<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------------
SCHEDULE 13D
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ELECTROPURE, INC.
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
286133
(CUSIP Number)
Catherine Patterson
Electropure, Inc.
23251 Vista Grande, Suite A
Laguna Hills, CA 92653
(714) 770-9347
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 25, 1997
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1 (b)(3) or (4), check
the following box [ ].
(Continued on following pages)
(Page 1 of 8 pages)
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities
of that section of the Act but shall be subject to all other provisions
of the Act (however, see the Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP No. 286133 PAGE 2 OF 8 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WYATT TECHNOLOGY CORPORATION 77-0027705
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00-EXCHANGE OF INTELLECTUAL PROPERTY
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA, USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,100,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING NONE
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
2,100,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,100,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.6% of the Common Stock
25.6% of voting power
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
CUSIP No. 286133 PAGE 3 OF 8 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PHILIP J. WYATT
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 - EXCHANGE OF INTELLECTUAL PROPERTY
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA, USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,100,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING NONE
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
2,100,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,100,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.6% OF THE COMMON STOCK
25.6% OF VOTING POWER
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 4
PAGE 4 OF 8 PAGES
ITEM 1. SECURITY AND ISSUER
Common Stock, $0.01 par value, of Electropure, Inc., a California
corporation ("Electropure"). Electropure's principal executive office is located
at 23251 Vista Grande, Suite A, Laguna Hills, California 92653.
ITEM 2. IDENTITY AND BACKGROUND
2.1 (a) Wyatt Technology Corporation
(b) 802 E. Cota Street, Santa Barbara, CA 93103
(c) Wyatt Technology Corporation is a privately-held,
California corporation, which manufactures instrumentation
and software for the analysis of macromolecules and
particles in solution.
(d) Not applicable
(e) Not applicable
(f) California, U.S.A.
2.2 (a) Philip J. Wyatt
(b) 802 E. Cota Street, Santa Barbara, CA 93103
(c) President and Chief Executive Officer of Wyatt Technology
Corporation, 802 E. Cota Street, Santa Barbara, CA
93103. Mr. Wyatt is the majority shareholder (60%) of
Wyatt Technology Corporation, a privately-held,
California corporation.
(d) Not applicable
(e) Not applicable
(f) U.S.A.
2.3 (a) Geofrey K. Wyatt
(b) 802 E. Cota Street, Santa Barbara, CA 93103
(c) Executive Vice President of Wyatt Technology Corporation,
802 E. Cota Street, Santa Barbara, CA 93103.
(d) Not applicable
<PAGE> 5
PAGE 5 OF 8 PAGES
(e) Not applicable
(f) U.S.A.
2.4 (a) Carolyn Walton
(b) 802 E. Cota Street, Santa Barbara, CA 93103
(c) Vice President of Finance, Wyatt Technology Corporation,
802 E. Cota Street, Santa Barbara, CA 93103.
(d) Not applicable
(e) Not applicable
(f) U.S.A.
2.5 (a) Clifford D. Wyatt
(b) 802 E. Cota Street, Santa Barbara, CA 93103
(c) Vice President of Sales, Wyatt Technology Corporation, 802
E. Cota Street, Santa Barbara, CA 93103.
(d) Not applicable
(e) Not applicable
(f) U.S.A.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On October 25, 1997, Electropure, Inc. issued 2,100,000 shares of its
common stock to Wyatt Technology Corporation as consideration for the grant by
Wyatt of an exclusive worldwide license for certain intellectual property which
is necessary in instrumentation and/or methods for the detection of harmful
substances in drinking water. The closing bid of the Issuer's Common Stock was
$0.625 on the date of the agreement.
ITEM 4. PURPOSE OF THE TRANSACTION
Wyatt Technology Corporation acquired 2,100,000 shares of Electropure
Common Stock in a private transaction with the Issuer on October 25, 1997 in
consideration for a manufacturing agreement and for the grant of a license (see
Item 3) to certain intellectual property. The license also provides for the
transfer by Wyatt of certain laboratory equipment and supplies required for
<PAGE> 6
PAGE 6 OF 8 PAGES
the research and development of instrumentation and software to detect toxicants
in drinking water.
The above transaction provides that Electropure, Inc. will file by
November 15, 1997 a registration statement pursuant to the Securities Act of
1933, as amended, to the end that up to, but no more than, 630,000 of the shares
issued in the transaction may be sold by Wyatt to cover income taxes due by
Wyatt pursuant to this transaction.
Wyatt Technology Corporation and/or its President and majority (60%)
shareholder, Philip J. Wyatt, may in the future acquire, hold and dispose of
shares of Common Stock or warrants or options for such Common Stock or other
securities of Electropure and such transactions may be in the open market,
privately or directly from Electropure.
Except as set forth above, neither Mr. Wyatt nor Wyatt Technology
Corporation has any plans or proposals which may have, which related to or which
would result in:
(a) The acquisition by any person of additional securities of
Electropure, or the disposition of securities of Electropure;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Electropure or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of Electropure or
any of its subsidiaries;
(d) Any change in the present Board of Directors or management of
Electropure, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the
Board;
(e) Any material change in the present capitalization or dividend
policy of Electropure;
(f) Any other material change in Electropure's business or corporate
structure;
(g) Changes in Electropure's charter, bylaws or instruments,
correspondence thereto or other actions which may impede the
acquisition or control of Electropure by any person;
(h) Causing a class of securities of Electropure to be delisted from a
national securities exchange or to cease to be quoted in an
inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of Electropure becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
(j) Any action similar to any of those enumerated above.
<PAGE> 7
PAGE 7 OF 8 PAGES
ITEM 5. INTEREST IN SECURITIES OF ISSUER
(a) Wyatt Technology Corporation owns 2,100,000 shares of the Common
Stock of Electropure, each carrying one vote per share. As the
majority shareholder owning 60% of Wyatt Technology Corporation,
Philip J. Wyatt, beneficially owns 1,260,000 of such shares.
Philip J. Wyatt, majority shareholder of Wyatt Technology
Corporation, owns beneficially 15.4% of the Common Stock of the
Issuer, with 11.7% of the voting power of all classes of stock of
Electropure.
(b) Since Philip J. Wyatt controls Wyatt Technology Corporation,
Philip J. Wyatt and Wyatt Technology Corporation share voting and
dispositive power over the shares it owns.
(c) Since October, 1997, Wyatt Technology has entered into the
following transactions with regard to Electropure's Common Stock:
On October 25, 1997, Wyatt Technology Corporation entered into a
Technology Transfer Agreement providing Electropure, Inc. with an
exclusive worldwide license to certain intellectual property and
providing for the transfer of certain laboratory equipment and
supplies. The agreement also provides that Wyatt will manufacture
all products developed by Electropure utilizing the licensed
technology for a minimum of three (3) years. Wyatt Technology
Corporation received 2,100,000 shares of the Common Stock of
Electropure in exchange for the above licensed rights, equipment
and manufacturing arrangement.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SECURITIES OF THE ISSUER
Pursuant to the transaction described in Item 4 above, Wyatt Technology
Corporation has the right to sell, upon registration by Electropure, Inc. up to
630,000 of the shares issued to it in consideration for the license; provided,
however, that any such sale will be limited to the minimum number of shares need
to pay any federal and state income taxes associated with such license
transaction. In addition, Electropure has been granted the right of first
refusal to purchase any shares offered by Wyatt for sale on the same terms
offered to an unaffiliated, bonafide third party.
ITEM 7. EXHIBITS
10.52 Technology Transfer Agreement, dated October 25, 1997, and
Exhibits A through E thereto.
10.52.1 Joint Filing Agreement.
<PAGE> 8
PAGE 8 OF 8 PAGES
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 13D is true, complete
and correct.
Dated: November 4, 1997
/S/ PHILIP J. WYATT
-------------------------------------------------
Philip J. Wyatt
WYATT TECHNOLOGY CORPORATION
By /S/ PHILIP J. WYATT
--------------------------------------------
Philip J. Wyatt, President
<PAGE> 9
SCHEDULE 13D
WYATT TECHNOLOGY CORPORATION
PHILIP J. WYATT
(Name of Reporting Persons)
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
PAGE
SEQUENTIALLY
NUMBERED
---------------
<S> <C> <C>
10.52 Technology Transfer Agreement, dated October 25, 1997, and
Exhibits A through E thereto.
10.52.1 Joint Filing Agreement
</TABLE>
<PAGE> 1
EXHIBIT 10.52; PAGE 1
TECHNOLOGY TRANSFER AGREEMENT
This agreement is effective as of October 25, 1997, by and between ELECTROPURE,
INC., a California Corporation, of 23251 Vista Grande, Suite A, Laguna Hills, CA
92653 (hereinafter called "ELECTROPURE") and WYATT TECHNOLOGY CORPORATION, a
California Corporation, of 802 East Cota Street, Santa Barbara, CA 93103
(hereinafter called "WYATT").
