Exhibit 10.1
* CONFIDENTIAL TREATMENT
The material marked by asterisk ("*") on the attached pages have been omitted
from the filed copy of this agreement in connection with a confidential
treatment request filed with the Securities and Exchange Commission by Redline
Performance Products, Inc.
CONTRACT ASSEMBLY AGREEMENT
This Contract Assembly Agreement (the "Agreement") is entered into
effective the 26th day of September, 2003, (the "Effective Date") by and between
REDLINE PERFORMANCE PRODUCTS, INC., a Minnesota corporation ("Redline"), having
its principal place of business at 0000 Xxxxxxxx Xxx, Xxxxx, Xxxxxxxxxx 00000
and INTERSTATE COMPANIES, INC. D/B/A INTERSTATE POWER PRODUCTS AND SERVICES,
("Contractor"), a Minnesota corporation, having its principal place of business
at 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxxxx, XX 00000 and assembly facilities at 000
00xx Xxx. XX Xxxx Xxxxx X.X. 00000.
INTRODUCTION
Contractor is engaged in the business of assembling various types of
vehicles. Redline desires to engage Contractor to assemble to Redline's
specifications, provide temporary inventory management and deliver snowmobiles
and possibly other vehicles to Redline or its designees. Contractor desires to
provide such services to Redline pursuant to the terms set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
promises made herein, the parties hereto agree as follows:
1. DEFINITIONS.
1.1 "ASSEMBLE" OR "ASSEMBLY" shall mean the (a) assembly of
Products from Components pursuant to specifications provided by Redline attached
as Exhibit A (to be provided by Redline prior to commencing Assembly); (b)
quality checking of Products to Quality Standards established by Redline
attached as Exhibit G (to be provided by Redline prior to commencing Assembly);
(c) testing of Products to the Test Specifications established by Redline
attached as Exhibit H (to be provided by Redline prior to commencing Assembly);
and (d) packaging of Products for shipment in industry standard shipping
containers pursuant to standards established by Redline attached as Exhibit B
(to be provided by Redline prior to commencing Assembly).
1.2 "XXXX OF MATERIALS" shall mean the respective Components and
other parts required to Assemble Products as established by Redline and attached
as Exhibit C (to be provided by Redline prior to commencing Assembly), as may be
amended from time to time on mutual agreement of the parties.
1.3 "CAPITAL EQUIPMENT" shall mean that unique equipment as agreed
by Redline and Contractor and set forth on Exhibit D (to be completed prior to
commencing Assembly) specifically required by Contractor for the Assembly of
Products; including but not limited to molds, jigs, test equipment and the like.
1.4 "COMPONENTS" shall mean those unique assemblies, components,
parts and accessories required for or used in the Assembly of the Product;
including, but not limited to, engines, tracks, skis, suspension assemblies,
body parts, wiring harnesses, lighting, instrument components and specifically
excluding standard fasteners, lubricants, fluids and connectors, all as set
forth in the Xxxx of Materials.
1.5 "PRICE" shall mean the actual price to Redline for Contractor
providing the Assembly and related services and Inventory Services (as defined
below) for Components and Products hereunder. Pricing will be determined by the
Risk Assessment and Pricing Matrix attached as Exhibit E prior to commencing
Assembly and as may be adjusted per Section 4.1.
1.6 "DELIVERY SCHEDULE" shall mean the forecast quantities and
anticipated dates of delivery of Product during the Term as set forth on Exhibit
F (to be provided by Redline prior to commencing Assembly) as may be modified
from time to time pursuant to Section 3.3.
1.7 "IP" OR "INTELLECTUAL PROPERTY" shall mean all utility
patents, design patents, utility models, other patent rights, copyrights, data
rights, trade secrets, know how, show how, proprietary information, including
but not limited to unique and proprietary assembly processes, tooling and the
like used in the Assembly of Product hereunder, moral rights, trademarks, trade
dress, content, service marks, logos, state law rights, or any like right
(including pending registrations or application thereof, divisionals,
continuations, derivatives, reissues, future derivatives, or reexaminations
associated therewith).
1.8 "PRODUCT" shall mean the Redline 800 Revolt snowmobile or
other vehicles or products as may be mutually agreed to be added to this
Agreement by the parties from time to time.
1.9 "QUALITY STANDARDS" shall mean those standards established by
Redline and set forth on Exhibit G regarding the quality of the Product and
Components that Products and Components must meet: (a) on delivery to
Contractor; (b) during the Assembly process; or (c) as finished Product.
1.10 "TEST SPECIFICATIONS" shall mean those specifications
established by Redline and se forth on Exhibit H, that finished Products must
meet to be deemed of acceptable quality for commercial sale.
