, 2001.
(6) The Company paid the Developer cash in the amount of Fifty
Thousand Dollars ($50,000) on October 15, 2002.
(7) The Company issued to the Developer in the name of Xxxx
Xxxxxxxx, 50,000 shares of the Company's common stock
(pre-split) having a fair market value of Fifty Thousand
Dollars ($50,000) on March 31, 2002.
(b) Amounts Due and Payable after January 14, 2003. As of the date of
this Agreement, the balance of the Compensation due to purchase the
Engine and Technology is Fifty Thousand Dollars ($50,000) in cash.
4.) Per Engine Fees.
(a) Calculation of Per Engine Fee. Following the date of this
Agreement, the Company shall pay the Developer a fee for each
production snowmobile, and/ or product ,built for the Company at the
Company's request that includes an engine which is a production version
of the Engine, as follows (the "Per Engine Fee"):
Snowmobiles Sold Amount of Per Engine Fee
---------------- ------------------------
1 -- 500 $200.00
501 -- 1,000 $150.00
1,001 -- 2,000 $100.00
(b) Limitations on Payment of Per Engine Fees. Nothing in this
Agreement or otherwise shall obligate the Company to use the Engine in
any of its snowmobiles or other powersports vehicles. Assignment of the
Engine and the Technology is not contingent upon the Company paying Per
Engine Fees.
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(c) Minimum and Maximum Per Engine Fees. There shall be no minimum
aggregate amount of Per Engine Fees under this Agreement. The aggregate
maximum amount of Per Engine Fees which may be payable by the Company
to the Developer under this Agreement shall not exceed Two Hundred
Seventy-five Thousand Dollars ($275,000)
(d) Payment of Per Engine Fee. The Per Engine Fee earned on engines
delivered to the Company at the Company's request in a calendar quarter
shall be payable to the Developer not more than fifteen (15) days after
the end of such calendar quarter (i.e., April 15th, July 15th, October
15th and January 15th).
5.) Ownership of Engine and Technology.
(a) Exclusive License. The Developer hereby grants the Company a
worldwide, exclusive license to use the Engine and the Technology in
connection with the conduct of the Company's business through December
31, 2003 and the Developer shall not have any rights to use the Engine
or Technology hereunder. Until such time as the Developer assigns the
Engine and the Technology to the Company as provided in this Agreement,
the Developer shall remain the exclusive owner of all right, title and
interest in and to the Engine and the Technology. However, the Company
shall indemnify and hold the Developer harmless against any liability,
demands, claims, costs, losses, damages, recoveries, and expenses,
including attorney fees and costs, from any and all actions and
proceedings which arise out of the use of the Engine and Technology in
the Company's snowmobiles or other products.
(b) Limitations on Use and Sale. Except as specifically provided in
this Agreement, the Developer shall have no right to use, transfer,
sell, assign, license or otherwise dispose of all or any part of the
documentation, production tooling, designs, drawings, notes,
prototypes, and other documents and materials, title or interest in and
to the Engine or the Technology.
(c) Transfer of Ownership. Effective as of the date the Company pays
the Developer the remaining unpaid Compensation in the amount of Fifty
Thousand Dollars ($50,000), the Developer hereby agrees to immediately
transfer and assign any and all right, title and interest of any kind
whatsoever (collectively, the "Rights") now existing or later arising
in connection with the Engine and the Technology. Both parties agree
that these Rights do not include the development of "after market"
parts that may have been or may be created by the Developer. The
Developer further agrees that, as of the date the Company pays the
Developer the remaining unpaid Compensation in the amount of Fifty
Thousand Dollars ($50,000), the Engine, the Technology and the Rights
shall be the sole and exclusive property of the Company and its
successors and assigns, and the Company and its successors and assigns
shall have the right to use or to apply for patents, copyrights or
other statutory or common law protections for the Engine and the
Technology in any and all countries. Developer agrees to execute an
assignment of the Engine, the Technology and the Rights in a form
reasonably acceptable to the Company. Upon transfer of ownership, the
Company shall indemnify, defend and hold harmless the Developer, and
its officers, directors, shareholders, employees and agents, against
any and all liability,
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demands, claims, costs, losses, damages, recoveries, settlements and
expenses, including attorney fees and costs, arising from any and all
actions and proceedings which arise out of the development, manufacture
or use of Engine and Technology in the Company's snowmobiles or other
products.