Witnesseth:
Whereas WYATT has developed various technologies and intellectual properties and
their associated patents (see Exhibit "A") and "Know-how" based on proprietary
laser light scattering techniques for the purpose of detecting mutagens,
carcinogens, and metabolic toxins in waters intended for human ingestion as well
as methods and instruments for detecting certain parasites in said water,; and
Whereas ELECTROPURE has long been active in the development of equipment for the
production of high quality industrial water and is desirous to expand their
current business to provide consumers with safe drinking water sources; and
WHEREAS, WYATT has the right to license said patents; and
Whereas WYATT has offered to grant and ELECTROPURE is desirous of receiving an
exclusive fully paid-up technology license to use such patents and intellectual
property throughout the world for the commercial development, marketing, use and
sale of instrumentation and/or methods for the detection of harmful substances
in drinking water; and
Whereas ELECTROPURE has offered to transfer to and WYATT agrees to accept, Two
million one hundred thousand shares (2,100,000) of its fully paid and
non-assessable restricted ELECTROPURE common stock in consideration for (i) such
fully paid-up license to use such patents for the life of such patents and to
use such Intellectual Property in perpetuity; (ii) technical training and
assistance to be provided by WYATT; and (iii) certain equipment to be
transferred by WYATT as is more fully described in Exhibit "C" hereto ; and
Whereas ELECTROPURE has agreed furthermore that the specialized instrumentation
required for the commercial exploitation of WYATT's licensed intellectual
property shall be manufactured by WYATT for the first three (3) years of this
AGREEMENT with a profit margin and corresponding price to be agreed upon between
the parties; and
Whereas WYATT is willing to manufacture said instrumentation on an exclusive
basis for the benefit of ELECTROPURE and will assist in its modification and
development as needed; and
Whereas ELECTROPURE agrees to accept said technology transfer and license and
WYATT agrees to the exchange therefor of said referenced ELECTROPURE stock and
manufacturing rights;
CONFIDENTIAL
<PAGE> 2
EXHIBIT 10.52; PAGE 2
Now, therefore, the parties hereto hereby agree as follows:
1. DEFINITIONS
1.1 "Licensed Patents." WYATT's patents as listed and described in
Exhibit "A" attached, as well as any future patents that WYATT shall create or
acquire which have use in instrumentation and/or methods for the detection of
harmful substances in drinking water.
1.2 "Intellectual Property." All patents, patent applications,
trademarks, copyrights, software, "know-how", proprietary information, and trade
secrets owned by WYATT which are licensed or transferred to ELECTROPURE under
terms of this Technology Transfer Agreement and are listed explicitly in Exhibit
"A".
1.3 "Drinking water," Water produced by water authorities
(municipalities, water companies, etc.) for delivery to consumers for home and
industrial uses including ingestion. Also waters generally referred to as
potable
1.4 "Harmful substances in drinking water." Carcinogens, mutagens,
metabolic poisons, parasites, bacteria, asbestos and other particulates capable
of producing harm to humans following ingestion.
1.5 "Drinking water quality monitoring products." Instruments and
associated software used to detect and respond to the presence of harmful
substances in drinking water.
1.6 "Licensed Products." That instrumentation, software and/or methods
especially made, used, or sold by ELECTROPURE to End Users or Resellers, for use
in a manner covered by a Licensed Patent of Exhibit "A" or resulting from
ELECTROPURE's use of the other Intellectual Property listed in Exhibit "A", or
incorporating products such as Optical Product(s), as defined in Exhibit "B",
sold by WYATT to ELECTROPURE and covered by WYATT patents not listed in Exhibit
"A."
1.7 "Resellers." Distributors, wholesalers, and retailers of water
quality monitoring products.
1.8 "End-Users." Customers who acquire ELECTROPURE Licensed Product(s)
for their internal use and not for redistribution, remarketing, time-sharing, or
service bureau use.
1.9 "Field of Use." Water districts, water companies, municipalities and
other suppliers of drinking water.
CONFIDENTIAL
<PAGE> 3
EXHIBIT 10.52; PAGE 3
1.10 "End-User License Terms." Terms and conditions described in the
attached End-User License Terms Exhibit to be incorporated into an End-User
license agreement by ELECTROPURE for use in the distribution of ELECTROPURE
Licensed Product(s).
1.11 "Proprietary Rights." Any and all rights in and with respect to
patents, copyrights, confidential Information, know-how, trade secrets, moral
rights, contract or licensing rights, confidential and proprietary information
protected under contract or otherwise under law, and other similar rights or
interests in intellectual or industrial property.
1.12 "Indemnify." To fully defend and indemnify the designated party to
be indemnified, its officers, directors, employees, agents and other
representatives, and to pay any and all liabilities, losses and damages
(including awards of court costs and attorneys' fees) resulting from the subject
claim.
1.13 "Confidential Information." Information (i) relating to the
architecture, design, and methodology embodied in the Intellectual Property of
Exhibit "A"; (ii) embodied herein regarding the terms and conditions of this
Agreement; and (iii) disclosed by one party to the other regarding past,
present, or future marketing and business plans, customer lists, and lists of
prospective customers.
1.13.1 "Confidential Information" includes all tangible materials which
contain the information described above, including without limitation, written
or printed documents and electronic media.
1.13.2 "Confidential Information" does not include (i) information which
is or becomes generally known or available through no act or failure to act by
the receiving party; (ii) is already known by the receiving party as evidenced
by its written records, (iii) is rightfully furnished to the receiving party by
a third party without restriction or disclosure; or (iv) is independently
developed by the receiving party without reference to Confidential Information.
1.14 "Technical Support Terms." Those terms and conditions set forth in
the attached Technical Support Terms Exhibit, and by reference incorporated
herein.
1.15 "Territory." The World.
1.16 "Effective Date." The date on which this Agreement is signed by
both parties.
1.17 "Complete System." The complete drinking water monitoring system
provided (whether by sale, lease, rent, etc.) by ELECTROPURE to End-users and/or
Resellers which incorporates or includes the INTELLECTUAL PROPERTY of Exhibit
"A" or LICENSED PRODUCT(S).
CONFIDENTIAL
<PAGE> 4
EXHIBIT 10.52; PAGE 4
2. LICENSE AND RESTRICTIONS
2.1 Grant of License and transfer of technology. Subject to the
limitations and restrictions provided in this Section 2 and to the other terms
and conditions of this Agreement, WYATT hereby grants, and ELECTROPURE hereby
accepts, the exclusive right and license:
2.1.1 Use License - to practice, use, sell, lease, rent and operate
Products based on WYATT's INTELLECTUAL PROPERTY listed in Exhibit "A" which are
necessary in instrumentation and/or methods for the detection of harmful
substances in drinking water.
2.1.2 Restricted Manufacturing License - WYATT has NOT granted to
ELECTROPURE the right to make, and have made the Optical Product(s) as defined
in Exhibit "B." All Licensed Products shall be manufactured by WYATT for a
period of three years pursuant to the terms of Exhibit "D." However, after that
period, WYATT shall retain the exclusive right ONLY to manufacture the Optical
Product(s) component of the instrumentation. For all components other than the
read head ELECTROPURE may after said three year period do its own manufacturing,
invite others to compete against WYATT or continue dealing with WYATT for such
products. The read head Supply and Delivery Agreement is contained in Exhibit
"B."
2.1.3 Distribution License - to market, distribute, and display the
Licensed Products only within the limits of the Field of Use, and to End-Users
and Resellers through any channel of distribution and only for use and
distribution within the Territory.
2.1.4 End-User Sublicenses - to grant sublicenses for licensed
Product(s) to End-Users only in conformity with the Sublicense Terms, and only
in the form of ELECTROPURE's license agreement which permits the End-User to
view and indicate agreement with the license terms prior to paying for the
license.
2.1.5 Reseller Sublicenses - to grant sublicenses to Resellers only for
redistribution of licensed Product(s), only in conformity with the Sublicense
Terms, only in written form and signed by the Reseller, and only on a standalone
basis and not as bundled with third-party products.
2.2 Irrevocable Agreement. This AGREEMENT is irrevocable, and WYATT may
not terminate this AGREEMENT by reason of ELECTROPURE's material breach;
provided, however, that in no event shall this provision be construed to nullify
any other remedy for a material breach by ELECTROPURE which is expressly
provided herein or otherwise available at law or in equity.
