EXHIBIT-10(i)
COAST SYSTEM
APPLICATION DEVELOPMENT AGREEMENT
This AGREEMENT dated May 24, 2001 ("Effective Date") is
between Aimrite Holdings Corporation, a Nevada corporation, having a place of
business at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Aimrite")
and Spartan Motors Chassis Inc., a Michigan corporation, having a place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Spartan").
A. Aimrite designs, manufacturers and sells vehicle suspension systems
generally consisting of a computer controller, software, dampers, sensors and
ride height control valves, which are collectively referred to as COAST Systems.
B. Spartan designs, manufacturers and sells chassis, including chassis
for recreational vehicles ("RV Chassis").
C. Aimrite desires to design and develop a customized COAST System for
Spartan Motors for use with its RV Chassis. If the design and development
efforts are successful, the parties wish to enter into certain exclusivity
obligations.
TERMS AND CONDITIONS
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The Parties agree as follows:
1. GENERAL OBLIGATIONS. Aimrite shall, with the cooperation of Spartan, design
and develop a customized COAST System for use with the Spartan RV Chassis as
follows:
a) RV CHASSIS SPECIFICATIONS. Spartan shall provide Aimrite with
specifications for the RV Chassis as well as certain performance specifications
for the customized COAST System ("Specifications"), a copy of which is attached
to this Agreement as Exhibit A. Spartan shall provide reasonable written
supplementation to the Specifications to the extent necessary to permit Aimrite
to perform its obligations under this Agreement.
b) DEVELOPMENT OF PROTOTYPE SYSTEM. Aimrite shall, upon receipt of the
Specifications, design and manufacture a prototype COAST System customized for
use with the RV Chassis in compliance with all applicable Specifications
("Prototype System").
c) RV CHASSIS. Spartan shall provide Aimrite with an RV Chassis on
which to install the Prototype System. Aimrite shall review the RV Chassis and
advise Spartan of any modifications that Aimrite considers necessary or
desirable to permit installation and proper operation of the Prototype System.
d) INSTALLATION OF PROTOTYPE SYSTEM. Aimrite shall make any
modifications to the RV Chassis approved by Spartan and shall install the
Prototype System on the RV Chassis. Aimrite shall make no modification to the RV
Chassis without the prior written consent of Spartan, which consent may be
withheld by Spartan at its sole discretion.
e) PROTOTYPE SYSTEM TESTS. Following installation of the Prototype
System within the RV Chassis, the parties will perform tests on the Prototype
System as follows:
i) AIMRITE TESTS. Aimrite shall test the Prototype System
installed in the RV Chassis to ensure proper operation of the Prototype
System as well as a commercially viable level of functionality. Aimrite
agrees to perform any reasonable tests specified by Spartan. Aimrite
shall provide Spartan with results of all tests conducted by Aimrite
whether or not such tests were specifically requested by Spartan.
ii) SPARTAN TESTS. Spartan shall have the right, but not the
obligation, to conduct any tests that it may desire on the Prototype
System installed in the RV Chassis.
iii) MODIFICATIONS. If during testing, it is determined that
further modifications to the Prototype System or the RV Chassis are
necessary or desirable, Aimrite shall perform such modifications.
Aimrite shall not, however, make any modifications to the RV Chassis
without the prior written consent of Spartan, which consent may be
withheld by Spartan at its sole discretion.
iv) PROTOTYPE APPROVAL. Spartan shall have sole discretion on
determining whether or not the Prototype System meets its approval for
development of a pre-production version.
f) PRE-PRODUCTION SYSTEM. Upon Spartan's approval of the Prototype
System, Aimrite will design and manufacture a pre-production COAST System
incorporating all modifications agreed upon by the parties during the Prototype
testing phase ("Pre-Production System"). Aimrite shall install the
Pre-Production System, at Spartan's option, on (i) the RV Chassis previously
provided to Aimrite by Spartan, (ii) a different RV Chassis provided to Aimrite
by Spartan or (iii) a completed motor home provided to Aimrite by Spartan.
g) PRE-PRODUCTION SYSTEM TESTS. Following installation of the
Pre-Production System by Aimrite, the parties will perform tests on the
Pre-Production System as follows:
i) AIMRITE TESTS. Aimrite shall test the Pre-Production System
installed in the RV Chassis to ensure proper operation of the
Pre-Production System as well as a commercially viable level of
functionality. Aimrite agrees to perform any reasonable tests specified
by Spartan. Aimrite shall provide Spartan with results of all tests
conducted by Aimrite whether or not such tests were specifically
requested by Spartan.
