SUPPLY AGREEMENT

This Supply Agreement ("this "Agreement"),entered into as of this 1st day of April, 1999, between UNIQUE POWERPRODUCTS, INC., a Colorado corporation ("UPP") with its principalplace of business at Frederick, Colorado, UNIQUE MOBILITY, INC., a Coloradocorporation, ("Unique") with its principal place of business atGolden, Colorado, and INVACARE CORPORATION, an Ohio corporation ("Invacare")with its principal place of business at Elyria, Ohio.

 

WITNESSETH:

 

WHEREAS, Unique Mobility, Inc., parent of UPP, and Invacarehave entered into a business relationship for the development and manufacture ofgearless motors including a License Agreement dated July 23, 1997 (the"License Agreement") for the exclusive use of certain gearless motortechnology in Medical Products (as defined in the License Agreement);

 

WHEREAS, UPP desires to manufacture and sell and Invacaredesires to purchase and take delivery of certain gearless motors for use onmotorized wheelchairs;

 

WHEREAS, motors are an essential component in themanufacturing processes utilized by Invacare and an assured source of supply ofgearless motors, manufactured to exacting specifications, is of criticalimportance to Invacare; and

 

WHEREAS, UPP and Invacare desire to define the terms andconditions by which UPP shall serve as Invacare's primary, assured source ofsupply for gearless motors and Invacare shall make purchase commitments uponwhich UPP may justifiably rely;

 

NOW, THEREFORE, in consideration of the representation,warranties, covenants and agreements contained herein and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, and with intent to be legally bound hereby, the parties agree asfollows:

 

 

I. Certain Definitions

 

The following terms shall have the meanings set forth herein:

 

1.1 "Contract Year" shall mean each consecutivetwelve (12) month periods commencing with the first date of the month following(1) the acceptance of motors by Invacare and (2) UPP having fullyoperational manufacturing facilities for the production of Motors.

 

1.2 "License Agreement" shall mean the agreementbetween Invacare and Unique Mobility, Inc. dated July 23, 1997.

 

1.3 "Motor" shall mean the gearless motor for useon motorized wheelchairs to be produced by UPP in accordance with theSpecifications and any improvements thereto developed during this agreement andsold to Invacare under this Agreement.

 

1.4 "Specifications" shall mean the specificationsrelating to Motors required and specified by Invacare as set forth in Exhibit1.4 attached hereto (which may be supplemented or modified from time to time bymutual agreement of the parties) and with which the Motors sold under thisAgreement shall comply.

 

1.5. "Term" shall mean the period of timeconsisting of the Original Term (as defined in Section 3.1) plus any RenewalTerms or, Additional Term (as defined in Section 3.2).

 

1.6 "Tooling" means the tools and equipment and thedrawings, patterns and specifications of such tools and equipment described inExhibit 1.6 attached hereto, as well as any additional tools as may be agreedupon between the parties from time to time.

 

 

II. Sale and Purchase Obligations

 

In accordance with the terms of this Agreement, Invacare andUPP hereby agree as follows:

 

2.1 Purchase Obligations. During the Term of this Agreement, UPP shallmanufacture, sell and deliver to Invacare, and Invacare shall purchase andaccept from UPP, quantities of Motors as follows:

 

(a) during each Contract Year, Invacare shall purchase fromUPP a minimum number of **[* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENTREQUEST*]** Motors and such greater numbers of Motors as arespecified in Release Orders issued by Invacare and approved by UPP pursuant toSection 4.1 hereof; and

 

(b) during each of the Contract Years of the Renewal Term,Invacare shall purchase minimum quantities of**[* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENTREQUEST*]** Motors at a price of lessthan**[* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENTREQUEST*]**per motor. The annual quantities and prices for each Contract Yearof the Renewal Term shall reflect cost reductions achieved by UPP and will benegotiated in good faith and agreed upon during the 120 day notice periodpursuant to Section 3.2 of this agreement.

 

2.2 Contract Year Forecast. At least fifteen (15) daysprior to the commencement of each calendar quarter (other than the firstcalendar quarter) during each Contract Year, Invacare shall provide UPP with agood faith revision and update of the annual estimate for the remainder of theContract Year. The parties specifically agree that Invacare's estimate isfurnished only to assist UPP in scheduling production and shall not create anyobligation on Invacare to purchase or UPP to supply quantities approximating theestimate if such quantities are not actually agreed to pursuant to Section 4.1hereof

 

 

III. Term of Agreement

 

3.1 Original Term. The original term of this Agreementshall commence as of the date hereof (the "Effective Date") and shallcontinue up to and including two Contract Years (the "Original Term").

