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EXHIBIT 10.26
AGREEMENT BY AND BETWEEN
CLARK MATERIAL HANDLING COMPANY
A Business Unit of Clark Equipment Company
as CLARK
and
DIXSON, INC.
For the Instrument Pod for the World Truck
Effective: ____________________________
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TABLE OF CONTENTS
PAGE
PART I. DESIGN AND DEVELOPMENT SERVICES .................................... 3
Articles
1. STATEMENT OF WORK .................................................. 3
2. DEFINITIONS ........................................................ 4
3. (Intentionally Left Blank) ......................................... 5
4. PROJECT STAFFING ................................................... 5
5. DEVELOPMENT MILESTONES ............................................. 6
6. TARGET COST ........................................................ 7
7. CHANGES IN THE SCOPE OF WORK ....................................... 8
8. PAYMENT FOR DEVELOPMENT COSTS ......................................10
9. OWNERSHIP OF TOOLING AND PAYMENT SCHEDULE ..........................11
10. PROTOTYPE AND PREPRODUCTION PROTOTYPES .............................15
11. NON-DISCLOSURE .....................................................16
12. ACCEPTANCE .........................................................18
13. (Intentionally Left Blank) .........................................19
14. CANCELLATION .......................................................19
15. (Intentionally Left Blank) .........................................19
16. (Intentionally Left Blank) .........................................19
PART II. PRODUCT MANUFACTURING AND SALE .....................................19
17. COMMENCEMENT OF MANUFACTURING ......................................19
18. FORECASTING AND ORDERING ...........................................20
19. TERMS OF DELIVERY ..................................................22
20. PRICING ............................................................23
21. PRICE CHANGES ......................................................24
22. (Intentionally Left Blank) .........................................26
23. PROTECTION FROM LABOR DISPUTES .....................................26
24. QUALITY ASSURANCE ..................................................28
25. WARRANTY ON INSTRUMENT PODS AND PARTS ..............................29
26. WARRANTY CLAIMS ....................................................31
27. PRODUCT LIABILITY INSURANCE ........................................33
28. INDEMNIFICATION ....................................................34
29. PARTS AVAILABILITY AND WARRANTY ....................................34
30. STANDARD TERMS OF SALES ............................................35
31. TERM AND TERMINATION ...............................................36
32. GENERAL PROVISIONS .................................................37
EXHIBITS
1. Clark Material Handling Company Design Specifications,
Instrument Pod for World Truck, of 28 November 1990
2. Functional Specifications
3. Clark Form - Certificate of Acceptance
4. Pricing Schedule
5. Clark Quality Assurance Program SQA1
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CLARK MATERIAL HANDLING COMPANY
THIS AGREEMENT, made and entered into this _____ day of _______, 1991 by and
between CLARK MATERIAL HANDLING COMPANY, having its principal offices at 333 W.
Vine Street, Lexington, Kentucky 40507, a business unit of Clark Equipment
Company, a Delaware corporation (hereinafter referred to as "CLARK") and DIXSON,
INC., a Colorado corporation with its principal office and place of business
located at 287 27 Road, Grand Junction, Colorado 81503 (hereinafter referred to
as "SUPPLIER").
This agreement is in two parts. The successful completion of the first part,
Part I, the design and development services portion, is a prerequisite for the
initiation of the second part, Part II, the product manufacturing and sale
portion.
PART I. DESIGN AND DEVELOPMENT SERVICES
ARTICLE 1. STATEMENT OF WORK
The SUPPLIER hereby agrees to design, develop, test and fabricate mockup,
prototype and preproduction electronic instrumentation and display packages
(collectively hereinafter referred to as Instrument Pods) to operate on a 12 or
24-volt DC electrical system for liquid propane (LPG), gasoline and
diesel-powered counterbalanced rider lift trucks in accordance with, and in
satisfaction of, the CLARK design and performance requirements set forth in the
Clark Material Handling Company Design Specifications,
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Instrument Pod for World Truck, 35 pages, of 28 November 1990 which is a
Contract Document attached hereto as Exhibit 1 and made a part hereof.
ARTICLE 2. DEFINITIONS
The definitions below apply to both Part I and Part II of the Agreement unless
otherwise indicated within a definition:
2.1 The Contract Documents are a part of this Agreement, and consist of this
Agreement and the Exhibits attached thereto.
2.2 The term "Work" with respect to the SUPPLIER includes labor, materials and
services used in the performance of Part I of this Agreement.
2.3 The term "World Truck" as used in the Contract Documents shall mean an
internal combustion (IC) rider, counterbalanced industrial truck,
corresponding to Classes IV and V of the United States Industrial Truck
Association classification system with all auxiliary systems, attachments,
and accessories specified by CLARK for use therewith manufactured or
assembled by or for CLARK for its affiliates in or outside the U.S. for
sale and use worldwide.
2.4 "Instrument Pod" means electronic instrumentation and displayed package
functionally adapted to the 1.25-5.0 ton IC World Truck according to
specifications set forth in Exhibit 1, as amended from time to time by
agreement of the parties as provided for under Article 32.4 hereof.
2.5 "Affiliate" means any domestic or foreign plant or facility which by
contract, license, or permission from CLARK has the
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authority to manufacture models similar to the World Truck.
ARTICLE 3. INTENTIONALLY LEFT BLANK
ARTICLE 4. PROJECT STAFFING
The SUPPLIER will staff the project with sufficient personnel to reach agreed
upon milestones by the completion dates set forth in Article 5 below.
