Document:

<PAGE>

                                                                   Exhibit 10.18

                   Manufacturing and Distribution Agreement
                   ----------------------------------------

     This Manufacturing and Distribution Agreement ("Agreement") is entered into
as of January 2, 2001 (the "Effective Date") by and between A.S.V., Inc.,
("ASV") a Minnesota corporation with a principal place of business at 840 Lily
Lane, Grand Rapids, Minnesota 55744 and Polaris Industries Inc., ("Polaris") a
Delaware corporation with a principal place of business at 2100 Highway 55,
Medina, MN 55340, (each a "Party" and collectively, the "Parties").

     WHEREAS, ASV is the developer and manufacturer of certain light utility all
surface loaders called RC-30 All Surface Loaders, and related accessory work
tools;

     WHEREAS, Polaris desires to obtain the right to manufacture and distribute
such RC-30 All Surface Loaders and work tools, under the Polaris brand name, and
ASV desires to grant Polaris such manufacturing and distribution rights, all on
the terms and conditions set forth herein;

     NOW, THEREFORE, the Parties agree as follows:

                                   ARTICLE 1
                                  DEFINTIONS

     All capitalized terms that are not otherwise defined herein shall have the
meanings set forth below:

     1.1  "Affiliate" means any person (individual, corporation, partnership,
           ---------
limited liability company or other entity) that directly or indirectly controls,
is under common control of or is controlled by either Party to this Agreement.
"Control" means the ownership, direct or indirect, of fifty percent (50%) or
more of the voting shares or capital of such person.

     1.2  "ASV Manufacturing Technology" means those patents, copyrights, trade
           ----------------------------
secrets, designs, drawings, know-how or any other intellectual property
(excluding the ASV Trademarks) owned or licensed (with right of sublicense) by
ASV during the term of this Agreement which cover or are otherwise necessary for
the manufacture of the Vehicles.

     1.3  "ASV Trademarks" means those trademarks, trade names and logos of ASV
           --------------
listed on, and the trade dress for the ASV Vehicle described on, Exhibit A
                                                                 ---------
hereto, as such Exhibit may be amended from time to time in ASV's sole
discretion.

     1.4  "ASV Vehicle" means the version of the Vehicles branded with the ASV
           -----------
Trademarks.

     1.5  "Confidential Information" means all trade secrets, confidential
           ------------------------
knowledge, and proprietary data of any kind or nature whatsoever relating to
this Agreement, or the businesses of either Party and its Affiliates.
Confidential Information also shall include any information prepared or
developed by a Party in connection with this Agreement, which reflects,
interprets,
<PAGE>

evaluates, includes or is derived from the Confidential Information of another
Party. Confidential Information shall include, but not be limited to, technical
specifications, diagrams, discoveries, economic models, pro forma and other
financial information, designs, business opportunities, cost and pricing data,
records, customer lists, and engineering, manufacturing, and marketing know-how.
Without limiting the foregoing, Confidential Information of ASV shall be deemed
to include the ASV Manufacturing Technology. Confidential Information does not
include information which (i) was generally known or available to the public at
the time of its disclosure hereunder, or which after such disclosure became
generally known or available to the public, provided that such disclosure was
made or occurred through no fault of the Receiving Party or its Affiliates, or
its or their officers, directors, or employees; (ii) was in the possession of
the Receiving Party prior to its disclosure hereunder; (iii) was known by the
Receiving Party at the time of its disclosure hereunder or was independently
developed at any time by the Receiving Party without reference to the Disclosing
Party's Confidential Information; (iv) is required to be furnished pursuant to
law or legal process; or (v) is rightfully obtained, subsequent to its
disclosure hereunder, by the Receiving Party or its Affiliates from a third
party who is lawfully in possession of such information and who is not under an
obligation of confidentiality to the Disclosing Party.

     1.6  "Disclosing Party" means a Party that discloses Confidential
           ----------------
Information hereunder.

     1.7  "Manufacturing Costs" means, to the extent actually incurred by a
           -------------------
Party hereunder in accordance with generally acceptable accounting principles,
(i) the direct costs of materials; (ii) the direct labor costs, and (iii)  the
overhead allocated at such Party's overhead application rate and to the extent
agreed by the Parties.

     1.8  "Polaris Trademarks" means those trademarks, trade names and logos of
           ------------------
Polaris listed on, and the trade dress for the Polaris Vehicle described on,
Exhibit B, as such Exhibit may be amended from time to time in Polaris' sole
---------
discretion.

     1.9  "Polaris Vehicles" means the version of the Vehicles branded with the
           ----------------
Polaris Trademarks.

     1.10 "Products" means collectively, the Vehicles and the Work Tools.
           --------

     1.11 "Receiving Party" means a Party that receives Confidential Information
           ---------------
hereunder.

     1.12 "Vehicles" means the RC-30 All Surface Loader line of light utility
           --------
all surface loaders, more particularly described on Exhibit C.
                                                    ---------

     1.13 "Work Tools" means those interchangeable portions attached to the
           ----------
Vehicles and designed to accomplish different tasks (e.g., bucket, snow blower,
mower, post hole digger, etc.).
<PAGE>

                                   ARTICLE 2
                                   PRODUCTS

     2.1  Product Scope.
          -------------

          (a)  The Parties shall initially manufacture and market hereunder two
branded versions of the Vehicles: Polaris Vehicle and the ASV Vehicle.  The
Polaris Vehicle and the ASV Vehicle will incorporate the same functionality and
have the same specifications; however, the Polaris Vehicle will bear the Polaris
Trademarks in the manner that Polaris deems appropriate and the ASV Vehicle will
bear the ASV Trademarks in the manner that ASV deems appropriate.

