EXCLUSIVE DISTRIBUTORSHIP, MANUFACTURING AND SUPPLY AGREEMENT
Exhibit
10.1
EXCLUSIVE
DISTRIBUTORSHIP, MANUFACTURING
AND
SUPPLY AGREEMENT
THIS
EXCLUSIVE DISTRIBUTORSHIP, MANUFACTURING AND SUPPLY AGREEMENT
(“Agreement”) is made and entered into as of October 29, 2007 (the “Effective
Date”)
by
and between ARIZONA EMERGENCY PRODUCTS, INC., an Arizona corporation
(“AEP”),
RAPID RESPONSE VEHICLES, L.L.C., an Arizona limited liability company
(“RRV”),
RHINO OUTDOOR INTERNATIONAL, INC., a Nevada corporation (“ROI”), and
RHINO
OFF-ROAD INDUSTRIES, INC., a Nevada corporation (“RHINO”). All of the above
persons
are sometimes referred to herein as the “Parties” (as the context may require)
or, individually
(as the context may require), to a “Party.” All of the Parties’ respective
addresses for their
principal places of business for notice and other purposes are set forth next
to
their respective
signatures on the signature page of this Agreement.
RECITALS.
1.
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ owns and controls Arizona Emergency Products,
Inc.,
an
Arizona corporation (“AEP”), his Affiliate company;
2.
WHEREAS, AEP engages in the business of designing, engineering, manufacturing,
fabricating,
assembling and/or installing various ‘after market’ accessories and devices on
emergency
and public safety vehicles used by various police, fire, sheriffs’, rescue,
homeland security
and other governmental ‘first responder’ emergency agencies and departments (the
“First
Responders”), including, without limitation, emergency equipment mounts, gun
mounts, emergency
lights, Global Positioning System [“GPS”] devices, sirens, etc. (the
“Accessories”);
3.
WHEREAS, AEP has developed substantial name recognition in the United States
with
various “First Responder” governmental departments and agencies generally, and
in the law enforcement
community specifically;
4.
WHEREAS, AEP commands a substantial market share in the United States for the
‘after
market’ post-manufacture design, engineering, manufacture, fabrication, assembly
and/or installation
of Accessories on such First Responder emergency vehicles;
5.
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ recognized the market and need for such First
Responders
to have ‘rough terrain, rapid response emergency vehicles’ (“RT/RREVs”) to
permit and
allow
such First Responders to have motorized vehicle access to otherwise unnavigable,
remote
and desolate geographical areas to perform their respective governmental
services;
6.
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ owns, controls and formed RAPID RESPONSE
VEHICLES,
L.L.C., an Arizona limited liability company (“RRV”), another of his Affiliate
companies,
as a new business entity for the purpose of designing, engineering,
manufacturing, fabricating,
assembling, developing, marketing and and/or distributing RT/RREVs to First
Responders
in North America;
7.
WHEREAS, Rhino Outdoor International, Inc. (“ROI”) is a publicly traded company
(Stock
Symbol ‘RHOI’) that owns, operates and controls various outdoor activity based
businesses;
1
8.
WHEREAS, in June 2006 ROI completed acquisition of (and now owns, operates
and/or
controls as an Affiliate) Rhino Off-Road Industries, Inc. (“RHINO”), which
engages in the
business of designing, engineering, manufacturing, fabricating and assembling
extreme terrain
off-road vehicles for consumers, hobbyists and off-road enthusiasts and
dealers;
9.
WHEREAS, RHINO is the designer, inventor and manufacturer of the Rhino
Off-Road
‘Rough Terrain Vehicle,’ an off-road vehicle that offers a high level of safety
and rideability in
a
production performance rough terrain vehicle that essentially combines the
features of
an
‘ATV’ and a ‘Monster Truck’ for consumers, hobbyists and off-road
enthusiasts;
10.
WHEREAS, ROI’s and RHINO’s experienced management and design professionals
are
committed to providing affordable, innovative, and safe performance products
and
rough terrain
vehicle with the highest quality customer service;
11.
WHEREAS, during 2007 AEP, RHINO and their management and design professionals
(including, among others, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, AEP’s President, and ▇▇▇▇▇▇
▇▇▇▇▇,
RHINO’s President) jointly financed, designed, invented, tested and developed a
prototype RT/RREV
(the “Prototype RT/RREV”) for use by First Responders by contributing their
collective
expertise in vehicle design, First Responder Vehicles and/or rough terrain
vehicles;
12.
WHEREAS, RRV and RHINO desire to enter into an exclusive distributorship,
manufacture
and supply agreement whereby RRV would promote, market, advertise, deal and
distribute
RT/RREVs exclusively to First Responders; and RHINO would manufacture,
fabricate,
assemble and sell RT/RREVs on an exclusive basis only to or for RRV – all upon
and subject
to all the terms, covenants and conditions set forth in this
Agreement;
13.
WHEREAS, RRV is entering into this Agreement for the purpose of assuring a
prompt
and regular source of the RT/RREVs, which RRV intends to enhance and improve
with post-manufacture
and aftermarket Accessories of the type also provided by AEP to First
Responders;
and
14.
WHEREAS, RHINO acknowledges that during the term of this Agreement, RRV will
be
relying upon RHINO’s ability to manufacture and deliver the RT/RREVs in the time
and manner
provided for herein, so that RRV will have RT/RREVs in the quantities necessary
to fill all
orders which RRV may obtain from its customers.
NOW,
THEREFORE, in consideration of the foregoing Recitals and the terms, covenants
and
conditions contained herein, and for other good and valuable consideration,
the
receipt and sufficiency
of which are hereby acknowledged, the Parties agree as follows:
AGREEMENT.
1.
DEFINITIONS. In addition to the terms defined elsewhere parenthetically
in this Agreement,
the following words and expressions shall have the meanings set forth
below:
1.1.
“Affiliate” or “Affiliates” shall mean any or
all natural persons (including ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇) and/or other business entities of any kind
or
nature
whatsoever controlled by, under common control with or controlling any Party
to
this Agreement.
2
1.2.
“CARB” means both the California Department of Consumer Affairs
Bureau
of
Automotive Repair and/or the California Research Bureau (as
applicable).
1.3.
“Confidential Information” means, except as otherwise provided
herein, any and all of
a
Party’s and/or the Parties’ information, data, designs, concepts, ideas,
processes, methods,
techniques, specifications, formulas, compositions, know-how, trade secrets,
and
improvements
of a confidential or proprietary nature, identified as such in writing before
disclosure
by any Party to any other Party, including any and all trade secrets (e.g.,
customers and
customer lists) and trade secret rights arising under the common law, United
States federal
law and/or the laws of the State of Arizona. As used herein, “Confidential
Information”
shall not include information a Party can demonstrate through its
records:
1.3
(a)
was or became public knowledge through no fault of that Party;
1.3
(b)
was known to the Party without restriction prior to the date of disclosure
and
such
knowledge was not obtained from the other Party;
1.3
(c)
was disclosed to the party without restriction by a third party who had a lawful
right
to
disclose it; or
1.3
(d)
was developed by the Party independently and without benefit of or access to
the
Confidential Information of the other Party.
1.4.
“Contract Documents” means, collectively, this Agreement (with
attached Exhibits), Purchase
Orders (defined below) placed in accordance with this Agreement, and the
Specifications
(defined below).
1.5.
“EPA” means the Environmental Protection Agency of United
States government and any
substantial equivalent of any country, state, county, municipality, city or
other governing authority
having jurisdiction over environmental quality or affairs within the
Territory.
1.6.
“Forecast” means a rolling, non-binding forecast, prepared
monthly, of the quantities of
the
number of RT/RREVs that RRV expects to purchase during the next succeeding
six
(6) months,
indicating expected purchases of RT/RREVs expressed in terms of RT/RREVs per
month.
1.7.
“Governmental Agency” means any First Responders and/or other
agencies of any Sovereign,
Federal, State or local government anywhere in the world, including any of
the
countries
thereof.
1.8.
“Intellectual Property Rights” means: (i) all patent rights and
all right, title and interest
in and to all letters patent and applications for letters patent, and all other
government issued or
granted indicia of invention ownership including any reissue, division,
continuation or
continuation-in-part applications; (ii) all copyrights and all other literary
property and works
of
authorship and author rights, and all right, title and interest in and to all
copyrights, and
copyrighted interests; (iii) all trademarks, trade names, service marks and
logos, and all rights,
title and interest in and to all applications, certifications and registrations
therefore; (iv) all
mask
work rights; (v) all licenses or license rights; and (vi) all rights, title
and
interest in and
to
all trade secrets and trade secret rights arising under the common law, United
States federal
law and/or the laws of the State of Nevada.
3
1.9.
“Related Persons” or “Related Person” means
any Affiliate, officer, director, shareholder,
manager, member, partner, employee of any Party and/or such person’s spouse,
heirs,
successors and assigns.
1.10.
“RT/RREV” or “RT/RREVs” means the ‘rough
terrain, rapid response emergency vehicle(s)’
described in the Exhibit A “Specifications”
1.11.
“Specifications” means the specifications set forth in Exhibit
A hereto, which the Parties
jointly developed together.
1.12.
“Purchase Order” means the form of purchase order set forth in
Exhibit B hereto, which
is
to be placed from time to time by RRV with RHINO pursuant to this
Agreement.
1.13.
“Term” means the period of time beginning on the Effective Date
first written above and
ending upon December 31, 2008; provided, however, that the Term shall be
extended automatically
for additional, successive, consecutive Terms of one (1) year beginning on
January
1st and ending on December
31st of each additional,
successive, consecutive year thereafter
unless RHINO or RRV delivers written notice to the other at least sixty (60)
but
no more than one hundred and twenty (120) days prior to the end of the then
existing
Term of such Party’s desire to terminate the Agreement as of the end of the
then-existing
Term.
1.14.
“Territory” means the United States of America and Canada, each
and every one of the
states of the United States of America and each and every one of the provinces
of Canada, and
each
and every county, city, town, municipality or other component governmental
entity (however
designated, whether incorporated or unincorporated) within any of the
above.
2.
EXCLUSIVE DISTRIBUTORSHIP.
2.1.
Exclusive Distributorship. RHINO hereby appoints RRV, on an exclusive
basis, as its sole
and
exclusive distributor for the sale, lease and/or other transfer for
consideration of any RT/RREV(s)
to any Governmental Agency within the Territory during the Term of this
Agreement
(as the same may be extended from time to time). RHINO surrenders any right
to
sell
RT/RREVs to any Governmental Agency within the Territory during the Term of
this
Agreement
(as the same may be extended from time to time).
2.2.
Non-Exclusive Distributorship. In addition to the Exclusive
Distributorship Territory granted
in the immediately preceding subsection, RRV shall have a non-exclusive right,
together
with others, to sell, lease, deal, distribute or otherwise transfer for
consideration any RT/RREV(s)
to any Governmental Agency outside of the Territory during the Term of this
Agreement
(as the same may be extended from time to time).
2.3.
