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AMENDED AND RESTATED DISTRIBUTORSHIP AGREEMENT
 
THIS AMENDED AND RESTATED DISTRIBUTORSHIP AGREEMENT (this “Agreement”) is made
and entered into this ____ day of March, 2009 (the “Effective Date”), by and
between Aura Systems, Inc., a corporation organized and existing under the laws
of Delaware with its principal offices in Los Angeles, California (“Company”),
and WePower LLC, a limited liability company organized and existing under the
laws of Delaware with its principal offices in Los Angeles, California (the
“Distributor”).
 
RECITALS
 
A.           Company has designed, invented and developed a unique, integrated
electromagnetic mobile power generation system capable of delivering on-demand
both AC and DC power for numerous end-uses, including without limitation,
industrial, commercial, recreational and military applications (the “AuraGen”).
 
B.           The AuraGen is the subject of substantial proprietary information,
including but not limited to patents, trademarks, trade secrets, know-how, and
confidential information owned by the Company.
 
C.           Distributor has acquired the rights to a patented vertical wind
turbine that is used to generate electricity using wind power.
 
D.           Distributor is engaged in the business of developing and marketing
energy solutions around the world, including without limitation wind energy
solutions.
 
F.           The Company wishes to appoint Distributor as its exclusive
commercial distributor for all applications in the Field of Use worldwide and is
willing to grant a limited right to Distributor to use, service and manufacture
the AuraGen in strict accordance with the terms and conditions set forth herein
and Distributor wishes to be so appointed.
 
G.           The Company and Distributor entered into a Distribution Agreement
as of February 27, 2009 and the Parties have agreed to certain modifications of
said Agreement as set forth herein.
 
Accordingly, in consideration of their mutual covenants and obligations
contained herein, and the mutual benefits to be derived herefrom, Company and
Distributor (collectively the “Parties”), intending to be legally bound, do
hereby covenant and agree as follows:
 
ARTICLE 1. DEFINITIONS
 
1.1 Aura Proprietary Rights
 
The term “Aura Proprietary Rights” means all Aura Technology, Aura Trademarks,
data, inventions, information (including, without limitation, Confidential
Information of Company), processes, know-how, trade secrets, sketches,
prototypes, notebooks, papers, drawings, formulae (including copies or extracts
thereof) and similar intellectual property rights which Company has
 

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or may hereafter develop and which are necessary or useful for the development,
manufacture, or sale of the Products or any components of the Products. Further,
Aura Proprietary Rights shall include all analyses, specifications, proposals,
reports or other information, data or documents (whether in raw, preliminary or
final form) and all inventions, discoveries, modifications and improvements,
whether or not patentable, which: (a) are concerned in some manner with, but not
directed to the Products or any components thereof; or (b) pertain to processes,
procedures, methods, and the like manufacturing, assembling or servicing of the
Products.
 
1.2 Aura Technology
 
The term “Aura Technology” means all patent rights concerning each and every
patent, whether U.S. or foreign, owned by or licensed to Company and any
associated Aura Proprietary Rights appurtenant thereto which are necessary, used
or useful to develop, manufacture, or sell the Products or any of the components
of the Products. Aura Technology shall further mean any future modifications,
enhancements or improvements to the technology embodied in the patents owned or
licensed by Company, the Products, or the Aura Proprietary Rights.
 
1.3 Aura Trademarks
 
The term “Aura Trademarks” means all those trademarks, service marks, designs,
logos, slogans and trade names belonging or licensed to Company, worldwide.
 
1.4 Confidential Information
 
The term “Confidential Information” means all know-how, formulations, recipes,
specifications, catalogs, books, price books, maintenance, parts and service
manuals, data sheets, sales, service and technical bulletins, customer lists,
sales and marketing programs, price lists, cost data, sales aids, such as
filmstrips and recordings, and all other publications and information, whether
or not reduced to writing, relating to the formulation, manufacture, use,
marketing and sale of the Products, as well as any other information which may
be divulged by one party under this Agreement to the other in the course of its
performance of this Agreement, which is marked as Confidential or which is
disclosed under circumstances that reasonably place the recipient on notice of
the confidentiality of the information.  Confidential Information does not,
however, include any information which the recipient can establish (i) was
publicly known and made generally available in the public domain prior to the
time of disclosure by the discloser; (ii) becomes publicly known and made
generally available after disclosure by the discloser to recipient through no
fault or breach of recipient; (iii) is already in the possession of recipient
without restriction on use or disclosure at the time of disclosure by discloser
as shown by recipient’s files and records prior to the time of the disclosure;
(iv) is obtained by recipient lawfully and without restriction on use or
disclosure from a third party without a breach of such third party’s obligations
of confidentiality; or (v) is independently developed by recipient without use
of or reference to discloser’s Confidential Information, as shown by recipient’s
files and records.
 
1.5 Distributor Trademarks
 
The term “Distributor Trademarks” means all those trademarks, service marks,
designs, logos, slogans and trade names belonging or licensed to Distributor,
worldwide.
 

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Field of Use
 
The term “Field of Use” means exclusively wind turbines and any other form of
energy or renewable energy device, product, system or good involving wind.
 
1.7             Products
 
The term “Products” means the AuraGen, as well as any future modifications,
enhancements or improvements to the AuraGen and any New Products deemed included
pursuant to Section 3.17 hereof.
 
1.8             Purchase Order
 
The term “Purchase Order” means a purchase order in the form of Exhibit “A”
attached to this Agreement or such other form as the parties may mutually agree
to in writing from time to time.
 
1.9             Specifications
 
The term “Specifications” means the standard Product manufacturer specifications
as such Specifications may be modified by the parties in writing from time to
time and any New Product Specifications deemed included pursuant to Section 3.16
hereof.
 
1.10             Territory
 
The term “Territory” means the entire world.
 
1.11             Valid Claim
 
The term “Valid Claim” means a claim of a patent or patent application in any
country that (i) has not expired; (ii) has not been disclaimed; (iii) has not
been cancelled or superseded, or if cancelled or superseded, has been
reinstated; and (iv) has not been revoked, held invalid, or otherwise declared
unenforceable or not allowable by a tribunal or patent authority of competent
jurisdiction over such claim in such country from which no further appeal has or
may be taken.
 
ARTICLE 2.                                APPOINTMENT AND SCOPE
 
2.1 Appointment of Distributor
 
On the terms and subject to the conditions of this Agreement and for the Term of
this Agreement, Company hereby appoints Distributor as the exclusive distributor
of the Products in or for the Field of Use in the Territory. As such, Company
shall not appoint additional sales representatives, agents or distributors for
the promotion, sale, lease or license of Products in or for the Field of Use in
the Territory; and (b) Company shall not, except as expressly permitted
hereunder, directly or indirectly, distribute, promote, market, solicit, lease,
license or sell the Products in or for the Field of Use in the Territory, except
through Distributor. Notwithstanding any restrictions contained herein,
Distributor may sell the Products within the Territory in such manner, on such
terms, to such customers and at such prices as Distributor may
choose.  Distributor hereby accepts such appointment. Company further appoints
to Distributor, and
 

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Distributor hereby accepts for the Term of this Agreement, to act as the
exclusive installation and warranty service provider for all Product in the
Field of Use in the Territory.
 
2.2 Independent Contractor Status
 
Distributor is an independent purchaser and reseller of the Products and nothing
contained in this Agreement shall create the relationship of joint venture,
principal and agent, or master and servant between Company and Distributor.
Distributor is not and shall not be considered an agent or legal representative
of Company for any purpose, and neither Distributor nor any director, officer,
agent or employee of Distributor shall be, or be considered, an agent or
employee of Company. Distributor shall, at all times, hold itself out as an
independent contractor with respect to Company and shall not represent itself as
an agent, representative or employee of Company, and shall prominently display
in any advertising or signage related to the Products that it is an Authorized
Independent Distributor of the Company. Distributor is not authorized to, and
agrees that it will not, make any warranties or representations or assume or
create any other obligation on Company’s behalf except as expressly authorized
herein or by Company in writing. This Agreement is not for the benefit of any
third party and shall not be deemed to give any right or remedy to any such
third party whether or not referred to herein.
 
2.3 Sub-Distributors
 
Distributor may appoint sub-distributors, sub-agents or other persons
(collectively “Sub-distributors”) which it reasonably believes are qualified in
terms of capability and reputation to perform its obligations under this
Agreement provided however that:
 
(a) in no event shall any Sub-distributor be appointed for a duration that is
longer than the initial expiration date set forth in Section 7.1 of this
Agreement;
 
(b) any such Sub-distributor is subject to the terms of this Agreement;
 
(c) any such Sub-distributor is approved in writing by Company provided that
such approval shall not be unreasonably withheld, conditioned or delayed;
 
(d) nothing contained in this Agreement shall be construed to create any
relationship whatsoever between Company and any Sub-distributor;
 
(e) Company shall have no obligation to such Sub-distributors under this
Agreement; and
 
(f) all of Company’s obligations under this Agreement shall be only to
Distributor.
 