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ii) SPARTAN TESTS. Spartan shall have the right, but not the
obligation, to conduct any tests that it may desire on the
Pre-Production System installed in the RV Chassis. Spartan shall have
the right to demonstrate the Pre-Production System to third parties and
to permit test use of the Pre-Production System by third parties;
provided that any such third parties have executed a confidentiality
agreement that is commensurate in scope with the confidentiality and
non-use provisions of this Agreement.
iii) MODIFICATIONS. If during testing, it is determined that
further modifications to the Pre-Production System or the RV Chassis
are necessary or desirable, Aimrite shall perform such modifications.
Aimrite shall not, however, make any modifications to the RV Chassis
without the prior written consent of Spartan, which consent may be
withheld by Spartan at its sole discretion. Following completion of any
such modifications, Aimrite agrees to repeat any tests of the modified
Pre-Production System specified by Spartan.
iv) APPROVAL. Spartan shall have sole discretion in
determining whether the Pre-Production System is approved for
commercialization, which determination shall take into account the
expected operation, functionality, reliability and cost of a production
version of the Pre-Production System ("Production System") as well as
the perceived market interest in such Production System.
h) SCHEDULE. Unless otherwise agreed in writing, the parties shall
perform their respective obligations under this Agreement in accordance with
time schedule set forth in the "Aimrite Suspension Project Schedule" attached as
Exhibit B to this Agreement.
2. PRODUCTION SYSTEMS.
a) PRODUCTION. If Spartan elects in its sole discretion to proceed with
commercialization of Production Systems, Spartan shall market and sell the
Production Systems in a manner determined in its discretion and Aimrite shall
provide Spartan with Spartan's entire requirements of Production Systems during
the term of this Agreement. All such Production Systems shall incorporate any
modifications agreed to or specified by Spartan during the test phase of the
Pre-Production System.
b) EXCLUSIVITY.
i) Beginning on the execution date of this Agreement and
continuing until Spartan makes its decision under Subsection 1(g)(iv)
regarding commercialization of Production Systems, (a) Spartan shall
obtain its entire requirements for computer controlled vehicle
suspension systems for its RV Chassis exclusively from Aimrite and (b)
Aimrite shall not design, develop, manufacture or otherwise exploit or
cooperate in the exploitation of any computer controlled vehicle
suspension systems for RV Chassis with any party other than Spartan.
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ii) If Spartan elects in its sole discretion to proceed with
commercialization of Production Systems, Spartan's and Aimrite's
respective exclusivity obligations under Subsection 2(b)(i) shall be
extended for an additional period of two (2) years beginning on the
date on which the Pre-Production System is approved for
commercialization by Spartan.
c) LIMITED RIGHT TO ALTERNATIVE SOURCE. Notwithstanding anything to the
contrary in this Agreement, Spartan shall have the right to purchase systems,
including without limitation Production Systems, from a third party upon the
occurrence of any of the following:
i) Aimrite is unable or unwilling to provide Spartan with
Production Systems that satisfy Spartan's quantity, quality, delivery
or other reasonable requirements;
ii) A customer for any reason requests the system of a third
party;
iii) Aimrite is unable or unwilling to provide Production
Systems at a price that is reasonably competitive with a reasonably
similar computer controlled independent multi-wheel vehicle suspension
system; or
iv) Aimrite is in default under this Agreement.
3. SERVICE FEES. Spartan shall pay to Aimrite the following amounts:
a) Upon execution of this Agreement, Spartan shall pay to Aimrite a sum
of Ten Thousand Dollars ($10,000); and
b) Upon approval of the Prototype Coast Motorhome System, Spartan shall
pay to Aimrite a sum of Fifty Thousand Dollars ($50,000).
4. INTELLECTUAL PROPERTY. Except as expressly provided, nothing in this
Agreement shall be construed as granting either party any right, title or
interest in or to any intellectual property of the other party. The parties
shall jointly own any technology, including any related intellectual property,
that is developed jointly by the parties under this Agreement. Aimrite shall
retain all right, title and interest in or to any intellectual property rights
that Aimrite may hold or obtain in the Production System unless such
intellectual property rights are jointly owned under the preceding sentence.