(d) Works for Hire. The Developer hereby acknowledges that all original
works of authorship which are made by the Developer (solely or jointly
with others) within the scope of the Developer's engagement which are
protectable by copyright are "works for hire," as that term is defined
in the United States Copyright Act (17 U.S.C. Section 101).
6.) Term; Termination and Effect of Termination. This Agreement shall
commence on the day and year first above written and shall continue until the
Company has paid the Developer the unpaid Compensation in the amount of Fifty
Thousand Dollars ($50,000). Upon termination of this Agreement, the Developer
shall immediately terminate any and all uses (of any nature or manner
whatsoever) of the Engine and the Technology.
7.) Nature of Relationship. The parties hereto agree that:
(a) Independent Contractor Status. The Developer, and its employees and
agents, shall not be considered agents or employees of the Company for
any purpose. The Developer shall be an independent contractor. The
Company shall not exercise any supervision over the Developer in the
performance of the Developer's services hereunder, nor shall the
Company require the Developer's compliance with detailed orders or
instructions, except observance of, and adherence to, the terms and
conditions of this Agreement or the transactions contemplated hereby.
The Developer, and its employees and agents, shall have no right or
authority to assume or create any obligation or responsibility, express
or implied, on behalf of or in the name of the Company, or to accept
service of legal process addressed to or intended for the Company, or
to bind the Company in any manner whatsoever.
(b) Payment and Withholding Responsibility. The Developer acknowledges
that its employees and agents are not employees of the Company and that
the Developer is responsible for the payment of employment taxes,
income tax withholding, employee benefits and other expenses which
relate to the Developer's employees. The Developer hereby defends,
indemnifies and holds the Company harmless from, and in respect of, any
costs or expenses to the Company which arise from the Developer's
failure to make all such payments.
8.) Disclosure of Company Confidential Information.
(a) Definition of Confidential Information. For purposes of this
Agreement, "Confidential Information" means any information that is not
generally known to the public that relates to the existing or
reasonably foreseeable business of the Company which has been expressly
or implicitly protected by the Company or which, from all of the
circumstances, the Developer knows or has reason to know that the
Company intends or expects the secrecy of such information to be
maintained. Confidential Information
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includes, but is not limited to, information contained in or relating
to pricing information, product designs, marketing plans or proposals,
customer, accounting or financial information, trade practices, trade
secrets and other proprietary information of the Company, whether
written, oral or communicated in another type of medium, whether
disclosed directly or indirectly, whether disclosed prior to or during
the term of this Agreement, whether disclosed before or after the date
of this Agreement, whether originals or copies, and whether or not
legal protection has been obtained or sought under applicable law. The
Developer shall treat all such information as Confidential Information
regardless of its source and whether or not marked as confidential.
(b) Developer Shall Not Disclose Confidential Information. The Company
shall provide to the Developer reasonable quantities of Confidential
Information concerning the Company and the Company's business from time
to time as requested by the Developer. The Developer will not, during
the term of this Agreement or following the termination of this
Agreement, use, show, display, release, discuss, communicate, divulge
or otherwise disclose Confidential Information to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever, other than the Developer's attorney, without the prior
written consent or authorization of the Company.
(c) Scope. The Developer's covenant in the forgoing Subsection to not
disclose Confidential Information shall not apply to information which,
at the time of such disclosure, may be obtained from sources outside of
the Company, or its agents, lawyers or accountants, so long as those
sources did not receive the information directly or indirectly as the
result of the actions of the Developer.