          (b)  Upon mutual written consent of the Parties, versions of the
Vehicles bearing other (third party) brands may be distributed in the future.

     2.2  Product Improvements.
          --------------------

          (a)  The Parties will from time to time discuss improvements and
enhancements to the Vehicles and Work Tools, and may decide to develop such
improvements or enhancements jointly or through one of the Parties.  Such agreed
improvements and enhancements will be included in Polaris' manufacturing and
distribution rights hereunder and ASV will retain the right to use such
improvements and enhancements in its own business.  Polaris and ASV will share
equally the costs related to developing these mutually agreed product
improvements and enhancements including tooling.

          (b)  Polaris may also make improvements and enhancements at its own
expense to the Polaris Vehicle with ASV's prior consent.  Such improvements and
enhancements will be made available for both the ASV and Polaris Vehicles.

          (c)  Ownership of the intellectual property relating to such
improvements and enhancements shall determined in accordance with Article 8
below.

    2.3   New Products.  The Parties may mutually agree to add to the Products
          ------------
contemplated by this Agreement certain additional light utility all surface
loaders models (***) that may be developed by ASV or Polaris during the term of
this Agreement.

                                   ARTICLE 3
                              DISTRIBUTION RIGHTS

    3.1   Polaris Distribution Rights.  ASV hereby grants to Polaris the
          ---------------------------
worldwide exclusive right to distribute the Polaris Vehicle and Work Tools
through the Polaris domestic and international dealer and distributor network as
it exists currently or as it may evolve during the term of this Agreement.  In
addition, as between ASV and Polaris, Polaris shall have the

_____________________
*** Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>

worldwide exclusive right to distribute the Vehicles and Work Tools to national
rental centers (as defined herein); provided, however, that the Parties
acknowledge that ASV's dealers may themselves resell the Vehicles to national
rental centers and provided, further that, after the third anniversary of the
Effective Date, the Parties shall review the national rental center exclusivity
to determine if Polaris is adequately marketing to this sector. As used herein,
the term national rental centers shall mean (1) United Rental Center; (2)
Nations Rental Center; (3) Rental Service Corporation (RSC); (4) Hertz Rental
Center; (5) National Equipment Services (NES), and (6) Prime Rentals.

     3.2  ASV Distribution Rights.  ASV shall retain the worldwide exclusive
          -----------------------
right to distribute the ASV Vehicles and Work Tools (other than To Polaris'
distribution network and directly to the national rental centers as set forth in
Section 3.1).  All rights not expressly granted to Polaris hereunder are
retained by ASV.

    3.3   Other Distribution Rights.  Polaris and ASV shall each have the right
          -------------------------
to distribute their respective Vehicles and Work Tools to all other rental
centers and the commercial and military markets.  In addition, Polaris and ASV
each retain the right to distribute other utility and commercial products.

                                   ARTICLE 4
                       DISTRIBUTION OF POLARIS VEHICLES

     4.1  Distribution Obligations.  Polaris shall use its best efforts to
          ------------------------
commercialize the Polaris Vehicle on a worldwide basis and will at all times
maintain an adequate, trained sales and support staff to promote the Polaris
Vehicle and Work Tools.  At least 30 days prior to January 1 of the applicable
year, Polaris will provide ASV an annual marketing plan for the Polaris Vehicle
and Work Tools for ASV's review and comment.

     4.2  Vehicle Sales in 2003.  The parties acknowledge and agree that there
          ---------------------
may be a certain sales level at which it is not economically prudent for the
parties to continue the relationship contemplated herein. In light of the
foregoing, the parties agree that if Polaris fails to distribute *** (***)
Polaris Vehicles during 2003, ASV shall have the right to terminate this
Agreement by giving Polaris written notice thereof, which notice shall be
delivered not later than January 31, 2004 and shall be effective thirty (30)
days after delivery thereof to Polaris.

                                   ARTICLE 5
                            MANUFACTURE AND SUPPLY

     5.1  Manufacturing Rights for Vehicles.  Initially, ASV shall manufacture
          ---------------------------------
both the ASV Vehicle and the Polaris Vehicle.  Polaris shall have the right to
assume the manufacturing of the ASV Vehicle and the Polaris Vehicle; provided
that Polaris provides ASV twelve months'

_________________
*** Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>

written notice of its intention to begin manufacturing the Vehicles and subject
to a reasonable transition to be mutually agreed by the Parties. As used in this
Agreement, the term "Manufacturing Party" shall refer to whichever Party is
manufacturing Vehicles at such time, and the term "Purchasing Party" shall refer
to whichever Party is purchasing Vehicles from the Manufacturing Party at such
time.

     5.2  Purchase and Supply of Vehicles.  The Manufacturing Party shall
          -------------------------------
manufacture its own requirements of its Vehicle, and shall manufacture and
supply the Purchasing Party with such Purchasing Party's Vehicle, in quantities
the Purchasing Party may order from time to time (subject to limitations to be
negotiated by ASV and Polaris).  The Manufacturing Party shall provide
sufficient manufacturing capacity, including tooling, to manufacture the
Vehicles in accordance with the agreed specifications and in sufficient
quantities to meet the Purchasing Party's orders.  If the demand for the ASV
Vehicles and Polaris Vehicles exceeds the supply, notwithstanding the
Manufacturing Party's efforts to provide sufficient manufacturing capacity, the
Manufacturing Party shall allocate supplies of the Vehicles between itself and
the Purchasing Party on a pro rata basis based on the Parties' sales forecasts
for the applicable period.

