Document:

exv10w4

Exhibit
10.4

TEXT OMITTED AND SUBMITTED SEPERATELY
PURSUANT TO CONFIDENTIAL TREATEMENT REQUEST
UNDER 17 C.F.R. SECTIONS 200.80(b)(4) AND
240.24b-2

SUPPLY AGREEMENT

NAVISTAR, INC

AND

ENOVA SYSTEMS INC

 

 

Navistar, Inc

Enova Systems

Supply Agreement

Table of Contents

	 	 	 	 	 
	NAVISTAR, INC
	 	 	 	 
	TERMS
	 	 	4	 
	1. TERM OF AGREEMENT
	 	 	4	 
	2. FREIGHT
	 	 	4	 
	3. PAYMENT TERMS
	 	 	4	 
	PRODUCT
	 	 	5	 
	4. PRODUCT TERMS
	 	 	5	 
	5. PRICING
	 	 	6	 
	6. MATERIAL CLAUSE
	 	 	8	 
	7. SERVICE PARTS AVAILABILITY
	 	 	8	 
	8. PACKAGING AND PACKING
	 	 	8	 
	9. LABELING
	 	 	9	 
	10. VOLUMES
	 	 	9	 
	11. TOOLING
	 	 	9	 
	12. PRODUCT IMPROVEMENTS / COST REDUCTION
	 	 	10	 
	13. FORCED SELLER CHANGES, OBSOLESCENCE, AND NEW PRODUCTS
	 	 	11	 
	14. PRODUCT REGULATORY COMPLIANCE
	 	 	11	 
	15. PRICING, QUANTITY, REBATE AND FREIGHT DISPUTES
	 	 	11	 
	16. INSPECTION OF PRODUCTS
	 	 	12	 
	17. TRANSACTION SUPPORT
	 	 	12	 
	SELLER PERFORMANCE
	 	 	12	 
	18. PERFORMANCE ACHIEVEMENT
	 	 	12	 
	19. KEEP COMPETITIVE AGREEMENT
	 	 	13	 
	20. SUPPLY FAILURE
	 	 	13	 
	21. LATE DELIVERY CHARGES
	 	 	13	 
	22. ASSURANCE OF PERFORMANCE
	 	 	13	 
	23. REIMBURSEMENT FOR NON-PERFORMANCE BY SELLER
	 	 	14	 
	24. WARRANTY
	 	 	14	 
	25. REIMBURSEMENT FOR WARRANTY CLAIMS
	 	 	15	 
	26. FINANCIAL VIABILITY
	 	 	16	 
	27. AUDIT RIGHTS
	 	 	16	 
	28. NAFTA DOCUMENTATION
	 	 	16	 
	29. SUPPLIER DIVERSITY PROGRAM
	 	 	16	 
	30. VALUE SELLING
	 	 	17	 
	ENGINEERING/TECHNICAL SUPPORT
	 	 	17	 
	31. GENERAL
	 	 	17	 
	32. COMPLIANCE WITH CONTROLLED REVISIONS OF ENGINEERING
	 	 	17	 
	33. ENGINEERING SPECIFICATION AND PRODUCT COMPLIANCE
	 	 	17	 
	34. TRUCK ENGINEERING CAD/CAM SUPPLIER DESIGN DATA REQUIREMENTS
	 	 	19	 
	35. ELECTRONIC DATA INTERCHANGE (EDI) TRANSACTION REQUIREMENTS
	 	 	19	 
	36. INFORMATION TECHNOLOGY
	 	 	20	 
	37. QUALITY REGISTRATION
	 	 	21	 
	LEGAL/REGULATORY
	 	 	21	 
	38. COMPLIANCE WITH LAWS AND REGULATIONS
	 	 	21	 
	39. NON-COMPLIANCE CHARGES
	 	 	21	 
	40. MATERIAL SAFETY DATA SHEETS (MSDS)/SUBSTANCE RESTRICTIONS
	 	 	21	 
	41. NON-DISCRIMINATION
	 	 	22	 

	 	 	 
	

	 	Date of revision:
March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

2

 

Navistar, Inc

Enova Systems

Supply Agreement

	 	 	 	 	 
	42.
VETERANS’ READJUSTMENT ASSISTANCE ACT
	 	 	22	 
	43. GOVERNMENTAL REQUIREMENTS
	 	 	22	 
	44. DIRECT PAYMENTS
	 	 	23	 
	45. INDEMNIFICATION
	 	 	23	 
	46. LIABILITY INSURANCE
	 	 	24	 
	47. REMOVAL OF IDENTITY OF BUYER
	 	 	25	 
	48. NEW BUSINESS
	 	 	25	 
	49. CONFIDENTIAL INFORMATION / INTELLECTUAL PROPERTY
	 	 	26	 
	50. TERMINATION
	 	 	27	 
	MISCELLANEOUS
	 	 	28	 
	51. ASSIGNMENT OF RIGHTS AND DUTIES
	 	 	28	 
	52. MODIFICATION AND AMENDMENT OF AGREEMENT
	 	 	29	 
	53. CHOICE OF LAW
	 	 	29	 
	54. CONSENT TO JURISDICTION
	 	 	29	 
	55. SEVERABILITY
	 	 	29	 
	56. NO LIMITATION OF RIGHTS AND REMEDIES; SPECIFIC PERFORMANCE
	 	 	30	 
	57. FORCE MAJEURE
	 	 	30	 
	58. ENTIRE AGREEMENT
	 	 	31	 
	59. NOTICES
	 	 	31	 
	60. NO WAIVERS
	 	 	32	 
	61. CONSTRUCTION
	 	 	32	 
	62. HEADINGS
	 	 	32	 
	63. COUNTERPARTS
	 	 	33	 
	APPENDIX
A — PRODUCT DESCRIPTION / PRODUCT PRICING
	 	 	35	 
	APPENDIX
B — NON-CONFORMANCE CHARGE SCHEDULE
	 	 	36	 
	APPENDIX
C — PRODUCTION VOLUMES
	 	 	37	 
	APPENDIX
D — SERVICE PARTS
	 	 	38	 
	APPENDIX
E — AFTERMARKET SERVICE PARTS DIRECT SHIP and PARTS DISTRIBUTION CENTER REQUIREMENTS
	 	 	39	 
	APPENDIX
F — AFTERMARKET PRICE FILE FORMAT & COMMUNICATION
	 	 	40	 
	APPENDIX
G — SURPLUS STOCK AND DIRECT SHIP RETURNS
	 	 	41	 

	 	 	 
	

	 	Date of revision:
March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

3

 

Navistar, Inc

Enova Systems

Supply Agreement

TERMS

1. TERM OF AGREEMENT

	 	 	 	This Supply Agreement (the “Agreement”) between NAVISTAR, INC, a Delaware corporation,
4201 Winfield Road, Warrenville, IL 60555 (the “Buyer” ) and ENOVA SYSTEMS INC, a California
corporation, 19850 S. Magellan Drive, Torrance, CA 90502 (the “Seller” ), dated February 28,
2008, (the “Effective Date” ) will be for an initial term of thirty-six (36) months
commencing February 28, 2008 and terminating February 28, 2011 unless otherwise terminated
as provided herein (the “Initial Term” ). This Agreement may be extended for 2 additional
terms of twelve (12) months (each a “Renewal Term” ) provided that both parties agree in
writing to such extension no later than sixty (60) days prior to expiration of the Initial
Term or renewal term, as the case may be. This Agreement is effective as of the Effective
Date and shall remain in effect until either terminated by either party in accordance with
the terms of this Agreement or the expiration of the Agreement at the end of the Initial
Term or any Renewal Term.

2. FREIGHT

	 	A.	 	Seller agrees to use only those freight carriers specified in writing by Buyer. Buyer
must approve in writing any other freight carriers used by Seller prior to shipment.
The terms of delivery for all Products (as defined below) sold pursuant to this
Agreement shall be F.O.B. at Seller’s United States’ plants. Seller further agrees
to ship any and all service parts to multiple locations as required
by
 Buyer’s
Distribution Network.
	 
	 	B.	 	Seller is responsible for following Buyer’s routing instructions and handling all
transportation activities efficiently and effectively. Specifically, Seller is required to
have Product staged for delivery and paperwork accurately prepared to support the freight
carrier’s prearranged pick-up time. Seller is responsible for paying any additional
transportation charges billed by the freight carrier as a result of Seller’s failure to have
Product staged for delivery and paperwork accurately prepared. Buyer expects Seller to
settle properly documented charges promptly. Seller’s failure to do so will result in
freight debits to Seller.

3. PAYMENT TERMS

	 	 	 	Payment terms under this Agreement shall be thirty (30) days from date of receipt of a
correct invoice from Seller, or the date of receipt of the Products (as defined below) by
Buyer, whichever is later. All payments shall be made in U.S. dollars. Buyer neither
guarantees nor is responsible for any liabilities incurred by any Third Party Designees
under this Agreement.

	 	 	 
	

	 	Date of revision:
March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

4

 

Navistar, Inc

Enova Systems

Supply Agreement

PRODUCT

4. PRODUCT TERMS

	 	A.	 	During the Initial Term (or Renewal Term, if any) of this Agreement, Buyer shall purchase
from Seller, and Seller shall sell to Buyer, one hundred percent (100%) of Buyer’s original
equipment, and one hundred percent (100%) of Buyer’s service requirements for
POST-TRANSMISSION HYBRID DRIVE SYSTEMS as detailed in the written specifications, drawings,
part numbers, design and style of Buyer ( “Product” ),
attached hereto as Appendix A — PRODUCT
DESCRIPTION / PRODUCT PRICING, or as they may be hereafter improved or modified if such
improvements and modifications are approved by Buyer in writing, except where the Buyer’s
customer specifies another supplier’s product. Buyer’s requirements for modules, which may
or may not include similar components or equipment as the Products herein, are not included
in Seller’s or Buyer’s obligations under this section. Seller shall also, at Buyer’s sole
option, sell Products to Buyer’s subsidiaries, affiliates, third party contractors or any
other Buyer designated party (Third Party Designee), under the same terms and conditions as
set forth in this Agreement. All of Seller’s representations, warranties and obligations
under this Agreement apply to sales to Third Party Designees.
	 
	 	B.	 	Seller hereby further agrees to provide to Buyer all Product related services and related
materials, including, without limitation, sequencing, painting, warehousing, packaging,
containers, necessary software, and any and all literature pertaining to such Products and
which service and materials are requested by Buyer. Costs of such services will be
determined and negotiated in good faith by both parties.
	 
	 	C.	 	Buyer reserves the exclusive right at any time to make changes or modifications to the
drawings and specifications of any Products, materials, or work covered by this Agreement
which are designed by Buyer, or are uniquely designed or created for Buyer. Any difference
in price or time for performance resulting from such changes shall be equitably adjusted,
and the Agreement shall be amended and modified in writing accordingly.
	 
	 	D.	 	During the Initial Term (and Renewal Term, if any) of this Agreement, Seller shall not
sell, give, transfer or in any way cause to be or facilitate to be manufactured or sold the
Products or any derivatives of Products identified in Appendix A — PRODUCT DESCRIPTION /
PRODUCT PRICING of this Agreement and any Products sold to Buyer under this Agreement to any
other party other than Buyer, into the North American School and Commercial Bus Market,
unless expressly authorized in writing by Buyer.
	 
	 	E.	 	Seller may not contract or sub-contract for any third party to make the Product or any
other component or sub-component thereof without prior written agreement of Buyer.
	 
	 	F.	 	Seller hereby agrees to provide Buyer’s Service Requirements for Products solely through
the Buyer’s Parts Distribution Network or Buyer’s designated Affiliates and Seller is hereby
prohibited from distributing such Products to Buyer’s Customers

	 	 	 
	

	 	Date of revision:
March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

5

 

Navistar, Inc

Enova Systems

Supply Agreement

	 	 	 	through any alternate aftermarket distribution channel, unless written authorization
to do so has been obtained from Buyer.
	 
	 	G.	 	Shipments of Products by Seller must equal the exact quantity ordered by Buyer, unless
otherwise agreed to in writing by Seller and Buyer. Shipping schedules may contain
authorization by Buyer to the Seller to fabricate within a time specified quantities of
Products under this Agreement, the delivery of which has not been specified by Buyer. A
shipping schedule may also contain authorization by the Buyer to the Seller to acquire
within a specified period of time materials necessary to fabricate a certain quantity of the
Products under this Agreement.
	 
	 	H.	 	Seller will be the exclusive POST-TRANSMISSION HYBRID DRIVE SYSTEM supplier for all
Buyers’ IC Corporation commercial passenger vehicles. Category includes (as described in the
USDOT http://tmip.fhwa.dot.gov/clearinghouse/ docs/accounting/):

	 	•	 	North American School buses,
	 
	 	•	 	North American Commercial and Shuttle buses.