ARTICLE 5. CONTRACT PRICE, DEVELOPMENT MILESTONES, PAYMENT
SCHEDULE, AND COMPLETION DATES
The SUPPLIER will design, develop, build, test and deliver to CLARK the
prototype Instrument Pods and the documentation relevant thereto for their
manufacturer as specified in Exhibit 1 for the Contract Price of $97,000.00,
twenty percent (20%), or $19,400 of which has been paid to SUPPLIER in advance
of entering into this Agreement, leaving the balance of $77,600 to be paid by
CLARK to SUPPLIER as progress payments after reaching agreed upon Milestones as
set forth in the schedule below:
PROGRESS PAYMENT SCHEDULE
DOLLAR COMPLETION
MILESTONES PERCENT AMOUNT DATE
- ---------- ------- ------ ----------
i) Completion of three (3) 40% $38,800 October 4, 1991
prototypes
ii) Environmental Electrical 20% $19,400 January 5, 1992
iii) Life Testing 10% $ 9,700 January 15, 1992
iv) Receipt of Documentation 10% $ 9,700 August 15, 1992
TOTAL: $77,600
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ARTICLE 6. TARGET COST
6.1 The SUPPLIER agrees to work in a cooperative manner with CLARK to design
each Instrument Pod to Achieve a Target Cost on a manufactured basis set
forth in 6.3 below.
6.2 The SUPPLIER shall maintain an up-to-date bill of material (BOM) based on
SUPPLIER'S standard costs of materials and labor for each version of the
Instrument Pod including assembly labor. The BOM for each Instrument Pod
shall be available for CLARK'S inspection upon request. CLARK and SUPPLIER
shall conduct a cost review of each BOM upon the completion of the
prototype Milestone set forth in Article 5 (i).
6.3 Each cost review in 6.2 is an early warning indicator of whether future
production costs will be reduced on a per-unit basis to be at or below
Target Cost. At each cost review, CLARK shall decide whether to continue
the development of the existing designs, revise the design specifications
to further reduce the projected unit cost, terminate one or more of the
Instrument Pod developments, in whole or in part, without terminating the
others, or terminate the Agreement because in the opinion of CLARK, the
SUPPLIER will be unable to meet the Target Cost for one or more of the
Instrument Pods. The Target Costs for each Instrument Pod design for the
applicable truck chassis are as follows:
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DESIGN TARGET TARGET TARGET
VERSION COST (1) COST (2) COST (3)
- ------- -------- -------- --------
(Per Pod) (Per Pod) (Per Pod)
Diesel $99.75 $95.00 $92.15
Gas $99.75 $95.00 $92.15
LPG $93.45 $89.00 $86.33
Target Cost: (1) up to 12,110 units; (2) from 12,111 to 17,300 units; and (3)
from 17,301 to 22,490 units of production of all design versions for 12 calendar
months.
6.4 The Target Cost does not include the incremental cost of optional rocker
switches, or connector interfaces, which upon approval by CLARK, shall be
added to the applicable Target Cost.
ARTICLE 7. CHANGES IN THE SCOPE OF WORK
7.1 CLARK shall have the right at any time to require alterations in, additions
to and deductions from the Design Specification (Exhibit 1) or the
Functional Specification (Exhibit 2) without rendering void the Contract.
All changes shall be completed within the Milestones set forth in Article
5.
When changes are requested, CLARK shall furnish SUPPLIER with a Change
Request describing the change as prepared by CLARK's engineering
department. A Change Request is a request for quotation. SUPPLIER shall not
proceed with the work described in the Change Request until the work is
authorized by an amendment to this Agreement pursuant to Article 32.4.
7.2 A Change Request may affect product development costs including design
verification testing and tooling costs.
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If the Design Specifications are revised at the request of CLARK after the
approval of the Functional Specification, resulting in additions to or
deletions from incremental costs, such costs shall be added to or
subtracted from the Target Cost set forth in Article 6.3 of the applicable
pod design.
The Functional Specification is the basis of the definition of the scope of
Work. Upon acceptance by CLARK of the Functional Specifications, all
changes in the scope of Work will result in changes in the Functional
Specification. CLARK shall not accept any SUPPLIER proposed increased costs
once the Functional Specification is approved by CLARK.
7.3 When a Change Request is made that will not be reflected by a change in the
Target Cost of the applicable pod design, SUPPLIER will submit a quotation
for changes in the Work to be performed on an estimated cost plus
percentage fee basis within twenty-one (21) calendar days from date of the
Change Request unless otherwise stated in the Request.
Each quotation shall be submitted in sufficient detail together with
adequate supporting information to facilitate checking by CLARK as follows:
(a) Estimated labor and material costs and expenses itemized to include:
(1) Engineering, drafting and testing labor using
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SUPPLIER's standard hourly rates as set forth in Article 7.5
(2) Material costs
(3) Transportation
(4) The use of tools or equipment having an original cost basis of
more than $1,500.00 per unit.
(b) Percentage fee for the Work to be performed by SUPPLIER
(c) Subcontract work and applicable handling fee as defined in Article 7.6
(d) Production tooling and manufacturing tooling.
Where changes involve both additions and deductions, the estimated costs of
the Work added and deducted shall be balanced against each other and the
percentage fees shall be applied to the net result.
CLARK shall authorize SUPPLIER to proceed on the basis of the quotation by
a written authorization within ten (10) days of receipt of the quotation.
Absent such authorization, SUPPLIER'S quotation is rejected and the Work
will not be performed until a revised quotation is accepted by CLARK.
Items of cost shall not include the expense of making good any damage or
replacement of materials rejected by CLARK as failing to conform with the
requirements of the Functional Specification.
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Should CLARK authorize the SUPPLIER to proceed with changes in the Work
pending submission of a quotation based on estimated cost plus percentage
fees, the SUPPLIER shall proceed on the basis of the estimate for the Work
involved, however, within ten (10) days of being authorized to proceed by
CLARK, SUPPLIER will submit a definitive quotation, which if not rejected
by CLARK within ten (10) days thereafter, shall be accepted. If rejected,
SUPPLIER may cease the work involved and CLARK will reimburse SUPPLIER for
the work up to the date of rejection on the basis of the estimate.