 

3.2 Renewal Term: Additional Terms. By written noticedelivered to UPP at least 120 days prior to the expiration of the Original Term,Invacare may elect, in its sole discretion, to extend the term of this Agreementfor an additional period of three (3) years (the "Renewal Term").Thereafter, this Agreement may be extended for such additional periods and undersuch terms (collectively, the "Additional Term") as UPP and Invacareshall, by mutual written agreement, determine.

 

3.3 Permitted Purchases. With respect to any ContractYear, UPP and Invacare shall be entitled to purchase Motors from any third partywithout liability to UPP under this Agreement because of any such purchases, solong as Invacare purchases by the end of any such Contract Year the MinimumQuantity of Motors set forth in 2.1(b) of this Agreement from UPP but subject toany royalty payments required under the License Agreement. The parties agreethat nothing in this Agreement affects in any way Invacare's rights with respectto the purchase of other motors. This Agreement relates solely to Motors asdefined herein.

 

 

IV. Terms and Conditions of Sale

 

4.1 Release Order. Invacare shall order all amounts ofMotors being purchased under this Agreement by delivering to UPP a blanketrelease order (the "Release Order"), in the form set forth in Exhibit4.1 attached to this Agreement, to be delivered to UPP on or before the last dayof each calendar quarter during the term hereof. Each Release Order shallspecify at least (i) the aggregate amount ordered, (ii) the date ofrequired delivery (which shall not be less than ninety (90) days after the dateof delivery of the Release Order) and the quantity to be delivered on such dateand (iii) any other terms not inconsistent with the terms of this Agreementthat are approved by UPP. Each Release Order must be approved by UPP.Notwithstanding the provisions of any other acknowledgment, invoice or otherdocument or instrument of UPP or Invacare, or any statement by any agent oremployee of UPP or Invacare, now or hereafter executed, all sales of Motors byUPP to Invacare will be subject to and in accordance with the terms of (i) thisAgreement and (ii) to the extent not inconsistent with this Agreement, theterms of the applicable Invacare Release Order, executed under this Agreement.Any motors ordered by Invacare from UPP but not supplied by UPP shall beincluded in the minimum quantity as set forth in Section 2.1 (a) and (b) of thisAgreement.

 

4.2 Delivery Terms: Time of the Essence. UPPacknowledges and agrees that with respect to the delivery dates specified in anyRelease Order TIME IS OF THE ESSENCE. UPP agrees to deliver Motors no more thantwo days before, and zero days after the date specified in the applicableInvacare Release Order for such Motors. Unless otherwise expressly provided inthe applicable Release Order, delivery will be. F.O.B., UPP's plant, Frederick,Colorado.

4.3 Title and Risk ofLoss. Title to and riskof loss on all of the Motors shipped by UPP to Invacare shall not pass toInvacare until inspection and acceptance of such Motors by Invacare inaccordance with the terms of this Agreement. During the Term of this Agreement,UPP will maintain in accordance with the terms of this Agreement sufficientinsurance to cover its risk of loss with respect to Motors ordered under thisAgreement and naming Invacare as an additional insured and loss payee as itsinterest may appear in ordered Motors. Upon written request from Invacare, UPPshall furnish Invacare with appropriate certificates of such insurance whichcertify the existence of such insurance and stipulate that no less than thirty(30) days notice shall be given to Invacare prior to any termination orreduction of the limits of coverage.

 

4.4 Acceptance and Inspection of Motors. Any Motorsdelivered to Invacare on or before the delivery date set forth in the ReleaseOrder shall be deemed to have accepted by Invacare on the tenth day after suchdelivery unless prior to that date Invacare shall have notified UPP that suchMotors are defective or do not conform to the Specifications. Inspection andtests of Motors by Invacare may, at Invacare's option, be made either at UPP'splant or the point of destination. In no event shall payment be deemed toconstitute acceptance. Acceptance by Invacare of all or any commercial unit ofMotors delivered pursuant to any particular Release Order or accepted byInvacare after the delivery date specified therein shall not (i) relieveUPP from any of its obligations and warranties hereunder, (ii) bindInvacare to accept future shipments of Motors or (iii) deprive Invacare of,or constitute a waiver of, any right or remedy which it may otherwise have underthis Agreement or under law including the right to return Motors alreadyaccepted.

