Document:

exv10w49

 

Exhibit 10.49

EQUIPMENT LEASE AGREEMENT

     THIS EQUIPMENT LEASE AGREEMENT (“Agreement”) is made and entered into on May 28, 2004, by and
between GK FINANCING, LLC, a California limited liability company (“GKF”), and Mercy Health Center,
an Oklahoma not for profit corporation (“Hospital”), with reference to the following facts:

R E C I T A L S

     WHEREAS, Hospital wants to lease a Leksell Stereotactic Gamma Unit, model C with Automatic
Positioning System, manufactured by Elekta Instruments, Inc., as specified in Exhibit A of the LGK
Agreement (hereinafter referred to as the “Equipment”); and

     WHEREAS, GKF is willing to lease the Equipment which GKF has acquired from Elekta Instruments,
Inc., a Georgia corporation (hereinafter referred to as “Elekta”), to Hospital, pursuant to the
terms and conditions of this Agreement.

A G R E E M E N T

     NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements set forth
herein, and for such other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

     1. Lease. Subject to and in accordance with the covenants and conditions set forth in
this Agreement, GKF hereby leases to Hospital, and Hospital hereby leases from GKF, the Equipment.
The Equipment to be leased to Hospital pursuant to this Agreement shall include the latest approved
Gamma Knife technology available as of the date of this Agreement (i.e., model C with Automatic
Positioning System), including all standard hardware and software related thereto.

     2. LGK Agreement. Simultaneously with the execution of this Agreement, Hospital and
Elekta shall enter into that certain LGK Agreement (the “LGK Agreement”), a copy of which is
attached hereto as Exhibit A. Hospital shall perform, satisfy and fulfill all of its obligations
arising under the LGK Agreement when and as required thereunder. Hospital acknowledges that GKF is
a third party beneficiary of the LGK Agreement and, in that capacity, GKF shall be entitled to
enforce Hospital’s performance, satisfaction and fulfillment of its obligations thereunder.

     3. Term of the Agreement. The initial term of this Agreement (the “Term”) shall
commence as of the date hereof and, unless earlier terminated or extended in accordance with the
provisions of this Agreement, shall continue for a period of ten (10) years following the date of
the performance of the first clinical Gamma Knife procedure (the “First Procedure Date”) at the

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Site. Hospital’s obligation to make the payments to GKF for the Equipment described in
Section 8 below shall commence as of the First Procedure Date.

     4. User License.

          4.1 Hospital shall apply for and obtain in a timely manner a User License from the Nuclear
Regulatory Commission and, if necessary, from the applicable state agency authorizing it to take
possession of and maintain the Cobalt supply required in connection with the use of the Equipment
during the term of this Agreement. Hospital also shall apply for and obtain in a timely manner all
other licenses, permits, approvals, consents and authorizations which may be required by state or
local governmental or other regulatory agencies for the development, construction and preparation
of the Site, the charging of the Equipment with its Cobalt supply, the conduct of acceptance tests
with respect to the Equipment, and the use of the Equipment during the Term, as more fully set
forth in Article 2.1 of the LGK Agreement. GKF shall reimburse Hospital for its direct costs to
obtain a User License and any other licenses, permits, approvals, consents and authorizations
required by this Section 4 upon presentation of invoices. In the event Hospital’s application to
obtain a User License and any other licenses, permits, approvals, consents and authorizations
required to operate the Equipment is denied after Hospital has used its best efforts, this
Agreement shall automatically terminate and all parties shall be released from the further
performance of any obligations or duties arising under this Agreement. Costs under this Section 4
shall be defined as “Startup Costs”.

     5. Delivery of Equipment; Site.

          5.1 GKF shall coordinate with Elekta and Hospital to have the Equipment delivered to Hospital
at (the “Site”) on or prior to the delivery date agreed upon by Hospital and Elekta in the LGK
Agreement. GKF makes no representations or warranties concerning delivery of the Equipment to the
Site or the actual date thereof.

          5.2 Subject to Section 6 below, Hospital at its cost and expense, shall provide a safe,
convenient Site for the Equipment. The location of the Site shall be subject to the prior approval
of GKF.

     6. Site Preparation and Installation of Equipment.

          6.1 GKF, at its cost and expense, shall prepare all plans and specifications required to
prepare, construct and improve the Site for the installation, use and operation of the Equipment
during the Term. The plans and specifications (i) shall be approved by Hospital, which approval
shall not be unreasonably withheld or delayed; (ii) shall comply in all respects with the Site
Planning Criteria attached as Exhibit E to the LGK Agreement (collectively the “Site Planning
Criteria”); and (iii) to the extent required by applicable law, shall be submitted to all state and
federal agencies for their review and approval. GKF, at its cost and expense, shall obtain all
permits, certifications, approvals or authorizations required by applicable federal, state

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or local laws, rules or regulations necessary to prepare, construct and improve the Site as
provided above.

          6.2 GKF, at its cost and expense, shall prepare, construct and improve the Site as necessary
for the installation, use and operation of the Equipment during the Term, including, without
limitation, providing all temporary or permanent shielding required for the charging of the
Equipment with the Cobalt supply and for its subsequent use, selecting and constructing a proper
foundation for the Equipment and the temporary or permanent shielding, aligning the Site for the
Equipment, and installing all electrical systems and other wiring required for the Equipment. In
connection with the construction of the Site, GKF, at its cost and expense, shall select, purchase
and install all radiation monitoring equipment, devices, safety circuits and radiation warning
signs required at the Site in connection with the use and operation of the Equipment. GKF shall be
responsible for the shipment, storage, placement and removal of all Cobalt and depleted Cobalt in
accordance with all State and Federal regulations. Any depleted Cobalt supply shall be properly
disposed of by GKF at such time as GKF shall deem necessary, in GKF’s sole and absolute judgment.

          6.3 In addition to construction and improvement of the Site, GKF, at its cost and expense,
shall be responsible for the installation of the Equipment at the Site, including the positioning
of the Equipment on its foundation at the Site in compliance with the Site Planning Criteria.

          6.4 During the Term, GKF, at its cost and expense, shall maintain the Site in a good working
order, condition and repair, reasonable wear and tear excepted.

     7. Marketing Support. Not less than ninety (90) days prior to the First Procedure
Date and the commencement of each succeeding twelve (12) month period during the Term, GKF and
Hospital shall jointly develop an annual marketing plan, budget and timeline, which shall be
implemented by Hospital with the support of GKF, based on the approved budget and timeline.
Hospital’s approval of such plan, budget and timeline shall not be unreasonably withheld or
delayed. If Hospital has not approved or disapproved the same within thirty (30) days following
its receipt, Hospital shall be deemed to have approved the same. GKF shall be * responsible for
any out-of-pocket marketing expenses paid to unrelated third parties that are included in the
marketing plan budget. Any marketing efforts conducted independently by Hospital shall be at
Hospital’s expense, and subject to coordination with GKF. Hospital’s approval of such plan, budget
and timeline shall not unreasonably withheld or delayed.

     8. Lease Payments.

          8.1 In consideration for and as compensation to GKF for (i) the lease of the Equipment by GKF
to Hospital pursuant to this Agreement; (ii) payment of Startup Costs; (iii) the preparation by GKF
of all plans and specifications required to prepare, construct and improve the Site for the
installation, use and operation of the Equipment; (iv) the preparation, construction and
improvement of the Site as necessary for the installation, use and operation of

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the Equipment; (v) the installation by GKF of the Equipment at the Site; (vi) the marketing of
the services to be provided using the Equipment; (vii) the cost of the individual referenced in
Section 11.3 below; and (viii) the maintenance by GKF of the Site in a good working order,
condition and repair, on a monthly basis, Hospital shall pay the “Lease Payment” to GKF for each
“Procedure” that is performed on any and all patients admitted to Hospital, on an inpatient or
outpatient basis, irrespective of whether (a) the Procedure is performed on the Equipment or using
any other equipment or devices; or (b) the Procedure is performed by Hospital, its representatives
or affiliates or by any other person or entity.

          (1) The “Lease Payment” shall be equal to (a) * of the “Technical Component
Collections” relating to each Procedure, less (b) Hospital’s aggregate “Additional Cost
Component,” if any, relating to those Procedures performed using the Equipment during the
corresponding month.

          (2) “Technical Component Collections” means (a) the total amount actually collected by
Hospital or its representatives or affiliates during each month from any and all payor
sources, including, without limitation, patients, insurance companies, state or federal
government programs or any other third party payors, as reimbursement for the technical
component of each Procedure performed on the Equipment or using any other equipment or
devices, plus (b) any and all other amounts actually collected by Hospital or its
representatives or affiliates during such month from any and all payor sources, including,
without limitation, patients, insurance companies, state or federal government programs or
any other third party payors, which amounts are related to “Extended Inpatient Days” (as
defined below) following a Procedure that is performed using the Equipment or using any
other equipment or devices, including, without limitation, any outlier payments. The
technical fees to be billed for Procedures performed utilizing the Equipment during the Term
of this Agreement shall be an amount which is economically justifiable based upon GKF’s
direct operating expenses and its total project costs, together with a return thereon.
Hospital shall consult and mutually agree with GKF from time to time regarding the amount of
the technical fees to be billed by Hospital for Procedures that are performed utilizing the
Equipment and any revisions thereto. Subject to compliance with the standard described in
the preceding sentence, Hospital and GKF shall mutually agree on the setting or revision of
the amount of the technical fees on no less than an annual basis, and the acceptance of the
technical fee component amounts with third party payors prior to their implementation.

          (3) An Additional Cost Component shall apply and be calculated if (a) unexpected
complications arise (e.g., stroke, heart attack) during the performance of a
Procedure using the Equipment such that the patient remains hospitalized for Extended
Inpatient Days; and (b) the Extended Inpatient Days and the Procedure are included as part
of the same reimbursement claim. Where applicable, the “Additional Cost Component” relating
to a Procedure utilizing the Equipment shall be equal to (i) the number of covered (by third
party payor) Extended Inpatient Days for that Procedure, multiplied by (ii) the
“Additional Cost Per Diem.” Notwithstanding anything to the contrary contained herein,
there shall be no deduction from the Lease Payment for any

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Additional Cost Component incurred where the Procedure is performed using any equipment
or devices other than the Equipment.

          (4) The “Additional Cost Per Diem” shall be equal to the quotient of (i) fifty percent
(50%) of the Technical Component Collections from the subject Procedure performed on the
Equipment that results in Extended Inpatient Days, divided by (ii) the then-current Medicare
Geometric Mean Length of Stay for the Diagnostic Related Group (DRG) under which such
discharge was billed (or could have been billed to Medicare), as such Geometric Mean Length
of Stay is set forth in the Federal Register.

          (5) “Procedure” shall mean any treatment, whether performed on an inpatient or
outpatient basis, that involves stereotactic, external, single fraction, conformal
radiation, commonly called Radiosurgery, that may include one or more isocenters during the
patient treatment session, delivered to any site(s) superior to the foramen magnum.

          (6) “Extended Inpatient Days” shall mean the number of days after the date of Procedure
during which the patient was properly classified as an inpatient, where all services
performed during such period are included as part of the same reimbursement claim. The date
of discharge shall not be included in the number of Extended Inpatient Days.

No Lease Payment for any Procedure shall be payable by Hospital to GKF unless and until the
Technical Component Collections corresponding to such Procedure have been actually collected by the
Hospital and/or its representatives or affiliates. On a monthly basis and by the 25th of the
following month, Hospital shall remit GKF’s aggregate Lease Payment for the preceding month.

It is acknowledged that the portion comprised of * of the Technical Component Collections relating
to each Procedure that is not paid as part of the Lease Payment is a good faith estimate of the
costs and expenses that will be incurred by Hospital during the corresponding month for services
and personnel associated with the performance of Procedures, including, without limitation, costs
and expenses for registered nurses, radiation technicians, recovery room, Hospital daily charges,
ventilator daily charges, MRI procedures, CT procedures, angiography procedures, the physicist,
laboratory services, pharmacy items, billing and collection services, other direct operating costs,
and physical space. Such costs and expenses shall not include (i) Lease Payments, (ii) physician
and other professional fees, and/or (iii) direct or indirect administrative overhead expenses.
Such percentage shall not be increased, reduced or otherwise modified regardless of whether
Hospital’s actual costs and expenses are higher or lower than the amount estimated.

Notwithstanding the foregoing, on each anniversary date of this Agreement, the parties shall meet
to review the percentage of the Technical Component Collections that are payable as part of the
Lease Payment, and any adjustments thereto must be mutually agreed upon by the parties in writing.
Upon request by GKF, Hospital shall promptly furnish GKF with written documentation substantiating
Hospital’s costs.

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     8.2 Within thirty (30) days following the end of each month (or portion thereof) during the
term of this Agreement, Hospital shall pay the Lease Payments to GKF and shall concurrently inform
GKF in writing as to the number of Procedures performed during that month utilizing the Equipment
and any other equipment or devices. To facilitate Hospital’s billing and collection for Procedures
performed, within three (3) business days after any Procedure using the Equipment is performed, the
administrative support individual referenced in Section 11.3 below shall provide Hospital with
written confirmation of the names of the patients treated. Hospital shall submit claims for
reimbursement to the appropriate payors for each Procedure within thirty (30) days after the
patient receiving the treatment is discharged. Such claims shall be submitted under Hospital’s
provider numbers and license, Hospital shall also diligently follow up any unpaid or denied claims
and re-bill and/or contest the same where appropriate so as to maximize Technical Component
Collections. All or any portion of any Lease Payment which is not paid in full within sixty (60)
days after its due date shall bear interest at the annual rate of five percent (5%) in excess of
the Federal Reserve Discount Rate then in effect as published in the Wall Street Journal or similar
publication (or the maximum monthly interest rate permitted to be charged by law between an
unrelated, commercial borrower and lender, if less) until the unpaid Lease Payment, together with
all accrued interest thereon is paid in full. If GKF shall at any time accept a Lease Payment from
Hospital after it shall become due, such acceptance shall not constitute or be construed as a
waiver of any or all of GKF’s rights under this Agreement, including the rights of GKF set forth in
Section 20 hereof.

          8.3 Within thirty (30) days after the close of each month, Hospital shall provide GKF with a
written report indicating the status of billings and collections for each Procedure performed
during that month, including, without limitation, the amount of the claim submitted, the amount
received or denied for each such procedure, and copies of the corresponding Explanation of Benefits
(“EOB”). Upon request by GKF, Hospital shall furnish to GKF information regarding reimbursement
rates from any or all payor sources for Procedures (applicable to Procedures performed either on an
inpatient or outpatient basis). If such reimbursement rates should change at any time or from time
to time after the date hereof, in each instance, Hospital shall provide written notice thereof to
GKF within five (5) days of Hospital receiving notice thereof. Prior to entering into or renewing
any third party payor contracts for the provision of Procedures utilizing the Equipment, Hospital
shall consult with GKF regarding the terms and provisions thereof, including the technical
component reimbursement rates. GKF shall maintain the confidentiality of all information provided
to GKF by Hospital with regard to Procedure charges, billing and reimbursement rates.

          8.4 The parties acknowledge that the Lease Payments payable to GKF and Hospital’s Cost
Component reflect their respective fair market value and are not determined in a manner that takes
into account the volume or the value of any referral or other business generated between the
parties.

          8.5 Within ten (10) days after Hospital’s receipt of written request from GKF, GKF shall have
the right to audit Hopsital’s books and records (including, without limitation, the

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books and records pertaining to any other Radiosurgery equipment and devices) during normal
business hours to verify the Technical Component Collections and Hopsital’s Cost Component, and
Hospital shall provide GKF with access to such books and records.

          8.6 New Technology. Notwithstanding anything to the contrary set forth in Section 8
of this Agreement, if, at any time during the term of this Agreement, Hospital purchases or leases
“New Technology,” then, from and after the “New Technology Effective Date,” no Lease Payment shall
be payable by Hospital to GKF for any Procedures performed using the New Technology;
provided that Hospital shall continue to be responsible for making Lease Payments to GKF
for all other Procedures performed on the Equipment or using any other equipment or devices as set
forth in this Section 8. Hospital shall provide GKF with not less than one hundred and eighty
(180) days prior written notice of Hospital’s intention to purchase or lease New Technology, which
written notice shall include any and all documentation evidencing compliance with the definition of
New Technology, and which documentation shall be subject to the prior written approval of GKF in
its sole but reasonable judgment. As used herein:

               (a) “New Technology” shall mean a treatment modality for performing Procedures which (a) uses
medical technology not commercially available as of the date of this Agreement; (b) consists of a
single device and not a combination of different types of equipment; and (c) has been documented in
at least (3) articles published in peer-reviewed journals in the United States, using five-year
minimum follow-up studies, to be more medically appropriate than the Equipment to perform
Procedures in treating 65% or greater of the currently treatable Gamma Knife indications.

               (b) “New Technology Effective Date” shall mean the later to occur of (a) the date that is
seven (7) years after the First Procedure Date, or (b) the date on which the first clinical
Procedure is performed using the New Technology on a patient admitted to Hospital on an inpatient
or outpatient basis.