2.
2. PREPARATION FOR ASSEMBLY
2.1 CAPITAL EQUIPMENT. Redline and Contractor shall, immediately
upon execution of this Agreement, determine what Capital Equipment, if any,
Contractor will require for Assembly of Products. Upon agreement of Redline and
Contractor as to the required Capital Equipment, Redline shall source and have
delivered to Contractor the Capital Equipment all at Redline's sole cost and
expense on a schedule agreed to by the parties. Contractor shall be responsible
for the maintenance and care of Capital Equipment while in the possession and
control of Contractor; including but not limited to responsibility for loss or
theft of Capital Equipment regardless of cause. All such Capital Equipment shall
remain the property of Redline. Contractor shall be responsible for maintaining
insurance on Capital Equipment. On termination or expiration of this Agreement
Contractor shall immediately return the Capital Equipment to Redline at the
location designated by Redline at Contractor's cost and expense, limited to
costs of removal and packaging, in good operating condition, reasonable wear and
tear excluded. In the event Capital Equipment requires replacement or reaches
the end of its useful life, Contractor and Redline shall meet to mutually agree
on the replacement of such Capital Equipment.
2.2 ASSEMBLY PROCESSES. Contractor shall within ninety (90) days
of the Effective Date, with the aid and assistance of Redline, develop Assembly
processes as required to assemble, quality check and test Products per the Xxxx
of Materials, Quality Standards, Assembly and Packaging Specifications, and Test
Specifications of Xxxxxxxx X,X,X and E and other terms and conditions of this
Agreement. During such development process, Redline shall provide Contractor the
Xxxx of Materials for Products, assembly drawings and other documentation in its
possession relating to or helpful in the Assembly of Products. Upon Redline's
acceptance of the Assembly processes, Contractor will undertake to immediately
begin the implementation of Assembly processes in order to meet the Delivery
Schedule for Products. In the event that either of the parties identify a
problem where the Assembly process will not permit the Product(s) to meet the
Quality Standards of Exhibit G and/or the Specifications and packaging
specifications of Exhibits A and B (an "Assembly Issue"), the parties, jointly
and in consultation with any affected Component Manufacturer, will develop a
remedy for the Assembly issue and an estimate as to the time and cost required
to correct the cause of the Assembly Issue. In the event the cause of the
Assembly Issue cannot be corrected within reasonable time periods or cost
parameters, as determined by Redline in its sole discretion, Redline shall have
the right to terminate this Agreement.
2.3 COOPERATION. Redline shall cooperate with Contractor in the
development of Assembly and other related processes and shall furnish to
Contractor such assistance and technical information Redline possesses as is
reasonably necessary to Assemble the Products.
2.4 COMPONENT PART INVENTORY. Redline shall purchase all
Components necessary for the Assembly and deliver them to Contractor at its
facilities in West Fargo ND. Contractor will maintain the inventory of such
Components at its facilities for use in Assembly of Products. Contractor shall
provide space in its facilities to inventory
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Components as may be required for the Assembly of Products, and finished
Products, until delivery to Redline or its designees ("Inventory Services").
2.4.1 Costs of providing inventory services including, but
not limited to receiving, storage, accounting,
pulling, and costs of insurance shall be included in
the Price. Contractor shall be responsible for any
loss or shortages of Component inventory while in
Contractor's possession and control.
2.4.2 Contractor shall provide Redline with a report of
inventory levels of Components monthly and shall
immediately notify Redline when inventory levels of
individual Components reach levels that may affect
Contractor's ability to Assemble Products based on
Product orders forecast or placed by Redline at any
time during the Term.
2.4.3 Contractor shall have responsibility for the
inspection of Components on delivery to Contractor to
ensure that such Components meet the Quality
Standards of Exhibit G, but shall not be responsible
for latent defects not apparent on a visual
inspection or pursuant to such other inspection as
required by Exhibit G.
2.4.4 Contractor shall immediately notify Redline of any
shortages in shipments of Components or Components
not meeting Quality Standards and shall comply with
Redline's reasonable requests regarding disposition
of any Components not meeting Quality Standards.
Contractor shall be responsible for any costs or
expenses incurred by either Contractor or Redline due
to Contractor's failure to visually inspect
Components or adequately perform such other
inspection as required by Exhibit G for Quality
Standard compliance. Any rework or corrective actions
required to be undertaken to cause Products to meet
Quality Standards due to Contractor's failure to
adequately visually inspect Components or perform
such other inspection of Components as required by
Exhibit G shall be undertaken at Component supplier's
sole cost and expense. Contractor shall provide
Redline with aid and assistance in pursing any claims
or recovery against Component suppliers relating to
the delivery of defective Components.