Expansion of Territory if Sales in Another Country. If RRV is the first
person or entity
to
effect a sale, lease and/or other transfer for consideration of any RT/RREV(s)
to any Governmental
Agency outside of the Territory then the Territory that is the subject of the
‘Exclusive
Distributorship’ granted in §2.1 shall automatically be deemed supplemented,
amended,
expanded and augmented to then include the geographical boundaries of the
national,
sovereign government wherein RRV first effected such a sale, lease and/or other
transfer
for consideration of any RT/RREV(s) to any such Governmental Agency (the
“Expanded
Territory”). The Expanded Territory shall remain part of the Territory that is
the subject
of the exclusive distributorship granted in §2.1; provided, however, that any
renewal
4
of
the
Term of this Agreement with respect to such Expanded Territory shall be subject
to the following
terms and conditions:
2.3
(a)
This right to acquire an Expanded Territory cannot be exercised: (i) during
the
period
commencing with the giving of any notice of default or request for adequate
assurance
of future performance to RRV and continuing until said default is cured or
such
adequate assurance of future performance is given by RRV, (ii) during the
period
of
time following either RHINO’s or RRV’s termination of this Agreement,
(iii)
during the time RRV is in breach of this Agreement; (iv) in the event that
RRV
has
been
given 3 or more notices of default, whether or not the defaults are cured,
during
the 12 month period immediately preceding the exercise of the right of first
refusal;
or (v) following any Party’s giving of written notice to terminate this
Agreement
at the expiration of the then existing Term for the same; and
2.3
(b)
For the right to continue such Expanded Territory RRV shall maintain sales
or
other
distributions within such Expanded Territory not less then double (twice) the
number
of
RT/RREVs sold or otherwise distributed within the immediately preceding
Term.
Any
sales, leases and/or other transfers for consideration of any RT/RREV(s) to
any
such Governmental
Agency shall be credited to the quantity set forth in the Table in §2.5,
below.
2.4.
Non-Compete. Neither RHINO nor ROI shall manufacture, sell, lease or
otherwise transfer
or distribute any products similar to the RT/RREVs, whether under any brand
or
trade name
registered by RHINO or any of its Affiliates or at all, to any Governmental
Agency in the
Territory during the Term of this Agreement; provided, however, that nothing
in
this Agreement
shall prohibit RHINO, ROI or any of their dealers from selling, leasing or
otherwise
distributing any of the consumer models of their RTVs to any Governmental
Agency
if
the same are one (1) or (2) seat RTVs. All Parties acknowledge and agree that
one of
the
distinctive features of the RT/RREV is its four (4) seat capacity, and therefore
neither RHINO
nor
ROI (nor any of their dealers) shall sell, lease or otherwise transfer or
distribute to
any
Governmental Agency any four (4) seat RTV during the Term of this Agreement.
If
any
Governmental Agency should desire to purchase, lease or otherwise acquire any
four (4) seat
RTV
during the Term of this Agreement then RRV shall also have the exclusive right
to sell,
lease or otherwise transfer or distribute any such vehicles to any Governmental
Agency in
the
Territory during the Term of this Agreement.
2.5.
RRV’s Best Efforts. RRV shall use its best efforts to promote and sell
the RT/RREVs to
the
maximum number of responsible customers in the Territory. RRV’s purchase of the
quantity
of RT/RREVs shown in the following table (if the initial and/or any later Term
hereof
is
extended in the manner suggested thereby) during any applicable Term will be
considered
to satisfy RRV’s obligation to use RRV’s “best efforts” to promote the
RT/RREVs;
provided, however, that neither this sentence nor the following table may be
construed
as creating a minimum quantity term or creating a minimum standard for
complying
with RRV’s ‘best-efforts’ obligation.
5
|
Term
|
Quantity
Deemed “Best Efforts”
|
|
Initial
– through 12/31/2008
|
Ten
(10)
|
|
1/1/2009
– 12/31/2009
|
Twenty
(20)
|
|
1/1/2010
– 12/31/2010
|
Forty
(40)
|
|
1/1/2011
– 12/31/2011
|
Eighty
(80)
|
|
1/1/2012
– 12/31/2012
|
One
Hundred and Sixty (160)
|
The
provisions of this section are intended to create a ‘Safe Harbor’ to avoid
disputes concerning
whether or not RRV was or is using its ‘best efforts.’ Nothing in this section
is intended
to obligate RRV to actually purchase the quantity of vehicles set forth in
the
above table
if
market or other conditions prohibit it to sell such quantities of RT/RREVs
notwithstanding
its best efforts.
2.6.
Relationship of the Parties.
2.6
(a)
Nature of Relationship. The Parties are entering into this Agreement as
independent
contractors and no partnership, joint venture or other association shall be
deemed
created by this Agreement. No Party shall have the right or authority
to:
(i)
Assume or create any obligation or responsibility, express or implied,
on behalf of any other Party; or
(ii)
Represent any other Party as agent or in any other capacity.
2.6
(b)
Payment of Expenses. RRV shall pay all of its expenses, including without
limitation
all travel, lodging and entertainment expenses incurred in connection with
its
services hereunder. RHINO shall not reimburse RRV for any of those expenses,
unless
otherwise stated
2.6
(c)
Limitation on Authority. RRV shall have no right to enter into any contracts
or
commitments in the name of, or on behalf of, RHINO, or to bind RHINO in any
respect
whatsoever, nor shall RHINO have any right to enter into any contracts or
commitments
in the name of, or on behalf of, RRV, or to bind RRV in any respect whatsoever.
In addition, RRV shall not obligate or purport to obligate RHINO by issuing
or making any affirmations, representations, warranties or guaranties with
respect
to the RT/RREVs to any third party, other than the warranties described in
§3.7
and
in Exhibit C attached hereto and made a part hereof.
2.7
Trademarks, Service Marks and Trade Names; Promotion on
Internet.
2.7
(a)
Right to Use. Each Party to this Agreement may use each other Party’s
trademarks,
trade names and service marks (hereinafter referred to as the “Trademarks”)
on a non-exclusive basis in the Territory only during any Term of this
Agreement
and solely for display or advertising purposes in connection with advertising,
marketing, promoting, selling and distributing the RT/RREVs in
6
accordance
with this Agreement. No Party shall at any time do or permit any act to be
done
which may in any way impair the rights of any other Party in such Party’s
Trademarks.
2.7
(b)
Quality Control. In order to comply with each other’s quality control
standards,
each Party shall: (i) use each other Party’s Trademarks in compliance with
all
relevant laws and regulations; (ii) accord each other Party the right to inspect
during
normal business hours, without prior advance notice, such Party’s facilities
used
in
connection with efforts to sell the RT/RREVs in order to confirm that such
Party’s
use of such Trademarks is in compliance with this Section; (iii) not modify
any
of
the Trademarks in any way and not use any of the Trademarks on or in
connection
with any goods other than the RT/RREVs; and (iv) prior to publishing
any
advertisement (including any Internet advertisement), marketing brochure or
other
product information (collectively, the “Promotional Material”) to promote the
RT/RREVs
using the other Party’s Trademarks first provide to the other Party a
specimen
or template of the proposed Promotional Material using the other Party’s
Trademarks
for the other Party to review and approve the same, which approval may
be
withheld in any Party’s sole and exclusive discretion.
2.7
(c)
Parties’ Instructions. Each Party shall follow each other Party’s instructions
with
respect to each of the following:
(i)
use
of any information about such Party and/or the RT/RREVs to be
placed
by any such Party on the Internet and/or its website;
(ii)
linking of any site on the Internet to any site on the Internet established,
operated or sponsored by such Party; and
(iii)
use
of any of the Trademarks on any site on the Internet. Each
Party acknowledges that it shall cease the activities described in (i), (ii)
and/or (iii)
above, if so instructed by any other Party.
2.8.
Responsibility for Taxes. Taxes now or hereafter imposed within the
Territory, or any
part
thereof, with respect to the transactions contemplated hereunder (with the
exception of
income
taxes or other taxes imposed upon any Party and measured by the gross or net
income
of
any Party) shall be the responsibility of RRV to collect and pay, and if paid
or
required
to be paid by RHINO, the amount thereof shall be added to and become a part
of
the amounts
payable by RRV hereunder.
2.9
RRV’s Right of First Refusal to Become Exclusive Distributor in Other
Territories.
2.9
(a)
The right of First Refusal granted in this subsection is subject to the
condition precedent
that RRV shall have first met or exceeded the quantity of orders of RT/RREVs
set forth in the Table in §2.5 for the Term immediately preceding the
transaction,
occurrence or event giving rise to the Right of First Refusal.
2.9
(b)
RHINO shall not, at any time prior to the expiration of the Term of this
Agreement,
or any extension thereof, enter into any contract with any other person (a
“Prospective
Exclusive Distributor”) that includes any other exclusive right to sell,
market,
distribute or otherwise deal the RT/RREVs, or any interest therein, (e.g.,
such
7
as
that
granted in this Agreement) in any geographical area outside of the Territory
without
first giving advance, written notice thereof to RRV, which notice is
hereinafter
referred to as “Notice of Exclusive Business Opportunity.”
2.9
(c)
The Notice of Exclusive Business Opportunity shall include the exact and
complete
terms of the proposed exclusive RT/RREV distributorship contract and shall
have
attached thereto a copy of the bona fide offer and counteroffer, if any, duly
executed
by both RHINO and the Prospective Exclusive Distributor.
2.9
(d)
For a period of 12 calendar days after receipt by RRV of the Notice of
Exclusive
Business Opportunity, RRV shall have the right to give written notice to
RHINO
of
RRV’s exercise of RRV’s right to acquire the rights of the Prospective
Exclusive
Distributor under the terms of such exclusive RT/RREV distributorship
contract
on the same terms, price and conditions as set forth in the Notice of
Exclusive
Business Opportunity. In the event that RHINO does not receive written
notice
of
RRV’s exercise of the right herein granted within said 12 calendar day
period,
there shall be a conclusive presumption that RRV has elected NOT to exercise
RRV’s
right hereunder, and RHINO may complete the exclusive RT/RREV distributorship
contract with the Prospective Exclusive Distributor on the same terms
set
forth
in the Notice of Exclusive Business Opportunity.
2.9
(e)
If RRV declines to exercise its right of first refusal after receipt of the
Notice of
Exclusive Business Opportunity, and, thereafter, RHINO and the Prospective
Exclusive
Distributor modify the price terms of such exclusive RT/RREV distributorship
contract by more than 5% then RRV’s right of first refusal shall reapply
to said transaction with the Prospective Exclusive Distributor.
2.9
(f)
If RRV declines to exercise its right of first refusal after receipt of the
Notice of
Exclusive Business Opportunity and, thereafter, the proposed exclusive RT/RREV
distributorship
contract is not consummated then RRV’s right of first refusal shall apply
to
any subsequent transactions concerning any proposed exclusive RT/RREV
distributorship
contract. If, however, said exclusive RT/RREV distributorship contract
is, in fact, completed, then said right shall be extinguished and shall not
apply
to
any such subsequent transactions for the territory that was the subject of
such
completed
contract (but shall with respect to any other, future contracts for any other
territories).
2.9
(g)
This right of first refusal cannot be exercised: (i) during the period
commencing
with the giving of any notice of default or request for adequate assurance
of future performance to RRV and continuing until said default is cured or
such
adequate assurance of future performance is given by RRV, (ii) during the
period
of
time following either RHINO’s or RRV’s termination of this Agreement,
(iii)
during the time RRV is in breach of this Agreement; (iv) in the event that
RRV
has
been
given 3 or more notices of default, whether or not the defaults are cured,
during
the 12 month period immediately preceding the exercise of the right of first
refusal;
or (v) following any Party’s giving of written notice to terminate this
Agreement
at the expiration of the then existing Term for the same.
2.10.
RT/RREVs Not Consumer Products. All of the Parties acknowledge and agree
that
the
RT/RREVs are not ‘consumer products’ and that they are not to be sold to any
Person
8
for
personal, family or household purposes. All of the RT/RREVs are to be
manufactured, sold
and
delivered to Governmental Agencies solely for their use by First Responders
incident to
the
conduct of their governmental and professional responsibilities.