     9. Use of the Equipment.

          9.1 The Equipment shall be used by Hospital only at the Site and shall not be removed
therefrom. Hospital shall use the Equipment only in the regular and ordinary course of Hospital’s
business operations and only within the capacity of the Equipment as determined by Elekta’s
specifications. Hospital shall not use nor permit the Equipment to be used in any manner nor for
any purpose which, in the opinion of Elekta or GKF, the Equipment is not designed or reasonably
suitable.

          9.2 This is an agreement of lease only. Nothing herein shall be construed as conveying to
Hospital any right, title or interest in or to the Equipment, except for the express leasehold
interest granted to Hospital for the Term. All Equipment shall remain personal property (even
though said Equipment may hereafter become attached or affixed to real property) and the title
thereto shall at all times remain exclusively in GKF.

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          9.3 During the Term, upon the request of GKF, Hospital shall promptly affix to the
Equipment in a prominent place, or as otherwise directed by GKF, labels, plates, insignia,
lettering or other markings supplied by GKF indicating GKF’s ownership of the Equipment, and shall
keep the same affixed for the entire Term. Hospital hereby authorizes GKF to cause this Lease or
any statement or other instrument showing the interest of GKF in the Equipment to be filed or
recorded, or refiled or re-recorded, with all governmental agencies considered appropriate by GKF,
at GKF’s cost and expense. Hospital also shall promptly execute and deliver, or cause to be
executed and delivered, to GKF any statement or instrument requested by GKF for the purpose of
evidencing GKF’s interest in the Equipment, including financing statements and waivers with
respect to rights in the Equipment from any owners or mortgagees of any real estate where the
Equipment may be located.

          9.4 At Hospital’s cost and expense, Hospital shall (a) protect and defend GKF’s ownership of
and title to the Equipment from and against all persons claiming against or through Hospital, (b)
at all times keep the Equipment free from any and all liens, encumbrances, attachments, levies,
executions, burdens, charges or legal processes imposed against Hospital, and (c) give GKF
immediate written notice of any matter described in clause (b).

     10. Additional Covenants of Hospital. In addition to the other covenants of Hospital
contained in this Agreement, Hospital shall, at its cost and expense:

          10.1 Provide properly trained professional, technical and support personnel and supplies
required for the proper performance of Gamma Knife procedures utilizing the Equipment. In this
regard, Hospital shall maintain on staff a minimum of two (2) Gamma Knife trained teams comprised
of neurosurgeons, radiation oncologists and physicists. Hospital shall be provided with six (6)
one week Elekta Gamma Knife training sessions for the training of its two (2) Gamma Knife teams.
GKF shall also be responsible for the reasonable travel related expenses for the physicians and/or
physicists associated with the six (6) Gamma Knife training sessions.

          10.2 Direct, supervise and administer the diagnosis, treatment and care of all patients who
receive Gamma Knife procedures.

          10.3 In consultation with GKF, provide reasonable and customary marketing support in terms of
administrative and physician support for the Gamma Knife service to be operated by the Hospital.

          10.4 Keep and maintain the Equipment and the Site fully protected, secure and free from
unauthorized access or use by any person.

     11. Additional Covenants of GKF. In addition to the other covenants of GKF contained
in this Agreement, GKF, at its cost and expense, shall:

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          11.1 Use its best efforts to require Elekta to meets its contractual obligations to GKF and
Hospital upon delivery of the Equipment and put the Equipment, as soon as reasonably possible, into
good, safe and serviceable condition and fit for its intended use in accordance with the
manufacturer’s specifications, guidelines and field modification instructions.

          11.2 Ensure Hospital’s quite enjoyment and use of the Equipment, free of the rights of any
other persons except for those rights reserved by GKF or granted to Elekta under the LGK Agreement
or the Purchase Agreement.

          11.3 GKF and Hospital shall mutually select an individual to be located at the Site to provide
Gamma Knife administrative and marketing support services. The individual’s duties shall include
but not be limited to scheduling Gamma Knife patients and coordinating professional and technical
personnel and support services to perform said Gamma Knife treatment. This individual shall also
verify patient insurance. The individual shall also assist with marketing activities on an as
needed basis. This individual is provided by the Hospital and GKF shall reimburse Hospital for the
cost of the individual and payment made by GKF to Hospital by the end of the following month. GKF
and Hospital shall mutually agree on individual.

     12. Maintenance of Equipment; Damage or Destruction of Equipment.

          12.1 During the Term and except as otherwise provided in this Agreement, GKF, at its cost and
expense, shall (a) maintain the Equipment in good operating condition and repair, reasonable wear
and tear excepted, (b) subject to Hospital’s compliance with its obligations under the LGK
Agreement and under Sections 4, 5, 9, 10, 12, 13, and 16 hereunder, cause the equipment to be in
compliance with all applicable state and federal regulations, and (c) maintain in full force and
effect a Service Agreement with Elekta and any other service or other agreements required to
fulfill GKF’s obligation to repair and maintain the Equipment under this Section 12. Hospital
shall promptly notify GKF in the event of any damage or destruction to the Equipment or of any
required maintenance or repairs to the Equipment, regardless of whether such repairs or maintenance
are covered or not covered by the Service Agreement. GKF shall pursue all remedies available to it
under the Service Agreement and under any warranties made by Elekta with respect to the Equipment
so that the Equipment will be free from defects in design, materials and workmanship and will
conform to Elekta’s technical specifications concerning the Equipment.

          12.2 GKF and Elekta shall have the right to access the Equipment for the purpose of inspection
and the performance of repairs at all reasonable times, upon reasonable advance notice and with a
minimum of interference or disruptions to Hospital’s regular business operations.

          12.3 Hospital shall be liable for, and in the manner described in Section 22 below shall
indemnify GKF from and against, any damage to or destruction of the Equipment caused by the misuse,
improper use, or other intentional and wrongful or negligent acts or

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omissions of Hospital’s officers, employees, agents, contractors and physicians. In the event
the Equipment is damaged as a result of the misuse, improper use, or other intentional and wrongful
or negligent acts or omissions of Hospital’s officers, employees, agents, contractors (other than
GKF and Elekta) and physicians, to the extent such damage is not covered by the Service Agreement
or any warranties or insurance, GKF may service or repair the Equipment as needed and the cost
thereof shall be paid by Hospital to GKF immediately upon written request together with interest
thereon at the rate of one and one-half percent (1.50%) per month (or the maximum monthly interest
rate permitted to be charged by law between an unrelated, commercial borrower and lender, if less)
and reasonable attorneys’ fees and costs incurred by GKF in collecting such amount from Hospital.
Any work so performed by GKF shall not deprive GKF of any of its rights, remedies or actions
against Hospital for such damages.

          12.4 If the Equipment is rendered unusable as a result of any physical damage to or
destruction of the Equipment, Hospital shall give GKF written notice thereof. GKF shall determine,
within thirty (30) days after it is given written notice of such damage or destruction, whether the
Equipment can be repaired. Subject to Section 12.3 above, in the event GKF determines that the
Equipment cannot be repaired, at the election of GKF in GKF’s sole and absolute discretion, (a)
GKF, at its cost and expense, may replace the Equipment as soon as reasonably possible taking into
account the availability of replacement equipment from Elekta, Elekta’s other then existing orders
for equipment, and the then existing limitations on Elekta’s manufacturing capabilities, and (b) in
such event, this Agreement shall continue in full force and effect as though such damage or
destruction had not occurred. If GKF elects not to replace the Equipment, GKF shall provide
written notice of such election to Hospital, and this Agreement shall terminate on the date that is
ninety (90) days following the date of such notice. In the event GKF determines that the Equipment
can be repaired, GKF shall cause the Equipment to be repaired as soon as reasonably possible
thereafter. Hospital shall fully cooperate with GKF to effect the replacement of the Equipment or
the repair of the Equipment (including, without limitation, providing full access to the Site)
following the damage or destruction thereof.

     13. Alterations and Upgrades to Equipment. Hospital shall not make any modifications,
alterations or additions to the Equipment (other than normal operating accessories or controls)
without the prior written consent of GKF. Hospital shall not, and shall not permit any person
other than representatives of Elekta or any other person authorized by GKF to, effect any
inspection, adjustment, preventative or remedial maintenance, or repair to the Equipment without
the prior written consent of GKF. All modifications, alterations, additions, accessories or
operating controls incorporated in or affixed to the Equipment (herein collectively called
“additions” and included in the definition of “Equipment”) shall become the property of the GKF
upon termination of this Agreement. The parties agree that the necessity for the reloading of the
cobalt-60 source, shall be discussed and mutually decided by GKF and Hospital. If GKF reloads the
Equipment at its cost, the initial Term of the Agreement shall be extended for * years from a
duration of 10 to * years.

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     14. Financing of Equipment by GKF. GKF, in its sole discretion, may finance the
Equipment. Financing may be in the form of an installment loan, a capitalized lease or other
commercially available debt or financing instrument. If GKF finances the Equipment through an
installment loan, GKF shall be required to provide the Equipment as collateral for the loan. If
GKF finances the Equipment through a capitalized lease, title shall vest with the lessor until such
time as GKF exercises its buy-out option under the lease, if any. If required by the lender,
lessor or other financing entity (the “Lender”), GKF may assign its interest under this Agreement
as security for the financing. Hospital’s interest under this Agreement shall be subject to the
interests of the Lender and Hospital shall execute such documentation as the Lender shall
reasonably require in furtherance of this Section 14.

     15. Equipment Operational Costs. GKF shall be responsible for all costs and expenses
for the operation and use of the Equipment. Significant costs and expenses are enumerated in
Exhibit 8.1. Between Hospital and GKF, Hospital shall be fully liable for all negligent,
intentional or wrongful acts or omissions of Hospital, its officers, directors, employees and
agents.

     16. Taxes. GKF shall pay all sales or use taxes imposed or assessed in connection
with the purchase of the Equipment and all personal property taxes imposed, levied or assessed on
the ownership and possession of the Equipment during the Term. All other taxes, assessments,
licenses or other charges imposed, levied or assessed on the Equipment during the Term shall be
paid by Hospital before the same shall become delinquent, whether such taxes are assessed or would
ordinarily be assessed against GKF or Hospital; provided, however, Hospital shall not be required
to pay any federal, state or local income, franchise, corporation or excise taxes imposed upon
GKF’s net income realized from the lease of the Equipment. In case of a failure by Hospital to pay
any taxes, assessments, licenses or other charges when and as required under this Section, GKF may
pay all or any part of such taxes, in which event the amount paid by GKF shall be immediately
payable by Hospital to GKF upon written request together with interest thereon at the rate of at
the rate of one and one-half percent (1.50%) per month (or the maximum monthly interest rate
permitted to be charged by law between an unrelated, commercial borrower and lender, if less) and
reasonable attorneys’ fees and costs incurred by GKF in collecting such amount from Hospital.

     17. No Warranties by GKF. Hospital warrants that as of the First Procedure Date, it
shall have (a) thoroughly inspected the Equipment, (b) determined that the Equipment is consistent
with the size, design, capacity and manufacture selected by it, and (c) satisfied itself that to
the best of its knowledge the Equipment is suitable for Hospital’s intended purposes and is good
working order, condition and repair. GKF SUPPLIES THE EQUIPMENT UNDER THIS AGREEMENT IN ITS “AS
IS” CONDITION. GKF, NOT BEING THE MANUFACTURER OF THE EQUIPMENT OR THE MANUFACTURER’S AGENT, MAKES
NO WARRANTY OR REPRESENTATION, EITHER EXPRESSED OR IMPLIED, AS TO THE EQUIPMENT’S MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR USE, DESIGN, CONDITION, DURABILITY, CAPACITY, MATERIAL OR

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WORKMANSHIP OR AS TO PATENT INFRINGEMENT OR THE LIKE. As between GKF and Hospital, Hospital
shall bear all risks with respect to the foregoing warranties. GKF shall not be liable for any
direct, indirect and consequential losses or damages suffered by Hospital or by any other person,
and Hospital expressly waives any right to hold GKF liable hereunder for, any claims, demands and
liabilities arising out of or in connection with the design, manufacture, possession or operation
of the Equipment, including injury to persons or property resulting from the failure of, defective
or faulty design, operation, condition, suitability or use of the Equipment, or with the accuracy,
completeness or suitability of the Site Planning Criteria, including GKF’s good faith compliance
therewith. All warranty or other similar claims with respect to the Equipment or the Site Planning
Criteria shall be made by Hospital solely and exclusively against persons other than GKF, including
Elekta or any other manufacturers or suppliers. In this regard and with prior written approval of
GKF, Hospital may, in GKF’s name, but at Hospital’s sole cost and expense, enforce all warranties,
agreements or representations, if any, which may have been made by Elekta or manufacturers,
suppliers or other third parties regarding the Equipment to GKF or Hospital. GKF shall not be
responsible for the operation of the Equipment. However, it shall be GKF’s responsibility that the
Equipment be properly maintained.

     18. Termination for Economic Justification.

          18.1 If, following the initial twenty-four (24) months after the First Procedure Date and
following each subsequent 12 month period thereafter during the Term, based upon the utilization of
the Equipment and other factors considered relevant by GKF in the exercise of its discretion,
within a reasonable period of time after GKF’s written request, Hospital does not provide GKF with
a reasonable economic justification to continue this Agreement and the provision of Gamma Knife
services at the Hospital, then and in that event, GKF shall have the option to terminate this
Agreement by giving a written notice thereof to Hospital not less than ninety (90) days prior to
the effective date of the termination designated in GKF’s written notice.

          18.2 Notwithstanding the provisions of Section 18.1, if at any time during the term of this
Agreement, Hospital is suspended or terminated from participation in the Medicare program, GKF
shall have the option to terminate this Agreement immediately by giving written notice thereof to
Hospital.

          18.3 As a result of any termination of this Agreement pursuant to this Section 18, GKF may
enter upon the Site and remove the Equipment and any improvements made by GKF to the Site without
liability of any kind or nature for so doing or GKF may demand that Hospital remove and return the
Equipment and such improvements to GKF, all at GKF’s sole cost and expense. GKF shall restore the
Site to a similar pre-deinstallation appearance and condition.

     19. Options to Extend Agreement. As of the end of the Term, Hospital shall have the
option either to:

12

 

          19.1 Extend the Term of this Agreement for a specified period of time and upon such other
terms and conditions in writing as may be agreed upon by GKF and Hospital taking into account the
use (e.g., number of Gamma Knife procedures, etc.) of the Equipment at the Site during the initial
Term and other factors deemed relevant by the parties;

          19.2 Terminate this Agreement as of the expiration of the Term.

          Hospital shall exercise one (1) of the two (2) options referred to above by giving an irrevocable
written notice thereof to GKF at least nine (9) months prior to the expiration of the initial Term.
Any such notice shall be sufficient if it states in substance that Hospital elects to exercise its
option and states which of the two (2) options referred to above Hospital is exercising. If
Hospital fails to exercise the option granted herein at least nine (9) months prior to the
expiration of the initial Term, the option shall lapse and this Agreement shall expire as of the
end of the initial Term. Further, if Hospital exercises the option specified in Section 19.1 above
and the parties are unable to mutually agree upon the length of the extension of the Term or any
other terms or conditions applicable to such extension prior to the expiration of the Term, this
Agreement shall expire as of the end of the initial Term.

     20. Events of Default by Hospital and Remedies.

          20.1 The occurrence of any one of the following shall constitute an event of default under
this Agreement (an “Event of Default”):

               20.1.1 Hospital fails to pay any Lease Payment when due pursuant to Paragraph 8 above and such
failure continues for a period of thirty (30) days after written notice thereof is given by GKF or
its assignee to Hospital; however, if Hospital cures the payment default within the applicable
thirty (30) day period, such default shall not constitute an Event of Default.

               20.1.2 Hospital attempts to remove, sell, transfer, encumber, assign, sublet or part with
possession of the Equipment or any items thereof, except as expressly permitted herein.

               20.1.3 Hospital fails to observe or perform any of its covenants, duties or obligations
arising under this Agreement or the LGK Agreement and such failure continues for a period of thirty
(30) days after written notice thereof by GKF to Hospital; however, if Hospital cures the default
within the applicable thirty (30) day period or if the default reasonably requires more than thirty
(30) days to cure, Hospital commences to cure the default during the initial thirty (30) day period
and Hospital diligently completes the cure as soon as reasonably possible following the end of the
thirty (30) day period, such default shall not constitute an Event of Default.

               20.1.4 Hospital ceases doing business as a going concern, makes an assignment for the benefit
of creditors, admits in writing its inability to pay its debts as they

13

 

become due, files a voluntary petition in bankruptcy, is adjudicated a bankrupt or an
insolvent, files a petition seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar arrangement under any present or future statute,
law or regulation or files an answer admitting the material allegations of a petition filed against
it in any such proceeding, consents to or acquiesces in the appointment of a trustee, receiver, or
liquidator of it or of all or any substantial part of its assets or properties, or it or its
shareholders shall take any action looking to its dissolution or liquidation

               20.1.5 Within sixty (60) days after the commencement of any proceedings against Hospital
seeking reorganization, arrangement, readjustment, liquidation, dissolution or similar relief under
any present or future statute, law or regulation, such proceedings shall not have been dismissed,
or if within thirty (30) days after the appointment without Hospital’s consent or acquiescence of
any trustee, receiver or liquidator of it or of all or any substantial part of its assets and
properties, such appointment shall not be vacated.