7.4 Should the SUPPLIER perform any work or should the SUPPLIER proceed in any
manner which the SUPPLIER may subsequently allege has caused the SUPPLIER
increased cost, damage or loss, purporting to have acted upon verbal
instruction or with tacit consent or acceptance or approval, the SUPPLIER
shall be held to have done so at its own peril and the SUPPLIER shall have
no claim against CLARK on account of the alleged increased cost, damage or
loss.
7.5 SUPPLIER STANDARD LABOR RATES
For Work performed pursuant to Article 7.3, SUPPLIER's standard labor rates
are as follows:
RATE
SERVICE ($/Man-Hr.)
------- -----------
Electronic Design Engineering $46.26
Mechanical Design Engineering $46.26
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Printed Circuit Board Design $30.51
Design Validation Testing $30.51
Engineering Technician $22.93
Project Administration $66.13
Documentation & Testing $22.93
7.6 HANDLING FEES FOR OUTSIDE SERVICES
A handling fee of 10% will be paid SUPPLIER on the invoice amount of
subcontracted Work identified in a quotation under Article 7.3 to be
performed as an outside service, net the cost of materials, any discounts,
freight, taxes, insurance and other charges by the subcontractor.
7.7 In the event of termination by CLARK at any time prior to the completion of
the Milestones set forth in the schedule of Article 5, CLARK shall be
responsible for SUPPLIER's cost incurred up to the effective date of
cancellation, which costs shall not exceed the sum of the progress payments
made up to the date of cancellation, plus the noncancellable tooling orders
incurred under Article 9.
SUPPLIER shall provide CLARK with a record of man-hours and material
invoices paid or incurred by SUPPLIER prior to termination. All drawings,
sketches, tooling and any design related material shall be delivered to
CLARK within 14 calendar days of a written notice to terminate.
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ARTICLE 8. PAYMENT FOR DEVELOPMENT COSTS
8.1 The SUPPLIER shall be paid by CLARK for successful completion of the Work
by the Milestones set forth in Article 5 according to the percentages of
the Contract Price applicable at each Milestone, the sum of which shall not
exceed the Contract Price.
8.2 The Milestones are applicable to all Instrument Pods and no progress
payment will be due from CLARK for any Instrument Pod until the Milestones
have been completed for all Instrument Pods covered by the Functional
Specifications (Exhibit 2).
8.3 SUPPLIER will issue an invoice to CLARK for the applicable progress payment
upon satisfactory completion of the percentage of Work set forth in the
Progress Payment Schedule in Article 5. Subject to verification by CLARK,
CLARK will pay the invoice within thirty (30) days of receipt.
ARTICLE 9. OWNERSHIP OF TOOLING AND PAYMENT SCHEDULE
9.1 PAYMENT STRUCTURE FOR TOOLING COST
The SUPPLIER will place tooling orders when released in writing by CLARK
and CLARK will pay SUPPLIER: (i) forty (40) percent of the total tooling
cost estimates of $75,300 set forth in Article 9.2 when the dollar value of
tooling ordered exceeds forth (40) percent or $30,120 of the total; (ii)
forty (40) percent or $30,120 upon delivery to SUPPLIER of tooling
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Fuel Gauge 0
Gasket 300
Other 11,000
Light Pipe Mold 1,800
Scale Plates (2 types) 400
Connector Gasket 4,500
Connector Terminal 0
-------
Subtotal: $58,800
The items of Manufacturing Tooling to be ordered by SUPPLIER are
identified as follows:
MANUFACTURING TOOLING ESTIMATED COST
Burn-in Fixtures $ 3,000
Pointering Fixture 2,000
Conformal Fixturing 500
Connector Fixture 3,500
Heat Insert Fixture 1,500
PCB Test Fixture 6,000
--------
Subtotal: $ 16,500
TOTAL FOR TOOLING: $ 75,300
9.3 The actual Production and Manufacturing Tooling cost will not exceed
$84,525 based on the SUPPLIER'S experience that complex tool costs can have
a +/- 20% error potential and simple tool costs, a +/- 5% error potential.
CLARK will pay SUPPLIER the
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ordered in (i) above and (iii) twenty (20) percent or $15,060 upon delivery of
all the production and manufacturing tooling. SUPPLIER will invoice CLARK upon a
showing of satisfactory completion of i. ii and iii above, and CLARK will pay
SUPPLIER's invoices within thirty (30) days after receipt. SUPPLIER will provide
CLARK with the names and addresses of tooling vendors and copies of their paid
invoices showing that they have been paid by SUPPLIER before SUPPLIER'S final
invoice under iii above will be paid by CLARK. Payment of any of SUPPLIER's
invoices for tooling will be subject to proof of all tooling vendors having been
paid by SUPPLIER, failing which CLARK may have a set-off for the value of such
unpaid tooling against any other open payable or charge under this Agreement.
9.2 The estimated cost for both the Production and Manufacturing Tooling is set
forth below:
PRODUCTION TOOLING ESTIMATED COST
------------------ --------------
Upper Housing $ 17,000
Lower Housing 18,000
Lens 0
Indicator Overlay (3 types) 5,300
Indicator Light Divider 0
Printed Circuit Board 500
Temperature Gauge 0
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total of $75,300 as the total cost of the tooling ordered under Article
9.2, unless SUPPLIER can substantiate by invoices received from tooling
vendors that the exceed in actual cost over the estimated cost was
justified and that SUPPLIER has paid the higher price, but in no event will
CLARK be responsible for tooling costs, which exceeds $84,525, unless
changes are made by CLARK to the Specifications (Exhibits 1 and 2)
requiring changes in the tooling, in which case any incremental tooling
cost will be reflected in the quotation to a Change Request and accepted
under Article 7.
9.4 The Production and Manufacturing Tooling ordered by SUPPLIER, together with
the technical data embodied therein, shall be the sole property of CLARK
upon delivery and acceptance by SUPPLIER of each tooling item identified in
Article 9.2 and SUPPLIER will mark or otherwise identify each tooling item
as being the property of CLARK by affixing a permanent label thereto
stating, "PROPERTY OF CLARK EQUIPMENT COMPANY" as a notice to third parties
that SUPPLIER is in possession of the tooling as a bailee solely for the
purpose of performance of this Agreement.