2.11.
Reciprocal Development Recoupment Payments. AEP and RHINO have all
expended
considerable time, money, labor, resources and other expense (collectively,
the
“Development
Costs”) developing the RT/RREV Prototype with the hope and expectation
that
the
business realized by this Agreement will allow them both to recoup and/or
amortize such
an
investment of Development Costs over the useful life of this Agreement (whatever
that
may
be). AEP and RHINO have fixed the amount of such Development Costs at
$250,000
for each of them (the “Development Cost Amount”). Since AEP and RHINO are
“Joint
Owners” and “Inventors” of the RT/RREV Prototype they desire that if either of
them should
terminate this Agreement before the fourth (4th) extension of the initial
Term hereof (i.e.,
before the expiration of the time periods shown in the Table in §2.5) then each
Party shall
pay
to the other a ‘Development Cost Recoupment Fee’ of $1,000 from the sale, lease
or other
distribution of each RT/RREV sold by such Party after the termination of this
Agreement
until each Party shall have recouped the amount of its respective, outstanding
Development
Cost Amount; provided, however, that both Parties’ Development Cost Amount
shall
be
reduced during the Term of this Agreement (as the same may be extended from
time
to
time)
by the amount of $1,000 for each RT/RREV purchased by RRV under the terms
hereof1.
3.
MANUFACTURING.
3.1.
Manufacture. During the term of this Agreement, RHINO shall manufacture,
fabricate
and assemble the RT/RREVs for RRV according to the Exhibit A Specifications
in
the
amount or number of such RT/RREVs designated in any Purchase Orders that RRV
may
submit
to
RHINO; provided, however, that the amount set forth in the Purchase Orders
does
not
materially deviate from the Forecasts and are otherwise consistent with the
terms and conditions
contained herein.
3.2.
Duty to Manufacture. RHINO shall: (a) establish and thereafter maintain
sufficient manufacturing
capacity to produce RT/RREVs in quantities sufficient to fill RRV’s projected
periodic
requirements, as set forth in RRV’s periodic Forecasts; provided, however, that
such Forecasts
do not exceed twenty percent (20%) of the immediately preceding Forecast
delivered
to RHINO; provided, further, however, that RHINO shall not be required to
acquire additional
facilities, plants or equipment to carry out the Forecasts if and when such
Forecasts increase
in quantity; (b) use its reasonable efforts to maintain a sufficient level
of
inventory of the
RT/RREVs (and/or the component parts necessary) to fulfill RRV’s purchase orders
consistent
with the Forecast; (c) at its expense, buy all raw materials and component
parts
necessary
to manufacture, fabricate and/or assemble such quantities of the RT/RREVs to
fulfill
RRV’s Purchase Orders; and (d) purchase, manufacture, assemble and/or fabricate
at its
1
For example, but not by way of limitation, if RHINO terminated this Agreement
effective December 31, 2011, and RRV had purchased the number of RT/RREVs shown
in the Table in §2.5, then each Party’s outstanding, unrecouped “Development
Cost Amount” would be the sum of $100,000, determined as follows: The amount of
the Development Cost Amount on the date of this Agreement [i.e., $250,000],
LESS
an amount equal to $1,000 TIMES the number of RT/RREVs purchased by RRV in
the
initial Term [i.e., 10 x $1,000 + $10,000], the First Renewal Term [i.e., 20
x
$1,000 + $20,000], the Second Renewal Term [i.e., 40 x $1,000 + $40,000], and
the Third Renewal Term [i.e., 80 x $1,000 + $80,000] – all for a total of
$150,000.)
9
expense
any dies, jigs, molds, patterns and tools necessary to manufacture, assemble
and/or fabricate
at its expense the RT/RREVs.
3.3.
RHINO’s Failure to Manufacture. The Parties recognize that the amount and
timing of
RRV’s
demand for the RT/RREVs is not certain or predictable; consequently, RHINO
may
be
unable
to fill all of RRV’s orders as they are received. Should demand for the RT/RREVs
exceed
RHINO’s supply and/or ability to produce the number or volume of RRV’s demand
for
the
same, then notwithstanding anything else to the contrary contained or implied
in
this Agreement:
3.3
(a)
RRV may order the manufacture of RT/RREVs from any competitor of RHINO
and
in so doing disclose the Specifications concerning the same (subject to a
Confidentiality
and Non-Disclosure Agreement) to such competitor to effect the manufacture
and delivery of any RT/RREVs that RHINO is unable or unwilling to produce,
manufacture and/or deliver for or to RRV;
3.3
(b)
When RHINO is next able to receive and process further Purchase Orders for
RT/RREVs
from RRV then it shall so notify RRV of the same in a written notice
under
this Agreement, and RRV shall thereafter direct any new or different orders
first
occurring after the receipt of such notice back to RHINO. The Parties intend
that, to
the
extent reasonably possible, RHINO shall manufacture, assemble and fabricate
all
orders of RT/RREVs that RRV shall make from time to time.
3.4.
Tooling. RHINO is responsible for routine/periodic/preventive maintenance
on all tools
used by it to manufacture, fabricate and/or assemble the RT/RREVs, and for
any
repairs and
replacements of the same, which shall be at RHINO’s sole cost and
expense.
3.5.
Specifications. RHINO shall manufacture all RT/RREVs according to the
Exhibit A Specifications.
RHINO and RRV may jointly amend the Exhibit A Specifications from time
to
time;
provided, however, that in the event of such a change RRV and RHINO shall
mutually
agree in good faith to the timing, scope and nature of the change as well as
any
related
pricing increases or delivery changes. RRV will not be responsible for material
made obsolete
by changes in Specifications beyond quantities corresponding to RRV’s Purchase
Orders
and Forecasts and RHINO’s obligations to build reasonable amounts of inventory.
At RRV’s
sole discretion, components, other than those designated in the Specifications,
may be designated
to RHINO for the assembly of the RT/RREVs. RRV and RHINO will negotiate in
good
faith to arrive at pricing adjustments due to changes in components and
component sourcing.
3.6.
Cooperation. RRV shall provide such reasonable information, assistance
and cooperation
and execute such documents (without incurring any financial cost) as may be
necessary
for RHINO (at RHINO’s expense) to secure any required EPA and/or CARB
approval
and for RHINO to satisfy any applicable requirements for the use, manufacture
and/or
distribution of the RT/RREVs pursuant to the EPA and/or CARB approval(s).
Further, RHINO
shall cooperate with RRV and allow quality audits upon reasonable notice and
at
reasonable
times to be conducted to ensure conformance with the EPA and/or CARB
approval(s)
and RRV quality standards (the latter of which have been disclosed to RHINO
in
the
Exhibit A Specifications).
10
3.7.
Covenants, Warranties and Representations. RHINO covenants with RRV, and
warrants
and represents to RRV, that:
3.7
(a)
The RT/RREVs be free from defects in materials, manufacturing, assembly,
fabrication
and/or workmanship;
3.7
(b)
All RT/RREVs supplied by RHINO to RRV under this Agreement shall be manufactured
in strict compliance with the Specifications and all applicable laws,
governmental
rules and regulations (including, without limitation, EPA and CARB rules
and
regulations);
3.7
(c)
Except for the Honda power train (which may be “rebuilt” if the same is
rebuilt
by Honda or its authorized agents and accompanied by a Honda warranty for
the
same), all RT/RREVs supplied by RHINO to RRV under this Agreement shall be
manufactured
using brand new, “never used” component parts and materials;
3.7
(d)
RHINO has a continuing duty to, and shall, warn RRV regarding any latent or
patent
defect that it may ever discover regarding any RT/RREVs sold hereunder,
which
duty shall survive the termination of this Agreement;
3.7
(e)
At all times relevant to this Agreement, and during any Term hereof, RHINO
shall
procure, keep and maintain at its sole cost and expense (and require its
subcontractors to
maintain) any and all insurance necessary and appropriate to cover its
obligations
set forth herein and RHINO shall maintain a policy or policies of insurance
for the following:
(i)
Product liability insurance concerning any RT/RREVs sold
hereunder,
including coverage for any recalls of any RT/RREVs sold hereunder,
in amounts to be approved by RRV;
(ii)
Workers’ Compensation and employer’s liability insurance
covering
all employees engaged in the performance of this agreement for claims
arising under an applicable Workers’ Compensation and occupational
disease acts;
(iii)
Commercial general liability insurance protecting RHINO
against
claims for bodily injury, personal injury and property damage. Such
insurance shall be on an occurrence basis providing single limit coverage
in an amount not less than $1,000,000 per occurrence with an annual
aggregate of not less than $2,000,000;
(iv)
Property damage insurance coverage on all of RHINO’s
personal
property, trade fixtures, and RHINO owned alterations and utility installations
at its principal place of business. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence.
The proceeds from any such insurance shall be used by RHINO
for
the replacement of such personal property, trade fixtures and RHINO
owned alterations and utility installations; and
11
(v)
Business Interruption insurance covering RHINO against loss of
income
and extra expense insurance in such amounts as will reimburse RHINO
for
direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent business owners engaged in a business
such as RHINO’s or attributable to prevention of access to its premises
as a result of such perils.
RRV
shall
be named as an ‘Additional Insured’ on RHINO’s products liability insurance
and commercial general liability insurance if such status results in no
significant
increase in the premiums for the same. RHINO shall provide RRV with written
evidence that all of the above insurances are in force before the Effective
Date
and/or
any renewal of any Term. No such insurance policy shall be cancelable or
subject
to modification except after thirty (30) days’ prior written notice to RRV.
RHINO
shall, at least 10 days prior to the expiration of any such policies, furnish
RRV
with
evidence of renewals or “insurance binders” evidencing renewal thereof, or
RRV
may
order such insurance and charge the cost thereof to RHINO, which amount
shall
be
payable by RHINO to RRV upon demand. Such policies shall be for a term
of
at
least one year, or the length of the remaining Term of this Agreement,
whichever
is less.
3.7
(f)
All RT/RREVs supplied by RHINO to RRV under this Agreement shall be subject
to the terms of RHINO’s warranty attached to this Agreement as Exhibit C;
and
3.7
(g)
The above covenants, warranties and representations set forth the limits of
RHINO’s
responsibility for manufacture, delivery and sale of the RT/RREVs to RRV
hereunder.
EXCEPT AS EXPRESSLY CONTAINED HEREIN, RHINO STATES THAT
NO
OTHER WARRANTIES, EXPRESS OR IMPLIED, CONTAINED IN THE
UNIFORM COMMERCIAL CODE OR OTHERWISE (INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE AND MERCHANTABILITY) SHALL APPLY TO THE RT/RREVs
SOLD OR AGREED TO BE FURNISHED HEREUNDER AND RRV ACKNOWLEDGES
THAT THE PRODUCTS SOLD HEREUNDER ARE BEING SOLD
“AS
IS” AND “WHERE IS” AND ALL OTHER WARRANTIES ARE EXCLUDED.