2.4.5 On termination or expiration of this Agreement,
Contractor shall promptly package Components and
finished Products in inventory and notify Redline
that they are available for pickup. Contractor shall
be entitled to retain such Components and finished
Products, and have a possessory lien on such
Components and finished Products, until such time as
all outstanding invoices owed Contractor are paid in
full.
4.
2.5 PRE-DELIVERY APPROVALS. Redline shall be responsible for and
shall obtain all pre-delivery approvals or certifications that may be required
before the Product can be sold to end users, including but not limited to any
required governmental, insurance or technical organization reviews and approval.
Contractor will assist as necessary, but responsibility for obtaining all
required approvals remains with Redline.
3. ORDERS FOR PRODUCT AND THE ASSEMBLY PROCESS
3.1 COMMENCEMENT OF ASSEMBLY. Upon acceptance of the Assembly
processes by Redline, after delivery of all necessary component parts to
Contractor, and pursuant to orders placed by Redline as more fully set forth
herein, Contractor shall begin commercial Assembly of Products. Contractor shall
assemble Redline Products and Redline shall accept delivery of Products as
ordered by Redline that are properly Assembled and meet the Quality Standards of
Exhibit G, the Assembly and Packaging Specifications of Exhibit A and the Test
Specifications of Exhibit H.
3.2 ASSISTANCE FROM REDLINE. Redline will provide an operations
manager and quality assurance manager (who may be the same individual) on site
at the assembly plant to initially supervise the assembly operation and the
quality assurance review. The quality assurance manager shall always be present
during assembly operations.
3.3 ORDERS FOR PRODUCT. Redline shall place orders for Products on
binding assembly orders submitted to Contractor from time to time setting forth
the quantity, delivery schedule and delivery location. Such orders shall be
submitted to Contractor by Redline at least seven (7) days prior to any
requested delivery date, unless otherwise agreed by the parties. Contractor
shall acknowledge said assembly orders within five (5) days of receipt. Redline
has no obligation to order any minimum quantities of Product from Contractor.
Redline shall, during the Term, provide Contractor with a ninety (90) day
forecast of anticipated quantities of Product required during said ninety (90)
day period and anticipated delivery dates, to be updated monthly.
3.4 CONFLICTS IN LANGUAGE. If any terms and conditions of any
assembly order, order acknowledgement, check, invoice, or like commercial form
conflict with the terms and conditions of this Agreement, this Agreement shall
control.
3.5 MODIFICATIONS. Contractor will only build to Redline's
documented specifications. Redline shall have the right to request modifications
in the Assembly process from time to time including but not limited to, the
addition of features and functions, design modifications or engineering change
orders or other modifications to Products which Redline desires to make from
time to time ("Modifications"). Any Modifications must be requested in writing
by Redline. Upon receipt of a request for Modifications, Contractor shall
provide the estimated time to develop or implement the Modifications and the
estimated costs, if any, of the Modifications. If such estimated costs and times
are acceptable to Redline, both Redline and Contractor will work in good faith
and mutual cooperation to execute an addendum to this Agreement or a separate
agreement to introduce the Modifications.
5.
3.6 INSPECTION AND TESTING. Contractor shall test each Product to
determine compliance with Test Specifications and Quality Standards. Contractor
shall be responsible for rework and correction of any Product that does not meet
the Redline established Test and Quality specifications at Contractor's sole
cost and expense. Contractor shall not be responsible for the cost of any
defective Components. Final testing shall be done in conjunction with Redline's
Quality Assurance Manager on site at Contractor's manufacturing facilities, and
Redline's Quality Assurance Manager shall approve all shipments to Redline or
dealers. Approval by Redline's Quality Assurance Manager prior to shipment,
shall result in a presumption that the Test Specifications and Quality Standards
have been met for the Product shipped.
3.7 COMPLIANCE. Products shall be tested or otherwise demonstrated
to be in compliance with all standards and regulations applicable to them and
have all technical certification(s) from governmental agencies or independent
testing laboratories required in the jurisdiction in which the specific Products
will be sold, to use, sell, export, import and otherwise distribute the Products
worldwide. Redline shall be responsible for all such testing and compliance
certifications; provided, however, Contractor shall provide Redline with such
aid and assistance as may be requested by Redline in conjunction with such
certifications or testing; including, but not limited to, access to information
and documentation utilized or generated during Assembly, access to Contractor
employees involved in Assembly and access to Contractor facilities utilized in
Assembly.