9.5 SUPPLIER will maintain, preserve, and repair the tooling, returning all or
any portion thereof to CLARK upon request, damage or breakage to be at
SUPPLIER's expense, normal wear and tear excepted, shipping to CLARK, or
other destination of
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the tooling to be at CLARK's expense. SUPPLIER will ship the tooling within
fourteen (14) days of a written request from CLARK for any or all of the
tooling items identified in Article 9.2. Shipments will be prepaid by
SUPPLIER and reimbursed by CLARK upon receipt of the tooling subject to
verification of its condition. SUPPLIER will be obligated to obtain
insurance for such shipments naming CLARK as the insured.
ARTICLE 10. PROTOTYPE AND PREPRODUCTION PROTOTYPES
10.1 CLARK will pay SUPPLIER $1000 for each prototype delivered for endurance
testing and design validation testing in accordance with the Specifications
(Exhibit 1 and 2).
10.2 CLARK will also pay SUPPLIER $285 for each preproduction prototype diesel
and gasoline pod design, and $267 for each preproduction prototype LPG pod
design made using the tooling listed in Article 9.2, the quantities of such
preproduction prototypes to be decided by CLARK, but not to exceed fifty
(50) prototypes.
10.3 SUPPLIER will invoice CLARK for the prototypes upon completion and delivery
for test and CLARK will pay the invoices thirty (30) days after receipt of
the invoices.
10.4 The prototypes shall become the sole and exclusive property of CLARK upon
completion by SUPPLIER and payment by CLARK. Possession of prototypes by
SUPPLIER shall be solely for the
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purpose of testing and upon being requested to do so, SUPPLIER will return
all the prototypes to CLARK within fourteen (14) days of such request, any
damage or breakage to be at SUPPLIER's expense, normal wear and tear from
testing excepted. SUPPLIER will prepay the freight to the destination
provided by CLARK in the request and insure the shipment against damage or
breakage at its expense naming CLARK as the insured.
ARTICLE 11. NON-DISCLOSURE
11.1 All technical information furnished by CLARK to SUPPLIER will be solely for
SUPPLIER's use in performing its obligations in accordance with this
Agreement. Such technical information shall not be disclosed to a third
party, except as necessary for Work performance under this Agreement. All
right, title and interest shall reside in CLARK to all drawings, test data,
documentation, test reports, material specifications and all models,
mock-ups, prototypes and tooling made, fabricated or produced under this
Agreement. All such materials shall be returned to CLARK when requested and
no technical information, or derivatives thereof, shall be used by
SUPPLIER, its affiliates, or any entity under its control thereafter.
11.2 All materials identified in 11.1 will be for SUPPLIER's use only in
performing the Work under Part I and production under Part II and shall not
be disclosed to third parties without
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CLARK's prior written consent, and upon completion or termination of the
Agreement, SUPPLIER shall return all such material to CLARK or make such
other disposition thereof as may be directed or approved by CLARK, and
refrain from manufacturing or selling any similar pods that would be ;used
on trucks in competition to the CLARK World Truck for three (3) years
thereafter.
11.3 SUPPLIER agrees to maintain all contractual and business information
pertaining to this Agreement confidential and not to disclose such
information without the prior written consent of CLARK.
11.4 SUPPLIER agrees that CLARK shall own all rights, title and interest
worldwide to any inventions, discoveries, or design improvements made
hereunder and will promptly disclose the same to CLARK so that it can file
patent applications thereon and SUPPLIER's employees working on this
project shall cooperate with CLARK in assigning such inventions,
discoveries, or design improvements to CLARK and in assisting patent
counsel in preparing, filing and prosecuting such patent applications in
the United States and abroad.
ARTICLE 12. ACCEPTANCE
12.1 Upon approval for production by CLARK, each Instrument Pod design accepted
for production will receive a Certificate of Acceptance in the form
attached hereto and made a part hereof as Exhibit 3.
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12.2 Any Instrument Pod design which fails to receive a Certificate of
Acceptance pursuant to 12.1 shall be rejected. CLARK may, at its option,
either terminate the Agreement or cancel that portion that pertains to the
rejected Instrument Pod design. The cause of rejection must be a material
inability of SUPPLIER to satisfy the Specifications of Exhibits 1 and 2.
The percentage of the rejected design costs bear to the total development
costs in Article 5 shall be used to reduce the Contract Price. SUPPLIER
shall reimburse CLARK, or CLARK may have a set-off against the cost for
developing other Instrument Pod designs which are accepted, or against
production units purchased under Part II.
ARTICLE 13. INTENTIONALLY LEFT BLANK
ARTICLE 14. CANCELLATION
CLARK shall have the right to cancel during Part I upon thirty (30) days
written notice to the SUPPLIER. It is understood that in case of such
cancellation, a cancellation charge computed in accordance with Article 7.7
will be paid by CLARK.
ARTICLE 15. INTENTIONALLY LEFT BLANK
ARTICLE 16. INTENTIONALLY LEFT BLANK
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PART II PRODUCT MANUFACTURING AND SALE
ARTICLE 17. COMMENCEMENT OF MANUFACTURING FOR EXCLUSIVE SALE TO
CLARK AND TERM OF AGREEMENT.
17.1 Upon CLARK issuing a Certificate of Acceptance, as provided for in Article
12.1, Part II of this Agreement shall become applicable to the Instrument
Pod designs accepted.
17.2 Under Part II, the SUPPLIER agrees to manufacture and sell to CLARK, and to
no one else during the term of this Agreement, which shall be for three (3)
calendar years following the year in which the latest Certificate of
Acceptance is issued, or not beyond the end of calendar year 1996,
whichever is later.