2.4 No Modification
 
Neither Distributor or any Sub-Distributor shall in any way modify or otherwise
alter the design, form, fit, function or any other aspect of the Products,
components thereof, or the Aura Technology unless it obtains Company’s prior
written consent, which may be withheld by Company in its sole discretion. If
Company agrees to such changes or improvements, the Parties
 

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shall mutually agree on the scope, extent and manner of making such changes or
improvements. In addition, Distributor shall not use the Aura Technology, or any
part thereof, in any way inconsistent with the provisions of this Agreement.
 
2.5 Additional Restrictions
 
Notwithstanding the rights specifically granted in this Agreement, Company does
not grant to Distributor or any Sub-distributor any license or other right
relating to any of the following. Neither Distributor nor any Sub-distributor
may, without the prior written consent of the Company, at any time directly or
indirectly:
 
(a)  
market, make, use, service, install, sell or otherwise distribute or incorporate
the Product or any components thereof in the products or businesses of any
source outside of the Field of Use;

 
(b)  
actively advertise, promote or solicit customers for Product systems outside the
Field of Use or establish or maintain any offices, facilities or depots related
to the sale or delivery of Product for any purpose outside of the Field of Use;

 
(c)  
make, use, sell or otherwise dispose of Product systems that are partially
assembled, in knocked down form, or semi-knocked down form;

 
(d)  
prepare, develop, make or have made, sell, or otherwise distribute any
derivative works based upon Product, the components thereof or the Aura
Technology;

 
(e)  
reproduce any Product or any components thereof or disclose or otherwise dispose
of the Aura Technology; or

 
(f)  
reverse engineer the Product, or any components thereof or the Aura Technology.

 
2.6 Rights Reserved
 
Notwithstanding anything to the contrary contained herein, all rights not
specifically granted under this Agreement shall be reserved and remain with the
respective owners. In no way limiting the generality of the preceding sentence,
Company shall have the right to make, use, sell, distribute, and grant licenses
to other third parties to do the same for all applications and markets of the
Products throughout the world outside of the Field of Use.
 
ARTICLE 3.                           TERMS AND CONDITIONS OF SALE
 
3.1 Purchase Orders
 
All purchases of Products under this Agreement by Distributor (or any
Sub-distributor, to the extent permitted under Section 2.3) shall be evidenced
by individual Purchase Orders, which, as supplemented by the terms of this
Agreement, shall constitute the entire agreement between the parties with
respect to sales of the Products by Company to Distributor. All Purchase Orders
will be accompanied by a deposit of ten percent (10%) of the aggregate Product
Price specified in the Purchaser Order. By placing a Purchase Order under this
Agreement, Distributor (or Sub
 

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distributor, to the extent permitted under Section 2.3) confirms its agreement
with and acceptance of all the provisions of this Article 3. Distributor shall
place all Purchase Orders for Product at least ninety (90) business days prior
to the requested delivery date (unless otherwise agreed to by Company). If any
term of a Purchase Order is inconsistent with this Agreement, then this
Agreement shall govern to the extent of any such inconsistency.  Orders may be
placed by contacting Aura Systems, Inc., 2330 Utah Avenue, El Segundo,
California 90245; telephone number 310-643-5300; facsimile number 310-643-7457;
email  melvin@aurasystems.com; attention Melvin Gagerman, Chairman and CEO.
 
3.2 Acceptance
 
Company shall acknowledge all purchase orders in writing to Distributor. Company
shall be deemed to have accepted any such Purchase Order for which Company does
not notify Distributor in writing within ten (10) business days after its
receipt that Company cannot meet such Purchase Order's terms.
 
3.3 Forecasts
 
Each Contract Year during the Term of this Agreement, Distributor shall provide
Company on a monthly basis with a 120 day rolling forecast, of which the first
ninety (90) days shall be a firm order by Distributor for delivery of the number
of Products specified therein pursuant to Purchase Orders delivered pursuant to
this Agreement.  The last thirty (30) days of the forecast shall be used for
purposes of facilitating Company’s manufacturing plans, but are not legally
binding on Distributor in any manner.
 
3.4 Prices
 
Prices charged to Distributor for Products purchased under this Agreement are
set forth in Exhibit “B” (collectively, the “Product Prices”). From time to
time, Company may change the prices for such Products provided that Company
provide Distributor written notice of any increase at least ninety (90) days
prior to such changes taking effect. Price changes will not affect orders placed
by Distributor and accepted by Company before such changes were communicated to
Distributor. Company shall exercise commercially reasonable efforts to minimize
any cost increases. All Product Prices are for delivery F.O.B. Origin, Company’s
designated facilities, freight collect. Title and risk of loss shall pass to
Distributor at the time the ordered Products are identified and loaded by the
Distributor’s carriage at Company’s designated facility. Distributor alone shall
be responsible for causing the Products to be loaded and delivered to the
delivery destination and shall be solely responsible for all freight, customs
duties, insurance or other shipping costs. For purposes of this Agreement, the
term “F.O.B.” shall have the meaning given in INCOTERMS 2000 as published by the
International Chamber of Commerce, Paris, France.  The Product Prices shall also
include any New Product Prices deemed included pursuant to Section 3.16 hereof.
 
3.5 Payment
 
Unless otherwise agreed by the parties in writing, Distributor shall cause
payment to be received by Company for Products no later than thirty (30) days
following the date that the Products are

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transferred to Distributor’s designated carrier, as evidenced by the shipping
receipt generated by such freight company.  Company shall invoice Distributor
for all amounts due and such invoices shall reference the Purchase Order number
and be sent to the “Bill to” address specified on the Purchase Order.  Company’s
packing list must reference the Purchase Order number and be sent to the
applicable “Ship to” address on the Purchase Order. In no way shall any payment
due under this Agreement by Distributor to Company be contingent upon
Distributor’s collection of payment from Distributor’s customers.

3.6 Delivery
 
Company will use commercially reasonable efforts to meet or exceed the delivery
dates specified in the Purchase Order.  Notwithstanding the foregoing, (i) in no
event will the Company be required to deliver a shipment of Products sooner than
ninety (90) days from the date of receipt of a Purchase Order therefore, and
(ii) in the event the Products covered by a Purchase Order were not included in
a sales forecast received by the Company from the Distributor, then the Company
and the Distributor will work together in good faith to identify a reasonable
and mutually acceptable delivery date for the Products, which in no event will
be required to be sooner than thirty (30) days after receipt of such Purchase
Order.
 
3.7 Partial Shipments; Failure to Deliver
 
Company reserves the right to make partial shipments of any order for one
hundred (100) Product units or more and shall not be liable for any failure to
ship complete orders.  Each partial shipment shall contain no less than fifty
(50) Product units, unless mutually agreed otherwise by the Parties. Distributor
will be invoiced separately for each partial shipment and will pay each invoice
when due, without regard to subsequent deliveries. Company shall attempt to
allocate its available inventory to Distributor in reasonable priority to all
other customers of Company.  Notwithstanding the foregoing or anything to the
contrary herein, the failure of Company to supply Products pursuant to the terms
of Purchase Orders submitted to Company in compliance with the provisions of
this Agreement shall be considered a breach of this Agreement and a failure by
Company to perform its material obligations under this Agreement pursuant to
Section 7.2 (a) hereof. In addition, Distributor shall continue to have any
other rights or remedies that it may have as a result of such failure to supply
Products.
 
3.8 Inspection
 
Upon receipt of any Product delivery, Distributor shall have fifteen (15) days
to inspect such Product for quantity shortages as well as readily apparent
damage and readily apparent discrepancies (such as, without limitation, the
inclusion of readily apparent nonconforming Products).  If such shortages,
damage or discrepancy is found, Distributor has the right to reject such Product
(“Rejected Product”) during such fifteen (15) day period.  Product not rejected
during such period shall be deemed accepted by Distributor and Company shall not
thereafter be liable for any such shortages, discrepancy or damage in such
shipment.  Rejected Product (or any shortages in Product quantity) shall be
replaced with conforming Product within ten (10) calendar days after
Distributor’s notice of rejection and/or shortage, with replacement Product
freight paid by the Company.  Distributor shall have the right to inspect and
test such replacement Product within fifteen (15) days of delivery.  For any
Rejected Product not replaced
 

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within ten (10) calendar days, Distributor shall be issued credit in full, and a
refund of pro-rata shipping charges.
 
