|
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, Michael Chamberlain 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, Michael Chamberlain 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, Michael Chamberlain 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;
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, Michael Chamberlain, AEP’s
President, and Howard Pearl,
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 Michael Chamberlain,
Howard Pearl and/or Walt Tatum) and/or other business entities
of any kind or nature
whatsoever controlled by, under common control with or
controlling any Party to this Agreement.
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.
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 1 st
and ending on December 31 st 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
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.
|
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
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
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
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 (4 th ) 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 hereof
1
.
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.)
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).
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
(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
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
|