 

4.5 Nonconforming Motors. If inspection discloses thatany Motors delivered to Invacare are not in accordance with Specifications orfail to meet the warranties contained in Section 6.1 of this Agreement, UPP,upon notice from Invacare of such nonconformity or failure given timely pursuantto Section 4.4 hereof, shall correct or replace such Motors at UPP's expense.Such correction and replacement shall include all Invacare's costs and expensesincurred in the replacement of said motors including product recall at the solediscretion of Invacare. After timely receipt by UPP of Invacare's notice ofnoncompliance or failure, all Motors which are the subject of the notice shallbe the responsibility of UPP, and UPP shall bear the risk of loss with respectto such Motors. Invacare may, and at UPP's direction shall, return such Motorsto UPP at UPP's risk, and all transportation and handling charges, both to andfrom the original destination, shall be paid by UPP. Any payment for such Motorsshall be refunded by UPP unless UPP promptly corrects or replaces the same atits expense and within the time period set forth herein. Return of any defectiveMotors by Invacare shall not be deemed a waiver of any right or remedy whichInvacare may have as a result or in connection with the existence of such defector defects.

 

4.6 Motor Purchase Price.

 

(a) Pricing. Except as otherwise provided in thisSection 4.6, the purchase price to be paid by Invacare for each Motor hereunder(the "Purchase Price") will be the sum of**[* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENTREQUEST*]** per unit (F.O.B.UPP's Plant, Frederick, Colorado) during the first and second Contract Year ofthis Agreement.

(b) Offer from Other Manufacturer. If during anyContract Year of the Renewal Term, Invacare receives a bona fide competitiveoffer for motors from a third party manufacturer (whether solicited by Invacareor offered without solicitation ) for substantially equivalent quantities ofproduct with specifications substantially equivalent to the Specificationsapplicable to Motors and at a price less than that agreed upon under the termsof this Section 4.6(b); then:

 

(i) UPP shall be entitled to a right of first refusal tomatch any such competitive pricing quoted to Invacare regarding the remainingMinimum Quantity for that Contract Year; and

 

(ii) in the event UPP does not elect to match suchcompetitive price quote, the Renewal Term shall, at the election of Invacare:

 

> 
(x) terminate this Agreement thirty (30) days                after Invacare's notice to UPP of such competitive bid with                Invacare thereafter being entitled to purchase Motors from such                third party without any liability to UPP under this Agreement by                reason of such purchase but subject to any royalty payments                required under the License Agreement, or

 

(y) continue for the remainder of its term.

 

(c) Most Favored Customer Status. The purchase pricefor Motors purchased by Invacare during this agreement shall not be lessfavorable than the price currently or hereafter extended to any other customerof UPP for Motors sold by UPP with specifications substantially equivalent tothe Specifications. In the event that, during the Term of this Agreement, UPPestablishes or offers a lower price for the sale of such product, UPP agrees tooffer such lower price to Invacare during the period such lower price is ineffect and subject to such other terms and conditions applicable to the lowerprice. From time to time, Invacare may request that UPP certify that it is notselling such product to any of UPP's other customers at a price that is lowerthan the price Invacare is then paying for Motors.

 

(d) Disputes. In the event of any dispute between theparties as to any computation relating to a reduction in the Purchase Price, theparties agree to abide by the determination of an accounting firm, agreed uponby the parties.

 

(e) Exclusivity For so long as Invacare purchases theMinimum Quantity of Motors set forth in Section 2.1(a) and (b) of thisAgreement, UPP and its affiliates agrees that, during the Term, Renewal Term,and any Additional Term as defined in Section Three of this Agreement, it willnot (i) disclose the design or Specifications of the Motors to any thirdparty in the health care field other than Invacare or (ii) sell, lease orotherwise dispose of any Motors to any party in the health care field other thanInvacare. This Section 4.6(f) shall be of no force or effect if UPP terminatesthis Agreement as a result of a material breach by Invacare.

 

4.7 Invoicing. Invoices, bills of lading and othershipping notices shall be in accordance with Invacare's special instructions,if any, as specified in the applicable Release Order and shall, in any event,contain the Release Order number.

 

4.8 Payment. Payment of the purchase price for Motorsto UPP shall be due thirty (30) days after receipt by Invacare of UPP's invoiceor receipt by Invacare of the ordered Motors, whichever occurs later.