2.3 Exclusive License. The license granted herein is exclusive in that
WYATT represents that WYATT has not granted, nor will it during the term hereof,
grant to another person, firm, entity, governmental agency or Reseller a license
that is in conflict with the technology transfer and licenses granted to
ELECTROPURE above, except for the limited licenses granted as stated to the U.
S. Government in the original Letters Patents. WYATT
CONFIDENTIAL
<PAGE> 5
EXHIBIT 10.52; PAGE 5
reserves the right to license its patents and Intellectual property as listed in
Exhibit "A" in other areas which are not in conflict with the licenses granted
to ELECTROPURE above for drinking water quality monitoring products.
2.4 No Restriction on Competing Products. This Agreement does not
restrict ELECTROPURE from marketing or distributing products that are
competitive with the Licensed Product(s).
2.5 Trademark Rights. No license is given nor intended for any
tradename, trademark, or service mark proprietary to WYATT unless listed in
Exhibit "A"; provided, however, that ELECTROPURE may reproduce WYATT
trademark(s) on its Licensed Product(s). ELECTROPURE shall not otherwise use
such trademarks for any purpose without the prior written approval of WYATT.
2.6 Export. Licensed Product(s), including associated technical data,
are subject to United States export control laws, and may be subject to export
or import regulation in other countries. If ELECTROPURE is authorized to
distribute Licensed Product(s) outside the United States at any time during the
term hereof, ELECTROPURE agrees to comply strictly with all such regulations,
and acknowledges that it has the responsibility to obtain such licenses to
export, re-export, or import Licensed Product(s). ELECTROPURE shall, at its own
expense, obtain and arrange for the maintenance in full force and effect of all
governmental approvals, consents, licenses, authorizations, declarations,
filings and registrations as may be necessary or advisable for the performance
of the terms and conditions of this Agreement, including without limitation,
fair trade approvals.
2.7 Retained Rights. All rights that are not expressly granted to
ELECTROPURE herein are retained by WYATT.
3. WYATT's SUPPORT RESPONSIBILITIES
3.1 Duties of WYATT. WYATT shall at its expense unless otherwise
provided:
3.1.1 Manufacture Optical Products for shipment to ELECTROPURE on the
basis of the Supply and Delivery Agreement of Exhibit "B." Manufacture all
Licensed Products for three (3) years as herein provided.
3.1.2 Ship Optical Products to ELECTROPURE as required under Section 5
hereof.
3.1.3 Provide to ELECTROPURE three (3) days (consisting of 8 hours each)
of training at WYATT's facility regarding the use and operation of the Licensed
Products and Optical Products as required, all travel and lodging expenses to be
the sole responsibility of ELECTROPURE; additional training, if requested by
ELECTROPURE, will be provided at WYATT's then-current rates for consulting
services.
CONFIDENTIAL
<PAGE> 6
EXHIBIT 10.52; PAGE 6
3.1.4 WYATT shall at its expense provide up to 500 man hours per year of
technical support to ELECTROPURE as requested by ELECTROPURE for the enhancement
of the Licensed Products and Optical Products and expansion of ELECTROPURE's
marketing programs. WYATT will provide ELECTROPURE access to WYATT's technical
consultants, as needed, under the same terms and conditions as such consultants
are paid by WYATT for comparable consultations. WYATT will provide also some of
its staff, if available and if requested by ELECTROPURE, on the same contract
basis as it charges its other customers for similar services.
4. ELECTROPURE's OBLIGATIONS TO TRANSFER ITS COMMON STOCK
4.1 Subject to and guided by Federal and California laws relating to the
issuance of securities, ELECTROPURE represents that it has the right and
authority to issue 2,100,000 shares of its restricted Common Stock to WYATT
subject to the terms of this AGREEMENT and subject to the terms of the
Non-Distribution and Registration Rights Agreement attached hereto and made a
part hereto as Exhibit "E". ELECTROPURE expressly warrants that at the Effective
Date of this Agreement, ELECTROPURE has outstanding approximately 83,983 and
5,417,098 shares of its Class A and Class B Common Stock, respectively, and
options to purchase approximately 1,056,264 shares of common stock at prices
ranging from $0.10 to $16.25 per share, all such warrants expiring through
August 2007.
4.2 ELECTROPURE represents that it will transfer said shares as soon as
possible at the completion of this AGREEMENT, but in no case later than 5 days
after the Closing Date thereof. The maximum fair market value at the closing
will be a bid price of $1 per share or less. For purposes of this Agreement,
"Fair Market Value" shall be defined as the closing or last reported bid of
ELECTROPURE's common stock as reported by the Electronic Bulletin Board or
National Quotation Bureau, Inc. on the EFFECTIVE DATE of this AGREEMENT.
4.3. ELECTROPURE represents that it currently intends to (i) issue an
option to purchase 300,000 shares of its Common Stock in conjunction with the
proposed employment of Gregory Quist; (ii) establish an Employee Stock Option
Program (to be administered by its Board of Directors or a committee appointed
by said Board) to provide for the grant of incentive stock options and
non-qualified stock options to officers, Directors, and key employees of
ELECTROPURE ; (iii) issue to each Director of ELECTROPURE, on an annual basis,
an option to purchase up to 10,000 shares of common stock in consideration for
such Director's service to the Board; and (iv) issue in conjunction with
employment agreements to be negotiated with Catherine Patterson and Ronald J.
O'Hare, a number of options (to be determined) to purchase common stock.
ELECTROPURE further represents that it does not have any plans or proposals
which would result in significant issuances to officers, Directors, or key
employees of shares or options to purchase shares of common stock which
issuances would or could have a materially adverse dilution effect on the common
stock holdings of WYATT. The parties hereto agree that any such issuances must
be approved by WYATT, which approval will not be unreasonably withheld.
CONFIDENTIAL
<PAGE> 7
EXHIBIT 10.52; PAGE 7
5. ELECTROPURE's MARKETING AND SUPPORT RESPONSIBILITIES
5.1 Duties of ELECTROPURE. Upon a positive confirmation of the
feasibility of Phase I, as described in Exhibit "C" hereto, ELECTROPURE shall at
its expense unless otherwise provided:
5.1.1 Produce trade dress, End-User documentation, and packaging as
required for Licensed Products.
5.1.2 Design and print product advertising and collateral materials for
the COMPLETE SYSTEM(S).
5.1.3 Develop, implement, and maintain a marketing and merchandising
strategy which incorporates commercially effective technology and marketing
techniques.
5.1.4 Provide suitable press releases and public relations efforts for
the promotion of the Licensed Products.
5.1.5 Promote, market, and distribute the Licensed Product(s) through
sales personnel with face-to-face contact with End-Users and/or through
Resellers.
5.1.6 Comply with all limitations and restrictions on marketing and
distribution provided in Section 2.
5.1.7 Maintain sufficient inventory levels of Licensed Product(s) to
satisfy reasonably anticipated demand.
5.2 Standard of Performance. ELECTROPURE shall use its best efforts to
perform the marketing and support responsibilities described above.
6. FUNDING THE TRANSFERRED TECHNOLOGY
6.1 ELECTROPURE agrees to obtain the necessary funds required to develop
the Licensed Product(s) and appurtenant licensed patents into a viable business.
To this effect, ELECTROPURE will fund immediately at the effective date of this
agreement a PHASE 1 (including Phase 1a and Phase 1b) program of five (5)
months' duration as described in detail in Exhibit "C." The amount of funds
required for this project is approximately $100,000.
6.2 Upon the successful completion of Phase 1, ELECTROPURE represents
that it will keep said project staff funded at this same rate until funds have
been raised to initiate Phase 2. Details of ELECTROPURE and WYATT activities
during this interim period are detailed in Exhibit "D."
CONFIDENTIAL
<PAGE> 8
EXHIBIT 10.52; PAGE 8
6.3 In order for the rights licensed hereby to be commercialized, the
parties have agreed that substantial funds may be required to be raised through
private or public offerings of ELECTROPURE securities, corporate borrowing, or a
combination of both. Once these funds are available, Phase 2 (see Exhibit "D")
of the program will begin. ELECTROPURE represents that it will use its best
efforts to procure sufficient funds (estimated to be from $10 to $15 million) in
a timely manner so that the water quality monitoring activity may become a
viable business.
6.3.1 WYATT agrees to assist ELECTROPURE in the presentations necessary
to raise such funds at WYATT's expense. WYATT will make available on a
reasonable basis its staff, including its CEO, for such presentations so long as
they do not interfere with WYATT's normal business activities.
7. PRODUCT ORDERS, PAYMENT, AND SHIPMENT
7.1 Purchase Orders. ELECTROPURE shall submit written purchase orders
for Licensed Products, and acceptance will only be effective upon issuance of
WYATT's invoice.