FURTHER, RHINO IS NOT RESPONSIBLE FOR ANY MISUSE, RECONFIGURATION
OR ALTERATION OF ANY RT/RREVs IF SUCH MISUSE,
RECONFIGURATION OR ALTERATION CAUSES ANY DEFECT, DAMAGE
OR
BREACH OF WARRANTY IN OR TO ANY RT/RREV MANUFACTURED
OR DELIVERED TO RRV HEREUNDER. RHINO SHALL IN NO
EVENT
BE LIABLE FOR ANY PUNITIVE, CONSEQUENTIAL, OR SPECIAL
DAMAGES HEREUNDER. FURTHER, RHINO AND ITS AFFILIATES AND
RELATED PERSONS SHALL NOT BE LIABLE IN CONTRACT, TORT OR OTHERWISE
FOR DAMAGE OR LOSS OF OTHER PROPERTY, EQUIPMENT, PROFITS,
REVENUE, COST OF CAPITAL, OR ANY OTHER TYPE OF LOSS RELATED
TO THE MANUFACTURE AND SALE OF THE RT/RREVS. IN NO EVENT
SHALL RHINO’S LIABILITY HEREUNDER EXCEED THE PURCHASE PRICE
OF
ANY DEFECTIVE OR NON-CONFORMING RT/RREV VEHICLE SOLD
HEREUNDER. ANY ACTION BROUGHT AS A RESULT OF A DEFECTIVE,
DAMAGED OR NON-CONFORMING RT/RREV MUST BE
12
BROUGHT
WITHIN THREE (3) YEARS FROM THE DATE OF SALE OR FOREVER
BE BARRED.
3.8.
Actions, Suits or Proceedings. RHINO has no knowledge of any actions,
suits or proceedings
pending or threatened before any commission, board, bureau, agency, arbitrator,
court
or
tribunal against it, or that would affect its ability to perform its obligations
under this Agreement.
3.9.
Record Keeping. RHINO shall maintain complete and accurate records for
such periods
as may be required by applicable law of all RT/RREVs sold to RRV, and RRV and
its representatives
and auditors for regulatory certification and the like, shall have full access
during
business hours to all such records. Such access shall not be unreasonably
withheld.
3.10.
Indemnification. In the performance of this agreement, RHINO shall take
all reasonably
necessary precautions to prevent the occurrence of any injury (including death)
of any
persons, or any damage to any property arising out of acts or omissions of
RHINO’s agents,
employees, sub-contractors or Related Persons, relating to RHINO’s obligations
hereunder
and, except to the extent that any such injury or damage is due directly and
solely to
RRV’s
negligence or intentional bad acts, shall indemnify, defend, protect and hold
RRV, its
Affiliates and/or its Related Persons harmless for, from and against any and
all
costs, losses,
expenses, damages, claims, suits or any liability whatsoever, including
attorneys’ and experts’
fees, arising out of any acts or omissions of RHINO, its Affiliates and/or
Related Persons,
including strict liability. RRV shall indemnify, defend, protect and hold RHINO,
its Affiliates
and Related Persons harmless for, from and against any and all costs, losses,
expenses,
damages, claims, suits or any liability whatsoever, including attorneys’ and
experts’ fees,
arising out of any acts or omissions of RRV, its Affiliates and/or Related
Persons, including
strict liability.
3.11.
RT/RREV Recalls. In the event of any recall of any RT/RREV as a result of
any government
investigation or substantial and serious customer complaints or significant
numbers
of product defects, the Parties will cooperate fully with each other in
effecting such recall.
RHINO shall first exert its reasonable best efforts to promptly replace any
recalled RT/RREVs
with RT/RREVs of the same type and number. In the event RHINO determines in
good
faith that replacing the RT/RREVs is commercially unreasonable, RHINO shall
refund to
RRV
the price of the RT/RREVs. RHINO is responsible for any cost associated with
the
manufacture
of the product that doesn’t meet the written Specifications.
4.
FORECASTS, ORDERS AND
SHIPMENTS.
4.1.
Forecasts. RRV will provide RHINO with monthly Forecasts concerning
anticipated future
orders of RT/RREVs within the next succeeding six (6) months. The Forecasts
will
be good-faith
estimates of RRV’s projected purchases of RT/RREVs, and RRV shall have no
liability
to RHINO for failure to purchase the quantities of RT/RREVs projected during
any
Forecast.
RHINO will have no liability to RRV for failure to manufacture any quantities
forecasted.
13
4.2.
Orders. All of RRV’s orders of RT/RREVs shall be assembled, fabricated
and manufactured
by RHINO at its principal offices set forth on the signature page of this
Agreement
during the Term hereof, as the same may be extended from time to time. RRV
shall
issue Purchase Orders for its requirements of RT/RREVs at least one hundred
and
twenty
(120) days prior to shipment(s) specified in such Purchase Orders. RHINO shall
deliver
the completed RT/RREVs within one hundred and twenty (120) days of its receipt
of any
Purchase Orders. RRV may submit Purchase Orders for RT/RREVs by facsimile or
email, followed
by written confirmation by regular first class mail. Each Purchase Order shall
include
the specific quantity of RT/RREVs. All orders shall be shipped to RRV’s
principal place
of
business set forth in this Agreement. Within five (5) business days following
the receipt
of an order, RHINO shall notify RRV of any anticipated problems in fulfilling
that order.
Failure to provide such notice shall conclusively be deemed an acceptance of
such Purchase
Order. Such notification may be given verbally by telephone to the Purchasing
Department
at RRV, but if given verbally must be followed by written confirmation by email,
fax
or
regular first class mail. To the extent that the terms and conditions on any
Purchase
Order or on any quotation, order acknowledgment or invoice are in conflict
with
the provisions
of this Agreement, the provisions of this Agreement shall be controlling unless
specifically
agreed to the contrary in writing by the relevant Parties hereto. To the extent
that the
terms
and conditions on any Purchase Order are in conflict with the terms and
conditions of
RHINO’s order acknowledgment or invoice, the provisions of such Purchase Order
shall be controlling.
In the event of any discrepancy between any Purchase Order accepted by RHINO
and
this
Agreement, the terms of this Agreement shall govern.
4.3.
Initial Order. Upon the complete execution of this Agreement, and subject
to the terms,
covenants and conditions contained herein (including, but not limited to, any
conditions
precedent or subsequent), RRV shall concurrently with the execution of this
Agreement
by all Parties place an initial order for ten (10) RT/RREVs at
a per unit price in the
amount set forth in Exhibit D to this Agreement (the “Price”).
4.4.
Non-Conforming Goods. RRV may reject (and shall not be obligated to pay
for) any RT/RREVs
that are defective or fail to conform in all material respects to the Exhibit
A
Specifications
and said RT/RREVs shall be returned to RHINO for replacement. RRV reserves
the right to inspect any RT/RREVs before paying for them, without regard to
the
manner
of
shipment or the fact that the goods may be shipped by RHINO under
reservation.
4.4
(a)
Notice of Rejection/Revocation of Acceptance. RRV shall notify RHINO of
any
RT/RREVs delivered to RRV that are being rejected as defective or as
nonconforming within
five (5) business days of delivery to RRV and any rejections received
by or given to RHINO after that date shall be null and void. Any such
notice:
(i) shall be in writing; (ii) shall specify the shipment of RT/RREVs being
rejected
and the vehicle identification numbers of any rejected RT/RREVs; and (iii)
shall
specify that such RT/RREVs are defective or fail to conform to the applicable
product
Specifications at the time of their delivery and detail with reasonable
precision
how such RT/RREVs fail to conform to Specifications or are otherwise
defective.
RRV will also request a Return Authorization Number so that the RT/RREVs
can be reworked, replaced or credited. Nothing in this Section shall limit
or
impair
RRV’s right to revoke any acceptance of any RT/RREVs, but the form of
any
such
notice of revocation of acceptance shall be as set forth in this
subsection.
14
4.4
(b)
Handling of Rejected RT/RREVs. In the case of any RT/RREVs rejected under
subsection (a) RHINO shall pay the cost of return shipment. RHINO will
replace
all such defective and non-conforming RT/RREVs thereof. If RHINO determines
in good faith that it is commercially unreasonable to replace the RT/RREVs,
RHINO shall refund to RRV the price of the RT/RREVs, if paid.
4.4
(c)
Complaints. RRV shall promptly refer to RHINO for review and evaluation
any
complaints, demands or notices received by RRV by or on behalf of a customer
or
any
Third Party.
4.5.
Shipment and Delivery.
4.5
(a)
Shipment F.O.B. RRV’s Place of Business. RHINO will ship RT/RREVs in
accordance
with the shipping instructions provided by RRV’s Purchase Order. All
shipments
will be made F.O.B RRV’s principal place of business.
4.5
(b)
Delivery Date. Subject to the terms of §4.2 [regarding “Orders”], RHINO will
ship
RT/RREVs so that they are delivered on RRV’s due-at-dock date specified in
each
Purchase Order (“Delivery Date”). Deliveries will be considered on-time if they
are
made
no more than five (5) Business Days earlier than the Delivery Date and
three
(3)
business days after the Delivery Date. Partial deliveries are permitted when
authorized
by RRV’s Purchasing Department. RHINO is not responsible for delays in
shipping
once such deliveries are placed with a reputable carrier.
4.5
(c)
Governmental Approvals. The ultimate shipment of orders to RRV shall be
subject
to the right and ability of RHINO to make such sales and obtain required
licenses
and permits, under all decrees, statutes, rules and regulations of any
government
within the Territory and any agencies or instrumentalities thereof presently
in effect or which may be in effect. RRV hereby agrees:
(i)
to
assist RHINO in obtaining any such required licenses or permits by
supplying such documentation or information as may be requested by RHINO;
(ii)
to
comply with such decrees, statutes, rules and regulations of the government
of any government within the Territory and any agencies or instrumentalities
thereof;
(iii)
to
maintain the necessary records to comply with such decrees, statutes,
rules and regulations;
(iv)
not
to re-export any RT/RREVs except in compliance with such decrees,
statutes, rules and regulations;
(v)
to
obtain all governmental approvals and licenses necessary to import
the RT/RREVs into the Territory;
(vi)
not
to sell, transfer or otherwise dispose of the RT/RREVs in violation
of the export laws of any government within the Territory; and
15
(vii)
to
indemnify, defend, protect and hold harmless RHINO for, from and
against any and all fines, damages, losses, costs and expenses (including
reasonable attorneys’ fees) incurred by RHINO as a result of any
breach of this subsection by RRV or any of RRV’s customers
4.5
(d)
Risk of Loss. Title and risk of loss will pass to RRV upon delivery of the
RT/RREVs
to RRVs principal place of business set forth in this Agreement.
4.6.
Invoicing and Payment. All amounts due and payable with respect to any
RT/RREV delivered
by RHINO in accordance with the preceding subsection and accepted by RRV shall
be
paid
in full within thirty (30) days after RRV’s receipt of an invoice covering such
RT/RREV.
All such amounts shall be paid by wire transfer, to such bank or account as
RHINO
may
from time to time designate in writing. Whenever any amount hereunder is due
on
a day
which is not a day on which banks in Las Vegas, Nevada are open for business
(a
“Business
Day”), such amount shall be paid on the next such Business Day. Amounts
hereunder
shall be considered to be paid as of the day on which funds are received by
RHINO’s
bank.
4.7.
Interest. All amounts due and owing to RHINO hereunder but not paid by
RRV on the
due
date thereof shall bear interest (in USD) at the rate of ten percent (10%)
per
annum, simple
interest. Such interest shall accrue on the balance of unpaid amounts from
time
to time outstanding
from the date on which portions of such amounts become due and owing until
payment
thereof in full.
5.
PRICING.
5.1.
Price. For the initial Term of this Agreement, the RHINO shall charge RRV
for each RT/RREV
purchased by RRV the unit Price set forth on Exhibit D. The Price is exclusive
of any
state
and local sales and use taxes, but inclusive of shipping, freight and insurance
charges.
Any late payments shall bear interest equal to ten percent (10%) per annum,
plus
all reasonable
costs, fees and expenses of collection, including arbitration and/or court
costs
and reasonable
attorneys’ fees, experts’ fees and expenses, including any ‘Costs and Fees’
described
in §13.2.