(d) Title. All documents or other tangible or intangible property
relating in any way to the business of the Company which are conceived
or generated by, or come into the possession of, the Developer during
the term of this Agreement shall be and remain the exclusive property
of the Company and the Developer agrees to return all such documents,
and tangible and intangible property, including, but not limited to,
all records, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, calculations or
copies thereof, which are the property of the Company or which relate
in any way to the business, customers, products, practices or
techniques of the Company and all other property of the Company,
including, but not limited to, all documents which in whole or in part
contain any Confidential Information of the Company which in any of
these cases are in the possession or under the control of the
Developer, to the Company upon the termination of this Agreement, or at
such earlier time as the Company may request.
(e) Compelled Disclosure. In the event a third party seeks to compel
disclosure of Confidential Information by the Developer by judicial or
administrative process, the Developer shall promptly notify the Board
of Directors of the Company of such occurrence and furnish to such
Board of Directors a copy of the demand, summons, subpoena or other
process served upon the Developer to compel such disclosure, and will
permit the Company to assume, at its expense, but with the Developer's
cooperation, defense of such disclosure demand. In the event that the
Company refuses to contest such
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a third-party disclosure demand under judicial or administrative
process, or a final judicial order is issued compelling disclosure of
Confidential Information by the Developer, the Developer shall be
entitled to disclose such information in compliance with the terms of
such administrative or judicial process or order.
9.) Developer Representations and Warranties.
(a) No Breach of Prior Agreements. The Developer represents and
warrants that performance of the terms of this Agreement as a Developer
of the Company does not and will not cause the Developer to breach any
agreement, commitment or understanding the Developer has with any other
party, whether formal or informal, to assign to such other party
inventions the Developer may hereafter make, or to keep in confidence
proprietary information of such other party which the Developer
acquired or learned prior to the Developer's engagement by the Company.
(b) Proprietary Information of Others. The Developer represents and
warrants that the Developer has not brought and will not bring to the
Company, or use for the benefit of the Company, any materials or
documents of a former employer (which, for purposes of this Section,
shall also include persons, firms, corporations and other entities for
which the Developer has acted or is currently acting, as an independent
contractor or Developer) that are not generally available to the public
or to the trade, unless the Developer has obtained written
authorization from any such person or entity permitting the Developer
to retain and use said materials or documents. With respect to any
materials or documents that the Developer may bring to the Company for
use in the course of the Developer's engagement, the Developer hereby
further represents and warrants that the Developer's use (or the
Company's use) of such materials or documents will not violate the
intellectual property rights of any former employer of the Developer,
or any other party.
(c) No Prior Assignment or Transfer. The Developer represents and
warrants that the Developer has not prior to the date of this Agreement
transferred, sold, assigned or otherwise disposed of the Developer's
intellectual property rights, title and interest in and to the Engine
and the Technology.
10.) Survival of Restrictive Covenants. Sections 4, 5, 6, 7, 8, 9 and
this section 10 of the Agreement shall survive the termination of this Agreement
and the obligations of the parties thereunder shall continue in full force and
effect.
11.) Miscellaneous.
(a) Entire Agreement; Modification. This Agreement, together with the
exhibits attached hereto, constitute the full and complete
understanding and agreement of the parties with respect to the subject
matter hereof, and supersedes and nullifies any prior or
contemporaneous understanding or agreement, whether written, oral or
communicated in any other type of medium, between the parties relating
thereto. No amendment or modification of any provision of this
Agreement shall be binding unless made in writing and signed by the
parties hereto.
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(b) Assignment. The rights and benefits of the Company and its
permitted successors and assigns under this Agreement shall be fully
assignable and transferable to any other entity (subject to that
entity's assumption of the obligations hereunder): (i) which is an
affiliate of the Company, as that term is defined under federal
securities law; or (ii) which is not an affiliate and with which the
Company has merged or consolidated, or to which it may have sold
substantially all its assets in a transaction in which such entity has
assumed the liabilities of the Company under this Agreement. In the
event of any such assignment or transfer, all covenants and agreements
hereunder shall inure to the benefit of, and be enforceable by or
against, the successors and assigns of the Company. This Agreement
shall not be assignable by the Developer without the prior written
consent of the Company, which shall not be unreasonably withheld, but
all obligations and agreements of the Developer hereunder shall be
binding upon and enforceable against the Developer and Developer's
successors and assigns.
