Document:

French Employment Agreement

UNIQUE MOBILITY, INC.

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made and entered into as of January 1, 2000, by and between UNIQUE MOBILITY, INC., a corporation organized under the laws of Colorado ("Employer"), and Donald A. French, an adult resident of Aurora, Colorado ("Executive").

WHEREAS, Executive is currently a party to an Employment Agreement with Employer dated January 1, 1997 (the "Old Agreement"); and

WHEREAS, Executive and Employer wish to replace the Old Agreement with this Agreement:

NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions hereinafter set forth, Employer and Executive agree as follows:

1.Termination of Old Agreement. Upon execution of this Agreement, the Old Agreement is hereby retroactively terminated, effective as of the date hereof.

2.Employment. Employer hereby agrees to employ Executive as its treasurer and chief financial officer for the term of employment set forth herein, and Executive hereby accepts such employment, all upon the terms and conditions hereinafter set forth.

3.Duties. Executive shall perform the duties assigned to him by the Board of Directors, subject to the control, supervision and direction of the Board of Directors and the Chairman of the Board.

4.Performance. During the term of Executive's employment under this Agreement and any renewal thereof, Executive shall devote Executive's best efforts and full working time and attention exclusively to the performance of the duties hereunder and to promoting and furthering the business of Employer, and shall not, during the term of employment, be engaged in any other business activity for personal pecuniary advantage. This paragraph shall not be construed as preventing Executive from investing Executive's assets in such form or manner as will not require any services on the part of Executive in the operation of the affairs of the companies in which such investments are made, subject to the provisions of Paragraph 17 hereof. Notwithstanding the foregoing, Executive may perform and assume other activities and obligations as the Board of Directors shall from time to time approve.
5.Term of Employment, Expiration and Termination.

(a)Subject to the provisions of Paragraphs' 15 and 16, the term of employment of Executive pursuant to this Agreement shall commence on January 1, 2000, and shall continue through December 31, 2002 (the "Original Term of Employment").

(b)Upon expiration of this Agreement, if Employer elects to not continue Executive's employment, Employer shall provide Executive notice of such fact and shall pay Executive: a lump sum equal to one (1) month's salary for each year of full-time employment with Employer, except that such sum shall be not less than twelve (12) month's salary and shall not exceed twenty-four (24) month's salary.

(c)Upon expiration of this Agreement, if Employer elects to continue Executive's employment without a written employment agreement, Executive's employment shall be at will, except that Executive's employment may be terminated without cause by Employer after notice to Executive. Upon such termination Employer shall pay Executive: a lump sum equal to one (1) month's salary for each year of full-time employment with Employer, except that such sum shall be not less than twelve (12) month's salary and shall not exceed twenty-four (24) month's salary.

(d)On termination of Executive's employment for cause during the Original Term of Employment pursuant to Paragraph 15(a), Executive shall receive no further salary.

(e)On termination of Executive's employment without cause during the Original Term of Employment pursuant to Paragraph 15(c), Employer shall pay Executive a lump sum equal to the greater of the annual salary and benefits payable under this Agreement until the expiration date of the Original Term of Employment, or any renewals thereof, one (1) month's salary for each year of full-time employment with Employer, except that such sum shall be not less than twelve (12) month's salary and shall not exceed twenty-four (24) months' salary. In the event of a material breach of this Agreement by Employer that is not cured after notice from Executive, Executive may elect to treat such breach as a constructive termination under this subparagraph entitling Executive to the benefits hereunder.

(f)On termination of Executive's employment by Executive without cause either (i) during the Original Tenn of Employment pursuant to Paragraph 16(b), or (ii) after expiration of the Original Tenn of Employment if Executive's employment continues without written agreement, Employer shall pay Executive a lump sum equal to three (3) month's salary, and Executive shall be entitled to no other severance benefits.

(g)If Executive's employment is terminated as a result of a hostile Change in Control (as defined below) of Employer, such termination shall be deemed a termination without cause under the provisions of Paragraph 5(e), except that Executive shall receive, a severance amount equal to twice any amount due under Paragraph 5(e). Any termination of Executive in contemplation of or within twelve (12) months after such Change in Control, except a termination for cause under Paragraph 15(a), shall be deemed a termination under this Subparagraph (g). Further, if Executive's position is materially changed by Employer in contemplation of or within twelve (12) months after any such Change in Control, Executive may elect to treat such change as a constructive termination under this subparagraph entitling Executive to the benefits hereunder. "Change of Control" means the election of new board members constituting a majority of the directors then in office, which new board members were not nominated by a majority of the directors in office on the date hereof.