3.8 PACKAGING & DELIVERY. Products shall be packaged and labeled
for shipment as set forth in Exhibit B or as more fully set forth on assembly
orders for particular Products. The assembly orders shall specify delivery
instructions, including method of carriage, ship to address and other order
specific delivery locations. Redline shall be responsible for arranging, with
the aid and assistance of Contractor, all shipping of Products. All shipments
shall be made "CIF Destination" or as otherwise directed by Redline, freight and
insurance prepaid, with Redline identified as the shipper and the named insured.
In the event an assembly order does not specify mode of shipment, Contractor
shall ship Product by common carrier. Contractor shall provide Redline with
confirmation of shipment and copies of shipping documentation for the particular
order shipped. In the event shipments are required outside the United States,
Redline, with the aid and assistance of Contractor, shall arrange for customs
brokers to assist with the export of the products and shall provide such brokers
with documentation as may be required for import/export permits, customs duties
or other excise and import taxes, port fees or charges and other similar costs
or fees. All such shipping and related costs shall be at Redline's sole cost and
expense. Risk of loss on all shipments transfers to Redline as soon as
Contractor has delivered Products to a common carrier for shipment or they have
been picked up from Contractor's facilities.
3.9 FAILURE TO DELIVER. Contractor shall immediately notify
Redline as soon as Contractor believes it will not meet a delivery date for
Product ordered pursuant to a binding assembly order or cannot meet forecast
delivery dates submitted by Redline in its rolling Delivery Schedule forecasts.
Included with any such notices shall be Contractor's forecast of when it will be
able to deliver Products pursuant to said binding assembly orders or forecasts.
If Contractor fails to deliver to Redline any of the Products at the
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times requested by Redline in a binding assembly order acknowledged by
Contractor, and such failure to deliver was not due to any fault of Redline or a
shortage of Components not the result of Contractor's failure to adequately
visually, or as required by Exhibit G, inspect Components, Contractor shall
credit Redline with the actual loss sustained by Redline, not to exceed 50% of
the Price of Assembly for the particular Product or Products not timely
delivered.
4. PAYMENT TERMS
4.1 ASSEMBLY CHARGES. Redline shall pay Contractor the Price for
providing Assembly and related services as determined per Exhibit E by the
parties prior to commencing Assembly of Products. Redline and Contractor shall
meet periodically during the term of this agreement, whether in person,
electronically or telephonically, to review the Price of Assembling Products.
4.2 INVOICING. Contractor shall invoice Redline weekly for
Assembly of Product completed in the preceding week. Redline shall pay each
assembly invoice within fifteen (15) days of the date of Redline's receipt of
correct invoices for Assembly and related services. All payments quotations,
invoices, pricing and the like are and shall be stated in US Dollars.
4.3 INTEREST ON LATE PAYMENTS. If Redline fails to make any
payment when due, other than as a result of a good faith dispute over all or any
portion of an invoice, Contractor may charge interest on the undisputed amounts
at one and one-half percent (1 1/2 %) per month.. Interest begins to accrue as
of the due date of the payment for any undisputed amounts.
5. NON-COMPETITION, AND NON-SOLICITATION.
5.1 NON-COMPETE AGREEMENT. As an inducement to Redline to enter
into this Agreement, during the term of this Agreement and for a period
of one (1) year after the termination of this Agreement, Contractor
shall not, directly or indirectly, either for itself or for any other
person, partnership, corporation, company or other entity, engage or
invest in, own, manage, operate, finance, control, or participate in
the ownership, management, operation, financing or control of, be
associated with, or in any manner connected with, lend its name or any
similar name to, or render services or advice to, any business which
designs, finances, constructs, develops, sells, manufactures, or
markets any product that competes with, is substantially similar to or
which may be marketed or sold as an alternative to Products or
Components.
5.2 HIRING OF REDLINE EMPLOYEES. During the Term, and for a period
of one (1) year thereafter Contractor shall not hire, offer to hire,
entice away or in any other way persuade or attempt to persuade any
employee, officer, director, independent contractor, supplier,
subcontractor or customer of Redline to leave the employ of or
terminate its, his or her business relationship with Redline or to
otherwise interfere with the business activities of Redline.
7.
5.3 HIRING OF CONTRACTOR EMPLOYEES. During the Term, and for a
period of one (1) year thereafter Redline shall not hire, offer to
hire, entice away or in any other way persuade or attempt to persuade
any employee, officer, director, independent contractor, supplier, sub
contractor or customer of Contractor to leave the employ of or
terminate its, his or her business relationship with Contractor or to
otherwise interfere with the business activities of Contractor.
