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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
NVID INTERNATIONAL, INC.
(Name Of Small Business Issuer In Its Charter)
DELAWARE 59-3458195
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
28870 U.S. Highway 19, North, Clearwater, Florida 34621
(Address Of Principal Executive Offices) (Zip Code)
(941) 312-9100
(Registrant's Telephone Number, Including Area Code)
Securities to be Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
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PART I
ITEM 1. - BUSINESS.
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General
NVID International, Inc. (the "Company") is a holding company the sole
material asset of which is the stock of its subsidiary, Aqua Bio Technologies,
Inc. References to the Company in this registration statement include the
activities of its subsidiary. The Company is in the business of researching,
developing and marketing water purification and disinfection products using a
technology known as ionization.
The Company was incorporated on August 20, 1984 under Delaware law as
Network Video, Inc., for the purpose of franchising video specialty stores. In
1986, it completed an initial public offering pursuant to a Registration
Statement under the Securities Act of 1933 on Form S-18. On February 17, 1988,
the Company filed Form 15, terminating its obligation to file periodic reports
with the United States Securities and Exchange Commission (the "Commission").
The Company discontinued its video business in 1988 because of intense
competition.
The Company conducted no business until 1994, when it entered into an
agreement with Superior Aqua Products, Inc., a Florida corporation ("Superior").
Under that agreement, the Company acquired all of the issued and outstanding
shares of Superior in exchange for the issuance of 18,281,500 shares of its
common stock. At the same time, the Company's shareholders authorized its name
change to NVID International, Inc.
The Company's administrative office is located at 28870 U.S. Highway 19,
North, Clearwater, Florida 34621, and its telephone number is (941) 312-9100.
The Company's fiscal year end is December 31.
On April 4, 1997, the Company was named as a defendant in civil
litigation brought by the Commission stemming from the actions of two Company
officers arrested for misappropriation of stockholder funds and fraud. On April
5, 1997, the two officers and two additional members of the Company's board of
directors resigned from their positions with the Company. On April 15, 1998,
following negotiations between the Company's new management and the Commission,
the Company executed a Consent and Stipulation for Final Judgment, which was
approved on August 14, 1998, and which terminated the Commission's proceedings
against the Company.
Overview of Business
The Company develops water disinfection systems using "ionization."
These systems are based on a process that emits precise amounts of copper and
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silver ions into water systems to control and remove bacteria, viruses, fungi,
yeast and algae. Uses for the Company's products include industrial, commercial
and residential water systems, cisterns, hospitals, agriculture, marine
habitats, pools, fountains, spas and cooling towers. From simple applications
like pools, spas or fountains, to more complicated hospital infection control
systems, the Company's products are designed to meet a broad spectrum of water
disinfection requirements. In addition to water disinfection systems, the
Company owns the rights to AXEN, a non-toxic, environmentally friendly liquid
disinfectant formulated for initial use as a surface cleaner. AXEN is also
produced with proprietary ionization technology.
There are various technologies used for disinfecting water. The
conventional technologies include chlorine, reverse osmosis, filtration,
ultraviolet light, ozone and chlorine dioxide. While all of these technologies
have beneficial attributes, they also possess significant drawbacks in terms of
cost, ease of handling and use, maintenance and long-term disinfecting
capability (commonly referred to as "residual effect"). In addition,
conventional water treatment systems often use significant amounts of chlorine,
a highly toxic and caustic chemical. Repeated studies have shown that the
toxicity of chlorine creates dangerous health and environmental hazards.
The benefits of the Company's ionization products include reduced
operating and maintenance costs resulting from a reduction of chlorine and
increased life of operating equipment.
Silver and copper have long been known for their biocidal properties -
copper for its ability to kill algae, and silver for its ability to kill a wide
range of bacteria and viruses. In fact, the characteristics of the process now
known as "ionization" were recognized in ancient Greece, where copper cups and
silver chalices were the preferred way to store drinking water. During the 19th
century, pioneers in the United States placed copper and silver coins in the
water casks attached to their wagons. The constant rocking and rolling of the
wagons released ions of copper and silver, which killed bacteria, yeast and
viruses, and helped maintain a clean water supply. More recently, NASA used
ionization technology to control bacteria for the Apollo space missions.
Ionization begins when an electric charge is applied to specially
formulated alloys of copper or silver. When electricity contacts the alloy, an
electrically charged atom called an "ion" is released. Ions, which have a
positive charge, attach to algae walls, bacteria and other particles, which have
a negative charge. The ions penetrate the foreign substances' membranes, and
eventually the foreign substances die. In killing the algae or bacteria, the
ions function much the same way as white corpuscles. They attack and kill by
attaching themselves to the cells' membranes. The dead matter then clumps
together and is carried away and filtered out of the water. Ionization is
recognized as a safe and effective method of removing bacteria and algae from
water, while avoiding the harmful side effects caused by large doses of chlorine
or other conventional water treatment chemicals.
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All water systems are susceptible to growth of microorganisms. Colonies
of microorganisms, including bacteria, viruses, protozoa and fungi, usually grow
within pipes, plants and tanks. Algae may also be present if the microorganisms
are exposed to sunlight. Sloughing, water pressure and grazing by protozoa
release the microorganisms into the water, where they can damage pipes and, more
seriously, expose water users to harmful - even fatal - bacteria (such as the
bacteria known as Legionella Pneumophila ("Legionella"), responsible for
Legionnaire's Disease). Chemical treatments, dosed at "safe" levels, are often
unable to cope with the freed bacteria in the time available for treatment.
Ionization is gaining recognition as the most successful and cost-effective
method of preventing the proliferation of microorganisms with minimal
environmental impact.
Industry Overview
Water purification and disinfection is a multi-billion dollar global
industry because of an increasingly limited supply of drinkable water, global
economic expansion, the increasing need for high-quality or ultra pure water by
commercial and industrial companies, heightened public health and safety
concerns relating to drinking water, and the promulgation of numerous government
regulations for water quality. The Science Advisory Board of the United States
Environmental Protection Agency (the "EPA") has indentified water contamination
as one of its highest ranking environmental risks.
The Company believes that it has benefited from, and will benefit from,
several existing and emerging market trends, including increased consumer
emphasis on health and safety concerns relating to drinking water and water
supplies, growing demand for alternatives to chlorine-based systems and
continued promulgation of government regulations relating to water purification
and treatment.
Principal components of the water purification and disinfection industry
include the consumer, bottled water, commercial and industrial, municipal and
wastewater treatment markets. With the exception of bottled water, the Company
has products in each of these market segments. Specifically, the Company has
focused on applications for Legionella control within hospital hot water
systems, cooling tower disinfection, industrial and residential drinking water
disinfection and purification, horticultural aspects of disinfection, pool and
spa disinfection, dental waterline disinfection and hard surface disinfection
within the food processing industry.
Disinfection/Purification Technologies
The principal technologies used in the water disinfection and
purification industry include:
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Filtration. Filtration is a process typically used for separating solids
from a liquid by means of a porous substance, layers of inert material (e.g.
sand, gravel) or a membrane. The most significant drawback to filtration is the
lack of a residual effect and the limitations imposed by the size of the
filters, which can be ineffective for controlling the growth of microorganisms.
Reverse Osmosis. Reverse osmosis is a water treatment process that
removes undesirable materials from the water by using water pressure to force
the water molecules through a semi-permeable membrane. Reverse osmosis, like
filtration, has no residual effect and can be extremely expensive because of the
replacement cost of a membrane.
Chlorine. A long-standing technology for water treatment first used at
the turn of the 20th century, chlorine remains the most widely adopted form of
water treatment in the United States. Chlorine is a relatively inexpensive gas,
which at appropriate levels, destroys most water-borne pathogens. The drawbacks
of chlorine include its high toxicity to human health, storage and handling
problems, limited residual effect, susceptibility to heat and light, and
environmental concerns.
Chlorine Dioxide. Though more expensive than chlorine, chlorine dioxide
is also more stable and retains a longer disinfecting residual than chlorine.
Chlorine dioxide, however, suffers the same logistical and handling problems as
chlorine and is also highly unstable under temperature and heat fluctuations.
Ozone. Ozone, a pale, light blue gas, has been used to treat drinking
water since the end of the 19th century. Significantly more expensive than
chlorine, ozone has highly effective germicidal properties. In addition to its
cost, however, ozone cannot be stored or transported because of its short life.
It has no residual effect.
Ultraviolet Light. Ultraviolet light is nominally more expensive than
chlorine, though it has no residual effect. It is effective against most forms
of viruses, though the equipment necessary for its use reduces its applications.
Ionization. Ionization disinfection systems were developed to overcome
the disadvantages and hazards associated with disinfection by chlorine and other
conventional water treatment systems. The contact time of silver, aided by the
synergistic effects of copper, will kill bacteria and viruses within minutes and
are completely unaffected by temperature and sunlight. Ionization is
cost-effective, non-corrosive, non-toxic, easily regulated and has a long-term
residual effect. As important, ionization technology is environmentally friendly
and creates no human health hazards. Ionized water produced by the Company's
systems is odorless, tasteless and, perhaps most importantly, ultra pure.
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The Company's Products
The selection of a particular Company water disinfection system depends
on the consumer's end-use and application. The Company's product lines include
Superior Aqua Systems, Ionic Disinfection Systems and the Random Metering
System. The Company has also developed and markets AXEN, a liquid disinfectant
formulation that employs ionization technology.
Random Metering System. Traditional ionization equipment produces the
same output rate of ions, regardless of the demands placed on the water system.
The Random Metering System ("RMS") expands the application of ionization
disinfection systems by creating a separate water source to create ions outside
of the treated water stream. RMS is the only known ionization water disinfection
system which can treat large volumes of drinking water. By controlling the
off-line water flow, ions can be concentrated and injected into the treated
water based on actual demand and flow rates.
Ions produced by the RMS product do not dissipate in high temperatures.
This characteristic enables RMS products to be used specifically to prevent and
control Legionella. The Legionella organism thrives within colonies of
microorganisms, which adhere to the inside of piping distribution networks that
transport water for domestic and drinking water use. Because RMS can treat even
large volumes of water effectively, it can be used in health care and hospital
settings.
In 1998, the Company formed an alliance with EHPC Ionization, Ltd. of
London, England, ("EHPCI, Ltd.") a company with similar interests in ionization
technology. EHPCI, Ltd. entered into a distribution and exclusive license
agreement with the Company which enables the Company to utilize RMS technology
to assemble, sell, distribute and service the RMS product line in North America.
EHPCI, Ltd. and Wallace & Tiernan, a subsidiary of United States Filter
Corporation, have executed an agreement allowing Wallace & Tiernan to
manufacture, market and distribute the RMS technology on a non-exclusive, global
basis. Based on the Company's exclusive license agreement with EHPCI, Ltd., the
Company receives a percentage of licensing fees and royalties paid by Wallace &
Tiernan to EHPCI, Ltd.
The Company has also licensed the RMS technology to Innovative Medical
Services, Inc. ("IMS") of El Cajon, California for North American hospital
applications, including hot water disinfection and control of Legionella. Under
the License Agreement with the Company, IMS will also market and distribute RMS
products in Australia, South and Central America and Mexico. Under the terms of
the license, IMS purchases the RMS systems from the Company and pays a royalty
to the Company on each unit sold.
Ion Disinfection System. The Ion Disinfection System ("IDS") was
designed to augment the Company's RMS product line. IDS uses ionic silver in
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much the same way as the RMS system. The difference between the RMS and IDS
systems are size and dosing capabilities. While the RMS product line is designed
to treat large volumes of water with adjustable injection of ionic silver, the
IDS unit doses directly into the treated water at a constant rate depending on
water flow. The compact size of the IDS units makes them ideal for residential
and light commercial use. Target markets include cisterns, water wells,
restaurants and small to medium sized hotels. Because of the size and
performance capabilities of the IDS product line, IDS products have also been
used in emergency situations requiring potable drinking water.
Based on the operational success of the IDS system in Mexico, the Company
has entered into a distributor agreement with Mr. Frederico Rodriguez, the owner
of Aqua Bio Technologies, S.A. de C.V. Aqua Bio Technologies, S.A. de C.V. has
been incorporated under the laws of Mexico to perform distribution and marketing
functions through its dealership arrangements with Mexican distributors in the
potable wastewater and filtration industries.
Superior Aqua Systems. The Company's Superior Aqua Systems ("SAS")
product line operates in conjunction with the existing circulation system of a
pool, spa, cooling tower or hot water system. SAS products use a flow cell,
which is simply inserted into the existing water circulation system, and a
control unit, which electronically regulates the output of ions into the water.
The release of the ions maintains a long-term disinfecting residual effect
regardless of heat, sunlight or evaporation. A simple testing kit may be used to
monitor subsequent water quality. When low levels of chlorine are used with SAS,
a synergistic residual effect produces near pristine water quality at a very low
cost.
SAS is proven beneficial for use in indoor and outdoor pools, fountains,
decorative ponds, cooling towers and a wide range of mid-level industrial and
agricultural applications. It is cost effective, environmentally safe and user
friendly.
AXEN. In addition to developing and marketing ionization water treatment
systems, the Company manufactures and markets the non-toxic, disinfectant
product AXEN (formerly Microsafe). AXEN formulations have been developed for
three separate market groups: (1) veterinary medicine, (2) dental applications,
and (3) as a hard surface disinfectant.
The world market for cleaning compounds is a multi-billion dollar
industry. Cleaning products may be classified broadly as household cleaners or
industrial/institutional cleaners. Household cleaners include laundry
detergents, dish detergents and surface cleaners. Only surface cleaners are
marketed typically as having disinfectant properties.
AXEN uses ionization stabilization technology to create a liquid
disinfectant suitable for many applications, including prevention of
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contamination by bacteria and viruses. The product is formulated by generating
silver ions in a citrate bath, which acts as a stabilizer for the silver. AXEN
can be produced in a liquid concentrated form and used on surfaces in food
processing plants, homes, hospitals, restaurants and public facilities to kill
bacteria, viruses, and other microorganisms. AXEN is cost effective to ship long
distances by container because of the high concentration levels achieved in the
manufacturing process. As a result, this allows the Company to market AXEN over
a broader geographical area.
The Company licenses the technology to corporate partners who
manufacture AXEN and maintain product inventories. IMS has signed an Agreement
to manufacture and market AXEN via the Internet, mass merchandisers,
manufacturer representatives and distributors. The Company has also entered an
Agreement with ETIH20, Inc., to manufacture and distribute AXEN in the
Southeastern United States, Costa Rica, and the Pacific Basin.
Further research and refinement of the AXEN product is being conducted
by Bio Analytical Services, Inc., Key Laboratories and ABC Research, Inc.
Distribution and Sale of Products
The Company distributes its products by licensing them for manufacture,
distribution and sale in certain geographic and niche markets to strategic
partners. The Company's products reach both domestic and international markets,
including North America, Europe, Mexico, Central and South America and the
Pacific Basin.
The Company's water disinfection systems are segmented into two general
categories: commercial and consumer. Consumer applications include potable water
supplies, pools, spas and fountains. Commercial applications include pools, spas
and fountains, as well as cooling towers, health care facilities, agriculture,
marine mammal habitats and industrial use. In addition, the Company sells AXEN
through license agreements as a household and commercial hard surface
disinfectant, for veterinary medicine applications and for dental applications.
Company policy dictates licensing its products for specific applications
in geographic areas. To date, the Company has licensed product applications in
municipal drinking water and wastewater applications, point of entry/point of
use drinking water applications, dental water lines, food processing and health
care applications.
Competitors
The markets in which the Company competes are highly competitive and
most are fragmented, with numerous regional and local participants. The Company,
however, believes it has a competitive advantage because few, if any, of its
competitors have the ionization technology found in RMS and AXEN. The Company
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believes its focus on certain geographic and niche markets, and the breadth and
range of its products, allows it to compete successfully in both domestic and
global markets. Many of the Company's competitors, such as U.S. Filter, Inc. and
Culligan, are multi-line companies with substantially greater resources than the
Company.
License Agreements
The Company has a Royalty Agreement with Mr. Andrew Arata for the AXEN
product line. Mr. Arata is the inventor of AXEN. Under the terms of the
agreement, he is paid 5% of gross revenues in perpetuity.
Wallace & Tiernan, Ltd. (UK), a subsidiary of United States Filter
Corporation, entered into an agreement with EHPCI, Ltd. for non-exclusive
worldwide manufacturing and distribution rights for the RMS system. Since the
Company held the exclusive North American license from EHPCI, Ltd. it became a
party to the agreement between EHPCI, Ltd. and Wallace & Tiernan, Ltd. Under the
terms of the worldwide agreement, the Company receives a royalty of 12 1/2% of
the gross selling price for all units sold in North America, and has the option
to purchase any RMS systems produced under private label by Wallace & Tiernan,
Ltd. for cost plus 28%.
Under the terms of the Company's RMS License Agreement with IMS (under
which EHPCI, Ltd. is a co-licensor), the Company and EHPCI, Ltd. collectively
receive a flat license fee and a royalty of 16 1/2% of the gross manufacturing
cost for all RMS units sold by IMS. The Company is entitled to 62.5% of the
consideration payable to the licensors collectively.
The Company has entered a five-year manufacturing and distribution
agreement with ETIH2O to produce and sell the AXEN product line exclusively in
the country of Costa Rica and on a non-exclusive basis in the southeastern
United States, including Florida, Georgia, Alabama, Mississippi, Louisiana,
South Carolina, North Carolina, Virginia, Tennessee and Kentucky.
ETIH2O, Inc. has also signed a two-year commitment for exclusive
manufacture and non-exclusive marketing of the AXEN product for New Zealand,
Australia, Thailand, Philippines, Singapore and Malaysia. Under the terms of the
agreement, the Company receives an escalating royalty on each sale.
Circle P Products, Inc. signed a Manufacturer's Representation Agreement
with the Company for representation of the AXEN veterinary product line. The
Company has also pursued further development of the AXEN product line through a
Licensing Agreement with EHPCI, Ltd.
The Company has entered a License Agreement with IMS for AXEN on a
worldwide basis for dental waterline application and point of use applications.
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Under the agreement, the Company receives a flat license fee and a 15% royalty
based on the manufactured cost of AXEN sold by IMS.
Intellectual Property
Patents. All of the products developed by the Company are protected by
U.S. and PCT country patents pending. As a result, the Company has very few
direct competitors using the same technology. The Company has competitors who
use different, more conventional technologies, including chlorine, ultraviolet,
ozone, chlorine dioxide, reverse osmosis, copper and silver.
The Company has sought patent protection for AXEN under both
international treaty and U.S. utility patent application. The Company owns the
property rights to AXEN under an assignment from AXEN's inventor, Andrew Arrata.
Trademarks. The Company is the owner of trademark registrations in the
United States for "Aqua Bio," and in Costa Rica for "Axenohl," "Axent" and
"Axenogen." The Company is in the process of registering the trademarks
"Axenohl," "Axent" and "Axenogen" in Australia, New Zealand, Indonesia,
Malaysia, Philippines, Singapore, Thailand, and Taiwan.
Trade Secrets. Three of the four product lines carried by the Company
use trade secrets involving ionization: RMS, IDS and AXEN. Each of these
products uses the stabilization of silver ions, which normally have a shelf life
of only three to four hours. By utilizing the Company's discoveries, however,
silver ions can be stabilized for periods up to six months.
These trade secrets are significant because of all the alternatives to
chlorine in water disinfection applications, the Company's process is the only
solution with a long-term disinfecting residual. The loss of these trade secrets
could have a materially adverse effect on the business of the Company.
Research & Development
The Company's current research and development focuses on expanding the
applications for the Company's existing product line and licensing additional
corporate partners. Current research and development projects include RMS
applications for Legionella control in hospital settings. AXEN is being tested
for use in dental water lines, certain agricultural and horticultural
applications, municipal drinking water systems and veterinary medicine.
Government Regulation
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The RMS technology has received the necessary government approvals for
use in drinking water disinfection in Mexico. AXEN formulations have been
submitted to the EPA for approval. EPA certification is expected during the
first half of year 2000. Upon EPA approval, AXEN will be submitted to the
U.S. Department of Agriculture (USDA) and the Food and Drug Administration (FDA)
for their approval. It should be noted that the Company is presently working
with both the USDA and the FDA in related laboratory and field studies.
The USDA and the Company have agreed to a field study at the USDA
facility in Athens, Georgia. The study commenced in March 2000. The subject
of the study is to determine the efficacy of AXEN in replacing toxic
disinfectants used in poultry production. Additionally, at the request of the
FDA, the Company submitted samples of AXEN for testing against the Vancomycin
Resistant Enterococcus virus. The Company submitted samples and a report from
an independent laboratory detailing AXEN's efficacy against the virus.
Both studies concluded the AXEN formulations were 99.9999% effective
against the subject virus strains. FDA approval for AXEN is expected during the
second quarter of 2000. AXEN product and labeling has been approved for drinking
water and veterinary applications.
Environmental Issues
The Company's product lines produce pesticides to treat a variety of
bacteria, viruses, fungi and pathogenic organisms. The primary biocide used in
ionization is ionic silver with trace amounts of other metals. The Company has
never received a notice or demand from any environmental authority regarding its
products. In addition, the Company has licensed the manufacture of its products
to other companies, and therefore does not require any environmental permits.
Prior to 1993, the EPA set the amount of silver recommended for drinking
water at 100 ppb. In 1993, the EPA dropped silver from the EPA's primary water
standards, though it was retained at 100 ppb for the secondary water standards
that are used as guidelines by states for setting their own standards. The EPA
is expected to drop silver eventually from its secondary standards.
The EPA is also expected to reduce the amount of Trihalomethanes allowed
in drinking water from 100 ppb to 80 ppb. Trihalomethanes are known carcinogens
formed when chlorine is combined with organic matter found in nature. The
anticipated effect of the reduction in Trihalomethanes is a greater emphasis on
technologies that reduce or eliminate the use of chlorine. The Company expects
to gain market share in all of its product lines as a result of a reduction in
Trihalomethane levels allowed in drinking water.
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ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
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Although the Company has been in existence for a number of years,
management's efforts to develop the Company's business have not yet resulted in
generation of significant revenues. To date, management's efforts have been
focused on developing licensing relationships and promoting and conducting
research and development to demonstrate the feasibility and efficacy of the
Company's products. Until potential customers are convinced of the viability of
the Company's technology, it is unlikely that the Company will generate
significant revenue.
Assuming that the Company can raise sufficient capital to maintain its
operations, over the next 12 months the Company expects that it will continue
development of licensing relationships and will continue research and
development. In addition, the Company will need to expand its staffing
considerably over such period of time.
Cash Requirements
The Company has engaged in a number of tests and demonstrations and has
entered into license agreements with entities for the distribution of its
products. These licensing relationships are in their early stages, however, and
it is difficult to predict what revenue stream, if any, they will generate. If
the Company's licensees meet performance criteria contained in the agreements in
all respects, the Company would be receiving royalty income of approximately
$250,000 per month by the end of the year 2000.
Nevertheless, the Company does not expect its royalty stream to be
sufficient to cover costs of operations in the immediate future. The Company
expects that it will continue to be required to raise capital to fund operations
at least through the second quarter of 2000. The Company will attempt to raise
such capital by borrowing, but no lender has issued a binding commitment to the
Company. Therefore, the Company may engage in one or more private placements of
common stock to fund its operating needs. At present, the Company has sufficient
cash to sustain the Company for approximately six months. Therefore, the Company
anticipates engaging in one or more capital raising transactions in the
immediate future.
Licensing
The Company's marketing plan calls for the creation of "flagship"
accounts and/or specific field tests to showcase the economic feasibility and
efficacy of the products in various applications. Once completed, the Company
intends to license numerous corporate partners for specific applications. Such
licensing generally will involve an initial license fee for exclusivity and an
ongoing royalty in perpetuity.
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As the Company emerges from its current stage, it expects to license
entities in a broad spectrum of applications. These licenses generally will be
for specific applications and geographic areas and will contain performance
criteria that the licensee must meet to maintain the license. To date, the
Company has licensed applications in municipal drinking water and wastewater
applications, point of entry/point of use drinking water applications, dental
water lines, food processing and healthcare applications. Most of the license
fees received have been and will be used to expand the scope of applications and
the geographic area for the Company's products.
Research and Development
Requirements for research and development will continue into the
foreseeable future to expand the spectrum of applications and allow the Company
to expand its licensing program. Current research and development is focused on
specific product applications, including Legionella control in hospital
settings, dental water lines, cut flowers, pythium control, hydroponics, cooling
tower applications, municipal drinking water systems, and veterinary
applications.
Future research and development will be focused on expanding specific
product applications for the AXEN and RMS product lines. These tests will be
ongoing over the course of the next few years.
Capital Expenditures
Management does not expect to incur any significant capital expenditures
in the foreseeable future.
Staffing
The Company must increase its work force. The Company's marketing plan
does not call for building a sales force to sell to end-users but instead to
license the technology to market segment leaders with existing sales forces. The
Company will train these sales forces to sell the Company's products and to
provide technical assistance through quarterly service to the systems.
Nevertheless, the Company requires an increased sales force to sell technology
licensing agreements. Management expects to add four employees during 2000 and
eight employees in 2001. The expected cost of these additional employees is
$300,000 in 2000 and $600,000 in 2001.
ITEM 3. - DESCRIPTION OF PROPERTY.
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The Company leases its principal offices at 28870 U.S. 19 North, Suite
3000 Clearwater, Florida, 33761, pursuant to an Executive Suite Lease Agreement
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between Athos Corporation, as agent for Hodusa Towers Executive Suites and Aqua
Bio Technologies, Inc. dated August 17, 1998.
The Company owns no real property.
ITEM 4. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
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The following table sets forth certain information regarding the holders
of the Company's Common Stock, par value $0.01 as of December 31, 1999 for each
of the Company's directors, and all executive officers and directors as a group.
No individual or group known to the Company holds beneficial ownership of more
than five percent of any class of the Company's voting securities. There are no
arrangements in effect which would result in a change of control of the Company.
As of December 31, 1999, there were 48,988,295 shares of Common Stock
outstanding.
NVID INTERNATIONAL, INC.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(1) (2) (3) (4)
Name And Amount And
Title Of Address Of And Nature Of Percent Of
Class Beneficial Beneficial Class
Owner Owner
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Common EHPC Ionisation Limited (1) 0 0%
87A Newington Causeway
London
SE1 6DH
England
Common David Larson, CEO, President, Director 700,000 1.40%
338 Woodlake Wynde
Oldsmar, Florida 34677
Common Michael Redden, CFO, Secretary, Director 95,000 0.19%
5153 Sandy Cove Avenue
Sarasota, Florida 34242
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Common Directors and Officers as a Group 795,000 1.59%
</TABLE>
(1) Pursuant to the Distribution and License Agreement dated August 26, 1998
among EHPCI, Ltd., EHPC, Ltd., the Company and its wholly-owned
subsidiary, EHPCI, Ltd. may be entitled as of August 26, 1999 to such
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number of shares of the Company's common stock as would result in its
owning 20% of the outstanding shares of common stock after issuance of
such shares. Under the same Agreement, EHPCI, Ltd. may be entitled, on
the grant of the U.S. Patent for RMS to the Company, to issuance of an
additional number of shares of common stock that would increase EHPCI,
Ltd.'s holding to 25% of the total number of shares outstanding
immediately after the issuance of such shares. The Company and EHPCI,
Ltd. are engaged in discussions to determine how much stock, if any,
will be issued pursuant to the Agreement.
ITEM 5. - DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
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The following table sets forth the names, positions with the Company and
ages of the executive officers and directors of the Company. Directors of the
Company will be elected at the Company's annual meeting of stockholders and
serve until their successors are elected and qualify. Officers are elected by
the Board and their terms of office are at the Board's discretion, or until
their successors are elected and qualify.
Name Age Position Director Since
David Larson 48 President April 7, 1997
Michael Redden 52 Secretary July 10, 1997
Dr. Robert Edelson 65 Director November 21, 1997
David Larson. Prior to coming to the Company in July 1996, Mr. Larson
served for 4 years as the director of marketing for Pinch-A-Penny, Inc., a
company specializing in pool and patio supplies sold through 117 franchised
retail stores in Florida. Prior to joining Pinch-A-Penny, Mr. Larson held sales
management positions with a division of PPG Industries that sold disinfectants
to many of the same markets that the Company now targets. Mr. Larson started
with the Company as Vice President of Sales of Aqua Bio Technologies, Inc. and
later became its President. Mr. Larson was appointed to the Board of Directors
on April 7, 1997. In June 1997, Mr. Larson was named President of NVID, which
was approved by the shareholders in November 1997.
Michael Redden. Mr. Redden was named Director of Foreign Development for
Aqua Bio Technologies, Inc. in August 1995 and has served as President for Aqua
Bio Technologies, Inc. since June 1997. Mr. Redden is currently the Company's
Secretary. Prior to working for the Company, Mr. Redden owned a yacht brokerage
and charter business on the west coast of Florida and started Caribe Star
Seafood, Ltd., a Nicaraguan-based corporation engaged in fish processing and
15
<PAGE>
export to the United States and the Far East. Mr. Redden was appointed to the
Company's Board of Directors on July 10, 1997.
Dr. Robert Edelson. Dr. Edelson was elected to the Company's Board of
Directors on November 12, 1997, after retiring from 27 years in the water
treatment business as a transition metal chemist. He was past President of the
Minnesota Environmental Health Association, teacher of the year for the National
Swimming Pool Foundation in 1997 and is an active member on the Chemical
Treatment and Process Committee of the National Spa and Pool Institute.
16
<PAGE>
ITEM 6. - EXECUTIVE COMPENSATION.
- --------------------------------
NVID INTERNATIONAL, INC> & SUBSIDIARIES
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Principal Other Annual
Position Year Salary Bonus Compensation
($) ($) ($)
(a) (b) (c) (d) (e)
David Larson, CEO 1997 $61,524 $ 600 0
1998 $72,047 $4,000 0
1999 $94,550 $5,000 0
Michael J. Redden,
CFO, Secretary 1997 $21,650 $ 600 0
1998 $38,902 $5,000 0
1999 $72,735 $5,000 0
(1) the annual salary for David Larson was set by Shareholders vote at the
Annual Shareholder's Meeting in 1997. The annual salary was fixed at $87,500
per year, but the amount reported in column(c) was all that was paid to the
individual. With no long-term plan in effect, all deferred compensation will
be submitted to a propsed Compensation Committee comprised of shareholders
appointed at the 2000 Annual Shareholder's Meeting, which will make
recommendations to the Board. The final authority on disposition shall rest
with the Board of Directors.
(2) The annual salary for Michael Redden was set by Shareholders vote at he
Annual Shareholder's Meeting in 1997. The annual salary was fixed at $62,500
per year, but the amount reported in column (c) was all that was paid to the
individual. With no long-term plan in effect, all deferred ocmpensation will
be sumitted to a proposed Compensation Committee comprised of shareholders
appointed at he 2000 Annual Shareholder's Meeting, which will make
recommendations to the Board. The final authority on disposition shall rest
with the Board of Directors.
(3) The annual salaries for David Larson and Michael Redden in 1999 are accurate
through November, December salaries and Christmas bonuses are estimated.
(4) No other employees were compensated over $50,000 per year during the
reporting period.
17
<PAGE>
ITEM 7. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- --------------------------------------------------------
On May 18, 1998, the Company executed a Promissory Note in the amount of
$25,000 payable to Ms. Lilly Lee Lucas and Ms. Khristina C. Burgess and on June
12, 1998, the Company executed a Promissory Note in the amount of $50,000
payable to Ms. Lilly Lee Lucas, Ms. Khristina C. Burgess, and Mr. Burt Lucas
(collectively, the "Notes"). The Company issued 110,000 shares of common stock
to Ms. Burgess in partial repayment for the Notes. The principal balance of the
Notes, after deducting the value of the issued stock, is $20,294. The holders of
the Notes have expressed to the Company's management a desire to receive
additional Company stock in lieu of cash for the Notes. Michael Redden, a
director and officer of the Company was formerly married to Ms. Burgess. Ms.
Burgess holds 841,000 shares of the Company's common stock.
Michael Redden is also owed $73,897 in back salary from the Company.
ITEM 8. - DESCRIPTION OF SECURITIES.
- -----------------------------------
The Company's common stock is traded on the "pink sheets."
The Company has one class of equity securities, its common stock,
authorized, issued and outstanding. The par value of the Company's common stock
is $0.001 per share. As of the Company's fiscal year ended December 31, 1999
there were 48,988,295 shares issued and outstanding. As of the date hereof, the
Company has 49,288,295 shares of common stock outstanding.
The Company is currently authorized to issue up to 50 million shares of
Common Stock. Holders of shares of Common Stock are entitled to share, on a
ratable basis, such dividends as may be declared by the Board of Directors out
of funds, legally available therefor. Upon liquidation, dissolution or winding
up of the Company, after payment to creditors that may be outstanding, the
assets of the Company will be divided pro-rata on a per share basis among the
holders of the Common Stock.
Each share of Common Stock entitles the holders thereof to one vote. The
By-Laws of the Company require that a majority of the issued and outstanding
shares of the Company need be represented to constitute a quorum and to transact
business at a Stockholders' Meeting.