(h)Upon Executive's voluntary retirement after age sixty-five during or upon expiration of the Original Term of Employment, or any extension thereof, Executive shall receive the severance benefits described under Paragraph 5(e), i.e., as if the severance was a termination without cause by the Employer.

(i)Upon any termination of Executive, at Executive's election, Employer shall assign to Executive or Executive's designee any life and disability insurance policies or other fringe benefits which may so be assigned. Any continued cost of such policies or benefits shall be Executive's responsibility.

(j)Upon the expiration or termination of Executive's employment, Executive or Executive's legal representative upon request shall promptly deliver to Employer all originals and all duplicates or copies of all documents, records, notebooks and similar repositories of or containing Confidential Information as defined in Paragraph 18 then in his possession, whether prepared by Executive or not.

6.Compensation. For the services to be rendered by Executive hereunder, Employer agrees to pay Executive during the term of employment, and Executive agrees to accept:

(a)An annual base salary of $158,916. Executive's annual base salary shall not be decreased during the Original Term of Employment.

(b)Executive's salary shall be paid in equal semi-monthly installments on the 15th and final day of each month during the term of his employment.

(c)Executive shall receive fringe benefits in accordance with Employer's policies and practices for employees generally (including, without limitation, participation in any stock option plans, life and disability insurance plans, health care and hospitalization plans, medical and dental reimbursement plans, profit sharing plans, retirement plans and other employee benefit plans) for which Executive is qualified. At Employer's expense Executive shall have a medical exam every two years until age fifty, and thereafter every year.

(d)During the last quarter of each fiscal year of Employment, Employer shall review Executive's performance under this Agreement and establish goals and objectives for Executive's performance for the next fiscal year. In such review, Employer, in its reasonable discretion, shall consider increasing Executive's salary and compensation based on relevant factors such as Executive's performance, Employer's accomplishments, increase or decrease in Executive's responsibilities, and cost of living increases. Any salary increases normally are to be effective on January 1 of each year.

(e)Employer has adopted a bonus plan to be administered by its Compensation Committee and in the Compensation Committee's discretion may award bonuses and stock options to Executive on terms to be determined by the Compensation Committee. As soon as practicable after the effective date of this Agreement, January 1, 2000, Executive shall receive an additional grant of options to purchase 60,000 shares at an exercise price determined based on the "Fair Market Value" of the stock, as defined under Employer's Stock Option Plan, on the date of the grant of the option.

7.Working Facilities. Executive shall be furnished with appropriate office space, secretarial assistance, and such other facilities and services as are suitable to Executive's position and adequate for the performance of Executive's duties.

8.Expenses. Employer shall reimburse Executive for all reasonable expenses that Executive incurs in connection with the business of Employer or any of its subsidiaries and in the performance of Executive's duties under this Agreement. Employer shall also reimburse Executive for membership fees and expenses related to Executive's membership in professional organizations, clubs, societies and groups as may be approved by the Chief Executive Officer from time to time, subject to such rules, regulations and record-keeping requirements as may be established from time to time by the Chief Executive Officer.

9.Vacations. Executive shall be entitled each year to a vacation of four (4) weeks, during which time his compensation shall be paid in full. Vacation time accrued during each calendar year must be used by the end of each calendar year, or will be lost, and will not accrue from one calendar year to the next. Exceptions to the foregoing non-accrual policy may be provided under terms and conditions approved in writing by resolution of the Board of Directors or its compensation committee in such body's sole discretion based on prolonged extra-ordinary work demands preventing Executive's timely taking vacation.

10.Disabilily. If Executive is unable to perform Executive's services by reason of illness or incapacity for a period of more than six (6) consecutive months, and subject to the provisions of Paragraph 11, Employer may terminate Executive's employment. Employer shall receive a credit against Executive's salary for any disability compensation benefit for the same calendar period received by Executive from Worker's Compensation or any commercial insurance carrier under Paragraph 11.
11.Insurance for the Benefit of Executive.

(a)Subject to the provisions of Paragraph 6(c), Executive shall be covered by Employer's medical and disability insurance in effect from time to time, the premiums for which shall be paid for by Employer.