     20.2 Upon the occurrence of an Event of Default with respect to Hospital, GKF may at its
option do any or all of the following:

               20.2.1 By written notice to Hospital, immediately terminate this Agreement as to the
Equipment, wherever situated. As a result of the termination, GKF may enter upon the Site and
remove the Equipment and any improvements made by GKF to the Site without liability of any kind or
nature for so doing or GKF may demand that Hospital remove and return the Equipment and such
improvements to GKF, all at Hospital’s sole cost and expense. GKF shall restore the Site to a
similar pre-deinstallation appearance and condition.

               20.2.2 Recover damages from Hospital as may be awarded by a court of competent jurisdiction
for the loss of the bargain represented by this Agreement. For purposes of determining such
damages, the parties agree that the following methodology shall be used: (a) the amount of such
damages shall be equal to the present value of the unpaid estimated future Lease Payments to be
made by Hospital to GKF through the end of the Term discounted at the rate of nine percent (9%);
and (b) the unpaid estimated future Lease Payments shall be based on the historical trend of
payments made by Hospital to GKF hereunder taking into account known factors which could impact the
historical trend through the end of the Term. Hospital and GKF acknowledge that the methodology
set forth in this Section 20.2.2 constitutes a reasonable method to calculate GKF’s damages
resulting from an Event of Default under the circumstances existing as of the date of this
Agreement. GKF shall use reasonable commercial efforts to mitigate its damages by attempting to
sell or lease the Equipment; provided that (i) GKF shall not be obligated to give
preference to the sale or lease of the Equipment over the sale, lease or other disposition of
similar equipment or improvements owned or leased by GKF, (ii) GKF shall have no obligation to sell
or lease any improvements made by GKF to the Site, and (iii) GKF’s inability in good faith to
mitigate damages shall not limit or otherwise affect the foregoing methodology for determining
damages as set forth in this Section.

14

 

               20.2.3 Sell, dispose of, hold, use or lease the Equipment or any improvements made by GKF to
the Site, as GKF in its sole and absolute discretion may determine (and GKF shall not be obligated
to give preference to the sale, lease or other disposition of the Equipment or improvements over
the sale, lease or other disposition of similar Equipment or improvements owned or leased by GKF).

               20.2.4 Exercise any other right or remedy which may be available to GKF under the Uniform
Commercial Code or any other applicable law or proceed by appropriate court action, without
affecting GKF’s title or right to possession of the Equipment or improvements, to enforce the terms
hereof or to recover damages for the breach hereof or to cancel this Agreement as to the Equipment.

In addition to the foregoing remedies, Hospital shall be liable to GKF for all costs and expenses
incurred by GKF as a result of the Event of Default or the exercise of GKF’s remedies.

          20.3 Upon termination of this Agreement or the exercise of any other rights or remedies under
this Agreement or available under applicable law following an Event of Default, Hospital shall,
without further request or demand, pay to GKF all Lease Payments and other sums owing under this
Agreement. Hospital shall in any event remain fully liable for all damages as may be provided by
law and for all costs and expenses incurred by GKF on account of such default, including but not
limited to, all court costs. The rights and remedies afforded GKF under this Agreement shall be
deemed cumulative and not exclusive, and shall be in addition to any other rights or remedies to
GKF provided by law or in equity.

     21. Events of Default by GKF and Remedies.

          21.1 The occurrence of any one of the following shall constitute an Event of Default
hereunder:

               21.1.1 GKF shall fail to observe or perform any of its covenants, duties or obligations
arising under this Agreement and such failure shall continue for a period of thirty (30) days after
written notice thereof is given by Hospital to GKF; however, if GKF cures the default within the
applicable thirty (30) day period or if the default reasonably requires more than thirty (30) days
to cure, GKF commences to cure the default during the initial thirty (30) day period and GKF
diligently completes the cure as soon as reasonably possible following the end of the thirty (30)
day period, such default shall not constitute an Event of Default.

               21.1.2 GKF ceases doing business as a going concern, makes an assignment for the benefit of
creditors, admits in writing its inability to pay its debts as they become due, files a voluntary
petition in bankruptcy, is adjudicated a bankrupt or an insolvent, files a petition seeking for
itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or
similar arrangement under any present or future statute, law or regulation or files an answer
admitting the material allegations of a petition filed against it in any such proceeding, consents
to or acquiesces in the appointment of a trustee, receiver, or liquidator

15

 

of it or of all or any substantial part of its assets or properties, or it or its shareholders
shall take any action looking to its dissolution or liquidation.

               21.1.3 Within sixty (60) days after the commencement of any proceedings against GKF seeking
reorganization, arrangement, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceedings shall not have been dismissed, or if
within thirty (30) days after the appointment without GKF’s consent or acquiescence of any trustee,
receiver or liquidator of it or of all or any substantial part of its assets and properties, such
appointment shall not be vacated.

          21.2 Upon the occurrence of an Event of Default involving GKF, Hospital may at its option do
any or all of the following:

               21.2.1 By written notice to GKF, immediately terminate this Agreement as to the Equipment and,
in such event, GKF shall remove the Equipment, the Cobalt and any improvements made by GKF to the
Site, at GKF’s sole cost and expense or, in the absence of removal by GKF within a reasonable
period of time after a written request therefore, Hospital may remove the Equipment, the Cobalt and
such improvements with all due care and store the same at GKF’s sole cost and expense.

               21.2.2 Seek to recover from GKF such loss as may be realized by Hospital in the ordinary
course of events as a result of the Event of Default.

          21.3 GKF shall in any event remain fully liable for reasonable damages as provided by law and
for all costs and expenses incurred by GKF on account of such default, including but not limited
to, all court costs (other than attorneys’ fees). However, GKF shall not in any manner be or
become liable to Hospital for any consequential or incidental damages that may be suffered by
Hospital which arise out of or result from the Event of Default.

          21.4 Notwithstanding the occurrence of an Event of Default with respect to GKF (including any
claim which would otherwise be in the nature of a set-off), Hospital shall fully perform and pay
its obligations hereunder (including payment of all Lease Payments) without set-off or defense of
any kind. Upon termination of this Agreement or the exercise of any other rights or remedies under
this Agreement or applicable law following an Event of Default, Hospital shall, without further
request or demand, pay to GKF all Lease Payments and other sums owing under this Agreement when and
as due.

     22. Removal of Equipment. Upon expiration of the Term, GKF, at its cost and expense,
shall remove the Equipment from the Site not more than ninety (90) days following the last day of
the Term; provided that all of GKF’s right, title and interest in and to the improvements
made by GKF to the Site pursuant to Section 6 above shall thereupon transfer to Hospital.

     23. Insurance.

16

 

          23.1 During the Term, GKF shall, at its cost and expense, purchase and maintain in effect an
all risk property and casualty insurance policy covering the Equipment. The all risk property and
casualty insurance policy shall be for an amount not less than the replacement cost of the
Equipment. The all risk property and casualty insurance policy maintained by GKF shall be
evidenced by a certificate of insurance or other reasonable documentation which shall be delivered
by GKF to Hospital upon request following the commencement of this Agreement and as of each annual
renewal of such policy during the Term.

          23.2 During the Term, Hospital shall, at its cost and expense, purchase and maintain in effect
general liability and professional liability insurance policies (or self-insurance coverage)
covering the Site (together with all premises where the Site is located) and the use or operation
of the Equipment by Hospital or its officers, directors, agents, employees, contractors or
physicians. The general liability and professional liability insurance policies shall provide
coverage (or self-insurance coverage) in amounts not less than One Million Dollars ($1,000,000.00)
per occurrence and Five Million Dollars ($5,000,000.00) annual aggregate. GKF shall be named as
additional insured party on the general liability and professional liability insurance policies to
be maintained hereunder by Hospital. The policies to be maintained by Hospital hereunder shall be
evidenced by a certificate of insurance or other reasonable documentation which shall be delivered
by Hospital to GKF no later than the First Procedure Date and as of each annual renewal of such
policies during the Term.

          23.3 During the construction of the Site and prior to the First Procedure Date, GKF, at its
cost and expense, shall purchase and maintain a general liability insurance policy which conforms
with the coverage amounts and other requirements described in Section 23.2 above and which names
Hospital as an additional insured party. The policy to be maintained by GKF hereunder shall be
evidenced by a certificate of insurance or other reasonable documentation which shall be delivered
by GKF to Hospital prior to the commencement of any construction at the Site.

          23.4 During the Term, Hospital shall maintain all workers compensation insurance as required
by applicable law.

     24. Indemnification

          24.1 Hospital and GKF each hereby covenants and agrees that it will defend, indemnify and hold
the other party and the other party’s officers, directors, members, employees and agents at all
times harmless from and against any loss, damage, and expense (including reasonable attorneys’ fees
and other costs of defense) caused by or arising out of: (i) any liability or obligation related
to the business of the indemnifying party prior to the date hereof; (ii) any obligation or
liability arising from services provided under this Agreement by the indemnifying party to the
extent any such liability or obligation directly results from the negligence or intentional
misconduct of the indemnifying party, it’s employees or agents; or (iii) any obligation or
liability resulting from a breach of any provision of this Agreement by the

17

 

indemnifying party, it’s employees or agents. The obligations of the parties under this
Section shall survive the expiration or earlier termination of this Agreement.

          24.2 Any party that intends to enforce an indemnity obligation shall give the indemnifying
party notice of any claim as soon as possible, but the failure to give such notice shall not
constitute a waiver or release of the indemnifying party and shall not affect the rights of the
indemnified party to recover under this indemnity, except to the extent the indemnifying party is
materially prejudiced thereby. In connection with any claim giving rise to indemnity under this
Section resulting from or arising out of any claim or legal proceeding by a person who is not a
party to this Agreement, the indemnifying party, at its sole cost and expense, may, upon written
notice to the indemnified party, assume control of the defense of such claim or legal proceeding,
to the extent that the indemnifying party admits in writing its indemnification liability to the
indemnified party with respect to all material elements thereof. If the indemnifying party assumes
the defense of any such claim or legal proceeding, the obligation of the indemnifying party
hereunder as to such claim or legal proceeding shall be to take all steps necessary in the defense
or settlement thereof and to hold the indemnified party harmless from and against any losses,
damages, expenses or liability caused by or arising out of any settlement approved by the
indemnifying party and the indemnified party or any judgment in connection with such claim or legal
proceeding. Each indemnified party shall cooperate with the indemnifying party in the defense of
any such action, the defense of which is assumed by the indemnifying party. Except with the
consent of the indemnified party, which consent may be withheld at the indemnified party’s sole
discretion, the indemnifying party shall not consent to any settlement or the entry of any judgment
arising from any such claim or legal proceeding which, in each case, does not include as an
unconditional term thereof the delivery by the claimant or the plaintiff to the indemnified party
of a release from all liability in respect thereof. If the indemnifying party does not assume the
defense of any claim or litigation, any indemnified party may defend against such claim or
litigation in such manner as it may deem appropriate, including but not limited to settling such
claim or litigation, after giving notice of the same to the indemnifying party, on such terms as
the indemnified party may deem appropriate. The indemnifying party will, promptly after any of the
same is incurred, reimburse the indemnified party in accordance with the provisions hereof for all
damages, losses, liabilities, costs and expenses incurred by the indemnified party.

          24.3 The indemnity obligations under this Section shall survive the termination of this
Agreement with respect to events occurring during or relating to the Term.

     25. Miscellaneous.

          25.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Neither party shall assign this
Agreement nor any of its respective rights hereunder and Hospital shall not sublease the Equipment
without the prior written consent of the other party, which consent shall not be unreasonably
withheld. An assignment or sublease shall not relieve the assigning party or

18

 

sublessor of any liability for performance of this Agreement during the remainder of the Term.
Any purported assignment or sublease made without the other party’s prior written consent shall be
null, void and of no force or effect.

          25.2 Agreement to Perform Necessary Acts. Each party agrees to perform any further
acts and execute and deliver any further documents which may be reasonably necessary or otherwise
reasonably required to carry out the provisions of this Agreement.

          25.3 Validity. If for any reason any clause or provision of this Agreement, or the
application of any such clause or provision in a particular context or to a particular situation,
circumstance or person, should be held unenforceable, invalid or in violation of law by any court
or other tribunal of competent jurisdiction, then the application of such clause or provision in
contexts or to situations, circumstances or persons other than that in or to which it is held
unenforceable, invalid or in violation of law shall not be affected thereby, and the remaining
clauses and provisions hereof shall nevertheless remain in full force and effect.

          25.4 Attorney’s Fees and Costs. In the event of any action, mediation or other
proceedings between or among the parties hereto with respect to this Agreement, each party shall
pay for their own attorneys’ fees and related costs and expenses, irrespective of which party is
deemed to be the prevailing party.

          25.5 Entire Agreement; Amendment. This Agreement together with the Exhibits attached
hereto constitutes the full and complete agreement and understanding between the parties hereto
concerning the subject matter hereof and shall supersede any and all prior written and oral
agreements with regard to such subject matter. This Agreement may be modified or amended only by a
written instrument executed by all of the parties hereto.

          25.6 Number and Gender. Words in the singular shall include the plural, and words in
a particular gender shall include either or both additional genders, when the context in which such
words are used indicates that such is the intent.

          25.7 Effect of Headings. The titles or headings of the various paragraphs hereof are
intended solely for convenience or reference and are not intended and shall not be deemed to
modify, explain or place any construction upon any of the provisions of this Agreement.

          25.8 Counterparts. This Agreement may be executed in one or more counterparts by the
parties hereto. All counterparts shall be construed together and shall constitute one agreement.

          25.9 Governing Law. This Agreement shall be interpreted and enforced in accordance
with the internal laws, and not the law of conflicts, of the State of Oklahoma applicable to
agreements made and to be performed in that State.

19

 

          25.10 Exhibits. All exhibits attached hereto and referred to in this Agreement
are hereby incorporated by reference herein as though fully set forth at length.

          25.11 Ambiguities. The general rule that ambiguities are to be construed against the
drafter shall not apply to this Agreement. In the event that any provision of this Agreement is
found to be ambiguous, each party shall have an opportunity to present evidence as to the actual
intent of the parties with respect to such ambiguous provision.

          25.12 Representations. Each of the parties hereto represents (a) that no
representation or promise not expressly contained in this Agreement has been made by any other
party hereto or by any of its agents, employees, representatives or attorneys; (b) that this
Agreement is not being entered into on the basis of, or in reliance on, any promise or
representation, expressed or implied, other than such as are set forth expressly in this Agreement;
(c) that it has been represented by counsel of its own choice in this matter or has affirmatively
elected not to be represented by counsel; (d) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (e) it has full power and
authority to execute, deliver and perform this Agreement, and (f) the execution, delivery and
performance of this Agreement has been duly authorized by all necessary corporate or other similar
action.

          25.13 Non-Waiver. No failure or delay by a party to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, or to exercise any
right, power or remedy hereunder or under law or consequent upon a breach hereof or thereof shall
constitute a waiver of any such term, condition, covenant, agreement, right, power or remedy or of
any such breach or preclude such party from exercising any such right, power or remedy at any later
time or times.

          25.14 Notices. All notices, requests, demands or other communications required or
permitted to be given under this Agreement shall be in writing and shall be delivered to the party
to whom notice is to be given either (a) by personal delivery (in which case such notice shall be
deemed to have been duly given on the date of delivery), (b) by next business day air courier
service (e.g., Federal Express or other similar service) (in which case such notice shall be deemed
given on the business day following deposit with the air courier service), or (c) by United States
mail, first class, postage prepaid, registered or certified, return receipt requested (in which
case such notice shall be deemed given on the third (3rd) day following the date of mailing), and
properly addressed as follows:

	 	 	 	 	 
	To GKF:

	 	Craig K. Tagawa
	 	 
	 

	 	Chief Executive Officer	 	 
	 

	 	GK Financing, LLC	 	 
	 

	 	Four Embarcadero Center, Suite 3700	 	 
	 

	 	San Francisco, CA 94111	 	 

20

 

	 	 	 	 	 
	To Hospital:

	 	Mark Nafziger
	 	 
	 

	 	Senior VP & CFO	 	 
	 

	 	Mercy Health Center	 	 
	 

	 	4120 W Memorial Road	 	 
	 

	 	Oklahoma City, OK 73120	 	 

A party to this Agreement may change his, her or its address for purposes of this Section by giving
written notice to the other parties in the manner specified herein.

          25.15 Special Provisions Respecting Medicare and Medicaid Patients

               25.15.1 Hospital and GKF shall generate such records and make such disclosures as may be
required, from time to time, by the Medicare, Medicaid and other third party payment programs with
respect to this Agreement in order to meet all requirements for participation and payment
associated with such programs, including but not limited to the matters covered by Section
1861(v)(1)(I) of the Social Security Act.

               25.15.2 For the purpose of compliance with Section 1861(v)(1)(I) of the Social Security Act,
as amended, and any regulations promulgated pursuant thereto, both parties agree to comply with the
following statutory requirements (a) Until the expiration of four (4) years after the termination
of this Agreement, both parties shall make available, upon written request to the Secretary of
Health and Human Services or, upon request, to the Comptroller General of the United States, or any
of their duly authorized representatives, the contract, and books, documents and records of such
party that are necessary to certify the nature and extent of such costs, and (b) if either party
carries out any of the duties of the contract through a subcontract with a value or cost of $10,000
or more over a twelve month period, with a related organization, such subcontract shall contain a
clause to the effect that until the expiration of four (4) years after the furnishing of such
services pursuant to such subcontract, the related organization shall make available, upon written
request to the Secretary, or upon request to the Comptroller General, or any of their duly
authorized representatives the subcontract, and books, documents and records of such organization
that are necessary to verify the nature and extent of such costs.