18
<PAGE>
PART II
ITEM 1. - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
SUMMARY OF QUARTERLY HIGH & LOW PRICE OF COMMON STOCK
1998-1999
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------- ----------------------------- ----------------------------
QUARTER HIGH BID LOW BID
------- -------- -------
- ----------------------------- ----------------------------- ----------------------------
1st Quarter 1998 0.0775 0.025
- ------------------------------- ----------------------------- ----------------------------
2nd Quarter 1998 0.16 0.08
- ------------------------------- ----------------------------- ----------------------------
3rd Quarter 1998 0.185 0.08
- ------------------------------- ----------------------------- ----------------------------
4th Quarter 1998 0.105 0.04
- ------------------------------- ----------------------------- ----------------------------
1st Quarter 1999 0.20 0.05
- ------------------------------- ----------------------------- ----------------------------
2nd Quarter 1999 0.20 0.0425
- ------------------------------- ----------------------------- ----------------------------
3rd Quarter 1999 0.13 0.055
- ------------------------------- ----------------------------- ----------------------------
4th Quarter 1999 0.0825 0.07
- ------------------------------- ----------------------------- ----------------------------
</TABLE>
FOOTNOTE
(1) The above table is based on Over-The-Counter quotations. These
quotations reflect inter-dealer prices, without retail mark-up, markdown
or commissions, and may not represent actual transaction.
(2) All historical data was obtained from OTC:BB web site.
As of December 10, 1999, there were 474 owners of record of the
Company's common stock.
The Company is just emerging from a developmental stage and as such has
not declared a dividend to date. As the Company's royalty agreements come into
play during the first and second quarter of year 2000, the Company hopes to
become profitable for the first time. The nature of the Company's products
dictates a continued and increasing research and development expenditure to
expand the number of markets. Additionally, the patent expense for numerous
international patents and the certification process (EPA, FDA, USDA) in numerous
countries will continue to tax revenues. Management does not expect to declare
dividends until at least the last quarter of 2001, if ever.
19
<PAGE>
ITEM 2. - LEGAL PROCEEDINGS.
- ---------------------------
None.
ITEM 3. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
- -------------------------------------------------------
None.
ITEM 4. - RECENT SALES OF UNREGISTERED SECURITIES.
- -------------------------------------------------
The following table sets forth information with respect to sales by the
Company of its securities during the past three years without registration under
the Securities Act of 1933. The table sets forth the time periods and amounts of
securities sold, as well as the consideration received by the Company. All
transactions described in the table were sales of the Company's common stock for
cash. None of such sales involved a public offering, and none of such sales were
underwritten. All sales were made to accredited investors who were existing
stockholders of the Company at the time of such sales. The Company believes that
such sales are exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------------------- ------------------------------- -------------------------------
Period of Issuance Number of Shares Aggregate Consideration
- --------------------------------- ------------------------------- -------------------------------
Second Quarter 1998 1,065,730 $ 94,500
- --------------------------------- ------------------------------- -------------------------------
Third Quarter 1998 1,482,500 77,000
- --------------------------------- ------------------------------- -------------------------------
Fourth Quarter 1998 1,666,666 75,000
- --------------------------------- ------------------------------- -------------------------------
First Quarter 1999 2,571,740 175,450
- --------------------------------- ------------------------------- -------------------------------
Second Quarter 1999 1,512,595 87,077
- --------------------------------- ------------------------------- -------------------------------
Third Quarter 1999 1,939,870 120,450
- --------------------------------- ------------------------------- -------------------------------
Fourth Quarter 1999 3,643,999 170,548
- --------------------------------- ------------------------------- -------------------------------
First Quarter 2000 300,000 10,000
- --------------------------------- ------------------------------- -------------------------------
</TABLE>
In addition, in 1998, the Company issued 150,000 shares of common stock
to two independent contractors as bonuses in exchange for services rendered on
behalf of the Company.
ITEM 5. - INDEMNIFICATION OF DIRECTORS AND OFFICERS.
- ---------------------------------------------------
Section 145 of the Delaware General Corporation Law (the "GCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
20
<PAGE>
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in right of the corporation - a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification if the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, by-laws, disinterested director vote, stockholder vote, agreement or
otherwise. Article VII, Section 7 of the Company's Bylaws requires the Company
to indemnify its officers and directors to the fullest extent permitted under
the GCL.
21
<PAGE>
PART III
DESCRIPTION OF EXHIBITS.
- -----------------------
3.(I)a Certificate of Incorporation dated August 20, 1984.
3.(I)b Certificate of Amendment of Certificate of Incorporation dated
March 31, 1985.
3.(I)c Certificate of Correction of Certificate of Amendment of Certificate
of Incorporation dated October 15, 1985.
3.(I)d Certificate for Renewal and Revival of Charter dated October
19, 1994.
3.(I)e Certificate of Amendment of Certificate of Incorporation filed
October 24, 1994.
3.(I)f Certificate of Amendment of Certificate of Incorporation filed
May 26, 1995.
3.(I)g Certificate for Renewal and Revival of Charter dated December 9, 1996.
3.(I)h Certificate of Amendment of Certificate of Incorporation dated
February 5, 1999.
3.(II) By-Laws.
10.1 Distribution and License Agreement dated August 26, 1998 between EHPC
Ionization, Ltd., ABT, NVID International, Inc. & EHPC, Ltd.
10.2 Licensing Agreement dated November 10, 1998 between EHPC Ionization,
Ltd., and Wallace & Tiernan, Ltd.
10.3 Non-Exclusive License Agreement dated November 10, 1998 between EHPC
Ionization, Ltd. and Wallace & Tiernan, Ltd.
10.4 Supplemental Letter Agreement dated November 10, 1998 between EHPC
Ionization, Ltd. and Wallace & Tiernan, Ltd.
10.5 Standard Manufacturing Agreement dated November 30, 1998 between
NVID International, Inc. and ETIH20.
10.6 Standard Manufacturing Agreement (Pacific Rim Countries) dated
September 17, 1999 between NVID International, Inc. and ETIH20.
22
<PAGE>
10.7 Royalty Letter Agreement and Affirmation dated September 23, 1999
between NVID International, Inc., ABT and Andrew B. Arata.
10.8 License Agreement dated November 12, 1999 between NVID International,
Inc., EHPC Ionization, Ltd. and Innovative Medical Services.
10.9 License Agreement dated November 24, 1999 between NVID International,
Inc. and Innovative Medical Services.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, on March 27,
2000.
NVID INTERNATIONAL, INC.
By:__/s/ David Larson_____
David Larson, President
24
<PAGE>
AUDIT REPORT
NVID INTERNATIONAL, INC. AND SUBSIDIARY
DECEMBER 31, 1998
25
<PAGE>
CONTENTS
Page
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS:
Consolidated Balance Sheet F-2
Consolidated Statement of Operations F-3
Consolidated Statement of Changes in Stockholders' Equity F-4
Consolidated Statement of Cash Flows F-5
Notes to Consolidated Financial Statements F-6-9
26
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
NVID International, Inc. and Subsidiary
Sarasota, Florida
We have audited the accompanying consolidated balance sheet of NVID
International, Inc. and Subsidiary (the Company) as of December 31, 1998 and the
related consolidated statements of operations, changes in stockholders' equity,
and cash flows for the year then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1998, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 8 to the
financial statements, the Company's significant operating losses raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to this matter are also described in Note 8. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
January 7, 2000, except for Note 9,
as to which the date is February 29, 2000
Gainesville, Florida
27
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current Assets
Cash $ 4,096
Accounts Receivable 45,366
Inventory 38,633
-------------
TOTAL CURRENT ASSETS 88,095
PROPERTY AND EQUIPMENT 31,299
OTHER ASSETS
Patents Pending 86,538
License Agreement 36,000
Deposits 3,145
-------------
TOTAL OTHER ASSETS 125,683
-------------
TOTAL ASSETS $ 245,077
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 63,079
Patent Costs Payable 90,162
Accrued Salaries and Benefits 215,980
License Fee Payable 20,000
-------------
TOTAL CURRENT LIABILITIES 389,221
LONG-TERM LIABILITIES
Notes Payable 102,271
-------------
TOTAL LIABILITIES 491,492
STOCKHOLDERS' EQUITY
Common Stock; 50,000,000 Shares Authorized
at $.001 par value, 48,278,886 Shares Issued
and Outstanding 48,279
Additional Paid-In Capital 4,816,743
Accumulated Deficit (5,111,437)
-----------
TOTAL STOCKHOLDERS' EQUITY (246,415)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 245,077
===========
See accompanying notes.
F-1
28
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
SALES $ 51,794
COST OF SALES 43,103
----------
GROSS PROFIT 8,691
OPERATING EXPENSES
Personal Services 339,098
Travel 64,071
Professional Services 29,806
Penalties and Fines 26,641
Research and Development 20,356
Rent 18,020
Depreciation and Amortization 16,345
Office Expenses 11,598
Telecommunications 10,863
Bad Debt Expense 7,780
Commissions 2,992
----------
TOTAL OPERATING EXPENSES 547,570
----------
OPERATING LOSS (538,879)
OTHER INCOME (EXPENSE)
Miscellaneous Income 7,079
Interest Expense (38,298)
Loss on Sale of Assets (8,402)
----------
TOTAL OTHER INCOME (EXPENSE) (39,621)
----------
NET LOSS $ (578,500)
==========
BASIC NET LOSS PER SHARE $ (.01)
==========
DILUTED NET LOSS PER SHARE $ (.01)
==========
See accompanying notes.
F-2
29
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTALS
Balance,
January 1, 1998 44,258,435 $44,258 $4,638,510 $(4,532,937) $149,831
Common Stock Issued:
For Services 150,000 150 5,850 -- 6,000
For Rent 61,500 62 9,813 -- 9,875
For Debt Service 440,898 441 14,785 -- 15,226
For Cash 3,368,053 3,368 147,785 -- 151,153
Net Loss -- -- -- (578,500) (578,500)
---------- ------- ---------- ----------- ---------
Balance,
December 31, 1998 48,278,886 $48,279 $4,816,743 $(5,111,437) $(246,415)
========== ======= ========== =========== =========
See accompanying notes.
F-3
30
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(578,500)
Adjustments to Reconcile Net Loss to Net
Cash Used by Operating Activities:
Depreciation and Amortization 16,345
Loss on Sale of Assets 8,402
Bad Debt Expense 7,780
Common Stock Issued for Operating Expenses 26,101
Interest Expense Added to Note 27,271
Changes in:
Accounts Receivable (21,760)
Inventory 38,429
Accounts Payable 27,177
Patent Costs Payable 10,356
Accrued Salaries and Benefits 215,980
---------
NET CASH USED BY OPERATING ACTIVITIES (222,419)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Received From Sale of Equipment 500
Purchase of Intangible Assets (17,500)
---------
NET CASH USED BY INVESTING ACTIVITIES (17,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds From Notes 60,000
Proceeds From Issuance of Stock 151,153
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 211,153
---------
DECREASE IN CASH AND CASH EQUIVALENTS (28,266)
CASH AT BEGINNING OF YEAR 32,362
--------
CASH AT END OF YEAR $4,096
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Year for Interest $1,242
Noncash Investing And Financing Activities:
Accounts Payable Incurred for Intangible Assets $48,802
Interest Added to Principal of Note $27,271
Note Created From Payment of License Fee $20,000
Stock Issued as Payment for:
Services $6,000
Rent $9,875
Interest $10,226
Debt $5,000
See accompanying notes.
F-5
31
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include those of NVID International, Inc.
(NVID) and its wholly owned subsidiary, Aqua Bio Technologies, Inc. (Aqua Bio),
hereafter collectively referred to as the Company. All significant intercompany
accounts and transactions have been eliminated.
Nature of Operations
NVID was incorporated on August 26, 1984 under the state laws of Delaware. Aqua
Bio (formerly d.b.a. Superior Aqua Products) was incorporated in the state of
Florida on November 7, 1991. Effective November 14, 1994, NVID issued 18,281,500
shares of its common stock in exchange for 100 percent of the issued and
outstanding common stock of Aqua Bio.
The Company is in the business of marketing and distributing electronic water
purification systems. The system contains specially designed electrodes inside
an "ion chamber". A safe, low, electronic charge is sent to the electrodes by a
solid state control unit. This produces positive charged atoms called "ions" of
copper and silver, which is concentrated to 60 ppb and injected into the process
water where they attach and kill algae, bacteria, fungus, yeast, etc. The
charged, dead microorganisms attach, forming larger particles which are removed
by the existing filtration system. The system use is directed towards
residential, commercial, industrial, and municipal applications.
The Company maintains corporate offices in Clearwater and Sarasota, Florida.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash equivalents. At December 31,
1998, cash consists of demand deposits.
Accounts Receivable
Accounts receivable are reported at net realizable value. There was no allowance
for doubtful accounts at December 31, 1998 since all receivables are deemed
fully collectible. There are no identifiable concentrations of credit risk
related to receivables.
F-6
32
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)
Inventory
The inventory of product held for sale is carried at the lower of cost or market
value using the first-in-first-out method.
Property and Equipment
Property and equipment is recorded at its acquisition cost. Depreciation is
provided using the straight-line method over the estimated useful lives of five
to seven years.
Maintenance and repairs of property and equipment that do not improve or extend
the life of the respective assets are charged to expense as incurred. Major
renewals and betterments are treated as capital expenditures and depreciated
accordingly.
When assets are retired or otherwise disposed of, the cost of the assets and the
related accumulated depreciation are removed from the accounts with any gain or
loss on disposition reflected in the statement of operations.
Intangible Assets
Intangible assets are stated at cost less accumulated amortization. Amortization
of the license agreement is computed using the straight-line method over the
estimated useful life of five years. Amortization of patent costs will begin
after the patents are issued.
Income Taxes
No provision for taxes has been made due to cumulative operating losses at
December 31, 1998. The Company has net operating loss carryforwards of
approximately $4,000,000 which will expire in 2009 through 2013. No tax benefit
has been reported in the financial statements and the potential tax benefits of
the loss carryforwards are offset by a valuation allowance of the same amount.
Earnings (Loss) Per Share
The computation of earnings (loss) per share of common stock is based on the
weighted average number of shares outstanding during the period.
F-7
33
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Useful
Lives
Manufacturing Equipment 5 years $8,005
Trade Show Displays 7 years 13,685
Demo Units 7 years 14,617
Computer Equipment 5 years 27,164
-------
Total 63,471
Less Accumulated Depreciation 32,172
---------
Property and Equipment, Net $31,299
=========
Depreciation expense for the year ended December 31, 1998 was $12,345.
NOTE 3 - INTANGIBLE ASSETS
Intangible assets consist of the following:
Patents Pending $86,538
Less Accumulated Amortization --
-------
Patents Pending, Net $86,538
=======
License Agreement $40,000
Less Accumulated Amortization (4,000)
-------
License Agreement, Net $36,000
=======
Amortization expense for the year ended December 31, 1998 was $4,000.
NOTE 4 - PATENT COSTS PAYABLE AND STOCK WARRANT
The Company retains the services of a patent attorney (the attorney) to whom it
owes $90,162 at December 31, 1998. At December 30, 1998, the Company issued a
warrant agreement providing the attorney the option to purchase 750,000 shares
of stock at an exercise price of $.10 per share. The warrant may be exercised
from December 31, 1999 to December 30, 2003. The warrant agreement gives the
attorney the right to apply any portion of the outstanding balance owed by the
Company for payment of the exercise price.
F-8
34
<PAGE>
NVID INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 5 - NET LOSS PER SHARE
Net Loss Shares Per Share
(Numerator) (Denominator) Amount
Basic Net Loss per Share
Net Loss Attributable to
Common Stockholders $(578,500) 46,268,660 $(.01)
====
Effect of Dilutive Securities
Warrants -- 4,110
-------- ----------
Diluted Net Loss per Share
Net Loss Attributable to
Common Stockholders Plus
Assumed Conversions $(578,500) 46,272,770 $(.01)
========= ========== ====
NOTE 6 - NOTES PAYABLE
Amounts due under two notes payable include the $75,000 principal amount
borrowed and $27,271 of interest added to principal. Accrued interest of $10,226
for the year ended December 31, 1998 was paid by the issuance of 340,898 shares
of common stock. Principal and unpaid accrued interest were due in full in June
of 1999. However, the notes include options for the Holders to extend the
repayment terms or to require issuance of the Company's stock at the date of
maturity. The due dates for these notes have been extended without a specified
due date. Interest accrues at 20%.
NOTE 7 - FINAL JUDGEMENT
On August 7, 1998, the Tampa Division of the U.S. District Court entered a final
judgement against the Company. The judgement required transfer of title to
$256,500 of receivables and payment of $25,000 to a receiver for distribution to
defrauded investors. The $256,500 had been transferred in 1997, in anticipation
of the final order, and the $25,000 was paid in 1998 and is included in
penalties and fines.
NOTE 8 - GOING CONCERN
The Company has incurred significant cumulative net operating losses. The
Company continues to raise capital and market its technologies in order to meet
operational expenses. Management expects revenue to increase significantly once
patent applications are finalized and U.S. Department of Environmental
Protection approvals are received.
NOTE 9 - SUBSEQUENT EVENTS
On February 29, 2000, the Securities and Exchange Commission delisted the
Company's shares due to noncompliance with filing requirements.
F-9
35
<PAGE>
EX-3.(I)a
Certificate of Incorporation
<PAGE>
EXHIBIT 3.(I)a
CERTIFICATE OE INCORPORATION
OF
NETWORK VIDEO, INC.
*********************************************************
1. The name of the corporation is
NETWORK VIDEO, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 120 Orange Street, in the City of Wilmington, County
of New Castle, The name of its registered agent at such address is. The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) common shares; all of such shares
shall be without par value.
5A. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
K. L. Husfelt Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
S. K. Fraticelli Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
S. E. Zimmerman Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
5B. The name and mailing address of each person, who is to serve as a
director until the final annual meeting of the stockholders or until a successor
is elected and qualified, is as follows:
<PAGE>
NAME MAILING ADDRESS
Frank Valencic 13477 Prospect Road
Strongsville, Ohio 44136
Robert Bunte 13477 Prospect Road
Strongsville, Ohio 44136
Lorna Benjamin 13477 Prospect Road
Strongsville, Ohio 44136
6. The corporation is to haves perpetual existence.
7. In furtherance and not in limitation of the powers conferred by statute,
the board of directors in expressly authorized: To make, alter or repeal
the by-laws of the corporation. To authorize sad cause to be executed
mortgages and liens upon the real and personal property of the
corporation To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper purpose
and to abolish any such reserve is the manner in which it was created.
By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee, The by-laws may provide I that in the absence or disqualification
of a member of a committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a quorum,
may unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
<PAGE>
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the certificate of incorporation,
adopting an agreement of merger or consolidation, recommencing to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the corporation) and, unless the resolution or by-laws, expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and assets
of the corpora-including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
8. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide. Meetings of stockholders may be held within
or without the state of Delaware, as the by-laws may provide. The books of the
corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the by-laws of the corporation.
9. The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore
named, for the purpose of forming a corporation pursuant to the General <PAGE>
Corporation Law of the State of Delaware, do not make this certificate, hereby
declaring and certifying that this is our act and deed and the facts herein
stated are true, and accordingly have hereunto set our hands this 20th day of
August, 1984.
-----------------------------
K.L. Husfelt
-----------------------------
S.M. Fraticelli
-----------------------------
S.K. Zimmerman
<PAGE>
EX-3.(I)b
Certificate of Amendment
<PAGE>
EXHIBIT 3.(I)b
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
(Pursuant to Section 242)
**********************************************
NETWORK VIDEO, INC., a corporation organized and existing under
and by virtue of the Genera Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the written consent of the necessary number of shares required
by statute of the stockholders of NETWORK VIDEO, INC. was given in accordance
with Section 228 of he General Corporation Law of Delaware, setting forth an
amendment to the Certificate of Incorporation of said corporation. The amendment
to the Certificate of Incorporation s as follows
Article 3. of the Certificate of Incorporation of this corporation is
hereby amended as follows: "3. the total number of shares which the corporation
is authorized to issue is Ten Million (10,000,000) shares of voting Common
Stock, each of which shall have a par value of $.001."
SECOND: Prompt notice of the taking of the corporate action amending the
Certificate of Incorporation in the manner set forth above has been given to the
sole stockholder, who had previously consented in writing, as provided by
Section 228 of the Genera Corporation Law of the State of Delaware.
THIRD: The 1,000 outstanding shares of Common Stock were split on a
3,670-for- basis, so hat, after he split and he change of par value from no par
value to $.001 per share the corporation has issued and outstanding 3,670,000
shares of Common Stock, $.001 par value per share.
<PAGE>
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by Frank S. Valencic, its President, and attested by Robert F. Bunte, its
Secretary, this 31 day of March, 1985.
NETWORK VIDEO, I NC.
BY___________________________________
Frank S. Valencic, President
ATTEST:
By__________________________________
Robert F. Bunte, Secretary
<PAGE>
EX-3.(I)c
Certificate of Correction
<PAGE>
EXHIBIT 3.(I)c
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
************************************************************
NETWORK VIDEO, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Certificate of Amendment of the Certificate of
Incorporation filed with the Secretary of State of Delaware on April 10, 1985
inaccurately stated that Article 3. of the Certificate of Incorporation was
amended when the actual Article being amended was Article 4. of the Certificate
of Incorporation.
SECOND: The corrected form of the amendment to the Certificate of
incorporation is as follows: Article 4. of the Certificate of incorporation of
this corporation is hereby amended as follows:
"4. the total number of shares which the corporation is authorized to
issue is Ten Million (10,000,000) shares of voting Common Stock, each of
which shall have a par value of $.001."
<PAGE>
IN WITNESS WHEREOF, said corporation has caused this Certificate of
Correction to be signed by Frank S. Valencic, its President, and attested by
Robert F. Bunte, its Secretary, this 15 day of October, 1985
NETWORK VIDEO, INC.
By_________________________________
Frank S. Valencic, President
ATTESTS
By_________________________________
Robert Bunte, Secretary
<PAGE>
EX-3.(I)d
Certificate for Renewal and Revival
<PAGE>
EXHIBIT 3.(I)d
Certificate
for Renewal and Revival of Charter
NETWORK VIDEO, INC. a corporation organized under the laws of Delaware.
the charter of which was voided for non-payment of taxes, note desires to
procure a restoration renew-It and revival of its charier, and hereby certifies
as follows;
1. The name of the corporation is Network Video, Inc.
-------------------
2. Its registered office in the State of Delaware, at 1209 Orange St.
Street, City of Wilmington zip Code 19301 County of ____ the name and
address of its registered agent is Corporation Trust Co.
3. The date at filing of the original Certificate of Incorporation to
Delaware was August 20, 1994.
4. The date when restoration renewal, and revival of the charter of this
company Is to commence is the 28th day of February 1990, same being
prior to the date of the expiration of the charter. This renewal and
revival of the charter of this corporation is to be perpetual.
5. This Corporation was duly organized and carried on the business
authorized by its charter until the First day of March. A.D, 1990 at
which time its charter became inoperative arid void for non-payment of
taxes sad this certificate for renewal and revival is tiled by authority
of the duly elected directors of the corporation in accordance with the
laws of the State of Delaware.
IN TESTIMONY WHEREOF and to compliance with the previsions of Section
312 of the General Corporation Law of the State of Delaware as amended providing
for the renewal, extension and restoration of charters, Robert F. Bunte the last
and acting President, and Robert F. Bunte, the last and acting Secretary 0f
Network Video, Inc., have hereunto set their hands to this certificate this 19th
day of October, 1994.
<PAGE>
EX-3.(I)e
Certificate of Amendment
<PAGE>
EXHIBIT 3.(I)e
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
(Pursuant to Section 242)
NETWORK VIDEO, INC., a corporation organized and existing under and by
virtue of the General Corporations Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That written consent of the necessary number of shares required
by statute of the stockholders of NETWORK VIDEO, INC. was given in accordance
with Section 228 of the General Corporations Law of Delaware, setting forth an
amendment to the Certificate of Incorporation of said corporation. The amendment
to the Certificate of Incorporation is as follows:
Article 4. of the Certificate of Incorporation of this corporation is
hereby amended as follows:
"4. The total number of shares of stock which the corporation shall have
the authority to issue Is Fifty Million (50,000,000) Common Voting
Shares, each of which shall have a par value of $0.001."
SECOND: Prompt notice of the taking off the corporate action amending
the Certificate of Incorporation in the manner set forth above has been given to
ail shareholders of record who have not heretofore previously consented in
writing, as provided by Section 228 of the General Corporation.
IN WITNESS WHEREOF, said corporation has caused this Certificate of
Amendment to be signed by Robert F. Bunte, its President and Attested by
Karen S. Pluto.
NETWORK VIDOE INC.
By.____________________________________
Robert F. Bunte, President
Attest: _________________________________
<PAGE>
EX-3.(I)f
Certificate of Amendment
<PAGE>
EXHIBIT 3.(I)f
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
(Pursuant to Section 242)
NETWORK VIDEO, INC., a corporation organized and existing under and by
virtue of the General Corporations Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That written consent of the necessary number of shares required
by statute of the stockholders of NETWORK VIDEO, INC. was given in accordance
with Section 228 of the General Corporations Law of Delaware, setting forth an
amendment to the Certificate of Incorporation of said corporation. The amendment
to the Certificate of Incorporation is as follows:
Article 1. of the Certificate of Incorporation of this corporation is
hereby amended as follows:
"1. The name of the corporation is NVID International, Inc.
SECOND: Prompt notice of the taking off the corporate action amending
the Certificate of Incorporation in the manner set forth above has been given to
all shareholders of record who have not heretofore previously consented in
writing, as provided by Section 228 of the General Corporation.
IN WITNESS WHEREOF, said corporation has caused this Certificate of
Amendment to be signed by Robert F. Bunte, its President and Attested by Tracy
Burden.
NETWORK VIDEO INC.
BY.____________________________________
Robert F. Bunte, President
Attest___________________________________
<PAGE>
EX-3.(I)g
Certificate for Renewal and Revival
<PAGE>
EXHIBIT 3.(I)g
Certificate
for Renewal and Revival of Charter
NVID International, Inc. a corporation organized under the laws of Delaware.
the charter of which was voided for non-payment of taxes, note desires to
procure a restoration renew-It and revival of its charier, and hereby certifies
as follows;
1. The name of the corporation is NVID International, Inc.
------------------------
2. Its registered office in the State of Delaware, at 1209 Orange St.
Street, City of Wilmington zip Code 19801 County of New Castle the name
and address of its registered agent is Corporation Trust Company.
3. The date at filing of the original Certificate of Incorporation to
Delaware was August 20, 1984.
------------
4. The date when restoration renewal, and revival of the charter of this
company Is to commence is the 28th day of February 1996, same being
prior to the date of the expiration of the charter. This renewal and
revival of the charter of this corporation is to be perpetual.
5. This Corporation was duly organized and carried on the business
authorized by its charter until the First day of March. A.D, 1996 at
which time its charter became inoperative arid void for non-payment of
taxes sad this certificate for renewal and revival is tiled by authority
of the duly elected directors of the corporation in accordance with the
laws of the State of Delaware.
IN TESTIMONY WHEREOF and to compliance with the previsions of Section
312 of the General Corporation Law of the State of Delaware as amended providing
for the renewal, extension and restoration of charters, Robert F. Bunte the last
and acting President, and Robert F. Bunte, the last and acting Secretary 0f NVID
International, Inc., have hereunto set their hands to this certificate this 9th
day of December, 1996.
<PAGE>
EX-3.(I)h
Certificate of Amendment
<PAGE>
EXHIBIT 3.(I)h
STATE OF DELAWARE
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
NVID INTERNATIONAL, INC. A corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of NVID INTERNATIONAL, INC.
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows: RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "4" so that, as amended, said
Article shall be and read as follows: THE TOTAL NUMBER OF SHARES OF STOCK WHICH
THE CORPORATION SHALL HAVE THE AUTHORITY TO ISSUE IS SIXTY MILLION (60,000,000)
COMMON SHARES, @ .001. SECOND: That thereafter, pursuant to resolution of its
Board of Directors, a special meeting of the stockholders of said corporation
will be duly held upon notice in accordance with Section 222 of the General
Corporate Law of the State of Delaware at which meeting stockholders wits vote
to ratify the actions of the Board of Directors in approving the amendment.
THIRD: That said amendment will be adopted in accordance with Section 242 of the
General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not he reduced under or by
reason of said amendment.
IN WHITNESS WHEREOF, said BOARD OF DIRECTORS Has caused this certificate to be
signed by MICHEAL J. REDDEN, an Authorizing Officer, this 5th day of FEBRUARY,
1988.
By: _______________________
Authorizing Officer
Name: MICHEAL J. REDDEN
Print or Type
Title: SECRETARY (CORPORATE)
<PAGE>
EX-3.(II)
By-Laws
<PAGE>
EXHIBIT 3.(II)
NETWORK VIDEO, INC.
B Y - L A W S
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Strongsville, State of Ohio, at such
place as may be fixed from time to time by the board of directors, or at such
other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the notice
of the meeting. Meetings of stockholders for any other purpose may be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof.
<PAGE>
Section 2. Annual meetings of stockholders, commencing with the year
1985, shall be held on the third Tuesday in August if not a legal holiday, and
if a legal holiday, then on the next secular day following, at 9:00 A. M., or at
such other date and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall elect
by a plurality vote a board of directors, and transact such other business as
may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten .nor more' than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at place within the city where the meeting
<PAGE>
is to be held, which place shall be specified in the notice of the meeting or if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the beard of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date
and hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than sixty days before the
date of the meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the Stark issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
<PAGE>
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting, _
unless the question is one upon which by express provision of the statutes or of
the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after three years from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action to be taken at any annual or special meeting of
stockholders of the corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
board shall be three. The directors shall be elected at the annual meeting of
the stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until his successor is elected and qualified.
Directors need not be stockholders.
<PAGE>
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall quality, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies ox newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under
the direction of its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are not by statute or
by the certificate of incorporation or by these by--laws directed or required to
be exercised or done by the stockholders.
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held
without notice at such time and at such place as shall from time to time be
determined by the board.
<PAGE>
Section 7. Special meetings of the board may be called by the president
on three days' notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the president or secretary in like
manner and on like notice on the written request of directors unless the board
consists of only one director; in which case special meetings shall be called by
the president or secretary in like manner and on like notice on written request
of the sole director.
Section 8. At all meetings of the board a majority of directors shall
constitute a quorum for the transaction of business and the act of a majority of
directors present at any meeting at which there is a quorum shall be the act of
the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting, if all members of the board or committee, as the case may be,
consent thereto in writing, and writing or writings are filed with the minutes
of proceedings of the board or committee.
<PAGE>
Section 10. Unless otherwise restricted by certificate of incorporation
or these by-laws, members of the board of directors, or any committee designated
by board of directors, may participate in a meeting of board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member ox
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member.
<PAGE>
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the beard of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151 (a) fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
ether class or classes of stuck of the corporation) adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
<PAGE>
Section 12. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the authority
to fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefore. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14 Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares entitled
to vote at an election of directors.
<PAGE>
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram,
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these by-laws otherwise provide.
<PAGE>
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
<PAGE>
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his
inability or refusal to act, the vice-president (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
<PAGE>
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend meetings of the board of directors
and all meetings of stockholders and record all the proceedings of the meetings
of the corporation and of the board of directors in a book to be kept for that
purpose and shall perform like duties for the standing committees when required.
He shall give, or cause to be given, notice of all meetings of the stockholders
and special meetings of the board of directors, and shall perform such other
duties as may be prescribed by the board of directors or president, under whose
supervision he shall be. He shall have custody of the corporate seal of the
corporation and he, or an assistant secretary, shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested by
his signature or by the signature of such assistant secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation oration and shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the beard of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers vouchers, money and other property of whatever kind
in his possession or under his control belonging to the corporation.
<PAGE>
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the treasurer or in the event of his inability or refusal to act,
perform the duties exercise the powers of the treasurer and shall perform such
other duties and have such other powers as the board of directors may from time
to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by, or in
the name of the corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner thereof
a written notice containing the information required to be set forth or stated
on certificates pursuant to Sections 151, 156, 202 (a or 218 (a or a statement
that the corporation will furnish without charge to each stockholder why so
requests the powers, designations, preferences and relative participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
<PAGE>
Section 2. Any of or all the signatures on a certificate may be
facsimile in case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates or uncertificated shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed When
authorizing such issue of a new certificate or certificates or uncertificated
shares, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
<PAGE>
same in such manner as it shall require and/or to give corporation a band in
such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be cancelled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the corporation.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
<PAGE>
distribution or allotment of any' rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting: provided, however,
that the beard of directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and assess
meets a person registered on its books as the owner of shares, and shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of Delaware.
<PAGE>
ARTICLE
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject
to the previsions of the certificate of incorporation, if any, may be declared
by the beard of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there mar be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting
r, and, at any special meeting of the stockholders when called for by vote of
the stockholders a full and clear statement of the business and condition of the
corporation.
<PAGE>
CHECKS
Section 9. All checks or demands for money notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of organization and the words "Corporate Seal,
Delaware", seal may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law, of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new
by-laws may be adopted by the
<PAGE>
EX-10.1
Distribution and License Agreement
<PAGE>
EXHIBIT 10.1
DISTRIBUTION AND LICENSE AGREEMENT
Date: 26-8-98
Parties:
1. EHPC Ionisation Limited, a company incorporated in England, whose
registered office is at 87A Newington Causeway, London, SE1 6DH,
England ("EHPCI")
2. Aqua Bio Technologies, a company incorporated in accordance with the
laws of the State of Delaware, in the United States of America, whose
principal place of business is at 28870 US 19 North, Suite 300,
Clearwater, Florida 33761, USA ("ABTI")
3. NVID International Inc, a company incorporated in accordance with the
laws of the State of Delaware, in the United States of America, whose
principal place of business is at 28870 US 19 North, Suite 300,
Clearwater, Florida 33761, USA ("NVID")
4. EHPC Limited, a company incorporated in England whose registered
office is at 87A Newington
Causeway, London, SEl 6DH, England ("EHPC")
Recitals:
(A) EHPCI manufactures electronic water treatment systems, incorporating the
Random Metering System (hereinafter referred to as the "RMS System" as
defined in clause 1.1 below) for which the Patent Applications (as
hereinafter defined) have been filed and wishes to extend the area in
which sales are made to the United States of America and Canada,
countries in which it has no existing customers and no marketing
experience for the water treatment system incorporating the RMS System.