     5.3  Forecasts.  The Purchasing Party shall submit to the Manufacturing
          ---------
Party, at least ninety (90) days in advance of the first applicable month, a
written forecast of its requirements for such Purchasing Party's Vehicles (and
Work Tools, as applicable) for the following twelve (12) month period, with the
initial forecast being attached hereto as Exhibit D.  The Purchasing Party shall
                                          ---------
update such forecasts in writing on a monthly rolling basis.  The first three
(3) months of such updated forecasts shall be binding on the Parties, and the
remaining nine (9) months shall be the Purchasing Party's non-binding best
estimate of its purchases of its Vehicles (and Work Tools, as applicable) for
such period.

     5.4  Purchase Orders.  The Purchasing Party shall submit to the
          ---------------
Manufacturing Party, at least ninety (90) days in advance of the requested ship
date, written or electronic purchase orders for purchases of the Purchasing
Party's Vehicles (and Work Tools, as applicable) in quantities consistent with
its firm forecasts; and the Manufacturing Party shall accept such purchase
orders in writing or electronically.  In addition, the Manufacturing Party shall
use commercially reasonable efforts to accept, by written or electronic notice
to the Purchasing Party, and fill any purchase orders for quantities in excess
of the firm forecasted amounts.

     5.5  Shipping and Delivery.  The Manufacturing Party shall use commercially
          ---------------------
reasonable efforts to ship the ordered Vehicles (and Work Tools, as applicable)
on or before the requested ship date and shall deliver all of the Purchasing
Party's Vehicles (and Work Tools, as applicable) F.O.B. the Manufacturing
Party's manufacturing facility.  The Vehicles (and Work Tools, as applicable)
shall be shipped to the Purchasing Party, or upon the Purchasing Party's
request, directly to the Purchasing Party's dealers or customers.  The
Purchasing Party shall be responsible for all shipping charges and the risk of
loss from the F.O.B point.

     5.6  Sale of Components.  When Polaris is the Manufacturing Party, ASV
          ------------------
shall supply to Polaris certain proprietary ASV components (e.g., tracks) for
the Vehicles at ASV's Manufacturing Cost.  In addition, when Polaris is the
Manufacturing Party, ASV shall use its
<PAGE>

best efforts to ensure an uninterrupted supply of parts and Caterpillar
components as needed in the manufacturing of the products at ASV costs.

     5.7  Sale of Parts.  ASV shall sell proprietary parts for Polaris Vehicle
          -------------
directly to Polaris *** (***). In addition, ASV shall use its best efforts to
ensure that Polaris has access to Caterpillar components and service items
(e.g., engines and controls). ASV shall guarantee delivery of said parts and
components as outlined in the ASV Parts Policy document (Exhibit E).

     5.8  Sale of Work Tools.  During the five (5) year period starting on the
          ------------------
Effective Date, ASV shall supply to Polaris, and Polaris shall purchase from
ASV, all Work Tools for the Polaris Vehicle.  Polaris shall provide forecasts
and orders for Work Tools in accordance with Sections 5.3 and 5.4 above.  After
such five-year period, Polaris shall no longer be required to buy Work Tools
from ASV and ASV shall no longer be required to supply Work Tools to Polaris.

     5.9  Manufacturing Licenses.  Effective upon Polaris exercising its rights
          ----------------------
to manufacture the Vehicles hereunder, ASV hereby grants to Polaris a non-
exclusive, worldwide license under ASV Manufacturing Technology, for the sole
purpose of manufacturing the Vehicles as provided hereunder.  Such license shall
not be transferable without the prior written consent of ASV, not to be
unreasonably withheld.  Notwithstanding anything to the contrary in this
Agreement, ASV shall retain the right to manufacture the ASV Vehicle itself.

     5.10 Subcontracting.  The Manufacturing Party shall not have the right to
          --------------
sublicense its rights to manufacture the Vehicles without the prior written
consent of the Purchasing Party.  Notwithstanding the foregoing, the Parties
acknowledge that the Manufacturing Party may have components or systems for the
Vehicles manufactured by third party manufacturers.  In no event shall any such
third party manufacture relieve the Manufacturing Party of its obligations
hereunder.

     5.11 Trademark Licenses.
          ------------------

          (a)  The Purchasing Party hereby grants to the Manufacturing Party a
non-exclusive, worldwide license to use the Purchasing Party's Trademarks for
the sole purpose of incorporating such Trademarks onto the Purchasing Party's
Vehicles (and in the case of Polaris, incorporating such Trademarks onto the
Polaris Vehicles, if Polaris so desires).

          (b)  ASV hereby grants to Polaris a non-exclusive, worldwide license
to use the ASV Trademarks for the purpose of incorporating such ASV Trademarks
onto the Polaris Vehicle and marketing such Vehicle. Polaris shall not be
obligated to so use the ASV Trademarks with respect to the Polaris Vehicle, but
if it does, such use will be in a manner reasonably acceptable to ASV and in
accordance with this Section 5.11.

__________________
*** Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>

          (c)  The licensee Party agrees that (i) the licensor Party's
Trademarks shall be used in accordance with the standards specified from time to
time by such licensor Party, (ii) the Vehicles bearing such licensor Party's
Trademarks will be of high standard and of such quality as to be adequate and
suited to the protection and enhancement of the licensor Party's Trademarks and
the goodwill pertaining thereto, and (iii) the use of the licensor Party's
Trademarks by it shall not reflect adversely upon the reputation of the licensor
Party or its Trademarks. The licensing Party shall have the right, upon request
to the licensee Party, to review and comment on the licensee Party's use of the
licensor Party's Trademarks, and such use shall be in reasonable conformance
with the foregoing requirements.