	 	I.	 	Buyer will be the only purchaser of Seller’s POST-TRANSMISSION HYBRID DRIVE SYSTEM for
all North American applications described in 4H. Seller will not sell POST-TRANSMISSION
HYBRID DRIVE SYSTEMS to any other customers for the North American applications described in 4H.
	 
	 	J.	 	In an effort to promote mutual growth Buyer will be Seller’s exclusive distributor of
POST-TRANSMISSION HYBRID DRIVE SYSTEMS for all Buyers’ IC Corporation North American bus
aftermarket applications.
	 
	 	K.	 	Buyer will offer to Seller access to the Buyer’s IC Corporation service, aftermarket and
dealer network.
	 
	 	L.	 	Seller will offer Buyer the necessary product support in
terms of Operation Training, Service Training, Repair Training and Sales Training of the POST-TRANSMISSION HYBRID
DRIVE SYSTEM.
	 
	 	M.	 	Seller will support Buyer in promoting and marketing the
POST-TRANSMISSION HYBRID DRIVE SYSTEM during trade shows, dealer events and other related sales
activities with personnel, necessary equipment (as needed) and share Seller’s
experience on marketing POST-TRANSMISSION HYBRID DRIVE SYSTEMS.
	 
	 	N.	 	Supplier product pricing does not include warehousing, sequencing, packaging and special
handling.

5. PRICING

	 	A.	 	Similar Pricing for Production Products and Service Parts. Products used for OEM
production vehicles (“Production Parts”), Products used to service previously sold
Production Products (“Service Parts”), and packaging, if applicable, shall be quoted and
priced by Seller to Buyer at the equivalent pricing levels. As Products cease being placed
in Buyer’s OEM production vehicles, Seller shall continue to provide the similar pricing
level for Service Parts as required. Price reductions granted to Buyer by Seller

	 	 	 
	

	 	Date of revision:
March 27, 2008 –Confidential Document
	 

	 	Effective 1/24/07

6

 

Navistar, Inc

Enova Systems

Supply Agreement

	 	 	 	on Production Products will also apply to all corresponding
Service Parts. ***
	 
	 	B.	 	Evidence of Cost to Buyer. Seller must provide Buyer with documentation satisfactory to Buyer
evidencing the acquisition or manufacturing costs, including packaging, if applicable, to Seller
for all Products covered in this Agreement.
	 
	 	C.	 	Pricing of Products. Pricing for Products shall under no circumstances exceed pricing of similar
products to Seller’s Parts Distributors or any other customer of Seller which is a competitor of
Buyer. Upon receipt of a written request from Buyer, Seller hereby agrees to provide Buyer’s Supply
Manager with all necessary documentation to evidence Seller’s compliance with its agreement set
forth in the previous sentence of this section.
	 
	 	D.	 	Similar Terms as Seller’s Other Customers. Seller will provide Products to Buyer with terms and
conditions on an overall basis that are no less favorable than those of any other customer of
Seller purchasing comparable quantities of the same or similar Products.
	 
	 	E.	 	Prices for Products are set forth in Appendix A — PRODUCT DESCRIPTION / PRODUCT PRICING
SCHEDULE.
	 
	 	F.	 	Seller will maintain first right to quote on all POST-TRANSMISSION HYBRID DRIVE SYSTEMS ordered beyond the original application.
	 
	 	G.	 	Seller will recognize Buyer’s commitment to promoting Seller’s POST-TRANSMISSION HYBRID DRIVE
SYSTEM by adjusting pricing as soon as the specified volume price break is achieved as described in Appendix A — PRODUCT
DESCRIPTION / PRODUCT PRICING SCHEDULE.
	 
	 	H.	 	Buyer recognizes that there will be an adjustment period during the price change process and
that during that period some POST-TRANSMISSION HYBRID DRIVE SYSTEMS may be purchased by Buyer at
the previous “higher” price; in order for Seller to compensate Buyer for this discrepancy, Buyer
will accept from Seller a rebate check for the amount overpaid on each POST-TRANSMISSION HYBRID
DRIVE SYSTEM at the end of Buyer’s fiscal year. Buyer agrees to provide to Seller the necessary
support documentation to calculate the amount of overpayment on the POST-TRANSMISSION HYBRID DRIVE SYSTEM that buyer
does not purchase at the new “lower” price.
	 
	 	I.	 	Buyer will provide it’s production Release to Seller at least Twenty one (21) days in advance of
the requested shipment date for all POST-TRANSMISSION HYBRID DRIVE SYSTEMS. Seller is not obligated to accept any changes, additions or schedule movement less
than ten (10) days before Buyer’s requested shipping date.

	 	 	 
	

	 	Date of revision:
March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

 

			
	***	 	CONFIDENTIAL TREATMENT REQUESTED

7

 

Navistar, Inc

Enova Systems

Supply Agreement

6. MATERIAL CLAUSE

	 	 	 	All pricing for raw material and component parts used for the Products by the Seller
shall be the sole responsibility and liability of the Seller, and Seller shall not attempt
to pass on any increase in raw material or component costs related to the Product to the
Buyer in the way of surplus charges, additional fees, currency fluctuations or otherwise. It
is further agreed that currency fluctuation shall not be a basis for Seller to increase raw
material pricing.

7. SERVICE PARTS AVAILABILITY

	 	A.	 	Service Parts for the Products covered by this Agreement will be furnished and combined
with Buyer’s Production Product orders. If Buyer ceases production of any product
incorporating a Product covered by this Agreement, Seller shall continue to maintain the
tools, jigs and fixtures at no charge to Buyer, and supply Buyer with the Products necessary
to satisfy Buyer’s past model service and replacement requirements for Product for a minimum
of *** after cessation of production.

	 
	 	B.	 	In addition, upon termination or expiration of this Agreement, Buyer shall have the
opportunity for a one-time buy of Products by Buyer to fulfill such service and
replacement requirements. Buyer and Seller shall negotiate in good faith with respect
thereto.
	 
	 	C.	 	Buyer agrees to offer Seller access to the Buyer’s parts distribution network in order to
support Seller’s POST-TRANSMISSION HYBRID DRIVE SYSTEM. Initial pricing for Service Parts is
included in Appendix D.
	 
	 	D.	 	Seller agrees for aftermarket and service parts to allow surplus stock and direct ship
returns as described in Appendix G

8. PACKAGING AND PACKING

	 	A.	 	Seller must comply with all requirements detailed in the Buyer’s D-13 Packaging and
Packing Requirement — 2001 Revision, as such is modified and amended from time to time.
This document is deemed a part of this Agreement and is available at
http://www.internationalsupplier.com/. This D-13 Packaging and Packing Requirement details
packing, packaging, labeling and shipping requirements.
	 
	 	B.	 	Buyer is responsible for conveying product packaging specifications to Seller.
	 
	 	C.	 	Interpretation of packaging specifications and determination of market competitive
packaging costs and pricing will be coordinated between Buyer’s and Seller’s Corporate
Packaging staffs.
	 
	 	D.	 	If returnable containers are required by Buyer, container and transportation costs will
be negotiated in good faith between Buyer and Seller.

	 	 	 
	

	 	Date of revision:
March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

 

			
	***	 	CONFIDENTIAL TREATMENT REQUESTED

8

 

Navistar, Inc

Enova Systems

Supply Agreement

	 	E.	 	Seller will adhere to all retail packaging regulations of the countries where the
Products will be sold. This includes but is not limited to federal, state, provincial,
county, city, and other applicable laws, regulations and statutes.
	 
	 	F.	 	Seller will adhere to all hazardous material packaging regulations of the countries where
the Products will be sold. This includes but is not limited to federal, state, provincial,
county, city, and other applicable laws, regulations and statutes.
	 
	 	G.	 	
 In support of Buyer’s lean manufacturing goals, Seller will adhere to requested standard
packs with standard shipping quantities.

9. LABELING

	 	 	 	Seller must meet the requirements identified in the Buyer’s Quick Receive Guideline,
which is available at http://www.internationalsupplier.com/, and which, as amended and
modified from time to time, is deemed part of this Agreement.

10. VOLUMES

	 	A.	 	Seller and Buyer agree that Buyer’s forecasted volumes are based on past usage and
projected market forecasts. The parties hereby agree that no minimum purchase quantities are
implied by any term of this Agreement, and no penalties shall be imposed on Buyer for
volumes of Products actually ordered by Buyer below those quantities forecasted except as
set forth below.
	 
	 	B.	 	The parties hereby agree that specific sales goals of POST-TRANSMISSION HYBRID
DRIVE SYSTEMS need to be achieved to maintain Buyers exclusive distribution and sale
of Seller’s POST-TRANSMISSION HYBRID DRIVE SYSTEM. These sales goals are described
in Appendix C- PRODUCTION VOLUMES.
	 
	 	C.	 	In the event that Buyer determines that sales goals determined by Seller can not be
achieved in the established calendar year, Buyer will immediately inform Seller of the
situation. Buyer will have then forty-five (45) days after the end of the calendar year to
achieve the goal. If Buyer does not meet the sales goal expectation of Seller by the last
day of February of the following calendar year Buyer will waive all exclusivity rights to
the distribution of Seller’s POST-TRANSMISSION HYBRID DRIVE SYSTEM.
	 
	 	D.	 	In the event that Seller determines that the forecasted volumes by Buyer can not be
supplied in a timely fashion, Seller agrees to inform Buyer immediately of the situation.
Seller and Buyer agree to negotiate in good faith and determine a viable solution to
Buyer’s product demand. If after the negotiation process is determined that Seller
can not meet Buyer’s product demand or it’s forecast Seller will waive all
exclusivity rights as a supplier of POST-TRANSMISSION HYBRID DRIVE SYSTEMS and Buyer
will replace at it’s discretion Seller’s POST-TRANSMISSION HYBRID DRIVE SYSTEM with
a competitive product. Increased cost to be paid by Seller for substitute products.

11. TOOLING

	 	A.	 	Unless otherwise agreed to in writing, Seller shall furnish at its own expense, keep in
good condition, and replace when necessary, all dies, tools, gauges, fixtures, and

	 	 	 
	

	 	Date of revision: March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

9

 

Navistar, Inc

Enova Systems

Supply Agreement

	 	 	 	patterns necessary for the production of the Products ordered. All tooling, jigs,
fixtures and associated manufacturing equipment necessary for the successful
production and testing of the Products for which Buyer pays Seller in full will
remain the exclusive property of Buyer, and Seller assumes all liability for any
loss, damage or shortage and/or for Seller’s failure to return such property,
including equipment, to Buyer upon request. The tooling which is owned by Buyer and
maintained by Seller shall be in accordance with the terms of the attached Tooling
and Bailment Agreement. Seller shall promptly notify Buyer of any such loss, damage
or shortage. Such tooling items must be identified and labeled as “Owned By
International”. Furthermore, all tooling owned by Buyer shall be used exclusively
for the manufacture of Products for Buyer. Seller will perform normal maintenance,
at Seller’s expense, for the duration of this Agreement.
	 
	 	B.	 	Tooling developed for the production of the Products will conform to Buyer’s product
development guidelines. It is expected that Seller will exercise due care and judgment in
the design, specification, sourcing, building, and supervision of building, of all tooling
in such a way to maximize production efficiency and minimize cost. Seller will analyze
domestic and overseas placement of tooling using various cost, part and tooling design, and
timing requirements. In those instances where Buyer has an obligation to pay for tooling
costs, Buyer will pay Seller only for those costs deemed to be globally competitive in cost
and quality by Buyer. Seller shall submit all tools for inspection and review by Buyer in
accordance with AIAG (Automotive Industry Action Group) Publication, Production Part
Approval Process, prior to Buyer making payment for same. Buyer may, at its option, see
detailed tooling documents, invoices and/or tooling orders prior to issuing its approval for
payment of tooling. Tooling costs may be shared with Seller or amortized as mutually agreed
upon by both parties in writing. If Seller pays for tooling and amortizes cost to Buyer as described in the attached
Amortization Agreement, upon completion of amortization Buyer shall have the option
to purchase all such tooling from Seller for the price of one dollar ($1.00).

12. PRODUCT IMPROVEMENTS / COST REDUCTION

	 	A.	 	Seller and Buyer are committed to an active product cost reduction program. Any
Buyer-initiated cost savings resulting from product improvements and/or design
changes shall be credited *** to Buyer after funding the
total cost of initial tooling investment. Any Seller initiated or mutually
developed cost savings resulting from product/process improvements and/or design
changes shall be shared *** with Buyer after funding total cost of
initial tooling investment.
	 
	 	B.	 	COMPASS/IdeaStream Credits. Seller will provide *** COMPASS/IdeaStream credit per calendar
year, beginning November, 1, 2008. All ideas must be credited by
October 31st
of each calendar year in order to qualify for the *** savings. Seller
hereby agrees that it will follow COMPASS/IdeaStream guidelines set forth in the
International Supplier Network website, http://www.internationalsupplier.com/, for
what constitutes an acceptable idea submission.