17.3 SUPPLIER will sell to CLARK, or its affiliates, commercial quantities of
merchantable quality Instrument Pods packaged and delivered in lots ordered
by CLARK, and its affiliates, to destinations specified in each order or
release coordinated with the separate production lines for assembly of the
Instrument Pods into the applicable World Truck chassis.
ARTICLE 18 FORECASTING AND ORDERING
18.1 CLARK and its affiliates will provide twelve (12) calendar month rolling
forecasts of their anticipated production needs based on their individual
factory build schedules for domestic and foreign plants manufacturing the
World Truck in which the Instrument Pods are to be assembled.
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18.2 Forecasts shall be issued by CLARK and its affiliates each calendar month
for each Instrument Pod beginning no sooner than with the calendar month
following the month in which a Certificate of Acceptance is issued for such
Instrument Pod, but not later than the month prior to the month in which
start-up of production occurs.
18.3 Each forecast shall cover fifty-two (52) calendar weeks of chassis build
quantities at the factory location issuing the forecast, the first eight
(8) consecutive calendar weeks of which SUPPLIER will deliver the ordered
quantities to the factory destination no earlier than three (3) days prior,
nor one (1) day after the specified delivery date. The first four (4) weeks
of the schedule will constitute a firm order period against which orders or
releases are issued by CLARK or its affiliates. Contracts of sale occur
only upon orders or releases issued for scheduled quantities during the
firm order period. CLARK or an affiliate may vary the scheduled quantities
plus or minus 15% from the fifth (5th) through the eighth (8th) week, and
thereafter, the factory issuing the forecast may change the forecasted
quantities and delivery dates as market conditions or other factors
require.
18.4 Orders or releases are issued against quantities specified during the firm
period which are deemed accepted by SUPPLIER unless alternate quantities
and dates are promptly proposed by SELLER within three (3) days of receipt
of the order or release, and such alternate quantities and delivery dates
are
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accepted in writing by the factory destination issuing the order or
release.
18.5 SUPPLIER acknowledges that its contract deliveries must be coordinated to
arrive at the factory destination specified in the order or release,
domestic or foreign, timed for assembly with the chassis build on which the
rolling forecasts at that location was based and such contract for
deliveries is a part of each contract of sale.
18.6 Quantities ordered which do not arrive at the factory destination within
the time allowed in 18.3 may be rejected as not conforming to the contract
of sale. SUPPLIER will be responsible for air shipping any order to its
destination and paying the difference in shipping charges between air and
surface transportation if it will be unable to meet the delivery commitment
in 18.3 and 18.5.
18.7 All contracts of sale will be upon the terms and conditions set forth in
this Agreement. While the parties may use their standard purchase
order/acknowledgement forms to place or acknowledge orders, no different or
additional terms or conditions set forth in such purchase
orders/acknowledgements will add to or modify in any way the terms and
conditions of any contract of sale.
ARTICLE 19. TERMS OF DELIVERY.
19.1 Orders or releases pursuant to Article 18.3 shall b&shipped from SUPPLIER'S
dock FOB in Grand Junction, Colorado to the
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factory destination specified in the order or release. SUPPLIER may be
asked to arrange for carriage to a transport center designated by CLARK
within the U.S. for trans-shipment to a factory destination. SUPPLIER may
be requested to arrange for documentation and shall do so at the request
and expense of the factory destination. Transportation charges, insurance,
financing fees, VAT (value added taxes) and other taxes, duties or levies
including costs for loading and unloading to the destination for each
shipment, if prepaid by SUPPLIER, shall be for the account of the factory
destination which charges shall be itemized and shown separately on the
commercial invoice. Risk of loss and legal title will pass when each
shipment is handed over to the first carrier at SUPPLIER's dock. When
requested, SUPPLIER shall arrange for bills of lading and commercial
invoices to be prepared in sets of duplicate originals, and sent as
necessary to enable representatives of CLARK or its affiliates at the
factory destination to take possession of the shipment upon arrival cleared
through customs of the country of importation to the factory destination,
and it shall be SUPPLIER's further obligation, when requested, to arrange
for all transport documentation to be accompanied by certifications of
governmental authorities, customs clearances, entry summary requirements
and port clearances to enable the factory destination to take possession
and free of all charges upon arrival, including value added taxes, ad
valorem taxes, port
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charges and duties including antidumping or countervailing duties. SUPPLIER
and CLARK or an affiliate may arrange to communicate the information
otherwise contained in a negotiable transport document by equivalent
electronic data interchange (EDI) messages provided the factory destination
acknowledges to SUPPLIER that such EDI messages are interchangeable with
negotiable transport documents and CLARK or its affiliate remain with the
same legal rights as if the shipment were handled otherwise by ordinary
negotiable transport documents.
ARTICLE 20. PRICING.
20.1 Orders or releases will be accepted by SUPPLIER for the quantities
identified therein and sold to CLARK or its affiliates by SUPPLIER for an
initial Unit Price established for each Pod as set forth in a Pricing
Schedule, attached hereto as Exhibit 4 and incorporated herein by
reference. The initial Unit Prices will be the same as the Target Cost for
each Instrument Pod as set forth in Article 6. Thereafter, Unit Prices may
vary according to annual adjustments as provided in Article 21 to determine
the current Unit Price, as set forth in the revised Pricing Schedules,
which when initialed by the parties and attached to the Agreement, becomes
effective and supersede the previous Pricing Schedule (Exhibit 4).
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20.2 The SUPPLIER and CLARK shall cooperate in an attempt to offset the impact
of inflation and other input costs on the SUPPLIER'S marginal cost in
producing the Instrument Pods with the goal of maintaining the Unit Prices
at or below the Target Cost during the term of this Agreement. Any cost
reduction in material, labor, variable overhead, fixed costs, or other
sources of costs to SUPPLIER's operations shall first be applied so as to
reduce the Unit Price below the Target Cost prior to making any economic
price adjustments as provided in Article 21.