          25.16 Force Majeure. Failure to perform by either party will be excused in the event
of any delay or inability to perform its duties under this Agreement directly or indirectly caused
by conditions beyond its reasonable control, including, without limitation, fires, floods,
earthquakes, snow, ice, disasters, acts of God, accidents, riots, wars, operation of law, strikes,
governmental action or regulations, shortages of labor, fuel, power, materials, manufacturer delays
or transportation problems. Notwithstanding the foregoing, all parties shall make good faith
efforts to perform under this Agreement in the event of any such circumstance. Further, once such
an event is resolved, the parties shall again perform their respective obligations under this
Agreement.

21

 

          25.17 Independent Contractor Status. With respect to the performance of the duties
and obligations arising under this Agreement, nothing in this Agreement is intended nor shall be
construed to create a partnership, an employer/employee relationship, a joint venture relationship,
or a lease or landlord/tenant relationship between GKF and Hospital.

          25.18 Mediation. Except as provided herein, no civil action with respect to any
dispute, claim or controversy arising out of or relating to this Agreement may be commenced until
the matter has been submitted for non-binding mediation to the Judicial Arbitration and Mediation
Services, Inc. (“JAMS”), except that if JAMS is no longer in existence or is otherwise unable to
appoint a neutral mediator, the parties shall submit the matter for non-binding mediation to the
American Arbitration Association (“AAA”), subject to the provisions in this section. Either party
may commence mediation by providing to the other party a written request for mediation, setting
forth the subject of the dispute and the relief requested. The parties will cooperate with one
another in selecting a mediator and in scheduling the mediation proceedings. The parties covenant
that they will participate in the mediation in good faith, and that they will share equally in its
costs. All offers, promises, conduct and statements, whether oral or written, made in the course
of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the
mediator, are confidential, privileged and inadmissible for any purpose, including impeachment, in
any litigation or other proceeding involving the parties, provided that evidence that is
otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a
result of its use in the mediation. Either party may seek equitable relief prior to the mediation
to preserve the status quo pending the completion of that process. Except for such an action to
obtain equitable relief, neither party may commence a civil action with respect to the matters
submitted to mediation until after the completion of the initial mediation session, or 45 days
after the date of filing the written request for mediation, whichever occurs first. Mediation may
continue after the commencement of a civil action, if the parties so desire. The provisions of
this Section may be enforced by any court of competent jurisdiction, and the party seeking
enforcement shall be entitled to an award of all costs, fees and expenses, including attorney’s
fees, to be paid by the party against whom enforcement is ordered.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the
date first set forth above.

	 	 	 	 	 	 	 
	“GKF”

	 	“Hospital”
	 
	GK FINANCING, LLC,

	 	MERCY HEALTH CENTER,
	a California limited liability company

	 	an Oklahoma not for profit corporation
	 
	 
	By:	 	
/s/ Craig K. Tagawa
 

Craig Tagawa

Chief Executive Officer
	 	By:
 
	 	/s/ Mark Nafziger
 

Mark Nafziger

Senior VP & CFO
	 	 

22exv10w2

 

EXHIBIT 10.2

Confidential

Execution Copy

PURCHASE AGREEMENT

This Purchase Agreement (“Agreement”) is made effective as of the 1st day of November,
2005 (the “Effective Date”), by and between Caterpillar Inc., a Delaware corporation with principal
offices in Peoria, Illinois (“Caterpillar”), and A.S.V., Inc., a Minnesota corporation with
principal offices in Grand Rapids, Minnesota (“ASV”). Caterpillar and ASV are sometimes referred
to individually as “party” and collectively as “parties”.

Recitals

	 	A.	 	ASV desires to supply to Caterpillar, and Caterpillar desires to purchase from
ASV, rubber-tracked undercarriages for certain multi-terrain loader (“MTL”) machines
manufactured by Caterpillar or its affiliates pursuant to the terms herein.
	 
	 	B.	 	In connection with this Agreement, the parties are simultaneously entering into
an agreement which will govern the terms and conditions under which ASV will register
the shares of ASV common stock held by Caterpillar (the “Registration Rights
Agreement”).

For the mutual promises and covenants contained herein and in the Registration Rights Agreement,
the receipt and sufficiency of which are acknowledged, the parties hereby mutually agree as
follows:

	1.	 	Products Covered by this Agreement.

	 	a.	 	Description. This Agreement sets forth the terms and conditions under which
ASV will develop and manufacture for use, sale or distribution by Caterpillar (1) those
ASV undercarriage systems set forth on Exhibit A attached hereto and
incorporated herein by reference (the “ASV Product”), for the Caterpillar A Series, B
Series and ***** MTL machines set forth on Exhibit A (collectively, the
“Caterpillar Machines”) and (2) replacement parts and components used in the
manufacturing of ASV Product (“OEM Aftermarket Parts”, together with ASV Product,
“Product”). Unless otherwise agreed upon by the parties, “Caterpillar Machines” shall
not include ***** MTL machines or any other machine or product not listed on
Exhibit A. Loegering Mfg. Inc. and its products and parts are expressly
excluded from the scope of this Agreement.
	 
	 	b.	 	Features. ASV Product will be incorporated on Caterpillar Machines in
accordance with agreed upon written specifications, as may be amended or updated from
time to time in writing by the mutual agreement of both parties (the “Base Product
Specifications”), including those component and functional specifications requested by
Caterpillar (unless ASV can provide reasonable written evidence to Caterpillar that ASV
has already used or conceived of such specifications, features or components prior to
Caterpillar’s request) under a request for proposal, and agreed upon by ASV, which
specifications differentiate Caterpillar Machines and ASV Product from similar machines
and undercarriages in the market, including those set forth on Exhibit B,
attached hereto and incorporated herein by reference, as amended from time to time by a
written amendment signed by both parties (the “Cat Specifications,” together with Base
Product Specifications, the “Specifications”). Any

 

			
	*****	 	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.

 

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	 	 	 	subsequent feature, specification and resulting design, process or engineering change to
an ASV Product or the Specifications requires the agreement of the parties prior to
introduction of such change. If ASV does not agree upon a feature change to the ASV
Product reasonably requested by Caterpillar, then Caterpillar may develop, make, have
made, sell or distribute or outsource the development, manufacture, sale or distribution
of, the affected ASV Product incorporating the feature change subject to the terms and
conditions of Section 11(b) should the product contain any ASV intellectual property.
	 
	 	c.	 	Development and Production Schedule. ASV will develop and validate each ASV
Product for ***** Caterpillar Machines to meet agreed upon reliability and quality
requirements of Caterpillar’s new product development plan for the ***** Caterpillar
Machines. ASV will complete such development of the ASV Product for ***** Caterpillar
Machines for pilot production and full production within the timeframe set forth in the
applicable, agreed upon Caterpillar new product introduction program.

	2.	 	Purchase and Sale of ASV Product. 

	 	a.	 	Scope. Subject to ASV meeting, to Caterpillar’s satisfaction, the QCLDM Goals
(defined in Section 3) and the other terms and conditions set forth herein, Caterpillar
will purchase from ASV one hundred percent (100%) of its sales and manufacturing
requirements in North American markets for those undercarriages produced to the
Specifications for the Caterpillar Machines as set forth on Exhibit A and ASV
will sell to Caterpillar one hundred percent (100%) of Caterpillar’s requirements for
undercarriages produced to the Specifications. Until such time as current export
markets are sourced outside of North America pursuant to Section 2(b), such export
markets are included within the scope of Caterpillar’s sales and manufacturing
requirements with respect to North American markets under this Agreement. ASV
understands that Caterpillar makes no guarantee as to the quantity of Product it will
require or that it will require Product at all.
	 
	 	b.	 	Other Sources.

	 	(1)	 	Notwithstanding anything contained herein to the contrary, Caterpillar
may source Product from suppliers other than ASV to the extent necessary to enable
Caterpillar to meet, outside of North America, governmentally determined local
country sourcing or minimum content requirements, whether mandated or established
by other means such as quotas, duties or fiscal incentives or penalties; provided,
however, that such alternative sourcing shall be permitted solely with respect to
Caterpillar’s sales and manufacturing requirements outside of North America and
shall be permitted only if ASV cannot meet the Local Requirements under Section
2(b)(2).
	 
	 	(2)	 	If Caterpillar sources or manufactures Caterpillar Machines outside of
North America, then, subject to ASV meeting, to Caterpillar’s satisfaction, the
capacity requirements for the applicable geographic area, as provided to ASV
pursuant to Section 2(c) (“Capacity Requirements”), the Caterpillar sourcing
requirements for the specified geographic areas (the “Sourcing Requirements”), and
the local country minimum content requirements (“Content Requirements”, together
with the Sourcing Requirements, the “Local

 

			
	*****	 	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.

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	 	 	 	Requirements”), then Caterpillar will purchase one hundred percent (100%) of its
requirements, for sales outside of North America, of ASV undercarriages produced to
the Specifications for inclusion on the Caterpillar Machines set forth in
Exhibit A. ASV will submit a proposal for or decline such business within
the reasonable timeframe indicated by Caterpillar.
	 
	 	(3)	 	If ASV is unwilling or ASV has indicated it is unable to meet the Local
Requirements, then ASV would grant to Caterpillar a license to the ASV intellectual
property necessary to fulfill Caterpillar’s requirements with respect to the
specified geographic area under the terms and conditions set forth in Section
11(b). If ASV is unwilling or ASV has indicated it is unable to meet the Capacity
Requirements, then ASV would grant to Caterpillar a license to the ASV intellectual
property necessary to fulfill Caterpillar’s requirements with respect to the
specified geographic area under the terms and conditions set forth in Section
11(c). Alternatively, if ASV is unwilling or ASV has indicated it is unable to
meet the Local Requirements or the Capacity Requirements, then Caterpillar may
source undercarriages for Caterpillar Machines from a third party for Caterpillar’s
sales and manfacturing requirements only for geographic areas outside of North
America provided that Caterpillar does not utilize ASV intellectual property.

	 	c.	 	Forecasts. Monthly, Caterpillar will provide ASV a non-binding, written
forecast of its requirements for ASV Product for the following twelve (12) month
period. Unless otherwise agreed to by the parties, the first three (3) months of such
updated forecasts shall be firm on the parties, and the remaining nine (9) months shall
be the parties’ best estimate but shall not be binding on either party. Annually,
Caterpillar will provide ASV a non-binding written forecast of its long-term capacity
requirements for a period of approximately two to five years following the date of
delivery of such written long-term capacity forecast.
	 
	 	d.	 	New Machines.

	 	(1)	 	The parties may, from time to time, engage in formal discussions (i.e.,
initiated when Caterpillar submits a written request for proposal (“RFP”) to ASV)
regarding development of undercarriages (“Discussions”) for any Caterpillar machine
not included in the definition of Caterpillar Machines (a “New Machine”).

	 	(A)	 	If the New Machine Discussions could represent a new, exclusive
opportunity for ASV, ASV agrees to maintain such Discussions on a confidential
and exclusive basis with Caterpillar until Caterpillar provides ASV Notice (as
defined below) or until the transaction is complete.
	 
	 	(B)	 	If the New Machine Discussions would only represent an
existing, non-exclusive opportunity for ASV, then (i) ASV could pursue this
opportunity with others in the marketplace, subject to the other terms of this
Agreement and Caterpillar and (ii) Caterpillar would be free to purchase all,
some or none of its requirements for undercarriages for the New Machines from
ASV or any other supplier.
	 
	 	(C)	 	ASV will send a written notice to Caterpillar within ten (10)
days of the date of Caterpillar’s RFP, indicating in such notice if this
opportunity would constitute a new opportunity for ASV or if ASV is already
formally discussing a similar opportunity with a third party for a machine
within the same size class, and competitive with, the New Machine proposed by
Caterpillar.

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	 	(2)	 	If, as a result of such Discussions, the parties reach agreement on
various commercial terms, including pricing, related to ASV’s supply of
undercarriages for such New Machine, then the parties will negotiate a separate
joint development agreement.
	 
	 	(3)	 	If after engaging in Discussions with ASV regarding development of an
undercarriage for a New Machine, Caterpillar decides to source undercarriages for
the New Machine from another supplier, or to manufacture such undercarriage itself,
then Caterpillar will notify ASV of this decision (“Notice”). Caterpillar will
provide to ASV a Notice upon the completion of the applicable “Caterpillar A
Review.”
	 
	 	(4)	 	Except as otherwise set forth herein, beginning three (3) months after
the date of such Notice, ASV may sell undercarriages to OEM’s (other than
Caterpillar and its affiliates) for incorporation on machines that compete with or
are similar to the New Machine listed in such notice (but not competitive with
Caterpillar Machines) (“Permitted OEM Machines”) so long as those ASV
undercarriages do not use or incorporate any Cat Specifications or intellectual
property obtained from Caterpillar, including, but not limited to, any Caterpillar
specification included in Caterpillar’s RFP, other than any specification, feature
or component for which ASV can provide reasonable written evidence that ASV used or
conceived of such specification, feature or component prior to the date of ASV’s
receipt of such RFP, and, in the case of the ***** Caterpillar Machine, either (A)
Caterpillar is selling and distributing the particular New Machine or (B) 18 months
has passed from the date of the Notice. Notwithstanding anything herein to the
contrary, under no circumstances will ASV sell, or license others to sell,
undercarriages for a New Machine, or any other undercarriage, made using or
incorporating any Cat Specifications or any other intellectual property obtained
from Caterpillar.
	 
	 	(5)	 	ASV may sell ASV Product produced to Cat Specifications only to (1)
Caterpillar, or Caterpillar affiliates designated by Caterpillar, for inclusion on
Caterpillar Machines or (2) ASV dealers for inclusion on ASV machines. ASV may not
sell, directly or indirectly, ASV Product to any third party manufacturing,
distributing or selling Competitive Machines (defined below). Except as otherwise
set forth herein, nothing will prevent ASV from developing, manufacturing and
selling its undercarriages to other machine manufacturers, including without
limitation undercarriages for New Machines as contemplated under Section 2(d)
above, unless (1) the undercarriages sold incorporate any Cat Specifications, any
Cat intellectual property or any other intellectual property obtained from
Caterpillar or (2) the machines for which the undercarriages are sold compete with
Caterpillar Machines (“Competitive Machines”). Further, ASV will not license, or
purport to license, to any third party, (A) any Caterpillar intellectual property
or other intellectual property obtained from Caterpillar, (B) any Cat
Specifications or (C) any ASV intellectual property in a manner that would result
in such third party competing with Caterpillar with respect to the Caterpillar
Machines in a manner that would be otherwise be prohibited under the terms of this
Agreement had the activities of such third party been conducted directly by ASV.
“Competitive Machines” include MTLs, compact track loaders, all surface loaders and
other rubber track loaders within the same size class (based on rated operating
capacity) as the Caterpillar Machines on Exhibit A (except with respect to
any Permitted OEM Machines). Competitive Machines

 

			
	*****	 	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.

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	 	 	 	do not include Permitted OEM Machines that compete with New Machines included in a
Notice.

	 	e.	 	If ASV violates Section 2(a) or 2(d), then, in addition to other remedies that
Caterpillar may have under law or equity, Caterpillar will no longer be required to
purchase its requirements for undercarriages from ASV and will be allowed to
manufacture, or outsource the manufacture of, ASV Product using the relevant ASV
intellectual property without restriction and pursuant to the Product License described
in Section 11(c).
	 
	 	f.	 	Purchase and Sale of Aftermarket Parts.

	 	(1)	 	Caterpillar will purchase 100% of its requirements for ASV proprietary
OEM Aftermarket Parts from ASV so long as ASV remains competitive in terms of cost,
quality, reliability and pricing of substitutable parts and components. A current
listing of the ASV proprietary and non-proprietary OEM Aftermarket Parts is set
forth on Attachment 1 to Exhibit C. “Proprietary OEM Aftermarket Parts”
are defined as those parts that are designed and built specifically for the ASV
Product. “Non-Proprietary OEM Aftermarket Parts” are defined as those parts that
are not designed and built specifically for the ASV Product. Caterpillar may
purchase Non-Proprietary OEM Aftermarket Parts from sources other than ASV, but
must not represent such parts as ASV OEM Aftermarket Parts.
	 
	 	(2)	 	Caterpillar and ASV will sell OEM Aftermarket Parts only to their
respective authorized machine dealers and not through other parts resellers.

	3.	 	Quality, Cost, Logistics, Development and Management. Caterpillar will monitor ASV’s
performance under this Agreement using quality, cost, logistics, development and management
goals agreed upon in writing by the parties (“QCLDM Goals”). The QCLDM Goals will be
reviewed and agreed upon by the parties on an annual basis.