          (d)  Polaris agrees that all uses of the ASV Trademarks by Polaris and
the goodwill associated with such uses shall inure solely to the benefit of ASV,
and upon any termination of this Agreement, all right and interest of Polaris in
and to the ASV Trademarks shall revert to ASV.  ASV agrees that all uses of the
Polaris Trademarks by ASV and the goodwill associated with such uses shall inure
solely to the benefit of Polaris, and upon any termination of this Agreement,
all right and interest of ASV in and to the Polaris Trademarks shall revert to
Polaris.

                                   ARTICLE 6
                              PRICING AND PAYMENT

     6.1  Price and Determination of Manufacturing Costs. The Manufacturing
          ----------------------------------------------
Party will sell to the Purchasing Party such Purchasing Party's Vehicles at an
initial price equal to *** (***). Such Manufacturing Cost will be mutually
agreed by the Parties at an annual meeting to be held not later than November
15, prior to the applicable year (or not later than January 2, 2001 for the year
2001). Manufacturing Cost for 2001 will be reevaluated not later than May 15,
2001. The Manufacturing Party shall bear or benefit from any increases or
decreases in the cost to manufacture incurred during such year, and thereafter
such increases or decreases shall be included, to the extent provided below, as
the starting point for the Manufacturing Costs for the next twelve months. All
manufacturing and purchasing cost savings or increases will be included in
Manufacturing Cost and, therefore passed on to ASV or Polaris under this
methodology. Increases in the labor rate and overhead rate will be limited to
increases in the Producer Price Index for the relevant period.

     6.2  Royalty on Polaris Vehicles.  When Polaris is the Manufacturing Party,
          ---------------------------
it shall pay to ASV a royalty for all Polaris Vehicles sold by Polaris, as
follows, based on the date of this agreement:

          Years 1-5  ***

          Years 6-10 ***

______________
*** Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>

          Years 10+ ***

Such royalties shall be payable on a quarterly basis within thirty (30) days of
the end of the applicable quarter.  In addition, Polaris shall provide ASV,
within fifteen (15) days for the end of each month, a written report detailing
the number of Polaris Vehicles sold during such month.

     6.3  Pricing of Work Tools.  ASV shall sell the Work Tools to Polaris
          ---------------------
*** (***).

     6.4  Pricing of Products to Dealers.  Each Party shall determine in its
          ------------------------------
sole discretion the price of its Vehicles and Work Tools to be paid by its
dealers or customers.

     6.5  Invoicing and Payment.  The Manufacturing Party shall invoice the
          ---------------------
Purchasing Party for Vehicles, and ASV shall invoice Polaris for Work Tools,
upon delivery to the carrier at the F.O.B. point, and the Purchasing Party shall
pay such invoices within ten (10) days of the invoice date.

     6.6  Audit Rights.  Each Party (the "Audited Party") shall keep true and
          ------------
accurate records of their respective Manufacturing Costs and in the case of
Polaris, the number of Polaris Vehicles sold.  The other Party (the "Auditing
Party") shall have the right to review and audit such books and records, using
internal personnel or independent certified public accountants reasonably
acceptable to the Audited Party, upon reasonable written notice to the Audited
Party and during normal business hours.  The Auditing Party shall bear the costs
of such audit, unless such audit reveals that the Audited Party underpaid or
overcharged by more than ten percent (10%) of the amount claimed by the Audited
Party.  In such case, the Audited Party shall bear the Auditing Party's out-of-
pocket costs for such audit.

                                   ARTICLE 7
                               PRODUCT WARRANTY

     7.1  Warranty to Dealers and Customers.  Each Party shall be responsible
          ---------------------------------
for warranting its respective Vehicles to its own dealers and customers for a
period of one (1) year from the date of delivery to the first customer.

     7.2  Warranty Service and Payment.  Warranty costs related to failures of
          ----------------------------
components purchased from third parties will be passed through to that party.
Warranty costs will not be included in the Manufacturing Cost.  Each company
will bear the administrative cost of its customer warranty program and will have
a distribution network in place to perform all necessary warranty repairs for
its respective Vehicle.

     7.3  WARRANTY DISCLAIMER.  NEITHER PARTY MAKES ANY WARRANTIES WITH RESPECT
          -------------------
TO THE VEHICLES OTHER THAN THOSE EXPRESSLY

______________
*** Denotes confidential information that has been omitted from the exhibit
and filed separately, accompanied by a confidential treatment request, with the
Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities
Exchange Act of 1934.
<PAGE>

SET FORTH IN SECTIONS 7.1 and 7.2, AND HEREBY DISCLAIMS ALL OTHER WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

     7.4  WAIVER. EXCEPT WITH RESPECT TO ANY BREACH OF ARTICLE 10
          ------
(CONFIDENTIALITY), IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR
RELIANCE DAMAGES ARISING OUT OF THIS AGREEMENT ON ANY THEORY OF LIABILITY EVEN
IF SUCH PARTY IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

                                   ARTICLE 8
                         INTELLECTUAL PROPERTY RIGHTS

     8.1  Intellectual Property Relating to Vehicles.  Any patents, copyrights,
          ------------------------------------------
trade secrets, designs, drawings, know-how or any other intellectual property
developed by ASV shall belong to ASV.  Any patents, copyrights, trade secrets,
designs, drawings, know-how or any other intellectual property jointly developed
by the Parties specifically for the Vehicles and Work Tools (but excluding
manufacturing processes therefor) shall belong to jointly to both Parties. Each
Party agrees to acknowledge and deliver promptly to the other Party without
charge such written instruments as may be necessary to vest an undivided, one
half interest in the same in such other Party.