3.9 Distributor Product Warranty
 
Distributor accepts the published standard warranty of Company as in effect from
time to time with respect to the Product. Subject to the limiting provisions of
such standard warranty, Company represents, warrants and covenants that:
(a) notwithstanding mechanical limitations such as, without limitation, the
existence of insufficient torque, the Products furnished hereunder shall meet
the quality, operating conditions and performance levels designated by the
manufacturer’s published ratings and specifications; (b) to the extent and for
the period provided in Company’s published standard warranty, the Products shall
be free from defects in workmanship and material (c) Company has good and
marketable title to (and has all rights, title and interest necessary to sell to
Distributor) the Products to be furnished hereunder and there are (and shall be)
no liens, claims or encumbrances of any kind whatsoever against the Products,
except for required governmental licenses or permits which may need to be
obtained in connection with the sale of the Products; and (d) Distributor may
exercise its rights under this Agreement free and clear of any obligation of the
Company to any third party, except for required governmental licenses or permits
which may need to be obtained in connection with the sale of the Products.
 
3.10 End User Warranty
 
At all times during the Term of this Agreement, Company shall warrant the
Products to Distributor’s customers in accordance with the terms of its standard
warranty attached hereto as Exhibit “C” (“End User Warranty”), as such End User
Warranty may be modified from time to time by the Company, and any such changes
shall become effective immediately upon Company forwarding such changes in
writing to Distributor. Any changes made by Company to such End User Warranty
will not apply to Products sold to Distributor pursuant to orders placed by
Distributor and accepted by Company before such changes were communicated to
Distributor. A copy of the End User Warranty shall be included as part of the
packaging included with the Product and Distributor shall distribute each
Product with all warranty cards, a copy of the End User Warranty and all other
packaging materials intact.
 
3.11 Distributor Warranty Repair or Replacement
 
Company, at its own expense and option, shall promptly either repair or replace
any defective Product during such period as Company’s standard warranty pursuant
to Section 3.9 above remains in full force and effect for that Product, provided
that Distributor has notified Company and, upon inspection by Company, Company
has found the Product to be defective. In the event Distributor arranges for a
Product to be repaired or serviced by a person or entity other than by a service
facility approved by Company, such action shall be solely at the expense of
Distributor and shall effectively terminate any Company warranty for such
Product.
 
3.12 Product Returns
 
All returns of non-defective Products shall be subject to Company’s standard
return policy for commercial and industrial products attached hereto as Exhibit
“D”, as amended from time to
 

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time. Company shall provide Distributor with reasonable advance written notice
of any change to Company’s standard return policy. Any such changes will not
affect orders placed by Distributor and accepted by Company before such changes
were communicated to Distributor or any Product previously sold to Distributor
before such changes were communicated to Distributor. Company shall have no
warranty obligations whatsoever including the replacement of any Product
pursuant to this Article 3 unless all of the provisions of Company’s Return
Policy then in effect have been met by Distributor.
 
3.13 Exclusive Remedy
 
THE REPAIR OR REPLACEMENT OF ANY NON-CONFORMING OR DEFECTIVE PRODUCT, SHALL
CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY OF DISTRIBUTOR (AND SHALL CONSTITUTE
FULFILLMENT OF ALL OBLIGATIONS OF COMPANY HEREUNDER) FOR THE BREACH OF SUCH
WARRANTY BY COMPANY OR ANY LIABILITY (INCLUDING WITHOUT LIMITATION ANY LIABILITY
FOR NEGLIGENCE) OF COMPANY WITH RESPECT TO THE PRODUCTS AND SERVICES COVERED BY
THIS AGREEMENT.  
 
THE PARTIES AGREE THAT COMPANY EXTENDS LIMITED EXPRESS WARRANTIES SOLELY TO
ORIGINAL END-USERS OF THE PRODUCTS AND NOT TO DISTRIBUTOR.  COMPANY MAKES NO
EXPRESS OR IMPLIED WARRANTIES OF ANY KIND TO DISTRIBUTOR WITH RESPECT TO THE
AURA TECHNOLOGY OR THE USE THEREOF, INCLUDING WITHOUT LIMITATION THE PRODUCTS
AND ANY COMPONENTS THEREOF INCORPORATING THE AURA TECHNOLOGY OR MANUFACTURED BY
THE USE THEREOF.  ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING WITHOUT
LIMITATION THE EXPRESS OR IMPLIED WARRANTY (I) THAT THE AURA TECHNOLOGY OR THE
USE THEREOF, INCLUDING WITHOUT LIMITATION THE PRODUCTS AND ANY COMPONENTS
THEREOF INCORPORATING THE AURA TECHNOLOGY OR MANUFACTURED BY THE USE THEREOF
WILL BE FREE FROM CLAIMS OF PATENT INFRINGEMENT, INTERFERENCE, OR UNLAWFUL USE
OF PROPRIETARY INFORMATION OF ANY THIRD PARTY, OR (II) OF THE ACCURACY,
RELIABILITY, TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS OR
MARKETABILITY OF THE AURA TECHNOLOGY, THE PRODUCTS, OR THE COMPONENTS THEREOF OR
ITS SUITABILITY OR FITNESS FOR ANY PURPOSE WHATSOEVER ARE HEREBY DISCLAIMED AND
EXCLUDED.
 
DISTRIBUTOR FURTHER ACKNOWLEDGES THAT THERE ARE NO WARRANTIES IMPLIED BY CUSTOM
OR USAGE IN THE TRADE BETWEEN DISTRIBUTOR AND COMPANY THAT HAVE BECOME A PART OF
THIS TRANSACTION. ANY ACTION FOR A BREACH OF ANY OF COMPANY’S OBLIGATIONS UNDER
THIS AGREEMENT OR OTHERWISE MUST BE COMMENCED WITHIN ONE (1) YEAR AFTER THE
CAUSE OF ACTION HAS ACCRUED. NOT WITHSTANDING THE ABOVE, THE COMPANY
ACKNOWLEDGES THAT IF THE PRODUCT CANNOT REASONABLY MEET DISTRIBUTORS’
SPECIFCATIONS AND NEEDS FOR THE FIELD OF USE, THAT

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DISTRIBUTOR MAY CANCEL THIS CONTRACT AT ANYTIME WITH THIRTY (30) DAYS WRITTEN
NOTICE AS A NON-CURBALE MATERIAL BREACH BY COMPANY UNDER SECTON 7.2, WHICH SHALL
NOT BE SUBJECT TO CURE.

 
3.14 No Assurances
 
Distributor acknowledges that:
 
(a) Wind speeds are extremely variable and in wind conditions insufficient to
provide torque levels equal to or exceeding the minimum torque guideline
requirements of the Products established by the manufacturer, such Products may
be unable to produce power levels equal to their maximum rating;
 
(b) Company has made no representations to Distributor and Distributor has
received no assurances, that: (i) its business relationship will continue with
Company beyond the stated term of this Agreement or its earlier termination in
accordance with this Agreement; (ii) any investment by Distributor in the
promotion of the Products will be recovered or recouped; or (iii) Distributor
shall obtain any anticipated amount of profits by virtue of this Agreement; and
 
(c) Other than the licenses granted herein, DISTRIBUTOR shall not have or
acquire, by virtue of this Agreement or the transactions contemplated hereunder,
any proprietary rights in the Products, the Company’s intellectual and
industrial property or in any goodwill related thereto, whether or not created
by its efforts.
 
THE PARTIES ACKNOWLEDGE THAT THIS SECTION AND RELATED SUBSECTIONS HAVE BEEN
INCLUDED AS A MATERIAL INDUCEMENT FOR COMPANY TO ENTER INTO THIS AGREEMENT AND
THAT COMPANY WOULD NOT HAVE ENTERED INTO THIS AGREEMENT BUT FOR THE
ACKNOWLEDGMENTS, AGREEMENTS AND LIMITATIONS OF LIABILITY AS SET FORTH HEREIN.
 
