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EXHIBIT 10.1
EXCLUSIVE MARKETING AND TECHNOLOGY AGREEMENT BETWEEN RELIABLE POWER SYSTEMS INC.
AND PERFECT POWER SYSTEMS INC.
4-10-01
Reliable Power Systems Proposal for the Exclusive sales and marketing of the
Seamless Power Machine.
Reliable Power Systems, Inc., ("RPSI"), desires to enter into an exclusive
relationship with Perfect Power Systems, Inc. ("Perfect Power"), to sell and
market the Patented Seamless Power Machine, (SPM), patent numbers, 6204572 and
6020657. The exclusive basis for this agreement covers all sales channels and
OEM potentials. This understanding also is based with the agreement that Perfect
Power or On-Line Power will not attempt to sell the SPM under any other Logo's
or product names. RPSI understands the Patented nature of this product and will
sell it with the full commitment to protect Perfect Power's patent. The
commitment from RPSI to pre-purchase SPM's from Perfect Power is based on the
exclusivity of the SPM to RPSI and if violated by Perfect Power will be
considered an immediate breach of this agreement. Perfect Power's current
projects are listed below. In the case where RPSI receives the Purchase Order on
named projects, both companies will split the gross profit minus commissions,
taxes or freight, as defined later in this contract. The projects known to RPSI
are as follows: Dana Corp, Eastern Missouri Location, Intel's San Francisco four
module parallel project, which was generated by Mike Warner, Above Net single
module system designed by Mike Mossman of CCG Inc. Invinsis Show room, single
module, and other projects that were quoted within the last ninety days by
Perfect Power and submitted in writing to RPSI within 15 days of signing this
agreement.
In the event Perfect Power refers a customer for the SPM to RPSI that produces a
sale, the actual purchase order from the customer will be used to determine the
gross profit over the purchase price from Perfect Power to RPSI. The gross
profit minus any taxes and commissions including freight will be divided between
the two companies, with 60 percent going to RPSI and 40 percent to Perfect
Power.
This contract shall remain in effect for a minimum of 24 months, and can be
extended by mutual agreement between RPSI and Perfect Power.
The SPM will be built to the specifications as defined by attachment A of this
agreement. The cost of the SPM between RPSI from Perfect Power is firm for the
contract period. RPSI desires to sell the complete product line of SPM's with
pricing for all available models currently under production. The price per unit
will be exclusive of freight, which will be handled directly by RPSI.
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The price per unit will be determined based upon the specifications of each
unit. RPSI agrees that the total purchase price for the full 65 unit commitment
will be at a minimum of at least $24,000,000.
The first order for the initial five units will be produced by Perfect Power
within twenty two weeks from receipt of approved drawings. The second purchase
release will be for units 6 through 25, with the third release being for units
26 through 46, with the final release for units 47 through 65. This release
schedule will allow for the full 65 unit commitment to be produced and shipped
within the twenty four month contract period.
The payment terms will be per the standard terms for Perfect Power as defined by
attachment B with this contract. This agreement should include the units from
500 kva though 1250 kva. Pricing for the 500 and 750 kva units will be
negotiated as a separate attachment to this contract. When other unit sizes
become available during the contract period they will be offered to RPSI based
on the existing pricing model of cost per kva. This is with the understanding
that the cost per kva goes down with units of larger sizes.
The commitment to pre-purchase SPM units is based on timely manufacturing
production cycles, (typically 18-22 weeks after release of an order by RPSI,
including the payment terms as defined in this agreement to Perfect Power), firm
delivery dates, and with the final testing preformed by authorized RPSI
personal. In the event a unit fails to meet its specifications, then Perfect
Power will correct the deficiency within a reasonable time frame, not to exceed
three weeks, or that unit can be declared unacceptable and removed form the pre
purchased agreement commitment.
The first commitment of products from Perfect Power for RPSI will be for the
1250 kva units with standard enclosure, as shown in the current SPM literature
(The shuttle design). It will include all monitoring options, including color
display with touch screen, RS 232, 422 and 485 communication interface. The
SPM's will be provided with the input, output and by-pass breakers. RPSI will
not accept any units built as prototypes or Alpha or Beta units currently in
Perfect Powers inventory. The first five units will be built and readied for
approval and acceptance by RPSI personnel, when completed and approved the
second order will be released, and the approval and released cycle will continue
until all 65 units are completed and accepted. The actual delivery schedule is
defined later in this contract. Additional units may be required in excess of
the original units and will be released per a rolling forecast that will be
updated at least twice per month. The delivery of the additional units will be
based upon 18-20 weeks from order release to Perfect Power.