(b)Employer shall at its expense continuously maintain without interruption in the name of Executive or Executive's designee or for the benefit of Executive or Executive's designee, life insurance coverage in an amount equal to Executive's then current salary for three (3) years.

12.Insurance for the Benefit of Employer. Employer shall have the right from time to time to apply for and take out in its name and at its own expense, life, health or other insurance upon Executive in any sum or sums which may be deemed necessary by Employer to protect its interest under this Agreement and Executive shall do all such things as may be necessary to assist in the procuring of such insurance by making a proper application therefor as may be required by the insurance company and submitting to the usual and customary medical examinations. Executive, in Executive's capacity as Executive, shall have no right, title or interest in or to such insurance, but the same shall be solely for the benefit of Employer and any amounts payable thereunder shall be solely payable to such Employer.

13.Death During Employment. If Executive dies during the term of his employment under this Agreement, Employer shall pay to the estate of Executive the compensation which would otherwise be payable to Executive up to the end of the third month after the month in which his death occurs. If, by that time, Executive's estate has not received any proceeds of the insurance provided for in Paragraph 11, Employer shall continue Executive's salary hereunder for up to an additional three months, or until such insurance proceeds are received, whichever is earlier ("Reimbursable Payments"), provided that Executive's estate shall reimburse Employer for any such Reimbursable Payments made from the proceeds of such insurance.

14.Representation and Warranty. Executive represents and warrants that he is not now, and will not be on the date of commencement of this Agreement, a party to any agreement, contract or understanding, whether of employment, agency or otherwise, which would in any way restrict or prohibit Executive from undertaking and performing Executive's duties in accordance with the terms and provisions of this Agreement.
15.Termination by Employer.

(a)Employer may terminate Executive's employment for cause, which is defined as follows:
i)Fraud, malfeasance, or embezzlement against Employer's assets or conviction of any felony;

ii)Except under circumstances of disability contemplated by the provisions of Paragraph 10, cessation of Executive's performance of Executive's duties hereunder or deliberate and substantial failure to perform them in a capable and conscientious manner;
iii) Violation of the provisions of Paragraph 14; or

iv)Deliberate and substantial breach of Executive's material obligations under any other provision hereof that is not cured within 30 days after notice to Executive of the breach.

(b)Should the Board of Directors of Employer determine cause exists, as defined in Subparagraph (a), to terminate Executive's employment, prior to termination for such cause, Employer shall provide Executive written notice reasonably describing the basis for the contemplated termination and a two-week period of time in which to respond in writing and in person prior to Employer's final determination of cause. During the period between such notice and final determination, the Board may suspend the performance of Executive's duties under this Agreement and direct Executive's non-attendance at work. However, Executive's right to compensation under this Agreement shall continue through and to any final termination of employment for cause.

(c)Employer may terminate Executive's employment upon three (3) months notice without cause, subject to the applicable provisions of Paragraph 5. During the period between such notice and final determination, the Board may suspend the performance of Executive's duties under this Agreement and direct Executive's non-attendance at work.
16.Termination by Executive.

(a)Executive shall have the right to terminate his employment on forty-five (45) days' written notice to Employer of any default by Employer in performing its duties under this Agreement, subject to the provisions of Paragraph 5(e) and provided that Executive may not terminate his employment if Employer cures the default within fifteen (15) days after receiving such notice.

(b)Executive may terminate Executive's employment upon three (3) months notice without cause, subject to the applicable provisions of Paragraph 5(f).
17.Restrictive Covenant.

(a)Executive agrees and covenants that, without the Board's prior written consent and except on behalf of Employer, he will not in any manner, directly or indirectly, own, manage, operate, control, be employed by, participate in, assist or be associated in any manner with any person, firm or corporation anywhere in the world whose business competes with Unique or any subsidiary of Unique. This covenant shall remain in effect until a date one (1) year after the date Executive's employment is terminated or, if his employment is terminated pursuant to Paragraph 16(a), until the termination date. Notwithstanding any other provision of this Agreement, Executive may own up to three percent (3 %) of the outstanding stock of a competing publicly traded corporation so long as he takes no other action furthering the business of such corporation.