5.2.
Price Increase/Decrease. After the initial Term expires, RHINO may
increase/decrease
the Price twice a year based on increases or decreases in RHINO’s actual
costs
of
labor, materials and other input costs. The Price increases/decreases will
be
submitted to
RRV in
January for implementation in April or July for implementation in October (as
the case
may
be) of said year. Reasonable written documentation must be provided for all
price increases.
Requested increases or decreases cannot exceed five per cent (5%) per year
unless RHINO’s
actual costs exceed such figure. RRV reserves the right to audit any price
increase at
its
sole cost at its sole discretion and RHINO will negotiate in good faith to
arrive at pricing adjustments
due to changes in design, components, or component sourcing.
5.3.
Disparity in Price Quote to Governmental Agency and Later Price Increase. Due
to
the
nature of government contracts and procurement, Prices for RT/RREVs quoted
to
Governmental
Agencies may be relied on them for several weeks or months before orders for
RT/RREVs
are placed by them. Moreover, once a Price quote is given to a Governmental
Agency
for an RT/RREV it is sometimes practically impossible to change it due to Price
increases
or the like, especially during the procurement cycle. Accordingly, if an actual
Price
16
increase
is first announced by RHINO, or first occurs, after a Price quote is given
by
RRV to a
Governmental Agency then RRV and RHINO shall equally ‘split’ between them any
loss occasioned
by any sale to such Governmental Agency that may occur thereafter based upon
such
circumstances.
5.4.
Price Reduction. RHINO and RRV shall work together to identify and reduce
costs in the
manufacture, fabrication and assembly of the RT/RREVs. At least annually by
the
end of the
third
quarter (i.e., by September 30th
of each year), RHINO
shall use its reasonable efforts to
furnish RRV with an analysis of potential cost savings which could reasonably
be
anticipated
by changes in the following areas: tooling, raw materials, component parts,
methods
of production, testing and inspection, packaging and special handling, assembly
and shipping,
third party vendors, audits, product design and specification, and quantity
of
product purchased,
but such savings shall not include relocation of plants, purchases of new
equipment
or renegotiation of existing agreements with vendors and employees (“Value
Engineering”).
Upon RRV’s request to be made no more than once per year, RHINO shall
prepare
an alternate quote that incorporates RRV’s recommendations for cost
savings.
5.5.Validation
Costs. RHINO will pay any charges, relating to the validation of any process
or
procedure necessary to manufacture, fabricate or assemble the RT/RREVs that
are
considered
reasonable and normal for the validation of subject process(es) or
procedure(s).
6.
MANUFACTURER’S OTHER OBLIGATIONS.
6.1.
Marketing and Technical Assistance. RHINO shall provide RRV, without
charge, with
such
marketing and technical assistance as RHINO may in its discretion consider
necessary
to assist with the promotion of the RT/RREVs.
6.2.
Training. RHINO shall provide training to RRV’s personnel at RHINO’s
offices or designated
facility in connection with the marketing and sale maintenance of the RT/RREVs.
RHINO
shall designate maintenance and support personnel to assist RRV in its sole
discretion.
All expenses associated with training will be at the sole cost of
RRV.
7.
PROPERTY RIGHTS.
7.1.
Disclaimer of Intellectual Property Rights or Confidential Information
in
RT/RREVs.
7.1
(a)
No Intellectual Property Rights in any RT/RREV. All of the Parties to this
Agreement
acknowledge and agree that
AEP, RRV and RHINO are “Joint Owners”2and
“Joint Inventors”3with respect
to the
design, invention, testing and development of
the
Prototype RT/RREV and any RT/RREV described in the Specifications within
the
meaning of Title 35 of the United States Code. However, none of the
Parties
2
35 U.S.C. 262 provides:
“Joint
owners. In the absence of any agreement to the contrary, each of the joint
owners of a patent may make, use, offer to sell, or sell the patented invention
within the United States, or import the patented invention into the United
States, without the consent of and without accounting to the other
owners.”
3
35 U.S.C. 116 provides:
“Inventors.
When an invention is made by two or more persons jointly, they shall apply
for
patent jointly and each make the required oath, except as otherwise provided
in
this title. Inventors may apply for a patent jointly even though (1) they did
not physically work together or at the same time, (2) each did not make the
same
type or amount of contribution, or (3) each did not make a contribution to
the
subject matter of every claim of the patent.”
17
presently
believes or expects that either the whole and/or any part of the RT/RREV,
as
currently shown in the Exhibit A Specifications, is subject to any Intellectual
Property
Rights of any of the Parties, nor do any of the Parties believe or expect that
the
RT/RREV, as currently shown in the Specifications, could be subject to any
Intellectual
Property Rights of any of the Parties given the nature of its design,
invention,
testing and/or development. Further, the Parties acknowledge and agree
that
the
terms ‘rough terrain,’ ‘rough terrain vehicle,’ ‘RTV,’ ‘rapid response
emergency
vehicle,’ and/or ‘rapid response vehicle’ (or words of similar import) so
directly
and immediately convey some knowledge of the characteristics of the RT/RREV,
and are otherwise so descriptive and generic, as to render those terms
unavailable
for Federal or State trademark or trade name designations or protection4. Accordingly,
the Parties disclaim and renounce vis-à-vis each other any right, title,
claim
or
interest in or to any Intellectual Property Rights pertaining to the
RT/RREVs;
provided, however, that nothing in this Section shall affect or impair the
right
of
any Party in or to such Party’s Trademarks.
7.1
(b)
Limited Nature of Confidential Information. All Parties to this Agreement
presently
and jointly have and claim as ‘Confidential Information’ the idea, notion or
concept
of a ‘rough terrain, rapid response emergency vehicle,’ as (to the Parties’
current
knowledge) no such vehicle currently exists within, or is used by, any
Governmental
Agency5.
Moreover, all Parties to this Agreement presently and jointly have
and
claim as ‘Confidential Information’ the idea, notion or concept of a ‘rough
terrain,
rapid response emergency vehicle’ set forth in the Specifications. However,
all
Parties to this Agreement realize that these ideas, notions or concepts of
a
‘rough terrain,
rapid response emergency vehicle’ will generally cease to be ‘Confidential
Information’
when one or more RT/RREVs (including the Prototype RT/RREV) are first
displayed in the public domain, and that it would be relatively simple for
any
competitor
to decompile or reverse engineer the same once it is in the public domain
as
the
means, methods and component parts for manufacturing, assembling and
fabricating
the same are common knowledge and already in the public domain. Accordingly,
except for Confidential Information that any Party may hereafter first
develop
or acquire (e.g., customer identities and lists, the particular demands and
ordering
habits of various Governmental Agencies, the price points for sales to
various
Governmental Agencies, etc.) the Parties disclaim and renounce vis-à-vis
each
other any right, title, claim or interest in or to any Confidential Information
pertaining
to the design, engineering, manufacture, fabrication, assembly, development
and/or creation of the Prototype RT/RREV and or any RT/RREV described
in the Specifications.
7.1
(c)
Effect of Termination of this Agreement. Upon the termination of this
Agreement
for any reason, any Party to this Agreement may fully and freely participate
in the designing, engineering, manufacturing, fabricating, assembling,
developing,
marketing and and/or distributing of RT/RREVs to any Person anywhere
in
the
world without restraint of any kind and without violating any Intellectual
Property
Rights or Confidential Information of any other Party to this
Agreement.
4
Indeed, RHINO twice sought to obtain trademark protection for similar terms
with
the United States Patent and Trademark Office (the “PTO”), but was unable to
obtain it for the reasons stated in the records of that office. See PTO files
for Serial numbers 78/772002 and 78/771976.
5
Except, perhaps, by the United States military, but then only with respect
to
combat operations.
18
8.
PRODUCT LIABILITY CLAIMS/LITIGATION.
8.1.
RT/RREV Liability Claims. Each Party shall notify each other party
promptly in writing
of any product liability claim or action brought with respect to any RT/RREV(s)
based
on
alleged defects in the manufacture, fabrication, assembly or labeling of the
RT/RREVs
or other adverse claim regarding the RT/RREVs. RHINO shall be responsible for,
and
shall
indemnify, defend, protect and hold RRV and its Affiliates and Related Persons
harmless
for, from and against any and all such claims, demands, causes of action,
losses, liabilities,
damages, judgments, costs and expenses (including, without limitation,
reasonable attorneys’
and experts’ fees and litigation costs) arising out of or relating to the
manufacture, fabrication,
assembly or labeling of the RT/RREVs. RRV shall be responsible for, and shall
indemnify,
defend, protect and hold RHINO and its Affiliates and Related Persons harmless
for,
from
and against any and all such claims, demands, causes of action, losses,
liabilities, damages,
judgments, costs and expenses (including, without limitation, reasonable
attorneys’ and
experts’ fees and litigation costs) arising out of or relating to damage or
liability caused by
any
after market installation of any Accessory on (or reconfiguration or misuse
by
RRV of)
any
RT/RREVs, or any negligence or intentional bad acts of RRV or Related Persons.
Nothing
in this Section shall be construed as requiring any Party to conduct and/or
assume any
other
Party’s defense against any claim or action described herein if such claim or
action is
based
on the negligent conduct, acts or omissions or intentional wrongdoing of the
other Party.
The provisions of this subsection shall survive any termination of this
Agreement, whether
upon expiration or termination by either party.
8.2.
Notice of Claims. Each Party to this Agreement shall promptly notify each
other, in writing,
of any potential or actual litigation or known governmental activity relating
to
the RT/RREVs
based on any alleged design related deficiencies of the RT/RREVs, or other
adverse
claim regarding the design or engineering of the RT/RREVs. Since AEP, RRV and
RHINO
jointly developed the RT/RREVs they shall all be responsible to defend and
respond to
all
such claims, demands, causes of action, losses, liabilities, damages, judgments,
costs and
expenses, including, without limitation, reasonable attorney’s fees and
litigation costs, arising
out of or relating to the design of this RT/RREVs. The provisions of this
subsection shall
survive any termination of this Agreement, whether upon expiration or
termination by either
party.
9.
NONDISCLOSURE.
9.1.
Preservation of Confidential Information.
9.1
(a)
Each Party recognizes the importance to the other Party of that Party’s
Confidential
Information, and such information is critical to the business of the
disclosing
Party. Each Party recognizes that neither Party would enter into this
Agreement
without assurance that its Confidential Information and the value thereof
will
be
protected as provided in this Article 9 and elsewhere in this
Agreement.
9.1
(b)
All Confidential Information shall remain the property of the disclosing Party.
The
receiving Party shall hold in strict confidence the disclosing Party’s
Confidential Information
and with no less than the same degree of care that it holds its own confidential
and proprietary information and it will take all reasonable precautions to
protect
such Confidential Information. The receiving Party shall not disclose such
information
to a third Party without the prior written approval of the disclosing
Party.
19
The
receiving Party will use the disclosing Party’s Confidential Information only
for the
purposes and under the circumstances provided in this Agreement.
9.1
(c)
Upon any termination of this Agreement, each Party will return the other
Party’s
Confidential Information and all documents or media containing any such
Confidential
Information to the other Party, except that the receiving Party has the
right
to
keep one copy of such information for legal purposes (which shall remain
subject
to the confidentiality provisions set forth herein), including, but not limited
to, copies
of
all documentation required by the EPA and/or CARB.