6. INTELLECTUAL PROPERTY & CONFIDENTIALITY.
6.1 LICENSE. Redline hereby grants and agrees to grant to
Contractor a limited, royalty free, non-exclusive license, to utilize Redline
IP, as required solely to Assemble Products for Redline and for no other purpose
whatsoever. Contractor agrees to assign, transfer and convey, for no additional
consideration, any rights in Redline IP that Contractor may acquire through
performance of Assembly services or other services hereunder.
6.2 TITLE TO INTELLECTUAL PROPERTY. Subject to the license granted
in Section 6.1 above, Redline shall own all rights to any IP provided to
Contractor hereunder or developed by Contractor in performing its assembly
services hereunder. All developments, inventions, works of authorship or other
creations relating to the Products by Contractor shall be "works made for hire"
within the meaning of the copyright laws of the United States or, if not "works
made for hire," ownership of any of the foregoing shall be transferred, assigned
and conveyed to Redline by Contractor as the exclusive property of Redline.
Contractor will give Redline all reasonable assistance necessary to perfect
Redline's rights, title and interest in and to any developments or IP developed
hereunder, including without limitation, the execution, acknowledgment and the
delivery of all documents necessary to effectuate the intent of the parties that
Redline own the IP.
6.3 CONFIDENTIAL INFORMATION. Each party acknowledges that, in the
course of the performance of this Agreement, it may have access to technical
information, communications, products, pricing data, customer information,
material marked as confidential, business plans, or like information that will
be or includes proprietary information that is unique, secret, confidential,
and/or which constitutes the exclusive property and trade secrets of the other
party ("Confidential Information"). Each party agrees to maintain the
confidentiality of the Confidential Information, not to disclose such
information to any third party unless expressly authorized by license grants in
this Agreement, and to use the Confidential Information only to the extent
necessary for legitimate business uses in connection with this Agreement. Upon
request of either party or on termination or expiration of this Agreement, each
party shall return the Confidential Information of the other party and all
copies thereof then in its possession or under its control. Nothing in this
Agreement shall prohibit or limit either party's use of information which (a) is
now, or hereafter becomes, publicly known or available through lawful means; (b)
is rightfully in receiving party's possession, as evidenced by receiving party's
records; (c) is disclosed to the receiving party without confidential or
proprietary restriction by a third party who rightfully possesses and rightfully
discloses the information; (d) is independently developed by the receiving party
without any breach of this Agreement and such can be shown by the receiving
party; or (e) is the subject of a
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written permission to disclose provided by the disclosing party. Redline and
Contractor agree that this Agreement and the provisions hereof shall be
Confidential Information, provided that Redline may disclose the terms of this
Agreement and the Agreement to the extent reasonably required to comply with
Redline's disclosure obligations under the Securities Exchange Act of 1934, as
amended, and regulations promulgated thereunder.
7. REPRESENTATIONS AND WARRANTIES.
7.1 CONTRACTOR REPRESENTATIONS AND WARRANTIES. Contractor
represents and warrants as follows:
7.1.1 Any Intellectual Property other than Redline IP
utilized in the Assembly of Products is either owned
by Contractor or Contractor has obtained the rights
in the Intellectual Property from its owner
sufficient to permit Contractor to Assemble and
Redline to sell, use, and distribute Products
worldwide, enable Redline to pass sales and
distribution rights on to Redline's distribution
channel, and use rights to customers and end users
and to permit Contractor to grant the licenses and
rights set forth herein to Redline.
7.1.2 Contractor shall use its best efforts in the
performance of this Agreement and the work and
services performed by Contractor hereunder shall be
performed in a workmanlike manner using good assembly
practices.
7.1.3 Contractor has assembly capacity, facility space and
trained personnel sufficient to meet Contractor's
Assembly, inventory, shipping and other obligations
hereunder.
7.1.4 Contractor's fulfillment of its obligations under
this Agreement will not violate any prior or current
agreements with or obligations to third parties.
7.1.5 All Assembly shall be conducted in compliance with
applicable law and regulation.
7.1.6 The Products will be free from all liens and other
encumbrances on delivery to Redline or its designees.
7.1.7 Contractor has all necessary corporate power and
authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby.
7.2 REDLINE REPRESENTATIONS AND WARRANTIES. Redline represents and
warrants as follows:
7.2.1 To the extent that Contractor is required to use
Intellectual Property in connection with the Assembly
and other services to be
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provided hereunder at the request or direction of
Redline, all such Intellectual Property shall be
owned or licensed by Redline or otherwise available
for use by Contractor without restriction.
7.2.2 Redline has no knowledge of any actual infringement
by Products on any third party IP.