(B) NVID has considerable experience in the marketing distribution and
assembly of water treatment systems within the Territories and has
established ABTI as its wholly owned subsidiary to assist it in such
marketing, distribution and assembly activities
(C) Because of the expertise which NVID and ABTI have in the distribution
and assembly of water purification systems, EHPCI wishes to appoint
ABTI, and ABTI wishes to act, as EHPCI's distributor and EHPCI wishes to
grant to ABTI a license to assemble the RMS System and any of the
Products (as hereinafter defined) in the Territories (as hereinafter
defined)
(D) EHPC owns a controlling interest in EHPCl
(E) EHPCI is currently discussing a licensing arrangement with Wallace and
Tiernan Limited ("USF/W&T") of Priory Works Tunbridge, Kent, TN England,
which is a wholly owned subsidiary of US Filters Inc ("USF") of 40004
Cook Street, Palm Desert, California, 92211 pursuant to which USF/W&T
would also be granted by EHPCI a license to market the RMS System and
the Products throughout the world and to assemble and manufacture the
RMS System in the United Kingdom and the United States of America
utilizing the Products supplied by EHPC.
<PAGE>
(F) It is acknowledged by EHPCI and ABTI that if a license is granted to
USF/W&T as aforesaid EHPCI will require the assistance of ABTI in
relation to research market and product development in order to enable
it to perform its obligations to USF/W&T
Operative provisions:
1. Interpretation
1.1 In this Agreement, unless the context otherwise requires:
`CERTIFICATION' means the UL certification required for electrical standards and
the NSF standard 50/60 (National Sanitation Foundation) certification for
commercial and drinking water applications in the United States of America.
`FORCE MAJEURE' means, in relation to either party, any circumstances beyond the
reasonable control of that party (including, without limitation, any strike,
lock-out or other form of industrial action).
`INVOICE VALUE' means the sums invoiced by EHPCI to ABTI in respect of any
Products less any amounts for transport or insurance included in the invoice.
`GROSS PROFIT' means the difference between (a) the amount invoiced by ABTI to
its customers in respect of the RMS System and (b) the aggregate cost to ABTI of
purchasing the RMS System or, where EHPCI has not supplied ABTI with the
complete RMS System, the agreed costs of any components supplied by EHPCI
(together with the import and freight costs and insurance costs of shipping the
Products to the Territories) and/or the costs of components purchased by ABTI
and freight and shipping costs and insurance costs together with the cost of
assembling the components to form the complete RMS System
<PAGE>
`INTELLECTUAL PROPERTY' means any patent, the Patent Applications, copyright,
registered design, Trade Mark, Specification, Manufacturing Know-How, Technical
Know-How or other industrial or intellectual property right existing in the
Territories m respect of the Products, and applications for any of the
foregoing.
`MANUFACTURING KNOW-HOW' means information relating to functions pertaining to
the manufacture and/or assembly of the RMS System and/or any of the Products
(including but not limited to engineering, design, manufacturing, packaging,
formulating, testing, raw materials purchasing, raw materials specifications,
quality of the RMS System and of the Products)
`PATENT APPLICATIONS' together means (a) the pending application for a patent
made jointly by messrs Bruce Wilden, Randy Reid and Syd Garvey within the United
States of America for electronic water treatment products incorporating the
Random Metering System (RMS) (patent application number 08/913422 filed on 15`h
September 1997) ("the US Patent Application") and (b) the pending application
for a patent made jointly by messrs Bruce Wilden, Randy Reid and Syd Garvey
within the Canada for electronic water purification products incorporating the
Random Metering System (RMS) (patent application number 2215370 filed on 15
September 1997.
`PRODUCTS' means the products and/or components relating to the RMS System and
listed in Schedule 1 and such other products and/or components as may be agreed
from time to time between the parties pursuant to clause 2.10
`RESTRICTED INFORMATION' means any trade secrets or confidential knowledge or
any financial or trading information relating to EHPCI, the RMS System, the
Products or their assembly, any other data or information which is disclosed by
EHPCI whether in writing or orally to ABTI pursuant to or in connection with
this Agreement and whether or not it is expressly stated to be confidential or
marked as such and any other information which is not in the public domain at
the date hereof including, without prejudice to the generality of the foregoing,
the Specification, the Manufacturing Know-How, the Technical Know-How or any
improvement or development disclosed to ABTI by EHPCI pursuant to clause 4.11,
any information relating to services, developments, inventions, processes,
plans, financial information, customer (prospective customer) lists, forecasts
and projections, and engineering methods
"RAIS SYSTEM" means the water purification system incorporating the random
metering system developed by EHPCI and licensed to ABTI in accordance with the
terms of this Agreement.
`THE SPECIFICATION' means the manufacturing and performance specification for
the RMS System set out in Schedule 4 hereto as amended from time to time by
EHPCI and notified in writing to ABTI
`TECHNICAL KNOW-HOW' means all information pertaining to the methods of use,
application, maintenance or servicing of the RMS System now possessed by EHPCI
and all improvements to or developments of such methods disclosed by EHPCI to
ABTI
`TERRITORIES' means the countries listed in Schedule 3
`TRADE MARKS' means: such trade marks as are used by EHPCI in relation to
the Products and/or the RMS System at any time during this Agreement
`USF/W&T AGREEMENT' means any agreement or arrangement entered into between
EHPCI and USF/W&T pursuant to which EHPCI shall grant to USF/W&T a license to
distribute and/or manufacture the RMS System and/or any of the Products
`USF/W&T LICENCE FEE' means the fixed sum agreed to be paid by USF/W&T to EHPCI
in consideration of EHPCI granting to USF/W&T a license to distribute and/or
manufacture the RMS System and or any of the Products pursuant to the
USF/W&TUSF/W&T Agreement
<PAGE>
`YEAR OF THIS AGREEMENT' means the period of 12 months from the date of this
Agreement and each subsequent consecutive period of 12 months during the period
of this Agreement.
1.2 Any reference in this Agreement to `writing' or cognate expressions includes
a reference to E-mail, facsimile transmission or comparable means of
communication.
1.3 Any reference in this Agreement to any provision of a statute shall be
construed as a reference to that provision as amended, re-enacted or extended at
the relevant time.
1.4 The headings in this Agreement are for convenience only and shall not
affect its interpretation.
2. Appointment of ABTI
2.1 Subject to clause 12, EHPCI hereby appoints ABTI to act as
(a) Importer and distributor for the resale of the RMS System and of the
Products in the Territories; and
(b) Assembler of the RMS System and the Products in the Territories and ABTI
agrees to act in such capacities, subject to the terms and conditions of this
Agreement.
2.2 Subject to and upon the terms and conditions of this Agreement, EHPCI hereby
grants to ABTI a license to use the Manufacturing Know-How, and the Technical
Know-How (hereinafter referred to as the `Licensed Know-How') to enable it to
assemble, sell, distribute and service the RMS System and the Products in the
Territories during the term of this Agreement.
2.3 ABTI shall be entitled to describe itself as `Importer, Distributor, and
Assembler for the RMS System and the Products, but it shall not hold itself out
as EHPCI's agent for sales of the RMS System or any of the Products or as being
entitled to bind EHPCI in any way.
2.4 ABTI may appoint third parties to assist it in the distribution and sale of
the RMS System and the Products Provided that it shall notify EHPCI before
appointing any such third party, and it shall use its reasonable endeavors to
ensure that any agreement made with such a third party shall not contain any
provision which may be in breach of or give rise to any investigation or
proceedings under the Federal Trade Commission's Trade Regulation Rule on
Franchising and Business Opportunity Ventures 1979 ( or any modification or
amendment thereof) or any other regulation rule or law applicable in the State
of Florida regulating franchise operations.
2.5 Without the prior and express permission of EHPCI, ABTI is prohibited from
sub licensing the rights granted hereunder pursuant to clause 2.2, including but
<PAGE>
not limited to the use of the Manufacturing Know-How, and the Technical
Know-Howany other entity other than any third party appointed in accordance with
clause 2.4 ABTI shall ensure that all sub-licenses granted by it comply with all
the terms and conditions of this Agreement and provided that in the event of a
permitted sub-license, all obligations, liabilities and duties of ABTI under
this Agreement shall remain the primary responsibility of ABTI to the intent
that any act or omission of a permitted sub-licensee shall be deemed to be an
act or omission of ABTI.
2.6 ABTI agrees to assemble the RMS System and the Products to the Specification
.In order that EHPCI may be assured that the provisions of this Agreement are
being observed ABTI shall allow EHPCI or any servant or agent of EHPCI to enter
upon its premises at any time during normal business hours for the purpose of
inspecting ABTI's method's of assembly of the RMS System and the Products.
2.7 In the event that ABTI fails at any time to assemble the RMS System and/or
any of the Products in accordance with the Specification then upon written
notice from EHPCI (such notice to be headed "Cure Notice" and to refer
specifically to clause 12.3 and the possible termination of this Agreement in
the event of failure to comply with the notice), ABTI shall immediately
discontinue the, assembly, distribution and sale of such non-conforming RMS
Systems and/or Products and shall immediately take any and all necessary steps
requisite for meeting the Specification in respect of such RMS System and/or
Products. If ABTI fails to meet the Specification in respect of such RMS System
and/or Products within 30 days next following such notice from EHPCI, such
failure shall constitute a material breach of this Agreement and sufficient
cause for EHPCI to terminate this Agreement.
2.8 ABTI and NVID each hereby agree to indemnify and keep indemnified EHPCI and
EHPC from and against all liabilities, costs, claims, demands and expenses
arising from the assembly of the RMS System and any of the Products by ABTI.
ABTI and NVID shall each maintain adequate indemnity insurance of not less than
$1,000.000 with a reputable insurance company in order to satisfy any claim
which EHPCI and/or EHPC may make under this clause 2. 8
2.9 EHPCI undertakes that it shall refer all inquiries I may receive from
potential customers for the RMS System in the Territories to ABTI
2.10 Provided that and for so long as EHPCI shall not have entered into the
USF/W&T Agreement EHPCI undertakes that ABTI shall have a first right of refusal
<PAGE>
to market and/or distribute any new products which EHPCI may hereafter develop
for sale in the Territories Provided that (a) if ABTI shall not have agreed to
market and/or distribute any of such new products within 21 days of EHPCI
notifying it of such new products, EHPCI shall be entitled (directly or
indirectly) to sell, market and/or distribute such new products in the
Territories for its own benefit; and (b) EHPCI shall not be obliged to offer any
new products to ABTI as aforesaid if such new products have been jointly
developed with a third party and provided that such products do not compete with
the RMS System with respect to its capacity (which, without prejudice to the
generality of the foregoing, shall include the volume of water treatable per
hour) or its effectiveness (which, without prejudice to the generality of the
foregoing, shall include the number and type of viruses and bacteria which may
be treatable by the RMS System)
2.11 ABTI shall use its reasonable endeavors to promote the Products within the
Territories and shall at all times be just and faithful to EHPCI in all
transactions and matters relating to, or in any way connected with this
Agreement.
2.12 EBPCI shall use its reasonable endeavors to procure that forthwith on the
signing of this Agreement there shall be issued to ABTI such number of ordinary
shares of (pound) 1 each in the capital of EHPC free from all liens, charges and
encumbrances and together with all rights attaching thereto as shall be equal to
10% of the total issued share capital of EHPC as at the date of issue thereof
and delivery to ABTI of the share certificates therefore. Such number of shares
as shall be equal to 50% of the total of the shares to be issued to ABTI shall
be issued on the execution of this Agreement and the balance shall be issued on
the first anniversary of the execution of this Agreement. Such shares are to be
held on such terms as are set out in the Articles of Association of EBPCI
2.13 For the avoidance of doubt, EHPCI shall not be involved in the management
or operation of ABTI or its business.
3. Payments to be made by ABTI and/or NVID
3.1 In consideration of EHPCI granting ABTI the right to distribute, assemble,
sell and service the RMS System and the Products within the Territories for the
term specified in clause 12.1, ABTI shall (or shall procure):
3.1.1 that forthwith on signing this Agreement NVID shall issue to EBPCI such
number of shares of common stock par value one tenth of a US cent each
free from all liens, charges and encumbrances and together with all
rights attaching thereto as shall increase the number of shares issued
to EHPCI hereunder to such number of shares as shall be equal to 5% of
the total number of shares in issue by NVID after the issue of such
shares to EHPCI and shall deliver to EHPCI the share certificates in
respect thereof.
3.1.2that on the first anniversary of the execution of this Agreement (provided
that it shall still be in full force and effect and that EBPCI shall not
have committed any material breach thereof which, if capable of remedy (as
defined in clause 12.4), it has failed to remedy within 30 days of a
written notice giving full particulars thereof and requiring it to be
remedied) NVID shall issue to EHPCI such number of shares of common stock
par value US one tenth of a cent each free from all liens charges and
encumbrances and together with all rights attaching thereto as shall
increase the number of shares issued to EHPCI hereunder to such number of
shares as shall be equal to 20% of the total number of shares in issue by
NVID immediately after the issue of such shares to EHPCI and shall deliver
to EHPCI the share certificates in respect thereof. EHPCI shall have the
right to require NVID to delay the issues of shares equal to half of the
above 20% until such time as EHPCI shall give NVID not less than 21 days
written notice that it wishes such shares to be issued and upon the
expiration of the said period of 21 days NVID shall forthwith issue all of
such shares to EHPC.
3.1.3 that on the grant of the US Patent Application NVID shall issue to EHPCI
such number of shares of US one tenth of a cent each free from all
liens, charges and encumbrances and together with all rights attaching
thereto as shall increase EHPCI's share holding in NVID to such number
<PAGE>
of shares as shall be equal to 25% of the total number of shares in
issue by NVID immediately after the issue of such shares to EBPCI and
shall deliver to EHPCI the share certificates therefore.
3.2 In the event that a binding agreements made by a third party to acquire more
than 50% of the common stock of NVID then in issue or if a similar percentage is
purchased on the open market by a third party then to the extent that any shares
to be issued to EHPCI in accordance with clause 3.1.2 shall not have been issued
by the date of such offer or purchase they shall immediately be issued by NVID
to EHPCI together with the shares to which EHPCI is entitled under clause
3.1.3.to the extent that they have not already been issued
3.3 The common stock issued by NVID to EHPCI in accordance with clause 3.1 shall
have full voting rights, shall not be of a different class to any other stock in
issue or issued subsequently and will not be on any different terms to any stock
that may be issued subsequently by NVID for whatever reason. EHPC hereby agrees
to execute NVID's Standard Subscription Agreement in respect of all of the
shares to be issued by NVID to EHPC in accordance with this Agreement. NVID
shall not be obliged to issue any shares to EHPC hereunder unless and until EHPC
has entered into a Standard Subscription Agreement in respect thereof.
3.4 NVID undertakes that from the date that and for so long as EHPCI shall be
the holder of not less than 20% of the issued share capital of NVID it shall not
without EHPCI's prior consent (such consent not to be unreasonably withheld or
delayed)-.
3.4.1 increase, alter, vary or reduce its authorized or issued share capital;
3.4.2 alter or vary any of the rights attached to any of the shares of the
Company;
3.4.3 alter or vary any provision contained in its Certificate of
Incorporation relating to any rights or pre-emption arising as a
consequence of any issue, allotment, sale or transfer or intended issue,
allotment, sale or transfer of any shares in its capital.
3.5 Prior to the date on which EHPCI shall become the holder of not less than
20% of issued share capital of NVID, NVID shall give EHPCI reasonable prior
written notice of the occurrence of any of the events set out in clause 3.4
3.6 ABTI shall pay to EHPCI such amount as shall be equal to 371/2 % of the
Gross Profit received by ABTI from purchases of the RMS System by, its customers
Such sum shall be payable m US Dollars ABTI at the end of every month in which
payment is made by the customer of ABTI's invoice for such Products
3.7 In consideration of EHPCI granting ABTI the right to assemble the RMS System
in the Territories, ABTI shall pay EHPCI in addition to the amount specified in
clause 3.1.7 such amount as shall increase EHPCI's share in the Gross Profit
received by ABTI in respect of any sale of the assembled RMS System by ABTI to
its customers to 421-~%. Such additional amount shall be payable together with
the amount payable pursuant to clause 3.6.
3.8 It is acknowledged by the parties that in consideration of EHPCI agreeing to
grant the licenses to assemble hereunder ABTI paid to EHPCI the sum of US$20,000
on 23rd June 1998 .A further sum of US$10,000 shall be paid by ABTI to EHPCI on
1' September 1998 and the sum of a US$10,000 shall be paid by ABTI to EHPCI on
1' October 1998.
<PAGE>
3.9 ABTI shall keep separate records and accurate accounts of (a) all agreements
entered into with sub-distributors in the Territories ;(b) of all sales of the
Products and/ or the RMS System ;(c) and of all payments due there from; and (d)
the suppliers of and the costs of purchasing any components within the
Territories and shall permit the duly appointed representatives of EHPCI to
inspect all such records and accounts and take copies thereof at all reasonable
times during normal business hours
3.10 ABTI shall, if so requested by EHPCI within 30 days of the end of any Year
of this Agreement, at its own expense, provide a report from its external
auditors as to the accuracy of the sums paid by ABTI to EHPCI in accordance with
this clause. If such report shows that there has been an underpayment by ABTI to
EHPCI of any sums due hereunder, ABTI shall within 21 days of the date of such
report pay to EBPCI such sum as shall be equal to the amount of the underpayment
provided that if such underpayment shall be equal to 3% or more of the total
sums payable by ABTI to EHPCI hereunder, ABTI shall pay to EHPCI together with
the sum referred to above an additional payment equal to 2% above the base prime
rate from time to time of Chase Manhattan Bank or the highest rate permitted by
applicable law, whichever is lower, in respect of the amount of the underpayment
calculated from the date when the original payments comprising the underpayment
were due to EHPCI until payment in full of the underpayment.
3.11.1 If at any time after EHPCI shall have been issued shares in the capital
of NVDI in accordance with clause 3.1 of this Agreement, it wishes to
transfer any or all of such shares it shall give to NVID notice thereof
in writing stating the number of shares to be sold and the price thereof
and NVID shall have a period of 28 days from the date of the notice
("the Acceptance Period") to notify EHPCI in writing that it wishes to
purchase all (but not part only) of the shares which are the subject of
EHPCI's notice. If NVID shall within the Acceptance Period give notice
that it wishes to purchase the said shares upon the same terms
completion of the sale of the shares shall take place not earlier than 7
and not later than 28 days after the date of the Acceptance Notice
3.11 If the offer for the shares by EHPCI is not accepted by NVID within the
Acceptance Period then EHPCI for a period of 6 months thereafter shall be at
liberty to transfer all or any of such of the shares which were the subject of
its to any persons at a price not being less than the price therefore specified
in its notice.
3.12 If, in accordance with clause 2.4, ABTI shall appoint a third party to
assist it in the assembly and/or distribution, sale or servicing of the RMS
System and/or any of the Products ABTI shall pay to EHPCI in respect of each
such appointment such sum as shall be equal to 40(degree)/a of the aggregate of
(i) Any fee received by ABTI from such third party by way of consideration
for the appointment of such third party; and
(ii) Any amounts received by ABTI in respect of any sales of the RMS System
and/or a of the Products by such third party
<PAGE>
4. Supply of the Products and /or the RMS System
4.1 Subject as provided in clauses 4.7 and 11 EBPCI shall use its reasonable
endeavors to supply the Products and/or the RMS System to ABTI in accordance
with ABTI's orders and directions which are accepted by EHPCI.
4.2 Each order for the Products and/or the RMS System shall constitute a
separate contract, and any default by EBPCI in relation to one order shall not
entitle ABTI to treat the Agreement as terminated.
4.3 ABTI shall give EHPCI not less than 30 days written notice of its estimated
purchase plan of the Products and/or the RMS System for each month, and shall
promptly notify EBPCI of any changes in circumstances which may affect such
plan.
4.4 Upon receipt and confirmation of each order EBPCI shall as soon as is
practicable inform ABTI of EHPCI's estimated delivery date for the shipment and
in any event shall use all reasonable endeavors to deliver the ordered Products
and/or RMS System within 14 days of receipt of the order and at the latest
within 30 days of receipt of the order, but delivery shall not be of the essence
and accordingly EBPCI shall have no liability to ABTI, if not withstanding such
endeavors there is any delay in delivery.
4.5.1 the title to any shipment of the Products and/or the RMS System shall
not pass to, ABTI until EHPCI has received payment in full of the price
therefore and ABTI shall hold the Products and/or the RMS System as
trustee for EBPCI until payment in full of all sums due from ABTI to
EBPCI on any account whatsoever. ABTI shall execute a security agreement
and financing statement in a form acceptable to EBPCI to secure payment
for the RMS System and any Products hereunder
4.5.2 EBPCI may appropriate any payment made to it by ABTI to such products
and accounts as it thinks fit, notwithstanding any purported
appropriation by ABTI to the contrary.
4.5.3 before payment for the RMS System, the Products (or any of them) ABTI
shall keep them fully insured and if the RMS System or any of the
Products or any part thereof is lost, destroyed or damaged, shall hold
the proceeds of the insurance for and to the order of EHPCI.
4.5.4 pending payment for the RMS System or any of the Products, ABTI shall to
such extent as may be practicable keep them separate and clearly
identified as the property of EHPCI.
4.5.5 if ABTI sells (before payment to EBPCI therefore) the RMS System or any
of the Products to any third party it shall, as between EBPCI and such
third party sell as principal but as between ABTI and EHPCI, ABTI shall
sell as the fiduciary agent of EHPCI.
4.5.6 ABTI shall hold the proceeds of any such sale separate and for EHPC:
account pending payment to EBPCI therefore.
4.5.7if payment is overdue in respect of the RMS System or any Products (that is
to say, payment of the balance of the purchase price therefore has not been
made within 60 days after the expiry of the 30 day period specified in
clause 5.4) or if an order is made or an effective resolution passed for
the winding up of ABTI or if an encumbrancer takes possession or a receiver
is appointed in respect of any of the assets of ABTI or if a distress, or
execution or sequestration or other process is levied or enforced upon any
of the assets of ABTI or if ABTI ceases or threatens to cease to carry on
business or becomes unable to pay its debts or if ABTI shall make an
arrangement or composition with its creditors or if any equivalent or
similar event shall arise in relation to ABTI in any jurisdiction then and
in any such event EHPCI may (without prejudice to any other right or remedy
available to it ) enter upon ABTI's premises without notice and recover the
RMS System and/or the Products and as between EHPCI and ABTI this clause
shall constitute the authority of ABTI to EHPCI to enter on the premises of
any other person holding the RMS System and/or the Products (or any of
them) on ABTI's behalf and on whose property the RMS System and/or the
Products may be and to remove the RMS System and/or the Products.
<PAGE>
4.6 Risk of loss of or damage to any shipments of the RMS System and/or the
Products shall pass to ABTI from the time of delivery to the carrier at EHPCI's
premises.
4.7 EHPCI shall not be under any obligation to continue the manufacture of the
RMS System and/or all or any of the Products in their existing form, and shall
be entitled to make such alterations to the specifications of the RMS System
and/or the Products as it may think fit.
4.8 ABTI, shall in respect of each order for the RMS System and/or the
Products be, responsible for:
4.8.1 ensuring the accuracy of the order;
4.8.2 providing EHPCI with any information which is necessary in order to
enable EHPCI to fulfill the order and to comply with all labeling,
marketing and other applicable legal requirements in the Territories,
and
4.8.3 obtaining all necessary import licenses, certificates of origin (subject
as provided in clause 5.1) customs clearances or other requisite
documents, and paying all applicable customs duties and taxes in respect
of the importation of the RMS System and/or the Products and their
resale in the Territories.
4.9.1ABTI shall disclose and deliver to EIHPCI for the exclusive use and benefit
of EHPCI any improvements or enhancements which shall have been developed
by ABTI or any third party appointed by ABTI in accordance with clause 2.4
and will give all information and data in its possession and will procure
that such third party shall give all such information in its possession as
to the exact mode of working, producing and using such improvements or
enhancements and also such explanations and instructions to EHPCI as may in
EHPCI's view be reasonably necessary to enable the full and effectual
working, production or use of the same and will furnish EI-IPCI with all
necessary plans, drawings, formulae and models.
4.10.1 ABTI will execute and do all acts matters documents and things necessary
to enable EHPCI to apply for and obtain protection for any enhancements
or improvements in any and or all countries and to vest title thereto in
EHPCI absolutely
4.10.2 If ABTI remains in default of any payment for which it is liable to
EHPCI on any account whatsoever, except where EHPCI has admitted in
writing to ABTI that it is at fault with respect to any shipment, EIHPCI
shall be entitled to stop all further deliveries irrespective of which
contract they are to be made under.
<PAGE>
4.11 EHPCI shall notify ABTI of any enhancement to the RMS System and/or any of
the Products as soon as practicable after they have been made and shall supply
such RMS System and/or enhanced Products to ABTI hereunder at no extra charge
unless EHPCI can produce written evidence that the cost of manufacture or
assembly thereof is greater than the cost of the RMS System or such Products
prior to the making of the enhancement in which event EHPCI shall be entitled to
charge NA such additional cost.
5. Payment for the RMS System, the Products and Services
5.1 The RMS System and all Products to be supplied by EHPCI pursuant to this
Agreement shall be sold on an ex works (Incoterms 1990) basis (packed for
export) and accordingly ABTI shall, in addition to the price (as specified in
Schedule 1 or as may in respect of any new products, as may be notified by EHPCI
to ABTI [upon 30 days written notice]), be liable for arranging and paying all
costs of transport and insurance. Save that the cost of the Certifications shall
be borne equally between EHPCI and ABTI.
5.2 Prices may be increased by EHPCI to take account of any increases in the
costs of any raw materials and/or labour in relation to the Products or any part
thereof. Price increases shall be notified to ABTI as soon as reasonably
practicable Price increases for any reason other than as specified herein shall
be agreed between the parties and notified by EHPCI to ABTI at least 30 days in
advance. Any orders that have been accepted by EHPCI and not shipped to ABTI
prior to the notification of any price increase will not be subject to any such
price increase.
5.3 All payments shall be made by ABTI in US dollars by wire transfer to such
bank account as EHPCI may from time to time notify in writing to ABTI <PAGE> 5.4
Payment terms will be 30% with any order and the balance 30 days after receipt
of the RMS System and/or any Products by ABTI or by such person as ABTI shall
direct in writing. Interest shall be payable at the rate of 2% per annum above
the base prime rate from time to time of Chase Manhattan Bank or the highest
permitted rate permitted by applicable law, whichever is lower, in respect of
any amount not paid 60 days after the due date therefore until payment in full
thereof (whether before or after judgment)
5.5 Special prices and payment terms will be considered for Products to be used
for promotional/display purposes or for trial use. These terms will be agreed on
an order-by-order basis.
5.6 ABTI shall make all payments under this Agreement without any deduction
other than such amount (if any) as is required to deduct by law. If ABTI is
required to make any such deductions, it shall do all things in its power which
may be reasonably necessary to enable or assist EHPCI to claim exemption there
from under any double taxation or similar agreement from time to time in force
and shall give EHPCI from time to time proper evidence as to the deduction and
payment over of the tax or sums withheld.
<PAGE>
6. Marketing of the RMS System and the Products
6.1 ABTI shall use its commercially reasonable endeavors to promote the sale of
the Products throughout the Territories and EHPCI shall use commercially
reasonable endeavors to support ABTI in that regard.
6.2 ABTI shall be entitled to promote and market the RMS System and the Products
in the Territories in such manner as it may think fit provided that (i) ABTI
shall not be entitled directly or indirectly to sell the RMS System or any of
the Products outside the Territories; and (ii) ABTI shall not supply the RMS
System or any of the Products to any third party which it knows or has
reasonable cause to believe is likely to re-sell the RMS System or any such
Products (or any of them) outside the Territories.
6.3 In connection with the promotion and marketing of the Products (other than
those assembled by ABTI pursuant to this Agreement) ABTI shall.
6.3.1 make clear, in all dealings with customers and prospective customers,
that it is acting as a distributor and assembler of the Products and not
as the agent of EHPCI;
6.3.2 comply with all legal requirements from time to time in force
relating to the storage and sale of the Products;
6.3.3 from time to time consult with EHPCI's representatives for the purpose
of assessing the state of the market in the Territories;
6.3.4 provide after -sales support services for customers in relation to the
Products as it deems necessary but which shall be sufficient to ensure
that the customers' Products shall be maintained in a reasonable
condition
7. Support and Training
7.1 EHPCI shall, (a) from time to time, free of charge, provide to ABTI with
such samples, catalogues, brochures, video tapes and up to date information
concerning the Products as ABTI may reasonably require in order to assist ABTI
with the sale of the Products in the Territories, and EHPCI shall answer with
reasonable promptness any non-routine technical inquiries concerning the
Products which are made by ABTI; and (b) supply free of charge to ABTI with the
first six complete RMS Systems supplied hereunder a spare controller and set of
anodes.
7.2 During the term of this Agreement, ABTI shall be entitled to send to EHPCI's
premises (at such times as may be agreed and for a period not exceeding five
working days) employees of ABTI for training by EHPCI in matters relating to the
provision of after-sales support services for the RMS System and the Products.
7.3 The services to be provided by EIHPCI pursuant to clauses 7.1 and 7.2 shall
be free of charge, but ABTI shall remain liable for all salaries and other
employment costs of traveling, accommodation and other expenses incurred by
employees of ABTI who are sent to EHPCI's premises.
7.4 ABTI will set up its own training facility to train its employees within 6
months of the date of this Agreement and thereafter EHPCI will only provide such
services entailed in clause 7.2 as an emergency back up to ABTI's service.
<PAGE>
7.5 EHPCI shall from time to time on reasonable request from ABTI make available
to ABTI in the Territories at ABTI's expense such relevant personnel, as shall
in EHPCI's opinion be ABTI necessary to assist ABTI in installing any of the
Products.
7.6 In any case where employees of either party visit the premises of the other
for the purpose of this Agreement, the party whose employees are visiting shall:
7.6.1 procure that each such employee complies with all security, safety and
other regulations which apply to or are in force at the other party's premises;
and
7.6.2 indemnify the other party against any direct reasonable or foreseeable
damage to property of the other party which is caused by any act or omission of
any such employee at the other party's premises.
7.7.1 EHPCI warrants the ABTI that the RMS System and all Products supplied
hereunder will be of merchantable quality and the RMS System will comply with
the Specification and to the extent that there shall be a breach by EEPCI of
such warranty in respect of any anodes or controllers comprised in the RMS
System, so that such anodes or controllers shall be defective in design,
materials or workmanship, EIIPCI shall at its option, replace or repair, or if,
through circumstances beyond its control repair or replacement is not possible,
then EHPCI shall refund the proportionate amount of the purchase price, or in so
far as such purchase price has not yet been paid, give credit accordingly, any
such defective controllers or anodes provided always that EHPCI shall not be
liable for any claim hereunder unless:
7.7.1.1Written notice of the defect is received by EBPCI at its registered
office within 24 months of receipt of the relevant RMS System by ABTI,
in the case of controllers and 12 months of receipt of the relevant part
of the RMS System by ABTI in the case of anodes; and
7.7.1.2 The anodes or controllers in question have been returned to EHPCI (at
EHPCI's expense if the anodes or controllers are upon inspection found
to be defective, otherwise at ABTI's expense) or at its option have been
made available for inspection by EBPCI at ABTI's premises; and
7.7.1.3. All terms for payment by ABTI have been strictly complied with.
7.8 EHPCI shall not give any warranty in respect of any components of any of the
RMS System or any of the Products other than those specified in clause 7.7.1 and
in clause 10.1, but shall to such extent as it shall be in its power to do so,
shall pass on to ABTI the benefit of any manufacturer's warranty to which it is
entitled in relation to such components
7.9 EBPCI does not give any warranty and shall not be liable in respect of any
Products comprised in the RMS System which have been assembled by ABTI or any
other third party on ABTI's behalf and ABTI shall indemnify refund and hold
harmless and keep indemnified EBPCI from and against all costs claims expenses
and liabilities arising as a result of the assembly of any Products comprised in
the RMS System by ABTI or on its behalf.
<PAGE>
7.10 The warranties given in clause 7.7.1 above and in clause 10.1 are given in
lieu of all other warranties whether express or implied arising by Common Law,
Statute, Custom or Trade, course of dealing or otherwise, including any
warranties of merchantability or fitness and all such conditions and warranties
are to the extent permitted by law hereby excluded.
7.11 Save as aforesaid EHPCI will accept no responsibility for any defects in
any of the Products howsoever caused, and in particular, even in respect of
defects for which EHPCl may have accepted liability as aforesaid EHPCI will not
in any circumstances be liable for any incidental or consequential losses or
damages whatsoever, including (without prejudice to the generality of the
foregoing) loss of profits, loss of contracts, damage to ABTI's property or the
property of any third party.
7. 11 For the avoidance of doubt EHPCI shall not be excluded from liability for
death or personal injury resulting wholly or in part from its own negligence or
that of its servants or agents.
7.12 Notwithstanding clauses 7.7, 7.8, 7.9, 7.10 and 7.11 EHPCI's liability for
any one claim or for the total of all claims arising from any one act of default
(whether the claim arises from EHPCI's negligence or otherwise) shall not exceed
the purchase price of the Product(s) in respect of which the claim arises or the
claims arise (as the case may be).