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Perfect Power will provide to RPSI a service commitment with OEM pricing that
will allow both companies to receive revenues. The service pricing will be
compared to other Battery-Less Systems for price comparison and will be
competitive. Perfect Power will additionally guarantee on site service within
the industry standards of timely performance, typically phone response within
two hour of an incoming service call and on site within one day, warranty
service and the stocking of all necessary spare parts to insure fast and
accurate on site repairs.
All service personal must be trained on the SPM and be provided with complete
service manuals and wiring diagrams. Copies of this information will be provided
to RPSI as part of this agreement. The pricing for the service offer must be
approved by RPSI before the first systems are put into production and the
initial payment is made to Perfect Power.
In the event that Perfect Power fails to respond to a customer service problem
in either a timely manor, not to exceed sixty days, or fails to adequately
repair the unit within the sixty day time period, or the unit cannot be
repaired, Perfect Power will replace the defective components or the entire
unit, if necessary, and loan the customer if desired a back up generator. RPSI
will return at its cost the defective parts to Perfect Power at its factory, and
Perfect Power aggress to send the replacement part to the customer site at its
costs.
RPSI Systems will produce a Marketing plan that will offer to both companies the
fastest and broadest based attack for the market potential of the SPM product
line. This plan will be sent to Perfect Power as part of this total offering
from PPSI. The marketing plan includes direct advertising in the major market
target areas such as newspaper ads, specialize ads in the trade journals, direct
market mailers for the Industrial, Hospital, Data, Telecom, and Utility areas.
The market plan will immediately push sales in the California and other
electrical vulnerable markets. This plan will include packaged solutions to the
quality power market that will cover the broadest possible customer base.
Reliable Power is currently contracting with both a Web Site designer and an
advertising agency to insure a professional advertising campaign.
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RPSI and Perfect Power as part of this agreement mutually agree not to hire
directly or indirectly through third parties, current employees or from either
company, or employees that choose to leave employment of either company or are
terminated for cause by either company. Should an employee obtain a written
release form this contractual clause; both companies must agree in writing that
an individual employee is exempt from this condition.
RPSI also desires to include other On-Line Power products currently listed in
the OLP customer catalog. RPSI is requesting On-Line Power to provide a separate
pricing discount structure for the complete OLP product offering. RPSI would
like to private label this offering as to insure no potential channel conflict
with your current sales force.
This agreement is the only contract between RPSI and Perfect Power, and will be
controlled by Colorado law and both venue and jurisprudence shall be in Denver
Colorado. In the event either party pursues a legal remedy in order to settle
any disputes relating to this contract, the prevailing party shall be awarded
costs, including without limitation, attorney's fees as deemed reasonable by the
court.
We look forward to working with you in this exciting relationship and getting
this agreement off to a mutual beneficial result.
Regards,
Tom Wiens
Chairman & CEO
Reliable Power Systems Inc.
c.c. Matt Essig
Director of Operations
Reliable Power Systems Inc.
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If the terms of this letter agreement are acceptable to you, please sign on
behalf of both Perfect Power and On-Line Power and return a copy to me.
Perfect Power Systems, Inc.
By:
-------------------------
Date:
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On-Line Power, Inc.
By:
-------------------------
Date:
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EXHIBIT A
WILL BE PROVIDED AFTER RECEIPT OF ORDER 1ST 5 UNIT FOR APPROVAL.
A
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EXHIBIT B
ATTACHED STANDARD PERFECT POWER SYSTEM'S TERMS & CONDITION (Doc.
#PPI-1021A-201). THE RPSI OEM TERMS WILL REQUIRE PAYMENT TERMS OF 1/3 WITH
PURCHASE ORDER, 1/3 WITH SUBMITTAL APPROVAL, AND 1/3 AFTER COMPLETION OF
MACHINE.
RPSI
---------------------------------------------------------------
Signature Date
Perfect Power
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Signature Date
B
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EXHIBIT C
OEM FIELD SERVICE AGREEMENT
IN ORDER FOR RPSI TO GENERATE REVENUE, PERFECT POWER WILL BILL ALL START-UP &
PREVENTATIVE MAINTENANCE AT RATE OF $1800 PER DAY PER PERSON WITH THE LODGING
AND TRAVEL EXPENSE IN ADDITION.