	 	 	 
	

	 	Date of revision: March 27, 2008 – Confidential Document
	 

	 	Effective 1/24/07

 

			
	***	 	CONFIDENTIAL TREATMENT REQUESTED

10

 

Navistar, Inc 

Enova
Systems 

Supply
Agreement

13. FORCED SELLER CHANGES, OBSOLESCENCE, AND NEW PRODUCTS

	 	A.	 	Seller shall not discontinue any Product(s) without written agreement from
Buyer. Buyer will work in good faith with Seller to accept reasonable requests.
	 
	 	B.	 	Seller shall provide Buyer *** advance warning of changes that
will result in changes to Buyer’s cost, part numbers, or production processes. Changes
that have a negative impact on the Buyer’s total installed cost may only be
implemented with prior written agreement from Buyer.
	 
	 	C.	 	When Seller introduces Products intended to replace those Product(s)
already purchased by Buyer, those Products will be priced to have a total installed
cost equal to or lower than the Products they replace. As replacement Products are
introduced, all terms and conditions described in this Agreement, including price
reductions, freight terms and rebates, will apply to the replacement Products on the
dates set forth in this Agreement.
	 
	 	D.	 	When Seller seeks to introduce new Products to Buyer that are not replacement
Products, Buyer and Seller will negotiate in good faith to implement a competitive
price. As new Products are introduced, all price reductions, freight terms, and rebates
described in this Agreement will apply to the new Products on the dates specified in
this Agreement.

14. PRODUCT REGULATORY COMPLIANCE

	 	A.	 	Components or systems purchased from Seller that have specific government
regulatory performance requirements will require Seller to provide evidence of
compliance satisfactory to Buyer and the applicable governmental regulatory authority,
in the form of a test report and/or engineering analysis, validating conformance to
those specific requirements.
	 
	 	B.	 	Seller must provide the same evidence of compliance whenever a change is made
to a particular component or system that affects the performance of that component or
system in relation to a specific government regulatory performance requirement.
	 
	 	C.	 	Seller must provide an annual “Letter of Conformance” as required by Buyer.

15. PRICING, QUANTITY, REBATE AND FREIGHT DISPUTES

	 	A.	 	All pricing, quantity, and freight debits, and rebate disputes between Buyer
and Seller that Seller wishes to contest must be communicated in writing by Seller to
the Buyer within six (6) months of the date Seller ships the Product to Buyer. For
quantity disputes, Seller must provide a copy of the relevant proof of delivery (“POD”)
that is stamped with the Buyer’s receipt number, and the bill of lading (“BOL”) number.
	 
	 	B.	 	Seller must provide ninety (90) days written notice to Buyer of any intention
to stop shipment of Products as a result of a dispute set forth above.

			
	 	 	 
	
	 	Date of revision: March 27, 2008 – Confidential Document

Effective 1/24/07

 

			
	***	 	CONFIDENTIAL TREATMENT REQUESTED

11

 

Navistar, Inc 

Enova Systems 

Supply Agreement

16. INSPECTION OF PRODUCTS

	 	 	 	All Products shall be received subject to Buyer’s inspection and/or rejection.
Defective Products or Products not in accordance with Buyer’s specifications will be
held for Seller’s instructions and at Seller’s risk, and, if Seller so directs, will
be returned at Seller’s expense. Payment for Products prior to inspection shall not
constitute an acceptance thereof. Returned Products will be deducted from total
shipments.

17. TRANSACTION SUPPORT

	 	A.	 	Seller and Buyer understand that in the commercial vehicle and bus industries,
suppliers are often required to provide incentives, extended warranties, or rebates to
truck end-customers and/or dealers to persuade the customer and/or dealer to specify
the supplier’s product(s) in lieu of competitive supplier products, which practice is
defined as “Transaction Support”. Transaction Support is paid by the Seller using
several approaches, including 1) through the bus OEM, 2) through the OEM dealer, and/or
3) directly to the end-customer.
	 
	 	B.	 	Seller and Buyer also understand that Customers typically interpret
Transaction Support to be a commitment between the product supplier and the Customer
that is independent of which bus OEM brand the Customer selects for their purchase.
	 
	 	C.	 	Seller understands Customer’s strategic preference for other bus components
that may not include Seller’s Product offering.
	 
	 	D.	 	If Seller provides Transaction Support to a Customer for multiple components
when ordering a competitor’s vehicle, and Buyer does not wish to include all of
Seller’s components in a proposal to the Customer, then Seller will offer the same or
dollar-value adjusted Transaction Support to the Customer when ordering vehicles
supplied by the Buyer with less than all of the multiple components in question. For
example, if Seller offers a Customer a $500 rebate for ordering a vehicle from Brand A
that includes Seller’s Product A, B, and C, and Buyer does not offer Seller’s Product C
to this Customer, then the Seller will offer such Customer a $500 rebate for ordering a
vehicle from Buyer or will adjust the rebate to reflect the reduction in dollar value
for the exclusion of Product C.

SELLER PERFORMANCE

18. PERFORMANCE ACHIEVEMENT

	 	 	 	Seller is required to meet all cost, performance, delivery, reliability, quality and
technology requirements, and documentation thereof, as specified in this Agreement.
Buyer’s plants, Parts Distribution Centers or Supply Manager will communicate
non-conformances directly to Seller with requests for corrective actions. These
corrective actions must be performed in a timely manner and the issues corrected to
the reporting location’s satisfaction. All non-conformances will be subject to the
minimum charges as detailed in Appendix B – NON-CONFORMANCE CHARGE SCHEDULE.

			
	 	 	 
	
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19. KEEP COMPETITIVE AGREEMENT

	 	 	 	Buyer and Seller recognize that continuing to be competitive in price, performance,
delivery, reliability, quality and technology is essential for this Agreement. If
Buyer reasonably demonstrates to Seller that any Product is not a competitive value
in price, performance, delivery, reliability, technology or quality with other
equivalent products of equivalent value, production, usage or availability in the
world, then Seller agrees to provide an action plan and timetable within sixty (60)
days of such demonstration to cure the deficiency to Buyer’s satisfaction. If the
plan fails to cure the deficiency within the agreed upon timetable, then Buyer may
at its option withdraw the non-competitive Product(s) from this Agreement and serve
notice to terminate the obligations of the parties under this Agreement with respect
thereto, effective upon the date specified by Buyer in such notice. Buyer agrees
that prior to exercising its option, it will consider, in good faith, any proposal
by Seller to correct the deficiency.

20. SUPPLY FAILURE

	 	 	 	In the event of a partial failure of Seller’s sources of supply for the Products
purchased, Seller will first meet all of Buyer’s requirements hereunder prior to any
allocation among customers under Section 2-615 of the Uniform Commercial Code.

21. LATE DELIVERY CHARGES

	 	 	 	If Buyer determines that Seller’s deliveries are so far behind a given schedule that
Buyer requests express shipments, Seller will pay the express charges. If Seller’s
deliveries are so far behind a given schedule that the Buyer is compelled to use
material not according to Buyer’s specification, or at a higher cost, the Seller
will pay whatever additional costs, expenses, losses, or damages Buyer sustains.

22. ASSURANCE OF PERFORMANCE

	 	 	 	If Buyer reasonably deems itself insecure with respect to Seller’s ongoing
performance, whether due to Seller’s financial capacity or otherwise, Buyer may
demand that Seller provide assurance of future performance to Buyer within five (5)
days of the demand. This assurance may be in any security acceptable to Buyer,
including but not limited to, collateral consisting of cash, letter(s) of credit,
surety bond, parent guaranty, or lender releases. This security shall be in an amount
satisfactory to Buyer and shall also be sufficient to offset costs and expenses
incurred or reasonably expected to be incurred by Buyer in securing for itself
completion of the project or other performance due from Seller. Buyer reserves its
right to any other remedies allowed in law or equity. Failure to provide the
requested performance assurance within the stated period shall constitute a default
of this Agreement, and Buyer shall be free to procure Product from an alternate
source and/or cancel this Agreement in its discretion immediately upon expiration of
the time specified for delivery of the requested performance assurance.

			
	 	 	 
	
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23. REIMBURSEMENT FOR NON-PERFORMANCE BY SELLER

	 	A.	 	Seller acknowledges that Buyer requires on-time delivery in order to operate
its plants and parts distribution centers. The parties further acknowledge that the
precise amount of Losses (as defined in Article 45 — INDEMNIFICATION) which Buyer would
sustain in the event Seller were to fail to make timely or conforming deliveries of
Products would be difficult to determine. Therefore, the parties agree that Seller
shall be responsible for any and all actual, consequential or incidental Losses
resulting from Seller’s failure to make timely or conforming deliveries of Products,
including, but not limited to, any costs or expenses Buyer incurs for the correction of
Products assembled out of sequence or for the correction of Products with quality
problems and any costs or expenses Buyer incurs in connection with Buyer’s assembly
line downtime as detailed in Appendix B — NON-CONFORMANCE CHARGE SCHEDULE. Seller will
advise Buyer immediately in writing of any apparent imminent problem, and the parties
will each use their best efforts to avoid any actual assembly line downtime. In
addition, Seller shall not be responsible for assembly line downtime charges for
delinquent delivery resulting from schedule changes by Buyer or Buyer’s unforeseen
manufacturing difficulties. With respect to Service Parts, Seller shall be responsible
for any emergency premium expenses for “truck down” orders.
	 
	 	B.	 	Seller shall promptly notify Buyer in writing of any anticipated labor dispute
or labor shortage or any other labor performance interruption, and Seller shall arrange
for advance deliveries or warehousing, at Buyer’s option and at locations acceptable to
Buyer, of a sixty (60) day supply of Products. Seller agrees to provide Buyer with its
plan to continue production and support Buyer with Product in the event of a labor
dispute, shortage, interruption, or contract expiration ninety (90) days before such
event. Seller also agrees to keep Buyer informed of the status of negotiations toward
renewal of any union contract or agreement. In the event that a labor dispute,
shortage, interruption, or contract expiration occurs and Seller is unable to provide
Buyer Product in accordance with this Agreement, Buyer may, at its option, and in
addition to any other rights Buyer may have, procure Product from an alternate source.
In the event that a labor dispute, shortage, interruption, or a contract expiration
lasts more than sixty (60) days and Seller is unable to provide Buyer Product in
accordance with this Agreement, Buyer may, at its option, and in addition to any other
rights Buyer may have, terminate this Agreement.
	 
	 	C.	 	Buyer and Seller agree to the delivery performance targets, and the associated
performance charges, for shipments to Buyer’s Parts Distribution Centers (PDC’s),
contract packagers, and/or freight forwarders.

24. WARRANTY

	 	A.	 	Seller agrees to provide Buyer a two (2) year warranty on Seller’s
POST-TRANSMISSION HYBRID DRIVE SYSTEM. This warranty will cover all Products mentioned
in Appendix A — PRODUCT DESCRIPTION / PRODUCT PRICING SCHEDULE. Warranty period will
start when the vehicle with the installed POST-TRANSMISSION HYBRID DRIVE SYSTEM is
delivered to the end user.

			
	 	 	 
	
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	 	B.	 	Seller agrees to warrant its Product(s) against defects in design, materials,
or workmanship, or any combination of these. This warranty is subject to the terms and
conditions published in Buyer’s CTS-1100 Warranty Manual in effect at the time the
Seller’s Product(s) is delivered to the end user, or is installed subsequently as an
aftermarket component, whichever is applicable, subject to Article 25 — REIMBURSEMENT
FOR WARRANTY CLAIMS, which follows.
	 
	 	C.	 	Seller’s warranty for Service Parts is not covered by 24A. Seller will honor a
12 month warranty on all Service Parts and products mentioned in Appendix D — SERVICE
PARTS.

25. REIMBURSEMENT FOR WARRANTY CLAIMS

	 	A.	 	Subject to the terms in Article 24 — WARRANTY above, Seller shall reimburse
Buyer for warranty claim costs determined by Buyer to be the result of a defect in the
Seller’s material, design, and/or workmanship as follows:

	 	i.	 	Material costs at the Seller’s selling price (Seller to Buyer’s Service Parts
Organization); plus 
	 
	 	ii.	 	Buyer’s Handling Allowance (Buyer to Dealer) in effect
at the time of failure (currently, dealer net price times ***; plus 
	 
	 	iii.	 	Dealer’s approved labor rate at the time of failure times the appropriate Standard Repair Time as published in Buyer’s current CTS-1200 and current S-00025 Warranty Time Schedule Manual or mutually agreed to time if no SRT is
published; plus
	 
	 	iv.	 	Freight charges associated with the delivery of replacement parts; plus
	 
	 	v.	 	Freight and processing cost incurred by Buyer due to Seller’s requirement to have failed material returned; plus 
	 
	 	vi.	 	Charges associated with the
purchase of parts outside of Buyer’s distribution system, and/or repairs made by subcontractors; plus 
	 
	 	vii.	 	Cost of repairs of any damage to other components caused by Seller’s defective parts.