7.13 All recommendations and advice given by EBPCI to ABTI or contained in any
of EHPCI's publications regarding use, performance characteristics, storage,
application or use of the Products are given in good faith but without
acceptance of liability on the part of EHPCI except in the event of fraud or
intentional misrepresentation.
7.14 In order to assist ABTI in the provision of technical services to its
customers it shall forthwith appoint Mr. Randy Reid as a Technical Consultant
(on such terms as shall be agreed between them) and in order to assist EHPCI in
product research it shall forthwith appoint Mr. Robert Edelson as a Technical
Consultant (on such terms as shall be agreed between them). Either EHPCI or ABTI
may appoint any other person other than the person mentioned above for the
purposes herein stated.
8. Intellectual Property and Know-How
8.1 ABTI and NVID acknowledge that all of the copyrights, the Trade Marks,
patents, the Patent Applications and any other pending patent applications and
other Intellectual Property rights used or embodied in or on connection with the
Products and the RMS System including documentation and manuals relating thereto
is and shall remain the property of EHPCI or of such persons as shall permit
EHPCI to use any such Intellectual Property and neither ABTI nor NVID shall
during or at any time after the termination of this Agreement in any way
question or dispute the ownership or any such rights by EHPCI or such other
persons.
8.2 ABTI shall not use any of the Trade Marks or any trade name, corporate
slogan, goodwill or product description in any advertising copy, promotional
material, signs or other written or printed material except as specifically
authorized in writing in advance b EHPCI.
<PAGE>
8.3 ABTI shall promptly notify EHPCI of any actual, threatened or suspected
infringement in the Territory of any intellectual Property of EHPCI which comes
to ABTI's notice, and of any claim by any third party so coming to its notice
that the importation of the Products and/or the RMS System into the Territories,
or their sale therein, infringes any rights of any other person, and ABTI shall
at the request and expense of EHPCI do all such things as my be reasonably
required to assist EHPCI in taking or resisting any proceedings in relation to
any such infringement or claim.
8.5 Neither ABTI nor NVID shall without the written permission of EHPCI during
or after the termination of this Agreement use or adopt any name, trade name,
trading style or commercial designation that includes or is similar to or may be
mistaken for the whole or any part of any of the Trade Marks, trade name,
trading style or commercial designation used by EHPCI and ABTI and NVID shall
procure that none of the third parties appointed by ABTI in accordance with
clause 2.4 shall during or after the termination of this Agreement use or adopt
any name, trade name, trading style or commercial designation that includes or
is similar to or may be mistaken for the whole or any part of any of the Trade
Marks, trade name, trading style or commercial designation used by EHPCI
8.6 Following the termination or expiry of this Agreement, EHPCI shall be
entitled to use and authorize others in the Territories to use labels and other
items of identification used by ABTI in connection with the manufacture,
assembly, distribution, advertising and sale of the RMS System and the Products.
8.7 EHPCI shall furnish to ABTI such Manufacturing Know-How and Technical
Know-How as EHPCI shall (acting reasonably) consider to be necessary to assist
ABTI in the assembly of the RMS System and the Products.
8.8 All information disclosed to ABTI by EHPCI relating to the assembly of the
RMS System or any of the Products in the course of development of the RMS System
or of any new product shall be deemed for all purposes to be Manufacturing Know
How.
9. Confidentiality and Non-Competition
9.1 ABTI shall at all times during the continuance of this Agreement and
after its termination:
9.1.1 use its best endeavors to keep all Restricted Information
confidential and accordingly not to disclose any restricted information to
any other person; and
9.1.2 not use any Restricted Information for any purpose other than the
performance of its obligations or the exercise of its rights under this
Agreement.
9.2 Any Restricted Information may be disclosed by ABTI to:
9.2.1 any governmental or other authority or regulatory body with a request
for confidential treatment; or
9.2.2. Any employees, agents, or third parties appointed in accordance with
clause 2.4 of ABTI or of any of the aforementioned persons, to such
extent only as is necessary fort use contemplated by this Agreement, or
as is required by law Provided that ABTI first procures the execution by
each of such aforementioned persons of a confidentiality undertaking in
form and substance satisfactory to EHPCI and to which EHPCI shall be a
party having the right to enforce such undertaking
<PAGE>
9.3 ABTI shall take all such steps as may be necessary to ensure that its
employees, agents, and the third parties referred to in clause 9.2 shall comply
with their aforesaid confidentiality undertakings both during and after their
employment or the termination or expiry of their agreements or arrangements with
ABTI.
9.4 Any Restricted Information may be used by ABT for any purpose, or disclosed
by ABTI to any other person, to the extent only that:
9.4.1 it is at the date hereof, or thereafter becomes, public knowledge
through no fault of ABTI: or
9.4.2 it can be shown by ABTI to have been known to it prior to its being
disclosed by EHPCI to ABTI.
9.5 Save as may be required for the proper performance of this Agreement, ABTI
shall not at any time during the continuance of this Agreement or for a period
of 6 months from the date on which this Agreement shall terminate for any reason
do or permit any of the following without the prior written consent of EHPCI:
9.5.1undertake or carry on either alone or in partnership or be interested or
concerned directly or indirectly in any capacity whatsoever (otherwise than
as a holder of not more than 3% in nominal value of the issued shares of
any company whose shares are quoted or dealt in on a recognized Stock
Exchange) in any trade or business within the Territories involving the
manufacture, assembly, sale, marketing or promotion of the Products or any
products which are substantially similar to and in competition with any of
the Products ("Competing Products") or any system of water purification
which is substantially similar to and in competition with the RMS System
(as detailed in the Patent Application) without the prior written consent
of EHPCI
9.5.2 directly or indirectly assemble, sell or distribute the RMS System
outside of the Territories;
9.5.3 employ, solicit or entice away or endeavor to employ, solicit or entice
away any employee of EHPCI; or
9.5.4 cause or permit any person, firm or company directly or indirectly under
its control to do any of the foregoing acts or things.
9.6 If ABTI, uses, assembles, services, sells, distributes or promotes any
Competing Product EHPCI may at any time give 30 days written notice to ABTI
requesting ABTI to cease all use, sale, assembly, distribution, servicing or
promotion of the said Competing Product whether or not EHPCI has already given
such notice regarding the said or any other Competing Product on any previous
occasion or occasions
9.7 If after the expiry of any notice given pursuant to clause 9.6 above ABTI at
any time uses, sells, assembles, services , distributes or promotes the
Competing Product specified in such notice (for so long as ABTI shall do so and
until the expiry of 180 days notice in writing from ABTI to EHPCI that ABTI has
ceased to do so) EHPCI shall have the right at any time without further notice
to terminate this Agreement without compensation to ABTI.
9.8 Each undertaking contained in Clause 9.5 shall be read and construed
independently of the other covenants therein contained so that if one or more
should be held to be invalid as an unreasonable restraint of trade or for any
other reason whatsoever then the remaining covenants shall be valid to the
extent that they are not held to be so invalid.
9.9 Whilst the covenants contained in Clause 9.5 are considered by the parties
to be reasonable in all the circumstances, if one or more should be held invalid
as an unreasonable restraint of trade or for any other reason whatsoever but
would have been held valid if part of the wording thereof had been deleted or
the period thereof reduced or the range of activities or area dealt with thereby
reduced in scope, the said covenants shall apply with such modifications as may
be necessary to make them valid and effective.
9.10 Any restriction contained in this Agreement by virtue of which this
Agreement is subject to registration under the Restrictive Trade Practices Act
1976 shall come into effect on the day following the day on which particulars of
this Agreement have been furnished to the Office of Fair Trading (or on such
other date as may be provided for in relation to any such restriction) and the
parties hereto agree to furnish such particulars within 3 months of the date of
this Agreement.
10. Warranties
EHPCI warrants to ABTI that:
10.1 it is not aware of any rights of any third party in the Territories which
would or might render the sale of the RMS System, or any of the Products
unlawful.
10.2 ABTI and NVID hereby jointly and severally warrant and undertake to EHPCI
that:
10.2.1 the information relating to the share capital of NVID and ABTI set
out in Schedule [5] hereto is accurate and complete;
10.2.2 all returns, particulars, resolutions and documents required to be filed
by NVID and ABTI with any governmental or regulatory authority have been
duly filed and were correct
10.2.3 the [audited] accounts of NVDI for the period ended 31"t December 1997
("the Last Accounts Date"), a copy of which are annexed to this
Agreement give a true and fair view of the assets, liabilities
(including contingent, unquantified or disputed liabilities) and
commitments of NVID at the date thereof and its profits or losses for
the financial period ended on that date
10.2.4 all returns, notifications, computations and payments which should have
been made or given by ABTI and/or NVID for a taxation purpose were made
or given within the requisite periods and were up-to-date, correct and
on a proper basis; and none of them is, or is likely to be, the subject
of dispute with any Revenue or other taxation authority
10.2.5 NVID and none of its subsidiaries, including ABTI, is engaged in
litigation or arbitration proceedings; there are no proceedings pending
or (save for potential proceedings by former shareholders already
disclosed to EHPCI) threatened either by or against ABTI or NVID and
5there is nothing which is likely to give rise to proceedings
<PAGE>
10.2.6 NVID and ABTI have taken all corporate and other action necessary to
authorize each of them to enter into and perform this Agreement
10.2.7 There are no material facts or circumstances in relation to the assets,
business or financial condition of NVID or ABTI which has not been fully
and fairly disclosed to EBPCI and which if disclosed might reasonably
have been expected to affect the decision of EHPC to enter into this
Agreement
10.2.8 all information given by NVID, its officers and employees to EHPCI
and/or EHPC relating to the business, activities, affairs, assets or
liabilities of NVID and ABTI was and is accurate and complete
11. Force Majeure
11.1 If either party is affected by Force Majeure it shall forthwith notify the
other party of the nature and extent thereof.
11.2 Neither party shall be deemed to be in breach of this Agreement, or
otherwise be liable to the other, by reason of any delay in the performance, or
non-performance, of any of its obligations hereunder to the extent that such
delay or non-performance is due to any Force Majeure of which it has notified
the other party; and the time for performance of that obligation shall be
extended accordingly.
11.3 If the Force Majeure in question prevails for a continuous period in excess
of six months, the parties shall enter into a bona fide discussion with a view
to alleviating its effects, or to agreeing upon such alternative arrangements as
may be fair and reasonable.
12. Duration and Termination
12.1 This Agreement shall come into force on the date hereof and, subject as
provided in clauses 2.7, 9.7, 12.2,12.3, 12.5 ,12.6 and 12.8 shall continue in
force for an initial period of 2 years and shall, subject to the aforesaid
clauses and neither party having served upon the other not less than 6 months
written notice of termination expiring at the end of such two years period
continue thereafter for successive periods of two years unless or until
terminated by either party giving to the other not less than six months written
notice of termination expiring at the end of any successive two year period.
12.2 Without prejudice to any other right to which it may be entitled, EHPCI
shall be, entitled at the end of any two year period of this Agreement to renew
the Agreement for such period as will extend the Agreement to a date ten years
after the date hereof and the Agreement shall subject to clauses 2.7, 9.7, 12.3,
12.5, 12.6 and 12.8 continue thereafter for successive periods of 10 years.
12.3 EHPCI or ABTI shall be entitled forthwith to terminate this
Agreement by written notice to the other if
12.3.1 that other party commits a material breach of any of the provisions of
this Agreement and, in the case of a breach capable of remedy, fails to remedy
the same within 30 days after receipt of a written notice giving full
particulars of the breach and requiring it to be remedied; <PAGE>
12.3.2 an encumbrancer takes possession or a receiver is appointed over any of
the property or assets of that other party;
12.3.3 that other party makes any voluntary agreement with its creditors or
become subject to an administration or examination order;
12.3.4 that other party goes into liquidation (except for the purposes of
amalgamation or reconstruction and in such manner that the company
resulting there from effectively agrees to be bound by or assume the
obligations imposed on that other party under this Agreement);
12.3.5 anything analogous to any of the foregoing under the law of any
jurisdiction including bankruptcy under US law, occurs in relation to
that other party; or
12.3.6 that other party ceases, to carry on business.
12.4 For the purposes of clauses 3.1.2 and 12.3.1 , a breach shall be considered
capable of remedy if the party in breach can comply with the provision in
question in all respects other than as to the time of performance (provided that
time of performance is not of the essence).
12.5 If at any time control (being the power of a person to secure (a) by means
of the holding of shares or the possession of voting power in or in relation to
ABTI; or (b~ by virtue of any powers conferred by the Certificate of
Incorporation or other document regulating ABTI) of ABTI is acquired by any
person or group of connected persons (as defined in Section 839 Income and
Corporation Taxes Act 1988) not having control of ABTI at the date of this
Agreement or there shall be a change in the management of ABTI, ABTI shall
forthwith give written notice to EHPCI identifying that person or group of
connected persons and/ or the change in management personnel and EHPCI shall be
entitled, by giving not less than [7] days' written notice to ABTI within 21
days after the notice from ABTI was given, to terminate this Agreement.
12.6 If in any Year of this Agreement the aggregate Invoice value of the RMS
System and the Products ordered by ABTI from EHPCI falls short of the aggregate
Invoice Value shown opposite that year of this Agreement in Schedule 2 then
unless ABTI pays an amount equal to the shortfall to EHPCI within 90 days after
the end of that Year of this Agreement, EHPCI shall be entitled by giving not
less than 90 days' written notice to ABTI within the end of the aforesaid period
of 90 days to terminate this Agreement.
12.7 The figures in Schedule 2 shall be reviewed with effect from the first day
of each Year of this Agreement (other than the first) and if upon any such
review there shall have been any increase or decrease in the index of retail
prices in respect of all items shown in the US City Average Consumer Price Index
For All Urban Consumers for all Items in relation to the index figure last
published before the date of this Agreement such figures shall for that Year of
this Agreement be increased or decreased (as the case may be ) in the same
proportion
<PAGE>
12.8 EBPCI hereby undertakes to grant to ABTI within 60 days of the date hereof
a sub-license in such form as shall thereafter be agreed between EBPCI and ABTI
to use market, assemble, distribute and sell the electronic water treatment
system incorporating the Random Metering System which is the subject of the US
Patent Application.
12.9 Any waiver by either party of a breach of any provision of this Agreement
shall not be considered as a waiver of any subsequent breach of the same or any
other provision thereof.
12.10 The rights to terminate this Agreement given by this clause shall be
without prejudice to any other right or remedy of either party in respect of the
breach concerned (if any) or any other breach.
13 Consequences of Termination
13.1 In the event of termination, EBPCI shall be entitled (but not obliged) to
repurchase all or any part of stocks of the Products and/or the RMS System then
held by ABTI at their invoice value or the value at which they stand in the
books of ABTI, whichever is the lower provided that:
13.1.1 EBPCI shall be responsible for arranging and for the cost of transport
and insurance, and
13.1.2 ABTI may sell stocks for which it has accepted orders from customers
prior to the date of termination, or in respect of which EBPCI does not,
by written notice given to ABTI within 7 days after the date of
termination exercise its right of repurchase, and for those purposes and
to that extent this Agreement shall continue in full force and effect;
13.1.2 ABTI shall at its own expense within 30 days send to EBPCI or otherwise
dispose of in accordance with EHPCI's directions all samples of the
Products and any advertising, promotional or sales material relating to
the Products then in ABTI's possession;
13.3 Outstanding unpaid invoices rendered by EBPCI in respect of the Products
and/or the RMS System shall become immediately due and payable by ABTI and
invoices in respect of Products and/or the RMS System ordered prior to
termination but for which an invoice has not been submitted shall be payable
immediately upon submission of the invoice;
13.4 All sums due under clauses 3.6, 3.7 and 3.8 shall become immediately due
and payable.
13.5 ABTI shall have no claim against EBPCI for compensation for loss of
distribution rights, loss of goodwill or any similar loss; and
13.6 EBPCI would be entitled (but not obliged) to purchase or to procure the
purchase of the shares issued by it to ABTI pursuant to clause 2.8 for their par
value. The purchase of the shares pursuant to the exercise by EBPCI of its
entitlement shall take place 7 days after the date of service on ABTI of notice
of exercise of such entitlement (or on the next succeeding business day if
completion would otherwise fall on a non-business day). On completion of the
purchase of the shares as aforesaid <PAGE>
13.6.1 ABTI shall deliver to EHPC or its nominee:
13.6.1.1 duly executed transfers of the shares accompanied by the relevant
share certificates; and/or
13.6.1.2 such other deeds and documents as may be necessary to transfer to
EHPC or its nominee the unencumbered beneficial ownership of the
shares.
13.6.2 on completion as aforesaid EHPC shall deliver or procure delivery to ABTI
of a banker's draft in respect of the total purchase price of the shares.
13.7 ABTI shall cease using any manufacturing Know-How, or Technical Know How
which it is still required to keep confidential
13.8 Subject as otherwise provided herein and to any rights or obligations which
have accrued prior to termination, neither party shall have any further
obligation to the other under this Agreement.
13.9 This Agreement cannot be used as collateral by any party to secure any loan
or other borrowing from any bank of any other financial institution.
14. Nature of Agreement
14.1 A waiver by any party of any breach of any of the terms, provisions or
conditions of this Agreement or the acquiescence of such party in any act
(whether of commission or omission) which but for such acquiescence would be a
breach of the aforesaid shall not constitute a general waiver of such term,
provision of condition or of any subsequent act contrary thereto.
14.2 Nothing in this Agreement shall create, or be deemed to create, a
partnership or relationship of principal and agent, of franchisor or franchisee
or of employer and employee between parties and ABTI shall be deemed to be an
independent contractor.
14.3 This Agreement contains the entire agreement between the parties with
respect to the subject matter thereof, supersedes all previous agreements and
understandings between the parties with respect thereto, and may not be modified
except by an instrument in writing signed by the duly authorized representative
of the parties.
14.4 This Agreement shall not be assignable in whole or in part by either of the
parties hereto save with the prior written consent of the other.
14.5 Each of the provisions of this Agreement are separate and severable and
enforceable accordingly and if at any time a provision is adjudged by any court
of competent jurisdiction to be void or unenforceable, the validity, legality
and enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
<PAGE>
15. NVID's Obligations
15.1 In consideration of EHPCI agreeing to enter into this Agreement with ABTI,
NVID hereby unconditionally and irrevocably undertakes to and covenants with
EHPCI (i) that ABTI will perform and observe all of its obligations to EHPCI
hereunder, (ii) to guarantee that ABTI will pay all the sums due hereunder on
the due dates for payment thereof (iii) to pay upon written demand any sum due
to EHPCI by ABTI and unpaid (including without prejudice to the generality of
the foregoing any interest thereon) and (iv) issue shares to EHPCI in accordance
with the provisions of clause 3.1.
15.2 NVID's liability under this clause shall be computed on the basis that this
Agreement is fully binding and enforceable against ABTI and that NVID's
liability shall not in any way be diminished discharged or affected by the
invalidity or enforceability of this Agreement or by:
i. the granting of time or indulgence to NVID or ABTI;
ii. the affecting of any release or compromise with ABTI or any
agreement not to sue ABTI; or
iii the variation of any term or part term of this Agreement.
15.3 This guarantee shall constitute an independent and primary obligation on
NVID and shall be a continuing guarantee and indemnity and shall continue in
full force and effect until all liabilities and moneys owing or payable by ABTI
to EHPCI hereunder shall have been paid, discharged or satisfied in full
notwithstanding any insolvency of ABTI or any change in the status of ABTI.
6. EHPCI's Obligations
16.1 In consideration of ABTI agreeing to enter into this Agreement with EHPCI,
EHPC hereby unconditionally and irrevocably undertakes to and covenants with
ABTI (i) that EHPCI will perform and observe all of its obligations to EHPCI
hereunder.
16.2 EHPCI's liability under this clause shall be computed on the basis that
this Agreement is fully binding and enforceable against EHPCI and that EHPCI's
liability shall not in any way be diminished discharged or affected by the
invalidity or enforceability of this Agreement or by:
i. the granting of time or indulgence to EHPC or EHPCI;
ii. the affecting of any release or compromise with EHPCI or any
agreement not to sue EHPCI; or
iii the variation of any term or part term of this Agreement.
16.3 This guarantee shall constitute an independent and primary obligation on
EHPC and shall be a continuing guarantee and indemnity and shall continue in
full force and effect until all liabilities and moneys owing or payable by EHPCI
to ABTI hereunder shall have been paid, discharged or satisfied in full
notwithstanding any insolvency of EHPCI or any change in the status of EHPCI.
<PAGE>
17. Governing Law
This Agreement shall be governed by and constructed in all respects in
accordance with English Law without giving effect to its conflict of laws
principles and each party hereby submits to the non-exclusive jurisdiction of
the English Courts.
18. Arbitration
Any dispute arising out of or in connection with this Agreement, including any
questions regarding its existence, validity or termination, shall be referred to
and finally resolved by arbitration under the Rules of the London Court of
International Arbitration, which Rules are deemed to be incorporated by
reference into this clause. The tribunal shall consist of two arbitrators, with
each of ABTI and EHPCI being able to nominate one arbitrator, and they mutually
appointing the third arbitrator the place of arbitration shall be London,
England and the arbitrators shall apply the law set forth in clause 17 of this
Agreement. Any award of such arbitration tribunal shall be final and binding
upon the parties to this Agreement and may be enforced in any court of competent
jurisdiction Notwithstanding the foregoing provisions of this clause 18, EHPCI
shall be entitled to seek injunctive relief in any court of competent
jurisdiction to protect its Intellectual Property and Confidential Information
19 Proposed Licensing Agreement with US Filters/Wallace and Tiernan
19.1 If during the initial two year period of this Agreement the USF/W&T
Agreement is entered into by EHPCI ABTI hereby agrees to undertake such research
market and product development to assist EHPCI in the performance of the USF/W&T
Agreement as EHPCI shall request from time to time. In consideration of these
services ABTI shall be entitled to (a) such sum as shall be equal to one fifth
of the USF/W&T License Fee received by EHPCI Provided that If the USF/W&T
Agreement is entered into by EHPCI prior to 1" September 1998 EHPC shall be
entitled to deduct from such sum any amount payable by ABTI to EHPCI pursuant to
clause 3. 8 ; and (b) such sum as shall be equal to 50% of all other fees
received by EHPCI from USF/W&T under the USF/W&T Agreement in respect of sales
of the RMS System and/or any Products by USF/W&T in the Territories pursuant to
the USF/W&T Agreement and received by EHPCI
19.2 For the avoidance of doubt, EHPCI hereby agrees that the USF/W&T agreement
would not operate to prevent ABTI from selling Products and /or the RMS System
in the Territories, and ABTI does not object to EHPCI entering into an agreement
with USF/W&T
19.3 If the USF/W&T Agreement is entered into by EHPCI during the initial two
year period of this Agreement it will not during the continuance thereof seek to
appoint another person, firm or company to act as its distributor for the RMS
System and/or the Products within the Territories other than USF/W&T and ABTI
<PAGE>
19.4 If the USF/W&T Agreement is not entered into by EHPCI within the first two
years of this Agreement EHPCI will not appoint any other person firm or company
to act as its distributor for the RMS System and/or the Products in the
Territories during the term hereof
19.5 If the USF/W&T Agreement is entered into by EHPCI the sum payable by ABTI
to EHPCI in accordance with clause 3.6 will not be payable if the Products
purchased by it to enable it to assemble and/or manufacture the RMS System are
purchased from USF/W&T.
20. Notices and Service
20.1 Any notice or other information required or authorized by this Agreement to
be given by any party to any other party is to be given personally or sent by
prepaid recorded delivery international airmail or overnight courier or
facsimile to the other party at the address stated in this Agreement or the last
known address of the party (if sent by facsimile, a confirming copy shall be
posted to the address stated in this Agreement or the last known address of the
party)
20.2 Receipt of any notice or other information given by fax pursuan
to clause 20. is to be acknowledged by fax.
20.3 Any notice or other information sent by fax transmission or comparable
means of communication shall be deemed to have been duly sent on the date of
transmission, provided that a confirming copy thereof is sent by recorded
delivery international airmail or overnight courier to the other party at the
addressed referred to in clause 17.1 within 24 hours after transmission.
SIGNED for and on behalf of EHPCI LIMITED By:_________________
Title:______________
Signed for and on behalf of EHPC LIMITED By:___________________________
Title:________________________
<PAGE>
SIGNED for an on behalf of AQUA BIO TECHONOLOGIES INC
By:_________________________
Title:_____________________
SIGNED for an on behalf of
NVID INTERABTITIONABTIL INC
By: _______________________
Title:_____________________
<PAGE>
SCHEDULE 1
EHPC
RETAIL PRICE
EFFECTIVE 19 AUGUST 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
MODEL COST COST PRICE((pound)) CAPACITY PRICE((pound))
- ------------------------------------------------------------------------------------------------------------
New Generation Nature Friendly RMS Circulating Water Systems
- ------------------------------------------------------------------------------------------------------------
for Pool's, spas & Cooling Waters
- -----------------------------------------------------------------------------------------
Micro RMS-5 TBA 96,000 Litres TBA
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Micro RMS-10 TBA 192,000 Litres TBA
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 5-1 2,340 40,000 Litres 5,980
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 10-1 3,078 200,000 Litres 7,696
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 30-1 4,900 749,700 Litres 12,250
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 70-1 5,534 1,749,300 Litres 13,835
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 100-1 6,300 2,499,000 Litres 15,750
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------
S.RMS 200-1 7,420 4,998,000
Litres 18,550
- ----------------------------------------------------------------------------------------
New Generation Nature Friendly RMS Drinking Water and
Down Water Hot & Cold Service
Disinfection System (Single Pass Units
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
RU-1 TBA 69 to 6,946 Litres/hour TBA
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
RU-2 TBA 69 to 13,893 Litres/hour TBA
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 5-2 2,340 1,666 Litres/hour 5,980
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 1(2 3,078 8,330 Litres/hour 7,696
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 30-2 5,650 24,990 Litres/hour 14,125
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 70-2 6,304 58,310 Litres/hour 15,760
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 100-2 7,090 83,300 Litres/hour 17,720
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
S.RMS 200-2 8,240 166,600 Litres/hour 20,000
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
CONSUMABLES
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
ANODE CHAMBER 5" 36 60.00
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
ANODE CHAMBER 10" 63 105.00
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
ANODE (per pair) 264 660.00
90 0Z (S) 520 1300.00
90 OZ (L)
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
3Z (S) 60 150.00
3Z (L) 112 280.00
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
35Z (S) 132 330.00
35Z L) 256 640.00
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
10Z (S) 88 220.00
10Z (L) 168 420.00
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
DOSING PUMPS
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Clients choice POA
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
(S) Standard
L) Large
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
SCALE PREVENTION UNITS
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Domestic 55.30 153.18
Small Building 8-Bed 102.70 199.99
Small Commercial 154.50 320.00
- -----------------------------------------------------------------------------------------
EHPC Retail Price.doc
</TABLE>
<PAGE>
SCHEDULE 2
Targeted Annual Sales Figures
Year of this Agreement Agreed targeted Annual Sales Figures
1998 $150,000
1999 180,000
2000 216,000
2001 259,200
2002 311,040
2003 373,248
2004 447,898
2005 537,478
2006 644,974
2007 773,969
<PAGE>
SCHEDULE 3
List of countries covered by this agreement:
USA
Mexico
Canada
<PAGE>
PCT
International Application Published under the patent cooperation treaty
Graphic omitted.
<PAGE>
SCHEDULE 4 cont.
The EHPC RMS
The general objective of Random Metering System (RMS) is to provide an improved
electronic water treatment system, which allows for finite control of the
introduction of ions and the ability to change the ratio of silver to copper
whilst on stream. This process is patented.
The crux of the system is the provision of an ion supply unit, fed directly with
a clean water supply to the water system to be controlled (i.e. to have its
contents purified). The unit generates ion-laden water which is then introduced
into the system to be treated as it is required. The system being treated will
normally use water (i.e. have water drawn from it, or lose water through
wastage, evaporation, etc) at a rate that will require replenishment at a rate
while still incorporating the required amount of ions.
In this system, the ion supply is isolated from the water system, i.e. it is
essentially "upstream" of the water system. The ion supply unit is therefore
unaffected by any of the problems associated with the recalculation of water,
such as the concentrates of calcium or chlorides.
The process is particularly suitable for applications where temperature,
tolerance levels, dose rate and ion distribution may cause problems in
controlling bacteria, biofilms, algae and fungi when using traditional ion
application techniques.
Benefits of the RMS System
1. The ionisation process is not affected by the quality of the water to
be treated.
2. There is total control of the ion input for either constant or varying
throughput of water.
3. The ions are introduced to the water being treated at the most effective
position in the system.
4. The mix of ions (e.g. silver to copper) can be varied to suit the
application.
5. The system can be applied to any water treatment requirement, within
drinking water standards when necessary.
6. The system is fully automatic with rapid response to changing needs.
7. Multi-sources can be treated from one RMS unit, e.g. a multi-pool
leisure facility or several cooling towers.
<PAGE>
GRAPHIC OMITTED
<PAGE>
Method of Works
1. Aims
To control algae, bacteria, fungal spores and viral contamination of
water services used for domestic purposes, and to eradicate Legionella.
The method is to be non-hazardous to the installers and maintainers and
to run at minimal cost. The equipment is to be installed so as to give
continuous treatment and be easy to maintain and to give conclusive
evidence that it is operational and working satisfactorily. Failure to
work satisfactorily must be readily indicated to those people in charge
of the apparatus. The water services, after treatment, shall comply with
criteria for `potable water' locally in force at this time and place.
2. Method
The apparatus may be referred to as being `chemical free' in operation,
as it employs metals which are positively ionised in very low
concentrations which are naturally toxic to live microorganisms in
water.
The apparatus is concerned with the production of a suitable toxicant
which can be `seeded' and mixed into the water supply at a rate
consistent with the demand for water.
The generation of the `ions' of silver and copper are caused to form a
highly concentrated liquid which is then inserted into the water supply
giving a diluted silver solution in the range 15 parts per billion up to
80 parts per billion.
Provided that silver, which is effective against Legionella, can be
found at the user points, which are outlets from the system, between
these concentrations, microbiological tests will show that biological
control has been established. At the lower limit, the reproductive
activity of the bacteria is stopped. At the higher limit, the Public
Health Authority will accept the water is potable for drinking purposes.
Should this upper limit be exceeded, no immediate harm is likely unless
the water is used for drinking purposes over a number of months by a
single individual continuously. (Above 80 parts per billion will be
employed to control entirely industrial applications).
In order to maintain the service it is essential to protect the low
energy electrodes from contamination and an RF unit having an inductive
coil i: employed to prevent the coating of the active surfaces with
calcium deposits. The polarity of the electrodes is caused to change
between anode and cathode frequently, to assist in obtaining even wear
of the electrodes.
The calibration of the units is an essential part of obtaining effective
control of the desired residual `killing' power at the system water
outlets.
<PAGE>
The equipment has been monitored in operation initially for some months.
This is necessary while the biofilm formed on the internal walls of
tanks and pipes is removed on contact with the ions.
It is expected that the quantities of biological material will be shown
to increase in solution after start-up. Having once commenced on this
operation, the process must be monitored so as to maintain sufficient
killing power to provide a healthy water service.
Supplementary introduction of silver ions may be a safeguard that is
necessary where cold feeds enter into hot water service calorifiers or
storage vessels. Where hot. water service installations are involved,
the water is not `potable' quality by definition and 80 ppb can be
exceeded.
It should be established that no ions are seeded into the water services
when there is no flow throughput for use. Where supplementary units are
employed on circulating hot water service systems, these may be run
continuously but under time switch control when demand is known to be
low.
Having established the desired calibration for the production of ions,
the digital display will show a figure marked in mil.Amps (mA). This
figure will drop in output after many weeks and will need to be manually
re-set by increasing the voltage at the potentiometer. This output of
`ions' can be easily administered by the person who takes readings of
residual. silver using the silver test kit by La Motte (Code No. 7754
Model PAG.LR)
3. Periodic Maintenance
Generally
It is suggested that observations be made at selected test points
throughout the premises where ionisation equipment has been fitted.
There is no legal obligation to undertake tests but mandatory testing of
water quality and temperatures may be enforced by Code of Practice in
public premises.
Weekly
Testing for residual silver should be undertaken at weekly intervals (or
as thought to be useful in specific circumstances). These results should
enable the fine-tuning of the EHPC Ltd. apparatus. These results should
be logged in the same way as micro-biological tests and temperature
testing and be available for inspection.
<PAGE>
Quarterly
The electrodes should be removed and cleaned and refitted unless badly
worn. This should be done under contract with EHPC Ltd.
4. Fault Finding Checks
1) Failure to find a correct ampere discharge on the display, as
shown on the label.
2) Silver residuals below 10 ppb using test kit and/or above 80 ppb at
test point locations.
3) No power supply to the apparatus.
4) Electrode chamber contains milky white water instead of clear
solution.
These are all indications of malfunction and require the investigation
of a qualified EHPC Approved Engineer on site. Reinstatement of the
electrical supply * will `cold start' the apparatus and initiate the
sequences.
The appliance can be safely isolated electrically and the water feed to
it valved `off.
The system will hold a high level of silver/copper-ionised liquid
sufficient to stop coliforms colonising the system pipe work for many
days.
The failure of the equipment is to be reported to EHPC immediately so
that spare components can be identified and fitted within an acceptable
time span.
See schematic diagrams and schedule `A' for component listings.
5. Risk Assessments
In conformity with the requirement to evaluate `risk' for the `user' and
installers and also maintainers, it is essential for all
electro-mechanical installations to comply with the IEE Regulations, 15
`h and 16`h Editions, as published. Component parts as supplied and
fitted by EHPC Ltd. and its sub-contractors will meet these obligations.