	4.	 	ASV Product Prices. Both ASV and Caterpillar are committed to controlling and
reducing costs, and both recognize that effective cost control is of the essence to this
Agreement. While this Agreement is in effect, ASV will maintain a cost control and reduction
program with respect to Product, and will review costs on a regular basis for progress toward
the objective of reducing ASV’s prices to Caterpillar. A constant interaction between
Caterpillar’s and ASV’s engineering personnel is essential. Any cost increases or
engineering, processes, design or material changes in Product must be documented and agreed to
in advance in writing by both parties.

	 	a.	 	Price for ASV Product included on B Series Caterpillar Machines. ASV will sell
to Caterpillar and designated Caterpillar affiliates ASV Product for inclusion on
existing B Series Caterpillar Machines at the prices set forth on Table 1 of
Exhibit C attached hereto and incorporated herein by reference (the “B Series
Prices”). *****.

 

			
	*****	 	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.

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	 	b.	 	Price for ASV Product included on ***** Caterpillar Machines.

	 	(1)	 	Subject to Section 4(b)(4), the price for ASV Product included on *****
Caterpillar Machines will be the lesser of: (A) ASV Manufacturing Costs plus an
amount to generate a *****% gross profit margin for ASV; and (B) the applicable
maximum price set forth on Table 2 of Exhibit C. Similar to the current
methodology being used by the parties, “ASV Manufacturing Costs” will include the
actual costs incurred by ASV, in accordance with US GAAP, in connection with
manufacturing ASV Product for Caterpillar for (W) direct material, (X) direct
labor, (Y) direct burden, including shipping and delivering ASV Product to
Caterpillar and (Z) the overhead allocated at ASV’s overhead application rate and
based upon manufacturing overhead expenses agreed upon by the parties incurred as a
result of manufacturing, testing, painting, shipping and delivering ASV Product to
Caterpillar. Caterpillar or its representatives may audit ASV’s books and records
to confirm the ASV Manufacturing Costs used in determining Production Price
(defined in Section 4(b)(2)).
	 
	 	(2)	 	Subject to Section 4(b)(1), the parties will determine the price
referenced in Section 4(b)(1)(A) above for ***** Caterpillar Machines at two points
in time: first, upon the initial production of the ***** Caterpillar Machines
(“Initial Production Price”); and second, upon completion of ASV’s production ramp
up, i.e., ***** (“Production Price”). Subject to Section 4(b)(1), if mutually
agreed by the parties, the *****.
	 
	 	(3)	 	Subject to Section 4(b)(1), the lesser of: (A) the Initial Production
Price; and (B) the applicable maximum price set forth on Table 2 of Exhibit
C will apply to ASV Product sold to Caterpillar for ***** Caterpillar Machines
during the 2006 calendar year. Subject to Section 4(b)(1), the lesser of: (Y) the
Production Price; and (Z) the applicable maximum price set forth on Table 2 of
Exhibit C will apply to ASV Product sold to Caterpillar for *****
Caterpillar Machines during the 2007 calendar year.
	 
	 	(4)	 	Beginning on *****, a *****% year-over-year price reduction will apply
to the current Production Price for the remainder of the term set forth in Section
6(b).
	 
	 	(5)	 	*****.
	 
	 	(6)	 	Exhibit D accurately details ASV’s cost build-up of the
Production Prices and maximum prices set forth on Table 2 of Exhibit C.

	 	c.	 	Shipping Costs. The margins/prices listed on Table 2 of Exhibit C
include ASV’s freight and delivery costs to ship ASV Product to the Caterpillar
facility located in Sanford, North Carolina (the “Facility”). The parties will agree
in advance upon the allocation of freight and delivery costs for transportation of ASV
Product to facilities other than the Facility. Both parties will review such shipping
costs annually. However, if Caterpillar or ASV identifies a lower cost shipping source
which meets each party’s quality, cost and delivery requirements, ASV will have the
option to either (1) change to the identified source to allow Caterpillar to realize
the full amount of such cost reduction or (2) reduce the purchase price by the
identified reduction.

 

			
	*****	 	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.

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	5.	 	Payment. Caterpillar or the applicable Caterpillar affiliate will pay all correct
invoices submitted pursuant to this Agreement within ***** from receipt of invoice for
undercarriage production supply and within ***** of receipt of invoice for OEM Aftermarket
Parts.

	6.	 	Term. This Agreement shall commence as of the Effective Date and continue through:

	 	a.	 	for ***** Caterpillar Machines, the earlier to occur of (1) Caterpillar
termination of production of B Series Caterpillar Machines or (2) November 1, 2010; and
	 
	 	b.	 	for ***** Caterpillar Machines, November 1, 2010;
	 
	 	 	 	unless sooner terminated by either party, pursuant to the provisions set forth in Section
13. THIS AGREEMENT SHALL AUTOMATICALLY RENEW FOR SUCCESSIVE ONE-YEAR RENEWAL TERMS UNLESS
EITHER PARTY PROVIDES TO THE OTHER PARTY HERETO AT LEAST SIX (6) MONTHS WRITTEN NOTICE OF
TERMINATION PRIOR TO THE EXPIRATION OF THE THEN-CURRENT TERM OF THIS AGREEMENT OR UNLESS
TERMINATED PURSUANT TO SECTION 13.

	7.	 	Aftermarket Parts. 

	 	a.	 	ASV will sell to Caterpillar and Caterpillar affiliates OEM Aftermarket Parts
for inclusion on A Series Caterpillar Machines and B Series Caterpillar Machines (“A
and B Series Parts”) at the prices determined within the pricing guidelines set forth
on Table 3 of Exhibit C and set forth in further detail on Attachment 1 to
Exhibit C, subject to Section 7(c).
	 
	 	b.	 	ASV will sell to Caterpillar and Caterpillar affiliates OEM Aftermarket Parts
for inclusion on ***** Caterpillar Machines (“***** Parts”) at prices determined within
the pricing guidelines set forth on Table 4 of Exhibit C, subject to Section
7(c). The parties will create a list of ***** Parts and specific prices similar to
Attachment 1 to Exhibit C prior to ASV’s initiation of full production of *****
Parts.
	 
	 	c.	 	Both parties will review and update the ASV proprietary OEM Aftermarket Parts
listed on Exhibit C on an annual basis for competitive pricing and content.
During that review, ASV will update the OEM Aftermarket Parts pricing lists on an
annual basis within the percentages set forth in Tables 3 and 4 in Exhibit C.
Caterpillar or its representatives may audit ASV’s books and records to confirm the ASV
Manufacturing Costs used in determining OEM Aftermarket Parts Prices as part of the
parties annual price reviews contemplated by Section 4.
	 
	 	d.	 	For a period of ***** years following the termination or expiration of this
Agreement, ASV will sell to Caterpillar OEM Aftermarket Parts at the applicable parts
prices listed in Exhibit C. If ASV for whatever reason ceases supplying any or
all of the OEM Aftermarket Parts, ASV will grant to Caterpillar an irrevocable,
worldwide, royalty-free, non-exclusive license for Caterpillar to manufacture (or
outsource the manufacture of), use, distribute and

 

			
	*****	 	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.

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	 	 	 	sell such parts incorporating ASV intellectual property to support the Caterpillar
aftermarket for the period of ***** years following the termination or expiration of the
Agreement.
	 
	 	e.	 	ASV will take all necessary action to permit Caterpillar access to an
alternative source of supply should ASV for whatever reason cease to be able to supply
any or all of the OEM Aftermarket Parts.
	 
	 	f.	 	While this Agreement is in effect, ASV agrees not to compete with Caterpillar
for the sale of OEM Aftermarket Parts.

	8.	Warranty. ASV warrants that each Product shall be in full conformity with ASV’s and
Caterpillar’s specifications, drawings, and data, including but not limited to, the
Specifications. ASV further warrants that Product will be free from defects in design,
material and workmanship. *****.

	 
	     *****.

	9.	 	Indemnification. 

	 	a.	 	ASV agrees to indemnify, defend, and hold harmless Caterpillar, its
subsidiaries, affiliates, directors, officers, employees, agents, successors and
assigns from and against all claims, demands, liabilities, losses, damages, costs, and
expense, of whatsoever nature, including attorneys’ fees, arising from the injury or
death of any person or loss or damage to property and the environment (including any
damage caused by ASV’s failure to comply with any state or federal environmental rules
and regulations), to the extent arising out of or connected with, directly or
indirectly, (1) any defect of design, material, or workmanship of Product or failure of
Product to conform with the Specifications, drawings, and data, including but not
limited to, any recall of Product and related costs, (2) any act or omission to act by
ASV or its employees, agents or contractors, (3) ASV’s breach of this Agreement and (4)
infringement of any third party intellectual property rights arising because or on
account of the design, manufacture, use or sale of the Product. It is expressly
understood that this Section does not apply to the extent any suit, action, or
proceeding is based upon actual or alleged infringement by improvements developed by
Caterpillar, Caterpillar-supplied components or Caterpillar-supplied component parts.
	 
	 	b.	 	Caterpillar agrees to indemnify, defend, and hold harmless ASV, its
subsidiaries, affiliates, directors, officers, employees, agents, successors and
assigns from and against all claims, demands, liabilities, losses, damages, costs, and
expense, of whatsoever nature, including attorneys’ fees, arising from the injury or
death of any person or loss or damage to property and the environment (including any
damage caused by Caterpillar’s failure to comply with any state or federal
environmental rules and regulations), to the extent arising out of or connected with,
directly or indirectly, (1) any defect of design, material, or workmanship of the
Caterpillar Machines (except with respect to the Product used in such Caterpillar
Machines), including but not limited to, any recall of Caterpillar Machines and related
costs, (2) any act or omission to act by Caterpillar or its employees, agents or
contractors, (3) Caterpillar’s breach of this Agreement and (4) infringement of any
third party intellectual

 

			
	*****	 	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.

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	 	 	 	property rights arising because or on account of the design, manufacture, use or sale of
the Caterpillar Machine, excluding the Product used in such machines. It is expressly
understood that this Section does not apply to the extent any suit, action, or
proceeding is based upon actual or alleged infringement by improvements developed by
ASV, ASV-supplied components or ASV-supplied component parts.

	10.	 	Confidential Information. Each party hereto agrees to hold in confidence any
proprietary technical and business information observed at the Facility or otherwise received
from the other party hereto (e.g., information relating to the disclosing party’s products or
manufacturing methods or both, including, but not limited to, technical specifications,
diagrams, discoveries, economic models, pro forma and other financial information, designs,
business opportunities, cost and pricing data, records, customer lists, vendor lists and
engineering, manufacturing, and marketing know-how) (the “Confidential Information”). The
receiving party may only use Confidential Information for the purposes stated herein during
the term of this Agreement. The receiving party shall obtain a signed copy of an Employee NDA
(defined below) from each of its employees and subcontractors, prior to such employee or
subcontractor performing services for the disclosing party. Upon request, the receiving party
agrees to make the Employee NDAs signed by its employees and subcontractors available to the
disclosing party for inspection. Each party shall use and shall not alter, except for filling
in names and dates, the disclosing party’s standard employee and/or subcontractor
nondisclosure agreement for signature by the receiving party’s employee or subcontractor, as
the case may be (each an “Employee NDA”). Each party shall be responsible for any breach of
this Section or any Employee NDA by its employees or agents.
	 
	 	 	Each party may be required to access the other party’s computer or other electronic systems
in the performance of Services. At either party’s request, the other party hereto shall
sign such party’s Nondisclosure and Security Agreement or comparable agreement used to
protect similar proprietary information of such party.
	 
	 	 	The obligations and restrictions on use and disclosure of Confidential Information shall
survive the termination and/or expiration of this Agreement for a period of five (5) years
after such termination and/or expiration.

	11.	 	Product Development and License.

	 	a.	 	ASV at its own cost will be responsible for designing, developing,
manufacturing, painting, improving and testing Product to meet the Specifications. In
addition, ASV will perform such product tests agreed upon by both parties. Caterpillar
will be responsible at its own cost for validation of the Caterpillar Machines equipped
with Product.
	 
	 	b.	 	Upon expiration of this Agreement, or at any time during the term of this
Agreement if so agreed upon by the parties, ASV shall grant to Caterpillar a
royalty-bearing, nonexclusive, worldwide license to ASV’s intellectual property on
terms agreed upon by both parties.
	 
	 	c.	 	Upon termination of this Agreement by ASV other than in accordance with Section
13 or by Caterpillar in accordance with Section 13, or if ASV cannot or will not
provide, or continue to provide, to Caterpillar ASV Product or OEM Aftermarket Parts or
the products described in Sections 2(f) or 7(d) (each a “Triggering Event”), ASV shall
grant and hereby grants to Caterpillar a royalty-bearing, nonexclusive, irrevocable,
worldwide license (the “Product License”) to ASV’s intellectual property that is
necessary or useful for Caterpillar to continue using said intellectual property and to
make, have made, sell, offer to sell, and import

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	 	 	 	products that are the same or similar to ASV Products or OEM Aftermarket Parts using the
relevant ASV intellectual property and incorporate ASV Product into Caterpillar Machines
for sale and distribution. If the defaulting party has not cured its default to the
satisfaction of the terminating party within a Cure Period (as defined in Section 13),
then the parties shall negotiate in good faith the royalty of the Product License with
the said royalty being no less favorable than those terms (1) currently in place with
existing licensees of ASV for products that are the same or similar to the ASV Products
or (2) if ASV does not have licensees, representing approximately the typical royalty
rates for similar intellectual property currently prevailing in the MTL machines
undercarriage industry, and taking into account whether such license is being granted as
a result of either party’s breach of the terms of this Agreement. In the event that the
parties are unable to agree upon commercially reasonable royalty for the Product License
within 60 days following a Cure Period and the breach has not been cured, then the
parties shall appoint an independent certified public accountant who is familiar with
MTL undercarriage market intellectual property royalty rates and who is acceptable to
both parties (“Expert”) or, in the absence of an acceptable Expert, appointed on the
application of either party by the President and CEO of the American Institute of
Certified Public Accountants provided that the Expert appointed shall be an independent
certified public accountant who is familiar with MTL undercarriage market intellectual
property royalty rates. Both parties shall cooperate in good faith with the Expert and
shall supply him or her in confidence all relevant data and information. The Expert so
appointed shall act as an expert, shall make his or her determination as expeditiously
as practicable, but in any event, within 60 days from selection or appointment of the
Expert (the “60-Day Period”). The Expert’s determination shall be binding on the
parties. The expenses of the Expert shall be borne equally by the parties. All aspects
of the proceeding (including the existence, content and result of the proceeding) shall
be treated as Confidential Information. During the 90-Day Period and 60-Day Period,
Caterpillar shall have access to the Product License, but shall pay the
finally-determined royalty for use during those periods and thereafter.
	 
	 	d.	 	Any and all intellectual property created solely by ASV during the course of
this Agreement shall be solely owned by ASV, and, except as otherwise set forth herein,
nothing herein shall be deemed to imply any license to or ownership interest in,
Caterpillar of any such intellectual property so created. In the event that ASV shares
any of ASV’s intellectual property with Caterpillar during the course of this
Agreement, the shared ASV intellectual property shall remain the property of ASV, and
nothing herein shall be deemed to imply any license to or ownership interest in,
Caterpillar of any such intellectual property of ASV. Caterpillar shall only be
permitted to use such intellectual property in its Development Efforts, in accordance
with ASV’s instructions, or upon the occurrence of a Triggering Event, and in all cases
in accordance with the terms of this Agreement, and any further use of the shared
intellectual property by Caterpillar other than for the benefit of ASV shall be
pursuant to a license in accordance with Section 11(b), in the case of Development
Efforts, and in accordance with Section 11(c), in the case of a Triggering Event.
	 
	 	e.	 	Any and all intellectual property created solely by Caterpillar during the
course of its Development Efforts shall be solely owned by Caterpillar, and nothing
herein shall be deemed to imply any license to, or ownership interest in, ASV of any
such intellectual property so created. In the event that Caterpillar shares any of
Caterpillar’s intellectual property with ASV during the course of this Agreement, the
shared intellectual property shall remain the property of Caterpillar and ASV shall
only be permitted to use such intellectual property in accordance with Caterpillar’s
instructions, and any further use of the shared intellectual property by ASV other than
for the benefit of Caterpillar shall be pursuant to a license upon terms similar to
those set forth in Section 11(b). Notwithstanding Caterpillar’s

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	 	 	 	purchasing obligations set forth in Section 2 to this Agreement, Caterpillar shall not
be prevented during the term of this Agreement or at anytime thereafter from developing
its own product that is similar to the ASV Product (the “Development Efforts”). To that
end, Caterpillar may only use ASV’s intellectual property pertaining to the ASV Product
in Caterpillar’s said Development Efforts, and in connection with any commercial sales
by or for Caterpillar of product developed as a result of such Development Efforts and
which incorporates ASV intellectual property, pursuant to a license granted under
Section 11(b).
	 
	 	f.	 	This Agreement shall govern the ownership of any intellectual property created
under this Agreement by the parties pertaining to the products in question
notwithstanding those provisions of any prior agreements between the parties,
including, but not limited to, the Multi-Terrain Rubber Tracked Loader Alliance
Agreement dated October 31, 2000 (the “MTL Alliance Agreement”).