7.2.3 Redline will utilize its best efforts to deliver all
Components and other parts to Contractor for Assembly
in a timely manner.
7.2.4 Redline has entered into an agreement with GE Capital
for dealer financing of Products.
7.2.5 Redline has all necessary corporate power and
authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby.
8. WARRANTY.
8.1 WARRANTIES. Contractor warrants that Products delivered to
Redline or its designees shall conform to the Quality
Standards of Exhibit G and the Test Specifications of Exhibit
H and be free in defects of workmanship for a period of One
(1) Year from the date of delivery to Redline or its
designees. Contractor makes no warranty to the end user, such
warranty responsibility to be the sole obligation of Redline.
8.2 NO OTHER WARRANTY. CONTRACTOR MAKES NO OTHER WARRANTY, IMPLIED
OR EXPRESS, AND NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR
PARTICULAR PURPOSE. REDLINE'S SOLE AND EXCLUSIVE REMEDY IN THE
EVENT OF BREACH OF WARRANTY IS REPAIR OR REPLACEMENT OF THE
DEFECTIVE PRODUCT. IN NO EVENT WILL CONTRACTOR'S LIABILITY
UNDER THIS CONTRACT EXCEED THE PRICE (AS DEFINED PURSUANT TO
EXHIBIT E) ALLOCABLE TO THE PRODUCT AND CONTRACTOR SHALL NOT
BE LIABLE FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES AS A
RESULT OF BREACH OF WARRANTY.
8.3 SERVICE WARRANTY. To the extent Contractor is asked to
undertake warranty work on Products, following delivery of the
Products, such work will be subject to Contractor's Service
Warranty, which is set forth in Exhibit I.
8.4 WARRANTY CLAIMS. Contractor shall, upon notice from Redline,
be provided with instructions concerning the handling of any
warranty claim arising during the warranty period. Redline
shall return any items for which a warranty claim is being
made to Contractor for inspection or take
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such other reasonable actions with regard to the retention or
disposal of items subject to any such warranty claim.
Contractor shall not be responsible for warranty claims on
Components covered by warranties from the Component
manufacturer that were not reasonably discoverable by visual
inspection by Contractor on receipt. Redline shall be solely
responsible for shipping costs and all risk of loss for any
item shipped to Contractor or returned to or its designee
pursuant to a warranty claim.
9. TERM AND TERMINATION.
9.1 TERM. Unless otherwise terminated as provided herein, this
Agreement shall be effective from the Effective Date through April 30, 2006,
unless renewed for an additional period through mutual agreement of the parties.
9.2 TERMINATION. This Agreement may be terminated as follows:
9.2.1 Immediately by Contractor if Redline breaches its
payment obligations under this Agreement, and such
breach is not cured within ten (10) days of the date
of notice of non-payment;
9.2.2 Immediately by either party if the other party fails
to cure a non-financial material breach of this
Agreement within thirty (30) days of written notice
of such breach;
9.2.3 Upon mutual agreement of the parties; and
9.2.4 By Redline pursuant to Sections 2.2 or 11.3.
9.3 OBLIGATIONS UPON TERMINATION. Immediately upon termination of
this Agreement by either party, each party will return all Confidential
Information provided to such party by the other party and Contractor shall
immediately return to Redline the Components and Products pursuant to Section
2.4.5, and return any Capital Equipment to Redline pursuant to Section 2.1.
10. INDEMNITY AND INSURANCE.
10.1 INDEMNITY BY CONTRACTOR. Contractor shall defend, indemnify
and hold Redline harmless from all damages, losses, obligations, deficiencies,
actions, claims, costs (including reasonable attorneys' fees), demands,
expenses, judgments and liabilities (collectively "Losses") of whatever nature
suffered or incurred by Redline arising or resulting from any material breach of
this Agreement by Contractor including, but not limited to a breach of any
representation or warranty set forth herein. However, no indemnity shall be
provided from Contractor to Redline per this Section if the Losses are due in
whole or in part to Contractor's use of any Redline IP where such IP causes the
Losses.
10.2 INDEMNITY BY REDLINE. Redline shall defend, indemnify and hold
Contractor harmless from all Losses of whatever nature suffered or incurred by
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Contractor arising or resulting from any material breach of this Agreement by
Redline including, but not limited to, a breach of any representation or
warranty set forth herein, or from any product liability claim brought by a
third party against Contractor related to a Product and not due to the
intentional or negligent acts or omissions of Contractor.