RPSI
---------------------------------------------------------------
Signature Date
Perfect Power
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Signature Date
C
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PERFECT POWER SYSTEMS
(Logo)
TERMS & CONDITIONS
Warranty Statement
Perfect Power
IS HEREIN CALLED "THE SELLER."
THE PERSON, FIRM OR CORPORATION TO WHOM OR WHICH THIS
QUOTATION IS MADE OR ACCEPTANCE IS PROVIDED IS
HEREIN CALLED "THE BUYER."
PPI-1021A-201
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1. ACCEPTANCE
No Order issued by the Buyer as a result of this quotation of otherwise
shall be binding on the Seller unless acknowledged in writing or by virtue of
the Seller's performance, and thereupon shall become a binding contract under
the terms and conditions set forth herein and/or in the Seller's acceptance
form. No changes in or revisions to this quotation or the prices, delivery
dates, terms, conditions, model and/or specifications stated or referred to on
the face or attached herein stated by the Buyer in its purchase order, or
otherwise, shall be binding upon the Seller if in conflict with the terms and
conditions, the process, delivery dates, model and/or specification stated or
referred to herein and/or in the Seller's acceptance unless expressly agreed to
in writing subsequent to the Seller's acceptance.
Acceptance of the Buyer's purchase order is subject to review of the
Buyer's credit status, the Seller, at any time prior to shipment of goods,
reserves the right to require security for payment. The Buyer agrees that
security may take the form of a security interest in the goods sold and agrees
to execute a Financing Statement should the Seller decide such security is
warranted.
2. PRICES
The Buyer agrees that if the Buyer hereafter makes any change in the
quantities scheduled for shipment from those shown on the face hereof, the price
of such units or parts may be changed to meet the Seller's price application to
the changed quantities scheduled.
Prices stated herein do not include any tax, excise, duty or levy now
or hereafter enacted or imposed by any governmental authority on the
manufacture, sale, delivery and/or use of account and the Seller will add all
such assessments to the price stated if no proper exemption certificate is
received relieving the Seller of the responsibility for paying or collecting
such assessments.
Buyer will pay to Seller all cost and fees associated with change
orders and cancellations.
Unless otherwise agreed in writing by the Seller, all prices are FOB
origin. Title and risk of loss to all articles sold by the Seller to the Buyer
shall pass to the Buyer upon delivery thereof by the Seller to a carrier for
shipment to the Buyer subject to any security interest retained by the Seller.
All quotations and proposals are valid for 60 days.
3. DELAY
The Seller shall not be liable or responsible for damage, loss, delays
or defaults in deliveries due to Acts of God, public enemies, laws, regulations
or orders of the federal, state or local governments or their agencies, fires,
accidents, strikes or labor troubles, riots or insurrection, unusually severe
weather, or material or transportation shortages. The Seller shall also not
incur liability or responsibility for delays in obtaining materials or supplies
due to such causes or for other causes beyond the Seller's control, nor shall
the Buyer cancel or have the right to cancel its purchase order because of
delays or defaults in deliveries due to such causes.
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4. WARRANTY
The Seller warrants to the Buyer (defined for the purposes of this
section only as the first purchaser for use, and not for resale) that all
products furnished under this order and which are manufactured by the Seller
will conform to final specifications, drawings, samples and other written
descriptions approved in wiring by the Seller and will be free from defects in
materials and workmanship. These warranties shall remain in effect for a period
of twelve (12) months after delivery to the Buyer or 18 months after shipment.
If the Seller installs the equipment or supplies technical direction of
installation by contract, said twelve (12) months shall run from the completion
of installation provided that the installation is not unreasonably delayed by
the ultimate Buyer. Parts replaced or repaired in the warranty period shall
carry the unexpired portion of the original warranty. A unit placed with the
Buyer on consignment and then later purchased will be under warranty for twelve
(12) months from the time the Seller receives notification of the Buyer's intent
to purchase said consigned item. The foregoing in its entirety is subject to the
provision that in no case will the total warranty period extend beyond eighteen
(18) months from the date the Seller ships equipment from the point of
manufacture.