     8.2  Intellectual Property Relating to Manufacturing Processes for the
          -----------------------------------------------------------------
Vehicles.  Any patents, copyrights, trade secrets, designs, drawings, know-how
--------
or any other intellectual property developed by either Party or jointly
developed by the Parties specifically for manufacture of the Vehicles shall be
jointly owned by the parties, without accounting.  Each Party agrees to
acknowledge and deliver promptly to the other Party without charge such written
instruments as may be necessary to vest an undivided, one half interest in the
same in such other Party.  Notwithstanding the foregoing, each Party shall own
any patents, copyrights, trade secrets, designs, drawings, know-how or any other
intellectual property developed by such party during the term of this Agreement
and relating to general manufacturing techniques.

                                   ARTICLE 9
                             TERM AND TERMINATION

     9.1  Term.  This Agreement shall have an initial term of five (5) years,
          ----
unless earlier terminated pursuant to this Article 9.  Thereafter, this
Agreement shall automatically be renewed for additional terms of one (1) year
each unless either Party gives written notice to terminate at least three (3)
months prior to the end of the initial term or any additional term.

     9.2  Termination for Default.  If either Party fails to perform this
          -----------------------
Agreement in any material respect (and does not remedy such failure to the
reasonable satisfaction of the non-defaulting Party within sixty (60) days after
written notice thereof has been sent to the other Party), then the non-
defaulting Party may terminate this Agreement.  Material breach shall
<PAGE>

include, but not be limited to, Polaris' or ASV's failure to manufacture and
supply the Vehicles, for Polaris to use its best efforts to commercialize the
Polaris Vehicle or for ASV to supply component parts in accordance with Section
5.7. ASV shall also have the right to terminate this Agreement as set forth in
Section 4.2.

     9.3  Termination for Bankruptcy.  Either Party may terminate this Agreement
          --------------------------
upon written notice to the other Party if any of the following occurs: (a)
appointment of a trustee or receiver for all or any part of the assets or
property of the other Party; (b) insolvency or bankruptcy of the other Party;
(c) the other Party makes a general assignment for the benefit of creditors; or
(d) dissolution or liquidation of the other Party.

     9.4  Effect of Termination or Expiration.
          -----------------------------------

          (a)  Except for termination by the Purchasing Party in the event of
the Manufacturing Party's breach of this Agreement, termination of this
Agreement shall not relieve the Purchasing Party of its obligations with respect
to any firm forecasts and accepted purchase orders in effect as of such
termination. In addition, notwithstanding any termination of this Agreement,
Polaris shall continue to have the right to sell any vehicles in inventory as
well as manufacture and distribute spare parts and otherwise support Vehicles
manufactured prior to the effectiveness of such termination, unless ASV is
manufacturing such proprietary components, in which case Polaris will source
such proprietary components from ASV.

          (b)  ASV's termination or the expiration of this Agreement shall not
preclude Polaris from using available technology to develop or manufacture
similar vehicles under Polaris trademarks.

          (c)  Termination or expiration of this Agreement shall not affect any
rights or obligations accrued prior to the date of such termination or
expiration.  Upon termination or expiration of this Agreement, the Parties shall
promptly return to each other such other Party's Confidential Information.

          (d)  Articles 7 (Product Warranty), 8 (Intellectual Property Rights),
10 (Confidentiality), 11 (Indemnification) and 12 (Miscellaneous) shall survive
termination of this Agreement.

                                  ARTICLE 10
                                CONFIDENTIALITY

     The Parties shall maintain the secrecy of Confidential Information as
follows:

     10.1 Disclosure of Information.  In connection with performance of this
          -------------------------
Agreement, the Parties may disclose to one another certain Confidential
Information.

     10.2 Restrictions on Disclosure and Use.  The Receiving Party shall hold
          ----------------------------------
the Disclosing Party's Confidential Information in strictest confidence and
trust and shall use the Confidential Information only in connection with the
purposes of this Agreement.  The
<PAGE>

Receiving Party shall not disclose Confidential Information provided by the
Disclosing Party and/or its Affiliates, or the fact that it has been made
available to the Receiving Party, except that the Receiving Party may disclose
Confidential Information and the fact that it has been provided to those
employees, officers, directors, agents, consultants and representatives of the
Receiving Party and its Affiliates who have a reasonable need to know such
information in connection with the purposes of this Agreement. The Receiving
Party shall be liable for any breach of the confidentiality obligation hereunder
by any of its Affiliates, or by any of the respective employees, officers,
directors, agents, consultants and representatives of the Receiving Party and/or
its Affiliates.

     10.3 Disclosure by Law or Regulation.  If the Receiving Party is required
          -------------------------------
by law or legal process to disclose any of the Confidential Information of the
Disclosing Party, the Receiving Party shall promptly notify the Disclosing Party
in writing so that the Disclosing Party may seek an appropriate protective order
or other remedy at the sole cost of the Disclosing Party.  If no such protective
order or other remedy is obtained, the Receiving Party shall furnish only that
portion of such Confidential Information that is legally required and shall
exercise its reasonable efforts to obtain reliable assurances from all Parties
receiving the designated portions of such Confidential Information that
confidential treatment shall be accorded to such Confidential Information.
Notwithstanding any such disclosure, any such Confidential Information so
disclosed shall, for all other purposes, continue to be treated as Confidential
Information under this Agreement.

     10.4 No Implied Licenses.  The disclosure of Confidential Information
          -------------------
pursuant to this Agreement, and any prior or future discussions, evaluations or
other communications between the Parties, shall not confer any right nor impose
or create any obligation on the Parties other than those expressly agreed to in
this Agreement.