10.3 CLAIMS PROCESS. In order for indemnity to be provided
hereunder, the claiming party shall: (i) promptly notify the other party of the
need for indemnity as soon as reasonably possible; (ii) provide the other party
with reasonable support necessary to defend against the Losses, at the
indemnifying party's expense; and (iii) grant the indemnifying party authority
to litigate, settle, or otherwise dispose of the action giving rise to indemnity
in any reasonable manner that the indemnifying party, with the consent of the
other party, which will not be unreasonably withheld, deems appropriate. In
satisfaction of this indemnity obligation, the indemnifying party may, in its
sole discretion: (i) settle the dispute; or (ii) obtain a license for the
parties to continue use of the IP in dispute. Each party shall have an ongoing
obligation to reasonably mitigate damages and liability accumulating against the
other party during any indemnification period under this Section.
10.4 LIMITATION OF LIABILITIES AND DISCLAIMERS. UNDER NO
CIRCUMSTANCES WHATSOEVER SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS OR LOSS
RESULTING FROM BUSINESS INTERRUPTION EVEN IF EITHER PARTY HAS BEEN ADVISED OF
THE POSSIBILITY OR LIKELIHOOD OF SUCH DAMAGES.
10.5 INSURANCE. During the Term, Redline shall maintain in full
force and effect products liability insurance in an amount of at least Two
Million Dollars ($2,000,000.00) per occurrence and Two Million Dollars
($2,000,000) in the aggregate per year. Redline shall also maintain umbrella
products liability insurance coverage in the amount of Three Million Dollars
($3,000,000) during the Term of this Agreement. Redline shall name Contractor as
an additional insured under said insurance and provide that such insurance will
not be cancelled or otherwise terminated during the Term. Contractor shall be
entitled to notice of any intent by an insurance company to terminate or not
renew a policy. The termination of or failure to renew the policy shall be
automatically be deemed a material breach of this Agreement. Redline shall
provide Contractor with evidence of such coverage prior to commencement of the
Assembly work and annually thereafter.
11 GENERAL PROVISIONS.
11.1 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.2 ENTIRE AGREEMENT. This Agreement, together with the exhibits,
schedules or attachments hereto, represents the only agreement between
the parties concerning the subject matter hereof and supersede all
prior representations,
12.
understandings and agreements whether written or oral. This Agreement
may not be altered, amended or modified, except by formal agreement in
writing signed by duly authorized representatives of both parties.
11.3 FORCE MAJEURE. Contractor shall not be responsible to Redline
for failure to perform any of the obligations imposed by the Agreement,
provided such failure shall be occasioned by fire, flood, explosion,
lightning, wind storm, earthquake, subsistence of soil, riot, war, or
any other cause beyond the reasonable control of Contractor. Contractor
shall promptly inform Redline of the occurrence of any event of force
majeure. In the event the Force Majeure exists for more than thirty
(30) days from the date of notice, Redline shall have the right to
terminate this Agreement immediately on notice to Contractor.
11.4 INDEPENDENT CONTRACTOR. Nothing contained herein shall be
deemed to create a joint venture, partnership or other such
relationship between the parties. Each of the parties is an independent
contractor with no authority to bind the other party to any obligations
or to legally represent the other party. Each party shall remain
responsible for the supervision of their own employees and any and all
responsibility for employee benefit plans and social benefits costs for
their employees; including but not limited to, unemployment
compensation, workers compensation, social security contributions and
withholding obligations for taxes or other levies, and for compliance
with applicable laws and regulations governing employees and the
employment relationship with such employees.
11.5 LIMITATION; SEVERABILITY OF PROVISIONS. To the extent any
court of competent jurisdiction determines that any covenant contained
in this Agreement is unenforceable in any respect, the court may limit
such covenant to render it enforceable in light of the circumstances in
which it was made, and such covenant, as so limited, will be
specifically enforced. If the court refuses to limit or cannot limit
such covenant or provision such that it is enforceable in part and the
covenant or provision is therefore found to be invalid or
unenforceable, the same will not affect in any respect whatsoever the
validity of the remainder of this Agreement.
11.6 WAIVERS. The waiver of any term or condition of this Agreement
shall be limited to the circumstance or event referred to therein and
shall not be deemed a waiver of any other term hereof or of the same
circumstance or event upon any recurrence thereof.
11.7 NOTICES. Any notice required or permitted to be given under
this Agreement will be in writing and will be deemed to have been given
when personally delivered or sent by facsimile to the other party at
such fax number as designated by the receiving party, or three (3) days
after sent by certified mail, return receipt requested, to the other
party at the address set forth above or at such other address as may be
designated by a party hereunder in accordance with this Section 11.7.
13.
11.8 ASSIGNMENT AND DELEGATION. Unless expressly set forth herein,
Contractor may not assign its rights or delegate its duties under this
Agreement without receiving the prior written consent of Redline.