 

4.9 Extra Charges. The purchase price for Motors to bepaid by Invacare pursuant to Section 4.6 is intended to be all inclusive (F.O.B.UPP's plant, Frederick, Colorado) and no additional charges of any kindwhatsoever shall be levied upon or paid by Invacare with respect to Motorsincluding, without limitation, charges with respect to packaging, insurance,use, excise or other tax or assessment (other than federal, state or local useor excise taxes or assessments to the extent permitted and invoiced inaccordance with Section 4.10 of this Agreement). UPP shall have soleresponsibility for payment of all such charges unless specifically agreed to inwriting in advance by Invacare.

 

4.10 Taxes. The purchase price for Motors under thisAgreement shall exclude any federal, state or local use or excise taxes leviedupon or measured by the sale, sales price or use of goods. All such taxeslawfully applicable shall be listed separately on UPP's invoice. If suchapplicable tax is not separately listed, UPP assumes responsibility for thepayment of such taxes and shall indemnify and hold Invacare harmless from anyand all liability in connection with such taxes. Tax exemption certificates orother evidence of exemption furnished by Invacare shall be accepted by UPP inlieu of such taxes.

 

4.11 Technical Cooperation. During the Term of thisAgreement, UPP shall use its commercially reasonable efforts to supportInvacare's use of Motors and otherwise cooperate with Invacare in maximizing itsuse of the Motors. Invacare shall have reasonable access to UPP's personnel andfacilities during the term of this Agreement and will be permitted to observeand assist with the manufacturing setup in a commercially-reasonable manner.

 

4.12 Mutual Savings. During the Term of thisAgreement, the parties will undertake commercially reasonable efforts to developmutual savings programs including, without limitation programs relating to rawmaterial supply arrangements, returnable packaging, inventory management andorder entry.

 

4.13 Audit. During the Term of this Agreement, eitherparty may request, no more frequently than is commercially reasonable, anindependent audit to confirm the other party's compliance with the terms of thisAgreement. The cost of such audit shall be paid by the party requesting thesame, unless the audit shall reveal that one party is not in compliance with theterms hereof; in which case such party shall pay the cost of the audit.

 

 

V. Tooling

 

5.1 Ownership and Exclusive Use. UPP agrees that theTooling, is owned by Invacare and shall have been paid for by Invacare. Theforegoing is and shall remain, while in the possession of UPP, the property ofInvacare and shall only be used by UPP for the manufacture of Motors to bedelivered to Invacare unless otherwise permitted by Invacare in writing. Suchproperty, and whenever practical, each individual item thereof; shall be plainlymarked by UPP as the "Property of INVACARE CORPORATION".;

 

5.2 Warranty. If the Tooling is in the possession ofUPP on the date this Agreement is executed, then UPP warrants to Invacare thatthe Tooling is in its possession as of the date of execution of this Agreementand is not encumbered in any way as a result of any act or omission of UPP.

 

5.3 Covenants. During the Term and until such time asthe Tooling is returned to Invacare in accordance with the terms hereof, UPPcovenants that it will (i.) not allow the Tooling to become encumbered inany way as a result of any act or omission of UPP, (ii.) not move theTooling to a location different from the address of UPP as stated herein withoutprior written consent of Invacare; (iii.) maintain and keep the Tooling ingood repair at its own expense; (iv.) insure the Tooling in a mannerconsistent with normal industry practices; and (v.) at the expiration ortermination of this Agreement, allow removal of the Tooling at Invacare'swritten request and, upon receipt of such request, it shall prepare the Toolingfor shipment and shall have it delivered to Invacare, at Invacare's expense, inthe same condition as originally received by UPP, ordinary wear and tearexcepted.

 

5.4 Taxes, Assessments and Warehouseman Status. Alltaxes and assessments as may be charged, assessed or imposed upon such Toolingnot related to the ownership thereof while in the possession or control of UPPshall be borne and discharged by UPP. In holding and maintaining the Tooling,UPP shall not be considered a warehouseman under the law of any state.

 

5.5 UCC Filing. UPP grants Invacare a securityinterest, and agrees to execute and deliver to Invacare an appropriate UCC formwhich with respect to the Tooling, identifies UPP as a bailee and Invacare as anowner/bailor and UPP further agrees that Invacare may cause such UCC form to befiled in the government recording offices as determined by Invacare.