9.1
(d)
Each Party acknowledges and agrees that the other Party shall be entitled to
appropriate
equitable relief in addition to whatever remedies it may have at law in the
event
of
a breach by the other Party of its covenants contained in this Article 9. The
foregoing
provision is in addition to, and not in limitation of, any and all remedies
at
law,
in
equity or otherwise, that the non-breaching Party may have upon the other
Party’s
breach of this Agreement.
9.2.
Third Party Request for Information. Except as otherwise provided in this
Agreement, any
Party
shall immediately notify the other Party of any private or governmental request
for Confidential
Information or any other information or documents relating to the RT/RREVs
or
this
Agreement. Each Party shall have the right to participate in the other Party’s
response to any
such
request. If a Party receives any legal instrument requiring the production
of
data, work
papers, reports, or other materials relating to this Agreement, that Party
shall:
9.2
(a)
Give the other party, if possible, the opportunity to participate in quashing,
modifying
or otherwise responding to any compulsory process in an appropriate and
timely
manner; and
9.2
(b)
Cooperate fully with the other party’s efforts to narrow the scope of any such
compulsory
process, to obtain a protective order limiting the use or disclosure of the
information
sought, or in any other lawful way to obtain continued protection of the
Confidential
Information.
9.3.
Reporting Loss, Theft or Misappropriation. If either party becomes aware
of the loss, theft
or
misappropriation of Confidential Information which is in its possession or
control, it shall
notify the other party in writing within ten (10) days of its discovery of
such
loss, theft or
misappropriation.
9.4.
Survival of Duties. The rights and duties of this Article 9 shall survive
the termination of
this
Agreement, whether upon expiration or termination by either party.
10.
MUTUAL WARRANTIES AND REPRESENTATIONS.
10.1.
Corporate Standing; Authority. Each Party to this Agreement represents
and warrants to
each
other Party that it is duly organized, validly existing and in good standing
under the laws
of
the State in which incorporated, and that it has full corporate power and
authority to carry
on
the business presently being conducted by it and to enter into and to perform
its obligations
under this Agreement.
10.2.
Due Authorization. Each Party to this Agreement represents and warrants
to each other
Party that it has taken all action necessary to authorize the execution and
delivery of this
20
Agreement
and the performance of each Party’s respective obligations hereunder. Each
Party’s
officer or manager (as the case may be) executing this Agreement on its behalf
has the legal
power, right and authority to bind the party to the terms and conditions of
this
Agreement,
and when he or she executes and delivers this Agreement and any instruments
contemplated
herein, he or she will have the power, right and authority to bind the party
thereto.
10.3.
No Violation. Each Party to this Agreement represents and warrants to
each other Party
that the execution, delivery and performance of and compliance with this
Agreement has
not
resulted, and to the best of its knowledge will not result, in any violation
of,
or be in conflict
with, or constitute a material default under, any contract, indenture, mortgage,
agreement,
instrument, franchise, permit, license, judgment, decree, order, statute, rule
or regulation
applicable to it.
11.
TERM AND TERMINATION.
11.1.
RRV’s Termination for RHINO’s Default. RRV may, by written notice to
RHINO, terminate
this Agreement in whole or in part for default if:
11.1
(a)
RHINO fails to perform in accordance with any of the requirements of
this
Agreement or fails to make sufficient progress so as to endanger performance
of
this
agreement after thirty (30) days written notice and opportunity to correct
any
such
non-performance, which thirty (30) day period shall be extended if RHINO is
reasonably
and in good faith diligently prosecuting a cure; or
11.1
(b)
The occurrence of any condition subsequent in RRV’s favor set forth in
§14.3;
or
11.1
(c)
Any such termination for default will be at no cost to RRV except for
completed
RT/RREVs delivered and accepted by RRV, prior to said termination.
11.2.
RHINO’s Termination for RRV’s Default. RHINO may, by written notice to
RRV, terminate
this Agreement in whole or in part for default if RRV:
11.2
(a)
Fails to timely meet its monetary and other payment obligations to RHINO
under this Agreement after ten (10) days prior written notice and opportunity
to
correct any such non-performance;
11.2
(b)
Fails to perform in accordance with any of the non-monetary requirements
of this Agreement after thirty (30) days prior written notice and opportunity
to correct any such non-performance, which thirty (30) day period shall
be
extended if RRV is reasonably and in good faith diligently prosecuting a cure;
or
11.2
(c)
The occurrence of any condition subsequent in RHINO’s favor set forth
in
§14.4.
11.3.
Termination by Either Party. This Agreement will terminate automatically,
and without
notice, on the occurrence of any of the following events:
21
11.3
(a)
An assignment for the benefit of creditors by any Party; application by
any
Party
for, or consent to the appointment of, a receiver with respect to any
substantial
part of the Party’s assets; appointment of a receiver; or an attachment or
execution
levied with respect to any substantial part of the assets of any Party if the
appointment
is not vacated, or the attachment or execution is not released, within 30
calendar
days after the date of appointment or levy; to the extent enforceable, any
Party
becomes insolvent or the subject of proceedings under any law relating to
bankruptcy
or the relief of debtors or admits its inability to pay its debts as they
become
due; or
11.3
(b)
Commitment by any Party, or any principal of any Party, of any crime
involving
moral turpitude, dishonesty, fraud, or other act that adversely affects the
business
reputation of such Party or (by association) the other Parties to this
Agreement.
11.4.
Termination Rights of Both Parties. If termination is the result of
events other than default,
in no event will the terminating party be liable to the other for any costs,
expenses or damages
arising from the act of terminating this Agreement according to its terms.
RHINO
would
be
responsible to complete all outstanding Purchase Orders for RT/RREVs ordered
by
RRV,
which orders were placed in accordance with any applicable Purchase Orders
accepted by
RHINO;
provided, however, that if RHINO receives any RRV Purchase Order and fails
to
reject
the same in by written notice to RRV within five (5) business days of its
receipt thereof then
such
Purchase Order shall conclusively be deemed accepted by RHINO. Any rejection
of
any
RRV
Purchase Order by RHINO shall be accompanied by a written explanation of the
grounds
therefore with sufficient detail to permit RRV to cure any perceived defect
in
its Purchase
Order, if applicable. RRV would be responsible to purchase any RT/RREVs that
were
the
subject of outstanding Purchase Orders to RHINO.
11.5.
Obligations upon Termination. Termination or expiration of this
Agreement, in whole or
in
part, shall be without prejudice to:
11.5
(a)
the right of any Party to receive upon its request all payments accrued and
unpaid,
or RT/RREVs ordered and not delivered, at the effective date of such
expiration
or termination;
11.5
(b)
the remedy of either Party with respect to any previous breach of any of
the
representations, warranties or covenants herein contained;
11.5
(c)
any rights to indemnification set forth herein; and
11.5
(d)
any other provisions hereof which expressly or necessarily call for performance
after such expiration or termination.
11.6.
Survival. Notwithstanding the termination of the Agreement, the confidentiality
provisions
under Article 9 shall survive and continue under their own terms.
12.
ASSIGNMENT OF AEP’S INTEREST IN THE RT/RREVs TO RRV. AEP hereby assigns
to
RRV
all of its right, title, estate, claims, liens or other interests in or to
the
RT/RREV Prototype
and RT/RREVs, including (but not limited to) its right as a “Joint Owner” and/or
“Inventor”
of the RT/RREV as enumerated in §7, and its right to recoup any Development
Costs
22
and/or
to
receive payment from RHINO of any Development Cost Amounts as enumerated in
§2.11,
and RRV hereby accepts the same.
13.
DISPUTE RESOLUTION. Any disputes between the parties shall be resolved as
follows:
13.1.
Initial Mediation of Disputes. If any claim, controversy or dispute
between all or any of
the
Parties and/or the Parties’ Affiliates and/or Related Persons (who are third
party beneficiaries
to the provisions of this §13) arising out of or relating to this Agreement
(including
any Exhibit hereto), the negotiation or performance of it, or the relationships,
rights or
duties
created by it (whether arising in tort, contract, statute or otherwise - a
“Dispute”) can not
be
resolved through negotiation, then the parties agree to try, in good faith,
to
settle the Dispute
by non-binding mediation in Las Vegas, Nevada administered by the American
Arbitration
Association under its Commercial Mediation Rules, and the parties shall equally
share
the
cost thereof; provided, however, that nothing in this subparagraph shall prevent
any party
from commencing any appropriate arbitration or legal action simultaneously
with
any such
request for mediation; and provided, further, that no right to a prompt or
speedy arbitration
hearing, provisional remedy or trial shall be delayed or postponed because
of
any party’s
‘unavailability,’ unjustified delay or refusal to participate in such a
mediation.
13.2.
Arbitration of Disputes. The Parties acknowledge that this Agreement
evidences a transaction
involving interstate commerce. Subject to the provisions of the next subsection
of this
section, if any Dispute between the Parties and/or the Parties’ Affiliates
and/or the Related
Persons can not be resolved through non-binding mediation in accordance with
the
preceding
subsection then it shall be settled by binding arbitration under Title 9 of
the
United States
Code (the “Federal Arbitration Act” or “FAA”), which shall be administered by
the American
Arbitration Association (the “AAA”) under its then current Commercial
Arbitration Rules
(the “AAA Rules”), and judgment on the award rendered by the arbitrator(s) may
be entered
in any court having jurisdiction thereof. The arbitrator(s) shall liberally
construe the term
“Dispute” so as to permit or allow the arbitration of any imaginable disputes
between the Parties.
In addition to any other exchange of information permitted by the Commercial
Arbitration
Rules, the Parties shall exchange a “Disclosure Statement” as required by
Arizona Rule
of
Civil Procedure 26.1. The arbitrator(s), consistent with the purposes of
arbitration to prevent
or avoid unnecessary legal fees and costs of dispute resolution, shall permit
or
allow the
Parties reasonable discovery (including depositions, interrogatories and/or
requests to produce
documents or inspect property) appropriate to the character, nature and extent
of the Parties’
Dispute. The arbitrator(s) shall award to the prevailing Party, if any (as
determined by the
arbitrator(s)), all of its Costs and Fees. “Costs and Fees” mean all reasonable
pre-award expenses
of the arbitration, including the arbitrators’ fees, AAA administrative and
filing fees, travel
expenses and hotel accommodations, out-of-pocket expenses such as copying and
telephone,
court costs, witness fees, and attorneys’ and experts’ fees;
13.3.
Certain Legal Actions and Lawsuits Permitted. The provisions of the
immediately preceding
subsection shall not prevent any of the following matters, claims, controversies
or disputes
from being commenced pending the outcome of any arbitration of the dispute
required
by this paragraph and/or prosecuted without arbitration (if applicable) in
any
court of competent
jurisdiction:
13.3
(a)
Any action to obtain any injunction relating to a Party’s Intellectual
Property
Rights, Trademarks and/or Confidential Information; provided, however,
that
such action shall be promptly stayed upon the issuance of any
preliminary
23
injunction
concerning the subject matter of such an action so that an arbitration
can
proceed thereafter to determine the merits of the same. No such action
in any court
shall be construed as a waiver of the arbitration provisions of this §13, but
(i) any
arbitration claim for a determination of the merits of any such claims for
any
permanent
injunctive or equitable relief concerning a Party’s Intellectual Property
Rights,
Trademarks and/or Confidential Information shall be governed by the expedited
time deadlines for arbitration administration, the appointment of the
arbitrator(s),
the scheduling of the hearing and the rendering of an arbitration award
(but
excluding any such Rules relating to the compensation of the arbitrator(s))
imposed
by the Expedited Procedures of the AAA Rules, (ii) the arbitrator(s) shall
be
(a)
intellectual property and/or commercial attorney(s) and/or (a) retired judge(s)
familiar
with such matters and claims that are available to preside over the arbitration
proceeding
subject to such expedited time limitations and (iii) if necessary to
promptly
determine the issue a Party’s Intellectual Property Rights, Trademarks
and/or
Confidential Information rights, including any right to any permanent
injunction,
the arbitrator(s) shall bifurcate the hearing on the issue of a Party’s right to
injunctive
or equitable relief from any other, unrelated damages claims asserted in the
arbitration
proceeding and promptly determine such Party’s claims for injunctive or
equitable
relief (with all other claims for damages or otherwise to be determined in
the
time
and manner required by the normal AAA Rules);
13.3
(b)
Any action concerning any alleged patent or latent defect in any RT/RREV(s)
where such action requires the joinder of a third person that is not a
party
to
this Agreement for the full and fair adjudication of the claim and to avoid
potentially
disparate rulings on such claims in arbitration and/or court proceedings
(e.g.,
a
products liability action or one for bodily injury, property damage and/or
personal
injury brought by a third person) is NOT subject to arbitration hereunder
unless
all third persons agree to join in the arbitration provisions of this
Agreement;
13.3
(c)
Any matter that is within the jurisdictional limits of the Small Claims or
Justice
Courts of the State of Arizona is NOT subject to arbitration
hereunder.