ARTICLE 21. PRICE CHANGES DUE TO ECONOMIC ADJUSTMENTS
21.1 The parties recognize that independent economic factors influence prices
apart from the cost factors deemed to be partially under the control of the
SUPPLIER referred to in
20.2. After application of the cost factors for reduction of the Unit Price as
provided in 20.2, the independent economic factors may be applied to
determine the current Unit Price, as provided in 21.2.
21.2 The Unit Prices will be established as provided in 20.1 from the effective
date of each Certificate of Acceptance through the end of the first full
calendar year following the calendar year in which such effective date
occurs. The current Unit Prices in subsequent calendar years may be
adjusted annually, starting with the beginning of the second calendar year
and each succeeding calendar year thereafter. A revised Pricing
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Schedule (Exhibit 5) will be attached to the Agreement superseding the
previous Pricing Schedule effective with the beginning of each calendar
year. In determining the annual adjustment to prices, starting with the
second calendar year, SUPPLIER and CLARK shall cooperate during the
previous calendar year as provided in 20.2 to apply cost reductions before
making any economic adjustments under 21.1. The economic adjustments shall
be made using the U.S. Department of Labor, Bureau of Labor Statistics
Producer Price Index for electronic components and accessories (commodity
code 1178)0 and plastic products (commodity code 072) as weighted
components in a Unit Price formula set forth below:
PM = PC + (0.5 x 0.2 PC) x (GL - GO)/100 +
(0.5 x 0.6 PC) x (IL - IO)/100
Where:
1. PM is the new Unit Price effective each succeeding calendar year;
2. PC is the old Unit Price;
3. GL is the September index for the electrical components and accessories
(commodity Code 1178) as published in the September issue of the
Producer's Price Index of the current calendar year;
4. GO is the corresponding index for September of the preceding calendar
year;
5. IL is the September index for plastic products (commodity Code 072)
published in the September
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issue of the Producer's Price Index for the current calendar year; and
6. I0 is the corresponding index for September of the preceding calendar
year.
ARTICLE 22. INTENTIONALLY LEFT BLANK
ARTICLE 23. PROTECTION FROM LABOR DISPUTES
23.1 In the event SUPPLIER'S hourly production workers organize a union and
SUPPLIER enters into an agreement to recognize such union, or any trade
union organization becomes certified to represent SUPPLIER's employees in a
skill affecting SUPPLIER's ability to fulfill the terms of this Agreement,
SUPPLIER will build an inventory bank of each Instrument Pod against the
possibility of a work stoppage or slow down prior to the expiration of any
such labor agreement of sufficient quantities of each Instrument Pod to
meet the eight-week forecast of CLARK and each of its affiliates following
expiration of any such labor contract. SUPPLIER shall store such pods off
site at a warehouse location from which SUPPLIER may continue to deliver
pods to fulfill the orders or releases received after the expiration of
such labor contract.
23.2 Neither CLARK nor SUPPLIER shall be liable for delays in delivery or
inability to perform or complete its obligations due to acts of God, acts
of the public enemy, civil or military police authorities, strikes,
epidemics, war or riot,
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and in the event of any such force majeure event causing such delays or
interruption of performance, the party affected thereby shall be excused
from performance from the time when the performance would otherwise have
been due for a period of time equal to the length of the force majeure
event, each party to bear its own expenses during such delay or
interruption of performance, and if the delay or interruption of
performance shall continue for a period in excess of eight calendar weeks
after the week in which the performance was due, the party believing itself
disadvantaged, shall at its option, be able to terminate this Agreement
thereafter.
ARTICLE 24. QUALITY ASSURANCE
24.1 SUPPLIER will establish and maintain a quality assurance program which
conforms to the CLARK Quality Assurance Program SQA1, a copy of which is
attached hereto as Exhibit 5 and made a part of this Agreement.
24.2 CLARK may, at its option and expense, review and inspect SUPPLIER's quality
assurance program and product quality at SUPPLIER's facilities. SUPPLIER
will provide Clark's representatives with good faith cooperation in such
assessments including furnishing testing and inspection devices as may be
reasonably required by CLARK's representatives to conduct such assessment
reviews and inspections. CLARK will use its best efforts consistent with
accomplishing its assessment reviews and inspections to avoid
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undue disruption or delay of SUPPLIER'S operations. Inspection and review
of SUPPLIER's quality assurance program and product quality will not
constitute acceptance of any Pods and will not relieve SUPPLIER of the
responsibility for any non-conformity.
24.3 If SUPPLIER has reason to believe that a defect in design or manufacture or
a non-conformity with the specifications may be present in any Pods or
parts, SUPPLIER will immediately advise CLARK and will cooperate with CLARK
to determine whether the defect or non-conformity is present and, if so,
will cooperate with CLARK to correct it. This provision will not be
construed to expand SUPPLIER warranty to CLARK or to relieve SUPPLIER of
its responsibility for the consequences of any such defect or
non-conformity.
ARTICLE 25. WARRANTY ON INSTRUMENT PODS AND PARTS
25.1 SUPPLIER warrants that the Instrument Pods sold hereunder will conform to
the specifications for the purpose intended, of good material and
workmanship, and free from defects. For purposes of this Agreement, any
failure of an Instrument Pod to be as warranted is referred to as a
"defect." This warranty extends to the performance of the Instrument Pods
in lift trucks into which the Instrument Pods are incorporated.
25.2 If any defect is discovered in an Instrument Pod prior to delivery of a
lift truck to a first user into which it has been incorporated, SUPPLIER
will pay or reimburse CLARK or its
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affiliates for the parts and labor required to correct the defect and any
damage to the lift truck resulting from the defect. An allocation of
overhead costs proportional to the labor charges will be added if the
repairs are made by CLARK or its affiliates before shipment of a truck to
the dealer or customer. The labor rate shall be at the standard dealer
warranty rate if the repairs are made by the dealer before delivery to a
first user or customer.