 

 

VI. Motor Warranties

 

6.1 Warranty of Motor. UPP hereby expressly warrants,for a period of 18 months after retail purchase of the wheelchair into whicheach Motor is installed, that such Motor shall be of merchantable quality, freefrom defects in materials and workmanship and fit for their intended use inInvacare's manufacturing process and shall conform strictly to, and withoutvariance from the Specifications as set forth in Exhibit 1.4 to this Agreement,as such Specifications and Exhibit may be amended and/or supplemented from timeto time by mutual agreement of the parties.

 

6.2 Warranty of Title. UPP hereby expressly warrantsthat title to Motors conveyed to Invacare shall be good and that all such Motorsshall be delivered free and clear of any security interest or other lien orencumbrance.

 

6.3 Warranty against Infringement: Indemnification.

 

(a) UPP. UPP expressly warrants that, except withrespect to any components or technology of Invacare that are incorporated intothe Motors with Invacare's consent ("Invacare Components"), the Motorsdo not infringe on any United States or foreign patent or on any other right ofany other person. Except with respect to any Invacare Components, UPP shall holdand save Invacare, its successors, assigns, customers and users harmless fromloss and/or liability or loss of any nature or kind arising out of or existingbecause of the infringement or alleged infringement of any patent by reason ofthe manufacture, sale or use of any goods furnished hereunder. Invacare shallnotify UPP in writing of any suit filed against it or its customers on accountof any such infringement or alleged infringement, and at UPP's request shallgive UPP control of the defense of such suit, insofar as Invacare has theauthority to do so, and information and assistance for the same, all at UPP'sexpense. In the event that Invacare should be enjoined in such suit orproceeding from using any part of a Motor delivered hereunder, UPP, at itsoption, shall promptly either (i) secure termination of the injunction orliability at UPP's expense, (ii) replace said Motor with non-infringinggoods or modify the Motor to become non-infringing all at UPP's expense or(iii) terminate this Agreement.

 

(b) Invacare. Invacare expressly warrants that thewheelchairs into which Motors are installed do not infringe on any United Statesor foreign patent or on any other right of any other person. Invacare shall holdand save UPP, its successors, assigns, customers and users harmless from lossand/or liability or loss of any nature or kind arising out of or existingbecause of the infringement or alleged infringement of any patent by reason ofthe manufacture, sale or use of any goods furnished hereunder. UPP shall notifyInvacare in writing of any suit filed against it or its customers on account ofany such infringement or alleged infringement, and at Invacare's request shallgive Invacare control of the defense of such suit, insofar as Invacare has theauthority to do so, and information and assistance for the same, all atInvacare's expense.

 

6.4 Performance Complying With Law. In performance ofwork under this Agreement or under any Release Order, UPP shall comply in allmaterial respects with all applicable federal, state and local laws andregulations and shall indemnify and hold Invacare harmless from any cost, lossor liabilities resulting from UPP's failure to so comply. Invacare shall complyin all material respects with all applicable federal, state and local laws andregulations and shall indemnify and hold UPP harmless from any cost, loss orliabilities resulting from Invacare's failure to so comply.

 

6.5 Survival of Warranties. The warranties set forthin this Section VI shall survive any inspection, delivery, acceptance of, orpayment by Invacare for Motors.

 

6.6 Notice. Invacare shall give UPP written notice ofany breach of warranty with respect to Motors as soon as reasonably possibleafter Invacare's discovery of any such breach.

 

6.7 Disclaimer: Damages. UPP MAKES NO INDEMNITY,REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AND NO WARRANTIES OFMERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE MOTORSEXCEPT FOR THE WARRANTIES AND INDEMNITIES EXPRESSLY SET FORTH IN THIS AGREEMENT.Each party expressly agrees that it shall be responsible for all damages causedby its breach or other noncompliance with the terms of this Agreement, includingconsequential and incidental damages.

 

 

> **VII. Representations and Covenants of UPP**
 

7.1 Existence. UPP is a corporation duly organized andvalidly existing under the laws of the State of Colorado. UPP is qualified to dobusiness in all jurisdictions wherein its ownership of property or the nature ofits business requires it to be so qualified. UPP has the legal right and allnecessary power and authority to own or hold under lease its properties and tocarry on its business as now being conducted.