     10.5 Return of Confidential Information.  All reports, notes, data,
          ----------------------------------
memoranda, records, or other tangible expressions of Confidential Information of
the other Party, including any electronically stored data, shall be returned to
the Disclosing Party by the Receiving Party promptly upon request of such
Disclosing Party.

     10.6 Survival.  The confidentiality obligation shall survive expiration or
          --------
termination of this Agreement for any reason.

                                  ARTICLE 11
                                INDEMNIFICATION

     11.1 Personal Injury and Property Indemnification by ASV.  Except to the
          ---------------------------------------------------
extent provided in Section 11.3, ASV agrees to indemnify, defend and hold
Polaris, its subsidiaries, Affiliates, directors, officers, employees and agents
harmless from and against all third party claims, demands, liabilities, losses,
damages, costs, and expenses, of whatsoever nature, including attorneys' fees,
arising from or in any way connected with the injury or death of any person or
loss or damage to property as a consequence of, or attributable to, any defect
of design, material, or workmanship of ASV Vehicles or Work Tools or failure of
ASV Vehicles or Work Tools to conform with the Parties' agreed written
specifications, drawings and data therefor.
<PAGE>

     11.2 Personal Injury and Property Indemnification by Polaris.  Except to
          -------------------------------------------------------
the extent provided in Section 11.3, Polaris agrees to indemnify, defend and
hold ASV, its subsidiaries, Affiliates, directors, officers, employees and
agents harmless from and against all third party claims, demands, liabilities,
losses, damages, costs, and expenses, of whatsoever nature, including attorneys'
fees, arising from or in any way connected with the injury or death of any
person or loss or damage to property as a consequence of, or attributable to,
any defect of design, material, or workmanship of Polaris Vehicles or failure of
Polaris Machines to conform with the Parties' agreed written specifications,
drawings and data therefor.

     11.3 Personal Injury and Property Indemnification by Manufacturing Party.
          -------------------------------------------------------------------
The Manufacturing Party agrees to indemnify, defend and hold the Purchasing
Party, its subsidiaries, Affiliates, directors, officers, employees and agents
harmless from and against all third party claims, demands, liabilities, losses,
damages, costs, and expenses, of whatsoever nature, including attorneys' fees,
arising from or in any way connected with the injury or death of any person or
loss or damage to property as a consequence of, or attributable to, any defect
of material, or workmanship of the Purchasing Party's Vehicles or failure of
Purchasing Party's Machines to conform with the Parties' agreed written
specifications, drawings and data therefor.

     11.4 Indemnification Procedure.  Any Party seeking indemnification
          -------------------------
hereunder shall promptly notify the indemnifying Party of the nature of the
claim for which the indemnified Party seeks indemnification.  The indemnified
Party shall give complete control of, and cooperate with, the defense of such
claim to the indemnifying Party and the indemnified Party shall not settle any
claim without the prior written approval of the indemnifying Party, such
approval not to be unreasonably withheld.

                                  ARTICLE 12
                                 MISCELLANEOUS

     12.1 Injunctive Relief.  It is understood and agreed by the Parties that
          -----------------
each may be irreparably injured by a breach of Article 10 (Confidentiality) and
that monetary damages may not be a sufficient remedy for any actual or
threatened breach thereof.  In addition to any remedies available at law, the
non-breaching Party may also be entitled to equitable relief, including
injunction and specific performance.

     12.2 Force Majeure.  No failure or omission by either Party in the
          -------------
performance of any of its obligations under this Agreement shall be deemed a
breach of this Agreement, nor create any liability or give rise to any right to
terminate this Agreement, if the same shall arise from or as a consequence of a
fire, flood, drought, hurricane, severe weather or other act of God, war,
insurrection, civil disturbance, labor dispute or any other cause beyond the
reasonable control of such Party, whether similar to or different from the
causes above enumerated, and any such cause shall absolve the affected Party
from responsibility for such failure to perform said obligation.

     12.3 Announcement.  Neither Party shall make any announcement concerning
          ------------
the nature and details of this Agreement without the express written consent of
the other Party, such consent not to be unreasonably withheld.
<PAGE>

     12.4 Assignment.  This Agreement may not be assigned by either Party
          ----------
without the prior written consent of the other Party, which consent shall not be
unreasonably withheld.

     12.5 Applicable Law, Jurisdiction and Venue.  The Parties agree that this
          --------------------------------------
Agreement shall be construed, interpreted, and applied in accordance with the
laws of the State of Minnesota, without reference to its conflict of laws
provisions.  The Parties hereby consent to personal jurisdiction and venue in
the state and federal courts located in Minnesota, and the parties agree such a
forum is mutually convenient and reasonable.

     12.6 Entire Agreement, Amendment.  This Agreement, including any Exhibits
          ---------------------------
attached hereto, constitutes the entire agreement between the Parties and there
are no prior understandings, agreements, representations or warranties between
the Parties relating hereto.  No modification or amendment to this Agreement or
any of its provisions shall be binding unless contained in a writing signed by
both Parties (except for modifications or amendments to Exhibits A and B).