(b)Until a date one (1) year after the termination date, Executive shall not (i) solicit any other employee of Employer to leave the employ of Employer, or in any way interfere with the relationship between Employer and any other employee of Employer, or (ii) induce any customer, supplier, licensee, or other business relation of Employer to cease doing business with Employer, or in any way interfere with the relationship between any customer or business relation and Employer.
18.Confidentiality.

(a)Definitions. For purposes of this Agreement, the following definitions shall apply:
i)"Inventions" shall mean all inventions, improvements, modifications, and enhancements, whether or not patentable, made by Executive within the scope of Executive's duties during Executive's employment by Employer.

ii)"Confidential Information" shall mean Employers proprietary know-how and information disclosed by Employer to Executive or acquired by Executive from Employer during Executive's employment with Employer about Employer's plans, products, processes and services, which Employer protects against disclosure to third parties. Confidential Information shall not include the Executive's general knowledge and experience possessed prior to or obtained during his employment with Employer.
(b)Restrictions on Disclosure.

i)During the period of employment with Employer and thereafter, Executive shall not disclose Confidential Information to any third parties other than Employer, its employees, agents, consultants, contractors and designees without the prior written permission of Employer, or use Confidential Information for any purpose other than the conduct of Employer's business.

ii)The restrictions on disclosure and use set forth herein shall not apply to any Confidential Information which:
A. At the time of disclosure to Executive by Employer is generally available to the public or thereafter becomes generally known to the public, through no fault of Executive;

B. Was known by Executive prior to his employment with Employer;

C. Executive at any time receives from a third party not under any obligation of secrecy or confidentiality to Employer;

D. Employer discloses to a third party not under any obligation of secrecy or confidentiality to it; and

E. Executive is requested or required to disclose pursuant to a subpoena or order of a court or other governmental agency, in which case Executive shall notify Employer as far in advance of disclosure as is practicable.

(c)Obligations Regarding Inventions. Without any royalty or any other additional consideration to Executive: (i) Executive shall promptly inform Employer of any Inventions by a written report, setting forth the conception and reduction to practice of all inventions; (ii) Executive hereby agrees to assign and assigns to Employer all of his right, title and interest: (1) to any Inventions made during the term of his employment by Employer (including without limitation the right to license or sell such Invention to others), (2) to applications for United States and foreign letters patent, and (3) to United States and foreign letters patent granted upon such Inventions; and (iii) Executive agrees upon request and at the sole cost and expense of Employer to, at all times, do such acts (such as giving testimony in support of his inventorship) and execute and deliver promptly to Employer such papers, instruments, and documents as from time to time may be necessary or useful to apply for, secure, maintaining, reissue, extend or defend Employer's interest in any Inventions or any or all United States and foreign letters patent, so as to secure Employer the full benefits of any Inventions or discoveries or otherwise to carry into full force and effect the intent of the assignment set out in subparagraph 18(c)(ii).

(d)Remedies. Executive acknowledges and agrees that Executive's disclosure of any Confidential Information would result in irreparable injury to Employer. Executive acknowledges and agrees that the Confidential Information is non-public information which Employee has expanded substantial time, money and effort to develop and is property considered "Trade Secrets" of Employer within the meaning of Colorado law. Therefore, upon the breach or threatened breach of the covenants in this paragraph by Executive, Employer shall be entitled to obtain from any court of competent jurisdiction a preliminary and permanent injunction prohibiting such disclosure and any other equitable relief that the court deems appropriate. In addition, Employer shall be entitled to seek damages.

(e)Any Confidential Information that is directly or indirectly originated, developed or perfected to any degree by Executive during the term of his employment by Employer shall be and remain the sole property of Employer.

19.Resolution of Disputes. In addition to any other remedies available to Employer, Employer shall be entitled to specific performance of the covenants contained in Paragraphs 17 and 18. If either party is successful in enforcing its rights under this Paragraph 19, the unsuccessful party shall reimburse the successful party for all of the costs of such enforcement, including but not limited to costs, litigation expenses and reasonable attorneys' fees. Except for an action to interpret or enforce Paragraphs 17 or 18, any controversy or claim arising out of or relating to the interpretation, alleged breach or enforcement of this Agreement shall be settled by arbitration before a single arbitrator in Denver, Colorado, in accordance with the commercial rules then in effect of the American Arbitration Association, Colorado Revised Statutes pertaining to the arbitration of civil disputes. The arbitrator, who shall be a person experienced in negotiating and making employment agreements and resolving employment disputes and in any other pertinent areas of law, shall make reasonably detailed findings to support any decision and award. The award of the arbitrator shall be final and binding and may be entered as a judgment in any court of competent jurisdiction. As part of the award in any arbitration or judicial proceedings, the prevailing party may be awarded its reasonable attorneys' fees, witness fees, expert witness fees and related costs and expenses in the discretion of the arbitrator.