	12.	 	Additional Terms.

	 	a.	 	ASV Purchase of Caterpillar Components. ASV agrees to continue to purchase
components as practicable from applicable Caterpillar component divisions in accordance
with the parties’ current business practices.
	 
	 	b.	 	Termination of Other Agreements. The parties hereby terminate the following
agreements by and between the parties: Termination Agreement dated January 22, 2004;
MTL Alliance Agreement and Amendment No. 2. to the MTL Alliance Agreement dated April
3, 2003; Tradename License Agreement dated April 13, 1999; Management Services
Agreement dated January 29, 1999; Marketing Agreement dated January 29, 1999;
Commercial Alliance Agreement dated October 14, 1998; Securities Purchase Agreement
dated October 14, 1998, and the Amendment to the Securities Purchase Agreement dated
January 30, 2003; and Securities Purchase Agreement dated October 31, 2000.
	 
	 	c.	 	Disposition of Certain ASV Assets. Upon termination of the MTL Alliance
Agreement, Caterpillar will either (1) return to ASV the ASV-owned assets previously
purchased by ASV pursuant to the MTL Alliance Agreement, located at the Facility and
identified on Exhibit F attached hereto and incorporated herein by reference
(the “ASV Assets”) or (2) purchase the ASV Assets pursuant to Caterpillar’s standard
equipment purchase order for an amount in cash equal to the net book value of the ASV
Assets, as reflected in ASV’s most recent regularly-prepared and audited financial
statements.

	13.	 	Termination and Other Remedies for Breach.

	 	a.	 	Caterpillar Termination Rights. Caterpillar may terminate this Agreement at
any time, either totally or partially, in the event any of the following items shall
occur:

	 	(1)	 	Quality — Any Product fails to meet the Specifications or the quality
goals set forth in the QCLDM Goals and ASV does not remedy such failure within the
Cure Period as set forth in Section 13(d)(2) or a Product experiences consistent
and recurring failures or other quality-related problems which disrupt
Caterpillar’s business whether or not such failures are remedied.
	 
	 	(2)	 	Delivery — ASV consistently fails to meet Caterpillar schedules with
timely shipments and daily shipments, if required, or the QCLDM Goals related to
delivery, and such failure results from any action or inaction on the part of ASV
or its agents or suppliers.

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	 	 	 	To that end, Caterpillar should not have to expedite normal deliveries. It is the
obligation of ASV to maintain an up-to-date schedule. Upon cases of non-delivery
resulting from ASV action or inaction, in addition to any other rights hereunder or
provided by law, Caterpillar may purchase the needed part or product in the open
market, and ASV shall reimburse Caterpillar the “cost-to-cover” charges either
through a cash payment within 30 days of Caterpillar paying for the replacement part
or products or through an offset by Caterpillar of any amounts owed to ASV
hereunder.
	 
	 	(3)	 	Competitiveness — ASV fails to be responsive to the market place or
fails to remain competitive on a worldwide basis with other manufacturers of
comparable parts or products in terms of price, quality, quantity, availability,
engineering, services, technology, reliability and timely delivery.
	 
	 	(4)	 	Breach — ASV materially breaches this Agreement or the Registration
Rights Agreement.

	 	b.	 	Other Termination Rights.

	 	(1)	 	Insolvency — Either party may terminate this Agreement if the other
party becomes insolvent or intends to dissolve or otherwise generally be unable to
pay debts as they come due, or makes a general assignment for the benefit of
creditors.
	 
	 	(2)	 	Bankruptcy — Either party may terminate this Agreement if a petition
under any bankruptcy act or similar statute is filed or is intended to be filed by
a creditor of the other party and is not vacated within ten (10) days through court
order.
	 
	 	(3)	 	Caterpillar Breach — ASV may terminate this Agreement if Caterpillar
does not make a payment owed to ASV hereunder in accordance with Section 5 or
otherwise materially breaches this Agreement, or if Caterpillar breaches Section 4
of the Registration Rights Agreement.

	 	c.	 	Additional Remedies for Breach. In addition to the other rights granted under
this Agreement, whether or not Caterpillar terminates this Agreement pursuant to
Section 13, provided Caterpillar has a basis for termination under Section 13, ASV
agrees to pay for all ASV and Caterpillar reasonable expenses incurred as a result of
such breach, including, but not limited to: material, tooling, labor, downtime and
transportation expenses.
	 
	 	d.	 	Effect of Termination.

	 	(1)	 	License. Upon termination, Caterpillar will receive the
Product License described in Section 11(c).
	 
	 	(2)	 	Termination Plan. Prior to the Agreement being terminated by
the respective party under Section 13(a) or 13(b)(3), Caterpillar and ASV will meet
to establish a 90-day corrective action plan to address the concern of the
terminating party (the “Cure Period”). If at the end of the Cure Period the
defaulting party has not cured its default to the satisfaction of the terminating
party, the parties agree to construct a termination plan to allow Caterpillar
sufficient time to secure another acceptable source of undercarriages and related
parts to avoid disruption to Caterpillar’s business. Upon Caterpillar’s reasonable
determination that it has secured an acceptable source of undercarriages and
related parts, Caterpillar shall provide ASV with at least 30 days’ prior written
notice of final termination.

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

	 	 	 	 	 
	 

	 	For Caterpillar:
	 	For ASV:
	 
	 	 	 	 
	 

	 	Caterpillar Inc.
	 	A.S.V., Inc.
	 

	 	5000 Womack Road
	 	840 Lily Lane
	 

	 	Sanford, North Carolina 27330
	 	Grand Rapids, Minnesota 55744-4089
	 

	 	Attn: SSL/MTL Product Manager
	 	Attn: Chief Executive Officer
	 

	 	Fax: (919) 777-2032
	 	Fax: (218) 327-9123
	 
	 	 	 	 
	 

	 	With a copy to:
	 	With a copy to:
	 

	 	Caterpillar Inc.
	 	Dorsey & Whitney LLP
	 

	 	100 N.E. Adams Street
	 	50 South Sixth Street, Suite 1500
	 

	 	Peoria, Illinois 61629
	 	Minneapolis, Minnesota 55402
	 

	 	Attn: General Counsel
	 	Attn: Philip E. Bauer
	 

	 	Fax: (309) 675-6620
	 	Fax: (612) 340-7800

	 	 	Written notice may also be sent by facsimile to the numbers listed above, but notice
delivered in such manner shall only be effective upon the sender receiving electronic
confirmation that the notice was faxed successfully. Notice shall be deemed received when
actually delivered to the recipient as demonstrated by shipping records of a nationally
recognized courier, the electronic confirmation or when delivered in person. The addresses
and transmittal numbers set forth above can be changed only by written notice that complies
with the requirements of this Section.
	 
	15.	 	Shipping Instructions. Orders will be placed using Caterpillar’s standard purchase
order and shipping instruction forms. Any special freight charges occurring as a result of
ASV’s lack of performance will be ASV’s responsibility. Any special freight charges occurring
as a result of Caterpillar’s lack of performance will be Caterpillar’s responsibility.
	 
	16.	 	Inspection. Caterpillar shall have the right (but not the obligation) at reasonable
times, to inspect materials, work in process, finished Product, and records relating thereto,
at any facilities at which Product is manufactured or such records are kept. Caterpillar
assumes no responsibility and waives no rights as a result of any such inspection.
	 
	19.	 	Force Majeure. Neither Caterpillar nor ASV shall be liable to the other for any
delay in or failure of performance of their respective obligations hereunder if such
performance is rendered impossible or impracticable by reason of fire, flood, hurricane,
severe weather, explosion, earthquake, drought, embargo, war, riot, act of God or of public
enemy, an act of governmental authority, agency or entity beyond the reasonable control of the
party whose performance is affected, irrespective of whether such contingency is specified
herein or is presently occurring or anticipated by either party. In the event either party is
prevented from fulfilling its obligations under this Agreement because of such a force majeure
as described herein, both ASV and Caterpillar shall make every effort to continue to maintain
as much as possible the supplier-customer relationship established under this Agreement.
However, if either Caterpillar or ASV are unable to meet its obligations hereunder because of
the conditions described above and such inability continues for a period of 60 days, the other
party shall have the right to terminate this Agreement upon 30 days’ prior written notice.

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	20.	 	Assignment; Subcontracting. This Agreement is not assignable by transfer,
disposition, sale or otherwise, by either party without the written consent of the other
party, such consent not to be unreasonably withheld; provided, however, that Caterpillar may
assign this Agreement to a Caterpillar affiliate or subsidiary without ASV’s consent. ASV
must notify Caterpillar in writing at least sixty (60) days prior to subcontracting any work
or manufacturing required to be performed hereunder. ASV shall remain responsible for all of
its obligations, whether or not those obligations are subcontracted to a third party.
Further, ASV will make its subcontractors, agents and employees aware of the ASV obligations
contained herein only to the extent such information is necessary to perform the subcontracted
work or to prevent harm to Caterpillar. To that end, ASV shall be responsible for a breach of
any ASV obligation contained herein by its subcontractors, agents and employees. Further, ASV
shall be solely responsible for payment for the services of all of its agents, servants, or
employees (including without limitation all salaries, taxes, insurance, fringe benefits or
other costs and expenses of any kind), and shall be responsible for their direct supervision
in the performance of all services provided by ASV and its agents, services and employees
hereunder. It is understood and agreed that this Agreement shall be binding upon and inure to
the benefit of the parties and their respective parent(s), subsidiaries, representatives,
attorneys, agents, successors and assigns.
	 
	21.	 	No Third Party Beneficiaries. Except as set forth in Section 9, nothing contained in
this Agreement, express or implied, shall be deemed to confer any rights or remedies upon, nor
obligate any of the parties hereto, to any person other than the parties and their affiliates
unless specifically stated herein to the contrary.
	 
	22.	 	Relationship of Parties. The parties’ relationship to each other is one of
independent contractor and nothing contained in this Agreement shall be construed to imply
that either party, or its officers, employees or agents, is an employee or agent of the other
party for any purpose. Each party is responsible for the supervision, direction and control
and assignment of their respective employees and agents. Neither party shall have the right,
power or authority to create any obligation, expressed or implied, or to make any
representation on behalf of the other party. Nothing herein is to imply an agency, joint
venture or partner relationship between the parties.
	 
	23.	 	Trademarks. ASV shall not use in advertising, publicity, promotion, marketing, or
other activity, any name, trade name, trademark, service mark or other designation of, or
owned by, Caterpillar except upon the prior written permission of the Caterpillar Public
Affairs Department.
	 
	24.	 	Applicable Law; Jurisdiction. This Agreement shall be deemed to have been entered in
the State of Illinois. It shall be governed by and construed in accordance with the laws of
the State of Illinois, without regard to the conflict of laws provisions thereof. Any and all
disputes concerning this Agreement may be instituted and maintained in the applicable federal
court of competent jurisdiction in the State of Illinois.
	 
	25.	 	Entire Agreement. This Agreement, the Binding Term Sheet Provisions, the
Registration Rights Agreement by and between the parties dated as of the date hereof, the
QCLDM Goals, the exhibits attached hereto and the terms and conditions referenced in any
purchase order issued by Caterpillar in connection with this Agreement (to the extent not
inconsistent with this Agreement) constitute the entire agreement and understanding between
the parties with respect to the subject matters herein and therein, and supersede and replace
any and all prior agreements and understandings, whether oral or written, between them with
respect to such matters, including the MTL Alliance Agreement. Both parties agree that the
terms and conditions of any ASV quotation, offer, acknowledgment or similar document, however
designated, shall not apply.

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	26.	 	Survival. Sections 7 through 11, 12(b), 13(c), 13(d), 14, 20-24 and 29 shall survive
termination of this Agreement.
	 
	27.	 	Waiver. The provisions of this Agreement may be waived, altered, amended, or
repealed in whole or in part only upon the written agreement 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, to this Agreement.
	 
	28.	 	Change in Control. During this Agreement, if there is a change in control of ASV,
Caterpillar shall have the right to terminate this Agreement effective immediately upon
written notice. For purposes of this Section, a “change in control” shall be deemed to have
occurred if and when any one or more third parties acting individually or jointly
(“Purchaser”) (a) purchases substantially all of the assets of ASV, or its parent company, if
applicable, or (b) becomes a beneficial owner, directly or indirectly, of securities
representing in excess of 50% of the combined voting power of the then outstanding securities
of ASV. Where the Purchaser is a competitor to Caterpillar, then a “change of control” shall
include a purchase of substantially all of the ASV manufacturing assets or intellectual
property related to this Agreement or if Purchaser becomes the beneficial owner, directly or
indirectly, of ASV securities representing a combined voting power equal to or greater than
twenty percent (20%).
	 
	29.	 	Severability; Injunctive Relief. Invalidation of any of the provisions contained
herein, or the application of such invalidation thereof to any person, by legislation,
judgment or court order shall in no way affect any of the other provisions hereof or the
application thereof to any other person, and the same shall remain in full force and effect,
unless enforcement as so modified would be unreasonable or grossly inequitable under all the
circumstances or would frustrate the purposes hereof. It is the intention of the parties that
if any of the restrictions or covenants contained herein is held to cover a geographic area or
to be for a length of time that is not permitted by applicable law, or in any way construed to
be too broad or to any extent invalid, such provision shall not be construed to be null, void
and of no effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret or reform
Section 2 to provide for a covenant having the maximum enforceable geographic area, time
period and other provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable law. The parties acknowledge that monetary damages may not
be adequate to protect a party from breach of Section 2 of this Agreement by the other party
and accordingly acknowledge that the nonbreaching party shall be entitled to seek, in addition
to any other remedies it may have, specific performance, temporary and permanent injunctive
relief or such other equitable remedies as may be available from any court of competent
jurisdiction without the necessity of proving actual damage.
	 
	30.	 	Public Disclosures. Neither ASV nor Caterpillar shall issue any press release or
make any other public disclosure (including disclosure to public officials) with respect to
this Agreement, except as required by law, without the prior written approval of the other
party.
	 
	31.	 	Construction. The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement.
	 
	32.	 	Section Headings. Section headings contained herein are for ease of reference only
and shall not be given substantive effect.

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	33.	 	Counterparts; Signatures. This Agreement may be signed in one or more counterparts,
each to be effective as an original. This Agreement shall not be binding on any party unless
signed by both parties hereto.

[The remainder of this page is intentionally left blank.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by
their duly authorized representatives as of the Effective Date.

	 	 	 	 	 	 	 
	Caterpillar Inc.

	 	 	 	A.S.V., Inc.	 	 
	 
	 	 	 	 	 	 
	By: /s/ Dan Murphy

	 	 	 	By: /s/ Gary D. Lemke	 	 
	 

Name: Dan Murphy

	 	 
	 	 

Name: Gary D. Lemke
	 	 
	Title: Vice President — Global Purchasing	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	and
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By: /s/ Edward J. Rapp
	 	 	 	 	 	 
	 

Name: Edward J. Rapp

	 	 	 	 	 	 
	Title: Vice President — Building Construction Products	 	 

[Signature Page to the Purchase Agreement]

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Exhibit A

ASV Product

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Caterpillar Machines	 	ASV Product
	 	 	A-series	 	B-series
	 	 	CAT part # A-series	 	ASV Part# A-series	 	CAT part # B-Series	 	ASV part #
	247/257
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RH Undercarriage
	 	 	212-6554	 	 	 	0702-093	 	 	 	218-5861	 	 	 	0702-242	 
	LH Undercarriage
	 	 	212-6555	 	 	 	0702-092	 	 	 	218-5862	 	 	 	0702-243	 
	Front Torsion Axle
	 	 	225-9259	 	 	 	0702-001	 	 	 	225-9259	 	 	 	0702-001	 
	Rear Torsion Axle
	 	 	206-3809	 	 	 	0702-002	 	 	 	206-3809	 	 	 	0702-002	 
	Spacer
	 	 	212-6686	 	 	 	0702-060	 	 	 	212-6686	 	 	 	0702-060	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	267/277
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Undercarriage Arrangement
	 	 	199-5258	 	 	 	0700-056	 	 	 	 	 	 	 	 	 
	 
	 	 	220-8151	 	 	 	0700-225	 	 	 	 	 	 	 	 	 
	 
	 	 	230-3758	 	 	 	0700-236	 	 	 	 	 	 	 	 	 
	RH Undercarriage
	 	 	220-8153	 	 	 	0700-265	 	 	 	252-0401	 	 	 	0700-272	 
	LH Undercarriage
	 	 	220-8154	 	 	 	0700-266	 	 	 	252-0402	 	 	 	0700-273	 
	Front Torsion Axle
	 	 	197-4909	 	 	 	0700-028	 	 	 	197-4909	 	 	 	0700-028	 
	Rear Torsion Axle
	 	 	197-4914	 	 	 	0700-029	 	 	 	197-4914	 	 	 	0700-029	 
	Tightener GP
	 	 	205-8108	 	 	 	0700-112	 	 	 	 	 	 	 	 	 
	Tool GP
	 	 	 	 	 	 	 	 	 	 	218-6994	 	 	 	0700-267	 
	Handle
	 	 	 	 	 	 	 	 	 	 	218-6995	 	 	 	0700-268	 
	Pin
	 	 	 	 	 	 	 	 	 	 	209-2360	 	 	 	0700-132	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	287
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RH Undercarriage
	 	 	215-3949	 	 	 	0703-056	 	 	 	252-0351	 	 	 	0703-166	 
	LH Undercarriage
	 	 	215-3951	 	 	 	0703-055	 	 	 	252-0352	 	 	 	0703-167	 
	Front Torsion Axle
	 	 	257-7385	 	 	 	0703-182	 	 	 	257-7385	 	 	 	0703-182	 
	Rear Torsion Axle
	 	 	257-7386	 	 	 	0703-183	 	 	 	257-7386	 	 	 	0703-183	 
	Spacer
	 	 	230-3729	 	 	 	0201-148	 	 	 	230-3729	 	 	 	0201-148	 
	Spacer
	 	 	230-3730	 	 	 	0201-147	 	 	 	230-3730	 	 	 	0201-147	 

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	Caterpillar Machines	 	ASV Product
	*****	 	CAT Part #	 	ASV part #
	1 Speed, Single-Level Suspension Undercarriage
	 	 	 	 
	RH Side

	 	258-2901
	 	2035-030
	LH Side

	 	258-2902
	 	2035-031
	1 Speed, Dual-Level Suspension Undercarriage
	 	 	 	 
	RH Side

	 	258-3001
	 	2035-199
	LH Side

	 	258-3002
	 	2035-200
	*****, Dual-Level Suspension Undercarriage
	 	 	 	 
	RH Side

	 	258-3701
	 	2035-244
	LH Side

	 	258-3702
	 	2035-352
	Used on All Suspensions options
	 	 	 	 
	*****

	 	*****
	 	      ***** 
	*****

	 	*****
	 	      ***** 
	*****

	 	*****
	 	      ***** 
	*****

	 	*****
	 	      ***** 
	277 / 287 LH Front Torsion Axle

	 	258-3603
	 	2035-274
	277 / 287 RH Front Torsion Axle

	 	258-3604
	 	2035-275
	277 / 287 LH Rear Torsion Axle

	 	258-3605
	 	2035-276
	277 / 287 RH Rear Torsion Axle

	 	258-3606
	 	2035-277
	Spacer

	 	230-3729
	 	0201-148
	Spacer

	 	230-3730
	 	0201-147
	Washer

	 	258-3013
	 	2035-249
	End Cap

	 	258-3009
	 	2035-356

Notes:

	1.	 	Products include the current part numbers and any new or replacement part numbers issued by
Caterpillar and agreed upon by Caterpillar and ASV.
	 