13.4.
Jurisdiction & Venue. The jurisdiction and venue for any proceeding
described in this §13
shall
be as follows:
13.4
(a)
Mediation. For any mediation proceeding arising out of §13.1, each Party
(and
each
Party’s Affiliate and Related Person availing himself/herself/itself to the
provisions
of this §13 as a third party beneficiary hereunder) agrees that the sole and
exclusive
venue for mediation sessions and proceedings for Dispute resolution under
this
Agreement shall be in Las Vegas, Nevada, and all Parties consent to jurisdiction
in
that
venue for purposes of any mediation proceeding to resolve (or attempt to
resolve)
any Disputes between them by mediation;
13.4
(b)
Arbitration. For any arbitration proceeding arising out of §13.2, each
Party
(and each Party’s Affiliate and Related Person availing himself/herself/itself
to the
provisions of this §13 as a third party beneficiary hereunder) agrees that the
sole and
exclusive jurisdictions and venues for arbitration hearings and proceedings
for
Dispute
resolution under §13.2 of this Agreement shall be divided by the arbitrator(s)
equally
between Henderson, Nevada and Phoenix, Arizona, so as to ‘split’ any
inconvenience
occasioned by the Parties in participating in any such arbitration
24
proceedings,
and all Parties (and their Affiliates and Related Persons availing themselves
to the provisions of this §13 as a third party beneficiaries hereunder)
consent
to those exclusive jurisdictions and venues for purposes of resolving any
Disputes
between them; and
13.4
(c)
Litigation. For lawsuits and legal actions arising out of and/or permitted
under
§13.3, each Party (and each Party’s Affiliate and Related Person availing
himself/herself/itself
to the provisions of this §13 as a third party beneficiary hereunder)
agrees that the sole and exclusive jurisdiction and venue for lawsuits, legal
actions
and proceedings related thereto for Dispute resolution under this Agreement
shall
be
in Phoenix, Arizona, and all Parties (and their Affiliates and Related Persons
availing
themselves to the provisions of this §13 as a third party beneficiaries
hereunder)
consent to that exclusive jurisdiction and venue for purposes of resolving
any
Disputes between them.
13.5.
Waiver of Jury Trial. THE PARTIES (AND THEIR AFFILIATES AND RELATED
PERSONS AVAILING THEMSELVES TO THE PROVISIONS OF THIS §13 AS
A
THIRD PARTY BENEFICIARIES HEREUNDER) HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING
ANY DISPUTE ARISING OUT OF THIS AGREEMENT THAT IS SUBJECT
TO THE ARBITRATION PROVISIONS HEREOF.
13.6.
Limitation on Powers of Arbitrator(s) and Courts to Award
Damages.
13.6
(a)
No Authority to Award Certain Damages. The arbitrator(s) shall have no
authority
to (and shall not) award any of the following damages in any arbitration
initiated
under this section, nor shall any court render any judgment against any of
the
Parties
for any:
(i)
Punitive Damages;
(ii)
Consequential and/or Special Damages; or
(iii)
Other damages not measured by the prevailing Party’s actual damages,
except as may be required or permitted by statute.
13.6
(b)
Limit on Breach of Contract/Warranty Damages. In no event shall RHINO’s
liability hereunder for any breach of its duty to manufacture, assemble,
fabricate,
sell, warrant and/or deliver any RT/RREV to RRV exceed the purchase price
of
any defective or non-conforming RT/RREV vehicle sold hereunder, together
with
related interest and Costs and Fees (as defined in §13.2). In no event shall
RRV’s
liability hereunder for any breach of its duty to purchase and pay for any
RT/RREV
delivered to (and accepted by) RRV from RHINO exceed the unpaid purchase
price of any RT/RREV(s), together with related interest and Costs and Fees
(as
defined in §13.2).
13.6
(c)
Limit on Interest Damages. Any monetary award in any arbitration or litigation
initiated under this section shall include, if allowed by applicable law,
preaward/pre-judgment
interest at the rate of ten percent (10%) from the time of the act or
acts
giving rise to the award.
25
14.
CONDITIONS PRECEDENT/SUBSEQUENT AFFECTING AGREEMENT.
14.1.
Conditions Precedent in Favor of RRV. The effectiveness, existence and
validity of this
Agreement is contingent upon the satisfaction or waiver by December 14, 2007
(the “Contingency
Date”) of each and every one of the following contingencies precedent in favor
of
RRV
and AEP, all of which are for the benefit of, and may be waived by, RRV and
AEP,
and
may
be elsewhere herein referred to as “RRV’s and AEP’s Contingencies:”
14.1
(a)
Financing Contingency. That RHINO shall have obtained, before the Contingency
Date, a written commitment for a loan or letter of credit from a lender or
lenders
of its choice in the amount of at least Two Hundred and Fifty Thousand
Dollars
($250,000) (the “RHINO Financing”), to be used solely for the provision
of work,
labor and materials for the manufacture, assembly, fabrication and shipment
of
the
RT/RREVs, on such terms as RHINO and Redwood Consultants, L.L.C. shall
agree
in
their sole and absolute discretion. This RHINO Financing shall remain in full
force
and
effect during the Term of this Agreement. RHINO agrees to use commercially
reasonable efforts to obtain such a loan commitment or letter of credit.
On
or
before the Contingency Date, RHINO must deliver written notice to RRV
indicating
whether the contingency set forth in this subsection has been met, and
provide
RRV with the documentation effecting the same, which RRV shall treat as
RHINO’s
Confidential Information. If RRV fails to receive written notice sufficient
to
satisfy this condition precedent by the Contingency Date then this Agreement
shall not
become effective and shall be null and void ab initio. If this
Financing Contingency
is not met or waived by the Contingency Date, RRV may, but is not obligated
to, waive this contingency, but such waiver shall only be deemed to have
occurred
if such waiver is received by RHINO in a writing signed by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
RRV’s manager.
14.1
(b)
Insurance. RHINO shall provide evidence of renewals or “insurance binders”
evidencing the existence by the Contingency Date of all of the forms and
policies
of insurance required by §3.7 (e), above;
14.1
(c)
Production Plan. Akin to RRV’s Forecast, RHINO shall provide to RRV a
written
plan (“RHINO’s Production Plan”), which shall include detailed discussions
of
the
following subjects and address the following issues (and any others RHINO
deems
appropriate) with sufficient particularity and detail (to be determined in
RRV’s
sole
discretion) so as to assure RRV of RHINO’s ability to adequately and timely
perform
its obligations hereunder:
(i)
Production Requirements and Processes needed to begin manufacture,
assembly, fabrication and delivery of the RT/RREVs;
(ii)
Quality Assurance Measures for the manufacture, assembly, fabrication
and delivery of the RT/RREVs;
(iii)
Unit costs for component items identified in the Exhibit A Specifications;
(iv)
Cost
Control Measures for the manufacture, assembly, fabrication and
delivery of the RT/RREVs;
26
(v)
Break-Even Analysis for the manufacture, assembly, fabrication and
delivery of the RT/RREVs;
(vi)
Identification of existing ‘Key Personnel’ to manage and oversee the
manufacture, assembly, fabrication and delivery of the RT/RREVs, including
the qualifications and responsibilities of management;
(vii)
Identification of future ‘Key Personnel’ to be hired to manage and oversee
the manufacture, assembly, fabrication and delivery of the RT/RREVs,
including the qualifications and responsibilities of management;
(viii)
Forecasted Capitalization of RHINO for the manufacture, assembly,
fabrication and delivery of the RT/RREVs under the initial order
and/or any Forecasts;
(ix)
An
itemization of the key risks facing RHINO in the performance of
its
duties under this Agreement, and contingency plans to deal with such
risks if they arise, including risks presented by:
(A)
Cost
Overruns;
(B)
Failure to Meet Production Deadlines;
(C)
Problems with Labor, Suppliers, or Distributors;
(x)
RHINO’s manufacturing plan for the RT/RREVs; and
(xi)
RHINO’s delivery plan for the RT/RREVs.
14.2.
Conditions Precedent in Favor of RHINO. The effectiveness, existence and
validity of
this
Agreement is contingent upon the satisfaction or waiver by the Contingency
Date
of each
and
every one of the following contingencies precedent in favor of RHINO and ROI,
all of
which
are for the benefit of, and may be waived by, RHINO and ROI, and may be
elsewhere
herein referred to as “RHINO’s and ROI’s Contingencies:”
14.2
(a)
Financing Contingency. That RRV shall have obtained, before the Contingency
Date, a written commitment for a loan or letter of credit from a lender or
lenders
of its choice in the amount of at least Two Hundred and Fifty Thousand
Dollars
($250,000) (the “RRV Financing”), to be used solely for the payment of
the purchase
Price of the RT/RREVs accepted by it pursuant to any Purchase Order, on
such
terms as RRV shall agree to in its sole and absolute discretion. This RRV
Financing
shall remain in full force and effect during the Term of this Agreement.
RRV
agrees to use commercially reasonable efforts to obtain such a loan commitment
or
letter
of credit. On or before the Contingency Date, RRV must deliver written
notice
to
RRV indicating whether the contingency set forth in this subsection has
been
met,
and provide RRV with the documentation effecting the same, which RRV
shall
treat as RRV’s Confidential Information. If RRV fails to receive written notice
sufficient
to satisfy this condition precedent by the Contingency Date then this
Agreement
shall not become effective and shall be null and void ab initio. If
this
27
Financing
Contingency is not met or waived by the Contingency Date, RHINO may,
but
is
not obligated to, waive this contingency, but such waiver shall only be deemed
to
have
occurred if such waiver is received by RRV in a writing signed by ▇▇▇▇
▇▇▇▇▇,
RHINO’s authorized agent.
14.2
(b)
RRV shall have procured by the Contingency Date a policy or policies of
insurance
for the following:
(i)
Product liability insurance (however designated) concerning any
RT/RREVs
sold by RRV as a dealer/distributor hereunder, in amounts to be
approved by RRV in its sole discretion;
(ii)
Workers’ Compensation and employer’s liability insurance
covering
all employees engaged in the performance of this agreement for claims
arising under an applicable Workers’ Compensation and occupational
disease acts;
(iii)
Commercial general liability insurance protecting RRV against
claims
for bodily injury, personal injury and property damage. Such insurance
shall be on an occurrence basis providing single limit coverage in
an
amount not less than $1,000,000 per occurrence with an annual aggregate
of not less than $2,000,000;
RHINO
shall be named as an ‘Additional Insured’ on RRV’s products liability
insurance
and commercial general liability insurance if such status results in no
significant
increase in the premiums for the same. RRV shall provide RHINO with written
evidence that all of the above insurances are in force before the Effective
Date
and/or
any renewal of any Term. No such insurance policy shall be cancelable or
subject
to modification except after thirty (30) days’ prior written notice to RHINO.