5. CONFIDENTIALITY. For purposes of this Agreement, the term "Confidential
Information" shall mean all confidential or otherwise proprietary business and
technical information relating to the parties and their respective business
plans exchanged by the parties under this Agreement. Confidential Information
may include, but shall not be limited to, ideas, inventions, concepts, know-how,
specifications, drawing, blue-prints, long-range and short-range plans,
production, manufacturing and sales techniques, financial statements and data,
information, formulas, sources of supply, advertising, actual and prospective
customers, pricing, costing, and accounting procedures.
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a) CONFIDENTIALITY AND NON-USE. Each party agrees to maintain in strict
confidence and, except to the extent expressly permitted in this Agreement, not
to use any Confidential Information received from the other party, without the
prior written consent of the other party. Each party agrees to disclose or
provide access to such Confidential Information only to those of its employees
who have a "need to know" the information and who are subject to obligations of
confidentiality and non-use at least commensurate in scope with those presented
in this Agreement.
b) PROTECTION OF CONFIDENTIAL INFORMATION. Each party agrees to use
reasonable efforts to protect the confidentiality of any Confidential
Information received from the other party and to prevent third party access to
any documents or other items containing Confidential Information received from
the other party.
c) EXCEPTIONS. Notwithstanding the foregoing, the parties respective
obligations of confidentiality and non-use will not apply to, information that:
(i) was or is in the public domain at the time of disclosure by the disclosing
party; (ii) enters the public domain after disclosure by the disclosing party
through no fault of the receiving party; (iii) was or is separately disclosed to
the receiving party by a third party not itself subject to an obligation of
confidentiality to the disclosing party with respect to such information; (iv)
was in the receiving party's possession at the time of disclosure by the
disclosing party; or (v) is independently developed by the receiving party
without use of or reliance upon any Confidential Information of the other party.
d) TERM OF CONFIDENTIALITY. The obligations of confidentiality and
non-use contained in this Agreement will remain in effect for five (5) years and
will survive termination or expiration of this Agreement.
6. REPRESENTATIONS AND WARRANTIES.
a) AIMRITE. Aimrite represents and warrants that is has: (i) the legal
power and right to assume the obligations and extend the rights granted to
Spartan in this Agreement and (ii) not made and will not make any commitments to
others in derogation of the rights granted in this Agreement. Aimrite further
represents and warrants that all technology, products or product designs
provided to Spartan are the original work product of Aimrite and will not
infringe the proprietary rights of any third party anywhere in the world.
b) SPARTAN. Spartan represents and warrants that it has: (i) the legal
power and right to assume the obligations and extend the rights granted to
Aimrite in this Agreement and (ii) not made and will not make commitments to
others in derogation of the rights granted in this Agreement.
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7. INDEMNIFICATION. Aimrite agrees to fully test and evaluate the Prototype
System, Pre-Production System and Production System, and further agrees to
assume all responsibility and liability for all damages, costs and other
expenses arising out of, associated with or related to the manufacture, sale,
use or other exploitation of any Production System, including without limitation
all damages, costs and other expenses relating to or associated with
infringement and product liability claims relating to the Production System.
Aimrite agrees to indemnify, defend and hold Spartan, its officers, directors,
employees, representatives, agents and the like harmless for any actual or
alleged infringement and for any liability, debt or other obligation arising out
of or relating to (a) Aimrite's breach of any of its obligations under this
Agreement or (b) Spartan's exploitation of any Production System.
8. CHANGE ORDERS. Changes in this Agreement or any of the specifications shall
become effective only when a written change request is executed by both parties.
Aimrite agrees to accept any change order which reduces the cost of performance
or reduces the overall time of performance without increasing the cost or
magnitude of performance. Aimrite also agrees to accept any change order that
increases the cost or magnitude of performance, if the changes are reasonable in
scope and a commensurate increase in compensation and a commensurate extension
of any relevant deadlines are agreed upon by the parties.
9. RELATIONSHIP. Aimrite is and shall be an independent contractor. This
Agreement does not create a joint venture, partnership, franchise, association,
or other relationship between Aimrite and Spartan. Neither party is an agent or
representative of the other and neither has no authority to make any promise,
covenant, commitment, warranty, representation or agreement on behalf of the
other with respect to any matter whatsoever. Aimrite shall have exclusive
control over the means and methods of performing services under this Agreement.
10. TERM OF AGREEMENT. This Agreement shall be effective as of the Effective
Date and shall remain in full force and effect for a term of two (2) years
unless otherwise terminated as provided herein.