7.2 This Agreement Controls. Notwithstanding the content of
ELECTROPURE's purchase order, this Agreement shall take precedence over such
purchase order, and any conflicting, inconsistent, or additional terms of
ELECTROPURE's purchase order shall be null and void.
7.3 Price and Payment.
7.3.1 Price; Resale Prices. ELECTROPURE shall pay the price per
unit for the Licensed Products manufactured by WYATT as indicated in Exhibit
"B". Any suggested selling strategies suggested by WYATT from time-to-time are
not binding on ELECTROPURE, and ELECTROPURE is free to determine its own selling
strategies.
7.3.2 Payment Terms. Payment terms are in full 45 days after
receipt of units of Licensed Products. WYATT reserves the right in its
reasonable commercial judgment to place ELECTROPURE on credit hold, in which
event WYATT will promptly inform ELECTROPURE, and WYATT may suspend ELECTROPURE
orders.
7.3.3 Taxes and Duties. The prices stated are exclusive of sales
or use taxes, ad valorem taxes, duties, licenses, or levies imposed on the
production, storage, sale, transportation or use of the Licensed Product.
ELECTROPURE shall pay all such charges either as levied by taxing authorities or
as invoiced by WYATT, or, in lieu thereof, ELECTROPURE shall provide an
exemption certificate acceptable to the relevant taxing authorities.
7.4 Shipment.
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<PAGE> 9
EXHIBIT 10.52; PAGE 9
7.4.1 Ship Dates. WYATT shall use reasonable efforts to meet ship
dates requested by ELECTROPURE, but in no event shall WYATT be liable for
failure to do so. In the event existing priorities and schedules prevent strict
compliance with requested delivery dates, purchase orders will be entered as
close as practicable to the requested date, and ELECTROPURE will be advised of
the actual shipping schedule.
7.4.2 Shipment Terms. Prices are F.O.B. WYATT's shipping location
(either WYATT's address or third party fulfillment contractors), freight
collect, unless specified otherwise by WYATT. Title to and risk of loss for
Licensed Products shall pass to ELECTROPURE upon delivery to the carrier for
shipment to ELECTROPURE.
7.4.3 Inspection. ELECTROPURE shall inspect all Licensed
Product(s) upon arrival at destination and shall within twenty (20) days of
arrival, give written notice to WYATT of any claim for damage or shortages.
Should ELECTROPURE fail to give such notice, or fail to obtain an extension from
WYATT, the Licensed Products shall be deemed to be accepted.
8. WARRANTIES
8.1 Technical Support. The parties have determined that it is in the
best interest of the parties that WYATT disclaim any and all performance
warranties regarding the Licensed Product, and provide in lieu thereof,
technical support services under the Technical Support Terms. Accordingly, the
disclaimer of performance warranties provided below does not nullify WYATT's
obligations to provide technical support under the Technical Support Terms.
8.2 Disclaimer of Performance Warranty. THE LICENSED PRODUCT AND
DOCUMENTATION ARE PROVIDED "AS-IS". WYATT does not warrant, guarantee or make
any representation regarding the use or the results of the use of the Licensed
Product or Documentation in terms of correctness, accuracy, reliability,
currentness or otherwise. ELECTROPURE assumes the entire risk as to the
performance and results of the Licensed Product and Documentation.
8.2.1 WYATT HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS AND IMPLIED,
INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW.
8.2.2 ELECTROPURE EXPRESSLY ACKNOWLEDGES THAT NO REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS AGREEMENT HAVE BEEN MADE RESPECTING THE GOODS
OR SERVICES TO BE PROVIDED HEREUNDER, AND THAT ELECTROPURE HAS NOT RELIED ON ANY
REPRESENTATION NOT EXPRESSLY SET OUT HEREIN.
8.3 ELECTROPURE's Performance Warranty. ELECTROPURE is free to make any
performance warranty regarding the Licensed Product in ELECTROPURE's name only.
ELECTROPURE shall not make any representation or warranty that binds WYATT.
CONFIDENTIAL
<PAGE> 10
EXHIBIT 10.52; PAGE 10
8.4 WARRANTIES. Subject to The OEM Supply Terms and Conditions Agreement
of Exhibit "B" incorporated herein by reference, the parties represent the
following.
8.4.1 Right to Contract and License. WYATT has the authority to
enter into this Agreement and the right to grant the rights and licenses granted
to ELECTROPURE herein without breach of obligation to any third party; and the
performance of this Agreement will not breach any obligation to any third party.
8.4.2 No Encumbrances. WYATT hereby represents and warrants that
the Licensed Product as of the Effective Date and throughout the term hereof
will not be pledged, covered, collaterally assigned as security, or otherwise
affected in any way by any bank loan, equipment financing, lending, or security
arrangement, or other such arrangement which is entered into by or binding upon
WYATT in any way.
9. INDEMNIFICATION
9.1 ELECTROPURE's Indemnity For Product Liability and Licensed Product
Warranties. Subject to the terms and conditions provided herein regarding all
Indemnities, ELECTROPURE shall Indemnify WYATT from and against any product
liability or warranty claim regarding the Licensed Product when incorporated by
ELECTROPURE as components of any larger system or product. To this effect,
ELECTROPURE agrees to provide product liability insurance and name WYATT
explicitly as a coinsured.
9.2 Rights Indemnities. Subject to the terms and conditions provided
herein regarding all Indemnities, WYATT shall Indemnify ELECTROPURE against any
breach by WYATT of any of the rights warranties stated above.
9.3 Infringement Indemnity of ELECTROPURE. Subject to the terms and
conditions hereof, ELECTROPURE shall Indemnify WYATT against any claim that any
material which ELECTROPURE combines with the Licensed Product created by
ELECTROPURE infringes any Proprietary Right of a third party.
9.4 Infringement Indemnity of WYATT. Subject to the terms and conditions
hereof, WYATT shall Indemnify ELECTROPURE against any claim that the Licensed
Product used by ELECTROPURE within the scope of this Agreement infringes any
Proprietary Right of a third party.
9.5 Infringement Indemnity Terms and Conditions. The infringement
Indemnities shall not apply to the extent that any third party's infringement
claim is based upon modifications, enhancements and other revisions to the
material which have been made by Indemnified party or by parties operating under
license from or authorization by the Indemnified party. In the event of any
ruling of infringement by a court of competent jurisdiction, or if the
Indemnifying party
CONFIDENTIAL
<PAGE> 11
EXHIBIT 10.52; PAGE 11
reasonably believes such a ruling is likely, the Indemnifying party shall, at
its expense and after notice to and consultation with the Indemnified party, at
the Indemnifying party's option either:
9.5.1 modify the subject infringing material so as not to
infringe, or replace such infringing material with a material that does not
infringe; provided, however, that any modified or replacement material provided
by WYATT shall have the same functionality, operating characteristics,
compatibility and interoperability as the infringing material being modified or
replaced; or
9.5.2 if ELECTROPURE is the Indemnified party, WYATT shall obtain
a license for ELECTROPURE to continue using the subject material, free of any
future liability from the claiming party.
9.6 Conditions to All Indemnities. All Indemnities are subject to the
following conditions:
9.6.1 The Indemnified party notifies the Indemnifying party in
writing within thirty (30) days of being apprised of the claim.
9.6.2 The Indemnifying party has sole control of the defense and
all related settlement negotiations, subject to the right of Indemnified party
to participate in and monitor such defense, at its own cost and option and
through its own counsel, for the purpose of consulting with the Indemnifying
party's counsel.
9.6.3 The Indemnified party provides the Indemnifying party with
the assistance, information, and authority necessary to perform as required
above, provided that reasonable costs and expenses incurred by the Indemnified
party in providing such assistance and information will be reimbursed by the
Indemnifying party.
10. INFRINGEMENT BY THIRD PARTIES OF LICENSED PATENTS
10.1 Notice of Infringement. Each party hereto agrees to notify promptly
the other of any alleged, or notice of infringement of Licensed Patents as well
as alleged or notice of infringement by ELECTROPURE's Licensed Product(s) or
tests hereunder of a third party's patent.
10.2 Third Party Infringement
10.2.1 WYATT's right to file suit. If any of WYATT's patents
licensed to ELECTROPURE are infringed by a third party, WYATT may elect to file
suit at its own expense and retain all proceeds arising from a judgment or
settlement.