20.Notices. All notices under this Agreement shall be delivered by hand or by registered or certified mail. Notices intended for Executive shall be addressed to Executive at 1194 Kalispell Street, Aurora, Colorado 80017. Notices intended for Employer shall be addressed to it at 425 Corporate Circle, Golden, Colorado 80401. All notices shall be effective upon actual delivery if by hand, or, if by mail, five (5) days after being deposited in the United States mail, postage prepaid and addressed as required by this section. Either party may by notice accomplished in accordance with this Paragraph 20 change the address to which future notices may be sent.
21.Miscellaneous Provisions.

(a)This Agreement contains the entire agreement between the parties and supersedes all prior agreements and it shall not be amended or otherwise modified in any manner except by an instrument in writing executed by both parties.

(b)Neither this Agreement nor any rights or duties under this Agreement may be assigned or delegated by either party unless the other party consents in writing.

(c)Except as otherwise provided herein, this Agreement shall be binding upon the inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

(d)This Agreement has been entered into in Colorado and shall be governed by the laws of that state.

(e)In fulfilling their respective obligations under this Agreement and conducting themselves pursuant to it, each party shall act reasonably and in good faith.

(f) If any provisions of this Agreement shall be held to be invalid or unenforceable for any reason, the invalid or unenforceable provision shall be deemed severed from this Agreement and the balance of this Agreement shall remain in full force and effect and be enforceable in accordance with its terms.

IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written.
EXECUTIVE:

/s/

Donald A. French

 

EMPLOYER:

UNIQUE MOBILITY, INC.

By: /s/

William G. Rankin

its PresidentSUPPLY AGREEMENT

 

SUPPLY AGREEMENT

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

 

WITNESSETH:

 

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

 

WHEREAS, UPP desires to manufacture and sell and Invacare
desires to purchase and take delivery of certain gearless motors for use on
motorized wheelchairs;

 

WHEREAS, motors are an essential component in the
manufacturing processes utilized by Invacare and an assured source of supply of
gearless motors, manufactured to exacting specifications, is of critical
importance to Invacare; and

 

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

 

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

 

 

I. Certain Definitions

 

The following terms shall have the meanings set forth herein:

 

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

 

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

 

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

 

1.4 "Specifications" shall mean the specifications
relating to Motors required and specified by Invacare as set forth in Exhibit
1.4 attached hereto (which may be supplemented or modified from time to time by
mutual agreement of the parties) and with which the Motors sold under this
Agreement shall comply.

 

1.5. "Term" shall mean the period of time
consisting of the Original Term (as defined in Section 3.1) plus any Renewal
Terms or, Additional Term (as defined in Section 3.2).

 

1.6 "Tooling" means the tools and equipment and the
drawings, patterns and specifications of such tools and equipment described in
Exhibit 1.6 attached hereto, as well as any additional tools as may be agreed
upon between the parties from time to time.

 

 

II. Sale and Purchase Obligations

 

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

 

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

 

(a) during each Contract Year, Invacare shall purchase from
UPP a minimum number of [* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENT
REQUEST*] 
 Motors and such greater numbers of Motors as are
specified in Release Orders issued by Invacare and approved by UPP pursuant to
Section 4.1 hereof; and

 

(b) during each of the Contract Years of the Renewal Term,
Invacare shall purchase minimum quantities of

[* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENT
REQUEST*] 
 Motors at a price of less
than

[* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENT
REQUEST*] per motor. The annual quantities and prices for each Contract Year
of the Renewal Term shall reflect cost reductions achieved by UPP and will be
negotiated in good faith and agreed upon during the 120 day notice period
pursuant to Section 3.2 of this agreement.