The liability of the Seller hereunder is limited to replacing or
repairing at the Seller's factory or on the job site at the Seller's sole
option. Any product, part or parts which have been returned to the Seller and
which are defective or do not conform to such specifications, drawings or other
written descriptions shall be replaced, provided that such part or parts are
retuned to the Buyer within ninety (90) days after such defect is found. Items
affected by factors other than defective equipment such as filters, fuses, or
light bulbs are not covered by this warranty. Warranty of the bearings is
dependent on properly maintaining the oil system. Parts replaced or repaired in
the warranty period shall carry the unexpired portion of the original warranty.
Warranty service will be provided during normal working hours. Additional
charges will be assessed to the Buyer for service outside normal hours or for
additional costs incurred in order to comply with local labor contracts. All
Items returned to the Seller for repair or replacement must be sent freight
prepaid to its factory and will be retuned to the Buyer freight collect. The
Buyer must obtain the Seller's Returned Materials Authorization prior to
returning items. The above conditions must be met if warranty is to be valid.
The Seller will not be liable for any damage done by unauthorized repair work,
unauthorized replacement parts, or from any misapplication of the item or for
damage due to an accident, abuse or an Act of God.
In no event shall the Seller be liable for loss, damage or expense
directly or indirectly arising from the use of the units or from any other
cause, except as expressly stated in this warranty. THERE ARE NO WARRANTIES
WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE HEREOF. THE SELLER DISCLAIMS ANY
IMPLIED WARRANTY OF MERCHANTABILITY OF THE GOODS OR OF THE FITNESS OF THE GOODS
FOR ANY INTENDED PURPOSE. The Seller is not liable for, and the Buyer waives any
right of action it has or may have against the Seller for any consequential or
special damages arising out of any breach of warranty and for any damages the
Buyer may claim for damage to any property or injury or death to any person
arising out of its purchase or the use, operation, or maintenance of the
product. The Seller will not be liable for any labor subcontracted or performed
by the buyer for preparation of item under warranty for return to the Seller's
factory or for preparation
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work for field repair or replacement. Invoicing of the Seller for labor either
performed or subcontracted by the Buyer will not be considered as a liability by
the Seller.
The Seller's obligations under this warranty are conditioned upon
timely receipt of all payments in strict accordance with payment terms, time
being of the essence in this regard. During the time while the Seller has not
received any amount overdue, the Seller shall have no obligation under this
warranty. The expiration date of the warranty shall not be extended upon payment
of the overdue amount.
This warranty may be modified only in writing, signed by an officer of
the Seller and shall extend to the Buyer as defined in this section but to no
one else. Accessories supplied by the Seller but manufactured by others carry
any warranty the manufacturers of such accessories have make to the Seller and
which can be passed on to the Buyer.
Buyer has not relied and shall not rely on any oral representation
regarding the Product sold hereunder and any oral representation shall not bind
Seller and shall not be part of any warranty.
5. PATENT PROTECTION
The Seller agrees to hold the Buyer and its customers harmless only
against infringement of patents covering the material or part in the form sold
by the Seller provided the Buyer or its customer promptly notifies the Seller of
any claim or litigation and tenders to the extent of the Buyer ability to do so,
the defense thereof to the Seller. The Buyer agrees to hold the Seller harmless
from any liability of the Seller for infringement of patents by reason of
manufacture according to the Buyer's specific design or by reason of the
incorporation of said part in a more comprehensive assembly than sold by the
Seller, provided the Seller promptly notifies the Buyer of any claim or
litigation and tenders to the extent of the Seller's ability to do so, the
defense thereof to the Buyer and/or the government where government contracts
are involved.
6. CANCELLATION OR CHANGES
The Buyer shall have the right by written order to make changes in
specifications or delivery schedules once agreed upon. If such changes alter the
amount due under the purchase order or the time required for performance, an
equitable adjustment of the price and/or time for performance shall be made.
Changes, engineering or otherwise, affecting the function or performance of the
articles ordered shall not be made without consent of the Seller in writing.
Cancellations for the convenience of the Federal Government may be affected and
cancellation charges paid as required by applicable Federal statutes or
regulations. If either the Buyer or the Seller should be declared insolvent, a
receiver should be appointed for all or a substantial portion of the assets of
either party by a court of competent jurisdiction, or if there should be filed
in any such court and not dismissed within thirty (30) days any application or
petition for adjudication of such insolvency or extension, however termed, of
the obligations of the Buyer or the Seller, of if either the Buyer or the Seller
should make an assignment of all or a substantial portion of its property for
the benefit of its creditors, then upon the happening on any of such events, the
other party may cancel any order placed by the Buyer with the Seller immediately
by notice in writing sent to the opposite party by registered mail at its last
known business address, or by personal service upon such party. If the product
is non-stock unit, it
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requires progress payment (see terms), and the order cannot be cancelled by
Buyer, and all progress payments are considered earned as they occur in case of
cancellation.