(c) Notices. To be effective, all notices, consents or other
communications required or permitted hereunder shall be in writing. A
written notice or other communication shall be deemed to have been
given hereunder: (i) if delivered by hand, when the notifying party
delivers such notice or other communication to the other party; (ii) if
delivered by facsimile or overnight delivery service, on the first
business day following the date of such notice or other communication
is transmitted by facsimile or timely delivered to the overnight
courier; or (iii) if delivered by mail, on the third business day
following the date such notice or other communication is deposited in
the U.S. mail by certified or registered mail addressed to the other
party. Mailed or faxed communications shall be directed as follows
unless written notice of a change of address or facsimile number has
been given in writing in accordance with this Section:
If to the Company: Redline Performance Products, Inc.
0000 Xxxxxxxx Xxx, Xxxxx X
Xxxxx, XX 00000
ATTN: President
Facsimile No.: (000) 000-0000
If to the Developer: RM Holdings
0000 Xxxxxxxx Xxx, Xxxxx X
Xxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
(d) Waiver. No waiver of any term, condition or covenant of this
Agreement by a party shall be deemed to be a waiver of any subsequent
breach of the same or other terms, covenants or conditions hereof by
such party.
(e) Construction. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity
without
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invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(f) Titles. Titles to sections and subsections of this Agreement are
solely for convenience and do not modify or interpret any provisions
contained therein.
(g) Representation by Counsel; Interpretation. The Company and the
Developer each acknowledge that they have been, or have had the
opportunity to be, represented by legal counsel in connection with this
Agreement and the matters contemplated by this Agreement. Accordingly,
any rule of law or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the party that
drafted it has no application and is expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to affect
the intent of the parties.
(h) Attorney Fees In the event an action is brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to
reasonable attorney fees and costs, including all expert fees
necessary.
(i) Governing Law; Venue. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
California, without regard to such state's choice of law provisions.
Actions or proceedings litigated in connection with this Agreement, if
any, shall be venued exclusively in the state and federal courts
located in the County of San Diego, State of California.
(j) Counterparts. This Agreement may be executed in separate and
several counterparts, each of which shall be deemed to be an original,
and all such counterparts shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Engine
Development Agreement effective as of the day and year first above written.
Date: January 14, 2003 RM HOLDINGS
/s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx
Dated: January 14, 2003 XXXX XXXXXXXX:
/s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, an individual
Date: January 14, 2003 REDLINE PERFORMANCE PRODUCTS, INC.:
/s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx, CEO
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EXHIBIT A
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into
effective as of the 14th day of January 2003, by and between REDLINE PERFORMANCE
PRODUCTS, INC., a Minnesota corporation with its principal place of business
located at 0000 Xxxxxxxx Xxx, Xxxxx X, Xxxxx, Xxxxxxxxxx 00000 (the "Company"),
DV/DT ENGINEERING, INC. a California corporation, with their principal place of
business located at 0000 Xxxxxxxx Xxx, Xxxxx X, Xxxxx, Xxxxxxxxxx 00000
("DV/DT"), and XXXX XXXXXXXX, formally doing business as RM HOLDINGS, an
individual residing in the State of California ("Xxxxxxxx"). DV/DT ENGINEERING
INC. and Xxxxxxxx are collectively referred to herein as the "Consultant."