 

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

 

 

III. Term of Agreement

 

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

 

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

 

3.3 Permitted Purchases. With respect to any Contract
Year, UPP and Invacare shall be entitled to purchase Motors from any third party
without liability to UPP under this Agreement because of any such purchases, so
long as Invacare purchases by the end of any such Contract Year the Minimum
Quantity of Motors set forth in 2.1(b) of this Agreement from UPP but subject to
any royalty payments required under the License Agreement. The parties agree
that nothing in this Agreement affects in any way Invacare's rights with respect
to the purchase of other motors. This Agreement relates solely to Motors as
defined herein.

 

 

IV. Terms and Conditions of Sale

 

4.1 Release Order. Invacare shall order all amounts of
Motors being purchased under this Agreement by delivering to UPP a blanket
release order (the "Release Order"), in the form set forth in Exhibit
4.1 attached to this Agreement, to be delivered to UPP on or before the last day
of each calendar quarter during the term hereof. Each Release Order shall
specify at least (i) the aggregate amount ordered, (ii) the date of
required delivery (which shall not be less than ninety (90) days after the date
of delivery of the Release Order) and the quantity to be delivered on such date
and (iii) any other terms not inconsistent with the terms of this Agreement
that are approved by UPP. Each Release Order must be approved by UPP.
Notwithstanding the provisions of any other acknowledgment, invoice or other
document or instrument of UPP or Invacare, or any statement by any agent or
employee of UPP or Invacare, now or hereafter executed, all sales of Motors by
UPP to Invacare will be subject to and in accordance with the terms of (i) this
Agreement and (ii) to the extent not inconsistent with this Agreement, the
terms of the applicable Invacare Release Order, executed under this Agreement.
Any motors ordered by Invacare from UPP but not supplied by UPP shall be
included in the minimum quantity as set forth in Section 2.1 (a) and (b) of this
Agreement.

 

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

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

 

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

 

4.5 Nonconforming Motors. If inspection discloses that
any Motors delivered to Invacare are not in accordance with Specifications or
fail to meet the warranties contained in Section 6.1 of this Agreement, UPP,
upon notice from Invacare of such nonconformity or failure given timely pursuant
to Section 4.4 hereof, shall correct or replace such Motors at UPP's expense.
Such correction and replacement shall include all Invacare's costs and expenses
incurred in the replacement of said motors including product recall at the sole
discretion of Invacare. After timely receipt by UPP of Invacare's notice of
noncompliance or failure, all Motors which are the subject of the notice shall
be the responsibility of UPP, and UPP shall bear the risk of loss with respect
to such Motors. Invacare may, and at UPP's direction shall, return such Motors
to UPP at UPP's risk, and all transportation and handling charges, both to and
from the original destination, shall be paid by UPP. Any payment for such Motors
shall be refunded by UPP unless UPP promptly corrects or replaces the same at
its expense and within the time period set forth herein. Return of any defective
Motors by Invacare shall not be deemed a waiver of any right or remedy which
Invacare may have as a result or in connection with the existence of such defect
or defects.

 

4.6 Motor Purchase Price.

 

(a) Pricing. Except as otherwise provided in this
Section 4.6, the purchase price to be paid by Invacare for each Motor hereunder
(the "Purchase Price") will be the sum of

[* MATERIAL OMITTED AND SEPARATELY FILED PURSUANT TO CONFIDENTIAL TREATMENT
REQUEST*] 
 per unit (F.O.B.
UPP's Plant, Frederick, Colorado) during the first and second Contract Year of
this Agreement.

(b) Offer from Other Manufacturer. If during any
Contract Year of the Renewal Term, Invacare receives a bona fide competitive
offer for motors from a third party manufacturer (whether solicited by Invacare
or offered without solicitation ) for substantially equivalent quantities of
product with specifications substantially equivalent to the Specifications
applicable to Motors and at a price less than that agreed upon under the terms
of this Section 4.6(b); then:

 

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

 

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

 

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

                 

                (y) continue for the remainder of its term.

                 

              

            

          

        

      

    

  

(c) Most Favored Customer Status. The purchase price
for Motors purchased by Invacare during this agreement shall not be less
favorable than the price currently or hereafter extended to any other customer
of UPP for Motors sold by UPP with specifications substantially equivalent to
the Specifications. In the event that, during the Term of this Agreement, UPP
establishes or offers a lower price for the sale of such product, UPP agrees to
offer such lower price to Invacare during the period such lower price is in
effect and subject to such other terms and conditions applicable to the lower
price. From time to time, Invacare may request that UPP certify that it is not
selling such product to any of UPP's other customers at a price that is lower
than the price Invacare is then paying for Motors.