 

7.2 Power. Authorization and Consent. The execution,delivery and performance of this Agreement and all of the documents to bedelivered by UPP hereunder (i) are within UPP's legal power and authority,(ii) have been duly authorized by all necessary action of the Board ofDirectors of UPP, (iii) are not in contravention of any provision of law,any provision of the Articles of Incorporation or other charter documents of UPP,any material agreement or indenture by which UPP is bound, or of any othermaterial document to which UPP is bound, and (iv) the same do not requirethe consent or approval of any governmental body, agency, authority or any otherperson which has not been obtained. This Agreement constitutes a legal, validand binding obligation of UPP enforceable (except as the same may be affected bygeneral principles of equity and any bankruptcy, fraudulent conveyance,preferential transfer, avoidance, insolvency or other law relating to theenforcement of creditors' rights), against UPP in accordance with its terms.

 

7.3 Compliance with Laws. UPP is not in violation ofany applicable statute, act, rule, regulation or order of any legislative,administrative or judicial body or official which would materially adverselyaffect its business, assets, operations, condition or prospects (financial orotherwise) or adversely affect its ability to perform under this Agreement.

 

7.4 Manufacturing Capacity. As of the date requiredunder the terms of this agreement, UPP has the capability and the capacity tomeet Invacare's requirements for Motors as contemplated by this Agreement. UPPacknowledges (i) Invacare's clear reliance upon this representation andcovenant in entering into this Agreement and in conducting its supplyarrangements accordingly and (ii) the immediate and direct harm and damageto Invacare that will result from UPP's inability to produce Motors required bythis Agreement.

 

7.5 Remedy of Force Majeure. UPP shall notify Invacareimmediately upon becoming aware of any event or condition that could establish aclaim of force majeure. UPP shall take all commercially reasonably actions andsteps to avoid or remedy the condition as to continue performance of thisAgreement.

 

7.6. Full Disclosure. There is no fact known to UPPwhich has not been disclosed to Invacare which may reasonably be expected tohave an adverse effect on UPP's performance under this Agreement. Norepresentation or warranty of UPP contained in this Agreement or in anyschedule, exhibit or document furnished or to be furnished in connection withthis Agreement contains or will contain any untrue statement of a material factor omits or will omit to state any material fact necessary to keep anystatements made herein or therein from being misleading.

 

 

> **VIII. Representations and Covenants of                Invacare

 **
8.1 Existence. Invacare is a corporation dulyorganized and validly existing under the laws of the State of Ohio. Invacare isqualified to do business in all jurisdictions wherein its ownership of propertyor nature of its business requires it to be so qualified. Invacare has the legalright and all necessary power and authority to own or hold under lease itsproperties and to carry on its business as now being conducted.

 

8.2 Power, Authorization and Consent. The execution,delivery and performance of this Agreement and of all the documents to bedelivered by Invacare hereunder (i) are within Invacare's legal power andauthority, (ii) have been duly authorized by all necessary action of theBoard of Directors of Invacare, (iii) are not in contravention of anyprovision of law, any provision of the Articles of Incorporation or othercharter documents of Invacare, any material agreement or indenture by whichInvacare is or shall in the future be bound, of any other material document towhich Invacare is or shall in the future be bound, and (iv) the same do notrequire the consent or approval of any governmental body, agency, authority orany other person which has not be obtained. This Agreement constitutes a legal,valid and biding obligation of Invacare enforceable (except as the same may beaffected by general principles of equity and any bankruptcy, fraudulentconveyance, preferential transfer, avoidance, insolvency or other law relatingto the enforcement of creditors' rights), against Invacare in accordance withits terms.

 

8.3 Compliance with Laws. Invacare is not in violationof any applicable statute, act, rule regulation or order of any legislative,administrative or judicial body or official which would materially adverselyaffect is business, assets, operations, condition or prospects (financial orotherwise) or adversely affect its ability to perform under this Agreement.

 

8.4. Full Disclosure. There is no fact known toInvacare which has not been disclosed to UPP which may reasonably be expected tohave an adverse effect on Invacare's performance under this Agreement. Norepresentation or warranty of Invacare contained in this Agreement or in anyschedule, exhibit or document furnished or to be furnished in connection withthis Agreement contains or will contain any untrue statement of a material factor omits or will omit to state any material fact necessary to keep anystatements made herein or therein from being misleading.

 

 
**IX.**Termination: Default: Remedies**
 

9.1 Breaches. Any breach of the agreements andprovisions of this contract shall permit the parties hereto to exercise anyrights or remedies they may have under this Agreement or under law.

 

9.2 Termination upon Substantial Impairment.Notwithstanding the provisions of Section 3 or Section 9.1 of thisAgreement, if either party commits a breach which substantially impairs thevalue of this Agreement to the other party and has not cured such breach withinthirty (30) days after receipt of written notice thereof, the aggrieved partyshall have the right to terminate this Agreement upon written notice to thebreaching party.