10.2.2 ELECTROPURE's right to file suit. If WYATT fails to file
suit against a Third Party infringer of a Licensed U. S. Patent within six (6)
months after receipt by WYATT of notification by ELECTROPURE and confirmed by
WYATT, ELECTROPURE shall have the
CONFIDENTIAL
<PAGE> 12
EXHIBIT 10.52; PAGE 12
right to sue an infringer of any patent or patent applications licensed
thereunder, at its own expense, in the name of WYATT, if necessary, and WYATT
agrees to join in such suit at ELECTROPURE's expense and to execute any
necessary papers for such suit. In this event, ELECTROPURE shall retain all
proceeds arising from a judgment or settlement
11. LIMITATION OF LIABILITY
11.1 WYATT's Limitation of Actual Damages. Except for rights and
infringement Indemnities, WYATT's liability to ELECTROPURE for actual damages
from any cause whatsoever, and regardless of the form of the action, whether in
contract, tort (including negligence), product liability or otherwise, will be
limited to the amounts paid to WYATT hereunder for LICENSED PRODUCT(S).
11.2 Disclaimer. NEITHER PARTY WILL BE LIABLE TO THE OTHER IN ANY EVENT
FOR ANY SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING ANY
DAMAGES FOR LOSS OF BUSINESS PROFITS, BUSINESS INTERRUPTION, OR LOSS OF BUSINESS
INFORMATION), EVEN IF INFORMED OF THE POSSIBILITY THEREOF IN ADVANCE TO THE FULL
EXTENT PERMITTED BY APPLICABLE LAW..
12. PROPRIETARY RIGHTS
12.1 Title to Licensed Patents and/or Intellectual Property. Under this
Agreement, ELECTROPURE acquires only a license for the Licensed Patents and the
other Intellectual Property and does not acquire any rights of ownership of any
Proprietary Rights embodied therein. All right, title and interest in and to the
proprietary rights embodied in the Licensed Patents and Intellectual Property
shall at all times remain the property of WYATT or its licensors.
12.2 Confidential Information. Each party acknowledges that the other
party may disclose its Confidential Information to the other in the performance
of this Agreement. Each party further acknowledges the other party's assertion
that the other party's Confidential Information is deemed to include valuable
trade secrets and confidential business information proprietary to the other
party and/or third parties. Accordingly, each party shall (i) take reasonable
steps to keep the Confidential Information disclosed by the other party
confidential, and (ii) use and disclose such Confidential Information only with
the receiving party's employees and contractors who have a need to know and only
for the purposes of fulfilling this Agreement, or for purposes of disclosure to
affiliated companies and professional advisors for the purpose of disclosing the
party's internal business.
12.3 Confidentiality of Licensed Product(s). Specifically regarding the
Licensed Product(s), ELECTROPURE acknowledges WYATT's claim that the Licensed
Product(s) embodies valuable trade secrets proprietary to WYATT. Accordingly,
ELECTROPURE shall take reasonable measures to protect the Licensed Product(s)
from unauthorized access,
CONFIDENTIAL
<PAGE> 13
EXHIBIT 10.52; PAGE 13
disclosure, and use, including without limitation, the placement of any
Proprietary Rights notice on the Licensed Product(s) that is reasonably
requested by WYATT. ELECTROPURE shall not:
12.3.1 Distribute, transfer, loan, rent, or provide access to the
Licensed Product(s), except as provided herein.
12.3.2 Remove or add any Proprietary Rights notice associated
with the Licensed Product(s) without the express written permission of WYATT.
12.3.3 Issue any sub-license without obtaining the agreement of
the sub-licensee to be bound by the foregoing.
12.4 Injunctive Relief. The parties hereby agree that any breach of this
Section regarding Proprietary Rights would constitute irreparable harm, and that
the aggrieved party shall be entitled to specific performance and/or injunctive
relief in addition to other remedies at law or in equity.
13. TERM AND TERMINATION
13.1 Term of Agreement. The term of this Agreement shall commence as of
the Effective Date hereof and shall continue to a mutually agreed upon
termination date.
13.2 Treatment of License in Bankruptcy. In the event of WYATT's
bankruptcy under The Intellectual Property Bankruptcy Protection Act, codified
as subsection (n) of Section 365 of the United States Bankruptcy Act, as such
act is set forth in Title 11, United States Code, as amended from time to time
("Bankruptcy Act"), and an attendant rejection of this Agreement or any license
granted herein pursuant to Section 365 thereof, the parties intend that the
provisions of the Bankruptcy Act shall apply.
13.2.1 The parties acknowledge that all Licensed Product(s)
delivered to ELECTROPURE by WYATT under this Agreement shall be deemed to be
embodiments of intellectual property, and as such, ELECTROPURE shall be entitled
to retain possession of same.
13.2.2 Pursuant to subsection (1)(B) of the Bankruptcy Act,
ELECTROPURE hereby elects to retain all of its rights under this Agreement.
14. CHOICE OF LAW AND VENUE
14.1 This AGREEMENT shall be governed by and construed under the Laws of
the State of California in force from time to time. Any proceeding arising out
of this AGREEMENT shall be brought in Los Angeles, California.
15. GENERAL PROVISIONS
CONFIDENTIAL
<PAGE> 14
EXHIBIT 10.52; PAGE 14
15.1 Notices. All notices shall be given in writing and shall be
effective when either (i) served by personal delivery, (ii) upon receipt of mail
sent as certified mail, return receipt requested, or (iii) upon receipt of
facsimile transmission if verified by a written or electronic record of the
transmission, provided that any such communication is addressed to the parties
at their respective addresses and/or facsimile numbers set forth below, or to
such other address or numbers as either party may later specify by written
notice or provide as part of the performance of this Agreement.
If to WYATT:
Wyatt Technology Corporation
802 E. Cota Street
Santa Barbara, CA 93103
Contact: Philip J. Wyatt
Telephone: (805) 963 - 5904
Facsimile: (805) 965 - 4898
If to ELECTROPURE:
Electropure, Inc.
23251 Vista Grande, Suite A
Laguna Hills, CA 92653
Contact: Floyd Panning
Telephone: (714) 770 9347
Facsimile: (714) 770 9209
15.2 Merger; Amendment. This Agreement shall not be considered an offer
by either party, and it shall not be effective until signed by both parties.
This Agreement constitutes the entire understanding of the parties with respect
to the subject matter of this Agreement and merges all prior communications,
understandings, and agreements. This Agreement may be modified only by a written
agreement signed by the parties.
15.3 Independent Contractors. The relationship of the parties is that of
independent contractor, and nothing herein shall be construed to create a
partnership, joint venture, franchise, employment, or agency relationship
between the parties. ELECTROPURE shall have no authority to enter into
agreements of any kind on behalf of WYATT and shall not have the power or
authority to bind or obligate WYATT in any manner to any third party.
15.4 Severability. If any provision of this Agreement is held to be
invalid or unenforceable for any reason, such provision shall be ineffective to
the extent of such invalidity or unenforceability; provided, however, that the
remaining provisions will continue in full force without being impaired or
invalidated in any way unless such invalid or unenforceable provision or clause
shall be so significant as to materially affect the Parties' expectations
regarding this
CONFIDENTIAL
<PAGE> 15
EXHIBIT 10.52; PAGE 15
Agreement. Otherwise, the Parties hereto agree to replace any invalid or
unenforceable provision with a valid provision which most closely approximates
the intent and economic effect of the invalid or unenforceable provision.
15.4.1 Amendments. The Parties hereby agree, that some of the
provisions of this AGREEMENT may need clarification and/or amendment in the
future and that said amendments will be made expeditiously and approved with the
written agreement of both Parties and without unreasonable delay.
15.5 No Implied Waivers. The failure of either party to enforce at any
time any of the provisions hereof shall not be a waiver of such provision, or
any other provision, or of the right of such party thereafter to enforce any
provision hereof.
15.6 Governing Law. This Agreement shall be construed under the laws of
the State of California, without regard to its principles of conflicts of law.
15.7 Force Majeure. Neither party shall be liable for damages for any
delay or failure of delivery arising out of causes beyond their reasonable
control and without their fault or negligence, including, but not limited to,
Acts of God, acts of civil or military authority, fires, riots, wars, or
embargoes.
15.8 Multiple Counterparts. This AGREEMENT may be executed
simultaneously in two or more counterparts, each one of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
15.9 Assignment. The rights and obligations of the Parties under this
AGREEMENT shall not be assignable or otherwise transferable without the prior
written consent of the other. Neither Party shall be entitled to transfer this
AGREEMENT without the prior written consent of the other, provided that nothing
herein shall preclude ELECTROPURE from sub-licensing the Licensed Products to
End-Users and/or Resellers as and to the extent herein elsewhere provided and
ELECTROPURE shall be entitled to sub-license the Licensed Product(s), to its
wholly-owned subsidiary, if any, and to assign this AGREEMENT to any such
wholly-owned subsidiary (in which case such assignee of ELECTROPURE shall have
and may exercise all of the rights, and shall assume all of the obligations, of
ELECTROPURE under this AGREEMENT). Subject thereto, this AGREEMENT shall inure
to the benefit of and be binding upon the Parties and their respective
successors (including any successor by reason of amalgamation of any Party) and
permitted assigns. No such assignment shall relieve ELECTROPURE from its
obligations hereunder.