     12.7 Notices.  When written notice is required by this Agreement, it shall
          -------
be sent by registered mail, by courier or by such other method as shall permit
the sender to verify delivery, to the addresses set forth below:

For ASV:        A.S.V., Inc.
                Attn: Mr. Gary D. Lemke
                840 Lily Lane
                Grand Rapids, Minnesota 55744
                Telephone: (218) 327-3434
                Facsimile: (218) 326-5579

                Copy To:
                Amy E. Ayotte
                Dorsey & Whitney
                Pillsbury Center South
                220 South Sixth Street
                Minneapolis, Minnesota 55402
                Telephone: (612) 340-2600
                Fax: (612) 340-8738

For Polaris:    Polaris Industries Inc.
                Attn: Mike Malone
                2100 Highway 55
                Medina, MN 55340
                Telephone: (763) 542-0542
                Fax: (763) 542-0595

                Copy To:
                Kaplan Strangis & Kaplan
<PAGE>

                Attn: James C. Melville
                5500 Norwest Center
                90 South Seventh Street
                Minneapolis, MN 55402
                Telephone: (612) 904-5613
                Fax: (612) 375-1143

Written notice may also be sent by facsimile to the numbers listed above, but
such notice shall not be effective unless the sender receives a return facsimile
acknowledging receipt of the notice.  Notice shall be deemed received when
actually delivered to the recipient as demonstrated by postal records.
Facsimile notice shall be deemed received upon receipt by the sender of an
acknowledgement as described above. The addresses and transmittal numbers set
forth above can be changed only by written notice, which complies with the
requirements of this Article 12.

     12.8   Independent Contractor. The relationship between the Parties shall
            ----------------------
be that of independent contractors, and nothing in this Agreement shall be
construed to establish a fiduciary, partnership, agency, or joint venture
relationship between the Parties, or constitute either Party, its agents and
employees as the agents or employees of the other Party or to grant them any
power or authority to act for, bind or otherwise create or assume any obligation
on behalf of the first Party for any purpose whatsoever.

     12.9   Severability. The invalidity or unenforceability of any provision of
            ------------
this Agreement shall not affect the validity or enforceability of the remainder
hereof.

     12.10  Counterparts.  This Agreement may be executed in any number of
            ------------
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.

     12.11  Headings.  The headings to the sections of this Agreement are solely
            --------
for convenience of reference, and they shall not govern, limit or aid in the
interpretation of any terms or provisions of this Agreement.

     12.12  No Waiver.  The provisions of this Agreement may be waived, altered,
            ---------
amended, or repealed in whole or in part only upon the written consent of the
Parties.  The waiver by either Party of any breach of this Agreement shall not
be deemed or construed as a waiver of any other breach, whether prior,
subsequent or contemporaneous, of this Agreement.

     IN WITNESS WHEREOF, the authorized representative of each Party have duly
executed this Agreement as of the Effective Date.

                    ASV, INC.

                    /s/ Gary D. Lemke
                    -----------------------------
                    Gary D. Lemke
                    President
<PAGE>

                         POLARIS INDUSTRIES INC.

                         /s/ Thomas C. Tiller
                         ---------------------
                         Thomas C. Tiller
                         President & CEO

List of Exhibits
----------------
Exhibit A:     ASV Trademarks
Exhibit B:     Polaris Trademarks
Exhibit C:     Vehicles
Exhibit D:     Initial Forecast
Exhibit E:     ASV Parts Policy<PAGE>

                                                                   EXHIBIT 10.38

                               SUBLEASE AGREEMENT
                               ------------------

THIS AGREEMENT is made as of this 11th day of December, 2000, between
Fieldworks, Inc., hereinafter referred to as "Sublessor", and Alternative
Business Furniture, Inc., hereinafter referred to as "Sublessee".

                              WITNESSETH, WHEREAS:

         Sublessor, as Tenant, entered into a lease with CSM Properties, Inc.,
as Landlord, dated May 16, 1997, as well as an addendum to lease dated December
30, 1997, leasing certain space containing approximately 52,769 square feet of
space in the building known as Edenvale Crossing Business Center, located at
7623-7631 Anagram Drive, Eden Prairie, Minnesota (the "Building"), to which
lease (hereinafter, the "Prime Lease") reference is hereby made, and which is
incorporated into this Agreement as Exhibit "B"; and

         The parties hereto have agreed that Sublessor shall sublet
approximately 4,728 square feet of such space to Sublessee (of which
approximately 4,728 square feet is warehouse space);

         NOW THEREFORE, the parties hereto hereby covenant and agree as follows:

         1.       Sublessor hereby subleases to Sublessee said 4,728 square
                  feet, more or less, of the space in said Building, as depicted
                  on Exhibit "A" attached hereto and made a part hereof, (the
                  "Subleased Premises"), for a term beginning January 1, 2001
                  and ending June 30, 2001, unless sooner terminated in
                  accordance herewith. After June 30, 2001, the term will become
                  Month-to-Month cancellable by either party with sixty (60)
                  days prior written notice. Commencing on January 1, 2001,
                  Sublessee to pay to Sublessor a monthly Gross Rent of Two
                  Thousand Nine Hundred Fifty Five dollars ($2,955.00) on the
                  first day of each and every month during the term hereof. This
                  Gross Rent figure includes all Base Rent and Additional Rent
                  as well as all utility charges to the Subleased Premises.

         2.       The Subleased Premises shall be used for the purpose of
                  general warehouse pursuant to the terms and conditions
                  described in the Prime Lease.

         3.       Sublessee may not assign its interest in this Sublease or
                  further sublet the Subleased Premises in whole or in part
                  without first obtaining the consent of Sublessor and Landlord
                  as outlined Article 9 of the Prime Lease.