RECITALS
WHEREAS, the Company is in the business of designing, manufacturing and
selling powersports products such as snowmobiles and ATVs;
WHEREAS, the Consultant is knowledgeable and experienced in the design,
development and manufacture of engines for powersports products;
WHEREAS, the Company and the Consultant previously reached an oral
agreement in December 1999, pursuant to which the Company would retain and
compensate the Consultant to provide to the Company certain general engineering,
consulting and advisory services with respect to the design, development and
manufacture of snowmobiles and other products, and pursuant to which the
Consultant would keep all Company proprietary information confidential and would
assign any and all right, title and interest in and to all such work done for or
on behalf of the Company;
WHEREAS, the Company and the Consultant acknowledge and agree that the
compensation paid to the Consultant by the Company pursuant to their prior
understanding and agreement was, in part, for the Consultant's agreement that
the Company would obtain and retain ownership of any and all work done for or on
behalf of the Company; and
WHEREAS, the Company and the Consultant desire to document and clarify
their prior understanding and agreement regarding the Company's engagement of
the Consultant to provide certain general engineering, consulting and advisory
services to the Company with respect to the
design, development and manufacture of snowmobiles and other powersports
products for the Company, and the Consultant's acceptance of such engagement and
assignment of any and all right, title and interest in and to all work done for
or on behalf of the Company, pursuant to and in accordance with the terms and
conditions contained in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises and covenants contained herein and the mutual benefits to be gained by
performance hereof, the parties hereto agree as follows:
1.) Engagement. The Company hereby engages the Consultant as an
independent consultant and the Consultant hereby accepts the engagement upon the
terms and conditions hereinafter set forth.
2.) Description of Consulting Services. The Consultant shall, from time
to time, at such times as the Company's management may reasonably request,
consult with, advise, assist and perform services for the Company with respect
to matters as to which the Consultant has special knowledge, competence and
experience, including, without limitation, general engineering services related
to the development of the Company's snowmobiles and other products. The
Consultant shall assist the Company with future services to be agreed upon by
the parties. With respect to particular projects, the parties shall mutually
agree on the services to be performed by the Consultant on such particular
projects.
3.) Term. Except as otherwise provided in this Agreement, the
obligations set forth hereunder shall commence on the date first set forth above
and shall continue until December 31, 2004. Either party may terminate this
Agreement upon written 60 day notice for any reason or for no reason. Both
parties will use their reasonable best efforts to facilitate a smooth transition
during the notice period. The Consulting Fee will be paid during the notice
period.
4.) Compensation.
(a) Consulting Fee. As compensation to the Consultant for services
rendered by the Consultant to the Company hereunder, the Company shall
pay the Consultant a consulting fee of Two Thousand Dollars ($2,000)
per week for total annual compensation under this term of the Agreement
of One Hundred Four Thousand Dollars ($104,000) until June 30, 2003.
Beginning July 1, 2003 and ending June 30, 2004, the Company shall pay
the Consultant a consulting fee of Two Thousand Five Hundred Dollars
($2,500) per week for total annual compensation under this term of the
Agreement of One Hundred Twenty Four Thousand Eight Hundred Dollars
($124,800). Beginning July 1, 2004 until December 31, 2004, so long as
the average monthly engines being delivered under the Engine
Development Agreement exceeds Fifty (50) per month per quarter, the
Consulting Fee shall revert back to the Two Thousand Dollars ($2,000)
per week amount for total annual compensation under this term of the
Agreement of One Hundred Four Thousand Dollars ($104,000). In the event
that the average delivery of engines falls below fifty (50) per month,
per quarter, then the higher monthly compensation of Consultant shall
be
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reinstated and retroactive to the beginning of said quarter. The
Consulting Fee shall be payable to the Consultant not more than fifteen
(15) days after the Company receives an invoice from the Consultant .
(b) Expense Reimbursement. The Consultant shall be entitled to
reimbursement from the Company for the reasonable expenses incurred by
the Consultant pursuant to this Agreement.
5.) Independent Contractor Status. The parties hereto agree that:
(a) Independence. The Consultant, and its employees and agents, shall
not be considered agents or employees of the Company for any purpose.