25.3 If any defect is discovered in a Pod within eighteen (18) months after the
date of delivery to CLARK or its affiliate or during the first two thousand
(2000) hours of use of a truck in which it is installed, whichever occurs
first, SUPPLIER will pay or reimburse CLARK and its affiliates for the
parts and labor required to correct the defect and any damage to the truck
resulting from the defect at the standard dealer warranty rate plus travel.
25.4 If a defect is discovered at any time that poses a hazard which may cause
personal injury or property damage, notwithstanding any other warranty
provision or warranty limitation, SUPPLIER will pay, or reimburse CLARK or
its affiliates, for the cost of parts and labor to correct the defect and
any damage to the truck caused by the defect, at the dealer's standard
warranty rate, plus travel to repair any truck into which the defective Pod
has been incorporated. In addition, the costs to provide proper notice and
warnings to
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dealers and to users of such trucks will be SUPPLIER's expense.
25.5 Parts provided by SUPPLIER for Pods under the warranty provisions of this
Agreement are covered by the above warranty provisions in 25.3 for the
remainder of any applicable warranty period, and thereafter are covered by
the Parts Warranty to the extent that the Parts warranty period exceeds the
Pod warranty period.
ARTICLE 26. WARRANTY CLAIMS
26.1 When a written claim for warranty reimbursement is made, SUPPLIER may take
the following actions:
a) SUPPLIER may require CLARK or its affiliates to return the defective
Pods or the defective Parts at SUPPLIER's expense to a designated
warranty administration facility operated by CLARK or its affiliates.
b) SUPPLIER may inspect any such defective Pods and Parts at the warranty
administration facility, or may instead, upon prompt written notice,
require CLARK or its affiliates, to return such Pods and Parts to
SUPPLIER'S facility at its expense. CLARK and its affiliates will
notify SUPPLIER when such Pods and Parts are available for inspection,
and provide a brief description of the basis for the warranty claims,
after which SUPPLIER will instruct CLARK, or its affiliates within ten
(10) days whether to send the returned Pods and Parts to SUPPLIER's
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facility and failing to receive such instructions, the Pods and Parts
will be automatically deposited for inspection by SUPPLIER at the
warranty administration facilities operated by CLARK and its
affiliates.
c) After inspection by SUPPLIER, if SUPPLIER determines that such Pods or
Parts are not defective, SUPPLIER will provide CLARK with the data and
analysis on which SUPPLIER's determination is based in each case, and
segregate each item for physical inspection and verification.
Otherwise, SUPPLIER will pay or reimburse CLARK and its affiliates in
accordance with the applicable warranty provisions for each item
subject to a warranty claim within fifteen (15) days from the date of
SUPPLIER's inspection.
d) Any warranty claim made by CLARK or its affiliates will be considered
accepted, unless within thirty (30) days after SUPPLIER's receipt of
the claim, as provided in paragraph b) above, SUPPLIER either notifies
CLARK or its affiliates in writing:
i) that the claim is denied in accordance with the procedure set
forth in paragraph c) above, or
ii) that SUPPLIER requests additional time not to exceed thirty (30)
days within which to complete the procedures set forth in
paragraph b) and c) above.
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26.2 The warranties provided by this Article 26 will not apply to Pods which are
incorporated into trucks which have not been approved by SUPPLIER for use
with that truck, however, CLARK or its affiliates may request such
approval, which shall not be unreasonably denied, and SUPPLIER will be
deemed to have granted its approval unless a refusal is made, in writing,
giving the reasons therefor within thirty (30) days of such request.
26.3 The warranties provided do not apply to malfunction or failure caused after
delivery to users by parties other than SUPPLIER or SUPPLIER's
representatives, by accident, misuse or neglect, or arising from
alterations not authorized by SUPPLIER. These warranties do not cover
service replacement of consummable items such a light bulbs.
26.4 The warranties provided in this Agreement are in lieu of all other
warranties, express or implied, and state SUPPLIER's entire obligations
with respect to defects in Pods or Parts. THERE ARE NO IMPLIED WARRANTIES
OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS STATED
IN THIS AGREEMENT, SUPPLIER WILL NOT BE LIABLE FOR INCIDENTAL OR
CONSEQUENTIAL COMMERCIAL DAMAGES FOR BREACH OF WARRANTY.
ARTICLE 27. PRODUCT LIABILITY INSURANCE
27.1 SUPPLIER will carry sufficient insurance with limits adequate in the
opinion of CLARK to satisfy claims by third parties of injury to persons or
damage to property contributed to or
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caused by the Pods or Parts and provide CLARK with evidence upon request
that such insurance is in force throughout the term of this Agreement and
thereafter.
27.2 In the event of any defect in design, workmanship, or manufacture in the
Pods or Parts sold to CLARK or its affiliates by SUPPLIER under this
Agreement that causes or as alleged to cause any injury to persons or
damage to property for which a claim is made by a third party against CLARK
or its affiliates for breach of warranty, strict liability or negligence,
SUPPLIER will indemnify and defend CLARK, or its affiliates, including
payment of all attorney fees and all damages, including punitive damages,
arising from such claims.
ARTICLE 28. INDEMNIFICATION
SUPPLIER agrees, at its own expense, to defend, protect, and hold harmless
CLARK, its successors and assigns, against all suits a law or in equity and
for all damages, expenses, claims and demands arising from infringement of
any United States or foreign patent, trademark or copyright by reason of
CLARK's or other's use, sale or purchase of the Instrument Pods covered by
this Agreement. CLARK will promptly notify SUPPLIER of such suit or action
and copies of legal documents served on CLARK with regard thereto shall be
promptly delivered to SUPPLIER.
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ARTICLE 29. PARTS AVAILABILITY AND WARRANTY
29.1 SUPPLIER shall have the obligation to sell to CLARK and its affiliates and
CLARK or its affiliates shall have the opt(pound)on to purchase from
SUPPLIER, during the term of this Agreement and for five (5) years
thereafter, replacement pods and component parts therefor which are
manufactured by SUPPLIER for the World Trucks and sold pursuant to this
Agreement.