15.10 Attached Exhibit(s). This Agreement includes the attached
exhibit(s) listed below, which are hereby incorporated in this Agreement by
reference.
Exhibit"A": WYATT patents licensed to ELECTROPURE for the monitoring and
screening of drinking water only.
CONFIDENTIAL
<PAGE> 16
EXHIBIT 10.52; PAGE 16
Exhibit "B": Supply and Delivery Agreement
Exhibit "C": Phase 1 program.
Exhibit "D": Phase 2 program.
Exhibit "E": Non-distribution and Registration Rights Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
below.
By: /S/ PHILIP J. WYATT Date: 10/25/97 By: /S/ FLOYD PANNING Date: 10/25/97
-------------------- -----------------
Wyatt Technology Corporation Electropure, Inc.
802 E. Cota Street 23251 Vista Grande, Suite A
Santa Barbara, CA 93103 Laguna Hills, CA 92653
CONFIDENTIAL
<PAGE> 17
EXHIBIT 10.52; PAGE 17
EXHIBIT "A"
WYATT INTELLECTUAL PROPERTY RELATING TO THE DETECTION OF PARASITES AND/OR
TOXICANTS IN DRINKING WATER
<TABLE>
<CAPTION>
PATENTS
NAME PATENT NUMBER COUNTRY ISSUE DATE
(MO/DY/YR)
<S> <C> <C> <C>
Method for determining the properties of 4,490,042 USA 12/25/84
wine
Method and Apparatus for characterizing 4,541,719 USA 9/17/85
Microparticles and Measuring their
Response to Their Environment
Process and Apparatus for Identifying or 4,548,500 USA 10/22/85
Characterizing Small Particles
Method and Apparatus for Measuring the 4,693,602 USA 9/15/87
Light Scattering Properties of Small
Particles
Process for Characterizing Suspensions of 4,710,025 USA 12/01/87
small particles
Process and Apparatus for Identifying or 0098095 UK 1/7/88
Characterizing Small Particles p3375209.5 Germany 1/7/88
France 1/7/88
Methods and Apparatus for Characterizing 0102726 France 6/8/88
Microparticles and Measuring their UK 6/8/88
Response to their Environment 83304206.2 Germany 6/8/88
</TABLE>
SOFTWARE
The program "GRABEM", related software and operating instructions therefore, and
Company notebooks (if still in existence) describing same and results therefrom.
All WYATT software used in conjunction with single particle light scattering
data collection instrumentation.
<PAGE> 18
EXHIBIT 10.52; PAGE 18
KNOW-HOW AND TRADE SECRETS
WYATT technical staff and consultants who have had personal knowledge and/or
involvement in the various projects concerned with the detection of toxicants in
drinking water will be made available subject to the terms and conditions of the
Technology Transfer Agreement hereof.
Access to restricted Government reports generated by WYATT concerning the
detection of toxicants in drinking water will be available as required for the
projects. These reports were disseminated by the Government on a restricted
basis as a condition of the Small Business Innovative Research ("SBIR") contract
grants. The restrictions were to allow the contractor (in this case WYATT) to
commercialize the program to the exclusion of competitors. These restrictions
were removed earlier this year. However, all laboratory notebooks still remain
the undisseminated property of WYATT.
Access to the experimental results of a three year WYATT program for the Office
of Naval Research will be available as needed. This program was concerned with
the development for the rapid identification of phytoplankton and plays a major
role for the proposed identification of waterborne parasites. Laboratory books,
circuitry, computer analyses (as they remain in storage) are included in this
"know-how."
Other areas of know-how include availability of WYATT staff and consultants for
their collective resources, as required.
From time-to-time, WYATT will file new patent applications that may be relevant
to the drinking water quality programs under development at ELECTROPURE. Details
of such applications will be disclosed in confidence by WYATT to ELECTROPURE and
ELECTROPURE will be granted exclusive rights thereto for their continuing work
in drinking water monitoring systems if and when such patents may issue.
OTHER INTELLECTUAL PROPERTY OF IMPORTANCE TO THIS TRANSFER
An operating DAWN-B light scattering photometer for the development of
waterborne particulate optical observables with software, spare parts, supplies,
and accessories.
Small autoclave for sterilization purposes.
Miscellaneous laboratory equipment and supplies for handling pathogens and other
microbial materials.
<PAGE> 19
EXHIBIT 10.52; PAGE 19
EXHIBIT "B"
OEM SUPPLY TERMS AND CONDITIONS AGREEMENT
RECITALS
This OEM Supply Terms & Conditions Agreement ("Supply Agreement") is entered
into as of the 25th day of October 1997 (the "EFFECTIVE DATE") by and between
ELECTROPURE, INC., a California Corporation ("ELECTROPURE") and WYATT TECHNOLOGY
CORPORATION, a California Corporation ("WYATT"), with reference to the following
facts:
1. Concurrently herewith, the Parties have entered into a TECHNOLOGY TRANSFER
AGREEMENT upon the terms and conditions set forth therein (the "TECHNOLOGY
TRANSFER AGREEMENT" or "TTA") .This Supply Agreement is intended as an Exhibit
to and should be read in conjunction with such TTA.
2. Accordingly, it is a condition precedent of this OEM Supply Terms &
Conditions that Phase I of Exhibit "C" has been successfully completed, and
confirmation of that completion will be made by ELECTROPURE to WYATT.
3. Assuming the above conditions are met, ELECTROPURE will purchase its
requirements for the LICENSED PRODUCT(S) from WYATT for incorporation into its
integrated Drinking Water Monitoring System(s) -under circumstances conforming
to the OEM certification set forth in ss. 2 hereof and according to the terms
generally contained herein.
NOW THEREFORE, in consideration of these promises and of the mutual agreements
and covenants herein set forth, the parties hereby agree as follows:
1. Definitions. Terms used in this Agreement with capital letters without
definition shall have the meaning ascribed thereto in the TTA. In addition, the
following terms shall have the meanings assigned to them below whenever they are
used in this Agreement. Except where the context otherwise requires, words
imparting the singular number shall include the plural number and vice versa;
words denoting any gender shall include all genders; words denoting persons
shall include bodies corporate, and vice versa.
1.1 "Original Manufacture" means the original manufacture of the Optical Read
Heads (" OPTICAL PRODUCT(S) ") for sale and installation by ELECTROPURE into the
Drinking Water Monitoring System(s)in the course of the original manufacture of
such equipment by ELECTROPURE. This manufacture would begin after the three year
period during which time WYATT would reserve the exclusive right to all
manufacturing at the terms described in the TTA.
<PAGE> 20
EXHIBIT 10.52; PAGE 20
1.2 "Optical Product" shall mean the original manufacture by WYATT of the
Optical Read Heads for purchase and installation by ELECTROPURE into the
Drinking Water Monitoring System(s) (the "Licensed Products"). Subject to the
provisions of ss. 2 and ss. 7 hereof, WYATT expressly retains the right to
manufacture the OPTICAL PRODUCT for sale to ELECTROPURE in accordance with the
terms and conditions of this Supply Agreement.
1.3 "Contract Year" means each twelve month period following the Effective Date
of this AGREEMENT.
1.4 "Net Selling Price" shall mean the gross selling price of a Drinking Water
Monitoring System and/or Licensed Products such as spare parts provided by
ELECTROPURE for sale, lease, rent, etc. to End-Users and/or Resellers inclusive
of such price escalation costs as are paid to Electropure by such purchasers and
exclusive of any freight and transport charges, taxes and excise and customs
duties, governmental charges applicable to sales and packages, insurance,
packaging costs, bona fide trade and cash discounts, allowance for returns,
giveaways, promotions or replacements.
2. MANUFACTURE, PURCHASE AND SALE OF THE LICENSED PRODUCT(S).
For a period of three (3) years commencing with the EFFECTIVE DATE of this
Supply Agreement, WYATT agrees to manufacture and sell, and ELECTROPURE agrees
to purchase, the LICENSED PRODUCT(S) from WYATT in accordance with the terms and
conditions hereof. . Following such three (3) year period , ELECTROPURE may at
its option manufacture all components of the Licensed Products, except the
Optical Product (to which WYATT expressly retains all manufacturing rights),
invite others to compete against WYATT, or continue to purchase such Licensed
Products from WYATT under terms to be agreed upon by the parties.