The electrodes have no injurious properties. The production of ionised
water by this method is also non-injurious to health of human beings. No
toxic or noxious gases are liberated by this process.
<PAGE>
The cleaning of electrodes requires that they are removed from the
chambers and cleaned using a chemical which does not attack silver or
copper. The operative performing this function must follow the
recommended method stated for that proprietary cleaning agent, and wear
protective clothing, eye protecting goggles and gloves in a
well-ventilated space.
In the event of the equipment failing, follow the procedures given under
`Fault Finding Checks'.
6. COSH Regulations
None of the components or the complete apparatus as put into use
generate or use any substances dealt with by these Regulations
<PAGE>
EX-10.2
Licensing Agreement dated Novemeber 10, 1998
<PAGE>
EXHIBIT 10.2
This Agreement is given on the 10thday of November 1998
BETWEEN
EHPC IONISATION LIMITED a company incorporated under the laws of England and
Wales under company number 03541625 whose registered offices are located at 87a
Newington Causeway, London se1 6DH (t Hereinafter known as the Licensor) AND
(1) WALLACE AND TIERNAN LIMETED a company incorporated under the laws of England
and Wales under company number 021 2577 whose registered offices are located at
Priory Works, Tudley Lane, Tonbridge, Kent TN 11 0QL (Hereinafter known as the
Licensee) (2) USF LIMITED a company incorporated under the laws of England and
Wales under company number 426414 whose registered offices are located at
Whittle Road, Meir Stoke on Trent, Staffs ST3 7020
1. The Parties agree to develop the Ionisation Non Halogen Disinfecting
system in accordance with the Development Programme.
2. a) EHPCI agrees to provide to USF for the purposes of the Development
Programme and to the extent the Parties agree is necessary, the
research services of Major Randy Reid at EHPCI's facility al Lyons
House, 2 Station Road, Frimley. Camberley, Surrey 4U18 S.HF and also at
a place or places to be nominated by USF for the purposes of the
Development.
b)USF shall pay t0 EHPCI a Research and Development Fee of(pound)30,000
at(pound)10,000 per month.
3. Each Party shall fund its participation in the development of the
ionisation Non Halogen Disinfecting System.
4. The period for the carrying out of the Development Programme shall
commence on the date of signature of this Agreement and expire three
months later or on such other date as the Parties agree to in
writing, which period is whereinafter called the "Development Period".
5. The Parties will meet at the following times:
a) every month during the duration of the Development Period
in order to discuss and evaluate the progress of the Development
Technology Know-how. EHPCI shall have the right to request additional
meetings upon reasonable notice to USF;
b) within thirty (30) days of the expiry of the Development
Period and determine the success or failure of the Development
Programme.
6. Neither Party will make any use of the disclosure of the Development
Programme Technology Know-How without the written consent of the
other.
7. The Parties agree that in the event of termination of this Agreement,
EHPCI shall have the right to Purchase the Development Programme
Technology Know-how from USF for a reasonable sum subject to a maximum
(pound)30.000 including those parts of the Development programme
Technology Know-how which are created by USF and those parts which
are not dependent on the Technology Know-How end to exploit the
Development Programme Technology Know-How at its absolute discretion.
<PAGE>
8. The Parties further agree that USF shall, for their own benefit use,
the Anodes In respect of the Product arid the Development Programme
Technology Know-How Development
9. IMPROVEMENTS
9.1 During the Term:
a) EHPCI will disclose to USF Improvements made by EHPCI which
upon disclosure will be deemed to form part of the Technology
Know-How and subject to the Licence, and by USF will disclose
to EHPCI Improvements made by USF and apply the same to the
prosecution of the Licence. USF hereby grants EHPCI on
Exclusive licence to use such Improvements in its course of
business.
b) USF acknowledges and agrees that the Improvements described
in clause 9.1a and Intellectual Property rights subsisting
therein vest in EHPCI and Mat upon termination of this
Agreement by EHPCI in any event, may be exploited by EHPCI
alone or with third parties in such ways as EHPCI deems tit
without account to USF.
EXECUTED BY THE PARTIES IN THIS AGREEMENT
Signed for and on behalf of:
EHPCI LTD
USF LIMITED
<PAGE>
EX-10.3
Non-Exlusive License Agreement
<PAGE>
EXHIBIT 10.3
NON-EXCLUSIVE LICENCE TO MANUFACTURE, NON-PATENTED PRODUCT
This License is given to on the 10th day of November 1996
BETWEEN
EHPC IONISATION LIMITED a company incorporated under the 106 of England and
Wales under company number 03541525 whose registered offices are located at his
Newington Causeway, London S C t GDH (Hereinafter known as the Licensor)
AND
(1) WALLACE /0,1U TIERNAN LIMITED a company incorporated under the laws of
England and Wales under company number 02126%7 whose registered offices are
located at Priory WOMB, Tudely Lane, Tonbridge, Kent TN 11 OQL (Hereinafter
known as the Licensee) (Z) USF LIMITED a company incorporated under the laves of
England and Wales under company number 426414 whose registered offices ate
located at Whittle Road Niger, Stoke on Trent, Staffs ST3 740
1. The License is personal to the parties hereto end may not be assigned
changed or dealt in in any way
2. The License hereby licenses the Licensee to manufacture and sell the
product for n period of five years from the date hereof.
3. Territory global markets vie the Licensee's existing direct sales
force and authorised agents and affiliates in the following areas:
Hot and Cold water systems, cooling towers, drinking water, w4mminp
pools, sees, ho; baths, ornamental water, golf courses, horticulture,
animal husbandry, irrigation water, hydroponics. NFT effluent treatment,
processing plant disinfection, saline water and sea water.
4. The Licensee hereby covenants with the Licensor
a) and will pay the Licensor r royalty of 25% of the quoted list price
for each unit of the product manufactured and sold and will keep proper
books and records of each transaction.
b) that it will only use the Anodes supplied by the Licensor during the
agreement period. The Licensor to limit the increased cost of the Anodes
to 4% per calendar year based on a stable market price. Any additional
over and above the % quoted must be advised in writing giving 60 days
notice.
c) that it will on the last day of the month give to the Licensor an
account of all unit manufactured and sold and sixty days after this
statement of account give to the Licensor a cheque for the amount or
royalty thereby payable, The Licensor or his duly appointed agent shall
have the right to inspect and take copies of all books and records
relating to the manufacture and sale of the product.
d) that a proper system of quality control will be operated end that
each unit of the product will be manufactured to conform to European
safety standards and free from any defect.
<PAGE>
e) that the Licensee will Indemnify and keep indemnified the Licensor
from and against all actions claims costs and demands of whatever nature
which may be made arising out of or incidental to any defect in the
manufacture of any unit of the product.
f) the Licensee will supply the Licensor and Isis authorised
distributors the product at cost plus a 26% profit margin.
5. The Licensor covenants with the Licensee:
a) the Licensor will provide the licensee with the technical knowledge,
specification and manufacturing techniques to enable the Licensee to
manufacture the product. And undertake to keep the Licensee informed of
any technology or technical changes which occur during the agreement
period.
b) that so long as the Licensee observes and performs its obligations
hereunder and so long as this licence continues that the Licensor will
not grant to any other person or company the right to manufacture the
product.
6. This licence may be determined before the expiration of three years from
the dale hereof:
a) By the Licensor if:
i) the Licensee continues for a period of 28 days after
service of a notice specifying a fundamental breach by the licensee to be in
breach of any of its obligations hereunder,
ii) or if the Licensee shall co into editors liquidation or
suffer the appointment of a receiver.
b) By the Licensee if:
i) the Licensor continues for 2 period of 28 days after service
of a notice specifying a fundamental breach by the Licensor to be
in breach of any of its obligations hereunder:
ii) or if the Licensor shall go into creditors liquidation
or suffer the appointment of a receiver.
7. Any notice required to be (liven may be given by ordinary first class post
or by facsimile transmission. Letters sent by first class post shall, unless the
contrary can be proved, be deemed to have been received on the next working day.
Facsimile transmissions shall be deemed to have beefs received on the day of
transmission or if that day is not a working day on the next working day
thereafter.
<PAGE>
EX-10.4
Supplemental Letter Agreement
<PAGE>
EXHIBIT 10.4
10th November 998
This letter is a supplement to the two agreements signed today between EHPC
Ionisation Ltd and Wallace & Tierman Ltd, namely the Non Exclusive License to
Manufacture a Non Patented Product arid the Exclusive Agreement to Develop the
Ionisation Non Halogen Disinfection System Product.
In tile Non Exclusive License to Manufacture the indemnity provided by the
Licensee. To the Licenser will be extended to include the warranties set out in
clause 13 2a) arid 13 2b) of the draft full agreement.
In clause 4a) of the Non Exclusive License to manufacture 75% of the royalty
shall be, deemed to be payable in respect of know how and flit' remaining 25% on
account of patent applications.
Clauses covering confidentiality are to be added to both agreements as set out
in clause 11 of the draft full agreement with the exception that clause 11.2
will terminate after the words Intellectual Property rights,
It is the intention of the parties that the draft Technology Know How,
Manufacturing and Marketing Agreement will be concluded no litter that 10th May
1999.
If the full agreement is not completed by that date either party has the option
to terminate the Non Exclusive License to Manufacture , Non Patented Product in
accordance with the terms contained therein.
It is the intention that sales target, to be achieved by Wallace & Tierman and
acceptable to both parties will be incorporated in the full agreement.
The full agreement will include provision for Wallace R, Tiernan to pay for a
50(degree)/0 share of the value of tile intellectual property rights (IPR) of
the current product. Such payment shall not exceed (pound)250,000. If agreement
ore the valuation cannot be achieved between the two partners a firm of
professional valuers will be d to conduct a calculation
For EHPC Ionisation Ltd
For Wallace Tiernan Ltd
<PAGE>
EX-10.5
Standard Manufacturing Agreement
<PAGE>
EXHIBIT 10.5
NVID INTERNATIONAL, INC.
STANDARD MANUFACTURING
AGREEMENT
THIS STANDARD MANUFACTURING AGREEMENT (the "Agreement") is made and
entered into effective as of the 30'h day of November 1998 (the "Effective
Date"), by and between, NVID International, Inc. a Delaware corporation
("Company"), and, ETIH20 a Florida corporation ("Manufacturer").
WITNESSETH:
WHEREAS, Company designs, develops, distributes and sells certain
Products, as defined below, and
WHEREAS, Manufacturer designs, develops, distributes, sells and
manufactures certain blended products; and.
WHEREAS, upon the terms end conditions set forth herein, Company and
Manufacturer desire to enter into an agreement where under Manufacturer will (1)
manufacture, package, sell and/or oversee the manufacture and package of the
Products, as defined below and as more particularly described on Schedule 1
attached hereto, in accordance with Company's design specifications, and (2)
test the Products in accordance with Company's functional test specifications.
NOW, THEREFORE, in consideration of the foregoing recitals and the
terms, provisions, and conditions set forth herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
Section 1. Definitions. For the purposes of this Agreement, the
following definitions shall
(a) "Affiliate" means, with respect to a specified Person, any other
Person who or which directly (or indirectly through one or more intermediaries)
controls; is controlled by, or is under common control with the Person
specified. For the purpose of this definition, the word "control" means, as to
any Person, the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract, or otherwise.
(b) "Company Product Schedule" means the written manufacturing schedule
provided by Company to' Manufacturer, specifying the description, quantity,
packaging and shipping instructions and requested delivery date for the
Products.
(c) "Company Product Schedule Forecast" means the written forecast and
Company Product Schedule for each Product that Company reasonably and in good
faith anticipates requiring during the immediately succeeding six (6) month
period which shall be updated by the Company monthly.
(d) "Company Packaging Specifications" means the packaging and shipping
specifications supplied by the Company as set forth on Schedule 5 attached to
this Agreement.
(e) "Company Testing Procedures" means the testing specifications,
procedures, standards and parameters provided by the Company as set forth on
Schedule 4 attached to this Agreement.
(f) "Confidential Information" has the meaning set forth in Section 12
of this Agreement.
(g) "Delivery" shall mean FOB to the carrier selected by Company, or
selected by Manufacturer and reasonably acceptable to Company.
(h) "Disclosing Party" has the meaning set forth in Section 12 of this
Agreement.
<PAGE>
(k) "Governmental Body" means any (i) nation, state, country, city,
town, village, district, or other jurisdiction of any nature; (ii) federal,
state, local, municipal, foreign, or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal; (iv)
multi-national organization or body; or (v) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
(l) "Intellectual Property" means, with respect to a specified Person,
(i) all registered and unregistered trademarks, service marks, and applications
therefore; (ii) all patents, patent applications, and inventions and
discoveries, that may be paten table; (iii) all copyrights in both published
works and unpublished works; and (iv) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blueprints owned, used, licensed, or otherwise
held by the Person specified.
(m) "Manufacturer Exclusive Territory" means, the states of the United
States as listed herein and the country of Costa Rica. The US states include:
Florida, Georgia, Alabama, Mississippi, Louisiana, S. Carolina, N. Carolina,
Virginia, Tennessee, and Kentucky. Manufacturer shall have the exclusive
right to all production of or the overseeing the production of the Company's
AXEN Product line.
(n) "Manufacturer Manufacturing Process" means the processes employed by
Manufacturer to manufacture, package and ship Products or oversee same while
conducting independent tests on such other Manufacturers which may be pursuant
to this Agreement.
(o) "Lead-time" means the length of time prior to shipment, which
Manufacturer must receive, for a Company Product Schedule in order for
Manufacturer to deliver Products by the requested delivery date.
(p) "Loaned Equipment" means capital equipment, including tools and
fixtures loaned to Manufacturer, or the purchase price of which is reimbursed to
Manufacturer, by or on behalf of Company for use in Manufacturer's Manufacturing
Process, and in which Company, its Affiliate or lessor retains title.
(q) "Person" means any individual, corporation (including any nonprofit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body. .
(r) "Products" means the products manufactured and packaged by
Manufacturer on behalf of Company pursuant to this Agreement, as described in
Schedule l attached hereto, including any updates, renewals, modifications or
amendments thereto, as agreed to in writing by the parties.
(s) "Receiving Party" has the meaning set forth in Section 12 of this
Agreement.
(t) "Specifications and Quality Requirements" means the specifications
("Specifications") and quality requirements ("Quality Requirements") for each
Product which are agreed to by Manufacturer, as set forth in Schedule 2 -
attached hereto, including any updates, modifications or amendments thereto, as
agreed to in writing by the parties.
(u) "Supplied Ingredients" means ingredients incorporated into the
Product, which are purchased directly from suppliers selected by Company or
which Company provides, directly or through distributors.
(v) "Turnkey Ingredients" means ingredient incorporated into the
Product, which are purchased directly from suppliers selected by Manufacturer.
<PAGE>
Section 2. Company Product Schedules and Company Product Schedule
Forecasts. Within Sixty (60) days from the Effective Date of this Agreement,
Company shall provide Manufacturer with the initial Company Product Schedule and
initial Company Product Schedule Forecast. Company shall thereafter provide
Manufacturer monthly with updated Company Product Schedule Forecasts, due on or
before the l` day of each quarter. Company acknowledges that Manufacturer must
receive timely Company Product Schedule Forecasts in order for Manufacturer to
exercise its good faith efforts to manufacture, test, package and deliver
Products pursuant to this Agreement. Manufacturer shall be deemed to accept a
Company Product Schedule upon receipt, unless Manufacturer notifies Company to
the contrary within Seven (7) working days of receipt.
Section 3. Product Manufacturer.
(a) Parameters. For each accepted Company Product Schedule, Manufacturer
will manufacture, test, package and deliver all items necessary to satisfy
production and delivery requirements, and adjust work cell capacity as necessary
to produce Products in accordance with the Product Specifications and Quality
Requirements for the prices and fees set forth on the Fee and Price Schedule and
in the Manufacturer's Exclusive Territory. Manufacturer shall use its good faith
efforts to (i) provide design test support; (ii) identify the most cost
efficient high quality ingredients and packaging to produce and ship the
Products; (iii) provide a manufacturing work cell support volume and delivery
requirements; (iv) test the Product in accordance with the Company Testing
Procedures; and (v) package the Products in accordance with the "Company
Packaging Specifications. In the absence of Company Testing Procedures and
Company Packaging Specifications, Manufacturer may, at its option, use its own
testing procedures and packaging specifications, or require Company to provide
such procedures and specifications. When requested by Company, Manufacturer may,
at its option and subject to agreed fee and cost adjustments, provide test
development services, volume production and advanced packaging technologies for
existing or future Products.
(b) Company Supplied Items. Company shall provide Manufacturer with the
Company Confidential Information, Intellectual Property, Loaned Equipment,
Product Specifications and Quality Requirements, Company Testing Procedures,
Company Packaging Specifications, and manufacturing process requirements
necessary for Manufacturers manufacture, testing, packaging and delivery of the
Products.
(c) Manufacturer Supplied Items. Manufacturer shall provide the
manufacturing process or overseeing of and independent manufacturing process,
any required manufacturing technology, manufacturing capacity, labor,
transportation logistics, systems, facilities and materials necessary for
Manufacturer's manufacture, testing, packaging and delivery of the Products,
except for Supplied Ingredients, or Loaned Equipment.
(d) Inspection. Subject to the Confidentiality provisions set forth in
Section 12, Company may, upon reasonable advance notice and at its own expense,
inspect Manufacturer's performance pursuant to this Agreement, provided that
such inspection is conducted during normal business hours and does not disrupt
Manufacturer's business operations.
(e) Materials Procurement and Management. Manufacturer shall use
reasonable commercial efforts to procure the necessary materials required to be
supplied by Manufacturer. Manufacturer shall not be responsible for
manufacturing delays or failures caused by Supplied Components, or Loaned
Equipment. Manufacturer shall use reasonable commercial efforts to manage the
materials inventory.
<PAGE>
Section 4. Design Development. Manufacturer and Company may enter into a
separate agreement for Manufacturer's assistance in the design and development
of Products, including the design and development of Product testing procedures
and specifications. This Agreement shall not be deemed to cover such services.
Section 5. Term of Agreement.
(a) Expiration and Termination Without Cause.
Except as otherwise provided, the term of this Agreement shall begin on
the Effective Date hereof and continue thereafter for a period of Five (5)
years, unless such term is extended in writing by the parties hereto. Company
has the right terminate this Agreement, at any time and at its sole discretion
if Company follows the provisions set forth in Schedule 3.
(b) Termination With Cause. Either party may terminate this Agreement
with cause upon written notice to the other party. "Cause" shall mean and is
limited to material breach of this Agreement by the non-terminating party which
is not cured within thirty (30) days of the delivery of written notice thereof
to the breaching party, provided that any breach involving a failure to make a
required payment must be cured within five (5) days of written notice thereof.
In the event of a disagreement between the parties concerning whether "cause"
exists under this paragraph, the Dispute Resolution provisions of Section 15
shall apply.
Section 6. Import/Export License and Control. Company shall not export,
re-export, resell or transfer, or otherwise require Manufacturer to ship or
deliver any Product, ingredient or any technical data (i) which violate any
export controls or limitations imposed by the United States or any other
Governmental Body, or (ii) to any country for which an export license or other
Governmental Body approval is required at the time of export, without first
obtaining all necessary licenses or other approvals. Company shall provide
Manufacturer with all licenses, certifications, approvals and authorizations
necessary for Manufacturer to comply with all import and/or export laws, rules
and regulations for the shipment and delivery of Products. Alternatively, and at
Manufacturer's option, Company shall provide all information necessary for
Manufacturer to obtain required import and/or export licenses, including, as
applicable, certificates of origin, manufacturers affidavits, and Material
Safety Data Sheets. Manufacturer shall not be responsible for failure to meet
delivery dates due to the Company's failure to timely provide the necessary
licenses or other such necessary certifications, approvals or authorizations. :
Company shall be responsible for compliance with any legislation or regulations
governing the importation of Products into the country of destination and for
the payment of any duties thereon.
Section 7. Change Orders.
(a) Volume Increases. All requests for increases in Product volume for
an outstanding Company Product Schedule must be in writing. Manufacturer shall
analyze each request, then determine and advise Company whether the request can
be met within the existing Lead-time. If Manufacturer determines that the
request can be met, Manufacturer will provide Company with a modified Company
Product Schedule, setting forth the expected delivery date of the changed order.
Company shall be responsible for all costs associated with the change order.
(b) Ingredient and Engineering Changes. All requests for ingredient
and/or engineering changes must be in writing. Manufacturer shall analyze each
request, then determine and advise Company whether the request can be satisfied
from both a logistics and regulatory basis. If Manufacturer determines that the
request can be satisfied, Manufacturer will advise Company of the anticipated
change in delivery schedules. Company shall be responsible for all costs
associated with the change order.
(c) Delivery Schedule Changes / Cancellations. All requests for delivery
schedule changes or cancellation must be in writing. The Company may make
Delivery schedule changes only in accordance with the change order procedures
and subject to the payment by the Company of change order costs as set forth on
the Change Order Procedures and Costs Schedule attached as Schedule 7 to this
Agreement.
<PAGE>
(d) Delivery Cancellations. The Company may make Delivery cancellations
only in writing and in accordance with the cancellation procedures and subject
to the payment by the Company of the Cancellation charges set forth on the
Cancellation Procedures and Costs Schedule attached as Schedule 8 to this
Agreement.
Section 8. Product Warranty and Limitation of Liability.
(a) Workmanship and Material. Manufacturer warrants that it will perform
its manufacturing, test and packaging services hereunder in a good, professional
and workmanlike manner. For a period of one (1) year from the date of Product
delivery, Manufacturer warrants that as Delivered: (i) Product will conform to
the Specifications and Quality Requirements applicable at the time of
manufacture; and (ii) except as to Supplied Ingredients, Product will be of good
material and workmanship, and free from defects for which Manufacturer is
responsible in the manufacture, testing and packaging of the Product. The
warranties provided herein are for the sole benefit of Company, not Company's
customers, and only Company shall have the right to enforce such warranties.
(b) Liens, Encumbrances and Infringements. Manufacturer warrants that:
(i) upon Product Delivery and payment by the Company of the contract price
thereof, the Company shall have good and clear title to the Product, free and
clear of all liens, claims and encumbrances; and (ii) all manufacturing
processes and services provided by Manufacturer are either owned or properly
licensed by Manufacturer or are in the public domain, and to Manufacturer's
knowledge do not infringe upon any proprietary rights of any third party.
(C) Warranty Limitation. THE WARRANTIES CONTAINED IN THIS SECTION ARE IN
LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, ARISING BY
STATUTE OR ARISING BY COURSE OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE
TRADE OR OTHERWISE, INCLUDING WITHOUT LIMITATION THE IMPLIED WARRANTIES OF
MERCHANTABILITY, TITLE AND FITNESS FOR A PARTICULAR PURPOSE. Manufacturer
EXPRESSLY DISCLAIMS AND COMPANY EXPRESSLY WAIVES ALL SUCH OTHER REPRESENTATIONS
AND WARRANTIES. NO ORAL OR WRITTEN STATEMENT OR REPRESENTATION BY Manufacturer,
ITS AGENTS OR EMPLOYEES SHALL CONSTITUTE OR CREATE A WARRANTY OR EXPAND THE
SCOPE OF ANY WARRANTY HEREUNDER. Manufactures warranty shall not apply to any
Products which Manufacturer determines to have been subjected to: (i) testing
for other than specified characteristics; (ii) effcacy and/or environmental
conditions in excess of the maximum values established in applicable
specifications; (iii) mishandling, accident, misuse, neglect, improper testing,
alteration, damage; or (iv) any other inappropriate or unauthorized action or
inaction which alters physical properties. This warranty shall not apply to any
defect in the Products arising from any design, formulation, specification,
process, procedure, adjustment or modification supplied or deemed supplied by
Company.
(d) Return Material Authorization ("RMA'). Company's sole and exclusive
remedy in the event of a breach of Manufacturer's warranties hereunder is
expressly limited to the correction of the defect by repair or replacement, at
Manufacturer's sole election and expense. During the warranty period,
Manufacturer will repair or replace defective Products caused by a breach of
Manufacturer's warranties, in accordance with the following RMA procedure. If
Company desires to return a Product based on a material or workmanship warranty
claim, Company shall first request an RMA number from Manufacturer. Company
shall then send the claimed defective Product to Manufacturer, with a return
purchase order identifying the RMA number. Manufacturer shall analyze the RMA
Product. If a warranty defect is found, and the RMA Product was received by
Manufacturer within 30 days following expiration of the applicable warranty
period, Manufacturer will repair or replace the Product, at Manufacturer's
option, within 20 days, and Manufacturer will reimburse Company for the
reasonable cost of transporting the Product. If Manufacturer determines the
claimed defect is not warranted, Company shall reimburse Manufacturer for costs
and expenses incurred to analyze and/or repair the Product, including all
transportation costs.
<PAGE>
(e) Test Correlation Cost. Manufacturer will charge a per unit test
correlation charge for each returned Product subject to an RMA that Manufacturer
determines was manufactured in accordance with the Specifications and Quality
Requirements, and tested in accordance with the Company Testing Procedures.
Manufacturer shall have no liability for defects in any testing
equipment/fixtures manufactured by any party other than Manufacturer. Test
correlation RMAs will be handled on a priority basis if requested by Company
provided, however Company understands and agrees that priority testing of RMA
will impact manufacturing delivery schedules.
(f) Liability Limitation.
EXCEPT AS PROVIDED IN SECTION 8 OR AS OTHERWISE PROVIDED HEREIN, NEITHER
PARTY SHALL BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS,
LOST REVENUE OR LOST ANTICIPATED SAVINGS IN CONNECTION WITH THIS AGREEMENT.
THE PARTIES' RESPECTIVE CONFIDENTIALITY OBLIGATION AND FOR LIABILITY
CAUSED BY GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY, UNDER NO
CIRCUMSTANCES WILL EITHER PARTY BE LIABLE TO THE OTHER UNDER ANY CONTRACT,
STRICT LIABILITY, NEGLIGENCE, OR OTHER LEGAL OR EQUITABLE THEORY, FOR ANY
PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS, LOST
REVENUE OR ANTICIPATED SAVINGS IN CONNECTION WITH THIS AGREEMENT. UNLESS FURTHER
LIMITED ELSEWHERE IN THIS AGREEMENT, THE ENTIRE LIABILITY OF Manufacturer AND
COMPANY'S EXCLUSIVE REMEDY FOR DAMAGES FROM ANY CAUSE RELATED TO OR ARISING OUT
OF THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT OR
TORT, WILL NOT EXCEED THE CHARGES PAID TO Manufacturer DURING THE TWELVE (12)
MONTH PERIOD IMMEDIATELY PRIOR TO NOTICE PURSUANT TO SECTION 17) FOR THE
PRODUCTS OR SERVICES WHICH ARE THE SUBJECT MATTER OF OR DIRECTLY RELATED TO THE
CAUSES OF ACTION ASSERTED.
Section 9. Delivery, Title and Payment.
(a) Risk of Loss all risk of loss will accrue to Company upon Delivery.
(b) Security Interest Notwithstanding the passing of Risk of Loss, or
any other provision contained herein, title to Products shall not pass to
Company until Manufacturer has received payment in full for Products Delivered,
and (i) the Company hereby grants to Manufacturer a security interest in Product
for which it has not paid in the event that the Company is deemed to have title
to such Product, (ii) for that purpose, this Agreement is a security agreement.
Until such time as payment in full is received, Manufacturer shall be entitled
at any time to require Company to return the non-paid for Products to
Manufacturer and, if Company fails to do so, Manufacturer may enter upon any
premises of Company or any third party where Products are stored and repossess
the same. Manufacturer reserves the right at any time to revoke any credit
extended to Company because of Company's failure to pay for any Products when
due or for any other reason and, in such event, all subsequent deliveries shall
be suspended until Company's account is brought current.
(C) Payment. All invoices shall be due and payable within 30 days from
the date of Delivery of the Product. Company shall be responsible for all
federal, foreign, state and local sales, use, excise and other taxes (except
taxes based on Manufacturer's net income), all delivery, shipping, and
transportation charges, and all foreign agent or brokerage fees, document fees,
customs and duties, unless specifically excluded by Schedule 3. The Fee and
Price Schedule will be reviewed and revised every Six (6) months and, if
appropriate, price schedules will be revised consistent with increases or
decreases in materials, components, equipment and other costs and expenses
applicable to the manufacture of the Products. Manufacturer reserves the right
to adjust its prices to reflect changing economic conditions.
<PAGE>
Section 10. Representations and Warranties. Company and Manufacturer
hereby represent and warrant to each other as follows:
(a) Organization and Good Standing. Each is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under this Agreement.
(b) Authority; No Conflict. This Agreement constitutes a legal, valid,
and binding obligation, enforceable in accordance with its terms. Each has the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement. Neither the execution and delivery of this Agreement,
nor the consummation or performance of any of the transactions or obligations
hereunder, will directly or indirectly contravene, conflict with, or result in a
violation of any law, administrative order, constitution, ordinance, principle
of common law, regulation, statute, or treaty of any Governmental Body or
violate either charter or bylaws or cause a breach of any material agreement, or
have a material adverse effect
(c) No Consents. Neither is required to obtain any consent or
authorization from any Person in connection with the execution and delivery
of this Agreement or the performance of its obligations hereunder.
(d) Claims. There are no pending claims or litigation that would or
might interfere with the (i) full and complete performance of any obligations
under this Agreement, or (ii) full and complete exercise and enjoyment of any
rights under this Agreement.
Section 11. Confidentiality.
(a) Definition of "Confidential Information. " For the purposes of this
Agreement, "Confidential Information" means all information or material (whether
or not reduced to writing) which is disclosed to one party hereto (the
"Receiving Party") or known by the Receiving Party as a consequence of the
Receiving Party's observation of, or its discussions, collaboration, or
association with the other party or the other party's employees, agents, or
Affiliates (collectively, the "Disclosing Party"), which information is not
generally known in the industries in which the Disclosing Party is engaged,
regarding the Disclosing Party or its business, including but not limited to
information relating to actual or prospective: pricing, costs, products,
services, suppliers, distributors, agents, representatives, customers,
employees, associated persons or entities, business plans, business programs,
business strategies, computer systems, processes, techniques, methods, concepts,
ideas, formulas, research, discoveries, inventions, development, improvements,
organization, techniques of application, computer programming, accounting,
recording, marketing, engineering, manufacturing, contracting, renting, leasing,
purchasing, specifications or technology provided by Manufacturer); or (b)
arises out of, in relation to or in connection with any Supplied Component or
(c) arises out of in relation to or in connection with the unauthorized use of
Manufacturer's Intellectual Property.; providing said Confidential Information
is not previously known to the Receiving Party.
Section 12. Work Product: Assignment. Upon payment in full of all
amounts due to Manufacturer under this Agreement, all specifications, designs,
discoveries, inventions, products, modifications, computer programs, technical
information, procedures, processes, improvements, developments, drawings, notes,
documents, information and materials made, conceived, reduced to practice or
developed by Manufacturer which result from or arise out of Manufacturer's
performance under this Agreement and uniquely relate to the Products or Company
Intellectual Property (collectively, the "Company Work Product") will be owned
exclusively by Company; provided that any and all specifications, designs,
discoveries, inventions, products, modifications, computer programs, technical
information, procedures, processes, improvements, developments, drawings, notes,
documents, information and materials made, conceived, reduced to practice or
developed by Manufacturer which result from, relate to or arise out of
Manufacturer's performance under this Agreement and relate to the manufacture,
assembly, test processes or packaging of Products and are not uniquely related
to the Product or constitute Manufacturer Intellectual Property (collectively,
the "Manufacturer Work Product") will be owned by Manufacturer. To the extent
such Work Product is designated as a "work made for hire" under applicable
<PAGE>
copyright law, it shall be considered a "work made for hire" from the moment of
creation, the copyright of which shall be owned exclusively by the respective
party worldwide. To the extent such Work Product does not qualify as a "work
made for hire" under applicable copyright law, all right, title and interest
that Manufacturer may have with respect to Company Work Product and Company may
have with respect to Manufacturer Work Product is hereby assigned, transferred
and conveyed from the moment of creation exclusively to the respective party.
Section 13. Governing Law; Resolution of Disputes. This Agreement
(including all matters relating to the interpretation, construction, due
execution, validity, and enforceability hereof) shall be governed by the laws of
the State of Florida, without reference to principles of choice of law or
conflicts of law there under. This Agreement shall be deemed for all purposes to
have been entered into in Pinellas County, Florida.
Alternative 1. Any litigation arising directly or indirectly from a
dispute hereunder shall be litigated solely in the Circuit Court of the State of
Florida in Pinellas County, Florida, or in the United States District Court for
the Middle District of Florida. The parties hereto submit to the personal
jurisdiction of such courts and agree that such courts shall be the sole situs
of venue for the resolution of any such dispute through litigation.
Alternative 2. If the joint consent or mutual consent of a Party or the
Parties is required under this Agreement, the Party or Parties shall in good
faith attempt to reach a consensus or their consent and no Party shall
unreasonably withhold its consent to any requested approval. If the Parties
cannot resolve any dispute, which may arise between them within ten (10)
business days, the matter shall be submitted to arbitration for resolution. The
arbitration board shall consent of one individual selected by each of the
Parties with necessary experience and appropriate skill (Arbitrator@), who shall
jointly appoint a third arbitrator, who shall have the power to resolve such
disputes. Within fifteen (15) business days of the selection of the Arbitrator,
the Parties shall present their claims to the Arbitrator for determination.