3.15 Indemnity By Company
 
Distributor will promptly notify Company if any third party claim is brought or
threatened against Distributor or a Sub-Distributor that arises out of a breach
of the representations and warranties set forth in this Agreement or from any
product liability claims that may be brought against Distributor arising out of
or related to the Products.  Company will indemnify, defend and hold Distributor
and its Sub-Distributors including their employees, agents and affiliates,
harmless from and against any and all payments, damages, losses, liabilities and
expenses (including reasonable attorneys’ fees) that they may suffer or incur in
connection with any such actual or threatened claim or any breach of
representation, warranty, covenant or agreement on the part of Company under
this Agreement.  The Company’s indemnification obligations do not apply:  (i) to
the extent that the Products are modified by Distributor or any customer after
shipment by Company without Company’s consent or direction and the claim arises
from such modifications, (ii) to the extent that the Products are combined or
used with other products, processes or materials in a manner contrary to their
intended use and the claim arises from such

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combination, or (iii) where Distributor or a customer continues the activity
that gave rise to the claim after being notified by Company of commercially
reasonable actions which would have avoided the claim or (iv) to any negligent
or willful act or omission or violation of any contractual arrangement of
Company’s affiliates, officers, directors, agents or employees, in connection
with its performance relating to this Agreement.

3.16           Indemnity by Distributor

Distributor agrees to indemnify, defend and hold Company, including its
employees, agents and affiliates, harmless from and against any and all
payments, damages, demands, claims, losses, expenses, costs, obligations and
liabilities (including reasonable attorney’s fees and costs), which arise out
of, result from or are related to: (i) any breach by Distributor or any
Sub-Distributor of any provision contained in this Agreement, including without
limitation any obligation, representation, warranty or covenant herein; (ii) any
occupational injury or illness sustained by any employee or agent of Distributor
or Sub-Distributor to the extent claims are made against, or held to be payable
by Company; (iii) any applicable sales or other taxes due from or on behalf of
Distributor or Sub-Distributor regardless of whether such taxes must be
collected by Company on behalf of the taxing authority and regardless of whether
Distributor shall challenge the assessment or amount of such taxes or (iv) any
negligent or willful act or omission or violation of any contractual arrangement
of Distributor or any of Distributor’s affiliates, Sub-Distributors, officers,
directors, agents or employees of each, in connection with its or their
performance relating to this Agreement.

 
3.17           Insurance
 
Both parties will each have and maintain in full force and effect during the
Term of this Agreement (including any post-termination period for which
indemnification obligations continue), all product liability and other insurance
reasonably necessary to cover such party’s anticipated indemnification
obligation and other risk of loss for which it may be liable under this
Agreement. All such insurance coverages shall be occurrence based and not claims
made.  Such policy or policies will (a) have aggregate limits of liability of
not less than $5,000,000 with respect to any incident or occurrence and of not
less than $10,000,000 in the aggregate; (b) name both Company and Distributor as
insured parties; and (c) provide that such policy may not be canceled except
upon not Less than 30 days’ written notice to both Company and Distributor. Each
party will provide such evidence of the effectiveness of such insurance to the
other party as may be reasonably requested.
 
3.18           Capacity

Subject to this Article 3, during the Term of this Agreement prior to any
Non-Exclusive Period (as that term is hereinafter defined), Distributor shall
purchase all Products that it requires for any application within the Field of
Use solely from Company.  In the event that Company is unable or otherwise
unwilling to accept any given Purchase Order, Distributor may, at Distributor’s
sole discretion, purchase such quantities of Product to fill said Purchase Order
from a third party provider. In the event that Company is incapable or otherwise
unable to supply Product in sufficient quantities to fulfill any given Purchase
Order that Company has previously

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accepted pursuant to Section 3.2 above (the difference between the amount stated
in any accepted Purchase Order and the amount supplied by Company in fulfillment
of that Purchase Order being a “Discrepancy Quantity”), Distributor may, at
Distributor’s sole discretion, purchase Product from a third party provider in
any amount not exceeding the Discrepancy Quantity for such Purchase Order. In
any event that a Discrepancy Quantity exists, Company will credit such
Discrepancy Quantity towards the Minimum Order requirement for that Contract
Year. No third party provider purchase by Distributor pursuant to this Section
3.18 shall relieve Distributor of any subsequent obligations to purchase Product
from Company or otherwise perform under the terms of this Agreement.

3.19

3.20

3.21 Most Favored Nations
 
During the Term of this Agreement Company agrees that Distributor shall be
allowed the full benefit of any and all lower prices and any other more
favorable terms and condition (“MFN” Terms) contained in any other agreement
entered into by Company for the sale of any product substantially similar to the
Product in the same or lesser quantities described in this Agreement to third
parties Company shall notify Distributor in writing of any such MFN Terms within
fifteen (15) calendar days after agreeing thereto, and shall make the MFN Terms
available to Distributor as of the effective date of such agreement and
thereafter for the greater of (i) three (3) months or (ii) such time that the
MFN Terms remain in effect.
 
3.22 Right of First Refusal
 
In the event that during the Term of this Agreement Company develops any new
products for sale in the Field of Use (“New Products”), prior to any sale of
such New Products to any third party, Distributor shall have the right of first
refusal to sell the New Products as Products pursuant to the terms of this
Agreement.  Company shall initiate such right of first refusal by providing
samples of such New Products and specifications therefor (“New Product
Specifications”) to Distributor and the proposed price (the “New Product
Proposed Price”) at which Company proposes to sell the New Products to
Distributor during the Term of this Agreement (collectively, the “New Product
Proposal”).  Distributor shall have three (3) months from receipt of a full and
complete New Product Proposal to test and evaluate the New Products and the New
Product Proposal (the “Acceptance Period”).  In the event that Distributor
accepts the New Product Proposal within the Acceptance Period then from and
after the date of such acceptance, the term “Product” hereunder shall be deemed
to include the New Products, the term “Product Prices” shall be deemed to
include the New Product Proposed Price and the term “Specifications” shall be
deemed to include the “New Product Specifications”.  In the event that
Distributor rejects or fails to accept the New Product Proposal within the
Acceptance Period then from and after the date of such rejection or failure to
accept, Company shall be free to sell the New Products to any third party;
provided, however, the sale price to such third party shall in no event be less
than the New Product Proposed Price.   In the event that Company ever wishes
during the Term of this Agreement to sell the New Products to a third party for
a price less than
 

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the New Product Proposed Price then Company shall first offer the New Products
to Distributor at such lower price pursuant to the right of first refusal set
forth in this Section 3.22.
 
3.23 Minimum Order
 
In order to maintain its exclusivity within the Field of Use, Distributor shall
purchase from Company the lesser of (i) that amount of Product equal to
Company’s maximum output per Contract Year (as defined below) or (ii) a minimum
of three thousand (3,000) units of the Products (collectively the “Minimum
Order”) during each year of the Term of this Agreement (the “Contract Year”);
provided, however, for the purposes hereof the initial Contract Year shall
commence on the Effective Date and end on the date which is eighteen (18) months
thereafter.  In the event that Distributor fails to purchase the Minimum Order
in any particular Contract Year then, the exclusive distributor rights granted
pursuant to Article 2 hereof shall become non exclusive commencing with the
Contract Year immediately following the Contract Year in which the Minimum Order
was not achieved and ending twelve (12) months thereafter (the “Non-Exclusive
Period”). If, during the Non-Exclusive Period, Distributor meets the Minimum
Order requirement for such Contract Year, this Agreement shall remain in effect
on a non exclusive basis for the remainder of the Term of the Agreement,
provided, however, that if Distributor fails to meet the Minimum Order
requirement during the Non-Exclusive Period, Company may, at its sole
discretion, terminate this Agreement pursuant to Article 17 below.
 
3.24 No Payment Set-Off.                                                      
All payments made by Distributor to Company under this Agreement shall be paid
in full, without set-off or counterclaim, and in such amount as may be necessary
in order that all payments (after deduction for withholding for or on account of
any present or future taxes, levies, imposts, duties or other charges imposed by
any political subdivision or taxing authority on such payments, collectively
“Taxes”) shall not be less than the amounts otherwise required to be paid under
this Agreement. Any and all Taxes required to be so withheld or deducted shall
be paid by Distributor to the proper taxing authorities, and proof of payment
shall be secured and sent to Company as evidence of such payment.
 
ARTICLE 4.                           DISTRIBUTOR’S OBLIGATIONS
 
4.1 Sales
 
Subject to the terms and provisions of this Agreement, Distributor shall use its
best efforts to promote, market, lease, license or sell the Products within the
Territory in such manner as Distributor determines in its sole and absolute
discretion.  Distributor may subcontract the performance of any of its
obligations under this Agreement to Sub-distributors in accordance with the
terms of this Agreement regarding appointment of Sub-distributors.
 
4.2 Sales Plans, Reports and Forecasts
 
No later than each November 1 during the Term of this Agreement, beginning
November 1, 2009, Distributor shall submit to Company a sales forecast for the
Products in and for the Field of Use in the Territory for the next calendar
year, January through December.  Company agrees to use all information provided
by Distributor under this Section 4.2, exclusively for Company’s own purposes
and shall treat it in strict confidence and shall not use or disclose the same
except as required to perform its obligations under this Agreement or except as
required by law.
 