The Consultant shall be an independent contractor. The Company shall
not exercise any supervision over the Consultant in the performance of
the Consultant's services hereunder, nor shall the Company require the
Consultant's compliance with detailed orders or instructions, except
observance of, and adherence to, the terms and conditions of this
Agreement or the transactions contemplated hereby. The Consultant, and
its employees and agents, shall have no right or authority to assume or
create any obligation or responsibility, express or implied, on behalf
of or in the name of the Company, or to accept service of legal process
addressed to or intended for the Company, or to bind the Company in any
manner whatsoever.
(b) Payment and Withholding Responsibility. The Consultant acknowledges
that its employees and agents are not employees of the Company and that
the Consultant is responsible for the payment of employment taxes,
income tax withholding, employee benefits and other expenses, which
relate to the Consultant's employees. The Consultant hereby defends,
indemnifies and holds the Company harmless from, and in respect of, any
costs or expenses to the Company which arise from the Consultant's
failure to make all such payments.
(c) Indemnification. The Consultant shall indemnify and hold the
Company, and its assignees, officers, directors, agents, or employees,
harmless from any and all actions, proceedings, losses and costs
(including, without limitation, reasonable attorneys' fees and other
costs and expenses of litigation) which arise out of the negligence,
recklessness or willful misconduct of the Consultant.
6.) Results of Work Performed. For purposes of this Agreement, results
of work performed shall mean documentation, designs, creations, code,
improvements, original works of authorship, formulas, processes or techniques
used in connection with the Redline snowmobiles or other Company products, other
than the Engine and Technology as those terms are defined in an Engine
Development Agreement between the parties of even date herewith. The Company and
Consultant agree that all the results of work performed by the Consultant on
behalf of the Company shall be the sole and exclusive property of the Company
and its successors and assigns, excluding any relation to "after market" parts,
pursuant to the terms of the Engine Development Agreement at Section 5 c.
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(a) Works for Hire. The Consultant hereby acknowledges that all
original works of authorship which are made by the Consultant (solely
or jointly with others) within the scope of the Consultant's engagement
which are protectable by copyright are "works for hire," as that term
is defined in the United States Copyright Act (17 U.S.C. Section 101).
7.) Disclosure of Company Confidential Information.
(a) Definition of Confidential Information. For purposes of this
Agreement, "Confidential Information" means any information that is not
generally known to the public that relates to the existing or
reasonably foreseeable business of the Company which has been expressly
or implicitly protected by the Company or which, from all of the
circumstances, the Consultant knows or has reason to know that the
Company intends or expects the secrecy of such information to be
maintained. Confidential Information includes, but is not limited to,
information contained in or relating to pricing information, product
designs, marketing plans or proposals, customer, accounting or
financial information, trade practices, trade secrets and other
proprietary information of the Company, whether written, oral or
communicated in another type of medium, whether disclosed directly or
indirectly, whether disclosed prior to or during the term of this
Agreement, whether disclosed before or after the date of this
Agreement, whether originals or copies, and whether or not legal
protection has been obtained or sought under applicable law. The
Consultant shall treat all such information as Confidential Information
regardless of its source and whether or not marked as confidential.
(b) Consultant Shall Not Disclose Confidential Information. The Company
shall provide to the Consultant reasonable quantities of Confidential
Information concerning the Company and the Company's business from time
to time as requested by the Consultant. The Consultant will not, during
the term of this Agreement or following the termination of this
Agreement, use, show, display, release, discuss, communicate, divulge
or otherwise disclose Confidential Information to any person, firm,
corporation, association, or other entity for any reason or purpose
whatsoever, other than the Consultant's attorney, without the prior
written consent or authorization of the Company.
(c) Scope. The Consultant's covenant in the forgoing Subsection to not
disclose Confidential Information shall not apply to information which,
at the time of such disclosure, may be obtained from sources outside of
the Company, or its agents, lawyers or accountants, so long as those
sources did not receive the information directly or indirectly as the
result of the actions of the Consultant.