 

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

 

(e) Exclusivity For so long as Invacare purchases the
Minimum Quantity of Motors set forth in Section 2.1(a) and (b) of this
Agreement, UPP and its affiliates agrees that, during the Term, Renewal Term,
and any Additional Term as defined in Section Three of this Agreement, it will
not (i) disclose the design or Specifications of the Motors to any third
party in the health care field other than Invacare or (ii) sell, lease or
otherwise dispose of any Motors to any party in the health care field other than
Invacare. This Section 4.6(f) shall be of no force or effect if UPP terminates
this Agreement as a result of a material breach by Invacare.

 

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

 

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

 

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

 

4.10 Taxes. The purchase price for Motors under this
Agreement shall exclude any federal, state or local use or excise taxes levied
upon or measured by the sale, sales price or use of goods. All such taxes
lawfully applicable shall be listed separately on UPP's invoice. If such
applicable tax is not separately listed, UPP assumes responsibility for the
payment of such taxes and shall indemnify and hold Invacare harmless from any
and all liability in connection with such taxes. Tax exemption certificates or
other evidence of exemption furnished by Invacare shall be accepted by UPP in
lieu of such taxes.

 

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

 

4.12 Mutual Savings. During the Term of this
Agreement, the parties will undertake commercially reasonable efforts to develop
mutual savings programs including, without limitation programs relating to raw
material supply arrangements, returnable packaging, inventory management and
order entry.

 

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

 

 

V. Tooling

 

5.1 Ownership and Exclusive Use. UPP agrees that the
Tooling, is owned by Invacare and shall have been paid for by Invacare. The
foregoing is and shall remain, while in the possession of UPP, the property of
Invacare and shall only be used by UPP for the manufacture of Motors to be
delivered to Invacare unless otherwise permitted by Invacare in writing. Such
property, and whenever practical, each individual item thereof; shall be plainly
marked by UPP as the "Property of INVACARE CORPORATION".;

 

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

 

5.3 Covenants. During the Term and until such time as
the Tooling is returned to Invacare in accordance with the terms hereof, UPP
covenants that it will (i.) not allow the Tooling to become encumbered in
any way as a result of any act or omission of UPP, (ii.) not move the
Tooling to a location different from the address of UPP as stated herein without
prior written consent of Invacare; (iii.) maintain and keep the Tooling in
good repair at its own expense; (iv.) insure the Tooling in a manner
consistent with normal industry practices; and (v.) at the expiration or
termination of this Agreement, allow removal of the Tooling at Invacare's
written request and, upon receipt of such request, it shall prepare the Tooling
for shipment and shall have it delivered to Invacare, at Invacare's expense, in
the same condition as originally received by UPP, ordinary wear and tear
excepted.

 

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

 

5.5 UCC Filing. UPP grants Invacare a security
interest, and agrees to execute and deliver to Invacare an appropriate UCC form
which with respect to the Tooling, identifies UPP as a bailee and Invacare as an
owner/bailor and UPP further agrees that Invacare may cause such UCC form to be
filed in the government recording offices as determined by Invacare.

 

 

VI. Motor Warranties

 

6.1 Warranty of Motor. UPP hereby expressly warrants,
for a period of 18 months after retail purchase of the wheelchair into which
each Motor is installed, that such Motor shall be of merchantable quality, free
from defects in materials and workmanship and fit for their intended use in
Invacare's manufacturing process and shall conform strictly to, and without
variance from the Specifications as set forth in Exhibit 1.4 to this Agreement,
as such Specifications and Exhibit may be amended and/or supplemented from time
to time by mutual agreement of the parties.

 

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

 

6.3 Warranty against Infringement: Indemnification.

 

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

 

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

 

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

 

6.5 Survival of Warranties. The warranties set forth
in this Section VI shall survive any inspection, delivery, acceptance of, or
payment by Invacare for Motors.

 

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

 

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

 

 

  
    
      
        
          
            
              
                
                  
                  VII. Representations and Covenants of UPP

                  
                   

                

              

            

          

        

      

    

  

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

 

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

 

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

 

7.4 Manufacturing Capacity. As of the date required
under the terms of this agreement, UPP has the capability and the capacity to
meet Invacare's requirements for Motors as contemplated by this Agreement. UPP
acknowledges (i) Invacare's clear reliance upon this representation and
covenant in entering into this Agreement and in conducting its supply
arrangements accordingly and (ii) the immediate and direct harm and damage
to Invacare that will result from UPP's inability to produce Motors required by
this Agreement.