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Licenses and Other Governmental Approvals
 
Company agrees to cooperate with Distributor as necessary to enable Distributor
to obtain, at Distributor’s expense (i) the export licenses within the portions
of the Territory that may be necessary to export the Products into and (ii) the
governmental and regulatory approvals and licenses within the portions of the
Territory that may be necessary to permit the sale, license, lease and other
disposition of the Products by Company and/or Distributor under this
Agreement.  At all stages in the regulatory approval process, Distributor and
Company will work together in good faith to conduct the tests and regulatory
approval process in a manner that is mutually acceptable to Company and
Distributor.  Company agrees to cooperate with Distributor as necessary to
enable Distributor to file for and obtain any government and regulatory
approvals and licenses required by Distributor and to provide Distributor with
the test results, specifications, and any other information that Distributor may
request from time to time to file for and obtain such government approvals and
licenses.
 
4.3 Compliance with Law
 
Each party shall at all times comply with the provisions of all applicable laws
and the rules and regulations thereunder, and refrain from engaging in any
illegal, unfair or deceptive trade practices or unethical business practices
whatsoever with respect to the promotion and sale or service of
Products. Distributor shall obtain and pay for such licenses, permits and
authorizations as may be necessary in connection with Distributor’s importation,
promotion and sale of Products.
 
4.4 Recalls
 
Distributor will reasonably inform Company of each complaint that Distributor
may receive or become aware of concerning the Products.  Distributor also shall
maintain records of all Products sold by Distributor.  If Company, any
governmental agency or other proper authority issues a product recall or product
advisory of any of the Products, Distributor agrees to cooperate with Company
(i) in contacting purchasers within the Territory during the course of any such
product advisories, recalls and complaints, (ii) in communicating to such
purchasers such information or instructions as Company may desire be transmitted
to such purchasers, (iii) in obtaining the removal of all such recalled Products
from Distributor’s inventory and the inventory of its customers and (iv) in
disposing of such recalled Product as Company so directs.  Company agrees to
reimburse Distributor for all costs and expenses incurred by Distributor in
connection with such Product advisories, recalls and complaints, unless the
Company can reasonably demonstrate that the advisory, recall or complaint is due
to the fault or negligence of Distributor, its representatives or affiliates.
 
4.5 Press Releases and Announcements
 
In the event any party proposes to issue any press release or public
announcement concerning any provisions of this Agreement or the transactions
contemplated hereby, such party shall so advise the other party hereto, and the
parties shall thereafter use commercially reasonable efforts to cause a mutually
agreeable release or announcement to be issued.  Neither party will publicly
disclose or divulge any provisions of this Agreement or the transactions
contemplated hereby
 

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without the other party’s written consent, except as way be required by
applicable law, including applicable securities laws or stock exchange
regulations, and except for communications to such party’s employees and
professional advisors.
 
4.6 Representations and Warranties of Distributor
 
Distributor represents and warrants to Company that, as of the date of this
Agreement:
 
(a) Power and Authority: Distributor has the corporate power an authority to
enter into and to carry the terms and provisions of this Agreement; and this
Agreement is the legal, valid and binding obligation of Distributor and is
enforceable against Distributor in accordance with its terms.
 
(b) No Conflicting Agreements: The execution, delivery and performance of this
Agreement by Distributor will not conflict with or violate any agreements or
understandings to which Distributor is a party or by which it may be bound.
 
(c) Litigation: There are no actions or proceedings pending, or to Distributor’s
knowledge, threatened, which would prevent or make unlawful the consummation of
the transactions contemplated by this Agreement.
 
(d) Infringement: Distributor has no actual knowledge, that its wind power
generation systems conflict with, violate or infringe any rights of any third
party (provided, however, such representation shall not apply to the Products to
the extent that they are a component of such system).
 
(e) Insurance. Distributor has insurance coverage for its business with respect
to the it’s sale, installation and performance of Covered Service with respect
to the Products (as required under Section 3.13 and agrees to disclose
information to such as may be reasonably requested by Company.
 
4.7 Export Controls
 
Distributor represents and warrants that it will not export or re-export the
Products, any components thereof or any underlying information or technology
into any country to which the U.S. has embargoed goods, or to anyone on the U.S.
Treasury Department's list of Specially Designated Nationals or the U.S.
Commerce Department's Table of Deny Orders. Nor shall Distributor export Product
or any underlying information or technology to any facility in violation of
these or other applicable laws and regulations. Distributor represents and
warrants that it is not a national or resident of, or located in or under the
control of, any country subject to such export controls.
 
4.8 Standards of Facility, Workmanship and Materials
 
Distributor shall at all times during the Term of this Agreement:
 
 
(a)
conduct business and perform Covered Service in a prompt, courteous,
workmanlike, competent, professional, and ethical manner;

 

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(b)           maintain suitable facilities, trained and certified personnel and
equipment, adequate to fulfill all duties as prescribed under this Agreement;
 
(c)
use only parts and materials of the highest quality in rendering Covered
Service; and

 
 
(d)
CAUSE ALL COVERED SERVICE AUTHORIZED HEREUNDER TO BE PERFORMED SOLELY BY
CERTIFIED PRODUCT PERSONNEL.

 
4.9 Competent Personnel
 
Distributor shall, throughout the Term of this Agreement, maintain a trained and
skilled sales force suitable to provide sales and technical assistance to
purchasers and potential purchasers of the Product within the Field of Use.
 
4.10 Maintenance and Inspection of Records
 
Distributor shall retain all invoices and records for all parts, sales,
promotion and services performed with respect to Products for a period of four
(4) years. Further, at all reasonable times during normal business hours
Distributor shall make available to Company, all of Distributor’s books,
records, invoices, including without limitation a customer lists and contact
information relating to Distributor’s performance of this Agreement.
 

 
ARTICLE 5.                           COMPANY’S OBLIGATIONS
 
5.1           Sales Support
 
Company shall provide Distributor, at no charge to Distributor, with reasonable
quantities of all sales and marketing information applicable to the Products,
including catalogs, specifications, promotional literature and other
materials.  All such materials will be provided to Distributor in English, and
Distributor may, at its sole expense, arrange for the translation of such
materials into all languages or dialects appropriate for the Territory through a
professional translation service approved in writing by Company, and for
reproduction of such translations in quantities adequate in light of the
potential sales volume for Products in the Territory. Distributor shall be
solely responsible for all costs associated with the promotion and advertising
of the Products in or for the Field of Use in the Territory.
 
5.2             Marketing Support
 
During the Term of this Agreement, Company shall: (i) publish Distributor’s name
and address as its authorized distributor in or for the Field of Use in the
Territory; (ii) from time to time, support Distributor’s marketing by involving
Distributor in its advertising and direct mail activities when appropriate and
without charge or at subsidized cost; (iii) furnish Distributor, upon
Distributor’s request, reasonable technical information respecting applications
or servicing of the Products; (iv) provide information to support Distributor’s
marketing efforts; and (v) transmit promptly all sales leads in or for the Field
of Use in the Territory to Distributor.
 

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                       5.3                                Training.  During the
first 3 months following the Effective Date of this Agreement, Company will
provide Distributor, free of charge, technical and sales training at Company’s
facilities located in El Segundo California, U.S.A. for up to two (2)
individuals.  Thereafter, Distributor shall pay Company for such services an
hourly rate of $100.00 U.S. Dollars for every individual being trained.
Distributor shall be solely responsible for all costs and expenses associated
with all training of Distributor’s personnel hereunder, including without
limitation all travel, living accommodations, salary and other expenses and
costs incurred by such personnel.
 

 
5.4             Consulting Service
 
Following the Effective Date of this Agreement, Company will, at no charge to
Distributor, provide Distributor those technical consulting services reasonably
necessary and practical to complete preparations for Distributor’s Ricoh
billboard début in New York City. Thereafter, at the request of Distributor,
Company will provide the services of up to five (5) technical consultants to
assist Distributor in the marketing, sale or technical aspects of the Product in
or for the Field of Use in the Territory. Distributor agrees to reimburse
Company for the reasonable living and travel expenses of such consultants, as
determined by Company. In addition, Distributor shall pay Company for such
consulting services an hourly consulting rate of $150.00 U.S. Dollars per
consultant.
 
5.5Representations and Warranties of Company
 
The Company represents and warrants to Distributor that, as of the date of this
Agreement:
 
(a) Power and Authority: Company has the corporate power and authority to enter
into and to carry out the terms and provisions of this Agreement; and this
Agreement is the legal, valid and binding obligation of Company and is
enforceable against Company in accordance with its terms.
 