RRV
shall, at least 10 days prior to the expiration of any such policies, furnish
RHINO
with evidence of renewals or “insurance binders” evidencing renewal thereof,
or RHINO may order such insurance and charge the cost thereof to RRV,
which
amount shall be payable by RRV to RHINO upon demand. Such policies shall
be
for a
term of at least one year, or the length of the remaining Term of this
Agreement,
whichever is less.
14.3.
Conditions Subsequent in Favor of RRV. The effectiveness, existence and
validity of this
Agreement is contingent upon the nonoccurrence after the Effective Date of
each
and every
one
of the following contingencies subsequent in favor of RRV and AEP, all of which
are
for
the benefit of, and may be waived by, RRV and AEP, but shall also (in addition
to any other
provisions of this Agreement relating to termination) permit or allow RRV and/or
AEP to
terminate this Agreement:
14.3
(a)
RHINO Financing Lost. That RHINO shall not have lost its RHINO Financing
or otherwise default in the terms, covenants and conditions of the
same;
14.3
(b)
RHINO Insurance Cancelled, Rescinded or Revoked. RHINO shall not have
had
any of the policies of insurance required by §3.7 (e), above, cancelled,
rescinded
or revoked; or
28
14.3
(c)
Failure to Determine Mutually Acceptable Specifications. If RRV and RHINO
have not mutually arrived at a mutually acceptable set of signed, Exhibit A
Specifications
by the Contingency Date.
14.4.
Conditions Subsequent in Favor of RHINO. The effectiveness, existence and
validity of
this
Agreement is contingent upon the nonoccurrence after the Effective Date of
each
and every
one
of the following contingencies subsequent in favor of RHINO and ROI, all of
which
are
for the benefit of, and may be waived by, RHINO and ROI, but shall also (in
addition
to any other provisions of this Agreement relating to termination) permit or
allow RHINO
and/or ROI to terminate this Agreement:
14.4
(a)
RRV Financing Lost. That RRV shall not have lost its RRV Financing or
otherwise
default in the terms, covenants and conditions of the same;
14.4
(b)
RRV Insurance Cancelled, Rescinded or Revoked. RRV shall not have procured
any of the policies of insurance required by §14.2 (b), above, or if any of the
same
have
been cancelled, rescinded or revoked; or
14.4
(c)
Failure to Determine Mutually Acceptable Specifications. If RRV and RHINO
have not mutually arrived at a mutually acceptable set of signed, Exhibit A
Specifications
by the Contingency Date.
15.
GENERAL PROVISIONS.
15.1.
Incorporation of Recitals and Definitions. All of the Recitals and
Definitions, including
any representations or terms included therein, are incorporated into this
Agreement as
a part
hereof.
15.2.
Severability. If any provision of this Agreement is or becomes or is
deemed invalid, illegal
or unenforceable in any jurisdiction then such provision shall be deemed amended
to conform
to applicable laws so as to be valid and enforceable or, if it cannot be so
amended without
materially altering the intention of the Parties, it shall be stricken and
the
remainder of
this
Agreement shall remain in full force and effect.
15.3.
Interpretation. Each Party has received independent legal advice from its
attorneys with
respect to the advisability of executing this Agreement and the meaning of
the
provisions hereof.
The provisions of this Agreement shall be construed as to their fair meaning,
and not for
or
against any Party based upon any attribution to such Party as the source of
the
language in
question. This contract will not be modified, supplemented, qualified, or
interpreted by any prior
course of dealing between the parties. This contract may not be modified,
supplemented, qualified,
or interpreted by any usage of trade
15.4.
Governing Law. This Agreement shall be governed by and construed in
accordance with
the
laws of Nevada, without regard to its conflict of law provisions.
15.5.
Entire Agreement; Amendments; Conflicts. This Agreement constitutes and
contains the
entire agreement of the Parties, and supersedes any and all prior or
contemporaneous negotiations,
correspondence, understandings and agreements between the Parties, written
or
oral,
respecting the subject matter hereof.
29
15.6.
Waiver and Amendment. No amendment, modification or change of any
provision of this
Agreement shall be effective unless and until made in writing and signed by
all
of the Parties
hereto. No waiver, forbearance of failure by any Party hereto of its right
to
enforce any provision
of this Agreement shall constitute a waiver or estoppel of such Party’s right to
enforce
any other provision of this Agreement or a continuing waiver by such Party
of
compliance
with any provision. No waiver of any provision of this Agreement shall be
effective
unless and until made in writing and signed by the Party to be charged with
having made
such
waiver. No modification or waiver may occur through performance
only.
15.7.
Counterparts. This Agreement may be executed in one or more counterparts,
each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same
instrument.
15.8.
Exhibits and Schedules. All exhibits and schedules to which reference is
made in this Agreement
are deemed to be incorporated by reference into this Agreement, whether or
not
actually
attached hereto.
15.9.
No Assignment of Rights; No Delegation of Duties. The Parties’
obligations under this
Agreement are unique and based upon the Parties’ respective expertise,
knowledge, skill and/or
industry contacts with respect to the RT/RREVs and/or their possible market
with
various
Governmental Agencies. Therefore, each of the Parties agrees that it will
neither assign
its rights nor delegate its duties under this Agreement without the prior
written consent of
the
other Parties, which may be withheld in the sole and absolute discretion of
any
of those Parties.
This prohibition of assignment and delegation extends to all assignments and
delegations
that may lawfully be prohibited by Agreement. Any attempted assignment or
delegation
without the prior, express written consent of the other Parties will be
void.
15.10.
Further Documents and Assurances; Cooperation. Each Party hereto shall
cooperate with
the
other Party hereto and shall take such further action and shall execute and
deliver such
further documents as may be necessary or desirable in order to carry out the
provisions and
purposes of this Agreement. The Parties shall each, diligently and in good
faith, undertake all
actions and procedures reasonably required to further and effect the purposes
and existence of
this
Agreement. The Parties agree to provide all further information, and to execute
and deliver
all further documents, reasonably required by any Party, Governmental Agency
or
governmental
authority, lender or other third person whose cooperation or assistance is
needed
by
any Party to perform its respective obligations hereunder.
15.11.
Force Majeure. Either Party shall be temporarily excused from performance
under this
Agreement If any force majeure, including but not limited to disaster, fire,
war, civil commotion,
strike, governmental regulation, energy shortage, or other occurrence beyond
the
reasonable
control of such Party should have happened and made it impossible for such
Party
to
perform its obligations under this Agreement; provided, however, that
such Party shall give
contemporaneous written notice to all other Parties promptly upon the occurrence
of
any such force majeure. Under such circumstances, performance under
this Agreement that
relates to the delay shall be suspended for the duration of the delay, provided
that the Party
so
affected resumes the performance of its obligations with due diligence as soon
as practicable
after the effects of such event have been alleviated provided that no such
event
shall
relieve RRV from any of its payment obligations hereunder. In case of any such
suspension,
the Parties shall use their best efforts to overcome the cause and effect of
such
30
suspension,
but in no event shall either Party be required to settle any litigation, strike,
lockout
or other labor difficulty contrary to its best interests in its sole
discretion.
15.12.
Notice.
15.12
(a)
Whenever any Party herein shall desire to give or serve any notice, demand,
request, approval, disapproval or other communication, each such communication
shall be in writing and shall be delivered personally, by messenger or
by
mail,
postage prepaid, or by e-mail or facsimile transmission, to the address set
forth
next to the Parties’ respective signatures in this Agreement. Copies of all
notices shall
be
sent to the Parties’ legal counsel designated below the signatures to this
Agreement.
15.12
(b)
Service of any such communication shall be deemed made on the date of
actual
receipt if personally delivered. Any such communication sent by regular mail
shall
be
deemed given 48 hours after the same is mailed. Communications sent by
United
States Express Mail or overnight courier that guarantee next day delivery shall
be
deemed
delivered 24 hours after delivery of the same to the Postal Service or
courier.
Communications transmitted by e-mail or facsimile transmission shall be
deemed
delivered upon electronic or telephonic confirmation of receipt (confirmation
report
from e-mail software or fax machine is sufficient), provided a copy is also
delivered
via delivery or mail. If such communication is received on a Saturday,
Sunday
or
legal holiday, it shall be deemed received on the next business
day.
15.12
(c)
Any Party hereto may from time to time, by notice in writing, designate a
different
address to which, or a different person or additional persons to whom, all
communications
are thereafter to be made.
15.13.
Time of Essence. Time is of the essence of this Agreement and each and
every Purchase
Order made or given incident to it; provided, however, that if the date upon
which any
performance by any Party is due under this Agreement is or ends on a Saturday,
Sunday or
federal, state or legal holiday, then such date shall automatically be extended
until 5:00 p.m.
Mountain Standard Time of the next day that is not a Saturday, Sunday or
federal, state or
legal
holiday.
[THE
REST
OF THIS PAGE IS INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]
31
IN
WITNESS WHEREOF the parties have executed this Agreement as of the dates below
their
respective signatures, effective as of the Effective Date. (This Agreement
shall
not become binding
upon the Parties until it has been signed by an authorized representative of
the
Parties.)
|
RHINO
OFF-ROAD INDUSTRIES,
INC.,
a Nevada corporation,
|
RAPID
RESPONSE VEHICLES, L.L.C.,
an
Arizona limited liability company,
|
| By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ |
|
▇▇▇▇▇▇
▇▇▇▇▇, President
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, Manager
|
|
Address:
Rhino
Off-Road Industries, Inc.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
Address:
Rapid
Response Vehicles, L.L.C.
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
| Phone: (▇▇▇) ▇▇▇-▇▇▇▇ |
Phone:
▇▇▇-▇▇▇-▇▇▇▇
|
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ |
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
|
Email:
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or
▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇▇▇.▇▇▇
|
Email: ▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇ |
| Web Address: ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ |
Web
Address: None Presently
|
| (Referred to herein as “RHINO”) |
(Referred
to herein as “RRV”)
|
|
ARIZONA
EMERGENCY PRODUCTS,
INC.,
an Arizona corporation,
|
|
| By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ | By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ |
|
▇▇▇▇▇▇
▇▇▇▇▇, President
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, President
|
|
Address:
Rhino
Off-Road Industries, Inc.
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
Address:
Arizona
Emergency Products, Inc.
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
| Phone: (▇▇▇) ▇▇▇-▇▇▇▇ |
Phone:
▇▇▇-▇▇▇-▇▇▇▇
|
| Fax: (▇▇▇) ▇▇▇-▇▇▇▇ |
Fax:
▇▇▇-▇▇▇-▇▇▇▇
|
|
Email:
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
Email: ▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇ |
| Web Address: ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ |
Web
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
| (Referred to herein as “ROI”) |
(herein
referred to as “AEP”)
|
Copies
of
all Notices to the above Parties shall also be sent to:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq.
Attorney
at Law
▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Tel:
(▇▇▇) ▇▇▇-▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Counsel
for RHINO and ROI
|
▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq.
The
▇▇▇▇▇▇▇▇ Law Firm, P.L.C.
Heritage
Court Building
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Tel:
▇▇▇-▇▇▇-▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Counsel
for AEP and RRV
|
32