(a) All purchases of the LICENSED PRODUCT(S) pursuant to this Agreement
shall be upon the terms and conditions specified in this Agreement, and such
terms and conditions shall govern all purchases hereunder notwithstanding any
inconsistent, conflicting or additional language as may exist on purchase
orders, invoices, confirmations, order acknowledgments or other forms or
communications of either WYATT or ELECTROPURE.
(b) WYATT agrees that it shall affix to the packaging for or where
practical to each unit of the LICENSED PRODUCT(S) a label, in form reasonably
acceptable to ELECTROPURE, bearing the appropriate part number for the LICENSED
PRODUCT(S) and patent markings as appropriate.
(c) WYATT agrees that it will continue to make the LICENSED PRODUCT(S)
available to ELECTROPURE for purchase during the effective period of this
AGREEMENT, at the price specified in ss. 3(a) below. A complete list of all
replaceable components and parts for the PRODUCT ("Spare Parts"), by part number
and description, shall be provided to ELECTROPURE, and included as Schedule 1 to
be supplied at a later date, as the same may be modified annually, after the
initial term of this AGREEMENT, pursuant to ss. 3(b) below. WYATT shall maintain
the capability of supplying Spare Parts, and shall sell the same to
<PAGE> 21
EXHIBIT 10.52; PAGE 21
ELECTROPURE at the prices set forth on Schedule l and adjusted annually per ss.
3(b) below, for a period of five (5) years after the date of the last shipment
of PRODUCT to ELECTROPURE. This clause shall survive termination of this
AGREEMENT.
(d) ELECTROPURE shall provide WYATT with annual purchase forecasts to be
updated quarterly. Any change in a quarterly update of fifteen percent (15%) or
more shall require a thirty (30) day notice and implementation period. WYATT
agrees that it shall use its best efforts to meet ELECTROPURE's reasonable
delivery requirements, provided that WYATT shall not be liable for damages
arising out of a breach of this obligation due to causes beyond its reasonable
control.
3. OEM PURCHASE PRICES.
The final configuration of the OPTICAL PRODUCT at the EFFECTIVE DATE of this
agreement is unknown. Its design and features will be developed during the
development phases of this AGREEMENT per Exhibit "C" and Exhibit "D" of the TTA.
There is a reasonably high probability that the design will be similar to the
extant 18 angle DAWN-DSP read head in which case the prices are well known and
listed below. In the event the read head design is to be submersible, such as
described in the article by Wyatt and Jackson in J. Limnology and Oceanography
34, 96-112 (1989), the price could be up to $12,000 per unit higher than the
prices listed below for the flow cell based DAWN-DSP read head structure.
(a) Subject to the foregoing provision, during the l term of this Supply
AGREEMENT WYATT will sell the LICENSED PRODUCT(S) to ELECTROPURE at the
following prices:
Cumulative Quantity (Units) Discounted U.S. Price for DAWN-DSP read heads.
0-100 $ 18,000/unit
101-200 15,000 /unit
over 200 12,000 /unit
The Cumulative Quantity shall be over the term of this OEM Supply Terms &
Conditions.
(b) In each subsequent year (after the initial term of this Agreement) WYATT
shall be entitled to adjust such OEM Price, and the Spare Parts prices, by an
amount to be negotiated by ELECTROPURE and WYATT, provided that any annual
increase shall in no event be more than the percentage increase in each
respective year, from the date hereof to the applicable anniversary date of this
Agreement, in the Producer Price Index, Special Grouping for "Finished Goods
Less Foods and Energy," published by the U.S. Department of Labor, Bureau of
Labor Statistics using 1982 as Base 100 (or any other index which supersedes
such index and is comparable thereto). Any sales, use, property or other similar
tax which WYATT may be required to collect upon the sale and delivery of the
LICENSED PRODUCT(S) shall be paid by ELECTROPURE in addition to the OEM purchase
price herein provided for.
4. DELIVERY, ACCEPTANCE AND PAYMENT.
<PAGE> 22
EXHIBIT 10.52; PAGE 22
(a) Delivery hereunder shall be F.O.B. Santa Barbara, California, and
the OPTICAL PRODUCT(S) shall be packed for shipment and delivered to a common
carrier to be selected by ELECTROPURE, at which time title and risk of loss
shall pass to ELECTROPURE.
(b) In the event that: a shipment of OPTICAL PRODUCT(S) or any portion
thereof fails to conform to the specifications, test, and quality assurance
procedures (to be specified by Amendment per ss.14.2 of the TTA), then
ELECTROPURE shall be entitled to reject such shipment of OPTICAL PRODUCT(S) or
the portion thereof that fails to so conform, as the case may be. ELECTROPURE
shall communicate its rejection hereunder by written notice, given within twenty
(20) days following the date on which such shipment was delivered, specifying
the grounds for such rejection. If no written notice of rejection is given by
ELECTROPURE within said twenty (20) day period, the OPTICAL PRODUCT(S) shall be
deemed to have been accepted. and to have conformed to such specifications. In
the event of any such rejection, WYATT agrees to use its best efforts to cure
such rejection or replace such nonconforming OPTICAL PRODUCT(S) within thirty
(30) days after receipt of written notice thereof In the event that the OPTICAL
PRODUCT(S) are rejected by ELECTROPURE and are returned to WYATT, WYATT shall be
responsible for any freight, customs, duties, insurance and other related costs
incurred in transporting the OPTICAL PRODUCT(S) to WYATT, and also any costs
incurred in supplying ELECTROPURE with replacement OPTICAL PRODUCT(S) which
conform to the specifications, provided that the failure in conformance was due
entirely to defective manufacture by WYATT.
(c) Upon shipment of the OPTICAL PRODUCT(S) hereunder, WYATT shall be
entitled to submit invoices therefor to ELECTROPURE. ELECTROPURE agrees to pay
each invoice in full within forty-five (45) days of receipt for all deliveries
accepted pursuant to ss. 4(b) hereof. Invoices shall be deemed to have been
received three days following their being deposited in the U.S. mail, postage
paid first class mail and addressed to ELECTROPURE.
5. PRODUCT MANUALS. WYATT will provide one English language set of all necessary
information on installation, operation and service instruction for the OPTICAL
PRODUCT to enable ELECTROPURE to produce the ELECTROPURE standard manual for its
Drinking Water Monitoring System(s). WYATT hereby grants ELECTROPURE the right
to use, modify, reproduce and distribute the aforementioned information as it
deems appropriate without additional charge.
6. PRODUCT CHANGES. WYATT agrees to inform ELECTROPURE of any proposed changes
to the OPTICAL PRODUCT prior to incorporation into the manufacture of the
OPTICAL PRODUCT. Changes include but are not limited to specifications of
materials, subassemblies and test procedures. ELECTROPURE approval of the
proposed changes will be forthcoming within 30 days of receipt of the
notification by WYATT, so long as the proposed changes have no effect on the
ELECTROPURE Drinking Water Monitoring System(s)resulting from the project.
7. MANUFACTURING RIGHTS
<PAGE> 23
EXHIBIT 10.52; PAGE 23
7.1 In the event WYATT experiences material difficulty (including
without limitation a Force Majeur condition) in supplying the OPTICAL PRODUCT(S)
either in sufficient quantity or at a consistent quality level, it will promptly
notify ELECTROPURE of such difficulty. Examples of a material difficulty include
the lack of sufficient facility space and/or equipment required to meet the
current demand of orders received, the inability to manufacture, have
manufactured or otherwise procure necessary components, the failure to meet
agreed upon specifications for the OPTICAL PRODUCT, the incapacity or
unavailability of key employees of WYATT, and the like. The parties will work
together and use their reasonable best efforts to resolve the problem(s) causing
the material difficulty, and WYATT may subcontract the right to manufacture the
OPTICAL PRODUCT to ELECTROPURE on a temporary basis on terms to be reasonably
agreed upon. Notwithstanding the parties efforts to resolve such problems, if
the difficulty in supplying the PRODUCT continues for 60 days or more,
ELECTROPURE shall have the right to manufacture (which shall include the right
to subcontract the manufacture of) the OPTICAL PRODUCT, but only until such time
as the problem(s) giving rise to the difficulty in supply shall cease.
7.2 If ELECTROPURE assumes the manufacture of the OPTICAL PRODUCT as
provided in Section 7.1, WYATT agrees to sufficiently train designated
ELECTROPURE personnel and ELECTROPURE agrees to pay WYATT its reasonable
expenses incurred in providing training. ELECTROPURE' designated personnel shall
also have access to the drawings and other information provided to the Escrow
Agent as set forth in Section 7.4.