11. TERMINATION.
a) TERMINATION BY AGREEMENT. The parties may terminate this Agreement
at any time by mutual written agreement and Spartan will return the Coast
Motorhome System to Aimrite.
b) END OF PHASE. Spartan may at its sole discretion terminate this
Agreement upon conclusion of the test phase of the Prototype System or the test
phase of the Pre-Production System by providing ten (10) days written notice to
Aimrite.
c) TERMINATION UPON DEFAULT. At any time during the term of this
Agreement, either party may terminate this Agreement upon thirty (30) days'
written notice to the other party if the other party is in material default in
the performance of any of its obligations hereunder and fails to cure the
default within sixty (60) days after receiving written notice of it, provided
that so long as such cure has been timely commenced and is diligently pursued,
the time for such cure may be extended as the parties may mutually agree in
writing.
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d) TERMINATION FOR CAUSE. Either party may immediately terminate this
Agreement by written notice to the other: (a) if the other party has ceased its
business activities or has otherwise begun winding up its business affairs; (b)
if bankruptcy, reorganization, arrangement or insolvency proceedings or other
proceedings for relief under any bankruptcy or similar law or laws for the
relief of debtors, are instituted by or against the other party and are
consented to or are not dismissed within ninety (90) days after institution; (c)
if a custodian, liquidator, receiver or trustee is appointed for the other party
or the major part of its property and is not discharged within ninety (90) days
after appointment; or (d) if the other party becomes insolvent or bankrupt,
makes an assignment for the benefit of its creditors or makes any comparable
arrangement with its creditors.
e) EFFECT OF TERMINATION; SURVIVAL OF CERTAIN PROVISIONS. If this
Agreement is terminated prior to Spartan's approval of the Prototype Systems,
Spartan shall have no obligation to pay to Aimrite the amount set forth in
Subsection 3(b). In the event of any termination of this Agreement, Sections 4-7
shall survive and continue in effect and shall enure to the benefit of and be
binding upon the parties and their legal representatives, heirs, successors, and
assigns.
12. NOTICES. Any notice or other communication permitted or required to be given
under this Agreement shall be in writing and shall be delivered in person, or
mailed, by certified mail, return receipt requested, postage prepaid, or by
facsimile transmissions.
a) If to Aimrite:
Aimrite Holdings Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
b) If to Spartan:
Spartan Motor Chassis Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Office
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
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13. AMENDMENT. No provision of this Agreement may be modified except by a
written document signed by a duly authorized representative of the parties.
14. ASSIGNMENT. Neither party may assign, subcontract, sublicense, delegate or
otherwise transfer any of its rights or obligations under this Agreement without
the prior written consent of the other.
15. WAIVER. No provision of this Agreement shall be deemed waived and no breach
excused, unless such waiver or consent shall be in writing and signed by the
party claimed to have waived or consented. Any consent by any party to, or
waiver of, a breach of the other party, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any different or subsequent
breach.
16. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors,
and authorized assigns.
17. COUNTERPARTS. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18. SEVERABILITY. If any provision of this Agreement shall be prohibited or
unenforceable by any applicable law, the provision shall be ineffective only to
the extent and for the duration of the prohibition or unenforceability, without
invalidating any of the remaining provisions.
19. HEADINGS. Headings are used for reference purposes only and shall not be
considered a part of this Agreement.
20. GOVERNING LAW. This Agreement shall be governed by and interpreted according
to the laws of the state of Michigan.
FORCE MAJEURE. The parties shall not be responsible for any failure to
perform due to unforeseen circumstances or causes beyond their reasonable
control, including, but not limited to acts of God, war, riot, embargoes, acts
of civil or military authorities, fires, floods, accidents, strikes, or
shortages of transportation, facilities, fuel, energy, labor or materials. In
the event of any such delay, the parties may defer the delivery dates for a
period equal to the time of such delay.
(The remainder of this page is intentionally left blank)
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21. ENTIRE AGREEMENT. This Agreement, including any exhibits, constitutes the
entire agreement between the parties with respect to the subject matter of this
Agreement and it supersedes all earlier agreements and understandings, oral and
written, between the parties.
The parties have executed this Agreement as of the Effective Date set
forth above.