 

9.3 Automatic Termination. Notwithstanding theprovisions of Sections 3, 9.1, or 9.2, this Agreement shall terminateimmediately in the event that any party hereto shall have (i) ceased to dobusiness as a going concern, (ii) made a general assignment for the benefitof creditors, (iii) filed a petition seeking the reorganization,arrangement, composition, adjustment, liquidation or dissolution of such partyor seeking similar relief under any other statute, law or regulation, or seekingthe appointment of a trustee, receiver, assignee, liquidator or similar officeof the court for a substantial part of its properties or (iii) had filedagainst it any such petition and such petition has not been dismissed for aperiod of 90 days.

 

9.4. Consequences of Termination. Termination of thisAgreement in accordance with the foregoing provisions will not affect the rightsand obligations of the parties with respect to Release Orders given by Invacareprior to the effective date of the termination or terminate liabilities arisingout of conduct prior to the actual date of termination. Otherwise, all rightsand obligations of the parties under this agreement shall cease to exist upontermination of this Agreement; provided, however, that (i) all warrantiesand indemnities of the parties and the obligations under 4.6(c) shall survivetermination and (ii) the party terminating this Agreement because of breachby the other party shall have the right to seek damages and equitable relief onaccount of such breach.

 

9.5 Specific Performance. UPP acknowledges thatInvacare is relying on UPP to be an assured source of supply for Invacare andthat a breach by JJPP of its obligation to sell Motors will disrupt theproduction of Invacare in a manner that can not be reflected by money damages.Accordingly, UPP hereby agrees that Invacare shall be entitled to specificperformance of UPP's obligations hereunder.

 

9.6 Reservation of Remedies. The rights, powers andremedies which may be given or reserved to the parties by this Agreement shallbe cumulative in addition to all other and further remedies provided by law.This Agreement shall not be construed to deprive the parties of any otherrights, powers and remedies otherwise given by law or at equity. No waiver byeither party of any breach, default or violation of any term warranty,representation, agreement, covenant, condition or provision hereof shallconstitute a waiver of any subsequent breach, default or violation of the sameor other term warranty, representation, agreement, covenant, condition orprovision.

 

 
**X. Force Majeure**
 

10.1 General. Neither party shall be liable to theother for delay in any performance or failure to render any performance underthis Agreement when such delay or failure is beyond the reasonable control ofand without intentional wrongdoing or bad faith of the party asserting the claimof force majeure. A "force majeure" shall include, but not be limitedto, any acts of God, strikes, lockouts, or other labor disputes or industrialdisturbances, civil disturbances, shortages of raw materials or energy, acts,directives or binding orders of any court or governmental authority or personpurporting to act therefor and such orders or regulations (regardless of thevalidity of such order or regulation) of governmental bodies or agenciesasserting jurisdiction as would inhibit or prohibit performance required by thisAgreement.

 

10.2 Suspension: Cancellation upon Force Majeure. Withrespect to a party to this Agreement, the other party will be correspondinglyrelieved of its obligations to perform pursuant to this Agreement as long assuch force majeure shall be continuing. In the event that the condition of forcemajeure shall continue for the lesser of (i) thirty (30) days or(ii) in a period of time such that this Agreement shall become commerciallyimpracticable, the parties shall each have the right to cancel this Agreement.During a period of suspension pursuant to this Section, UPP and Invacare agreethat Invacare shall be entitled to purchase Motors from any third party withoutliability to UPP under this Agreement because of any such purchases.

 

10.3 Obligations. Section 10 shall in no way affectthe obligation of either party with respect to obligations incurred hereunderprior to the event of force majeure.

 

 
**XI. Miscellaneous**
 

11.1 Indemnification. UPP and Unique shall indemnifyand hold Invacare harmless against all claims, actions, costs, losses,liabilities and damages including, without limitation, reasonable attorney'sfees, on account of or related to, in whole or in part, any claims of injuriesto persons or damage to property based in whole or in part upon any defect indesign or manufacture or nonconformity in any Motor. Invacare shall indemnifyand hold UPP harmless against all claims, actions, costs, losses, liabilitiesand damages including, without limitation, reasonable attorney's fees, onaccount of or related to, in whole or in part, any claims of injuries to personsor damage to property based in whole or in part upon any defect or nonconformityin any wheelchair, except to the extent that any such claim, action, cost, loss,liability or damage results from a defective or nonconforming Motor. Each partyshall indemnify and hold the other party to this Agreement harmless against allclaims, actions, costs, losses, liabilities and damages including, withoutlimitation, reasonable attorney's fees, on account of or related to, in whole orin part, any (i) act or omission of such party or its agents, employees orsubcontractors or (ii) any other breach or alleged breach by such party ofany of its obligations under this Agreement or any Release Order.