	 	B.	 	In the event that a Product fails at an extraordinary rate and results in Buyer
issuing an Authorized Field Change or a Safety Recall, Seller will reimburse Buyer for
reasonable expenses associated with administering the Authorized Field Change or Safety
Recall in addition to the reimbursement as specified in Article 25-A-iii –
REIMBURSEMENT FOR WARRANTY CLAIMS above.
	 
	 	C.	 	If Buyer agrees to reimburse a Customer for product failures beyond the
warranty period or terms in order to show good will and maintain customer satisfaction,
Seller agrees to negotiate in good faith with Buyer regarding reimbursement for these
expenses to Buyer on a case-by-case basis.
	 
	 	D.	 	Seller will issue credit within sixty (60) days of the time that the claim is
presented by the Buyer. If Seller fails to do so the Buyer has the right to debit the
Seller’s account.

			
	 	 	 
	
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	 	E.	 	If the Seller disputes its responsibility for a claim it must do so in
writing within sixty (60) days of notice of such claim and provide details to support
such denial.

26. FINANCIAL VIABILITY

	 	 	 	Buyer will not award any new or additional business to Seller without evidence of
the Seller’s financial viability, including, without limitation, being provided with
its most current audited financial statements and all of Seller’s monthly and
quarterly unaudited financial statements since its last audit. All financial
information will be promptly provided to the Buyer upon request.

27. AUDIT RIGHTS

	 	 	 	In order to assess Seller’s compliance with the terms and conditions of this
Agreement, Seller shall permit Buyer and its authorized representatives, including
its accountants and attorneys (and Seller shall obtain a similar right from
permitted subcontractors), reasonable access to all of Seller’s books and records
pertaining to the performance of this Agreement, wherever such books and records may
be located and shall also grant Buyer and its representatives reasonable access to
the Seller’s business and operations personnel involved in the performance of this
Agreement.

28. NAFTA DOCUMENTATION

	 	A.	 	Seller will provide to Buyer annually, by the specified due date, an accurate
and complete North American Free Trade Agreement (“NAFTA”) Certificate of Origin for
those Products by part number that qualify for NAFTA and an accurate and complete
Country of Origin Affidavit for all Products by part number. The NAFTA Certificate of
Origin must be completed in accordance with regulations published by the U.S.
Department of the Treasury in 19 C.F.R. Sec. 181.11 et seq. and any amendments thereto,
and in accordance with Buyer’s NAFTA Policy included in the Customs Invoicing
Instructions (International document PR-38) available on the Buyer’s supplier website
http://www.internationalsupplier.com/. In the event that Seller fails to comply
with this requirement, Buyer reserves the right to assess a *** non-compliance per
Product part number charge.
	 
	 	B.	 	In addition to the NAFTA Certificates of Origin or Country of Origin
Affidavits mentioned above, the Seller will provide to the Buyer any requested
supplemental part content and functionality information in relation to import or export
operations, which may or may not be directly related to NAFTA.

29. SUPPLIER DIVERSITY PROGRAM

	 	 	 	Seller agrees to utilize “Small Disadvantaged-Owned Business Concerns,
Minority-Owned Business Concerns, Women-Owned Business Concerns, Veteran-Owned
Business Concerns, Service Disabled-Owned Business Concerns, and Hubzone-Located
Business Concerns” as required by Federal Laws 97-507, 99-661, and 103-355. Buyer’s
policy states that all suppliers receiving contracts from Buyer in excess of
five-hundred thousand dollars ($500,000), except small business concerns defined
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	 	 	 	will set a 5% minimum spending goal to further subcontract with Small
Disadvantaged-Owned Business Concerns; will set a 5% minimum spending goal to
further subcontract with Minority-Owned Business Concerns; will set a 5% minimum
spending goal to further subcontract with Women-Owned Business Concerns; and will
set a 3% minimum spending goal to further subcontract with Veteran-Owned Business
Concerns, Service Disabled-Owned Business Concerns, and Hubzone-Located Business
Concerns commensurate with the Seller’s sales to the Buyer. The Seller further
agrees to submit an annual written plan to Buyer by August 31st outlining
how the above stated goals will be achieved. Reference is hereby made to the
Supplier Diversity section of Buyer’s supplier website for goal details at
http://www.internationalsupplier.com/.

30. VALUE SELLING

	 	 	 	Buyer has a Brand Promise which is “INTERNATIONAL listens, understands, and delivers
the best ways to move our Customers ahead. On the road and in their business.”
Seller is required to provide a value statement to the Buyer upon request. The value
statement should describe the value to the Buyer’s Customers that the Seller’s
Product provides over their competitor’s product.

ENGINEERING/TECHNICAL SUPPORT

31. GENERAL

	 	 	 	Seller will provide at no additional cost to Buyer such design and design
qualification assistance, manufacturing assistance, technical, service parts and
field support as required by Buyer.

32. COMPLIANCE WITH CONTROLLED REVISIONS OF ENGINEERING SPECIFICATIONS

	 	 	 	In addition to the requirements set forth in Article 33 — ENGINEERING SPECIFICATION
AND PRODUCT COMPLIANCE, Seller must assure that Products comply with the most current
controlled revisions of Buyer’s Engineering Material Specifications (“CEMS”), Truck
Material Specification (“TMS”), or Engineering Standard Parts as defined in
Statements of Work (“SOW”), Specification Transmittals, prints, models, and math
data. Information Handling Services Inc., or other firm identified by Buyer, shall be
the sole source for controlled copies of the foregoing documents and Seller is
responsible for ensuring that it obtains controlled copies for the duration of the
term of this Agreement in order to assure compliance with the most current documents.

33. ENGINEERING SPECIFICATION AND PRODUCT COMPLIANCE

	 	A.	 	TRUCK GENERAL REQUIREMENTS. Seller must do the following:

	 	i.	 	Meet requirements as defined in Statements of Work (“SOW”),
Specification Transmittals, prints, models, and math data.

			
	 	 	 
	
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	 	ii.	 	Assure that Wiring System Sellers are capable of supplying
and receiving CAD data in NDP, with the ability to transition to a
Saber/Unigraphics (“UG”) based CAD system in conjunction with Buyer.
	 
	 	iii.	 	Supply Unigraphics (UG) compatible 3D engineering CAD data and
drawings. Reference Article 34 — TRUCK ENGINEERING CAD/CAM SUPPLIER DESIGN
DATA REQUIREMENTS.
	 
	 	iv.	 	Have the capability of and use electronic data exchange for
engineering and CAD data throughout the life of the development program and
for production maintenance.
	 
	 	v.	 	Use quality tools where warranted in the development of
Buyer components, such as, but not limited to, FEA (Finite Element Analysis),
DVP&R’s (Design Verification Plans and Reports), DFMEA (Design Failure Mode
and Effects Analysis), PFMEA (Process Failure Mode and Effects Analysis), and
must provide raw data, test reports, and detailed FMVSS Compliance reports
for all tests as needed.
	 
	 	vi.	 	Provide on-site supplier engineers during the Product
Development Process if requested by Buyer’s engineers.
	 
	 	vii.	 	Have production intent prototype parts development capability.

	 	B.	 	ENGINE SYSTEMS AND COMPONENTS. Seller must do the following:

	 	i.	 	Seller must use an organized cross functional Program Management
Process with defined deliverables and timing as well as status reporting that
meet the requirements of Buyer’s engineering defined product development
process (Quality Value Planning Process — QVPP for Engine or Product
Development Process — PDP for truck).
	 
	 	ii.	 	All Seller processes from prototype through production release
must be in compliance with the principles of Advanced Product Quality Planning -
APQP -as defined in the manual published by AIAG and preferably validated by
QS-9000 certification.
	 
	 	iii.	 	Seller must assign a program manager to insure resource
availability for early involvement in the design process (simultaneous
engineering).
	 
	 	iv.	 	Seller must provide prototypes as a part of their commitment and
rapid prototyping capability, either developed in house or with a qualified
partner.
	 
	 	v.	 	Seller who provides strategic technology components or
assemblies must provide product definition in the form of 3D solid models and 2
D drawing documentation in Buyer’s native I-Deas CAD/CAM/CAE system format (no
translations). Seller who provides non-strategic components or assemblies is
also required to provide the product definition in the form of 3D solid models
and 2D drawing documentation, however, alternative CAD/CAM/CAE systems can be
employed provided that Seller provides a format which is compatible with I-Deas
and with prior written approval from Buyer’s engineering. Commodity components
and assemblies are excluded from this requirement.
	 
	 	vi.	 	Seller is required to employ bi-directional data transfer of
CAD/CAM/CAE product definition data via FTP site-to-site communication. All
other engineering and program support documentation (Program Management APQP
deliverables) are required to utilize a bi-directional transfer via either
Internet / FTP communication schemes. All data transferred between Buyer and
the Seller must be encrypted with a methodology approved by Buyer’s Information
Technology Group. All FTP communication must be via Buyer’s FTP site.

			
	 	 	 
	
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	 	C.	 	SERVICE PARTS. Seller must do the following:

	 	i.	 	Seller must furnish, at Buyer’s request, bills of materials,
specifications and drawings regarding components and subassemblies associated
with complete parts and assemblies supplied for Buyer’s production
requirements.

34. TRUCK ENGINEERING CAD/CAM SUPPLIER DESIGN DATA REQUIREMENTS

	 	 	 	Buyer requires that Seller adhere to acceptable levels of CAD/CAM data as outlined in
Buyer document TEM-PR-7.03 and is deemed part of this Agreement.

35. ELECTRONIC DATA INTERCHANGE (EDI) TRANSACTION REQUIREMENTS

Buyer recognizes that Seller’s currently does not support EDI transactions. Buyer will
exempt Seller of supporting EDI transactions until Seller’s sales to Buyer reach an
accumulated volume of one hundred and fifty (150) POST-TRANSMISSION HYBRID DRIVE SYSTEMS
units per year. Seller will then comply with Buyer’s EDI transaction requirements which
follow.

	 	A.	 	Buyer requires that all EDI transactions with trading partners will be
communicated utilizing ANSI X 12 standards and AIAG implementation guidelines. The
following table summarizes the transaction requirements for Buyer’s Truck, Engine and
Service Parts business units. Please be reminded that as business needs and
conditions change, this set of required transactions will be modified accordingly.

	 	 	 	 	 	 	 	 	 
	EDI	 	 	 	 	 	 	 	 
	TRANSACTION	 	PURPOSE	 	TRUCK	 	ENGINE	 	SERVICE PARTS
	830

	 	Materials Release
	 	All Suppliers
	 	All Suppliers
	 	All Suppliers *
	 
	 	 	 	 	 	 	 	 
	862

	 	Shipment Authorization
	 	Selected Suppliers
	 	Selected Suppliers
	 	Selected Suppliers
	 
	 	 	 	 	 	 	 	 
	866

	 	Sequenced Components
	 	Selected Suppliers	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	856

	 	Shipment Notification
	 	All Suppliers
	 	All Suppliers
	 	All Suppliers
	 
	 	 	 	 	 	 	 	 
	824

	 	Applications Advice
	 	All Suppliers
	 	All Suppliers
	 	All Suppliers
	 
	 	 	 	 	 	 	 	 
	861

	 	Receiving Advice
	 	All Suppliers	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	846

	 	Inventory Advice
	 	 	 	All Suppliers	 	 
	 
	 	 	 	 	 	 	 	 
	864

	 	Text Messages
	 	All Suppliers	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	997

	 	Functional Acknowledgment
	 	All Suppliers
	 	All Suppliers
	 	All Suppliers
	 
	 	 	 	 	 	 	 	 
	850

	 	Purchase Order
	 	Selected Suppliers
	 	Selected Suppliers
	 	All Suppliers
	 
	 	 	 	 	 	 	 	 
	860

	 	Purchase Order Change
	 	Selected Suppliers
	 	Selected Suppliers
	 	All Suppliers
	 
	 	 	 	 	 	 	 	 
	810

	 	Invoice
	 	Selected Suppliers
	 	 	 	Selected Suppliers
	 
	 	 	 	 	 	 	 	 
	820

	 	Remittance Advice
	 	Selected Suppliers
	 	Selected Suppliers
	 	Selected Suppliers

 

			
	*	 	For Service Parts, the 830 is a planning document only, to be used
solely for forecasting, not shipping, purposes.