29.2 During the term of this Agreement and for five (5) years thereafter, CLARK
and its affiliates will maintain a stock of Pods and Parts to supply
dealers and customers; however, SUPPLIER will also maintain a back-up
supply of Pods and Parts in sufficient quantities. The parties shall from
time to time agree on the appropriate quantities of back-up Pods and Parts.
SUPPLIER will use its best efforts to ship back-up Pods and Parts orders
within twenty-four (24) hours after the order is received. An order will be
considered a back-up order if the Pod or Part is required to repair a truck
which is idle or out of service because the repair cannot be supplied from
stock maintained by CLARK or its affiliates.
29.3 If any defect is discovered in a Part within eighteen (18) months after the
date of delivery to CLARK or its affiliates or during the first two
thousand (2000) hours of use of a truck in which it is installed, whichever
occurs first, SUPPLIER will pay or reimburse CLARK and its affiliates for
the parts and labor required to correct the defect and any damage to the
truck resulting from the defect at the standard
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dealer warranty rate plus travel.
29.4 A replacement Pod or Part is covered under the Pod Warranty for the
remainder of the applicable warranty period in Article 25.3 and thereafter
is covered by the replacement Pod or Part Warranty to the extent the latter
exceeds the former.
ARTICLE 30. STANDARD TERMS OF SALE
30.1 The contracts of sale for Pods and Parts shall be made pursuant to this
Agreement and any standard or printed terms accompanying any purchase
order, release, invoice, confirmation, or any other communications shall
not modify or change the terms of this Agreement. In the event of any
conflict with the written or printed terms of any such communication and
those of this Agreement, or the presence of any additional or different
terms than those in this Agreement, the terms of this Agreement shall be
controlling and supersede any such conflicting, additional or different
terms.
ARTICLE 31. TERM AND TERMINATION
31.1 Except as otherwise provided under Article 14 of Part I, this Agreement
shall remain in force for the term set forth in 17.2 of Part II, unless
terminated immediately by notice in writing given by either party to the
other upon the happening of any of the following events:
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i) Upon the breach by the other party of any provisions of this Agreement,
provided where such breach is capable of remedy, notice of termination
shall not be given unless and until the party in breach fails to remedy
such breach within thirty (30) days after notice in writing from the
other party requiring such remedy;
ii) Upon the other party making any concession with its creditors or having
a petition in bankruptcy filed by or against it or having or suffering
a receiver or administrator to be appointed over the whole or any part
of its assets, or a moratorium being declared in respect of any of its
debts, or taking advantage of any statute for the relief of insolvent
debtors, or any action being taken for the suspension of payments or of
any creditor's rights or of any petition in bankruptcy which is not
vacated within thirty (30) days, and
iii) Upon either party ceasing to do business in a normal way, or any
significant change in control, or sale or disposition of substantially
all the assets of either party without the prior written consent of the
other party.
31.2 The termination of this Agreement shall not relieve either party of any
obligations or monies due the other party prior to termination, nor shall
termination of this Agreement prejudice any rights or obligations which are
deemed to
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survive termination pursuant to the following articles: 7.7; 10.4, 11;
24.3; 25; 26; 27; 28 and 29.
ARTICLE 32. GENERAL PROVISIONS
32.1 Written notice shall be deemed to have been duly served in person on the
individual or the officer for whom it is intended, when sent by any of the
means described herein, or if sent by registered or certified mail to the
business address given below on the date sent with proper U.S. postage
paid.
32.2 Notices to be given by either party will be in writing and may be delivered
by either telecopy facsimile, telegram, or prepaid registered or certified
mail to the following address:
SUPPLIER: Dixson, Inc.
287 27 Road
Grand Junction, Colorado 81503
Telecopy No. 303-245-6267
CLARK: Clark Material Handling Company
333 W. Vine Street
Lexington, Kentucky 40507
Telecopy No.: 606-288-1541
AND A COPY TO: CLARK/Legal
Suite 701
106 W. Vine Street
Lexington, KY 40507
Telecopy No.: 606-288-1355
32.3 This Agreement will not be assigned by either party without the prior
written consent of the other party, except when the assignment is made to a
wholly owned subsidiary of the parties, or to a successor of the business
to which this
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Agreement relates. Unless otherwise agreed, no assignment will relieve the
party assigning of any duty to perform or any liability for breach.
32.4 This Agreement encompasses the entire Agreement between the parties
respecting the sale and purchase of the Pods and Parts covered by this
Agreement and supersedes any and all previous Agreements, Memoranda,
negotiations or understandings of the parties with respect thereto. This
Agreement and the Contract Documents may be modified by mutual agreement of
the parties only by written amendment signed by both parties.
32.5 Any failure by either party hereto to enforce, at any time, any term or
condition of this Agreement will not constitute, nor will it be construed
as a waiver of that party's right thereafter to enforce each and every term
and condition of this Agreement.
32.6 If for any reason any provision of this Agreement is invalid, illegal, or
unenforceable, then such provision will be deemed severable form the other
provisions of this Agreement, all of which remain in full force and effect
and binding on the parties to this Agreement.
32.7 This Agreement and all disputes arising pursuant to this Agreement will be
governed by and construed in accordance with the laws of the Commonwealth
of Kentucky.
32.8 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in duplicate originals by their duly authorized representatives as of the
day and year first written above.
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DIXSON, INC.
BY: /s/
-------------------------------------
TITLE: Vice President of Marketing
-------------------------------------
DATE: 9/23/91
-------------------------------------
CLARK MATERIAL HANDLING COMPANY A Business
Unit of Clark Equipment Co.
BY: /s/
-------------------------------------
TITLE: President
-------------------------------------
DATE: 12/20/91
-------------------------------------
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