Within ten (10) business days of the presentation of the claims of the Parties
to the Arbitrators, the Arbitrators shall issue a written opinion. To the extent
the matters in dispute are provided for in whole or in part in this Agreement,
the Arbitrators shall be bound to follow such provisions to the extent
applicable. In the absence of fraud, gross misconduct or an error in law
appearing on the face of the determination, order or award issued by the
Arbitrator, the written decision of the Arbitrator shall be final and binding
upon the Parties. The arbitration proceeding shall be carried on and heard in
accordance with the Florida Arbitration Code. The prevailing Party in the
arbitration proceeding shall be entitled to recover its reasonable attorney'
fees, costs and expenses, including travel-related expenses.
Section 14. Force Majeure. Neither Party will be liable for any delay in
performing or for failing to perform its obligations under this Agreement
resulting from any cause beyond its reasonable control including, without
limitation, acts of God; blackouts; power failures; inclement weather; fire;
explosions; floods; hurricanes; tornadoes; epidemics; strikes; work stoppages;
component or material shortages; slow-downs; industrial disputes; sabotage;
accidents; destruction of production facilities; riots or civil disturbances;
acts of government or governmental agencies including changes in law or
regulations that materially and adversely impact the Party; provided that the
Party affected by such event promptly notifies the other Party of the delay.,
that the Party not affected by the delay may seek replacement product or supply
from another source and if the delays or disruptions caused by the force majeure
conditions are not cured within 60 days of the force majeure event, then either
Party may immediately terminate this Agreement.
Section 15. Miscellaneous.
(a) Amendments. No change, modification, or termination of any of the
terms, provisions, or conditions of this Agreement shall be effective unless
made in writing and signed or initialed by both parties hereto. There shall be
no oral modifications of this Agreement. '
(b) Exhibits. All exhibits, annexes, and schedules hereto are
incorporated herein and made a part hereof as if fully set forth in this
Agreement in their entirety.
<PAGE>
(c) Severability. Each section, subsection, and paragraph of this
Agreement constitutes a separate and distinct provision. In the event that such
a provision is determined to be invalid or unenforceable, the provision shall be
deemed limited in scope and effect to the extent, and only to the extent,
necessary to render the same valid and enforceable. If such a limiting
construction is impossible, such invalid or unenforceable provision shall be
deemed severed from this Agreement, but every other section, subsection, and
paragraph shall be deemed valid.
(d) Headings and Captions. The headings, titles, captions, and sections
contained in this Agreement are provided for convenience of reference only and
shall not be considered a part hereof for purposes of interpreting or applying
this Agreement; such titles or captions do not define, limit, extend, explain,
or describe the scope or extent of this Agreement or any of its terms,
provisions, representations, warranties, conditions, etc., in any manner or way
whatsoever.
(e) Gender and Number. All pronouns and variations thereof shall be
deemed to refer to the masculine, feminine, or neuter and to the singular or
plural as the identity of the person or entity or persons or entities may
require.
(f) Binding Effect on Successors and Assigns; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
successors and assigns; provided, however, except as provided herein, this
Agreement may not be assigned by either party without the express written
consent of the other party to this Agreement. Either party may assign this
Agreement, without consent of the other party, in connection with the
acquisition or merger of such party, or the acquisition of all, or substantially
all, of the assets of such party.
(g) Waiver. The failure of a party to enforce any term, provision, or
condition of this Agreement at any time or times shall not be deemed a waiver of
that term, provision, or condition for the future, nor shall any specific waiver
of a term, provision, or condition at one time be deemed a waiver of such term,
provision, or condition for any future time or times.
(h) Entire Agreement; Counterparts. This Agreement, together with all
Schedules attached hereto, constitutes the entire agreement among the parties
hereto with, respect to the subject matter hereof, and it supersedes all prior
memoranda, correspondence, conversations, and negotiations. This Agreement may
be executed in several counterparts that together shall constitute but one and
the same Agreement.
(i) Recitals; Use of Certain Terms. Each party agrees that the recitals
to this Agreement are true and correct and are incorporated herein by this
reference and made a legally binding part of this Agreement. Whenever the terms
"hereof," "herein," and "hereunder" are used in this Agreement, such terms shall
refer to this Agreement in its entirety and not to any particular section,
subsection, paragraph, or other portion of this Agreement.
(i) Notices. Any notices or other communications required or permitted
hereunder shall be given in writing and shall be delivered or sent by hand
delivery, facsimile, e-mail, or by certified or registered mail, postage
prepaid, to the following address and/or facsimile number, or to such other
address or facsimile number as shall be furnished in writing by such party:
If to Manufacturer: ETIH20
Rt. 14, Box 1517
Lake City, Florida 32024
Fax: (904) 755-8642
e-mail
<PAGE>
If to Company: NVID International, Inc.
28870 US 19 N, Suite 300
Clearwater, Florida 33761
Fax: (813) 669-5005
e-mail: [email protected]
Any such notice or communication shall be effective and be deemed to
have been given when received if delivered by hand delivery, when fax or e-mail
confirmation is received if delivered by facsimile or e-mail, or as of two (2)
days following the date mailed, provided that any notice or communications
changing any of the addresses set forth above shall be effective and deemed
given only upon its receipt.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives.
MANUFACTURER: ETIH20
By:
Date:
Andrew Arata, President
COMPANY NAME: NVID international, Inc.
By:
Date:
David Larson, Chief Executive Officer
<PAGE>
SCHEDULE 1
PRODUCTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December, 1998 between NVID
International, Inc. (hereinafter "Company") and ETIH20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule shall be jointly developed by Company andManufacturer
<PAGE>
SCHEDULE 2
SPECIFICATION & QUALITY REQUIREMENTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December, 1998 between NVID
International, Inc. (hereinafter "Company") and ET1H20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SCHEDULE 3
PRICE AND FEE SCHEDULE
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December, 1998 between NVID
International, Inc. (hereinafter "Company") and ETIH20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
WHEREAS, Manufacturer designs, develops, distributes, sells, licenses
technology and manufactures certain blended products; and.
WHEREAS, upon the terms and conditions set forth herein, Company and
Manufacturer desire to enter into an agreement where under Manufacturer will (1)
manufacture, package, sell and/or oversee the manufacture and packaging of the
Products in accordance with Company's design specifications, and (2) within a
specified exclusive territory as defined below, and (2) test the Products in
accordance with Company's functional test specifications.
NOW, THEREFORE, in consideration of the recitals of Standard
Manufacturing Agreement and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intend to be legally bound hereby, agree as follows: '
Section 1. Royalty on Sales of -Products by Manufacturer. Manufacturer is
entitled, under the Standard Manufacturing Agreement to conduct transactions
involving the Company's Products to end users. Company is entitled to a royalty
on all such transaction in accordance with the following schedule:
[] Seven percent (7%) for all such transactions occurring between December 4,
1998 and December 4, 1999.
[] Ten percent (10%) for all such transactions occurring between December 5,
1999 and December 5, 2000.
[] Fifteen percent (15%) for all such transactions occurring thereafter.
of the gross price received by Manufacturer; less shipping, handling, duties, or
applicable tax. Payment of said Royalty shall occur on the last day of the Month
during which the Manufacturer received payment in full for said Products. Should
end user make partial payments, the Company shall receive royalties on a
pro-rata basis. Company shall not solicit nor respond to a solicitation from any
client of Manufacturer.
Section 2. Commission on Technology. Licensing Agreements. Technology Licensing
Agreements shall be reviewed, approved or not approved at the sole discretion of
<PAGE>
the Company. Each Agreement and its terms will be treated individually by the
Company. The following subsections (a & b) are given as an example of commission
structure due Manufacturer, if Manufacturer is responsible for said Technology
Licensing Agreement. Because each Agreement is treated individually, so to will
the actual commission. Wherever possible the commission structure shall resemble
the examples given the subsection a & b.
(a) Upfront Licensing Fees. Manufacturer is entitled to Fifteen percent
(15%) of all licensing fees received by the Company for sales of Technology
Licensing Agreements made directly by Manufacturer to licensees. Manufacturer is
further entitled to a Commission of Twenty percent (20%) on all completed sales
to said licensee for a designated period of Six (6) months from the date of
signing the Technology Licensing Agreement. At the conclusion of the Six (6)
month designated period, Manufacturer will receive a Royalty of
Seven percent (7%) of gross sales for the first year Ten percent
(10%) of gross sales for the second year Fifteen percent (15%) of
gross sales thereafter
to licensee by the Company. Notwithstanding the provisions of Section 7 of this
Agreement, this royalty percentage shall remain in effect as long as the initial
or subsequent terms of the licensing Agreement between the Company and licensee
remains valid. Payment of said Commission shall occur on the last day of the
Month during which the Company received payment in full for said Products.
Should licensee make partial payments, Manufacturer shall receive commissions
and Royalties on a pro-rata basis.
(b) No Up-Front Licensing Fees. Should the Company agree to a Technology
Licensing Agreement, brought to it by Manufacturer, which does not include an
up-front licensing fee; said licensing fee shall be included in the price the
products are sold to licensee. Said rate not to exceed 10% of the wholesale
price of the Product and shall continue until an agreed upon licensing fee has
been satisfied. Manufacturer is entitled to a commission equal to those outlined
in (a) above, but paid quarterly and based on the amount of licensing fee
received by Company.
Company further recognizes Manufacturer's efforts to license a French firm,
Virbac prior to the signing of this Agreement. Should Manufacturer be successful
in signing said company to a Technology Licensing Agreement acceptable to
Company; said company shall be treated as Manufacturer's account. Subsection a &
b of Section 2 shall apply.
Section 3. Consulting Fees. From time to time the Company may wish to engage
Manufacturer in a consulting capacity for research, testing, certifications,
licenses, and the general advancement of the AXEN Product line. Manufacturer
hereby agrees and acknowledges that all such consulting time shall be
pre-approved by the Company, and all hours must be logged and submitted to the
<PAGE>
Company on a monthly basis. Further, Manufacturer acknowledges and agrees
consulting time is to be billed to the Company at the rate of Fifty Dollars
($50.) per hour and any time spent traveling on behalf of the Company, be billed
at the rate of One Hundred Seventy Five Dollars ($175.) per day. As soon as the
Company's AXEN Product line is profitable, travel time will be billed at the
rate of $250.00 per day.
Section 4. Sales to Company Clients. Manufacturer is entitled, under the
Standard Manufacturing Agreement to manufacture and/or oversee manufacturing,
testing and shipping of the Company's Products to third parties designated by
the Company. Both the Company and the Manufacturer agree this service shall be
provided by Manufacturer on a "cost plus" basis.
(a) Manufacturer Production. If, under the terms of the Agreement, the
Manufacturer produces the Company Products; the "cost plus" rate agreed on by
both parties shall be cost plus Thirty percent (30%). Said cost and percentage
shall be the only amount due and payable to the Manufacturer by the Company;
provided the Company has not issued prior written instructions authorizing
billing changes. Manufacturer shall provide Company with a Bill of Materials,
any direct costs and labor breakdown, which will be reviewed for accuracy or
adjustment by both parties on a semi-annual basis. Company shall not be
responsible for Manufacturer's indirect or overhead costs. The service provided
by Manufacturer shall be deemed turnkey and include, but not limited to
manufacture, testing, packaging, and shipping of the Company Products.
(b) Manufacturer as Overseer. If, under the terms of the Agreement, the
Manufacturer oversees the production, packaging, and/or shipping of the Company
Products; the "cost plus" rate agreed on by both parties shall be cost plus
Thirty percent (30%). Said cost and percentage shall be the only amount due and
payable to the Manufacturer and/or third party sub-contractor by the Company;
provided the Company has not issued prior written instructions authorizing
billing changes. Company shall provide Manufacturer a list of acceptable third
party sub-contractor. The service provided by Manufacturer shall be deemed
turnkey and include, but not limited to overseeing, via an "on-site"
representative, the manufacture, packaging, and shipping of the Company
Products; while also providing independent testing, quality assurance, and
quality control.
Section 5. In the Event Company is Sold. Notwithstanding any provision contained
herein, the Manufacturer agrees and consents that should the Company desire to
sell or convey to any third party more than Fifty One percent (51%) of the
shares of common stock of the Company; this Agreement will not in any way or
manner hinder, retard, nullify, or cancel said transaction. Manufacturer further
agrees to relinquish any rights provided by Standard Manufacturing Agreement,
attached hereto and render same null and void; provided it is compensated in
accordance with the following:
Date of Transaction Compensation
Dec. 5, 1998 through Dec. 5, 1999 $100,000.00
<PAGE>
After December 5, 1999 and as long as this Agreement is in place, the buy out
amount will equal the amount of Manufacturer's gross sales of the product AXEN
for the twelve month period prior to sale of controlling interest of the
Company; or One Hundred Thousand Dollars ($100,000.00) whichever is greater.
Section 6. Should Company License Manufacturer's Exclusive Territory.
Notwithstanding any provision contained herein, the Manufacturer agrees and
consents that should the Company desire to sell, license or convey to any third
party any rights held by Manufacturer, this Agreement will not in any way or
manner hinder, retard, nullify, or cancel said transaction. Manufacturer further
agrees to relinquish any rights provided by Standard Manufacturing Agreement,
attached hereto and render same null and void; provided it is compensated in
accordance with the following:
(a) Company Sells, Licenses or Conveys Only Manufacturer's Territory.
Should the sale, licensing, or conveyance of Manufacturer's rights under this
Agreement be assigned to a third party by the Company, Manufacturer is entitled
to compensation as follows:
Date of Transaction Compensation
Dec. 5, 1998 through Dec. 5, 1999 25% of Sale price
Dec. 6, 1999 through Dec. 6, 2000 50% of Sale price
Dec. 7, 2000 through Dec. 7, 2001 67.5 % of Sale price
Dec. 8, 2001 through Dec. 8, 2002 75% of Sale price
Dec. 9, 2002 through Dec. 5, 2003 87.5% of Sale price
Sales price being defined as the net price the Company receives for the sale of
said territory. '
(b) (b) Company Sells, Licenses, or Conveys Territory Greater in Area &
Including Manufacturer's Territory. Should the sale, licensing, or conveyance of
Manufacturer's rights under this Agreement be assigned to a third party by the
Company, Manufacturer is entitled to compensation for that portion of the total
area which is termed "Manufacturer Exclusive Territory". Said compensation is to
be determined gross sales volume the Manufacturer's Exclusive Territory for the
twelve (12) months immediately preceding said sale or the population figures as
published in the most recent U. S. Census whichever is greater. Once the
proportional allotments have been determined, the actual compensation due and
payable to Manufacturer shall be settled based on the following:
Date of Transaction Compensation
Dec. 5, 1998 through Dec. 5, 1999 37.5% of Exclusive Territory Allotment
Dec. 6, 1999 through Dec. 6, 2000 50% of Exclusive Territory Allotment
Dec. 7, 2000 through Dec. 7, 2001 75% of Exclusive Territory Allotment
Dec. 8, 2001 through Dec. 8, 2003 100% of Exclusive Territory Allotment
Section 7. Termination of This Agreement.
<PAGE>
a. Termination by Manufacturer. Manufacturer may terminate the Agreement
at any time by delivering written notice of termination to the Company at least
thirty (30) calendar days prior to the effective date of such termination. In
the event of such termination, Manufacturer, shall no longer have the right to
receive any Commissions, except that Manufacturer shall be entitled to all
unpaid Commissions that became fully earned by Manufacturer prior to the
effective date of termination. However, the rights to receive the Commissions as
set forth in the preceding sentence are subject to Paragraph (c) below.
b. Termination by the Company for Cause The Company may terminate the
this Agreement at any time for Cause by delivering written notice of termination
to Manufacturer. Such a termination may, at the option of the Company, be
effective immediately upon delivery of such notice. Such written notice shall
specify the reason that the Company is terminating the Agreement. For the
purposes of this Agreement, the term Cause means (i) any dishonesty or
misrepresentation by Manufacturer in his or her dealings with the Company or the
Company's clients, the commission of fraud by Manufacturer, negligence by
Manufacturer in connection with or related to his or her engagement with or
representation of the Company, or the commission by Representative or it's
principal owner and or manager of any act involving dishonesty or moral
turpitude; or (ii) any breech of this Agreement or any failure to follow the
lawful policies and directives of the Company. In the event of a termination of
the Agreement by the Company for Cause, Manufacturer shall, after the effective
date of such termination, be entitled to receive no further Commissions, and
Royalties whatsoever, regardless of whether such commissions or Royalties,
became fully earned by Manufacturer prior to the effective date of such
termination, except that upon Company view of damages sustained; any commissions
or royalties that became fully earned by Manufacturer prior to the effective
date of termination and which exceed Company sustained damages resulting from
said action, the difference is due and payable to Manufacturer. Manufacturer may
dispute termination for cause and is entitled to due process via an independent
arbitrator, who's findings shall be binding on both parties.
Loss of Rights to Commissions or Royalties. Notwithstanding anything contained
in this Section 7 to the contrary, Manufacturer will immediately lose all rights
to any further payment of Commissions or Royalties (regardless of whether such
Commission or Royalty became fully earned prior to the effective date of
termination) if Manufacturer individually or jointly with others, directly or
indirectly, whether for Manufacturer's own account or for that of any other
person or entity, owns or holds any ownership interest in any person or entity
engaged in the development, manufacturing, and/or marketing of a product similar
to AXEN, in it's various formulations in any state or country.
<PAGE>
MANUFACTURER
Signature:
Mr. Andrew Arata, President
ETIH20, Inc.
NVID INTERNATIONAL, INC.
Signature:
Mr. David Larson, President
NVID International, Inc
<PAGE>
SCHEDULE 4
COMPANY TESTING PROCEDURES
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December , 1998 between NVID
International, Inc. (hereinafter "Company") and ETIH20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SCHEDULE 5
COMPANY PACKAGING SPECIFICATIONS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December , 1998 between NVID
International, Inc. (hereinafter "Company") and ETIH20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SCHEDULE 6
EPIDEMIC FAILURE PARAMETERS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December , 1998 between NVID
International, Inc. (hereinafter "Company") and ETIH20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SCHEDULE 7
CHANGE ORDER PROCEDURES & COSTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December , 1998 between NVID
International, Inc. (hereinafter "Company") and ETIH20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SCHEDULE 8
CANCELLATION PROCEDURES & COSTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement, dated December , 1998 between NVID
International, Inc. (hereinafter "Company") and ETIH20, Inc. (hereinafter
"Manufacturer") attached hereto, constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and it supersedes all
prior memoranda, correspondence, conversations, and negotiations. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
EX-10.6
Standard Manufacturing Agreement
<PAGE>
EXHIBIT 10.6
NVID INTERNATIONAL, INC.
STANDARD MANUFACTURING AGREEMENT
Pacific Rim Countries
THIS STANDARD MANUFACTURING AGREEMENT (the "Agreement") is made and
entered into effective as of the 17" day of September 1999 (the "Effective
Date"), by and among, NVID International, Inc. a Delaware corporation
("Company"), and, ETIR20 a Florida corporation ("Manufacturer") and Andrew
Arata, an individual ("Arata").
WITNESSETH:
WHEREAS, Company designs, develops, distributes and sells certain
Products, as defined below, and
WHEREAS, Manufacturer designs, develops, and manufactures certain
blended products; and.
WHEREAS, upon the terms and conditions set forth herein, Company and
Manufacturer desire to enter into an agreement where under Manufacturer will (1)
manufacture, package, and/or oversee the manufacture and packaging of the
Products, as defined below and as more particularly described on Schedule 1
attached hereto, in accordance with Company's design specifications, and (2)
test the Products in accordance with Company's functional test specifications.
NOW, THEREFORE, in consideration of the foregoing recitals and the
terms, provisions, and conditions set forth herein, the parties hereto,
intending to be legally bound hereby, agree as follows:
Section 1: Definitions. For the purposes of this Agreement, the
following definitions shall have the following meanings, except as otherwise
specifically set forth herein:
(a) "Affiliate" means, with-respect to a specified Person, any other
Person who or which directly (or indirectly through one or more intermediaries)
controls, is controlled by, or is under common control with the Person
specified. For the purpose of this definition, the word "control" means, as to
any Person, the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract, or otherwise.
(b) "Company Product Schedule" means the written manufacturing schedule
provided by Company to Manufacturer, specifying the description, quantity,
packaging and shipping instructions and requested delivery date for the
Products.
(c) "Company Packaging Specifications" means the packaging and shipping
specifications ,supplied by the Company as set forth on Schedule 5 attached to
this Agreement.
(d) "Company Testing Procedures" means the testing specifications,
procedures, standards and parameters provided by the Company as set forth on
Schedule 4 attached to this Agreement.
(e) "Confidential Information" has the meaning set forth in Section 12
of this Agreement.
<PAGE>
(f) "Delivery" shall mean FOB to , the carrier selected by Company, or
selected by Manufacturer and reasonably acceptable to Company.
(g) "Disclosing Party" has the meaning set forth in Section 12 of this
Agreement.
(h) "Fee and Price Schedule" means the schedules of fee and prices
agreed to by the parties for each Product covered by this Agreement as set forth
in Schedule 3 attached hereto, including any updates, modifications or
amendments thereto as may be agreed to by the parties in writing.
(j) "Governmental Body" means any (i) nation, state, country, city,
town, village, district, or other jurisdiction of any nature; (ii) federal,
state, local, municipal, foreign, or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal; (iv)
multi-national organization or body; or (v) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
(j) "Intellectual Property" means, with respect to a specified Person,
(i) all registered and unregistered trademarks, service marks, and applications
therefore relating to the Products; and (ii) all patents, patent applications,
and inventions, and discoveries relating to the Products.
(k) "Manufacturer Exclusive Territory" means New Zealand, Thailand,
Indonesia, Philippines, Taiwan, Singapore, Malaysia, and Australia.
(l) "Manufacturer Manufacturing Process" means the processes employed
by Manufacturer to manufacture, package and ship Products or oversee same while
conducting independent tests on such other Manufacturers which may be pursuant
to this Agreement.
(m) "Person" means any individual, corporation (including any nonprofit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
(n) "Products" means the products manufactured and packaged by
Manufacturer on behalf of Company pursuant to this Agreement, as described in
Schedule l attached hereto, including any updates, renewals, modifications or
amendments thereto, as agreed to in writing by the parties.
(o) "Receiving Party" has the meaning set forth in Section 12 of this
Agreement.
(p) "Specifications and Quality Requirements" means the specifications
("Specifications") and quality requirements ("Quality Requirements") for each
Product which are agreed to by Manufacturer, as set forth in Schedule 2 attached
hereto, including any updates, modifications or amendments thereto, as agreed to
in writing by the parties.
(q) "Use Dilutions" means any dilutions of AXEN concentrates by any
means in which the dilution and repackaging thereof results in increased value
of the Product.
Section 2. Company Product Schedules; Exclusivity. From time to time,
the Company will provide Manufacturer with one or more Company Product Schedules
relating to the manufacture of the Products. With respect to each such Company
Product Schedule, Manufacturer shall have the obligations set forth in Section 3
below. During the term of this Agreement, Manufacturer shall have the exclusive
<PAGE>
right to manufacture any Products that the Company intends to deliver to
end-users located in the Manufacturer Exclusive Territory. With respect to
Products that the Company intends to deliver to other Persons, Manufacturer
shall not have the exclusive right to manufacture such Products.
Section 3. Product Manufacture.
(a) Parameters. For each Company Product Schedule, Manufacturer will
manufacture, test, package and deliver all items necessary to satisfy production
and delivery requirements in accordance with the Product Specifications and
Quality Requirements for the prices and fees set forth on the Fee and Price
Schedule. Manufacturer shall use its best efforts to (i) provide design test
support; (ii) identify the most cost efficient high quality ingredients and
packaging to produce and ship the Products; (iii) test the Product in accordance
with the Company Testing Procedures; and (iv) package the Products in accordance
with the Company Packaging Specifications. The Company may make Delivery
cancellations only in writing and in accordance with the following cancellation
procedures: No Company Product Schedule can be cancelled within one week of
Manufacturer's delivery date
(b) Company Supplied Items. Company shall provide Manufacturer with the
Company Confidential Information, Intellectual Property, Product Specifications
and Quality Requirements, Company Testing Procedures, Company Packaging
Specifications, and manufacturing process requirements necessary for
Manufacturer's manufacture, testing, packaging and delivery of the Products.
(c) Manufacturer Supplied Items. Manufacturer shall provide the
manufacturing process or overseeing of an independent manufacturing process, any
required manufacturing technology, manufacturing capacity, labor, transportation
logistics, systems, facilities and materials necessary for Manufacturer's
manufacture, testing, packaging and delivery of the Products.
(d) Inspection. Subject to the Confidentiality provisions set forth in
Section 11, Company may, upon reasonable advance notice and at its own expense,
inspect Manufacturer's accounting records and performance pursuant to this
Agreement, provided that such inspection is conducted during normal business
hours.
(e) Materials Procurement and Management. Manufacturer shall use
reasonable commercial efforts to procure the materials necessary for the
manufacture of the Products.
Section 4. Design Development. Manufacturer and Company may enter into
a separate agreement for Manufacturer's assistance in the design and development
of Products, including the design and development of Product testing procedures
and specifications. This Agreement shall not be deemed to cover such services.
Section 5. Term of Agreement.
(a) Expiration and Termination Without Cause. Except as otherwise
provided, the term of this Agreement shall begin on the Effective Date hereof
and continue thereafter for a period of Two (2) years, unless such term is
extended in writing by the parties hereto. As long as manufacturer produces
required quotas and lives up to the terms of this Agreement, this Agreement
<PAGE>
shall be reviewed for renewal at the end of said period. Company has the right
to terminate this Agreement at any time and at its sole discretion if Company
follows the provisions set forth in Schedule 3 The Company shall review the
Manufacturer's performance at the end of the term of this Agreement. The
performance criteria on which the Manufacturer shall be judged is addressed in
Schedule 3 of this Agreement. Both parties agree these performance criteria are
subject to an annual review and' adjustment by the Company. In addition, the
Company shall have the right to terminate this Agreement upon thirty (30) days
prior written notice to Manufacturer if the Company enters into an agreement to
merge or consolidate with another Person (even if the Company is the surviving
Person in the merger), the Company enters into an agreement to sell all or
substantially all of the assets of the Company (or any subsidiary of the
Company) to a third Person, or the holders of more than 50% of the outstanding
capital stock of the Company enter into an agreement to sell their shares of
stock in the Company.
(b) Termination With Cause. Either party may terminate this Agreement
with cause upon written notice to the other party. "Cause" shall mean and is
limited to material breach of this Agreement by the non-terminating party which
is not cured within thirty (30) days of the delivery of written notice thereof
to the breaching party. In the event of a disagreement between the parties
concerning whether "cause" exists under this paragraph, the Dispute Resolution
provisions of Section 15 shall apply. In addition, the Company may terminate
this Agreement immediately upon written notice to Manufacturer for "Good Cause."
For the purposes hereof, "Good Cause" is defined as (i) any dishonesty or
misrepresentation by Manufacturer in its dealings with the Company or the
Company's clients, the commission of fraud by Manufacturer, negligence by
Manufacturer in connection with or related to his or her engagement with or
representation of the Company, or the commission by Arata, the Manufacturer, or
any Affiliate thereof of any act involving dishonesty or moral turpitude, or
(ii) any failure by the Manufacturer to follow the lawful policies and
directives of the Company. In the event of a termination of this Agreement by
the Company for "Cause" or "Good Cause," Manufacturer shall, after the effective
date of such termination, be entitled to receive no further compensation,
royalties, or remuneration under this Agreement, regardless of when such amount
were earned by Manufacturer; provided, however, upon the Company's review of any
damages sustained by the Company as a result of Manufacturer's acts or
omissions, any compensation that became fully earned by the Manufacturer prior
to the effective date of termination which exceeds such damages shall be paid to
the Manufacturer. Notwithstanding anything contained in this Agreement,
Manufacturer will forfeit all right to receive any royalties, commissions, or
other compensation or remuneration under this Agreement if Manufacture breaches
any of the noncompetition obligations set forth on Schedule 3 to this Agreement.
(c) Termination by Manufacturer without Cause. Manufacturer may
terminate this Agreement at any time without cause by delivering 30-days prior
written notice of termination to the Company, provided that Manufacturer shall
be obligated to complete the manufacture, packaging, and shipment of all
Products for which the Company has delivered a Company Product Schedule prior to
the date that Company receives such written notice of termination.
(d) Special Termination by Company. In addition to the termination
rights of the Company set forth elsewhere in this Agreement, the Company may
terminate this Agreement immediately in the event that the Company desires to
enter into a license agreement granting another Person the right to manufacture
or have manufactured, market or have marketed, sell or have sold Products in the
Manufacturer Exclusive Territory (such other person is herein referred to as the
"New Licensee"). In the event that the Company terminates this Agreement
pursuant to this Section 5(d), the Company shall pay Manufacturer the amounts
described on Schedule 3 under the caption "Compensation for Special
Termination."
Section 6. Import/Export License and Control. Manufacturer will not
ship or deliver any Product, ingredient or any technical data (i) which violates
any export controls or limitations imposed by the United States or any other
Governmental Body, or (ii) to any country for which an export license or other
Governmental Body approval is required at the time of export, without first
obtaining all necessary licenses or other approvals. Manufacturer shall provide
all licenses, certifications, approvals and authorizations necessary to comply
with all import and/or export laws, rules and regulations for the shipment and
delivery of Products.
<PAGE>
Section 7. License of Technology The Company hereby grants to
Manufacturer the right and license to use the Intellectual Property solely for
the purposes of manufacturing, having manufactured, marketing, and selling
Products directly to end-users in the Manufacturer Exclusive Territory:
Manufacturer, or it's agents or sub distributors shall not manufacture, market
or sell said products outside the manufacturer exclusive territory without
written consent of the company This right and license shall be exclusive. This
right and license shall include the right to sublicense the Intellectual
Property only to such Persons and for such purposes as are approved by the
Company in writing The right and license granted in this Section 7 shall
automatically terminate upon the termination of this Agreement. Manufacturer
shall manufacture Products pursuant to this Section 7 only in accordance with
the Specifications and Quality Requirements for the Products, and Manufacturer
shall assist the Company in connection with the Company's quality-control
efforts. Manufacturer also hereby agrees that it will market the Products only
under the Product names set forth on Schedule 1 to this Agreement. In
consideration of the right and license granted in this Section 7, Manufacturer
shall pay to the Company the royalty and fees set forth on Schedule 3 to this
Agreement. The Company may terminate the right and license set forth in this
Section 7 at any time upon thirty (30) days prior written notice if it has
reasonable grounds to believe that any actions or omissions by Manufacturer
threaten the quality control, registrations, or status of any of the
Intellectual Property.
Section 8. Product Warranty and Limitation of Liability.
(a) Workmanship and Material. Manufacturer warrants that it will
perform its manufacturing, test and packaging services hereunder in a good,
professional and workmanlike manner. Manufacturer warrants that as delivered,
(i) Products will conform to the Specifications and Quality Requirements
applicable at the time of manufacture, and (ii) Products will be of good
material and workmanship and free from defects.
(b) Liens Encumbrances and Infringements. Manufacturer warrants that:
(i) upon Product Delivery and payment by the Company of-the contract price
thereof, the Company shall have good and clear title to the Product, free and
clear of all liens, claims and encumbrances; and (ii) all manufacturing
processes and services provided by Manufacturer are either owned or properly
licensed by Manufacturer or are in the public domain, and to Manufacturer's
knowledge do not infringe upon any proprietary rights of any third party.
Section 9. Delivery, Title and Payment.
(a) Risk of Loss. All risk of loss will accrue to Company upon
Delivery.
(b) Payment. All invoices shall be due and payable within 30 days from
the date of Delivery of the Product. Company shall be responsible for all
federal, foreign, state and local sales, use; excise and other taxes (except
taxes based on Manufacturer's net income), all delivery, shipping, and
transportation charges, and all foreign agent or brokerage fees, document fees,
customs and duties, unless specifically excluded by Schedule 3.
Section 10. Representations and Warranties. Company and Manufacturer
hereby represent and warrant to each other as follows:
<PAGE>
(a) Organization and Good Standing. Each is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under this Agreement.
(b) Authority; No Conflict. This Agreement constitutes a legal, valid,
and binding obligation, enforceable in accordance with its terms. Each has the
absolute and unrestricted right, power, authority, and capacity to execute and
deliver this Agreement. Neither the execution and delivery of this Agreement,
nor the consummation or performance of any of the transactions or obligations
hereunder, will directly or indirectly contravene, conflict with, or result in a
violation of any law, administrative order, constitution, ordinance, principle
of common law, regulation, statute, or treaty of any Governmental Body or
violate either charter or bylaws or cause a breach of any material agreement, or
have a material adverse effect
(c) No Consents. Neither is required to obtain any consent or
authorization from any Person in connection with the execution and delivery of
this Agreement or the performance of its obligations hereunder.
(d) Claims. There are no pending claims or litigation that would or
might interfere with the (i) full and complete performance of any obligations
under this Agreement, or (ii) full and complete exercise and enjoyment of any
rights under this Agreement.
Section 11. Confidentiality.
For the purposes of this Agreement, "Confidential Information" means
all information or material (whether or not reduced to writing) which is
disclosed to the Manufacturer or known by the Manufacturer as a consequence of
the Manufacturer's observation of, or its discussions, collaboration, or
association with the Company or the Company's employees, agents, or Affiliates
(collectively, the "Disclosing Party"), which information is not generally known
in the industries in which the Disclosing Party is engaged, regarding the
Disclosing Party or its business, including but not limited to information
relating to actual or prospective: pricing, costs, products, services,
suppliers, distributors, agents, representatives, customers, employees,
associated persons or entities, business plans, business programs, business
strategies, computer systems, processes, techniques, methods, concepts, ideas,
formulas, research, discoveries, inventions, development, improvements,
organization, techniques of application, computer programming, accounting,
recording, marketing, engineering, manufacturing, contracting, renting, leasing,
purchasing, specifications or technology.