(b) No Conflicting Agreement: Company has not granted to any person other than
Distributor any right, title or interest or entered into any agreement which is
in conflict with or inconsistent with any of the terms or conditions of this
Agreement.
 
(c) Litigation: There are no actions or proceedings pending, or to Company’s
knowledge, threatened, which would prevent or make unlawful the consummation of
the transactions contemplated by this Agreement.
 
(d)           Infringement: Company has no actual knowledge, that the Products
conflict with, violate or infringe any rights of any third party.
 
5.6             For the Term of this Agreement, Company shall:
 
(d) Reimburse Distributor for the cost of initial replacement parts and for
labor costs as set forth in Exhibit “E” hereto only for Covered Service
authorized by
 

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Company which is performed by Distributor on Covered Products in accordance with
this Agreement;
(e) Mail checks in payment of non-disputed claims for Covered Service performed
by Distributor no later than forth-five (45) working days after Company’s date
of receipt and approval of such claims; and
 
(f) Upon request by Distributor, provide Distributor with sample copies of
Service Agreements.  The initial form of such Service Agreements is attached
hereto as Exhibit “F” and shall not be modified without the prior written
approval of Distributor.
 
ARTICLE 6.                           TRADEMARKS AND CONFIDENTIAL INFORMATION
 
6.1             Mutual Grant of Trademark License
 
During the Term of this Agreement and subject to its provisions, Company grants
to Distributor a non-exclusive license to use Aura Trademarks to identify and
promote the sale of the Products within the Field of Use and Distributor grants
to Company a non-exclusive license to use Distributor Trademarks to identify and
promote Distributor’s wind power technology used in conjunction with the
Products within the Field of Use. Distributor may not use the Aura Trademarks in
connection with the sale or promotion of any goods, services, products,
equipment or process other than the Products within the Field of Use. Company
may not use the Distributor Trademarks in connection with the sale or promotion
of any goods, services, products, equipment or process other than the Products
within the Field of Use.   Upon termination of this Agreement, Distributor and
Company shall each promptly cease using any trademarks belonging to the other
Party.
 
6.2             Trademark Markings
 
Distributor agrees that each of the Products sold or otherwise distributed by
Distributor shall prominently bear all appropriate Aura Trademarks and that
Distributor shall clearly indicate Company’s ownership of such Aura Trademarks.
Distributor shall do everything reasonably required of it by Company in
connection with trademark marking or the giving of such other notices as
provided for under United States or applicable foreign trademark laws.
Distributor agrees not to remove or deface any Aura Trademarks, and to not,
unless authorized in writing by Company, add any other mark or identifying
indicia to the Products.
 
6.3             Trademark Ownership
 
Distributor acknowledges and agrees that Company is the sole and exclusive owner
of the Aura Trademarks. Other than with respect to Distributor Trademarks
licensed to Distributor, Company acknowledges and agrees that Distributor is the
sole and exclusive owner of the Distributor Trademarks. As such, neither Party
shall at any time acquire any rights in the other Party’s trademarks by virtue
of its use thereof. Further, nothing contained in this Agreement shall be
construed as (i) an assignment or grant to Distributor of any right, title or
interest in or to the Aura Trademarks, it being understood that all rights
relating thereto are reserved by Company, except for the licenses granted
hereunder for the right to use and utilize the Aura Trademarks as expressly
provided herein, or (ii) an assignment or grant to Company of any right, title
or interest in or to the Distributor Trademarks, it being understood that all
rights relating thereto are
 

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reserved by Distributor, except for the licenses granted hereunder for the right
to use and utilize the Distributor Trademarks as expressly provided herein. .
Distributor shall not use any of the Aura Trademarks, or any mark or name
confusingly similar thereto, in any manner, except (i) on letters, letterhead,
business cards and signs solely in order to identify itself as an authorized
distributor of Company and/or (ii) in sales and promotional materials, provided
such materials have been previously approved by Company, such approval not to be
unreasonably withheld or delayed. Distributor agrees that it will not knowingly
do anything inconsistent with Company’s ownership of its intellectual property,
including without limitation, questioning the validity of the Aura Trademarks or
registering or attempting to register the Aura Trademarks in its own name or
that of any other firm, person or corporation.  Company shall not use any of the
Distributor Trademarks, or any mark or name confusingly similar thereto, in any
manner, except (i) on letters, letterhead, business cards and signs solely in
order to identify itself as the manufacturer of Products provided to Distributor
as an authorized distributor of Company and/or (ii) in sales and promotional
materials, provided such materials have been previously approved by Distributor,
such approval not to be unreasonably withheld or delayed. Company agrees that it
will not knowingly do anything inconsistent with Distributor’s ownership of its
intellectual property, including without limitation, questioning the validity of
the Distributor Trademarks or registering or attempting to register the
Distributor Trademarks in its own name or that of any other firm, person or
corporation.
6.4             Patent Marking
 
Distributor shall do everything reasonably required of it by Company in
connection with patent marking or the giving of such other notices as provided
for under United States or applicable foreign patent laws.
 
6.5           Protection of Trademarks and Patents
 
Distributor agrees to take such actions as Company may reasonably require for
the protection of Company’s proprietary interest in the Aura Trademarks, Aura
Technology, and all other Aura Proprietary Rights. Distributor shall cooperate
fully and in good faith at Company’s expense with Company for the purpose of
preserving Company’s rights in and to the Aura Trademarks, Aura Technology and
all other Aura Proprietary Rights. Distributor agrees to promptly notify the
Company in writing of any uses, which may be infringements of the trademarks,
technology or other proprietary rights which come to Distributor’s attention. In
the event of infringement of Aura Trademarks, Aura Technology, and other Aura
Proprietary Right, the Company shall have the sole right to determine whether or
not any action shall be taken on account of any such infringement(s).
 
6.6             Confidential Information
 
                                (a) Each party shall hold the Confidential
Information disclosed to it by the other party in strict confidence and shall
not use or disclose the same except to its employees and agents on a
need-to-know basis provided such employees and agents have agreed to be bound by
confidentiality obligations at least as protective of the Confidential
Information as the terms of this Agreement or are bound by a legally enforceable
code of professional responsibility to protect the confidentiality of such
Confidential Information.  The parties may disclose Confidential Information as
required by law (including without limitation all applicable
 

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securities laws and regulations) or as reasonably required to file for and
obtain any government or regulatory approvals and licenses necessary to sell or
distribute the Products for sale, lease, license or other disposition for the
Field of Use in the Territory provided that the disclosing party informs the
non-disclosing party of such disclosure prior to its occurrence.
(b) Return of Documents. Distributor and the Company each acknowledge that all
Confidential Information supplied to it by the other Party shall remain the sole
property of the disclosing Party and that all documents and other tangible media
that embody any such Confidential Information must be, at the disclosing Party’s
option, either promptly returned or destroyed, except as otherwise may be
required from time to time by applicable law, upon the disclosing Party’s
written request. Confidential Information in documentary or other tangible form,
and all copies of it, must be returned promptly to the disclosing Party upon
termination of this Agreement or, as applicable, upon earlier expiration of
Distributor’s rights thereto in accordance with this Agreement.
 
(c)  Injunctive Relief. Each party acknowledges and agrees that because: (i) an
award of money damages in inadequate to compensate the other party for any
breach of this Article 6 by the first party; and (ii) any breach of this Article
6 will causes irreparable harm, if there is a breach or threatened breach of
this Article 6 by the first party, the other party is entitled to equitable
relief, including injunctive relief and specific performance, without proof of
actual damages.
 
(d) Survival. The covenants and agreements contained herein with respect to any
Confidential Information deemed a trade secret under applicable law shall
continue until the information ceases to be a trade secret under applicable law.
The obligations with respect to all other Confidential Information shall
continue following termination of this Agreement.
 
(e)  Restricted Rights. The Products (including all software components) and any
accompanying documentation are provided with Restricted Rights. Use,
duplication, or disclosure by the U.S. Government is subject to restrictions as
set forth in subparagraph (c)(1) of the Commercial Computer Software -
Restricted Rights clause at FAR 52.227-19, subparagraph (c)(1)(ii) of The Rights
in Technical Data and Computer Software clause at DFARS 252.227-7013, or
subparagraph (d) of the Commercial Computer Software—Licensing at NASA FAR
supplement 16-52.227-86, or their equivalent, as applicable.
 