	 	B.	 	Buyer and its suppliers share the challenges of continuously rising Customer
expectations and an increased demand for speed and agility in all business processes.
In recognition of these challenges, the following requirements have been developed to

			
	 	 	 
	
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	 	 	 	streamline EDI activities while delivering the highest standards of process quality
and business flexibility. For purposes of clarity, these requirements have been
grouped into three categories: Implementation, Production and General. Seller must:

	 	i.	 	Implementation.

	 	a.	 	Implement all Buyer required transactions for all
plants in the applicable Buyer business unit within thirty (30) days of
first contact by Buyer or its designated enabling service.
	 
	 	b.	 	Eliminate testing for location changes, where the
supplier is currently doing that transaction with Buyer.
	 
	 	c.	 	Implement location changes for all current
transactions within seventy- two (72) hours of first contact by Buyer.

	 	ii.	 	Production.

	 	a.	 	Trade all required transactions in a
“productionized” flow that eliminates all manual intervention by Buyer in
the underlying business processes.
	 
	 	b.	 	Access mailboxes minimum daily to retrieve 830,
846, 862, 850 and 860 transactions, and at 45-minute intervals to
retrieve 866 transactions.
	 
	 	c.	 	Send 997 transactions to acknowledge all
transactions received from Buyer.
	 
	 	d.	 	Review all 997 transactions received from Buyer to
timely identify and correct errors related to the 856 transaction at the
translation level.
	 
	 	e.	 	Comply with all requirements pertaining to the
‘receiving suite’ of transactions, which include timely transmission of
accurate 856 transactions and timely processing / acknowledging 824
transactions.
	 
	 	f.	 	Communicate any systems downtime affecting 856
transmission to the appropriate Buyer’s EDI Coordinator.

	 	iii.	 	General.

	 	 	 	Provide current EDI contact information to Buyer at
mailto:edi.hotline@nav-international.com.

	 	C.	 	Due to Buyer’s high level of EDI to application integration, any manual
processing introduces excess cost, time, complexity and opportunity for error. As a
result, Buyer reserves the right to impose charges for non-compliance to EDI
requirements, as follows:

	 	i.	 	Failure to meet implementation requirements in Articles
35-B-i-a and 35-B-i-b — EDI TRANSACTION REQUIREMENTS above will
result in a charge of *** per
day past the specified timeframe until implementation status is achieved.
	 
	 	ii.	 	Failure to meet production requirements highlighted in Articles 35-B-ii-a and
35-B-ii-e — EDI TRANSACTION REQUIREMENTS above will result in a charge
of *** per occurrence.

36. INFORMATION TECHNOLOGY

	 	A.	 	Seller attests to information technology capability that enables them to
electronically access Buyer via the International Supplier Network (“ISN”)
website: http://www.internationalsupplier.com/.
	 
	 	B.	 	Seller agrees to participate in any and all systems made available via ISN
within sixty (60) days of notice of availability. This includes but is not limited to
current systems

			
	 	 	 
	
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such as eSPEC, (electronic RFQ) and COMPASS, or planned systems such as eQuote
(electronic quote), collaborative design tools, supplier profile, etc.

	37.	 	QUALITY REGISTRATION

All suppliers to Buyer are required to be registered to QS-9000 Quality Systems
Requirements and as modified from time to time. Buyer will also accept ISO
9000:2000 or TS-16949 registration as long as the Seller can also fulfill all
AIAG PPAP (Production Part Approval Process) documentation and approval
requirements. Seller must maintain its certification with an accredited
registrar and must furnish copies of registration certificates to the Buyer’s
Supply Manager upon request.

LEGAL/REGULATORY

	38.	 	COMPLIANCE WITH LAWS AND REGULATIONS

Seller agrees that all materials, supplies, articles, or equipment to be
manufactured or furnished hereunder will be produced in compliance with all
applicable laws including, but not limited to, the Fair Labor Standards Act. If
this Agreement exceeds $10,000 and is otherwise subject to the Walsh-Healey
Public Contracts Act, Seller also agrees that all materials, supplies, articles,
or equipment to be manufactured or furnished hereunder will be produced in
compliance with that Act.

	39.	 	NON-COMPLIANCE CHARGES

Any instance of Seller’s exception to or non-compliance with any of the
requirements set forth in this Agreement will result in a standard
non-negotiable and non-reversible charge back per occurrence. See Appendix B -
NON-CONFORMANCE CHARGE SCHEDULE for specific non-compliance charges.

	40.	 	MATERIAL SAFETY DATA SHEETS (MSDS)/SUBSTANCE RESTRICTIONS

	 	A.	 	Seller shall properly classify, describe, package, mark, label and provide
Material Safety
Data Sheets (“MSDS”) for approval by Buyer prior to the initial shipment of all
Products, provide a new MSDS each time there are any changes to the Product that
affect the MSDS, and provide an updated MSDS every three years commencing with
the effective date of this Agreement. Seller will defend, indemnify and hold
harmless
Buyer from any claims, penalties, or damages incurred by Buyer as a result of any
Product received from Seller not in agreement with the current MSDS provided to
Buyer.
	 
	 	B.	 	Seller is expected to eliminate lead (“Pb”) unless required by Buyer’s
specification,
mercury (“Hg”), cadmium (“Cd”) and
hexa-valent chromium (“Cr VI”) from
its
Products. Seller will provide written notification of its action plans to Buyer
to
eliminate these four heavy metals from its Products within six (6) months of the
signing of this Agreement.

			
	 	 	 
	
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	 	C.	 	If the Seller’s parts are subsequently incorporated into Buyer’s
Customers’ products, and if these Customers have specific material and/or
substance reporting and management requirements, Buyer will cascade these
requirements down to Seller and expects Seller to further cascade the
requirements down to its sub-tier suppliers. Seller has to achieve the specific
material and/or substance reporting and management requirements as part of the
Production Part Approval Process (PPAP). Any changes in the use of substances or
concentrations of the substances as a result of engineering changes requires
pre-approval from Buyer and may require re-approval of the PPAP process.

	41.	 	NON-DISCRIMINATION

If this Agreement is subject to Executive Order 11246 pertaining to
non-discrimination and non-segregation, Seller certifies that it (1) is in
compliance with Sec. 202 of Executive Order 11246, as amended by Executive Order
11375, and subsequent Executive Orders and the Rules and Regulations set forth
by the Secretary of Labor in effect as of the date of this order; (2) does not
and will not provide or maintain at any of its establishments, nor permit its
employees to perform their services at any location under its control where
there are maintained segregated facilities; and (3) agrees that a breach of this
Certification violates the Equal Employment clause of Executive Order 11246.
“Segregated Facilities” means facilities which are in fact segregated on a basis
of race, color, creed, religion or national origin. Seller agrees to (1) obtain
an identical certification from proposed subcontractors prior to the award of
subcontracts exceeding $10,000 which are not exempt from the provisions of the
Equal Opportunity clause, and (2) maintain such certifications in its files. The
charge for making a false representation is prescribed under 18 U.S.C. 1001 and
any such false representation shall be a material breach of this Agreement.

	42.	 	VETERANS’ READJUSTMENT ASSISTANCE ACT

Seller agrees to comply with Section 503 of the Rehabilitation Act, the Vietnam
Era Veterans’ Readjustment Assistance Act (38 U.S.C. 4212) and implementing
regulations set forth by the Secretary of Labor as are applicable.

	43.	 	GOVERNMENTAL REQUIREMENTS

Seller agrees to comply with all applicable statutes, regulations, laws and
other Government requirements, including but not limited to, 48 C.F.R. Sections
52.219-8 (Utilization of Small Business Concerns), 52.222-26 (Equal Employment
Opportunity), 52.222-35 (Equal Opportunity for Special Disabled Veterans,
Veterans of the Vietnam Era, and Other Eligible Veterans), 52.222-36
(Affirmative Action for Workers with Disabilities), 52.222-39 (Notification of
Employee Rights Concerning Payment of Union Dues or Fees), 52.222-41 (Service
Contract Act of 1965) and 52.247-64 (Preference for Privately Owned U.S.- Flag
Commercial Vessels). The term “Contractor” and similar terms used in such FAR
provisions shall be construed to mean Seller for the purposes of this Agreement.

			
	 	 	 
	
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	44.	 	DIRECT PAYMENTS

Buyer reserves the right to make payments directly to subcontractors, agents
and other entities whose efforts have been obtained by Seller in the
fulfillment of this Agreement if Seller becomes unable for any reason to timely
compensate them or to meet its debt obligations. In addition, Buyer reserves
the right to make payments directly to bankruptcy courts, trustees in
bankruptcy or receivers, as it deems necessary. Any amounts paid by Buyer to
the entities or persons listed in this paragraph other then Seller plus legal
expenses incurred will be subtracted from any amounts owed to Seller under this
Agreement. If Buyer makes direct payments to subcontractors or others as set
out in this Article, Seller waives any right to further recompenses from Buyer
for the work completed by these entities. Buyer reserves its right to any other
remedies allowed in law or equity.

	45.	 	INDEMNIFICATION

	 	A.	 	Indemnification by Seller. Seller agrees to protect, defend,
hold harmless and
indemnify Buyer, its officers, directors, dealers, employees, agents and
affiliates,
against all claims, actions, suits, proceedings, demands (collectively,
“Claims”),
including all liabilities, losses, costs, expenses (including all legal costs and
expenses)
and all judgments, settlements and judicially or administratively imposed damages
(including all consequential damages) (collectively with Claims, “Losses”),
resulting
from or arising or related to:

	 	i.	 	Any breach or violation of Seller’s representations, covenants or
agreements
under this Agreement;
	 
	 	ii.	 	Any alleged negligence, gross negligence, recklessness, willful
misconduct or
fraud on the part of Seller and/or its Affiliates or any employee,
subcontractor
or agent of theirs related to this Agreement, or;
	 
	 	iii.	 	Any property damage or personal injury, including death, attributed
to, in
whole or in part, a defect in the design, materials, or workmanship of
Seller’s
Products or occurring in connection with the manufacture of such Seller’s

Products.

	 	B.	 	Indemnification by Buyer. Buyer agrees to protect, defend, and
hold harmless, and
indemnify Seller, its officers, directors, employees, agents, and affiliates,
against all
Losses, resulting or arising from or related to:

	 	i.	 	Any breach or violation of Buyer’s representations, covenants or
agreements
under this Agreement;
	 
	 	ii.	 	Any alleged negligence, gross negligence, recklessness, willful
misconduct or
fraud on the part of Buyer and/or its Affiliates or any employee,
subcontractor
or agent of theirs related to this Agreement, or;
	 
	 	iii.	 	Any property damage or personal injury, including death, attributed to,
in
whole or in part, Buyer’s negligent installation or use, or both, of
Seller’s
Products.

	 	C.	 	Intellectual Property Indemnity. Seller agrees to defend, at its
sole expense, any Claim
against Buyer, Buyer’s Customers, or either of their officers, directors,
employees,
agents and affiliates based on an assertion or Claim that any Product furnished by

			
	 	 	 
	
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Seller to Buyer hereunder or the use or sale by Buyer or its Customers in the
manner contemplated by this Agreement infringes any patent or copyright or other
intellectual property right or is a wrongful use of third-party trade secret or
proprietary information, and further agrees to indemnify and hold Buyer harmless
from any Losses, including attorneys’ fees, settlements associated with said
Claim, or any Losses, including attorneys’ fees or costs, finally awarded in any
such Claim. If the use or sale of any Product furnished pursuant to this
Agreement is enjoined as a result of such Claim, Seller, at its option and at no
expense to Buyer, shall obtain for Buyer and its Customers the right to use and
sell the Product(s) or shall substitute an equivalent product(s) acceptable to
Buyer and extend this indemnity thereto. This indemnity does not extend to any
Claim based on any infringement of any patent by the combination of Product(s)
furnished by Seller with other components added thereto by Buyer, except when the
Product(s) is a material part of the invention of an asserted patent and the
components furnished by Buyer to complete the claimed combination, such as an
engine, sensor, or vehicle frame are not novel within the meaning of the patent
or are specified or approved by Seller. This indemnity does not extend to any
infringement or alleged infringement arising solely out of Seller’s compliance
with Buyer-required specifications, designs, or instructions that (i) are created
solely by Buyer and (ii) are thereafter furnished to Seller in writing.

	 	D.	 	Collaborative Efforts. In the event that a Claim should be made
based upon a design
defect and the design was a collaborative effort, Seller and Buyer shall cooperate
fully
in the defense of this matter, sharing in all Losses related to such Claim, provided
each
party will contribute to the aggregate Losses arising from such Claim in a proportion
reflecting to the relative and comparative responsibilities of the parties for such
Losses,
as well as any other relevant equitable considerations.
	 
	 	E.	 	Notice of Indemnification. No Claim shall be valid unless notice of
the matter which
may give rise to such Claim is given in writing by the indemnitee (the “Indemnitee”)
to
the persons against whom indemnification may be sought (“Indemnitor”) as soon as
reasonably practicable after such Indemnitee becomes aware of such Claim. Failure of
the Indemnitee to notify the Indemnitor within such notice period shall not relieve
Indemnitor of any liability hereunder, except to the extent the Indemnitor reasonably
demonstrates that the defense of such third party claim is materially prejudiced by
such failure. Such notice shall state that the Indemnitor is required to indemnify
the
Indemnitee for a Loss and shall specify the amount of Loss, if available, and
relevant
details thereof. The Indemnitor shall notify Indemnitee within a reasonable time from
such notice of its intention to assume the defense of any such claim, which consent
shall not be unreasonably withheld or delayed.