Section 12. Work Product; Assignment. All specifications, designs,
discoveries, inventions, products, modifications, computer programs, technical
information, procedures, processes, improvements, developments, drawings, notes,
documents, information and materials made, conceived, reduced to practice or
developed by Manufacturer which result from or arise out of Manufacturer's
performance under this Agreement and uniquely relate to the Products or Company
Intellectual Property (collectively, the "Company Work Product") will be owned
exclusively by Company. To the extent such Work Product is designated as a "work
made for hire" under applicable copyright law, it shall be considered a "work
made for hire" from the moment of creation, the copyright of which shall be
owned exclusively by the Company. To the extent such Work Product does not
qualify as a "work made for hire" under applicable copyright law, all right,
title and interest that Manufacturer may have with respect to Company Work
Product is hereby assigned, transferred and conveyed from the moment of creation
exclusively to the Company.
Section 13. Governing Law; Resolution of Disputes. This Agreement
(including all matters relating to the interpretation, construction, due
execution, validity, and enforceability hereof) shall be governed by the laws of
the State of Florida, without reference to principles of choice of law or
conflicts of law there under. This Agreement shall be deemed for all purposes to
have been entered into in Pinellas County, Florida. Any litigation arising
directly or indirectly from a dispute hereunder shall be litigated solely in the
Circuit Court of the State of Florida in Pinellas County, Florida, or in the
United States District Court for the Middle District of Florida. The parties
hereto submit to the personal jurisdiction of such courts and agree that such
courts shall be the sole situs of venue for the resolution of any such dispute
through litigation.
<PAGE>
Section 14. Force Majeure. Neither Party will be liable for any delay
in performing or for failing to perform its obligations under this Agreement
resulting from any cause beyond its reasonable control including, without
limitation, acts of God; blackouts; power failures; inclement weather; fire;
explosions; floods; hurricanes; tornadoes; epidemics; strikes; work stoppages;
component or material shortages; slow-downs; industrial disputes; sabotage;
accidents; destruction of production facilities; riots or civil disturbances;
acts of government or governmental agencies including changes in law or
regulations that materially and adversely impact the Party; provided that the
Party affected by such event promptly notifies the other Party of the delay,
that the Party not affected by the delay may seek replacement product or supply
from another source and if the delays or disruptions caused by the force majeure
conditions are not cured within 60 days of the force majeure event, then either
Party may immediately terminate this Agreement.
Section 15. Miscellaneous.
(a) Amendments. No change, modification, or termination of any of the
terms, provisions, or conditions of this Agreement shall be effective unless
made in writing and signed or initialed by both parties hereto. There shall be
no oral modifications of this Agreement.
(b) Exhibits. All exhibits, annexes, and schedules hereto are
incorporated herein and made a part hereof as if fully set forth in this
Agreement in their entirety.
(c) Severability. Each section, subsection, and paragraph of this
Agreement constitutes a separate and distinct provision. In the event that such
a provision is determined to be invalid or unenforceable, the provision shall be
deemed limited in scope and effect to the extent, and only to the extent,
necessary to render the same valid and enforceable. If such a limiting
construction is impossible, such invalid or unenforceable provision shall be
deemed severed from this Agreement, but every other section, subsection, and
paragraph shall be deemed valid.
(d) Headings and Captions. The headings, titles, captions, and sections
contained in this Agreement are provided for convenience of reference only and
shall not be considered a part hereof for purposes of interpreting or applying
this Agreement; such titles or captions do not define, limit, extend, explain,
or describe the scope or extent of this Agreement or any of its terms,
provisions, representations, warranties, conditions, etc., in any manner or way
whatsoever.
(e) Gender and Number. All pronouns and variations thereof shall be
deemed to refer to the masculine, feminine, or neuter and to the singular or
plural as the identity of the person or entity or persons or entities may
require.
(f) Binding Effect on Successors and Assigns; Assignment. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and assigns; provided, however, except as provided herein,
this Agreement may not be assigned by either party without the express written
consent of the other party to this Agreement. Either party may assign this
Agreement, without consent of the other party, in connection with the
acquisition or merger of such party, or the acquisition of all, or substantially
all, of the assets of such party.
<PAGE>
(g) Waiver. The failure of a party to enforce any term, provision, or
condition of this Agreement at any time or times shall not be deemed a waiver of
that term, provision, or condition for the future, nor shall any specific waiver
of a term, provision, or condition at one time be deemed a waiver of such term,
provision, or condition for any future time or times.
(h) Entire Agreement; Counterparts. This Agreement, together with all
Schedules attached hereto, constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof, and it supersedes all prior
memoranda, correspondence, conversations, and negotiations concerning the
specified Pacific Rim countries. This Agreement may be executed in several
counterparts that together shall constitute but one and the same Agreement.
(i) Recitals; Use of Certain Terms. Each party agrees that the recitals
to this Agreement are true and correct and are incorporated herein by this
reference and made a legally binding part of this Agreement. Whenever the terms
"hereof," "herein," and "hereunder" are used in this Agreement, such terms shall
refer to this Agreement in its entirety and not to any particular section,
subsection, paragraph, or other portion of this Agreement.
(j) Notices. Any notices or other communications required or permitted
hereunder shall be given in writing and shall be delivered or sent by hand
delivery, facsimile, e-mail, or by certified or registered mail, postage
prepaid, to the following address and/or facsimile number, or to such other
address or facsimile number as shall be furnished in writing by such party:
If to Manufacturer or Arata: ETIH20
Rt. 14, Box 1517
Lake City, Florida 32024
Fax: (904) 755-8642
e-mail
With a copy to:
If to Company: NVID International, Inc.
28870 US 19 N, Suite 300
Clearwater, Florida 33761
Fax: (727) 669-5005
e-mail: [email protected]
With a copy to:
Any such notice or communication shall be effective and be deemed to
have been given when received if delivered by hand delivery, when fax or e-mail
<PAGE>
confirmation is received if delivered by facsimile or e-mail, or as of two (2)
days following the date mailed, provided that any notice or communications
changing any of the addresses set forth above shall be effective and deemed
given only upon its receipt.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives.
MANUFACTURER: ETIH20
By: DATE:
Andrew Arata, President
COMPANY NAME: NVID International, Inc.
By: DATE:
David Larson, President
By: DATE:
Andrew Arata, individually
<PAGE>
SCHEDULE 1
PRODUCTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SCHEDULE 2
SPECIFICATION & QUALITY REQUIREMENTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
<PAGE>
SCHEDULE 3
PRICE AND FEE SCHEDULE
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
Royalty on Sales of Products by Manufacturer pursuant to Section 7. In the event
that Manufacturer sells any Products pursuant to the right and license granted
in Section 7 of this Agreement, Company shall pay manufacturer the following
royalties:
O Ten percent (10%) for all Products shipped between
August 19, 1999 and August 20, 2000.
O Seventeen percent (17%) for all Products shipped
between August 21, 2000 and August 22, 2001.
O Twenty Five percent (25%) for all Products shipped
thereafter.
of the gross price received by Manufacturer; less shipping, handling, duties, or
applicable sales tax paid by Manufacturer. Notwithstanding, any provisions to
the contrary, should Manufacturer enter into a sublicense with any third party,
regardless if said third party is owned, in whole or in part, by Manufacturer or
any officers or Affiliates thereof, in addition to the above royalties,
Manufacturer shall pay to the Company the following sublicense royalties: .'
o Ten percent (10%) of all license fees, royalties, or other
similar remuneration received by the Manufacturer as a result
of shipments of Products (or Use Dilutions thereof) made
between August 19, 1999 and August 20 , 2000. .
o Seventeen percent (17%) of all license fees, royalties, or
other similar remuneration received by the Manufacturer as a
result of shipments of Products (or Use Dilutions thereof)
made between August 21, 2000 and August 22, 2001.
o Twenty Five percent (25%) of all license fees, royalties, or
other similar remuneration received by the Manufacturer as a
result of shipments of Products (or Use Dilutions thereof)
made thereafter.
Non-Competition Obligations. During the Agreement Term and for a period of two
(2) years thereafter (regardless of the reason for the termination of the
Agreement Term), Manufacturer and Arata shall not (and they shall cause their
Affiliates not to), individually or jointly with others, directly or indirectly,
whether for their own account or for that of any other person or entity, own or
hold any ownership interest in any person or entity engaged in research,
manufacturing, or marketing a produce similar in composition and method of
production to the product AXEN, in its various formulations in any state or
country, and Manufacturer or Arata shall not act as an officer, director,
employee, partner, independent contractor, consultant, principal, agent,
proprietor, or in any other capacity for, nor lend any assistance (financial or
otherwise) or cooperation to, any such person or entity; provided, however, that
it shall not be a violation of this Section 1 for Manufacturer or Arata , to own
a one percent (1%) or smaller interest in any corporation required to file
periodic reports with the Securities and Exchange Commission.
<PAGE>
Finder's Fee for New Licensees. In the event that Manufacturer, during the term
of this Agreement, introduces the Company to any Person who or which enters into
an agreement with the Company where under the Intellectual Property is licensed
to such Person for the purpose of the manufacture and sale of the Products by
such Person, the Company shall pay, a finder's fee to Manufacturer, unless the
Company or any Affiliate thereof had an actual or proposed business relationship
with such Person at or prior to such introduction. This finder's fee shall be
equal to the following:
(a) Upfront Licensing Fees. In the event that such Person and the
Company enter into a license agreement that provides for an up-front royalty or
license fee that is payable at the time of the execution of such license
agreement, the finder's fee will be equal to Fifteen percent (15%) of such
up-front royalty or license fee actually received by the Company. Manufacturer
will be entitled to additional finder's fees in the amount of twenty percent
(20%) of all royalties or license fees actually received by the Company under
such license agreement during the six (6) month period following the effective
date of the license agreement. Thereafter, Manufacturer will be entitled to:
Ten percent (10%) of all such royalties or license fees
actually received by the Company from such Person during the
first year after the expiration of such 6 month period
Seventeen percent (17%) of all such royalties or license fees
actually received by the Company from such Person during the
second year after the expiration of such 6 month period Twenty
Five percent (25%) of all such royalties thereafter
Payment of such fees to Manufacturer shall occur on the last day of each month
on the basis of royalties or license fees actually received by the Company from
the licensee during the immediately preceding month.
(b) No Up-Front Licensing Fees. Should the Company agree to a
Technology Licensing Agreement, brought to it-by Manufacturer, which does not
include an up-front licensing fee; said licensing fee shall be included in the
price the products are sold to licensee. Said rate not to exceed 10% of the
wholesale price of the Product and shall continue until an agreed upon licensing
fee has been satisfied. Manufacturer is entitled to a commission equal to those
outlined in (a) above, but paid quarterly and based on the amount of licensing
fee received by Company.
Consulting Fees. Froth time to time the Company may wish to engage Manufacturer
in a consulting capacity for research, testing, certifications, licenses, and
the general advancement of the AXEN Product line. Manufacturer hereby agrees and
acknowledges that all such consulting time shall be pre-approved by the Company,
in its sole discretion, and all hours must be logged and submitted to the
Company on a monthly basis. Further, Manufacturer acknowledges and agrees
consulting time is to be billed to the Company at the rate of Fifty Dollars
($50.) per hour and any time spent traveling on behalf of the Company, be billed
at the rate of One Hundred Seventy Five Dollars ($175.) per day. As soon as the
Company's AXEN Product line is profitable, travel time will be billed at the
rate of $250.00 per day.
Payment for Manufacturing Services. In consideration of the provision of the
manufacturing services set forth in Section 3 of this Agreement the Company
shall pay Manufacturer for such services on a "cost plus" basis.
<PAGE>
(a) Manufacturer Production. If the Manufacturer produces the Products;
the "cost plus" rate agreed on by both parties shall be cost plus Thirty percent
(30%). Said cost and percentage shall be the only amount due and payable to the
Manufacturer by the Company; provided the Company has not issued prior written
instructions authorizing billing changes. Manufacturer shall provide Company
with a Bill of Materials, any direct costs and labor breakdown, which will be
reviewed for accuracy or adjustment by both parties on a semi-annual basis and
such agreement deemed essential to this Agreement: Company shall not be
responsible for Manufacturer's indirect or overhead costs. The service provided
by Manufacturer shall be deemed turnkey and include, but not limited to
manufacture, testing, packaging, and shipping of the Company Products.
(b) Manufacturer as Overseer. If Manufacturer desires to have the
Products manufactured, packaged, and/or shipped by a third party, then the
Company must provide prior written approval of such third-party manufacturer.
Such prior written approval shall be in the sole discretion of the Company. In
the event that the Company grants such prior written approval, then the amount
paid by Manufacturer to such third party shall not be in excess of cost plus
fifteen (15) percent.
In the Event Company is Sold. Notwithstanding any provision contained herein,
the Manufacturer agrees and consents that should the Company desire to sell or
convey to any third party more than Fifty One percent (51%) of the shares of
common stock of the Company; (a "Qualified Sale"), this Agreement will not in
any way or manner hinder, retard, nullify, or cancel said transaction.
Manufacturer further agrees to relinquish any rights provided by Standard
Manufacturing Agreement for Designated Pacific Rim Countries, attached hereto
and render same null and void; provided Manufacturer is paid the following
termination fee:
After August 19, 1999, and as long as this Agreement is in place, the
termination fee will equal the greater of (i) the amount of Manufacturer's gross
sales of the product AXEN for the twelve month period prior to the closing of
the Qualified Sale (less sales and excise taxes, duties, and shipping expenses),
or (ii) all hard, "Out of Pocket" expenses. "Out of Pocket Expenses" are defined
4's all expenses actually incurred by Manufacturer in obtaining certifications
and/or Trademark registration which can be documented via official receipt, less
any fees or compensation of any form, paid or owed to principals of ETIH20 or
any owned or partially owned subsidiary thereof.
Compensation For Special Termination. In the event that the Company terminates
this Agreement solely pursuant to Section 5(d), the Company shall pay
Manufacturer the following amounts:
(a) If the New Licensee is granted exclusive rights with respect to
only the Manufacturer Exclusive Territory, then the Company shall pay to
Manufacturer a percentage of the initial, up-front license fee (the "Initial
Fee") which the New Licensee pays at the inception of its license agreement with
the Company. This percentage shall be equal to 20% of the Initial Fee if the
termination pursuant to Section 5(d) occurs between August 19, 1999 and August
19,2000; 30% of the Initial Fee if such termination occurs between August 20,
2000 and August 21, 2001; 40% of the Initial Fee if such termination occurs
between May 28, 2001 and May 28, 2002; and 50% of the Initial Fee if such
termination occurs thereafter.
<PAGE>
If the New Licensee is granted exclusive rights with respect to a territory that
is greater than the Manufacturer Exclusive Territory, then the amount payable to
Manufacturer shall be equal to the amounts determined pursuant to paragraph (a)
above multiplied by a fraction, the numerator of which is the total population
of the Manufacturer Exclusive Territory as of the date of termination and the
denominator of which is the total population (as of the date of termination) of
the territory in which the New Licensee is granted exclusive rights.
Performance Criteria Notwithstanding any provision contained herein, the
Manufacturer agrees and consents that the Limited Exclusivity granted by the
Company for designated Pacific Rim countries is subject to performance criteria.
Prior to the Agreement Term expiration date, the Company shall review
Manufacturer's performance. A renewal for a specific term or, at the Company's
option, in perpetuity may be granted if Manufacturer has
(1) Has applied for and received certifications and / or trademark
registration in the countries of New Zealand, Thailand, Indonesia, Philippines,
Taiwan, Singapore, and Malaysia and Australia. Manufacturer must demonstrate it
has all necessary permits, licenses, certifications and registrations to legally
conduct business in subject countries.
(2) Has achieved, for a period of six months immediately preceding said
review of performance criteria, a sales quota of a minimum of Five (5) each,
Fifty Five (55) gallon drums of AYCEN concentrate per month for each of the
preceding six months, per country.
(3) In the specific case of the country of Australia, Manufacturer has
achieved, for a period of six months immediately preceding said review of
performance criteria, a sales quota of Ten (10) Fifty Five (55) gallon drums of
AXEN concentrate for each of the preceding six months.
<PAGE>
SECTION 4
COMPANY TESTING PROCEDURES
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.,
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SECTION 5
COMPANY PACKAGING SPECIFICATIONS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SECTION 6
EPIDEMIC FAILURE PARAMETERS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SECTION 7
CHANGE ORDER PROCEDURES & COSTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
SECTION 8
CANCELLATION PROCEDURES & COSTS
This Schedule is one of Eight (8) Schedules which together with the
Standard Manufacturing Agreement for Designated Pacific Rim Countries dated
August 19, 1999 between NVID International, Inc. (hereinafter "Company") and
ETIH20, Inc. (hereinafter "Manufacturer") attached hereto, constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof, and it supersedes all prior memoranda, correspondence, conversations,
and negotiations concerning this particular geographic territory. This Agreement
may be executed in several counterparts that together shall constitute but one
and the same Agreement.
This Schedule will be jointly developed by Company & Manufacturer
<PAGE>
<PAGE>
facsimile or e-mail, or as of two (2) days following the date mailed, provided
that any notice or communications changing any of the addresses set forth above
shall be effective and deemed given only upon its receipt
IN WITNESS WHEREOF. the Parties have caused this Agreement to be
executed by their duly authorized representatives
MANUFACTURER: ETIH20
By.
Andrew Arita, President
COMPANY NAME: NVID International, Inc.
By: Date:
Larson President
By: Date:
Andrew a rata, individually
<PAGE>
EX-10.7
Royalty Letter Agreement and Affirmation
<PAGE>
EXHIBIT 6.7
ATTORNEYS AT LAW
CNB NATIONAL BANK BUILDING
201 N. MARION STREET - SUITE 301
P.O. DRAWER 2349
LAKE CITY, FL 32056-2349
JOHN E. NORRIS
FREDERICK L. KOBERLEIN
GUY W. NORRIS
LEANORA G. JOHNSON
TEL: C904) 752-7240
FAX: C904) 752-1577
(degree) CERTIFIED MEDIATOR
September 23, 1999
Mr. Andrew Arata
Route 15, Box 1517
Lake City, FL 32054
Dear Mr. Arata:
In accordance with our prior discussions and commitments to you, we reconfirm
that you and your heirs are entitled to and will receive royalties of five
percent (5%) of all gross revenues realized by NVID International, Inc. and its
successors and AquaBio Technologies, Inc. and its successors on the following
product, its patent or any of its derivative.
AXENOHL also referred to as project "XS".
International Filing PCT/US98/21604
Domestic Filings 09/169,229 - 10/9/98 date of filing
and 60/128,212 - 4/7/99 date of filing
Gross revenues include, but are not limited to, sales of product,
licensing of product or patent, sales of patent, use of patent, use of name, and
any other transaction which results in revenue, tangible or intangible. Product
as used herein includes any products derived from or based upon AXENOHL.
We also reconfirm that the original agreement between you and NVID
International, Inc. remains in force.
NVID International, Inc.
By:
Mr. David Larson
Acknowledged By: Andrew B. Arata
AquaBio Technologies, Inc.
By:
Title:
<PAGE>
EX-10.8
License Agreement dated November 12, 1999
<PAGE>
EXHIBIT 10.8
LICENSE AGREEMENT
(Random Metering System)
THIS LICENSE AGREEMENT ("Agreement") is made this 12'h day of November,
1999, by and between NVID International, Ins., a Delaware corporation
("Co-Licensor" or "Licensors") and EHPC IONIZATION, Ltd, an English corporation
("Co-Licensor" or "Licensors") 'and Innovative Medical Services, a California
corporation ("Licensee").
WHEREAS, Licensors holds, marketing and distribution rights to the products
known as RMS ("RMS" or the "Licensed Product'). RMS is patent pending in the
USA, Canada, Australia, Japan, New Zealand, EP and several other countries (to
be disclosed by the closing date), for the killing of bacterial and other
biological contaminants from a water system as more particularly described in
the attached Exhibit A: PATENT and EHPC IONIZATION Ltd., License Agreement; and
WHEREAS, Licensors desires to license certain marketing and distribution rights
to the Licensed Product to the Licensee on the terms and conditions set forth
herein.
THEREFORE, Licensors and Licensee agree as follows:
1. Representations And Warranties Of Licensee
As an inducement to, and to obtain the reliance of Licensors, Licensee
represents and warrants as follows:
1.1. Organization, Good Standing, Power, Etc. Licensee (i) is a
corporation duly organized, validly existing and in good standing under the law
of the State of California; (ii) is qualified or authorized to do business as a
foreign corporation and is in good standing in all jurisdictions in which
qualification or authorization may be required; and (iii) has all requisite
corporate power and authority, licenses and permits to own or lease and operate
its properties and carry on its business as presently being conducted and to
execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby.
1.2. Capitalization. The authorized capital stock of Licensee consists
solely of 20,000,000 shares of Common Stock, no par value, (the "Licensee Common
Stock"), of which, on the date hereof shares are issued and outstanding and no
shares are held in the treasury of Licensee. In addition the Company has
5,000,000 shares of Preferred Stock authorized, none of which are presently
outstanding. All of such issued and outstanding shares of the Licensee Common
Stock have been duly authorized and validly issued and are fully paid and
non-assessable with no personal liability attaching to the ownership thereof and
were not issued in violation of the preemptive or other rights of any person.
1.3. Authorization of Agreement. This Agreement has been or will
be at closing duly and validly authorized, executed and delivered by Licensee.
1.4. Compliance with Applicable Laws. The conduct by Licensee of their
business does not violate or infringe on any domestic (federal, state or local)
or foreign law, statute, ordinance or regulation now in effect, or, to the
knowledge of Licensee proposed to be adopted, the enforcement of which would
materially and adversely affect its business or the value of its properties or
assets.
1.5. Exchange Act Filings and Financial Statements. Licensee has filed
all reports required of it with the United States Securities and Exchange
Commission (the SEC) pursuant to Section 12(g) of the Securities Exchange Act of
1934 (the 1934 Act) including without limitation, registration statements,
10-KSB's, 10 QSB's, Form 8's, etc. for each of the annual, quarterly or other
fiscal periods from the first to latest such filings since Licensee first so
registered as a public company.
1.6. Recognition of Licensors Trade Secrets.
<PAGE>
1.6.1. Licensee acknowledges and agrees that the documentation
and data provided pursuant to the Test Marketing Period described below
are "Licensors Trade Secrets" and constitute valuable property rights
of Licensors.
1.6.2. Licensee agrees that during the term of this Agreement,
or following its termination and for all times thereafter, it will keep
secret and confidential all Licensors Trade Secrets which it knows or
may hereafter come to know as a result of the relationship established
by this Agreement. The Licensors Trade Secrets shall not be disclosed
by Licensee to third parties and shall be kept secret and confidential
except (i) to the extent that the same have entered into the public
domain by means other than improper actions by Licensee or (ii) to the
extent that the disclosure thereof may be required pursuant to the
order of any court or other governmental body.
1.6.3. It is understood and recognized by Licensee that in the
event of any violation by Licensee of the provisions of subparagraph
1.6 above, Licensors' remedy at law will be inadequate and Licensors
will suffer irreparable injury. Accordingly, Licensee consents to
injunctive and other appropriate equitable relief upon the institution
of legal proceedings therefore by Licensors in order to protect the
Licensors Trade Secrets. Such relief shall be in addition to any other
relief to which Licensors may be entitled at law or in equity.
1.6.4. Licensee shall cause their employees who shall have
access to Licensors Trade Secrets hereof, to sign appropriate Trade
Secrecy Agreements in the form of Exhibit "A" annexed hereto and made a
part hereof.
2. Representations And Warranties Of Licensors
As an inducement to, and to obtain the reliance of LICENSEE, LICENSORS
represents and warrants as follows:
2.1. Organization, Good standing, Power, Etc. Licensors (i) is a
corporation duly organized, validly existing and in good standing under the laws
of their respective federal, state, local or foreign governmental or regulatory
bodies and (ii) has all requisite corporate power and authority, licenses,
permits and franchises to own or lease and operate its properties and carry on
its business as presently being conducted and to execute, deliver and perform
this Agreement and consummate the transactions contemplated hereby.
2.2. Authorization of Agreement. This Agreement has been or will
be at closing duly and validly authorized, executed and delivered by Licensors.
2.3. Material Contracts There has not occurred any default by Licensors
or any event which with the lapse of time or the election of any person other
than Licensors will become a default, except defaults, if any, which will not
result in any material loss to or liability of Licensors.
2.4. Permits, Licenses, Etc. Licensors has all permits, licenses,
orders and approvals of federal, state, local or foreign governmental or
regulatory bodies that are required in order to permit it to carry on their
business as presently conducted.
2.5. Compliance with Applicable Laws. The conduct by Licensors of its
business does not violate or infringe upon any domestic (federal, state or
local) or foreign law, statute, ordinance or regulation now in effect, or, to
the knowledge of Licensors proposed to be adopted, the enforcement of which
would materially and adversely affect its business or the value of its
properties or assets.
2.6. Litigation. There is no material claim, action, suit, proceeding,
arbitration, investigation or inquiry pending before any federal, state,
municipal, foreign or other court or governmental or administrative body or
agency, or any private arbitration tribunal, or to the knowledge of Licensors
threatened, against, relating to or affecting Licensors or any of its properties
or business, or the transactions contemplated by this Agreement; nor to the
knowledge of Licensors is there any basis for any such material claim, action,
suit, proceeding, arbitration, investigation or inquiry which may have any
adverse effect upon the assets, properties or business of Licensors, or the
transactions contemplated by this Agreement. Neither Licensors nor any officer,
director, partner or employee of Licensors, has been permanently or temporarily
enjoined by order, judgment or decree of any court or other tribunal or any
agency from engaging in or continuing any conduct or practice in connection with
<PAGE>
the business engaged in by Licensors. There is not in existence at present any
order, judgment or decree of any court or other tribunal or any agency enjoining
or requiring Licensors to take any material action of any kind or to Licensors
and its business, properties or assets are subject or bound. Licensors is not in
default under any order, license, regulation or demand of any federal, state or
municipal or other governmental agency or with respect to any order, writ,
injunction or decree of any court which would have a materially adverse impact
upon Licensors' operations or affairs.
2.7. Other Information. None of the information and documents which
have been furnished or made available by LICENSORS, or any of its
representatives to LICENSEE or any of their representatives in connection with
the transactions contemplated by this Agreement is materially false or
misleading or contains any material misstatements of fact or omits any material
fact necessary to be stated in order to make the statements therein not
misleading.
2,8. Covenant to Refrain from Trading in Licensee Securities. The
Licensors, its executive officers and directors represent and warrant that since
August 1, 1999 they have not engaged in trading of Licensee securities and until
such time that Licensee has announced the Closing of this Agreement, the
Licensors, its executive officers and directors will not engage in trading of
Licensee securities.
2.9. Authority to grant a License Pursuant to the Licensors', the
holder of the patents for the Licensed Product and the knowledge and consent
thereof, the Licensors has the right and authority to grant the license set
forth in this Agreement to the Licensees.
2.10. Compliance with Environmental Laws Licensors has not caused or
permitted its business, properties, or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce, or process any Hazardous Substance (as such term is defined herein)
except in compliance with all applicable laws, rules, regulations, orders,
judgments, and decrees, and has not caused or permitted the Release of any
Hazardous Substance on or off the site of any property of Licensors. The term
'Hazardous Substance' shall mean any hazardous waste, as defined by 42 U.S.C. '
6903(5), any hazardous substance, as defined by 42 U.S.C.' 601(14), any
pollutant or contaminant, as defined by 42 U.S.C.' 9601(33), and all toxic
substances, hazardous materials, or other chemical substances regulated by any
other* law, rule, or regulation. The term 'Release' shall have the meaning set
forth in 42 U.S.C. ' 9601(22).
3. Marketing, Manufacturing and Distribution Licenses
3.1.1. Grant of License far R MS. Subject o Closing of this
Agreement as set forth below, Licensors grants to the Licensee a three
year, exclusive license for Australia, North, Central and South America
and a non-exclusive license for the Mexico and other World markets to
market and distribute RMS for the Markets as set forth below. Provided
there has been no breach of this Agreement by the Licensee which has
not been cured within thirty days of written notice of such breach,
this geographic license shall automatically renew on terms herein for
subsequent additional three year terms.
3.1.2. Internet Market. IMS shall have the right to market via
the Internet at it's sole discretion
3.1.2.1. The Market The Healthcare Market shall be
all water purification and disinfections systems for the
killing of bacterial and other biological contaminants and the
removal of bio-film for commercial/private: hospitals,
clinics, surgical centers, doctors' offices or medical or
health related facilities, including military and medical and
health facilities.
<PAGE>
3.1.2.2. Registration Certification or Licensing
Payments. Upon Closing of this Agreement and except as
set forth below, Licensors (NVID) agrees to bear the cost of
any registration, certification or licensing fees or
payments required to market and sell RMS to the Healthcare
Market. (UL or Edison Testing Lab certification)
3.1.2.3. Licensing Fee. Licensee will pay to
Licensors, a Licensing Fee totaling $210,000, payable at the
rate of One Thousand, Five Hundred dollars ($1,500.00) per RMS
System sold plus sixteen and one half percent (16.5%) of the
manufactured cost of the RMS system sold by the Licensee. At
such time that the Licensee has paid $210,000 of Continuing
Licensee Fees, the Continuing Licensing Fee shall be sixteen
and one half percent (16.5%) of the manufactured cost of the
RMS system sold by the Licensee.
3.1.2.4. RMS Research Agreement payment. Upon Closing
of this Agreement, Licensee shall reimburse Fifteen Thousand
Four Hundred dollars ($15,400) to NVID (paid 8-26-99 to Dr.
Yu) for testing the effectiveness of the RMS against
Legionella. Dr Yu and his staff will establish a Veterans
Administration Hospital Research Protocol for testing the RMS.
3.1.2.5. Maintenance of License Licensee shall
maintain its license for RMS by meeting or exceeding the
following annual performance criteria:
3.1.2.5.1. $250,000 in gross sales within the I" year; and
3.1.2.5.2. $400,000 in gross sales within the 2"(degree)year;
and
3.1.2.5.3. $650,000 in gross sales within the 3`d year.
In the event, Licensee meets or exceeds the performance criteria during the
initial term of the license, the license shall automatically renew for
subsequent three years terms.
4. Closing.
4.1. The Closing The Closing of this Agreement shall take place on or
before the thirtieth (30) calendar day following execution of this Agreement or
such date as may be agreed upon by the parties, (herein called the "Closing
Date"), at the offices of the Licensee. At the Closing, each of the respective
parties hereto shall execute, acknowledge, and deliver (or shall cause to be
executed, acknowledged, and delivered) any agreements, resolutions, or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
5. Special Covenants
5.1. Me Diligence. The parties hereto shall have up to and including
the date prior to Closing within which to complete their due diligence
investigations on the other party and the transaction contemplated hereunder. In
the event either party hereto decides, in its sole discretion, not to proceed
with the Closing based on its due diligence investigation, it shall notify the
other in writing of such decision and this Agreement shall terminate without
obligation to the other party except as to the confidentiality provisions.
5.2. Exchange of Information. Each party shall cooperate fully by
exchanging information requested by the other party in a timely manner. Without
in any manner reducing or otherwise mitigating the representations contained
herein, each party and/or its attorneys shall have the opportunity to meet with
the accountants and attorneys of the other party to discuss its respective legal
and financial condition and this transaction. If this transaction is not
completed, all documents received by each party and/or its attorney shall be
returned to the other party and all such information so received shall be
treated as confidential in accordance with Paragraph 8.10.
5.3. Distributor Agreement. After Closing, the order, purchase,
shipment, payment and other terms relevant to the wholesale purchase and sale of
the Licensed Products pursuant to this Agreement shall be governed by the terms
of the form of Purchase Order attached hereto as Exhibit "B" and the Uniform
Commercial Code.
<PAGE>
6. Conditions Precedent To Obligations Of Parties
6.1. Licensors' Closing Conditions. The obligations of Licensors
hereunder are subject to fulfillment prior to or at the Closing of each of the
following conditions:
6.1.1. Representations and Warranties. The representations
and warranties of Licensee made pursuant to Paragraph
1 above, shall be true and accurate in all material respects as of the
Closing Date.
6.1.2. Performance. Licensee shall have performed and
complied with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or at
the Closing.
6.1.3. No Adverse Change. There shall not have been, since
the date of the latest audited financial statements of
Licensee, any materially adverse change in Licensee's financial
condition, assets, liabilities or business.
6.1.4. Opinion of Licensee' Counsel. Licensee shall have
delivered to Licensors an opinion of Licensee's counsel, Dennis
Brovarone, Attorney at Law, dated the Closing Date to the effect that:
(i) Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, has all
requisite power to carry on its business as now being conducted and to
execute, deliver and perform this Agreement and to perform its
obligations; (ii) Licensee is duly qualified to do business as a
foreign corporation and is good standing in each jurisdiction in which
the nature of the business conducted by it or the property owned,
operated or leased by it makes such qualification necessary; (iii) this
Agreement has been duly authorized by all necessary corporate action on
the part of Licensee, has been duly executed and delivered by IMS and
constitutes the legal, valid and binding obligation of Licensee
enforceable in accordance with its terms except as enforceability
thereof may be limited by the insolvency or other laws affecting the
rights of creditors and the enforcement of remedies; (iv) Licensee has
prepared and filed with the SEC all periodic reports required of it
under the 1934 Act; (v) neither the execution, delivery and performance
by Licensee of this Agreement, nor compliance by Licensee with the
terms and provisions hereof, will conflict with, or result in a breach
of the terms, conditions or provisions of, or will constitute a default
under, the Articles of Incorporation or Bylaws of Licensee or any
agreement or instrument known to such counsel to which Licensee is a
party or by which IMS or any of its properties or assets are bound;
(vi) there are no actions, suits or proceedings pending or, to the
knowledge of such counsel, threatened against Licensee before any court
or administrative agency, which have, in the opinion of such counsel,
if adversely decided, will have any material adverse effect on the
business or financial condition of Licensee or which questions the
validity of this Agreement. In rendering his opinion, counsel shall be
allowed to rely on written representations of officers and directors of
the Licensee as to factual matters without independent verification
thereof.