(d) Title. All documents or other tangible or intangible property
relating in any way to the business of the Company which are conceived
or generated by, or come into the possession of, the Consultant during
the term of this Agreement shall be and remain the exclusive property
of the Company and the Consultant agrees to return all such documents,
and tangible and intangible property, including, but not limited to,
all records, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, calculations or
copies thereof, which are the property of the Company or which relate
in any way to the business, customers, products, practices or
techniques of
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the Company and all other property of the Company, including, but not
limited to, all documents which in whole or in part contain any
Confidential Information of the Company which in any of these cases are
in the possession or under the control of the Consultant, to the
Company upon the termination of this Agreement, or at such earlier time
as the Company may request.
(e) Compelled Disclosure. In the event a third party seeks to compel
disclosure of Confidential Information by the Consultant by judicial or
administrative process, the Consultant shall promptly notify the Board
of Directors of the Company of such occurrence and furnish to such
Board of Directors a copy of the demand, summons, subpoena or other
process served upon the Consultant to compel such disclosure, and will
permit the Company to assume, at its expense, but with the Consultant's
cooperation, defense of such disclosure demand. In the event that the
Company refuses to contest such a third-party disclosure demand under
judicial or administrative process, or a final judicial order is issued
compelling disclosure of Confidential Information by the Consultant,
the Consultant shall be entitled to disclose such information in
compliance with the terms of such administrative or judicial process or
order.
8.) Subsequent Competition.
(a) Other Snowmobile Manufacturers. During the Consultant's engagement
by the Company, and for a period of one (1) year thereafter, except as
noted below, the Consultant shall not, either directly or indirectly,
either alone or in concert with others, perform any work related to the
design, development, or manufacture of snowmobiles for or on behalf of
any other person or entity involved, directly or indirectly, in the
design, development, or manufacture of snowmobiles or otherwise in the
snowmobile industry. In the event that there is a change of control of
the Company while Consultant is still engaged for service with the
Company, in that Xxxx Xxxxx resigns, is terminated, or is no longer an
Executive Officer of the Company, the term of this section will be
reduced from one (1) year to six (6) months and the Consultant will be
provided with six (6) months paid notice of termination if the Company
terminates this Agreement before the expiration. In addition, if the
Company files for bankruptcy or ceases operations, the terms of this
section will immediately become null and void.
(b) Nature of Restrictions. The Company shall construe nothing
contained in this Agreement to prevent the Consultant from engaging in
a lawful profession, trade or business after the termination of the
Consultant's engagement. The Company with respect to its Confidential
Information and intellectual property shall construe this Agreement
only as one that prohibits the Consultant from engaging in acts which
are unfair to the Company, and which are in violation of the confidence
and trust reposed in the Consultant.
9.) Solicitation of Company Employees. During the Consultant's
engagement by the Company, and for a period of one (1) year thereafter, the
Consultant will not, directly or indirectly, alone or in concert with others,
solicit any of the Company's employees, except for Xxxxx Xxxxxxxx, for
employment or other engagement by any other company which is, by any
5
reasonable standard, in competition with the Company. The Consultant understands
that the above restraint is necessary in order to reduce the risk that the
Company's Confidential Information will be disclosed to and used by its
competitors to its detriment.
10.) Survival of Restrictive Covenants. The provisions of Sections 5,
6, 7, 8, 9 and this Section 10 of this Agreement shall survive the expiration of
the term of the Consultant's engagement hereunder, and shall be binding upon the
Consultant following the termination of the Consultant's engagement under this
Agreement.
11.) Miscellaneous.
(a) Nondisclosure of Agreement. The parties agree that this Agreement,
and its terms and conditions, shall remain confidential and shall not
be disclosed by the Consultant to any person except by order of a court
of competent jurisdiction or with the prior written consent of the
Company.
(b) Entire Agreement; Modification. This Agreement, together with the
exhibits attached hereto, constitutes the full and complete
understanding and agreement of the parties with respect to the services
to be provided by the Consultant to the Company, and supersedes and
nullifies any prior or contemporaneous understanding or agreement,
whether written, oral or communicated in any other type of medium,
between the parties relating thereto. No amendment or modification of
any provision of this Agreement shall be binding unless made in writing
and signed by the parties hereto.