	46.	 	LIABILITY INSURANCE

During the Initial Term (and Renewal Terms, if any) of this Agreement, Seller
shall maintain at its own expense Commercial General Liability Insurance,
including coverage for products liability and completed operations with limits of
no less than US$ 5,000,000 per occurrence and US$ 5,000,000 general aggregate for
death, bodily injury, and property damage. Buyer retains the right to obtain an
increase in the above stated insurance limits at any time.

			
	 	 	 
	
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Seller’s liability under this Agreement shall not be limited by the amount of
such insurance coverage and such insurance shall be primary and not
contributory as to other insurance Buyer may have in effect. The
above-required policy shall be written on an “occurrence” basis unless the
policy is available only on a “claims made” basis, in which case such “claims
made” insurance coverage shall be maintained in effect for a period of four
(4) years after the termination of this Agreement.

Seller shall also maintain Workers’ Compensation Insurance per statutory
requirements.

Such policies shall be maintained with an insurer authorized to issue
policies in the United States, which insurers shall be satisfactory to Buyer,
and shall name Buyer as an additional insured with regard to the Commercial
General Liability Insurance. Such policies shall provide that thirty (30)
days written notice shall be given to Buyer prior to cancellation or material
changes to the policies. Any such change, modification or cancellation shall
not affect Seller’s obligation to maintain the insurance coverage set forth
above.

As of its execution of this Agreement, Seller shall provide Buyer with a
certificate of insurance evidencing such coverage. Failure to provide such
certificate of insurance shall void this Agreement, at Buyer’s sole option.

	47.	 	REMOVAL OF IDENTITY OF BUYER

At its own expense Seller agrees to destroy or remove to the Buyer’s complete
satisfaction Buyer’s corporate name, addresses, trademarks, patent numbers,
and all other references to Buyer from all Products rejected or canceled by
Buyer, or purchased or produced by Seller in excess of quantities specified
by Buyer, whether such Products are completed or partially completed,
delivered, tendered for delivery, or undelivered, prior to disposition of
such Products to parties other than Buyer, or to destroy such Products.
Seller acknowledges that any sale of Products bearing the Buyer’s trade name
and/or trademarks to any person or entity other than Buyer is an infringement
of the Buyer’s proprietary rights in its trade name and/or trademarks and is
an attempt by Seller to “pass off” products of others as the products of
Buyer. Without first obtaining the written consent of Buyer, Seller agrees
that it shall not in any manner make known the fact that Seller has
furnished, or contracted to furnish, Buyer the Products covered by this
Agreement, or use the name of Buyer or any of its trademarks or trade names
in Seller’s advertising or other promotional material.

	48.	 	NEW BUSINESS

Buyer shall negotiate with Seller in good faith with regard to placing new
production business of Buyer with Seller if, in Buyer’s opinion, Seller is
competitive in the areas of price, performance, delivery, reliability,
technology and quality with other manufacturers of any such products. Both
Buyer and Seller shall work together to develop target costs and establish
the lowest possible cost of any new product. Seller agrees to provide all
price/cost submissions with full cost transparency throughout the iterative
design process. Seller shall also specify tooling and production lead times
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the quotation. Nothing in this Article 48 — NEW BUSINESS shall be construed as an
obligation on the part of Buyer to develop or purchase any products other than
those Products covered by this Agreement.

	49.	 	CONFIDENTIAL INFORMATION / INTELLECTUAL PROPERTY

	 	A.	 	During the term of this Agreement, each party hereto may disclose to the
other certain
confidential information relating to the manufacturing, sale, marketing, development
or
distribution of the Product(s), the application of the Product(s) by Buyer,
processes,
trade secrets and business and financial information and marketing plans of either
party as well as confidential information (which may be in electronic form, as well)
resulting from the performance of this Agreement, including, without limitation,
purchase orders, sales projections, customer lists, designs under development,
intellectual property and know-how. Any such information that is marked or otherwise
clearly identified at the time of disclosure as “confidential” or “proprietary” or
any
information which a person would reasonably deem to be confidential information of
the parties under the circumstances shall be considered as “Confidential
Information”
for purposes of this Agreement, provided that, if the information is disclosed
orally, a
writing identified as “confidential” or “proprietary” and summarizing the
Confidential
Information will be provided within thirty (30) days after disclosure. During the
term
of this Agreement and for a period of five (5) years after the expiration or
termination
of this Agreement, the receiving party will use its best efforts to prevent the
disclosure
of such Confidential Information to third parties and will not use such Confidential
Information for any purpose other than to effectuate the provisions of this
Agreement.
“Best efforts” with respect to any Confidential Information means at least that
degree
of care normally used by the receiving party to prevent disclosure to others of its
own
confidential information of similar importance, but in no case less than a
reasonable
degree of care. Notwithstanding the foregoing, Seller and Buyer agree that
Confidential Information shall not include any information which: (a) is or
becomes
publicly known through no wrongful act on the receiving party’s part; or (b) is, at
the
time of disclosure under this Agreement, already known to the receiving party
without
restriction on disclosure; or (c) is, or subsequently becomes, rightfully and
without
breach of this Agreement, in the receiving party’s possession without any obligation
restricting disclosure; or (d) is independently developed by the receiving party
without
reference to or use of the Confidential Information; or (e) is disclosed pursuant to
an
order of any governmental or judicial authority, after prior notice to the
disclosing
party respecting such order, and affording the disclosing party reasonable
cooperation
respecting any objections by the disclosing party to the request for disclosure,
including a reasonable opportunity for the disclosing party to obtain a protective
order
in respect to the Confidential Information at the expense of the disclosing party.
	 
	 	B.	 	Upon request of the disclosing party at any time, the recipient agrees to
return to the
disclosing party or destroy all materials in its possession or control which contain
Confidential Information of the disclosing party, including, without
limitation,
documents, drawings, CAD drawings, computer media, models, prototypes, sketches,
designs, and lists furnished by the disclosing party or accessed by the recipient,
including copies thereof made by the recipient, and to delete from its computers any
software, data files, or CAD files containing Confidential Information furnished by
the
disclosing party. If materials are destroyed, an officer of the recipient shall
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such materials to the disclosing party and certify that their destruction has been
completed. Notwithstanding the foregoing, each party shall be entitled to maintain
one archival copy of the Confidential Information within its Law Department or at
the office of its General Counsel, such archival copy to be used solely in
connection with resolving claims or disputes between the parties relating to this
Agreement.

	 	C.	 	Seller agrees to communicate to Buyer all inventions, discoveries, computer
programs,
algorithms, technical data and information resulting under this Agreement made or
conceived by Seller, its employees, contractors or subcontractors solely or in
collaboration with Buyer’s personnel during the term of the Agreement: and Seller
shall
execute or cause its employees, contractors or subcontractors to execute any and all
documents which Buyer may deem necessary to assign or to convey to Buyer or a
subsidiary thereof, Buyer’s successors or assigns, the sole and exclusive right,
title and
interest in and to such inventions, discoveries and improvements in any Letters
Patent
therefore.
	 
	 	D.	 	Seller agrees that all drawings, graphics, technical analyses, models,
prototypes,
writings, computer programs, algorithms, and other materials developed under this
Agreement are considered to be works for hire and shall become and remain the
property of Buyer. All drawings created under this Agreement shall be marked
“International® Confidential” or “International® Proprietary” or words to that
effect.
At the request of Buyer, Seller shall execute or cause its employees, contractors or
subcontractors to execute, any and all documents which International may deem
necessary to assign to International or a subsidiary thereof, Buyer’s successors or
assigns, the sole and exclusive right to such designs, model, and other materials, as
well as to industrial design registrations, design patents and copyrights related
thereto.
	 
	 	E.	 	Seller is granted a limited trademark license to use the International logo and
word
mark, and any other trademarks owned by International or its wholly-owned affiliates,
International Truck Intellectual Property Company LLC and International Engine
Intellectual Property Company LLC, solely as necessary to fulfill the terms of this
Agreement and for no other purpose. Buyer reserves the right to review and approve
or disapprove all uses of the licensed trademarks.
	 
	 	F.	 	This Article 49 — CONFIDENTIAL INFORMATION / INTELLECTUAL PROPERTY, shall
survive the termination or expiration of this Agreement.

	50.	 	TERMINATION

	 	A.	 	Termination by Buyer. Buyer shall have the right at any time and for
any reason (without any penalty) to terminate, in whole or in part, this Agreement or
the deliveries specified and the authorizations contained in any shipping schedule
given to the Seller by Buyer, provided the Buyer shall provide the Seller one hundred
and twenty (120) days notice of such termination, whereupon this Agreement shall
automatically terminate immediately after the 120th day. Upon such
termination by Buyer, the Buyer shall have no liability or responsibility to the
Seller for Products completed or partially completed, or raw materials acquired by
the Seller for the purpose of performing this Agreement, unless the delivery or
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Products or the acquisition of such raw materials were authorized in shipping
schedules delivered to the Seller by the Buyer prior to Buyer’s termination
notice.

	 	B.	 	Termination by Seller: At any time during the Initial Term (or any
Renewal Term) of
this Agreement should Buyer default in performing any of its material obligations
hereunder, the Seller may give written notice of default giving the full details
thereof.
If Buyer fails within thirty (30) days of the receipt of written notice of default
to cure
the default, then Seller shall have the right to terminate this Agreement with
regard to
the particular Product materially affected by the default, or if the default
materially
affects all Products, Seller shall have the right to terminate this Agreement in its
entirety. The Seller shall give Buyer thirty (30) days written notice from the
determination of the failure to cure the default, whereupon the termination shall be
effective.
	 
	 	C.	 	Rights and Obligations of Parties. Except as otherwise provided
for herein, the
termination of this Agreement for any reason shall be without
prejudice to (without
acting as a limitation):

	 	i.	 	Either party’s obligations of confidentiality provided for in
Article 49 —
CONFIDENTIAL INFORMATION / INTELLECTUAL PROPERTY;
	 
	 	ii.	 	Either party’s right to receive all payments (including any amounts
provided for
in Article 5 — PRICING hereof) accrued hereunder prior to the date of such
termination; and
	 
	 	iii.	 	Any other remedies which either party may then or thereafter have
hereunder
or under law, equity or otherwise.

	 	D.	 	Survival. Any termination or expiration of all or part of this
Agreement shall not relieve
either party of obligations incurred pursuant to and during the Initial Term (or any
Renewal Term) prior to such termination or expiration of this Agreement, including
but
not limited to the warranty provisions set forth in Article 24 — WARRANTY hereof,
the
Indemnification provisions of Article 45  —  INDEMNIFICATION hereof, and
the
Confidential Information provisions set forth in Article 49  —
CONFIDENTIAL
INFORMATION / INTELLECTUAL PROPERTY hereof. Articles 23A — REIMBURSEMENT
FOR NON-PERFORMANCE BY SELLER, 24 — WARRANTY, 25 — REIMBURSEMENT FOR
WARRANTY CLAIMS, 39 — NON-COMPLIANCE PENALTIES, 45 — INDEMNIFICATION, 47
 —  REMOVAL OF IDENTITY OF BUYER, 49  —  CONFIDENTIAL INFORMATION /
INTELLECTUAL PROPERTY, 50C and D — TERMINATION, 53 — CHOICE OF LAW, 54 -
CONSENT TO JURISDICTION, 56 — NO LIMITATION OF RIGHTS AND REMEDIES, and
59 — NOTICES of this Agreement and any other provision, that by its terms is
intended
to survive, shall survive any termination or expiration of this Agreement.

MISCELLANEOUS

	51.	 	ASSIGNMENT OF RIGHTS AND DUTIES

Either party may assign the rights and duties under this Agreement, either in
whole or in part, only with the prior written consent of the other party. No
permitted assignment hereunder shall be deemed effective until the assignee shall
have executed and delivered an instrument in writing reasonably satisfactory in
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the other party pursuant to which the assignee assumes all of the obligations of
the assigning party hereunder. Any purported assignment of this Agreement in
violation of this Article 51 — ASSIGNMENT OF RIGHTS AND DUTIES shall be void.

	52.	 	MODIFICATION AND AMENDMENT OF AGREEMENT

No modifications of, or additions to, the provisions or conditions of this
Agreement (including the Exhibits, Appendices and Schedules hereto) will become a
part of the Agreement until agreed to in writing by the Buyer and Seller. This
Agreement (including the Exhibits, Appendices and Schedules hereto) may not be
amended or modified without the written consent of both Buyer and Seller. For
purpose of clarity, Appendix A — PRODUCT DESCRIPTION may not be amended, modified
or altered without the written consent of Buyer and Seller. Notwithstanding the
foregoing, Buyer may issue addenda to Contracts for the purposes of modifying the
part numbers listed in Appendix A. Such modifications will constitute a binding
amendment unless Seller provides Buyer written notice of Seller’s objection within
thirty days of Seller’s receipt of the addenda.