7. APPLICABLE LAW
Any provision which the Buyer is required to insert in this order by
virtue of any valid federal or state law, or any valid rule or regulation issued
thereunder, if specifically submitted in writing by the Buyer to the Seller
before its acceptance of the order and if approved by the Seller in writing
shall be deemed embodied therein by reference when this order is accepted.
Notwithstanding the above, this quotation or acceptance and any
resulting agreement shall be governed by and interpreted in accordance with the
laws of the State of California.
Regardless of the state to which products are shipped, because Perfect
Power is a California corporation doing business in California, these Terms &
Conditions, and all rights and obligations hereunder, shall in all respects be
interpreted, enforced and governed by and under the laws of the State of
California.
8. DRAWINGS
The Seller's prints or drawings attached heretofore or hereafter
furnished by the Seller to the Buyer in connection with the obtaining or
performance of the Buyer purchase order are the property of the Seller and
represent a proprietary article in which Perfect Power retains any and all
patent and other rights, including exclusive rights of use and/or sale.
Possession of such prints or drawings does not convey any permission to
manufacture the article or articles shown therein or reproduce such prints or
drawings, such permission to be granted only by specific authorization, in
writing, signed by an officer or other authorized agent of Perfect Power
thereof.
The Seller grants no license, express or implied, by virtue of drawings
or materials provided by the Seller, other than the right of the Buyer to use
the specific materials provided in the form delivered by the Seller.
In the event drawing approval is required to commence fabrication,
price and delivery schedule is subject to readjustment if approval is not
received by the Seller within (30) days after the Seller submittal.
9. SPECIFICATIONS
a. If the Seller's model number appears on the face hereof, not
withstanding any correspondence from the Buyer referencing
contrary information, then only the Seller's specifications and/or
drawings for such model shall be applicable to the articles
furnished under such order.
b. In only the Buyer part number appears on the face hereof,
notwithstanding any correspondence from the Buyer confirming that
number, then only such specifications as have been agreed upon in
writing by the Buyer and the Seller prior to the date hereof shall
be applicable to the products furnished under such order and no
other additional specifications and no warranty or performance,
including duration or length of time thereof as is included in
specifications agreed upon in writing by Buyer and Seller prior to
the date
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hereof shall be applicable to the Product furnished by Seller under such order.
Should Buyer be given submittal package for approval & Buyer's acceptance of
submittal will constitute the product performance as supplied in submittal and
it supersede all other specification verbal or written at any time.
10. ERRORS
The terms and conditions hereof shall control over any purchase
order or subsequent agreement or documents in direct conflict. Stenographic or
clerical errors in this quotation are subject to correction.
11. PAYMENT
Payment terms are net thirty (30) days after shipment. Absent of
contrary agreement, partial shipments will be payable as they occur. When the
equipment is ready for delivery, if the Buyer fails to provide shipping
instructions or otherwise withholds direction for the delivery of the equipment,
the equipment will be placed in storage, shipment will be considered
accomplished and the 30-day payment period will begin. Payment in full will then
be required before actual shipment to the Buyer can be made. At the end of the
30-day period, an extra charge of 3 percent per month will begin, covering the
cost of storage, insurance and the use of capital. If the product is non-stock
item, the Seller would require 30% with initial purchase order & Seller will
provide a submittal package for Buyer approval. Then Buyer will provide approval
with additional 30% of purchase price. Upon notification for completion of
product, the Buyer will provide 30% of purchase price with the final 10% due at
start up or 30 days after shipment which ever happens first.
12. DEFAULT
In the event of a default by Buyer of any of its obligations hereunder,
Buyer agrees to pay all costs and expenses incurred by Seller in connection
therewith, including but not limited to, reasonable attorney's fees, costs of
suit and costs associated with repossession of merchandise and interest payment
of 1.5% per month. The Buyer's obligations hereunder are incurred and shall be
performed in Los Angeles County.
STANDARD FACTORY ACCEPTANCE TESTING IS INCLUDED IN THE PRICE QUOTED.
SPECIAL TESTING OR WITNESS TESTING ARE EXTRA COST ITEMS.
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