	2.	 	Prices are firm except as set forth in Section 4 of the Agreement.

 

			
	*****	 	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.

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Exhibit B

Cat Specifications

	§
	 	*****

	§
	 	*****

Future Cat Specifiations will be included in a Requests for Proposal pursuant to Section
1(b) or Section 2(d) of the Agreement.

 

			
	*****	 	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.

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Exhibit C

Pricing

     Table 1

	 	 	 	 	 	 	 
	 	 	 	 	 	 	*****price reductions
	B Series	 	4/1/05 – 12/31/05	 	1/1/06 – 12/31/06	 	thereafter
	Alpha undercarriage
	 	$*****	 	$*****	 	$*****
	Beta undercarriage
	 	$*****	 	$*****	 	$*****
	Charlie undercarriage
	 	$*****	 	$*****	 	$*****

     Table 2

	 	 	 	 	 	 	 	 	 
	 	 	Maximum Price for	 	Maximum Price for
	*****	 	    1/1/06 – 12/31/07	 	1/1/08
à
	ASV Single
Level Beta 1-speed
	 	$	*	****	 	*****     % price reduction
on the adjusted Production price in effect as of December
31st of the prior year
	ASV Dual
Level Beta 1-speed
	 	$	*	****	 	*****     % price reduction
on the adjusted Production price in effect as of December
31st of the prior year
	ASV Dual
Level Beta***** 
	 	$	*	****	 	*****     % price reduction
on the adjusted Production Price in effect as of December
31st of the prior year

     Table 3***

	 	 	 	 	 
	A Series and B Series	 	Until 10/31/05	 	11/1/05 à
	Alpha undercarriage

	 	***** * - *****%
	 	***** ASV / ***** Cat ***** **
	Beta undercarriage

	 	***** * - *****%
	 	***** ASV / ***** Cat ***** **
	Charlie undercarriage

	 	***** * - *****%
	 	***** ASV / ***** Cat ***** **

 

			
	******	 	 means the ASV Dealer Net Price after all discounts to their
dealers are applied.
	 
	**	 	The parties agree that under the ***** / ***** ***** ,
the price Caterpillar will pay for A and B Series Parts will not exceed, on a
weighted-average basis, ***** minus ***** %.
	 
	*****	 	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.

			

C-1

 

Confidential

Execution Copy

     *** See also Attachment 1

     Table 4**

	 	 	 	 	 
	              *****	 	From Date of Full Production	 
	ASV Single Level
	 	***** ASV / *****
	Beta 1-speed
	 	Cat ***** *
	ASV Dual Level
	 	***** ASV / *****
	Beta 1-speed
	 	Cat ***** *
	ASV Dual Level
	 	***** ASV / *****
	Beta *****
	 	Cat ***** *

 

 

			
	*	 	The parties agree that under the ***** / ***** *****, the ***** price will not exceed, on a weighted average basis, ***** minus
***** %.
	 
	**	 	Sell also Attachment 2 [to be completed by the parties pursuant to Section 7(b)]
	 
	*****	 	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.

C-1

 

Confidential

Execution Copy

Attachment 1 to Exhibit C

A Series and B Series OEM Aftermarket Parts Prices

	 	 	 	 	 	 	 
	Description	 	Cat Part #	 	ASV Part #	 	Price
	Non Proprietary Parts:
	 	 	 	 	 	 
	WASHER,4.05x2.1875x0.188

	 	224-9407
	 	0200-331
	 	$*****
	MOTOR,DRIVE,*****

	 	215-3898
	 	0201-141
	 	$*****
	NUT,HEX,JAM,1
1/4 - 7,RH

	 	212-6632
	 	0304-077
	 	$*****
	SNAP,RING

	 	006-8663
	 	0304-118
	 	$*****
	NUT,HEX,JAM,LOCKING,3/4-10UNC,

	 	212-6559
	 	0304-722
	 	$*****
	BEARING (62092RS)

	 	199-5358
	 	0307-039
	 	$*****
	BEARING,BALL,6207-OPEN

	 	199-9929
	 	0307-923
	 	$*****
	HOSE,DRIVE,MTL,-12

	 	204-1384
	 	0700-097
	 	$*****
	HOSE,DRIVE,MTL,-12

	 	204-1383
	 	0700-098
	 	$*****
	HOSE,DRAIN,MTL,-8

	 	204-1382
	 	0700-099
	 	$*****
	HOSE,BRAKE,MTL,-6

	 	204-1385
	 	0700-100
	 	$*****
	PIN,LOCK,1/4"

	 	209-2670
	 	0700-109
	 	$*****
	PIN,3/4x5.5

	 	209-2360
	 	0700-132
	 	$*****
	RETAINER

	 	210-4693
	 	0700-153
	 	$*****
	HOSE,-12,6000 PSI,53.5

	 	212-6655
	 	0700-203
	 	$*****
	HOSE,-12,6000 PSI,48.8

	 	212-6656
	 	0700-204
	 	$*****
	HOSE,-12,6000 PSI,63

	 	212-6657
	 	0700-205
	 	$*****
	MOTOR,HYD

	 	220-8142
	 	0700-217
	 	$*****
	WASHER,17.5x32.0x8.0

	 	220-8122
	 	0700-218
	 	$*****
	HOSE,-12,6000PSI,59.0

	 	222-5666
	 	0700-227
	 	$*****
	HOSE,-8,2000PSI,57.1

	 	222-5667
	 	0700-229
	 	$*****
	RING,SNAP,O.D,.125THICK,3.00"

	 	234-0743
	 	0700-235
	 	$*****
	HOSE,-12,6000PSI,47.6

	 	230-3711
	 	0700-237
	 	$*****
	HOSE,-12,6000PSI,77.6

	 	230-3708
	 	0700-238
	 	$*****
	HOSE,-12,6000PSI,50.8

	 	230-3709
	 	0700-239
	 	$*****
	HOSE,-12,6000PSI,50.4

	 	230-3710
	 	0700-240
	 	$*****
	HOSE,-6,2248PSI,38.6

	 	222-5669
	 	0700-244
	 	$*****
	HOSE,BRAKE,TIER II

	 	218-6979
	 	0700-269
	 	$*****
	BEARING,CONE

	 	212-6631
	 	0702-075
	 	$*****
	BEARING,CUP

	 	216-6119
	 	0702-076
	 	$*****
	BUSHING,DU,1.75 x 2.0

	 	212-6694
	 	0702-077
	 	$*****
	HOSE,DRIVE,RH,B

	 	210-4680
	 	0702-083
	 	$*****

 

			
	*****	 	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 1 of 6

Attachment 1 to Exhibit C

 

 

Confidential

Execution Copy

	 	 	 	 	 	 	 
	Description	 	Cat Part #	 	ASV Part #	 	Price
	HOSE,DRIVE,LH,A

	 	210-4681
	 	0702-084
	 	$*****
	HOSE,DRIVE,RH,A

	 	210-4682
	 	0702-085
	 	$*****
	HOSE,DRIVE,LH,B

	 	210-4683
	 	0702-086
	 	$*****
	HOSE,CASE,LH

	 	210-4684
	 	0702-087
	 	$*****
	HOSE,BRAKE

	 	212-6551
	 	0702-089
	 	$*****
	BEARING,CUP

	 	216-6120
	 	0702-105
	 	$*****
	BEARING,CONE

	 	215-3966
	 	0702-106
	 	$*****
	O-RING,2-037,2-625 ODx2.5 IDx.

	 	3P-0815
	 	0702-113
	 	$*****
	RING,RETAINER,INT

	 	6V-1366
	 	0702-114
	 	$*****
	RING,SNAP,INT,PLATED

	 	216-6148
	 	0702-115
	 	$*****
	WASHER,BEARING

	 	216-6149
	 	0702-155
	 	$*****
	HOSE,CASE,RH

	 	233-5912
	 	0702-261
	 	$*****
	BUSHING,DU,2.50x3.50

	 	230-3755
	 	0703-025
	 	$*****
	HOSE,BRAKE,PORT Z

	 	222-5729
	 	0703-077
	 	$*****
	PIN,CLEVIS,.75x3.00

	 	238-7609
	 	0703-117
	 	$*****
	PIN,CLEVIS,.75x4.00

	 	238-7610
	 	0703-118
	 	$*****
	HOSE-12,6000 PSI,86.8"

	 	218-6637
	 	0703-170
	 	$*****
	HOSE-12,6000 PSI,90.2"

	 	218-6638
	 	0703-171
	 	$*****
	HOSE-8,2000 PSI,45.2"

	 	218-6639
	 	0703-172
	 	$*****
	HOSE-12,6000 PSI,70.9"

	 	218-6647
	 	0703-173
	 	$*****
	HOSE-12,6000 PSI,75.2"

	 	218-6648
	 	0703-174
	 	$*****
	NUT,HEX,NYLOCK,1/2-13 UNC,ZN

	 	9X-0941
	 	8040-606
	 	$*****
	NUT,HEX,NYLOCK,5/8-11 UNC,ZN

	 	3K-2889
	 	8040-726
	 	$*****
	NUT,HEX,1-8 UNC,STEEL LOCK,ZN

	 	212-6558
	 	8043-806
	 	$*****
	WASHER,SPRING LOCK,3/8,ZN

	 	113-0693
	 	8051-272
	 	$*****
	WASHER,SPRING LOCK,1/2,ZN

	 	113-0693
	 	8051-332
	 	$*****
	WASHER,SPRING LOCK,5/8,ZN

	 	155-1170
	 	8051-431
	 	$*****
	CAPSCREW,HH,3/8-16 UNCx1.0,GD8

	 	165-3926
	 	8102-222
	 	$*****
	CAPSCREW,HH,1/2-13UNCx1.75,GD8

	 	8T-8919
	 	8102-406
	 	$*****
	BOLT,CARRIAGE,1/2-13UNCx1.75,G

	 	223-8372
	 	8111-406
	 	$*****
	BOLT,CARRIAGE,1/2-13x2.00,GD8,

	 	220-8163
	 	8111-407
	 	$*****
	TUBE,COVER

	 	210-4646
	 	0200-003
	 	$*****
	TUBE,INNER

	 	210-4645
	 	0200-004
	 	$*****
	TOOTH,DRIVE,SPROCKET

	 	199-5332
	 	0302-635
	 	$*****
	SLEEVE,OUTER,TOOTH,SPROCKET

	 	199-5333
	 	0302-765
	 	$*****
	MOTOR,HYD

	 	222-5662
	 	0702-195
	 	$*****
	 
	 	 	 	 	 	 
	Proprietary Parts:
	 	 	 	 	 	 

 

			
	*****	 	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 2 of 6

Attachment 1 to Exhibit C

 

 

Confidential

Execution Copy

	 	 	 	 	 	 	 
	Description	 	Cat Part #	 	ASV Part #	 	Price
	KIT,SCRAPER

	 	234-0796
	 	0200-436
	 	$*****
	SPACER, AXLE

	 	230-3730
	 	0201-147
	 	$*****
	RETAINER,AXLE

	 	230-3729
	 	0201-148
	 	$*****
	BEARING CONE,TAPERD END WHEEL

	 	111-2124
	 	0201-347
	 	$*****
	BEARING CUP,TAPERED END WHEEL

	 	111-2125
	 	0201-348
	 	$*****
	SEAL,APY,1.250x2.062x.450

	 	212-6681
	 	0303-141
	 	$*****
	SEAL,AP5,50x90x11.4

	 	199-5377
	 	0303-217
	 	$*****
	GUARD,BEARING

	 	215-3956
	 	0304-117
	 	$*****
	TENSIONER,TRACK

	 	238-7679
	 	0304-957
	 	$*****
	WHEEL,UHMW,OUTER,10"

	 	199-5428
	 	0307-009
	 	$*****
	PLUG,HOUSING,BEARING

	 	190-8103
	 	0307-074
	 	$*****
	PLATE,WHEEL,OUTER,6.5 x .1875

	 	200-0809
	 	0307-090
	 	$*****
	LOCK,AXLE,CARRIAGE

	 	204-1371
	 	0307-093
	 	$*****
	WLMT,SWING JOINT

	 	199-5277
	 	0307-113
	 	$*****
	WHEEL,SPLIT,14"

	 	199-5305
	 	0307-717
	 	$*****
	WHEEL,SPLIT,10"

	 	199-5429
	 	0307-718
	 	$*****
	SEAL,AP1TCY,34x72x23.5

	 	199-9928
	 	0307-801
	 	$*****
	AXLE,CARRIAGE

	 	204-1375
	 	0307-909
	 	$*****
	WLMT,TUBE,WHEEL

	 	199-5432
	 	0307-919
	 	$*****
	ASSY,TUBE,AXLE,W/NO WHEELS

	 	199-5424
	 	0307-926
	 	$*****
	ASSY,TUBE,WHEEL,10"

	 	199-5427
	 	0308-420
	 	$*****
	TRACK,220x18.0 -Rodless

	 	200-0796
	 	0310-666
	 	$*****
	WLMT,GUARD,SEAL

	 	204-1431
	 	0314-304
	 	$*****
	KIT,GUIDE,TRACK,MTL

	 	215-4007
	 	0402-463
	 	$*****
	WLMT,GUIDE,TRACK,A

	 	238-7701
	 	0402-612
	 	$*****
	WLMT,GUIDE,TRACK,B

	 	238-7702
	 	0402-615
	 	$*****
	WLMT,TABLE,I

	 	199-5326
	 	0700-016
	 	$*****
	WLMT,TABLE,II

	 	199-5327
	 	0700-017
	 	$*****
	WLMT,TUB,I

	 	199-5288
	 	0700-019
	 	$*****
	AXLE,TORSION,7000LB,-29DEG,41

	 	197-4909
	 	0700-028
	 	$*****
	AXLE,TORSION,7000LB,16DEG,41.4

	 	197-4914
	 	0700-029
	 	$*****
	WLMT,RACK,I

	 	204-1445
	 	0700-035
	 	$*****
	WLMT,RACK,II

	 	204-1369
	 	0700-036
	 	$*****
	WLMT,BEARING,I

	 	204-1425
	 	0700-038
	 	$*****
	WLMT,BEARING,II

	 	204-1426
	 	0700-039
	 	$*****
	WLMT,TUB,II

	 	199-5289
	 	0700-049
	 	$*****
	WLMT,BRIDGE

	 	199-5290
	 	0700-050
	 	$*****
	WLMT,PIVOT,CARRIAGE

	 	199-5370
	 	0700-059
	 	$*****
	RING,SPROCKET

	 	200-0996
	 	0700-065
	 	$*****
	WLMT,TENSIONER,TUBE

	 	205-8106
	 	0700-081
	 	$*****

 

			
	*****	 	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 3 of 6

Attachment 1 to Exhibit C

 

 

Confidential

Execution Copy

	 	 	 	 	 	 	 
	Description	 	Cat Part #	 	ASV Part #	 	Price
	WLMT,ROD,RH

	 	205-8105
	 	0700-083
	 	$*****
	WLMT,ROD,LH

	 	205-8104
	 	0700-086
	 	$*****
	CAP,RATCHET

	 	205-8090
	 	0700-091
	 	$*****
	WLMT,RATCHET

	 	205-8107
	 	0700-096
	 	$*****
	HANDLE,EXTENSION

	 	209-2616
	 	0700-108
	 	$*****
	ASSY,JACK

	 	205-8108
	 	0700-112
	 	$*****
	SUB-ASSY,HOUSING,BEARING

	 	210-4672
	 	0700-148
	 	$*****
	ASSY,AXLE,14"

	 	210-4697
	 	0700-155
	 	$*****
	WLMT,SPROCKET,MACH

	 	210-4671
	 	0700-165
	 	$*****
	WLMT,CAP,14"WHEEL

	 	212-6593
	 	0700-174
	 	$*****
	WHEEL,14"

	 	212-6590
	 	0700-181
	 	$*****
	WHEEL,14",SPLIT

	 	212-6591
	 	0700-182
	 	$*****
	ASSY,AXLE,14"

	 	236-5095
	 	0700-184
	 	$*****
	WLMT,GUIDE,TRACK,1

	 	215-4008
	 	0700-187
	 	$*****
	WLMT,GUIDE,TRACK,2

	 	215-4009
	 	0700-190
	 	$*****
	AXLE,BETA,END

	 	236-5090
	 	0700-241
	 	$*****
	WLMT,CAP,14" WHEEL

	 	230-3772
	 	0700-247
	 	$*****
	ASSY,AXLE,14" W/O WHEELS

	 	230-3734
	 	0700-248
	 	$*****
	SUPPORT,BRIDGE,MACHINED

	 	238-7678
	 	0700-251
	 	$*****
	ASSY,WHEEL,14",TPRD CNTR WHL

	 	236-5089
	 	0700-252
	 	$*****
	WHEEL,14" SPLIT,1/2" BLT,LRG C

	 	236-5091
	 	0700-253
	 	$*****
	TRACK,220 IN,HIPLUG

	 	238-7664
	 	0700-260
	 	$*****
	ASSY,TURNBUCKLE,TENSIONER

	 	218-6994
	 	0700-267
	 	$*****
	ASSY,HANDLE,TENSIONER

	 	218-6995
	 	0700-268
	 	$*****
	AXLE,TORSION,7680LB,7DEG,36.83

	 	225-9259
	 	0702-001
	 	$*****
	AXLE,TORSION,7680LB,-32DEG,36.