ARTICLE 7.                           TERM AND TERMINATION
 
7.1             Term
 
Unless terminated as provided in Sections 7.2 or 9.3 below or by mutual written
consent, this Agreement shall continue in full force from the Effective Date of
this Agreement until the expiration or abandonment of the last Valid Claim of
the Aura Technology utilized in the Products in the Field of Use (the “Term”);
provided, however, for the purpose of this sentence the term “Valid Claims”
shall only apply to a claim of a patent or patent application in the United
States.  To the extent that Company accepts an order from Distributor following
the expiration of this Agreement, the same shall be governed by the terms
hereof, but will not be deemed to have otherwise extended the Agreement.
 

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7.2           Termination for Cause
 
To the extent that either party shall elect to terminate this Agreement for
cause, each of the following shall constitute cause or good cause and sufficient
grounds for such termination and this Agreement may be terminated prior to the
expiration of the Term as provided in Section 7.1 above, upon notice to the
other party, as follows:
 
A. By either party, effective immediately, in the event that the other party
should fail to perform any of its material obligations under this Agreement and
should fail to remedy such failure within ninety (90) calendar days after
receiving written demand to remedy such failure; provided that if such breach is
not curable within such ninety (90)-day period that the party in breach has
commenced to substantially cure such breach within such ninety (90) day period
and, in any event, such breach shall have been remedied within one hundred
twenty (120) days of receipt of such written demand to remedy such breach;
 
B. By either party if the other party is dissolved, becomes insolvent, is
adjudicated bankrupt, voluntarily or involuntarily files a petition for
bankruptcy, makes an assignment for the benefit of creditors, seeks any other
similar relief under any bankruptcy law or related statues or otherwise becomes
financially incapable of performing its obligations in accordance with the terms
of this Agreement, and such judgment, assignment or incapacity is not revoked
within one-hundred twenty (180) calendar days;
 
C. By either party if all or substantially all of the assets of the other party
are transferred, sold or liquidated; or
 
D.           At the election of Company, in writing, in the event that
Distributor fails to meet the Minimum Order requirement during the Non-Exclusive
Period
 
7.3             Rights of Parties Upon Termination
 
The following provisions shall apply upon the termination or expiration of this
Agreement for any reason:
 
D. In the event that Distributor has entered into agreement(s) during the Term
of this Agreement with customer(s) in the Territory to provide Products to such
customer(s) as such Products are ordered by such customer(s) for a fixed time
period (such arrangements are referred to herein as “Tenders”), Company shall
continue to sell Products to Distributor after the non-renewal or expiration of
this Agreement, but only to the extent necessary for Distributor to satisfy its
obligations under such Tenders, only for prices that are no greater than the
maximum prices set forth on Exhibit “B”, as modified from time to time, and only
for a period of time that is no longer than one (1) year after such non-renewal
or expiration.
 
E. Each party shall immediately cease all use of, and return to the disclosing
party, any Confidential Information in its possession.
 
F. Company shall repurchase from Distributor at the actual price paid by
Distributor, or credit Distributor for, the Products in Distributor’s possession
at the time of termination or expiration of this Agreement which Distributor has
purchased from Company (the
 

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“Termination Inventory”); provided, however that Company shall have no
obligation to repurchase or issue a credit for any Products which are not in
their original condition or have been altered or modified in any way by
Distributor.  In the event the termination is made by Distributor pursuant to
7.1(A) for acts or breaches of the Company, the Company shall be solely
responsible for arranging and paying for the packaging, freight, insurance and
taxes related to the return of the Termination Inventory to Company.
G. Sections 1, 3, 6, 7 and 8 of this Agreement shall survive the termination or
non-renewal of this Agreement for any reason.
 
H. Neither party shall be discharged for any antecedent obligations or
liabilities to the other party under this Agreement, unless otherwise agreed in
writing;
 
I. All rights granted under this Agreement to either party shall forthwith and
without further act or instrument, be assigned and revert to their respective
original owners. In addition, the parties agree to execute any instruments
requested by one another, which are necessary to accomplish or confirm the
foregoing. Any such assignment, transfer or conveyance shall be without
consideration other than the mutual agreements contained herein.
 
J. COMPANY SHALL NOT BE LIABLE TO DISTRIBUTOR FOR ANY DAMAGES, LOSSES OR
EXPENSES RESULTING FROM ANY TERMINATION OR EXPIRATION OF THIS AGREEMENT ARISING
FROM ANY CLAIMS ASSERTED BY DISTRIBUTOR WHICH ARE BASED UPON LOSS OF GOODWILL,
PROSPECTIVE PROFITS OR ANTICIPATED ORDERS, OR ON ACCOUNT OF ANY EXPENDITURES,
INVESTMENTS, LEASES OR COMMITMENTS MADE BY DISTRIBUTOR;
 
                        7.4                                Orders Following
Termination. To the extent that Company accepts an order from Distributor
following the expiration of this Agreement, the same shall be governed by the
terms hereof, but will not be deemed to have otherwise extended the Agreement.
 
ARTICLE 8.                       INSTALLATION AND WARRANTY SERVICE
 
8.1             Service
 
In addition to its other duties and obligations as prescribed under this
Agreement, Distributor agrees to provide installation and warranty service to
those Service Agreement holders (“Holders”) whose Products were purchased from
Distributor or its sub distributors pursuant to the terms of this Agreement and
are covered by Service Agreements in full force and effect (collectively
“Covered Service”). A full and exhaustive list of all Covered Services is
attached hereto as Exhibit “D”. Distributor may not provide any services under
this Agreement for any Product outside of the Field of Use without the prior
express written consent of Company. While Distributor may not provide any
service which is not listed as a Covered Service for any Product covered by a
valid Service Agreement without the prior written consent of Company,
Distributor may, at its own risk and expense, provide service for Products
within the Field of Use whose Service Agreements have expired. In the event that
Distributor wishes to perform a service not listed as a Covered Service on a
Product falling within the Field of Use and covered by a valid Service Agreement
(a “Non-Covered Service”), Distributor must obtain the prior written consent of
Company to do so. Such consent for Non-Covered Service may be withheld by
Company for
 

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any reason at Company’s sole discretion. All Non-Covered Services will be
provided by Distributor at Distributor’s sole risk and expense.
 
8.2             Covered Service
 
Distributor shall perform all Covered Service in accordance with this Agreement.
In performing Covered Service, Distributor shall restore each Product, to its
proper working condition as determined by manufacturer specifications.
 
8.3             Equipment and Rates
 
The parts reimbursement rates payable by Company for Covered Services is set
forth in Exhibit “D” also sets forth the rate payable by Company for labor to
perform Covered Service. Service Area. When on-site service is required by
Company or Service Agreements, Distributor will perform Covered Service on the
Holder’s premises where the Product is located (“Holder Premises”). Service
calls to render Covered Service at a Holder Premises shall be charged to Company
at the rate provided for in Exhibit “E” herein or as mutually agreed to by
Distributor and Company. Distributor shall not be reimbursed for mileage or time
charges (“M/T Charges”) resulting from performance of Covered Services unless
Company has given its prior written approval of M/T Charges. If Company approves
M/T Charges, Distributor will be reimbursed the M/T Charges approved by Company.
 
8.4           Submission of Invoices
 
Distributor shall submit claims for Covered Service using forms acceptable to
Company bearing Distributor’s signature and the signature of the customer for
whom the Covered Service was performed. Distributor shall submit all claims for
Covered Service to Company within fifteen (15) days of the date on which such
Covered Service was rendered. Distributor shall not submit any claims to Company
for anything which does not constitute Covered Service pursuant to a valid
Service Agreement.  Unless otherwise agreed by the parties in writing, Company
shall cause payment to be received by Distributor for any Covered Service no
later than thirty (30) days following the date of submittal of such claims to
Company.
 
8.5             Distributor Warranty
 
 
Distributor will take defective generator from the installed location and send
to company if it can not be repaired on site for repair or replacement under
company’s warranty. Distributor will not void warranty given by company.
 

8.6             Service Literature
 
Distributor shall, at all times during the Term of this Agreement, subscribe to
all pertinent Covered Product service literature including without limitation
all service bulletins.
 
ARTICLE 9.                           GENERAL PROVISIONS
 
9.1             Entire Agreement
 

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This Agreement, including any Exhibits hereto, represents the entire agreement
between the parties on the subject matter hereof and supersedes all prior
discussions, agreements and understandings of every kind and nature between
them. This Agreement may be modified, amended, rescinded, cancelled or waived,
in whole or in part, only by written instrument signed by all of the parties
hereto.
9.2             Notices
 
All notices under this Agreement shall be in English and shall be in writing and
given by airmail, certified or registered, postage prepaid, return receipt
requested, cable, telex or facsimile, promptly confirmed by airmail, addressed
to the parties at the addresses immediately below their respective signatures
hereto, or to such other address of which either party may advise the other in
writing. Any notice given by airmail shall be deemed received by the addressee
three (3) business days from the date of mailing. All other forms of notice will
be deemed given when sent.
 