SPARTAN MOTOR CHASSIS INC. AIMRITE HOLDINGS CORPORATION
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By: By:
-------------------------------- --------------------------------
Title: Title:
-------------------------------- --------------------------------
Date: Date:
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EXHIBIT A
"Specifications"
S P A R T A N
Motorhome / Bus / Specialty Vehicles Engineering Group
To: FILE Friday, March 16, 2001
Fm: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Engineer
Re: Aimrite COAST Project White Paper...
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o Target chassis:
- MM-Mountain Master - Maximum GVW 37,600-lbs (FA=14,600-lbs
RA=23,000-lbs TA=N/A)
- Me2 - Mid Engine MM - Maximum GVW 47,600-lbs (FA=14,600-lbs
RA=23,000-lbs TA=10,000-lbs) *Tag axle is optional
- K2 - K2 - Maximum GVW 47,600-lbs (FA=14,600-lbs RA=23,000-lbs
TA=10,000-lbs) *Tag axle is optional
o Front gross axle weight rating capacity:
- 12,000-lbs
- 13,200-lbs
- 13,700-lbs
- 14,600-lbs
o Rear gross axle weight rating capacity:
- 17,000-lbs
- 19,000-lbs
- 20,000-lbs
- 23,000-lbs
o Tag gross axle weight rating capacity: - 10,000-lbs
o Axle suppliers:
- Front - ▇▇▇▇▇▇▇ IFS (Independent Front Suspension)
- Rear - Meritor
- Tag - Silent Drive
o Suspension suppliers:
- Front - ▇▇▇▇▇▇▇ (Granning IFS)
- Rear - ▇▇▇▇▇▇▇ (Reyco 240-AR)
- Tag - Silent Drive
- Air tank capacity that feeds the suspension systems - (p/n 1567-MM5)
has a minimum certified volume rating of 2087 cu-in.
o MM chassis Power Plants
- ISC 315; 330 & 350 HP - Air compressor is manufactured by Wabco and
produces 18.7 CFM at rated SAE 1250 RPM (1:1 Drive ratio).
- ISL 370 HP - Air compressor is manufactured by Wabco and produces
18.7 CFM at rated SAE 1250 RPM (1:1 Drive ratio).
Page 1 of 3
S P A R T A N
Motorhome / Bus / Specialty Vehicles Engineering Group
o Me2 chassis Power Plants
- ISC 315; 330 & 350 HP - Air compressor is manufactured by Wabco and
produces 18.7 CFM at rated SAE 1250 RPM (1:1 Drive ratio).
- ISL 370 HP - Air compressor is manufactured by Wabco and produces
18.7 CFM at rated SAE 1250 RPM (1:1 Drive ratio).
o K2 chassis Power Plants
- ISM 450 & 500 HP - Air compressor is manufactured by Wabco and
produces 18.7 CFM at rated SAE 1250 RPM (1:1 Drive ratio).
o Minimum durability of components must meet our chassis warranty of two
years or 50,000 miles, which ever come first, from date of vehicle owner
registration.
VOCATION DESCRIPTION
Vocation: Motorhome
Region of Operation: Standard - North America (US & Canada)
Fuel Type: Diesel
Electrical System Voltage: Standard - 12 volt
Maximum Amperage Draw: Standard - Up to 150 amps continuous
USAGE
Typical number of starts and stops: Standard - 4 or less starts/stops per mile
Road Usage Classification: Standard - Class A / Class AA
Class A / AA = Turnpike, Interstate or On-
highway of excellent maintained Asphalt or
Concrete
Annual Anticipated Mileage: Standard - Up to 20,000 miles / year
Maximum Desired Speed: Standard - Up to 80 MPH
Estimated Annual Utilization: Standard - Up to 400 hours / year
Maximum Continuous Operation: Standard - Up to 6 hours / day
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S P A R T A N
Motorhome / Bus / Specialty Vehicles Engineering Group
OPERATING ENVIRONMENT
Maximum Ambient Air Temp: Standard - Up to 106 degrees F @ Sea
Level
Minimum Ambient Air Temp: Standard - Down to - 20 degrees F @ Sea
Level
Average Annual Humidity: Standard - Up to 60% average relative
humidity
Maximum Altitude: Standard - Up to 10,000 ft above Sea Level
Maximum Anticipated Grade: Standard - Up to 10 percent
Length of Maximum Grade: Standard - Up to 10 miles
Dirt / Dust Conditions: Heavy - Typical US in City/Route Service
Water Crossing Depth: Standard - Up to 18 inches
Maximum Continuous Idle Time: Standard - Up to 60 minutes
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