	 	206-3809
	 	0702-002
	 	$*****
	TRACK,15 x 165.9

	 	207-9711
	 	0702-006
	 	$*****
	WLMT,PLATE,BEARING

	 	212-6530
	 	0702-024
	 	$*****
	CAP,2" x 1.25"

	 	252-0443
	 	0702-032
	 	$*****
	WLMT,SUSP,ALPHA

	 	206-3811
	 	0702-038
	 	$*****
	RING,SPROCKET,ALPHA

	 	210-4647
	 	0702-048
	 	$*****
	WHEEL,10"

	 	206-3812
	 	0702-057
	 	$*****
	ASSY,WHEEL,10"

	 	212-6628
	 	0702-059
	 	$*****
	SPACER,AXLE

	 	212-6686
	 	0702-060
	 	$*****
	ASSY,TENSIONER

	 	210-0825
	 	0702-064
	 	$*****
	ASSY,SEAL

	 	219-4302
	 	0702-098
	 	$*****
	CAP,WHEEL

	 	215-4006
	 	0702-111
	 	$*****
	RETAINER,SEAL

	 	216-6141
	 	0702-112
	 	$*****
	WLMT,TENSIONER

	 	210-0826
	 	0702-116
	 	$*****
	WLMT,ROD,LH

	 	210-4641
	 	0702-117
	 	$*****

 

			
	*****	 	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 4 of 6

Attachment 1 to Exhibit C

 

 

Confidential

Execution Copy

	 	 	 	 	 	 	 
	Description	 	Cat Part #	 	ASV Part #	 	Price
	WLMT,ROD,RH

	 	210-4640
	 	0702-118
	 	$*****
	CAP,WHEEL

	 	212-6682
	 	0702-132
	 	$*****
	CAP,3/4-10

	 	224-9417
	 	0702-143
	 	$*****
	AXLE,MACHINED,10.32

	 	215-3968
	 	0702-145
	 	$*****
	AXLE,MACHINED,9.73

	 	215-3969
	 	0702-150
	 	$*****
	PLATE,WHEEL,10"

	 	215-4005
	 	0702-156
	 	$*****
	WLMT,HUB,WHEEL,10"

	 	215-4004
	 	0702-158
	 	$*****
	ASSY,HUB,WHEEL,10"

	 	215-4002
	 	0702-168
	 	$*****
	ASSY,HUB,WHEEL,10",1/2" BOLT H

	 	219-4303
	 	0702-169
	 	$*****
	WLMT,TABLE

	 	207-9741
	 	0702-184
	 	$*****
	 
	 	 	 	 	 	 
	WHEEL,10",W/HUB

	 	223-8399
	 	0702-200
	 	$*****
	ASSY,WHEEL,10",W/HUB

	 	223-8398
	 	0702-201
	 	$*****
	WHEEL,14",W/HUB

	 	223-8397
	 	0702-202
	 	$*****
	ASSY,WHEEL,14",W/HUB

	 	223-8396
	 	0702-203
	 	$*****
	WHEEL,10", BORED TO 1/2" BOLT

	 	215-4003
	 	0702-208
	 	$*****
	WASHER,4.41x2.00x.104

	 	224-9409
	 	0702-210
	 	$*****
	ASSY,INSTALLATION,TRACK

	 	224-9415
	 	0702-214
	 	$*****
	ASSY,TOOL,TRACK INSTALL,W/O BU

	 	224-9416
	 	0702-218
	 	$*****
	INSERT,WHEEL

	 	234-0778
	 	0702-219
	 	$*****
	TABLE,MACHINED,RH

	 	234-0740
	 	0702-227
	 	$*****
	TABLE,MACHINED,LH

	 	234-0741
	 	0702-228
	 	$*****
	SPROCKET,CAST,MACHINED

	 	234-0742
	 	0702-230
	 	$*****
	RAIL,ONE PIECE,AXLES

	 	218-5699
	 	0702-239
	 	$*****
	AXLE,ONE PIECE,CENTER

	 	218-5698
	 	0702-241
	 	$*****
	PLATE,BACKING

	 	252-0441
	 	0702-259
	 	$*****
	PLATE,BRACKET,TENSIONER

	 	252-0442
	 	0702-260
	 	$*****
	WLMT,RAIL,ALPHA,HEAVY

	 	252-0440
	 	0702-263
	 	$*****
	ASSY,TUBE,W/WHEELS,14"

	 	222-5685
	 	0703-001
	 	$*****
	AXLE,END,18"

	 	222-5686
	 	0703-003
	 	$*****
	WLMT,TUBE,AXLE,14"x3.5ID

	 	222-5683
	 	0703-004
	 	$*****
	ASSY,TUBE,W/WHEELS,10"

	 	222-5689
	 	0703-008
	 	$*****
	WLMT,HUB,WHEEL,10"

	 	234-0734
	 	0703-009
	 	$*****
	WLMT,TUBE,AXLE,10"

	 	222-5687
	 	0703-012
	 	$*****
	WLMT,SUSP,LH

	 	215-3953
	 	0703-017
	 	$*****
	AXLE,TORSION,10000 LB,15,29.5

	 	220-8146
	 	0703-019
	 	$*****
	AXLE,TORSION,10000 LB,15,33.25

	 	215-3948
	 	0703-020
	 	$*****
	WLMT,SUSP,RH

	 	220-8157
	 	0703-043
	 	$*****
	WLMT,TABLE,DRIVE,RH

	 	219-4390
	 	0703-044
	 	$*****
	WLMT,TABLE,DRIVE,LH

	 	220-8159
	 	0703-046
	 	$*****
	WLMT,BEARING PLATE, RH

	 	230-3741
	 	0703-058
	 	$*****

 

			
	*****	 	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 5 of 6

Attachment 1 to Exhibit C

 

 

Confidential

Execution Copy

	 	 	 	 	 	 	 
	Description	 	Cat Part #	 	ASV Part #	 	Price
	WLMT,BEARING,LH

	 	222-5691
	 	0703-059
	 	$*****
	TRACK,HIPLUG,199.92@PL

	 	220-8161
	 	0703-061
	 	$*****
	WHEEL,UHMW,OUTER,10"

	 	238-7728
	 	0703-062
	 	$*****
	WHEEL,SPLIT,UHMW,INNER,10"

	 	238-7729
	 	0703-063
	 	$*****
	ASSY,TUBE,10",W/O WHEELS

	 	222-5688
	 	0703-064
	 	$*****
	ASSY,TUBE,14",W/O WHEELS

	 	230-3771
	 	0703-065
	 	$*****
	WHEEL,14"OUTER,1/2"HOLES

	 	230-3732
	 	0703-069
	 	$*****
	WHEEL,14",SPLIT,1/2" HOLES

	 	230-3733
	 	0703-070
	 	$*****
	WLMT,HUB,9.75,0.5

	 	222-5684
	 	0703-083
	 	$*****
	AXLE,CHARLIE END

	 	222-5682
	 	0703-086
	 	$*****
	LOCK,AXLE,END

	 	234-0789
	 	0703-090
	 	$*****
	MOUNT,AXLE,MACHINED

	 	234-0733
	 	0703-094
	 	$*****
	WLMT,BRKT,TENSIONER

	 	236-5094
	 	0703-106
	 	$*****
	PLATE,AXLE,EXT,0.5"

	 	238-7709
	 	0703-111
	 	$*****
	SCRAPER,W/ADJUSTABLE REAR

	 	238-7697
	 	0703-112
	 	$*****
	SCRAPER,W/ADJUSTABLE FRONT

	 	238-7698
	 	0703-113
	 	$*****
	ASSY,TENSIONER,CHARLIE

	 	236-5108
	 	0703-116
	 	$*****
	WLMT,TENSIONER,OPEN

	 	252-0328
	 	0703-162
	 	$*****
	AXLE,TOR,HRD,10K,15,15,29.5

	 	257-7385
	 	0703-182
	 	$*****
	AXLE,TOR,HRD,10K,15,33.25

	 	257-7386
	 	0703-183
	 	$*****
	WLMT,TUB,OPEN,RH

	 	238-7710
	 	2020-006
	 	$*****
	WLMT,TUB,OPEN,LH

	 	238-7711
	 	2020-007
	 	$*****
	WLMT,ROD,LH

	 	252-0339
	 	2020-029
	 	$*****
	END,TURNBUCKLE,RH

	 	252-0327
	 	2020-033
	 	$*****
	ASSY,TURNBUCKLE,LIGHT

	 	238-7712
	 	2020-034
	 	$*****

 

			
	*****	 	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 6 of 6

Attachment 1 to Exhibit C

 

 

Confidential

Execution Copy

Exhibit D

Cost Build Up

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Single Level U/C	 	 	Dual Level U/C	 	 	Dual Level U/C	 
	 	 	1 Speed Motor	 	 	1 Speed Motor	 	 	*****	 
	New Material Cost
	 	$	*	****	 	$	*	****	 	$	*	****
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Labor (Assembly)
	 	 	*	****	 	 	*	****	 	 	*	****
	Labor (Loading)
	 	 	*	****	 	 	*	****	 	 	*	****
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Freight in @ *****
	 	 	*	****	 	 	*	****	 	 	*	****
	Freight Out @ *****/mile
	 	 	*	****	 	 	*	****	 	 	*	****
	Tarp Charge (Nov. - May)
	 	 	*	****	 	 	*	****	 	 	*	****
	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Sub Total
	 	 	*	****	 	 	*	****	 	 	*	****
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Margin @ *****
	 	 	*	****	 	 	*	****	 	 	*	****
	 
	 	 	 	 	 	 	 	 	 
	Actual Sell Price to Cat
	 	$	*	****	 	$	*	****	 	$	*	****

 

			
	*****	 	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.

D-1

 

 

Confidential

Execution Copy

Exhibit E

Warranty

	1.	 	Periods: ASV shall warrant Product pursuant to Section 8 for the same periods for
which Caterpillar warrants Caterpillar Machines to the end users under Caterpillar’s standard
warranty periods. In line with Caterpillar’s current standard warranty periods, ASV’s
warranty will begin on the delivery date of the Caterpillar Machine to the end user as
recorded in Caterpillar’s warranty system or the applicable replacement parts warranty start
date (each, the “Warranty Start Date”) and extend for the following periods:

	 	a.	 	Product: ***** in service for Product and all components used therein, except
machine undercarriage rubber belts.
	 
	 	b.	 	Machine undercarriage rubber belts: ***** operating hours, whichever occurs
first. If a disabling defect in material or workmanship is found during the warranty
period, ASV will provide an allowance toward the purchase of a new rubber belt. Such
allowance will be based on accrued hours. The allowance will be calculated as follows:
	 
	 	 	 	User Allowance:
	 
	 	 	 	*****
	 
	 	 	 	*****
	 
	 	c.	 	Replacement parts: ***** days after Warranty Start Date.

	 	 	ASV may amend the warranty periods set forth above only with Caterpillar’s prior written
consent.

	2.	 	Exclusions:

	 	•	 	Caterpillar is responsible for providing timely notice of a warranty failure and
proof of the delivery date to the first user.
	 
	 	•	 	ASV shall not be responsible for the cost associated with transporting the product
to and from the place of business of a Caterpillar dealer or other source approved by
ASV. Nor will ASV be responsible for travel, time and mileage to the customer
location.
	 
	 	•	 	ASV shall not bear labor costs or local taxes, if applicable.
	 
	 	•	 	ASV shall not be responsible for parts shipping charges in excess of those which are
usual and customary.

	3.	 	Limitations:

	 	•	 	ASV is not responsible for failures resulting from:
	 
	 	•	 	Any use or installation which ASV reasonably judges as improper.
	 
	 	•	 	Abuse, neglect and/or improper repair.

 

			
	*****	 	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.

E-2

 

 

Confidential

Execution Copy

	 	•	 	Delay by the user or Caterpillar in making the product available after being notified of a
potential product problem.

	4.	 	Warranty Administration: Caterpillar will provide to ASV a monthly Field Incident
Report (“FIR”) documenting standard warranty claims paid by Caterpillar in the previous month.
The FIR will include, in Caterpillar’s sole discretion: the Caterpillar Factory Claim
Number, Dealer Code, Caterpillar Model Designation, Caterpillar Product Serial Number,
hours/miles/kilometers on the Caterpillar Machine, hour/miles/kilometers on the Product,
Caterpillar Machine build date, Caterpillar Machine delivery date, description of the Product
repaired or replaced, replacement Product’s Warranty Start Date, repair date, warranty claim
paid date, Warranty Costs (as defined in Section 8) and warranty claim story.
	 
	 	 	ASV will review the FIR and deliver to Caterpillar a summary report within thirty (30) days
of date of the FIR, which report will detail the warranty claims for which ASV accepts
responsibility, otherwise ASV will be deemed to have accepted responsibility for all claims
(“Accepted Claims”). ASV will reimburse Caterpillar for all Accepted Claim within sixty
(60) days of the date of the FIR or Caterpillar may offset payments due under Section 5
against the amount of the Accepted Claims.
	 
	 	 	If Caterpillar disputes ASV’s decision regarding rejected warranty claims or Warranty Costs
(a “Dispute”), then the parties will meet or hold a discussion via telephone conference to
attempt to resolve the Dispute within sixty (90) days of the date of the FIR. If the
parties are unable to resolve the Dispute, then both parties will engage senior management
to resolve the Dispute. If a Dispute cannot be resolved under this process, then the
parties may seek other rights available to them under the Agreement, in equity or law.
	 
	5.	 	Return of Failed Product: Failed Product shall not be returned to ASV unless ASV
specifically requests such return, and then such product shall be returned at ASV’s sole
expense.
	 
	 	 	Returned failed Product becomes the property of ASV upon resolution of the claim; however,
ASV may not reuse, repair, or resell the returned failed Product in connection with this
Agreement without prior approval from Caterpillar.
	 
	6.	 	Improvement; Review: ASV will, if applicable, take action to improve the reliability
of Product furnished and will reduce future failure rates through the use of FIR data. The
parties will review this warranty program annually to assure that it is meeting the intent of
both parties to improve product reliability and reduce warranty cost.

E-2

 

 

Confidential

Execution Copy

Exhibit F

ASV Assets

ASV, Inc.

Assets at Caterpillar Sanford

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Depreciation	 	 	 	 	 	Accum Depr	 	 	Annual	 	 	NBV @	 
	Date Purchased	 	Description	 	Life/Method	 	Cost	 	 	@ 12/31/2004	 	 	Depr Exp	 	 	9/30/2005	 
	 
	May 14, 2001
	 	3-Ton Free Standing Tube Structure	 	10 yr SL	 	$	*	****	 	$	*	****	 	$	*	****	 	$	*	****
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	September 13, 2001
	 	DC Electric Transducer Control Tool Kit	 	10 yr SL	 	$	*	****	 	$	*	****	 	$	*	****	 	$	*	****
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	October 26, 2001
	 	Bridge Crane	 	10 yr SL	 	$	*	****	 	$	*	****	 	$	*	****	 	$	*	****
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Total	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	*	****
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

			
	*****	 	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.

F-1

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