9.3             Force Majeure
 
Neither party shall be in default hereunder by reason of any failure or delay in
the performance (either in whole or in part) of any obligation under this
Agreement (other than the payment of money) where such failure or delay arises
out of any cause beyond the reasonable control and without the fault or
negligence of such party (an “Event of Force Majeure”).  Such causes shall
include, without limitation, storms, floods, other acts of nature, fires,
explosions, riots, war, terrorism or civil disturbance, strikes or other labor
unrests, embargoes, shortage or failure in supply of raw materials from the then
contemplated sources of supply and no other source or supply can be located or
obtained with commercially reasonable diligence and effort, and other
governmental actions or regulations which would prohibit either party from
ordering or furnishing Products or from performing any other aspects of the
obligations hereunder. Within ten (10) days from the date of commencement of an
Event of Force Majeure, the party affected by such an event shall advise the
other party (the “Other Party”) of the date when such delay in performance
commenced, and the reasons therefore as enumerated in this Agreement; likewise,
within ten (10) days after the delay ends, the party affected by such an Event
of Force Majeure shall advise the Other Party of the date when such delay ended,
and shall also specify the redetermined time by which the performance of the
obligation hereunder is to be completed.  In the event that the Event of Force
Mejeure continues for a period of sixty (60) days then the Other Party shall
have the right to elect to terminate this Agreement upon ten (10) days notice to
the party affected by such an event.
 
9.4             Severability
 
In the event any one or more of the provisions contained in this Agreement are
deemed illegal or unenforceable, in whole or in part, the remaining provisions,
and any partially unenforceable provisions to the extent enforceable, shall
nevertheless be binding and enforceable. In the event that any act, regulation,
directive, or law of a government having jurisdiction and respect of this
Agreement, including its departments, agencies or courts, should make it
impossible or prohibit, restrain, modify or eliminate any act or obligation of
either party under this Agreement, the non-affected party shall have the right,
at its option, to suspend this Agreement or the parties may, at their mutual
agreement, make such modifications therein as may be necessary.
 

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9.5           Assignment
 
Except as expressly provided for herein, neither party may assign or otherwise
transfer any of its rights or obligations under this Agreement without the other
party’s prior written approval and any such assignment or transfer shall be
void.  Notwithstanding the foregoing, Distributor may assign this Agreement or
any of its rights or obligations, upon notice to Company, to (i) an affiliated
company or entity or (ii) an unaffiliated company or entity pursuant to a sale,
merger or other consolidation of such party or any of its operating divisions.
This Agreement does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement.
 
9.6             Applicable Law
 
This Agreement is deemed made and entered into in the State of California and
shall be construed, enforced and performed in accordance with the laws of the
State of California, without reference, to choice of law.  THE RIGHTS AND
OBLIGATIONS OF THE PARTIES IN CONNECTION WITH THIS AGREEMENT AND ANY PURCHASE OF
THE PRODUCTS SHALL NOT BE GOVERNED BY THE PROVISIONS OF THE 1980 U.N. CONVENTION
ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS.
 
9.7             Dispute Resolution
 
Any and all disputes of whatever nature, arising between the parties of this
Agreement or the underlying business relationship, including termination thereof
and statutory claims, and which are not resolved between the parties themselves,
shall be submitted to binding and final arbitration to be conducted in English,
in Los Angeles, California, before a single arbitrator in accordance with the
Commercial Arbitration Rules of the American Arbitration Association for Complex
Commercial Cases in effect as of the date of this Agreement.  Judgment upon the
award of the arbitrator may be entered in any court having jurisdiction thereof.
In the event of any proceeding in arbitration between the parties arising in any
manner out of this Agreement or the asserted breach thereof, the prevailing
party shall recover court costs or costs of arbitration, as appropriate, and
reasonable attorneys’ fees.
 
9.8             Waiver
 
The waiver or excuse by either party hereto as to any breach, default or
deficiency and the performance by the other party of any duty or obligation by
the other party to be performed hereunder shall not constitute or be deemed a
continuing waiver or excuse of the same or any other duty or obligation owed by
the other.
 
9.9             Interpretation
 
In the event any claim is made by any party relating to any conflict, omission
or ambiguity in this Agreement, no presumption or burden of proof or persuasion
shall be implied by virtue of the fact that this Agreement was prepared by or at
the request of a particular party or that party’s counsel.  Reference to
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”
 

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9.10           Captions
 
Captions of sections of this Agreement are included for reference only, shall
not be construed as part of this Agreement and shall not be used to define,
limit, extend or interpret the terms hereof.
 
9.11             Currency
 
Unless otherwise agreed by the parties in writing, all payments required to be
made under this Agreement shall be made in United States Dollars via cash,
check, wire transfer, or other immediately available funds. The remitting party
shall pay at its own expense all charges and expenses associated with the other
party’s receipt of such payment.
 
9.12             Cumulative Remedies
 
No remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy and each and every right and remedy
hereunder is cumulative with each and every other right and remedy herein or in
any other agreement between the parties or under applicable law.
 
9.13             Receipt
 
Distributor hereby acknowledges receipt of a signed copy of this Agreement.
 
9.14             Counterparts
 
This Agreement may be executed in any number of counterparts, each of which
shall constitute an original and all of which together shall constitute one and
the same instrument.
 
9.15             No Consequential Damages
 
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
CONSEQUENTIAL OR INDIRECT DAMAGES, HOWEVER CAUSED.
 
9.16             Successors
 
Except as otherwise provided herein, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their permitted successors and
assigns.
 

 

 
[signature page to follow]
 

 

 

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IN WITNESS WHEREOF, Company and Distributor have caused this instrument to be
executed by their duly authorized employees, as of the day and year first above
written.
 

 

 
[_____________________________]
(“Company”)
 
WEPOWER LLC
(“Distributor”)
         
Name:
   
Name:
 
By:
   
By:
 
Title:
   
Title:
 
Date:
   
Date:
           

 

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EXHIBIT A
 FORM OF PURCHASE ORDER

EXHIBIT B
 INITIAL PRODUCT PRICE LIST

EXHIBIT C
 END-USER WARRANTY

EXHIBIT D
RETURN POLICY

EXHIBIT E
COVERED SERVICE LIST AND APPROVED SERVICE REIMBURSEMENT RATES

EXHIBIT F
FORM OF SERVICE AGREEMENT

 

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EXHIBIT E
 
Parts and Labor Reimbursement Rates

Service
Code       Description                                                                                                                                            Rate____

 
Installation
 
W-AG001
Buss charge up failure inspection (inspect for and tighten loose screws or
internal ECU connectors)
$40.00
W-AG002
Software upgrades; Reprogram ECU and test AuraGen® system under load
$40.00
W-AG003
Remove and Replace RPM Sensor
$40.00
W-AG004
Remove and Replace Electronic Control Unit (ECU)
(including re-programming and load testing of system)
$120.00
W-AG005
Remove and Replace Serpentine Belt (if defective within 18 months of AuraGen®
operation)
$40.00
 
W-AG006
Remove and Replace Idler or Tensioner Pulleys
$60.00
 
W-AG007
Remove and Replace Generator
$120.00
W-AG008
ECU Diagnostics: Troubleshoot bus charge up failure, electrical connections or
installation computer / interface box communication issues per AuraGen®
Troubleshooting Guide.
$75.00
 
W-AG009
Generator Diagnostics: Troubleshoot bus charge up failure per AuraGen®
Troubleshooting Guide.
$40.00
 
W-AG010
Remove and Replace Mounting Kit
(requires approval)
W-AG011
Remove and replace Mechanical Idle Control and re-program ECU. (Trucks)
$75.00
 
W-AG012
Remove and replace Mechanical Idle Control and re-program ECU. (Vans)
$100.00
 
W-AG-SB-XXXX
Component replacement or system upgrades specified by AuraGen® Service
Bulletin's (SB's)
($ noted in SB)

Labor Reimbursement Rates:

Warranty labor rate for work performed at Distributor facility will be
reimbursed at the lesser of: (a) Distributor’s posted hourly rate in effect at
the time of service or (b) the normal and customary rates in the industry for
such service in effect at the time and place of service, but in no event shall
such reimbursement exceed $75.00 per hour.

Invoices that are submitted for Covered Products’ warranty repair (labor and
travel), that exceed US $150 will require written approval from Company prior to
commencement of such warranty repair.  In the event such approval is not
obtained Distributor shall not be required to perform such repair.

Repairs that were directly caused by Product component failure will be subject
to time limitations published in industry standard flat rate manuals.

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