(c) Assignment. The rights and benefits of the Company and its
permitted successors and assigns under this Agreement shall be fully
assignable and transferable to any other entity (subject to that
entity's assumption of the obligations hereunder): (i) which is an
affiliate of the Company, as that term is defined under federal
securities law; or (ii) which is not an affiliate and with which the
Company has merged or consolidated, or to which it may have sold
substantially all its assets in a transaction in which such entity has
assumed the liabilities of the Company under this Agreement. In the
event of any such assignment or transfer, all covenants and agreements
hereunder shall inure to the benefit of, and be enforceable by or
against, the successors and assigns of the Company. This Agreement
shall not be assignable by the Consultant without the prior written
consent of the Company, consent shall not be unreasonably withheld, but
all obligations and agreements of the Consultant hereunder shall be
binding upon and enforceable against the Consultant and Consultant's
successors and assigns.
(d) Notices. To be effective, all notices, consents or other
communications required or permitted hereunder shall be in writing. A
written notice or other communication shall be deemed to have been
given hereunder: (i) if delivered by hand, when the notifying party
delivers such notice or other communication to the other party; (ii) if
delivered by facsimile or overnight delivery service, on the first
business day following the date of such notice or other communication
is transmitted by facsimile or timely delivered to the overnight
courier; or (iii) if delivered by mail, on the third business day
following the date such notice or other communication is deposited in
the U.S. mail by certified or registered
6
mail addressed to the other party. Mailed or faxed communications shall
be directed as follows unless written notice of a change of address or
facsimile number has been given in writing in accordance with this
Section:
If to the Company: Redline Performance Products, Inc.
0000 Xxxxxxxx Xxx, Xxxxx X
Xxxxx, XX 00000
ATTN: President
Facsimile No.: (000) 000-0000
If to the Consultant: DV/DT Engineering, Inc.
0000 Xxxxxxxx Xxx, Xxxxx X
Xxxxx, XX 00000
Attn: Xx. Xxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
(e) Waiver. No waiver of any term, condition or covenant of this
Agreement by a party shall be deemed to be a waiver of any subsequent
breach of the same or other terms, covenants or conditions hereof by
such party.
(f) Construction. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective or valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining
provisions of this Agreement.
(g) Titles. Titles to sections and subsections of this Agreement are
solely for convenience and do not modify or interpret any provisions
contained therein.
(h) Representation by Counsel; Interpretation. The Company and the
Consultant each acknowledge that they have been, or have had the
opportunity to be, represented by legal counsel in connection with this
Agreement and the matters contemplated by this Agreement. Accordingly,
any rule of law or any legal decision that would require interpretation
of any claimed ambiguities in this Agreement against the party that
drafted it has no application and is expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to affect
the intent of the parties.
(i) Attorney Fees In the event an action is brought to enforce any
provision of this Agreement, the prevailing party shall be entitled to
reasonable attorney fees and costs, including all expert fees
necessary.
(j) Governing Law; Venue. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
California, without regard to such state's choice of law provisions.
Actions or proceedings litigated in connection with this
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Agreement, if any, shall be venued exclusively in the state and federal
courts located in the County of San Diego, State of California.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all
such counterparts shall constitute one and the same instrument.
(Signature page follows)
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SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement effective as of the day and year first above written.
Date: January 14, 2003 DV/DT ENGINEERING, Inc.
/s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, President
Dated: January 14, 2003 XXXX XXXXXXXX:
/s/ Xxxx Xxxxxxxx
------------------------------------
Xxxx Xxxxxxxx, an individual
Date: January 14, 2003 REDLINE PERFORMANCE PRODUCTS, INC.:
/s/ Xxxx Xxxxx
------------------------------------
Xxxx Xxxxx, CEO
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