Redline may assign this Agreement to an affiliate or a successor of
Redline provided that the Redline affiliate agrees to be bound by the
terms and conditions of this Agreement. The provisions of this
Agreement will be binding upon and inure to the benefit of the parties
and their permitted successors and assigns.
11.9 EXPORT CONTROL. The parties are subject to U.S. laws and
regulations governing the export of U.S. products and technology. Each
party agrees that it shall not directly or indirectly engage in any
acts which would constitute a violation of such laws or regulations.
Neither party shall ship, export, re-export, divert or otherwise
dispose or authorize or permit the shipment, exportation,
re-exportation, diversion or other disposition, of any U.S.-origin
equipment, know-how, technical data, documentation or other materials
furnished pursuant to this Agreement, to any party or in any manner
which would constitute a violation of any present or future export
control law or regulation of the United States.
11.10 GOVERNING LAW. This Agreement and all acts and transactions
pursuant or relating hereto, and all rights and obligations of the
parties hereto will be governed, construed, and interpreted in
accordance with the domestic laws of the State of Minnesota without
giving effect to any choice of law provision or rule. The parties
specifically disclaim application of the United Nations Convention on
the International Sale of Goods, 1980. In order to induce the parties
to accept this Agreement, and as a material part of the consideration
therefore:
11.10.1 The parties hereto agree that all actions or
proceedings arising out of this Agreement will be litigated in
courts located within Hennepin County, Minnesota;
11.10.2 The parties irrevocably and unconditionally consent
to the exclusive jurisdiction of such courts and consent to
the service of process in any such action or proceeding by
personal delivery or any other method permitted by law;
11.10.3 The parties agree that venue is proper in as set
forth in item 11.10.1 above;
11.10.4 The parties waive any and all rights they may have to
transfer or change the venue of any such action or proceeding;
and
11.10.5 The parties agree that service of any process,
summons, notice or document by Registered Mail to such party's
respective address set forth above will be effective service
of process for any such action or proceeding with respect to
all matters.
11.11 REMEDIES. The parties understand that they may not have an
adequate remedy at law for the breach or threatened breach by the other
Party to this
14.
Agreement. Accordingly, if a party breaches or threatens to breach this
Agreement, that party may be obligated to reimburse the other party for
the reasonable attorneys' fees and costs incurred by it in enforcing
its rights under this Agreement. The parties further agree that in the
event of such a breach or a threatened breach, in addition to other
remedies which may be available to a party, that party will have the
right to xxx in equity and enjoin the other party from breaching or
threatening to breach this Agreement.
11.12 GOOD FAITH. Whenever the parties are obligated hereunder to
mutually agree on a matter, the parties shall promptly and in good
faith undertake negotiations with regard to any such matter and shall
not unreasonably withhold agreement on any such matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
Redline Performance Interstate Companies, Inc. d/b/a
Products, Inc., Interstate Power Products & Services,
a Minnesota corporation a Minnesota corporation
Xxxx X. Xxxxx Xxxx Xxxxxx
/s/ Xxxx X. Xxxxx /s/ Xxxx Xxxxxx
--------------------------- --------------------------
Signature Signature
President & CFO V.P. Ops. RR.
--------------------------- --------------------------
Title Title
9/26/03 10/7/03
--------------------------- --------------------------
Date Date
15.
EXHIBIT LIST
EXHIBIT A - Specifications for Assembly of Products from Components as
established by Redline (To be provided by Redline prior to
commencing Assembly).
EXHIBIT B - Packaging standards as established by Redline (To be provided
by Redline prior to commencing Assembly).
EXHIBIT C - Xxxx of Materials as established by Redline (To be provided by
Redline prior to commencing Assembly).
EXHIBIT D - Capital Equipment as agreed between Redline and Contractor (To
be completed prior to commencing Assembly).
EXHIBIT E - Risk Assessment and Pricing Matrix as agreed between the
parties (Risk Assessment to be mutually agreed on by the
parties prior to commencing Assembly).
EXHIBIT F - Delivery Schedule as established by Redline (To be provided by
Redline prior to commencing Assembly).
EXHIBIT G - Quality Standards as established by Redline ( To be provided
by Redline prior to commencing Assembly).
EXHIBIT H - Test Specifications as established by Redline (To be provided
by Redline prior to commencing Assembly).
EXHIBIT I - Contractors Service Warranty (To be provided by Contractor
prior to commencing Assembly).
16.
CONFIDENTIAL TREATMENT REQUESTED
Exhibit E
* [SIX PAGES REDACTED; CONFIDENTIAL TREATMENT REQUESTED]