 

7.5 Remedy of Force Majeure. UPP shall notify Invacare
immediately upon becoming aware of any event or condition that could establish a
claim of force majeure. UPP shall take all commercially reasonably actions and
steps to avoid or remedy the condition as to continue performance of this
Agreement.

 

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

 

 

  
    
      
        
          
            
              
                
                VIII. Representations and Covenants of
                Invacare

                 

                

              

            

          

        

      

    

  

8.1 Existence. Invacare is a corporation duly
organized and validly existing under the laws of the State of Ohio. Invacare is
qualified to do business in all jurisdictions wherein its ownership of property
or nature of its business requires it to be so qualified. Invacare has the legal
right and all necessary power and authority to own or hold under lease its
properties and to carry on its business as now being conducted.

 

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

 

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

 

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

 

 

  
    
      
        
          
            
              
                
                  
                  IX. Termination: Default: Remedies

                  
                   

                

              

            

          

        

      

    

  

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

 

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

 

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

 

9.4. Consequences of Termination. Termination of this
Agreement in accordance with the foregoing provisions will not affect the rights
and obligations of the parties with respect to Release Orders given by Invacare
prior to the effective date of the termination or terminate liabilities arising
out of conduct prior to the actual date of termination. Otherwise, all rights
and obligations of the parties under this agreement shall cease to exist upon
termination of this Agreement; provided, however, that (i) all warranties
and indemnities of the parties and the obligations under 4.6(c) shall survive
termination and (ii) the party terminating this Agreement because of breach
by the other party shall have the right to seek damages and equitable relief on
account of such breach.

 

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

 

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

 

 

X. Force Majeure

 

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

 

10.2 Suspension: Cancellation upon Force Majeure. With
respect to a party to this Agreement, the other party will be correspondingly
relieved of its obligations to perform pursuant to this Agreement as long as
such force majeure shall be continuing. In the event that the condition of force
majeure shall continue for the lesser of (i) thirty (30) days or
(ii) in a period of time such that this Agreement shall become commercially
impracticable, the parties shall each have the right to cancel this Agreement.
During a period of suspension pursuant to this Section, UPP and Invacare agree
that Invacare shall be entitled to purchase Motors from any third party without
liability to UPP under this Agreement because of any such purchases.

 

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

 

 

XI. Miscellaneous

 

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

 

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

 

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

 

If to UPP:

 

  
  
                     
  Unique Power Products, Inc.

                     
  7501 Miller Drive

                     
  Frederick, CO 80530

                     
  Attention: Donald A. French

                     
  Telecopy No.: 303/684-0579

   

  
    
      
       

      

    

  

If to Unique:

 

  
    
      
      
      Unique Mobility, Inc

      425 Corporate Circle

      Golden, CO 80401

      Attention: Donald A. French

      Telecopy No.: 303/278-7007

      
       

      

    

  

If to Invacare:

 

  
    
      
      
      Invacare Corporation

      One Invacare Way

      Elyria, OH 44035

      Attention: Thomas R. Miklich

      Telecopy No.: 440/366-9008

      
       

      

    

  

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

 

11.4. Counterparts. This Agreement may be executed in
any number of counterparts, each of which when executed by the parties hereto
and delivered shall be deemed to be an original, and all such counterparts taken
together shall be deemed to be but on and the same instrument.

 

11.5 Governing Law. This Agreement shall be governed
by, and construed and enforced in accordance with the laws of the State of
Colorado.

 

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

 

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

 

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

 

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

 

11.10 Exhibits. Each Exhibit referred to herein and
attached hereto is an integral part of this Agreement and is incorporated hereby
by this reference.

 

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

 

11.12. Survival of Representations and Warranties.
All agreements, representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the closing of the transactions
contemplated hereby.

 

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

 

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

 

 

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

 

 INVACARE CORPORATION

By: /s/

Name:

Title:

 

UNIQUE POWER PRODUCTS, INC.

By: /s/

Name:

Title:

 

UNIQUE MOBILITY, INC.

By: /s/

Name:

Title:

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