	53.	 	CHOICE OF LAW

This Agreement shall be governed by and construed under the laws of the State of
Illinois, without giving effect to the choice of law provisions thereof.

	54.	 	CONSENT TO JURISDICTION

All actions, proceedings, claims, counterclaims or cross-complaints in any action
or other proceeding brought by any party hereto against any other party hereto
with respect to any matter arising out of, or in any way connected with or related
to, this Agreement or any portion thereof, whether based upon contractual,
statutory, tortuous or other theories of liability arising out of or relating to
this Agreement, shall be heard and determined in any federal court sitting in
Chicago, Illinois, unless there is no federal court jurisdiction, in which case
the action or proceeding shall be heard and determined in any state court sitting
in Chicago, Illinois, and the parties hereto hereby irrevocably submit to the
jurisdiction of such courts in any such action or proceeding, IRREVOCABLY AGREE
THAT ANY SUCH COURT IS A PROPER VENUE FOR ANY SUCH ACTION, and irrevocably waive
the defense of an inconvenient forum. Each party irrevocably consents to the
service of any and all process in any such action or proceeding by the mailing of
copies of such process to such party at its address specified in Article 59 —
NOTICES. Nothing in this Article 54 — CONSENT TO JURISDICTION shall affect the
right of any party hereto to serve legal process in any other manner permitted by
law.

	55.	 	SEVERABILITY

In the event that any provision of this Agreement or the application thereof to
any party of circumstance shall be finally determined by a court of proper
jurisdiction to be invalid or unenforceable to any extent, then (i) a suitable and
equitable provision shall be substituted therefore in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid and
unenforceable provision, and (ii) the remainder of this Agreement and the
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circumstances other than those to which it is held invalid or unenforceable shall
not be affected thereby.

	56.	 	NO LIMITATION OF RIGHTS AND REMEDIES; SPECIFIC PERFORMANCE

The provisions of each Article of this Agreement are not intended to limit any
rights and remedies of the Seller or Buyer at law or in equity. Each of the parties
acknowledges and agrees that the other party would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in any
court having jurisdiction over the parties and the matter (subject to the
provisions set forth in Article 54 — CONSENT TO JURISDICTION above), in addition to
other remedy to which they may be entitled, at law or in equity.

	57.	 	FORCE MAJEURE

	 	A.	 	Except as described below, neither party shall be liable for any failure or
delay in the
performance of its obligations under this Agreement to the extent this failure or
delay
both:

	 	i.	 	Is caused by any of the following: acts for war, terrorism,
civil riots, or rebellions; quarantines, embargoes, and other similar unusual
governmental action; extraordinary elements of nature or acts of God; and
	 
	 	ii.	 	Could not have been prevented by the non-performing party’s
reasonable precautions or commercially accepted processes (including, but not
limited to, implementation of disaster recovery and business continuity plans
in accordance with industry best practices), or could not reasonably be
circumvented by the non-performing party through the use of substitute
services, alternate sources, work-around plans, or other means by which the
requirements of a buyer of products substantively similar to the product
hereunder would be satisfied.

Events meeting both of the above criteria are referred to as “Force Majeure
Events.” The parties expressly acknowledge that Force Majeure Events do not include
vandalism, the regulatory acts of governmental agencies, labor strikes, lockouts,
labor difficulty or the non-performance of third parties or subcontractors relied
on for the delivery of the Product unless such failure or non-performance by a
third party or subcontractor is itself caused by a Force Majeure Event, as defined
above. Upon the occurrence of a Force Majeure Event, as long as the non-performing
party provides the other party written notice of the Force Majure event within ten
(10) days of its occurrence, the non-performing party shall be excused from any
further performance or observance of the affected obligation(s) for as long as such
circumstances prevail, and such party continues to attempt to recommence
performance or observance to the greatest extent possible without delay.

	 	B.	 	Notwithstanding any other provision of this Article, a Force Majeure Event
shall
obligate Seller to begin and successfully implement all services relating to disaster

			
	 	 	 
	
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	 	recovery set forth in a “Disaster Recovery Plan” as may be specifically requested by
Buyer. If a Force Majeure Event causes a material failure or delay in the performance
of any Seller obligation with respect to any Product, Buyer may, at its option, and
in addition to any other rights Buyer may have, procure such Product from an
alternate source until Seller is again able to provide such Products. If a Force
Majeure Event causes a material failure or delay in the performance of any Seller
obligation with respect to any Product for more than five (5) consecutive days, Buyer
may, at its option, and in addition to any other rights Buyer may have, terminate
this Agreement
	 
	 	 
	58.

	 	ENTIRE AGREEMENT
	 
	 	 
	 

	 	      This Agreement, together with confidentiality, non disclosure agreements and the
Exhibits, Appendices and Schedules attached hereto (and thereto), embodies and sets
forth the entire agreement and understanding of the parties with respect to the
subject matter herein and there are no promises, terms, conditions or obligations,
oral or written, expressed or implied, other than those contained in this Agreement.
The terms of this Agreement shall supersede all previous oral or written agreements
which may exist or have existed between the parties relating to the subject matter of
this Agreement. No party shall be entitled to rely on any agreement, understanding or
arrangement which is not expressly set forth in this Agreement. Any amendments to
this Agreement must be in writing and signed by the parties to this Agreement.
	 
	 	 
	59.

	 	NOTICES
	 
	 	 
	A.

	 	Except as otherwise specifically provided, any notice or other documents to be
given under this Agreement shall be in writing and shall be deemed to have been duly
given if sent by registered mail or nationally recognized overnight courier to a party
or delivered in person to a party at the address set out below for such party or such
other address as the party may from time to time designate by written notice to the
other:

	 	 	 	 	 	 	 
	 	 	If to Buyer:	 	Navistar, Inc
	 	 	 	 	4201 Winfield Road

P.O. Box 1488

Warrenville, IL 60555

	 
	 	 	 	Attn:	 	Ramses Banda
	 
	 	 	 	Phone:	 	630-753-2712
	 
	 	 	 	Email:	 	Ramses.banda@navistar.com
	 
	 	 	 	 	 	 
	 	 	 	 	With copies to:
	 
	 	 	 	Attn:	 	Mark Meegan
	 
	 	 	 	Phone:	 	630-753-6112
	 
	 	 	 	Email:	 	Mark.Meegan@navistar.com
	 
	 	 	 	 	 	 
	 	 	If to Seller:	 	ENOVA SYSTEMS
	 	 	 	 	19850 South Magellan Drive

Torrance, CA 90502
	 
	 	 	 	Attn:	 	Terry Morano
	 
	 	 	 	Facsimile:	 	310.527.7888
	 
	 	 	 	Phone:	 	310.527.2800

			
	 	 	 
	
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Navistar, Inc 

Enova Systems 

Supply Agreement

	 	 	 	 	 	 	 
	 
	 	 	 	Email:	 	tmorano@enovasystems.com
	 
	 	 	 	 	 	 
	 	 	 	 	With copies to:
	 
	 	 	 	Attn:	 	Mike Staran
	 
	 	 	 	Facsimile:	 	310.527.7888
	 
	 	 	 	Phone:	 	310.527.2800
	 
	 	 	 	Email:	 	 mstaran@enovasystems.com

	 	 	 
	B.

	 	Any such notice or other document shall be deemed to have been received by the
addressee five (5) business days following the date of dispatch of the notice or other
document by Email and by mail or, where the notice or other document is sent by
overnight courier or by hand, simultaneously with the delivery. To prove the giving of
a notice or other document it shall be sufficient to show that it was dispatched.
	 
	 	 
	60.

	 	NO WAIVERS
	 
	 	 
	 

	 	Neither the failure nor delay on the part of a party to require the strict
performance of any term, covenant or condition of this Agreement or to exercise any
right or remedy available on a breach thereof shall constitute a waiver of any such
breach or of any such term or condition. The consent to, or the waiver of, any
breach, or the failure to require the performance or timely performance of any term,
covenant, or condition of this Agreement shall not be construed as authorizing any
subsequent or additional breach and shall not prevent a subsequent enforcement of
such term, covenant, or condition.
	 
	 	 
	61.

	 	CONSTRUCTION
	 
	 	 
	 

	 	The language in all parts of this Agreement shall be construed, in all cases,
according to its fair meaning. Buyer and Seller hereby acknowledge that each party
hereto and its counsel have reviewed and revised this Agreement and that any rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.
Whenever used herein, the words “include’, “includes” and “including” shall mean
“include, without limitation”, “includes, without limitation” and “including,
without limitation”, respectively. The masculine, feminine or neuter gender and the
singular or plural number shall each be deemed to include the others whenever the
context so indicates. “Days” means calendar days unless other specified.
	 
	 	 
	62.

	 	HEADINGS
	 
	 	 
	 

	 	The headings used in this Agreement are for convenience only and are not a part of
this Agreement nor affect the interpretation of any of its provisions.

			
	 	 	 
	
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	Navistar, Inc  

Enova Systems  

Supply Agreement
	 
	 	 
	63.

	 	COUNTERPARTS
	 
	 	 
	 

	 	This Agreement may be executed simultaneously in counterparts (and may be delivered
by facsimile), each of which shall be deemed an original, but all of which together
shall constitute a single agreement.

			
	 	 	 
	
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly
authorized officers or representatives as of the day and year first above written.

	 	 	 
	BUYER: NAVISTAR, INC

	 	SELLER: ENOVA SYSTEMS INC.
	 
	 	 
	 

	 	 
	Name: Ramses Banda

	 	Name: Bill Frederiksen
	Title: Supply Manager

	 	Title: Executive Director of Operations
	 
	 	 
	Date:

	 	Date:

			
	 	 	 
	
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Navistar, Inc 

Enova Systems 

Supply Agreement

APPENDIX A — PRODUCT DESCRIPTION / PRODUCT PRICING

Supplier product pricing does not include warehousing, sequencing, packaging and special handling.

Long Term Agreement

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Enova Systems, Inc.
	 	 	 	 	 	 
	Navistar, Inc.

	 	 	 	Revised 3/31/08
	 	  
	Charge Sustaining Post Transmission Parallel Hybrid SV620000A-
	 	 	 	 	 	 
	 
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Volume Based Pricing Levels
	 	 	 	 	 	 	 	 	(pricing Levels are established according to cumulative Sales of Systems)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1000 p.a.	 	3000 p.a.	 	5000 p.a.
	 	 	 	 	 	 	 	 	 	 	 	 	200 p.a.	 	500 p.a.	 	unit price	 	unit price	 	unit price
	Part
	 	 	 	 	 	 	 	Initial/Single	 	unit price (200-	 	unit price (500-	 	(1000-2999	 	(3000-4999	 	(5000+
	Number
	 	Description	 	Qty	 	System Price	 	499 Systems)	 	999 Systems)	 	Systems)	 	Systems)	 	Systems)
	 
	 	Drive System	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SV520300A-
	 	25/80kW In-line Induction Motor &	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Mounting System Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV620200A-
	 	P90 Controller (CEU) w/ DC/DC	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 
	 
	 	Converter & Mounting Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV620900A-
	 	Cable & Harness System Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV620700A-
	 	Cooling System & Mounting Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV620400A-
	 	Dual Battery Pack & Junction
Box (NiMh)	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	System Tuning and Test
	 	 	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	Total System w/
batteries and options
(sustaining)
	 	 	 	 	 	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 

 

			
	Terms	 	Software development and other development quotations are based on Enova
providing limited vehicle control function for operation of
engine and electric motor only. Pricing may vary dependent on level of vehicle control
required and inter-component communication. 90
days ARO (estimated) based on Statement of Work to be mutually defined.
	 
	 	 	Pricing is based on cumulative sales to Buyer. During the duration of
this agreement and any renewal thereof.
	 
	 	 	Once the pricing level has been
achieved, the pricing level for that part number will not revert to a
lower level (higher per unit price).
	 
	 	 	Pricing level does not revert to a
lower accumulated sales volume pricing.
	 