 

11.2 Agency. This Agreement does not constitute UPP orInvacare as agent of the other and neither party shall hold the other out to beits legal representative, agent or employee for any purpose whatsoever.

 

11.3 Notices. All notices, requests, consents andother communications required or permitted hereunder shall be in writing andshall be personally delivered, electronically delivered by facsimile or telex,mailed by overnight mail service or mailed by certified mail, return receiptrequested, postage prepaid to the following addresses or to such other addressesas the parties hereto may designate in writing:

 

If to UPP:

 

                     Unique Power Products, Inc.                       7501 Miller Drive                       Frederick, CO 80530                       Attention: Donald A. French                       Telecopy No.: 303/684-0579

 

 

If to Unique:

 

Unique Mobility, Inc      425 Corporate Circle      Golden, CO 80401      Attention: Donald A. French      Telecopy No.: 303/278-7007

 

If to Invacare:

 

Invacare Corporation      One Invacare Way      Elyria, OH 44035      Attention: Thomas R. Miklich      Telecopy No.: 440/366-9008

 

All such notices, requests, consents and other communicationsshall be deemed to be properly given when delivered personally, or, if sent byU.S. mail, as of the date on the return receipt, or if sent by overnight mailservice, the next business day after delivery to the overnight mail service, orif sent electronically, upon verification of receipt.

 

11.4. Counterparts. This Agreement may be executed inany number of counterparts, each of which when executed by the parties heretoand delivered shall be deemed to be an original, and all such counterparts takentogether shall be deemed to be but on and the same instrument.

 

11.5 Governing Law. This Agreement shall be governedby, and construed and enforced in accordance with the laws of the State ofColorado.

 

11.6 Integration: Construction. This Agreement,together with the Confidentiality Agreement and License Agreement, shallcomprise the complete agreements of the parties hereto and shall supersede allprior agreements, written or oral, pertaining to the subject matter hereof ThisAgreement has been drafted with the joint participation of the parties heretoand shall be construed to be neither against nor in favor of UPP or Invacare.

 

11.7 Waivers and Amendments. No amendment,modification, supplement, termination or waiver of any provision of thisAgreement, and no consent to any departure therefrom, may in any event beeffective unless in writing and signed by the party or parties affected thereby,and then only in the specific instance and for the specific purpose given.

 

11.8 Attorneys' Fees. Each party to this Agreementshall bear its own legal fees and any and all other expenses relating to thetransactions contemplated in this Agreement. If any party institutes any actionor proceeding to enforce this Agreement or any provision here or for damages byreason of any alleged breach of this Agreement or of any provisions thereof orfor a declaration of rights hereunder, then the prevailing party in any suchaction or proceeding shall be entitled to receive from the other party all costsand expenses, including reasonable attorneys fees, incurred by the prevailingparty in connection with such action or proceeding.

 

11.9 Headings. The table of contents and headings ofthis Agreement are for convenience of reference only and shall not affect theconstruction of any provision of this Agreement.

 

11.10 Exhibits. Each Exhibit referred to herein andattached hereto is an integral part of this Agreement and is incorporated herebyby this reference.

 

11.11 Successors and Assigns. This Agreement and theprovisions hereof shall be binding upon and inure to the benefit of each of theparties and their successors and assigns.

 

11.12. Survival ofRepresentations and Warranties.All agreements, representations and warranties contained herein shall survivethe execution and delivery of this Agreement and the closing of the transactionscontemplated hereby.

 

11.13 Severability. The invalidity or unenforceabilityof any provision of this Agreement shall not affect the validity orenforceability of any other provision.

 

11.14 Assignment. Neither party may assign its rightsor obligations hereunder without the prior written consent of the other party.

 

 

1N WITNESS WHEREOF the parties have executed this SupplyAgreement as of the day and year first written above.

 

 INVACARE CORPORATION

By: /s/Name:Title:

 

UNIQUE POWER PRODUCTS, INC.

By: /s/Name:Title:

 

UNIQUE MOBILITY, INC.

By: /s/Name:Title:

 

 **