6.1.5. Current Status with Sec and Exchange Commission.
Licensee shall have prepared and fled with the SEC all periodic reports
required under the 1934 Act pursuant to Section 12(g) thereof.
6.1.6. Due Diligence. Licensors shall have completed and be
satisfied with its due diligence investigation of Licensee pursuant
to Paragraph 5.1.
6.2. Licensee's Closing Conditions. The obligations of Licensee
hereunder are subject to fulfillment prior to or at the Closing of
each of the following conditions:
6.2.1. Representation and Warranties. The representations
and warranties of Licensors made pursuant to Paragraph
2 above, shall be true and accurate in all material respects as
of the Closing Date.
<PAGE>
6.2.2. No Adverse Changes, There shall not have been, since
the date of the latest audited financial statements of Licensors, any
materially adverse change in their financial condition, assets,
liabilities or business.
6.2.3. Opinion of Licensors' Counsel. Licensors shall have
delivered to Licensee, an opinion of their respective legal counsels,
respectively, dated the Closing Date to the effect that: (i) Licensors
is a corporation duly organized, validly existing and in good standing
under the laws of their respective states, has all requisite power to
carry on its business as now being conducted and to execute, deliver
and perform this Agreement and to perform its obligations; (ii)
Licensors are duly qualified to do business and are in good standing in
each jurisdiction in which the nature of the business conducted by it
or the property owned, operated or leased by it makes such
qualification necessary; (iii) this Agreement has been duly authorized
by all necessary corporate action on the part of Licensors, has been
duly executed and delivered by Licensors and constitutes the legal,
valid and binding obligation of Licensors, enforceable in accordance
with its terms except as enforceability thereof may be limited by the
insolvency or other laws affecting the rights of creditors and the
enforcement of remedies; (iv) neither the execution, delivery and
performance by Licensors of this Agreement, nor compliance by Licensors
with the terms and provisions hereof, will conflict with, or result in
a breach of the terms, conditions or provisions of, or will constitute
a default under, the Articles of Incorporation or Bylaws of Licensors
or any agreement or instrument known to such counsel to which Licensors
is a party or by which Licensors or any of its properties or assets are
bound; (v) there are no actions, suits or proceedings pending or, to
the knowledge of such counsel, threatened against Licensors before any
court or administrative agency, which, in the opinion of such counsel,
if adversely decided, will have any material adverse effect on the
business or financial condition of Licensors or which questions the
validity of this Agreement. In rendering their opinion, counsel shall
be allowed to rely on written representations of officers and directors
of the Licensors as to factual matters without independent verification
thereof.
6.2.4. Due Diligence. Licensee shall have completed and be
satisfied with its due diligence investigation of Licensors pursuant
to Paragraph 5.1.
7. Patent and Copyright Indemnity.
7.1. Licensors warrants that the use of the Licensed Product by the
Licensee pursuant to the terms hereof shall not constitute an infringement of
any existing patent, copyright or other right. Subject to the limitation set
forth below, Licensors hereby agrees to defend or settle any suit, proceeding or
claim brought against the Licensee based on a claim that the use of the Licensed
Products or any part thereof by the Licensee constitutes an infringement of any
existing patent, copyright or other right. Subject to the limitation set forth
below, Licensors shall pay all damages or costs awarded against or expenses,
including attorneys' fees, incurred by the Licensee in such suit, proceeding or
claim. The prior written consent of the Licensee shall be obtained prior to
Licensor engaging legal counsel with respect to a claim or settlement thereof.
7.2. In the event the Licensed Products or any part thereof shall be in
Licensors' opinion likely to or shall become the subject of a claim for patent,
copyright, or other infringement, Licensors shall, at its option and expense,
procure for the Licensee the right to continue using such affected part of the
Licensed Products or modify such affected part to become non-infringing. Should
Licensors elect to remove or modify such infringing part of the Licensed
Products, Licensors shall forthwith replace such part with a functionally
equivalent non-infringing part or take other appropriate action to insure that
the Licensed Products conforms to the Specifications to the Licensee's
satisfaction, without cost to the Licensee.
7.3. In the event that Licensors shall refuse or shall be unable to
supply or shall be prevented from supplying the Licensed Products or any part
thereof to the Licensee, or in the event that the Licensee's continued use of
the Licensed Products shall be prohibited or enjoined at any time, Licensors
shall promptly replace all affected parts of the Licensed Products with
functionally equivalent non-infringing parts or shall take such other action to
insure that the Licensed Products conforms to the Specifications to the
Licensee's satisfaction, without cost to the Licensee.
<PAGE>
7.4. Licensors warrants that the Licensee shall suffer no interruption of its
normal business activities or cycles as a result of any claimed infringement,
any litigation referred to in Paragraph 7 hereof or any replacement of items
contemplated in Paragraphs 7 hereof.'
8. Miscellaneous
8.1. Expenses and Further Assurances. The parties hereto shall each
bear their respective costs and expenses incurred in connection with the
transactions contemplated by this Agreement. Each party hereto will use its best
efforts provide any and all additional information, execute and deliver any and
all documents or other written material and perform any and all acts necessary
to carry out the intent of this Agreement and to comply with U.S. and Brazilian
law.
8.2. Survival of Representations, Warranties and Covenants. All of
the representations, warranties and covenants made as of the date of this
Agreement and as of Closing, shall survive the closing of this transaction.
8.3. Successors and Assigns. All representations, warranties,
covenants and agreements in this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns whether so expressed or not.
8.4. Governing Law. This Agreement and the legal relations among the
Parties hereto shall be governed by and construed in accordance with the laws of
the State of California and that the State or Federal Courts of California shall
be the jurisdiction in which any legal proceedings relative to this Agreement
shall be brought. The foregoing notwithstanding, the Parties agree that prior to
litigation, they will arbitrate any disputes relative to this Agreement through
the services of the offices of the American Arbitration Association in and for
San Diego, California.
8.5. Attorney's Fees In any action brought to enforce the terms and
conditions of this Agreement, the prevailing party shall be entitled in addition
to any other remedies, its reasonable attorneys fees incurred in the prosecution
or defense of the action.
8.6. Section and Other Headings. The section and other headings
herein contained are for convenience only and shall not be construed as part
of this Agreement.
8.7. Counterparts. This Agreement may be executed in any number
of counterparts and each counterpart shall constitute an original instrument,
but all such separate counterparts shall constitute but one and the same
instrument.
8.8. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof. This Agreement may not be amended or modified, except
by a written agreement signed by all parties hereto.
8.9. Sever. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffectual
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
8.10. Confidentiality. Each party hereto agrees with the other parties
that, unless and until this Agreement has been consummated, or for a period of
one (1) year from the date of this Agreement if the transaction contemplated by
this Agreement is not consummated it and its representatives will hold in strict
confidence all data and information obtained with respect to the other party
from any representative, Officer, Director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except: (i) to the extent
such data or information has theretofore been publicly disclosed, is a matter of
public knowledge or is required by law to be publicly disclosed; and (ii) to the
extent that such data or information must be used or disclosed in order to
consummate the transactions contemplated by this Agreement. The foregoing
notwithstanding, Licensee shall be authorized to publicly announce the execution
and closing of this Agreement, details thereof and a description of Licensors
and the business conducted thereby.
<PAGE>
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective Officers, hereunto duly authorized, as of the
date first above written.
NVID INTERNATIONAL, INC.
By: David J Larson, President
By: Michael Redden, Secretary
EHPC IONIZATION, Ltd.,
By: Bruce Milden, Managing Director
By: Carolyn Wilden, Company Secretary
INNOVATIVE MEDICAL SERVICES
By: Michael L. Krall, President
By: Dennis Atchley, Secretary
<PAGE>
EX-10.9
License Agreement dated November 24, 1999
<PAGE>
EXHIBIT 10.9
LICENSE AGREEMENT
(AXENORL)
THIS LICENSE AGREEMENT ("Agreement") is made this 24`" day of November
1999, by and between NVID International, Inc., a corporation ("Licensor") and
Innovative Medical Services, a California corporation ("Licensee").
WHEREAS, Licensor holds all rights to the product known AXENOHL or the "Licensed
Product"), being patented pending products for the killing of bacterial and
other biological contaminants from a water system as more particularly described
in the attached Exhibit A: PATENT PENDING; and
WHEREAS, Licensor desires to license certain marketing and distribution rights
to the Licensed Products to the Licensee on the terms and conditions set forth
herein.
THEREFORE, Licensor and Licensee agree as follows:
1. Representations And Warranties Of Licensee
As an inducement to, and to obtain the reliance of Licensor, Licensee
represents and warrants as follows:
1.1. Organization, Good Standing, Power, Etc. Licensee (i) is a
corporation duly organized, validly existing and in good standing under the law
of the State of California; (ii) is qualified or authorized to do business as a
foreign corporation and is in good standing in all jurisdictions in which
qualification or authorization may be required; and (iii) has all requisite
corporate power and authority, licenses and permits to own or lease and operate
its properties and carry on its business as presently being conducted and to
execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby.
1.2. Capitalization. The authorized capital stock of Licensee consists
solely of 20,000,000 shares of Common Stock, no par value, (the "Licensee Common
Stock"), of which, on the date hereof 4,562,242 shares are issued and
outstanding and no shares are held in the treasury of Licensee. In addition the
Company has 5,000,000 shares of Preferred Stock authorized, none of which are
presently outstanding. All of such issued and outstanding shares of the Licensee
Common Stock have been duly authorized and validly issued and are fully paid and
non-assessable with no personal liability attaching to the ownership thereof and
were not issued in violation of the preemptive or other rights of any person.
1.3. Authorization of Agreement. This Agreement has been or will
be at Closing duly and validly authorized, executed and delivered by Licensee.
1.4. Compliance with Applicable Laws, The conduct by Licensee of their
business does not violate or infringe on any domestic (federal, state or local)
or foreign law, statute, ordinance or regulation now in effect, or, to the
knowledge of Licensee proposed to be adopted, the enforcement of which would
materially and adversely affect its business or the value of its properties or
assets.
1.5. Exchange Art Filings and Financial Statements. Licensee has filed
all reports required of it with the United States Securities and Exchange
Commission (the SEC) pursuant to Section 12(g) of the Securities Exchange Act of
1934 (the 1934 Act) including without limitation, registration statements,
l0.KSB's, 10QSB's, Form 8's, etc. for each of the annual, quarterly or other
fiscal periods from the first to latest such filings since Licensee first so
registered as a public company.
1.6. Recognition of Licensor Trade Secrets,
1.6.1. Licensee agrees that during the term of this Agreement,
or following its termination and for all times thereafter, it will keep
secret and confidential all Licensor Trade Secrets which it knows or
may hereafter come to blow as a result of the relationship established
by this Agreement. The Licensor Trade Secrets shall not be disclosed by
Licensee to third parties and shall be kept secret and confidential
except (i) to the extent that the same have entered into the public
domain by means other than improper actions by Licensee or (ii) to the
extent that the disclosure thereof may be required pursuant to the
order of any court or other governmental body,
<PAGE>
1.6.2. It is understood and recognized by Licensee that in the
event of any violation by Licensee of the provisions of subparagraph
1.6.2 above, Licensor's remedy at law will be inadequate and Licensor
will suffer Irreparable injury. Accordingly, Licensee consents to
injunctive and other appropriate equitable relief upon the institution
of legal proceedings therefor by Licensor in order to protect the
Licensor Trade Secrets. Such relief shall be in addition to any other
relief to which Licensor may be entitled at law or in equity.
1.6.3. Licensee shall cause their employees who shall have
access to Licensor Trade Secrets hereof, to sign appropriate Trade
Secrecy Agreements in the form of Exhibit B annexed hereto and made a
part hereof.
2. Representations And Warranties Of Licensor
As an inducement to, and to obtain the reliance of LICENSEE, LICENSOR
represents and warrants as follows:
2.1. Organization, Good Standing, Power, Etc. Licenser (i.) is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and (ii) has all requisite corporate power and authority, licenses,
permits and franchises to own or lease and operate its properties arid carry on
its business as presently being conducted and to execute, deliver and perform
this Agreement and consummate the transactions contemplated hereby.
2.2. Authorization of Agreement, This Agreement has been or will be
at Closing duly and validly authorized, executed and delivered by Licensor,
2.3. Material Contracts There has not occurred any default by Licensor
or any event which with the lapse of time or the election of ally person other
than Licensor will become a default, except defaults, if any, which will not
result in any material loss to or liability of Licensor.
2.4. Permits, Licenses, Etc. Licenser has all permits, licenses,
orders and approvals of federal, state, local or foreign governmental or
regulatory bodies that are required in order to permit it to carry an their
business as presently conducted.
2.5. Compliance with Applicable Laws. The conduct by Licensor of its
business does not violate or infringe upon any domestic (federal, state or
local) or foreign law, statute, ordinance or regulation now in effect, or, to
the knowledge of Licensor proposed to be adopted, the enforcement of which would
materially and adversely affect its business or the value of its properties or
assets.
2.6. Litigation. There is no material claim, action, suit, proceeding,
arbitration, investigation or inquiry pending before any federal, state,
municipal, foreign or other court or governmental or administrative body or
agency, or any private arbitration tribunal, or to the knowledge of Licensor
threatened, against, relating to or affecting Licensor or any of its properties
or business, or the transactions contemplated by this Agreement; nor to the
knowledge of Licensor is there any basis for any such commercial claim, action,
suit, proceeding, arbitration, Investigation or inquiry which may have any
adverse effect upon, the assets, properties or business of Licensor, or the
<PAGE>
transactions contemplated by this Agreement. Neither Licensor nor any officer,
director, partner or employee of Licensor, has been permanently or temporarily
enjoined by order, judgment or decree of any court or other tribunal or any
agency from engaging in or continuing any conduct or practice in connection with
the business engaged to by Licensor. There is not in existence at present any
order, judgment or decree of any court or other tribunal or any agency enjoining
or requiring Licensor to take any material action of any kind or to Licensor and
its business, properties or assets are subject or bound, Licensor is not in
default under any order, license, regulation or demand of any federal, state or
municipal or other governmental agency or with respect to any order, writ,
Injunction or decree of any court which would have a materially adverse impact
upon Licensor's operations or affairs.
2.7. Other Information. None of the information and documents which
have been furnished or made available by LICENSOR, or any of its representatives
to LICENSEE or any of their representatives in connection with the transactions
contemplated by this Agreement is materially false or misleading or contains any
material misstatements of fact or omits any material fact necessary to be stated
in order to make the statements therein not misleading.
2,8. Covenant to Refrain from trading in Licensee Securities, The
Licensor, its executive officers and directors represent and warrant that since
August 1, 1999 they have not engaged in trading of Licensee securities and until
such time that Licensee has announced the Closing of this Agreement, the
Licensor, its executive officers and directors will not engage in trading of
Licensee securities.
2.9. Authority to Grant a License. Pursuant to the Licensor as
the holder of the patents for the Licensed Products and the knowledge and
consent thereof, the Licensor has the right and authority to grant the license
set forth in this Agreement to the Licensor.
2.10. Compliance with Environmental Laws Licensor has not caused or
permitted its business, properties, or assets to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose of, transfer,
produce, or process any Hazardous Substance (as such term is defined herein)
except in compliance with ' all applicable laws, rules, regulations, orders,
judgments, and decrees, and has not caused or permitted the Release of any
Hazardous Substance on or off the site of any property of Licensor. The term
'Hazardous Substance' shall mean any hazardous waste, as defined by 42 U.S.C.'
6903(5), any hazardous substance, to defined by 42 U.S.C. ' 601(14), any
pollutant or contaminant, as defined by 42 U.S.C. ' 9601(33), and all toxic
substances, hazardous materials, or other chemical substances regulated by any
other law, rule, or regulation. The term 'Release' shall have the meaning set
forth in 42 U.S.C.' 9601(22).
3. Marketing And Distribution Licenses
3.1 Grant of License for AXENOHL, Subject to Closing of this Agreement
as set forth below, Licensor grants to the Licensee a three year, license to
market and distribute AXENOHL for the below described markets where geographic
exclusivity is detailed. (EXCLUSIVITY IS MARKET SPECIFIC ...See markets below
for exclusivity) Provided there has been no breach of this Agreement by the
Licensee which has not been cured within thirty days of written notice of such
breach, this geographic license shall automatically renew on terms herein for an
additional three year terms. This license does not grant the specific right to
manufacture AXENOHL for the first six months from the date of closing. However,
if after 6 (six) months alternative means of manufacturing becomes desirable or
necessary based on market conditions, IMS will have the right or option to
manufacture the AXENOHL formulations adhering strictly to NVID specifications.
If NVID cannot supply AXENOHL for any reason within the first six months from
the closing date, IMS will have the right to manufacture AXENOHL prior to the
end of the six-month period. IMS will bear the complete cost associated with
manufacturing set-up and will offer to provide NVID the AXENOHL product at
manufacturer cost. In such instance, NVID will provide the manufacturing know
how to assist IMS in setting up a manufacturing operation for the AXENOHL
product for their respective markets. (This does not include the price of the
manufacturing equipment or the price of ETI H20 to set-up the operation.)
<PAGE>
3.1.1. Manufactured Price
3.1.1:1. The term "Manufactured Price" as used in
this agreement shall mean the actual cost to NVID to produce
AXENOHL per gallon as of the fate supplied to It by NVID's
supplier thereof.
3.1.2. Point-of-Use System Market. The Point-of-Use or
Point-of-Entry System Market shall be water purification
and disinfectant systems for consumer and commercial use. The
point-of-use market for water purification shall consist of
faucet-mount, countertop and under-the-counter models designed
by or marketed by IMS for residential or commercial water
disinfections usage. (Exclusive geographical area; Worldwide)
3.1.3. Healthcare Market. The Healthcare Market shall be all
water purification and disinfections systems for hospitals, clinics,
surgical centers, doctors' offices or other similar medical or health
related facilities, including military medical and health facilities.
Exclusive, license for Australia, North, Central and South America and
a non-exclusive license for, Costa Rica and other World markets.
3.1.3.1. IMS will grant back to NVID a non-exclusive
right to distribute for this market in Mexico.
3.1.4. AXENOHL Licensing Fee. Commencing one month after
Licensee sells AXENOHL in the Point of Use System Market or Healthcare
market, Licensee shall pay a Licensing Fee of S70,000 payable at the
rate of$10,000 per month for (7) seven consecutive months.
3.1.5. AXENOHL, EPA Testing Payments. Licensee shall
be responsible for the fees associated with EPA
certification as provided by EPL-Bio-Analytical. Said fees for EPA
Certification not to exceed $70,000.
3.1.5.1. Fees Disbursement
3.1.5.1.1.520,000 will be paid to NVID
International, Inc. upon closing of this Agreement
as partial repayment of invoices already paid to
EPL-Bio-Analytical by NVID.
3.1.5.1.2. The remaining balance of up to
$50,000 shall be paid to EPL-Bio-Analytical at the
rate of work actually performed monthly commencing
ten (10) days following the closing, and shall not
exceed the actual invoice cost of EPL-Bio-Analytical.
3.1.5.1.3. Royalty. Subject to Closing of
this Agreement asset forth below, the Licensee shall
pay to Licensor, a royalty in the amount of fifteen
percent (15%) of the actual manufactured price of
AXENOHL sold by or through the Licensee during a
calendar quarter in the Point-of-Use Market. The
Royalty shall be paid on or before the thirtieth (30)
day after the close of each calendar quarter for all
AXENOHL for which the Licensee has been paid during
each calendar quarter adjusted solely for returned or
credited product.
3.1.5.1.3.1. Buyer agrees to furnish
Seller with an annual accounting setting
forth the number of units sold in the prior
year concurrently with the filing of it's
form 10-SBK.
3.1.6. Food Processing Market. The Food Processing Market
shall be water purification and disinfectant systems
for commercial human or animal food preparation or processing
operations. Exclusive, license for Australia. North,
Central and South America and a non-exclusive license for, Costa Rica
and other World markets.
3.1.6.1. AXENOHL, USDA Research Agreement Payment.
Win ten (10 days following the Closing of this Agreement,
Licensee shall pay the U.S. Department of Agriculture, 529,500
for a one year research and testing agreement to determine if
AXENOHL may be approved for use in preparation and processing
of food for human or animal consumption.
3.1.6.2. Exclusive License Fees. IMS will pay to
NVID any up-front licensing fees generated by any
third parties for rights to AXENOHL that 1MS may grant in the
food Processing Market in the following manner:
Year One: 15% of fee; Year Two 18.5(degree)/a of fee, Year
Three 20% of fee, Year Four and thereafter 20"/0.
<PAGE>
3.1.6.3. Royalty. Subject to Closing of this
Agreement as set forth below, the Licensee shall pay to
Licensor, a royalty in the amount of fifteen percent (15%) of
the manufactured price of AXENOHL sold by or through the
Licensee during a calendar quarter in the Food Processing
Market. The Royalty shall be paid on or before the thirtieth
(30) day after the close of each calendar quarter for all
AXENOHL for which the Licensee has been paid during each
calendar quarter adjusted solely for returned or credited
product.
3.1.7. Dental Market, The Dental Market shall be water
purification and disinfectant systems for use by Dentists
and Oral Surgeons. (Exclusive geographical area; Worldwide)
3.1.7.1. AXENOHL, IDS and RMS Dental Research
Agreement payment. Upon Closing of this Agreement, Licensee
shall pay the actual cost, not to exceed $17,000 to Dr.
Richard Karpay for beginning the research and testing
agreement to determine the efficacy of AXENOHL, IDS and RMS
for dental disinfection and bioofilm removal and an additional
payment not to exceed S 17,000 upon completion of Dr. Karpay's
research.
3.1.7.2. Royalty. Subject to Closing of this
Agreement as set forth below, the Licensee shall pay to
Licensor, a royalty in the amount of fifteen percent (15%) of
the manufactured price of AXENOHL sold by or through the
Licensee during a calendar quarter In the Dental Market. The
Royalty shall be paid on or before the thirtieth (30) day after
the close of each calendar quarter for all AXENOHL for which
the Licensee has been paid during each calendar quarter
adjusted solely for returned product.
4. Closing
4.1. Closing. The Closing of this Agreement shall take place on or
before the thirtieth calendar date following execution of this Agreement or such
date as may be agreed upon by the parties, (herein called the "Closing Date"),
at the offices of the Licensee. At the Closing, each of the respective parties
hereto shall execute, acknowledge, and deliver (or shall cause to be executed,
acknowledged, and delivered) any agreements, resolutions, or other instruments
required by this Agreement to be so delivered at or prior to the Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence the
transactions contemplated hereby.
5. Special Covenants
5.1. Due Diligence. The patties hereto shall have up to and including
the date prior to Closing within which to complete their due diligence
investigations on the other party and the transaction contemplated hereunder. In
the event either party hereto decides, in its sole discretion, not to proceed
with the Closing based on its due diligence investigation, it shall notify the
other in writing of such decision and this Agreement, hall terminate without
obligation to the other party except as to the confidentiality provisions.
5.2. Exchange of Information. Each party shall cooperate fully by
exchanging information requested by the other party in a timely manner. Without
in any manner reducing or otherwise mitigating the representations contained
herein, each party and/or its attorneys shall have the opportunity to meet with
the accountants and attorneys of the other party to discuss its respective legal
and financial condition and this transaction. If this transaction is not
completed, all documents received by each party and/or its attorney shall be
returned to the other party and all such information so received shall be
treated as confidential in accordance with Section x.
6. Conditions Precedent to Obligations of Parties
<PAGE>
6.1. Licensor's Closing Conditions. The obligations of Licensor
hereunder are subject to fulfillment prior to or at
the Closing of each of the following conditions:
6.1.1. Representations and Warranties, The representations and
warranties of Licensee made pursuant to Paragraph l above, shall be
true and accurate in all material respects as of the Closing Date.
6.1.2. Performance, Licensee shall have performed and complied
with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
6.1.2.1. Licensee will use reasonable commercial
marketing efforts in Licensees representations of all market
niches covered in this agreement.
6.1.3. No Adverse Changes. There shall not have been, since
the date of the latest audited financial statements
of Licensee, any materially adverse change in Licensee's financial
condition, assets. Liabilities or business.
6.1.4. Opinion of Licensee's Counsel. Licensee shall have
delivered to Licensor an opinion of Licensee's counsel, Dennis
Brovarone, Attorney at Law, dated the Closing Date to the effect that:
(i) Licensee is a corporation duly organized, validly existing and in
good standing under the laws of the State of California, has all
requisite power to carry on its business as now being conducted and to
execute, deliver and perform this Agreement and to perform its
obligations; (ii) Licensee is duly qualified to do business as a
foreign corporation and is good standing in each jurisdiction in which
the nature of the business conducted by it or the property owned,
operated or leased by it makes such qualification necessary; (iii) this
Agreement has been duly authorized by all necessary corporate action on
the part of Licensee, has been duly executed and delivered by IMS and
constitutes the legal, valid and binding obligation of Licensee
enforceable in accordance with its terms except as enforceability
thereof may be limited by the Insolvency or other laws affecting the
rights of creditors and the enforcement of remedies; (iv) Licensee has
prepared and filed with the SEC all periodic reports required of it
under the 1934 Act; (v) neither the execution, delivery and performance
by Licensee of this Agreement, nor compliance by Licensee with the
terms and provisions hereof, will conflict with, or result in a breach
of the terms, conditions or provisions of, or will constitute a default
under, the Articles of Incorporation or Bylaws of Licensee or any
agreement or instrument known to such counsel to which Licensee is a
party or by which IMS or any of its properties or assets are bound;
(vi) there are no actions, suits or proceedings pending or, to the
knowledge of such counsel, threatened against Licensee before any court
or administrative agency, which have, in the opinion of such counsel,
if adversely decided, will have any material adverse effect on the
business or financial condition of Licensee or which questions the
validity of this Agreement. In rendering his, opinion, counsel shall be
allowed to rely on written representations of officers and directors of
the Licensee as to factual matters without independent verification
thereof
6.1.5. Current Status with Securities and Exchange
Commission,. Licensee shall have prepared arid filed with the SEC all
periodic reports required under the 1934 Act pursuant to Section 12(g)
thereof.
6.1.6. Due Diligence. Licenser shall have completed and be
satisfied with its due diligence investigation of Licensee pursuant
to Paragraph 5.1.
6.2. Licensee's Closing Conditions. The obligations of Licensee
hereunder are subject to fulfillment prior to or at the Closing of
each of the following conditions:
6.2.1. Representations and Warrant's, The representations and
warranties of Licensor made pursuant to paragraph 2 above, shall be
true and accurate in all material respects as of the Closing Date.
<PAGE>
6.2.2. No Adverse Changes. There shall not have been, since
the date of the latest audited financial statements of Licensor, any
materially adverse change in their financial condition, assets,
liabilities or business.
6.2.3. Opinion of Licensee's Counsel Licensor shall have
delivered to Licensee, an opinion of their counsel, Mr Curt Crecly,
Attorney at Law, respectively, dated the Closing Date to the effect
that: (i) Licensor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has all
requisite power to carry on its business as now being conducted and to
execute, deliver and perform this Agreement and to perform its
obligations; (ii) Licensor is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of the business
conducted by it or the property owned, operated or leased by it makes
such qualification necessary; (iii) this Agreement has been duly
authorized by all necessary corporate action on the pan of Licensor,
has been duly executed and delivered by Licensor arid constitutes the
legal, valid and binding obligation of Licensor, enforceable in
accordance with its terms except as enforceability thereof may be
limited by the insolvency or other laws affecting the rights of
creditors and the enforcement of remedies; (iv) neither the execution,
delivery and performance by Licensor of this Agreement, nor compliance
by Licensor with the terms and provisions hereof, will conflict with,
or result in a breach of the terms, conditions or provisions of, or
will constitute a default under, the Articles of Incorporation or
Bylaws of Licensor or any agreement or Instrument known to such counsel
to which Licensor is a party or by which Licensor or any of its
properties or assets are bound; (v) there are no actions, suits or
proceedings pending or, to the knowledge of such counsel,. threatened
against Licensor before any court or administrative agency, which, in
the opinion of such counsel, if adversely decided, will have any
material adverse effect on the business or financial condition of
Licensor or which questions the validity of this Agreement. In
rendering their opinion, counsel shall be allowed to rely on written
representations of officers and directors of the Licensor as to factual
matters without independent verification thereof.
6.2.4. Due Diligence. Licensee shall have completed and be
satisfied with its due diligence investigation of Licensor pursuant
to paragraph 5.1.
7. Patent and Copyright Indemnity.
7.1. Licensor warrants that the use of the Licensed Products by the
Licensee pursuant to the terms hereof shall not constitute an infringement of
any existing patent, copyright or other right. Licensor hereby agrees to defend
or settle any suit, proceeding or claim brought against the Licensee based on a
claim that the use of the Licensed Products or any part thereof by the Licensee
constitutes an Infringement of any existing patent, copyright or other right.
Licensor shall pay all damages or costs awarded against or expenses, including
attorneys' fees, incurred by the Licensee in such suit, proceeding or claim.
7.2. In the event the Licensed Products or any part thereof shall be in
Licensees opinion likely to or shall become the subject of a claim for patent,
copyright, or other Infringement, Licensor shall, at its option and expense,
procure for the Licensee the right to continue using such affected part of the
Licensed Products or modify such affected part to become non-infringing. Should
Licensor elect to remove or modify such infringing part of the Licensed
Products, Licensor shall forthwith replace such part with a functionally
equivalent non-infringing part or take other appropriate action to insure that
the Licensed Products conforms to the Specifications to the Licensee's
satisfaction, without cost to the Licensee.
7.3. In the event that Licensor shall refuse or shall be unable to
supply or shall be prevented from supplying the Licensed Products or any part
thereof to the Licensee, or in the event that the Licensee's continued use of
the Licensed Products shall be prohibited or enjoined at any time, Licensor
shall promptly replace all affected parts of the Licensed Products with
functionally equivalent non-infringing parts of shall take such other action to
insure that the Licensed products conforms to the Specifications to the
Licensee's satisfaction, without cost to the Licensee.
<PAGE>
7.4. Licensor warrants that the Licensee shall suffer ~o interruption
of its normal business activities or cycles as a result of any claimed
infringement, any litigation referred to in Paragraph 7 hereof or any
replacement of items contemplated in paragraph 7 hereof.
8. Miscellaneous
8.1. Expense and Further Assurance. The parties hereto shall each bear
their respective costs and expenses incurred In connection with the transactions
contemplated by this Agreement. Each party hereto will use its best efforts
provide any and all additional information, execute and deliver any and all
documents or other written material and perform any and all acts necessary to
carry out the intent of this Agreement and to comply with U.S. law.
8,2. Survival of Representations, Warranties and Covenants, All
of the representations, warranties and covenants made as of the date of this
Agreement and as of Closing, shall survive the closing of this transaction,
8.3, Successors and Assigns, All representations, warranties, covenants
and agreements In this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors and assigns whether so expressed or not,
8.4. Governing Law. This Agreement and the legal relations among the
Parties hereto shall be governed by and construed In accordance with the laws of
the State of California and that the State or Federal Courts of California shall
be the jurisdiction in which any legal proceedings relative to this Agreement,
shall be brought. The foregoing notwithstanding, the Parties agree that prior to
litigation, they will arbitrate arty disputes relative to this Agreement through
the services of the offices of the American Arbitration Association in and for
San Diego, California.
8.5. Attorney's Fees In any action brought to enforce the terms and
conditions of this Agreement, the prevailing party shall be entitled in addition
to any other remedies, its reasonable attorneys fees Incurred in the prosecution
or defense of the action.
8.6. Section and other Headings. The section and other headings
herein contained are for convenience only and shall not be construed as part
of this Agreement.
8.7. Counterparts. This Agreement may be executed in any number of
counterparts and each counterpart shall constitute an original instrument, but
all such separate counterparts shall constitute but one and the same instrument.
8,8. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto and supersedes all prior agreements,
understandings and arrangements. oral or written, between the parties hereto
with respect to the subject matter hereof. This Agreement tray not be amended or
modified, except by a written agreement signed by all parties hereto.
8.9. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffectual to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction,
8.10. Confidentiality. Each party hereto agrees with the other parties
that, unless and until this Agreement has been consummated, or for a period of
one (1) year from the date of this Agreement if the transaction contemplated by
this Agreement is not consummated it and its representatives will hold in strict
confidence all data and information obtained with respect to the other patty
<PAGE>
from any representative, Officer, Director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except: (i) to the extent
such data or information has theretofore been publicly disclosed, is a matter of
public knowledge or Is required by law to be publicly disclosed; and (ii) to the
extent that such data or information must be used or disclosed in order to
consummate the transactions contemplated by this Agreement. The foregoing
notwithstanding, Licensee shall be authorized to publicly announce the execution
and closing of this Agreement, details thereof and a description of Licensor and
the business conducted thereby.
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective Officers, hereunto duly authorized, as of the
date first above written.
NVID INTERNATIONAL, INC.
By: David J. Larson, President
By: Michael J. Redden, Secretary
INNOVATIVE MEDICAL SERVICES
By: Michael L. Krall, President
By: Dennis Atchley, Secretary
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