         4.       This Sublease is subject and subordinate to the Prime Lease.
                  Except as may be inconsistent with the terms hereof, all the
                  terms, covenants and conditions contained in the Prime Lease
                  shall be applicable to this Sublease with the same force and
                  effect as if Sublessor were the lessor under the Prime Lease
                  and Sublessee were the lessee thereunder, and in
<PAGE>

                  the case of any breach hereof by Sublessee, Sublessor shall
                  have all the rights against Sublessee as would be available to
                  the Lessor against the Lessee under the Prime Lease if such
                  breach were by the Lessee thereunder.

         5.       Notwithstanding anything to the contrary herein set forth, the
                  only services or rights to which Sublessee may be entitled
                  hereunder are those to which Sublessor may be entitled under
                  the Prime Lease.

         6.       Sublessee shall neither do nor permit anything to be done
                  which would cause the Prime Lease to be terminated or
                  forfeited by reason of any right of termination or forfeiture
                  reserved or vested in the lessor under the Prime Lease, and
                  Sublessee shall indemnify and hold Sublessor harmless from and
                  against all claims of any kind whatsoever by reason of which
                  the Prime Lease may be terminated or forfeited.

         7.       Sublessee agrees to provide Sublessor unrestricted access to
                  the 686 square foot mechanical lab during normal business
                  hours (Monday thru Friday between the hours of 9:00 am thru
                  4:00 pm).

         8.       Sublessor agrees to pay a brokerage fee equal to the amount of
                  one (1) months gross rent, Two Thousand Nine Hundred Fifty
                  Five dollars ($2,955.00), to be divided equally between Welsh
                  Companies, LLC and Cushman & Wakefield. Such Brokerage fee
                  will be due and payable upon full execution of the Sublease.

         9.       Sublessee has paid Sublessor on the execution and delivery of
                  this Sublease the sum of Two Thousand Nine Hundred Fifty Five
                  dollars ($2,955.00) to be held as a security and damage
                  deposit for the full and faithful performance of the terms,
                  covenants and conditions of this sublease on Sublessee's part
                  to be performed or observed, including but not limited to
                  payment of Base Rent and Additional Rent in default or for any
                  other sum which Sublessor may expend or be required to expend
                  by reason of Sublessee's default, including any damages or
                  deficiency in reletting the Subleased Premises, in whole or in
                  part, whether such damages shall accrue before or after
                  summary proceedings or other re-entry by Sublessor or the
                  Prime Landlord. If Sublessee shall fully and faithfully comply
                  with all the terms, covenants and conditions of this Sublease
                  on Sublessee's part to be performed or observed, the security,
                  or any unapplied balance thereof, shall be returned to
                  Sublessee within ten (10) days after the time fixed as the
                  expiration of the demised term and after the removal of
                  Sublessee's property and surrender of possession of the
                  Subleased Premises to Sublessor.

         10.      Sublessor agrees to demise and re-key the Subleased Premises.
                  Sublessee will permit Sublessor to retain a copy of the key.
                  With the exception of the Sublessor demising and re-keying the
                  Subleased Premises, the Sublessee agrees to take the space in
                  its "As-Is" condition. Any other improvements must receive
                  prior approval of the Sublessor and Lessor and will be
                  completed at the Sublessee's expense.

         11.      Sublessee acknowledges the main electrical panel and the air
                  compressor for the Sublessor is located in the Subleased
                  Premises. Sublessee agrees
<PAGE>

                  not to disrupt such panel or compressor and further agrees to
                  provide Sublessor access to such panel and compressor when
                  necessary.

         12.      Sublessee represents that it has read and is familiar with the
                  terms of the Prime Lease.

         13.      All prior understandings and agreements between the parties
                  are merged within this Agreement, which alone fully and
                  completely sets forth the understanding of the parties; and
                  this Sublease may not be changed or terminated orally or in
                  any manner other than by an agreement in writing to which the
                  written consent of the lessor under the Prime Lease shall have
                  been obtained.

         14.      Any notice or demand which either party may or must give to
                  the other hereunder shall be in writing and delivered
                  personally or sent by certified mail, return receipt
                  requested, addressed to Sublessor as follows:

                          Fieldworks, Inc.
                          7631 Anagram Drive
                          Eden Prairie, Minnesota 55344

                  with a copy thereof to the Landlord under the Prime Lease in
                  the manner and at the place designated in the Prime Lease, and
                  if to Sublessee, as follows:

                          Alternative Business Furniture, Inc.
                          7605 Corporate Way
                          Eden Prairie, Minnesota 55344

                  with a copy thereof to the Landlord under the Prime Lease in
                  the manner and at the place designated in the Prime Lease.
                  Either party may, by notice in writing, direct that future
                  notices or demands be sent to a different address.

         15.      The covenants and agreements herein contained shall bind and
                  inure to the benefit of Sublessor, Sublessee, and their
                  respective heirs, executors, administrators, successors and
                  assigns.
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused these presents to be
executed the date and year first above written.

SUBLESSEE:                                  SUBLESSOR:
Alternative Business Furniture, Inc.        FIELDWORKS, INC.

By:      /s/ Mark Frommelt                  By:      /s/ Thomas Sparrvik
    -------------------------------             --------------------------------

Its:     Co-Owner                           Its:     President/CEO
     ------------------------------              -------------------------------

Date:    December 14, 2000                  Date:    December 18, 2000
      -----------------------------               ------------------------------

                            CONSENT OF PRIME LANDLORD

         The undersigned, as Prime Landlord under the Prime Lease, hereby
consents to the foregoing Sublease, provided that Fieldworks, Inc., its
successors or assigns, shall not on account of this consent be relieved or
released from any of its obligations under the Prime Lease.

                                            CSM Properties, Inc.

                                            By:      /s/ Dave Carland
                                                --------------------------------

                                            Its:     Vice President
                                                 -------------------------------

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}]]