	 	 	FOB Torrance California
	 
	 	 	Additional Charges: Navistar program Management (***), System
Integration (***)

Long Term Agreement

							
	Enova Systems, Inc.	 	 	 	 	 	 
	Navistar, Inc.
	 	 	 	Revised 3/31/08
	 	 
	Charge Depleting Post Transmission Parallel Hybrid SV520000A-	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Volume Based Pricing Levels	 
	 	 	 	 	 	 	 	 	(pricing Levels are established according to cumulative Sales of Systems)	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1000 p.a.	 	 	3000 p.a.	 	 	5000 p.a.	 
	 	 	 	 	 	 	 	 	 	 	 	 	200 p.a.	 	 	500 p.a.	 	 	unit price	 	 	unit price	 	 	unit price	 
	Part
	 	 	 	 	 	 	 	Initial/Single	 	 	unit price (200-	 	 	unit price (500-	 	 	(1000-2999	 	 	(3000-4999	 	 	(5000+	 
	Number
	 	Description	 	Qty	 	 	System Price	 	 	499 Systems)	 	 	999 Systems)	 	 	Systems)	 	 	Systems)	 	 	Systems)	 
	 
	 	Drive System	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SV520300A-
	 	25/80kW In-line Induction Motor &	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Mounting System Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV520200A-
	 	P90 Controller (CEU) w/ 6.6kW	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 
	 
	 	charger & DC/DC Converter System	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 
	 
	 	Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV520900A-
	 	Cable & Harness System Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV520700A-
	 	Cooling System & Mounting Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV520400A-
	 	Battery Pack (Li-Ion)	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	 
	 	- Split Battery Pack	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	System Tuning and Test
	 	 	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	Total System w/
batteries and options
(depleting)
	 	 	 	 	 	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 

 

			
	Terms	 	Software development and other development quotations are based on Enova providing limited vehicle
control function for operation of
engine and electric motor only. Pricing may vary dependent on level of vehicle control required and
inter-component communication. 90
days ARO (estimated) based on Statement of Work to be mutually defined.
	 
	 	 	Pricing is based on cumulative sales to Buyer. During the duration of this agreement and any
renewal thereof.
	 
	 	 	Once the pricing level has been achieved, the pricing level for that part number will not revert to
a lower level (higher per unit price).
	 
	 	 	Pricing level does not revert to a lower accumulated sales volume pricing.
	 
	 	 	FOB Torrance California
	 
	 	 	Additional Charges: Navistar program Management (***), System Integration (***)

Notes: p.a. = per annum

			
	 	 	 
	
	 	Date of revision: March 27, 2008 — Confidential Document

Effective 1/24/07

 

			
	***	 	CONFIDENTIAL TREATMENT REQUESTED

35

 

Navistar, Inc 

Enova Systems 

Supply Agreement

APPENDIX B — NON-CONFORMANCE CHARGE SCHEDULE

	 	 	 	 	 
	Article Reference	 	Description	 	Charge
	18. Performance Achievement

	 	Customs Invoicing Non-Compliance (as detailed

in Customs Invoicing Instructions PUR-4003 on

the ISN website)
	 	*** per non-complying/missing

invoice
	 
	 	 	 	 
	18. Performance Achievement

	 	International/Penske LLP Non-Compliance (as

detailed in the Penske Supplier Training

Manual on the ISN website)
	 	*** per non-complying occurrence
	 
	 	 	 	 
	18. Performance Achievement

	 	Routing Matrix Non-Compliance (as detailed in
latest Routing Matrix CTDR-1 letter).
	 	Full dollar value of
non-conforming freight bill
	 
	 	 	 	 
	18. Performance Achievement

	 	Service Parts D-13 Supplier Packaging and
Shipping Standards — US ONLY (as detailed in
Compliance Letter).
	 	*** per occurrence, plus cost
excess labor and handling
	 
	 	 	 	 
	23. Reimbursement for
Non-Performance (Late Delivery,
Defective Material) by Seller

	 	Per ITPS-074001-ST (Supplier Material Charge

Back Process):
	 	 
	 
	 	   -   Repair Cost: Excess
Time To Complete Truck/Bus for Shipment

	 	- Plant Shop Rate (***) *
Repair 

  Hours * # of Units/Parts
Affected

	 
	 	    -   Production Line Down
Time Cost:

	 	- Hourly Cost for Production

  Line * Down Time Hours

	 

	 	    -   Miscellaneous
Costs:
	 	 
	 

	 	        -   Premium freight

	 	- Full dollar value of
freight bill
	 

	 	       -   Other extraordinary
charges

	 	- TBD
	 
	 	 	 	 
	28. NAFTA Documentation

	 	Missing NAFTA Certificate of Origin (as
detailed in Article 28 — NAFTA DOCUMENTATION
of this Agreement)
	 	*** per non-complying part

number
	 
	 	 	 	 
	34. EDI Transaction Requirements

	 	EDI 856 Advance Ship Notice (ASN) errors (as
detailed Article 35 — EDI TRANSACTION
REQUIREMENTS of this Agreement available on
ISN website)
	 	*** per non-complying

transaction (implementation TBD)
	 
	 	 	 	 
	34. EDI Transaction Requirements

	 	Implementation of all required EDI
transactions within 30 days of contact (as
detailed in Article 35 — EDI TRANSACTION
REQUIREMENTS of this Agreement)
	 	*** per day thereafter

			
	 	 	 
	
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	***	 	CONFIDENTIAL TREATMENT REQUESTED

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Navistar, Inc 

Enova Systems 

Supply Agreement

APPENDIX C — PRODUCTION VOLUMES

Include annual volumes or other appropriate and relevant descriptives.

Annual Sales Goal Volumes to be purchased from Seller by Buyer are as follows,

	 	 	 
	     Agreement Year	 	Annual Sales Goal
	Calendar Year 2007

	 	30 POST-TRANSMISSION HYBRID DRIVE SYSTEMS
	Calendar Year 2008

	 	400 POST-TRANSMISSION HYBRID DRIVE SYSTEMS
	Calendar Year 2009

	 	1,100 POST-TRANSMISSION HYBRID DRIVE SYSTEMS
	Calendar Year 2010

	 	2,500 POST-TRANSMISSION HYBRID DRIVE SYSTEMS

Buyer and Seller recognize that calendar year 2010 reaches in to the first extension of the
supply agreement if Buyer and Seller agree to extend the commercial relationship as per 1.

Buyer and
Seller to review volumes every four (4) months. Appendix C
is subject to 10A and 10C.

			
	 	 	 
	
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Navistar, Inc

Enova Systems

Supply Agreement

APPENDIX D — SERVICE PARTS

	 	 	 	 	 	 	 
	 

	 	Long Term Agreement- Service Pricing
	 	 	 	 
	 
	 	 	 	 	 	 
	Enova Systems, Inc.
	 	 	 	 	 	 
	International Truck and Engine Corporation
	 	 	 	 	 
	Post Transmission Parallel Hybrid

	 	 	 	3/31/2008	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Volume Based Pricing Levels

(pricing Levels are established according to cumulative Sales of Systems)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Service Parts	 	Service Parts	 	Service Parts	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Service Parts	 	500 p.a. units	 	1000 p.a.	 	3000 p.a. units	 	Service Parts
	Part	 	 	 	 	 	 	 	Service Parts	 	200 p.a. units	 	(500-999	 	units (1000-	 	(3000-4999	 	5000 p.a. units
	Number	 	Description	 	Qty	 	Single System	 	(200-499 units)	 	units)	 	2999 units)	 	units)	 	(5000+ units)
	 
	 	Drive System	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SV520300A-
	 	25/80kW In-line Induction	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Motor & Mounting System Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV520200A- (CD)

	 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 
	SV620200A- (CS)
	 	P90 Controller (CEU)	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	V37000AC
	 	6.6kW Charger	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	V15000AA
	 	12V/100A DC/DC Converter	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV520700A- (CD)

	 	 	 	 	 	 	 		 	 	 		 	 	 			 	 		 	 	 		 	 	 		 	 
	SV620700A- (CS)
	 	Cooling System & Mounting Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV520900A- (CD)

	 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 
	SV620900A- (CS)
	 	Cable & Harness System Assembly	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	 
	 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 
	 
	 	System Total Price	 	 	 	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	 
	 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 
	Accessories/Options
	 	 	 	 	 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 	 		 	 
	SV520400A- (CD)
	 	Battery Pack (Depleting)	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	SV620400A- (CS)
	 	Dual Battery Pack & Junction Box (Sustaining)	 	 	1	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 
	 
	 	Split Battery Pack (CD)	 	 	 	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 	 		***	 

			
	Terms	 	Service parts pricing is similar to Production pricing, Service pricing does not include
shipping, handling or special packaging.
	 
	 	 	Pricing is based on cumulative sales to Buyer. During the duration of this agreement and any renewal thereof.
	 
	 	 	Once the pricing level has been achieved, the pricing level for that part number will not revert to a lower level (higher per
unit price).
	 
	 	 	Pricing level does not revert to a lower accumulated sales volume
pricing.
	 
	 	 	FOB Torrance California

			
	 	 	 
	
	 	Date of revision: March 27, 2008 — Confidential Document

Effective 1/24/07

 

			
	***	 	CONFIDENTIAL TREATMENT REQUESTED

38

 

Navistar, Inc

Enova Systems

Supply Agreement

APPENDIX E — AFTERMARKET SERVICE PARTS DIRECT SHIP and

PARTS DISTRIBUTION CENTER REQUIREMENTS

Critical / Emergency Orders:

Emergency
orders shipped same day based upon availability. Seller agrees there is no
additional charge for emergency orders.

Dealer Benefits: 

No core

Freight Policy:

Seller will pay freight for Aftermarket Direct Ship orders for the following International
Aftermarket
Business units:

a. United States

b. Canada

c. Mexico

d. Export (FOB to US port — For example: Miami)

			
	 	 	 
	
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Navistar, Inc

Enova Systems

Supply Agreement

APPENDIX F AFTERMARKET PRICE FILE FORMAT & COMMUNICATION

	 	1.	 	Price file shall be provided in an electronic format.
	 
	 	2.	 	Price file shall be sent to the International Aftermarket Pricing Manager
and International Aftermarket Supply Manager(s).
	 
	 	3.	 	Price file shall include the following pieces of information for each part number:

	 	a.	 	Enova’s full part number
	 
	 	b.	 	International Part Distribution Center (PDC) part number
	 
	 	c.	 	International Direct Ship (DS) part number
	 
	 	d.	 	Description
	 
	 	e.	 	Suggested Dealer Net
	 
	 	f.	 	PDC Cost
	 
	 	g.	 	DS Cost
	 
	 	h.	 	Country of Origin
	 
	 	i.	 	Lead Time
	 
	 	j.	 	Weight
	 
	 	k.	 	Mandatory Purchase Multiple
	 
	 	l.	 	Standard Unit Pack Quantity (qty per pallet or over pack box)

			
	 	 	 
	
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Navistar, Inc

Enova Systems

Supply Agreement

APPENDIX G- SURPLUS STOCK AND DIRECT SHIP RETURNS

I. Return Eligibility:

A. Annual Return

1. Seller will accept one product return per calendar year.

2. Warranty returns are not included or restricted by this Section.

3. All returns for surplus material are to be returned freight prepaid to the
Enova facility.

B. Direct Ship Return

1. Seller will accept product returns as requested; only products shipped direct
from Seller’s warehouse are applicable for return.

C. Shipped In Error Return

1. Seller will accept product returns as requested and waive restocking fees.

II. Restocking Fee:

A. Returns will be assessed a 10% re-stocking fee. Product value and re-stocking
charges will be calculated from the price at the time of purchase.

			
	 	 	 
	
	 	Date of revision: March 27, 2008 — Confidential Document

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41exv10w1

Exhibit 10.1

SUMMARY OF DIRECTOR COMPENSATION

(Effective July 1, 2008)

     Effective July 1, 2008, non-employee directors of Cardiogenesis Corporation are entitled to
receive the following compensation for their service on the Board and committees of the Board:

     1. Each non-employee director will receive an annual retainer of $12,000 (payable quarterly)
and a per meeting fee of $2,500 for each regularly scheduled quarterly meeting of the Board of
Directors attended in person by such director ($1,250 for regularly scheduled quarterly meetings
attended telephonically) as well as reimbursement for travel expenses associated with attendance at
any such meeting. The Chairman of the Board will receive an additional annual retainer of $5,000
per year, payable quarterly.

     2. In addition, the chairmen of the Company’s Audit Committee, Compensation Committee, and
Corporate Governance Committee will receive an additional annual retainer of $5,500, $5,500 and
$2,000 per year (payable quarterly). Members of the Audit Committee,
other than the chairman, will
receive an additional annual retainer of $2,500 (payable quarterly).

     3. Each member of the Company’s Audit Committee, Compensation Committee and Corporate
Governance Committee will receive a per meeting fee of $1,000 for each regularly scheduled separate
meeting of such Committee attended in person or telephonically.

     4. Pursuant to the terms of the Company’s 1996 Director Stock Option Plan, as currently in
effect, each non-employee director of the Company receives an option to purchase 22,500 shares of
Common Stock upon their election to the Board of Directors and subsequent option grants of 7,500
shares upon their re-election each year (provided that such re-election is at least six months after
the date of initial election to the Board of Directors). The exercise price is 100% of the closing
price of the Company’s common stock on the date prior to the grant date. Initial option grants vest
as to one-third of the shares on each yearly anniversary of the grant date until fully vested.
Subsequent option grants vest in full on the first anniversary of the date of grant. If the
non-employee director ceases to serve as a director for any reason, vesting shall cease as of the
date of such termination and shall be exercisable for 60 days following termination except in the
case of death or disability in which case the option shall be exercisable for a period of 12 months
following termination as a director.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}]]