7.3 In the event of liquidation, declaration of bankruptcy, an
assignment for benefit of creditors or the like by WYATT, whether the foregoing
are the result of voluntary or involuntary acts, or if ownership of WYATT is
transferred to a competitor of ELECTROPURE, then ELECTROPURE shall have the
immediate and perpetual right to thereafter make, use and sell the PRODUCT as
set forth herein, including, without limitation, the patent license contained in
Section 2 of the TTA.
7.4 WYATT shall transfer within sixty (60) days of the successful
conclusion of Phase II of the TTA (Exhibit "D"), a detailed set of drawings and
other information such as a bill of materials and vendor listing, all of which
is sufficient to enable ELECTROPURE to manufacture the OPTICAL PRODUCT, to Iron
Mountain Records Management, Inc. (the "Escrow Agent") to be held in escrow.
WYATT agrees to execute an agreement with the Escrow Agent having terms and
conditions appropriate to carry out the intent of this provision. The conditions
of release from escrow to ELECTROPURE shall be a written representation by
ELECTROPURE to the Escrow Agent that conditions permitting ELECTROPURE to
manufacture the OPTICAL PRODUCT as provided in Sections 7.1 or 7.3 shall have
occurred and notice to WYATT thereof with the opportunity to object for a period
of ten (10) days. The reasonable cost of reproducing such drawings and
information will be borne by ELECTROPURE. Any updates or revisions to the
manufacturing specifications will similarly be provided to the Escrow Agent as
they become available. In the event the Escrow Agent declines or ceases acting
as Escrow Agent hereunder, ELECTROPURE shall appoint a successor Escrow Agent,
which successor must be an independent third party, and which is recognized
regionally, nationally or among trade
<PAGE> 24
EXHIBIT 10.52; PAGE 24
professionals as a capable escrow agent for the type of materials to be placed
in escrow hereunder.
7.5 In the event that ELECTROPURE obtains the right to make the OPTICAL
PRODUCT, as provided in this ss. 7, ELECTROPURE agrees to pay WYATT a royalty of
3% of the net selling price of the ELECTROPURE Drinking Water Monitoring
System(s)resulting from the Project, or $2500 per ELECTROPURE Drinking Water
Monitoring System(s)sold which resulted from the Project, whichever is less.
7.6 So long as WYATT continues its operations, WYATT also agrees to
provide up to 15 man days of technical support at no additional cost to that set
forth above to enable ELECTROPURE to carry out its manufacturing rights.
8. LIMITED OPTICAL PRODUCT(S) WARRANTY. WYATT warrants the LICENSED PRODUCT(S)
against defects in materials and workmanship when used in accordance with the
appropriate instructions for a period of fifteen (15) months from the date of
shipment of the OPTICAL PRODUCT(S). WYATT MAKES NO OTHER WARRANTY, EXPRESSED OR
IMPLIED. THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. The warranty provided herein and the data, specifications and
descriptions of the OPTICAL PRODUCT(S) appearing in Exhibit "F" may not be
altered except by express written agreement signed by an officer of WYATT and
ELECTROPURE. Representations, oral or written, which are inconsistent with this
warranty or such publications are not authorized and if given, should not be
relied upon.
WYATT will repair or replace, at no cost to ELECTROPURE, all parts, components
and subassemblies which become defective during the warranty period. The
foregoing warranty shall not apply as to any defect resulting from abuse,
misuse, or neglect by ELECTROPURE or by any third party.
For warranty replacement parts, WYATT shall be responsible for any freight,
customs and duties, insurance and other related costs incurred in transporting
the defective OPTICAL PRODUCT(S) to WYATT and also in supplying ELECTROPURE with
PRODUCT which conforms to the test specifications in Exhibit "F". WYATT shall
specify within forty-eight (48) hours of being notified of a claim hereunder the
carrier and/or mode of return to WYATT for warranty repair or replacement.
9. INDEMNITIES.
(a) WYATT shall indemnify and hold ELECTROPURE harmless from any costs
or expenses reasonably incurred by ELECTROPURE in connection with the sale or
use of any ELECTROPURE product that results from the Project but only to the
extent that such costs and expenses relate to (i) any assertion of infringement
of patents, trademarks, trade names or rights of third parties associated with
sale or use of the OPTICAL PRODUCT or any other rights transferred hereunder or
under the TTA, or (ii) bodily injury or property damage resulting directly from
the OPTICAL PRODUCT portion of the ELECTROPURE Drinking Water Monitoring
System(s) resulting from the Project, provided, however, that no such indemnity
shall be available to ELECTROPURE where ELECTROPURE has engaged in gross
negligence or willful misconduct. In addition, WYATT assumes no liability from
any interpretations, results, conclusions, or actions based on operation of the
ELECTROPURE Drinking Water Monitoring
<PAGE> 25
EXHIBIT 10.52; PAGE 25
System(s) resulting from the Project, provided, however, that no such indemnity
shall be available to ELECTROPURE where ELECTROPURE has engaged in gross
negligence or willful misconduct. In addition, WYATT assumes no liability from
any interpretations, results, conclusions, or actions based on operation of the
ELECTROPURE Drinking Water Monitoring System(s). If WYATT chooses to design
around any such alleged infringement, WYATT shall provide ELECTROPURE with
suitable technical assistance to render the OPTICAL PRODUCT non-infringing,
provided however, that the same shall not reduce WYATT's indemnification
obligations under this Section 9(a).
(b) ELECTROPURE shall indemnify and hold WYATT harmless from any costs
or expenses reasonably incurred by WYATT in connection with the sale or use of
any ELECTROPURE Drinking Water Monitoring System(s) resulting from the Project
incorporating the OPTICAL PRODUCT as follows: (i) with respect to intellectual
property infringement, to the extent that such costs and expenses are not
related to any assertion of infringement of patents, trademarks, trade names or
rights of third parties associated with the sale or use of the OPTICAL PRODUCT
or the rights transferred or licensed hereunder or under the TTA, and (ii) with
respect to bodily injury and property damage, to the extent such bodily injury
or property damage did not directly or indirectly result from the use of the
OPTICAL PRODUCT portion of the ELECTROPURE Drinking Water Monitoring System(s),
provided, however, that no such indemnity shall be available to WYATT where
WYATT has engaged in gross negligence or willful misconduct.
(c) No party shall have any obligation for claims under this Section 9
if the party seeking indemnification makes (i) any prejudicial admission or
other communication regarding such claim or (ii) any settlement, without the
prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld or delayed. The indemnified party agrees to give the
indemnifying party prompt notice of any such claim, and the indemnifying party
shall have the right (but not the obligation) to defend any claim by any third
party for which indemnity hereunder will be sought.
IN WITNESS WHEREOF, the parties have caused this Supply Agreement to be duly
executed below.
By: /S/ PHILIP J. WYATT Date: 10/25/97 By: /S/ FLOYD PANNING Date: 10/25/97
------------------- -----------------
Wyatt Technology Corporation Electropure, Inc.
802 E. Cota Street 23251 Vista Grande, Suite A
Santa Barbara, CA 93103 Laguna Hills, CA 92653
<PAGE> 26
EXHIBIT 10.52; PAGE 26
EXHIBIT "C"
DRINKING WATER SCREENING (LASERPURE) PROJECT
As this Exhibit forms the crux of the AGREEMENT, some of it will be in narrative
form.
The Phase 1 project delineated herewith relates to an intense program of initial
measurements, analyses, and market studies required to confirm that some
elements of the proposed instrumentation, which will form an important element
of ELECTROPURE's future business, will perform. In addition, it is anticipated
that some proposal writing may be undertaken to insure the continuity of the
programs should ELECTROPURE's capital raising activities be delayed.
The technology transferred has (at inception) two main areas for exploitation:
(1) Detection and early warning of dangerous particulate materials such as
parasites and other organisms such as bacteria, viruses, spores, etc. Also
included (for future programs) would be asbestos fibers and similar materials
which pose a health hazard to the consumer. (2) Detection and early warning of
dangerous soluble substances such as mutagens, carcinogens and metabolic
poisons. The latter technology area has already been confirmed during a study by
WYATT for the U. S. Army. This confirmation was the successful product of an
earlier SBIR program performed by WYATT for the U. S. Army about a decade ago.
Though successful, the concept was never commercialized. Several extant WYATT
patents cover much of this material.
To make the latter area into a viable product line will require the development
of specialized instrumentation for the implementation of the methods developed
(and patented) under the Army program, market studies, and the establishment of
a marketing plan, and some "missionary" work with the EPA to develop the
enabling directives that would make the concepts and instrumentation required of
all water consumer delivery agencies. While these markets may well represent the
major opportunity (on a worldwide basis) for the future growth of ELECTROPURE's
consumer market products, it would appear that the parasite detection concepts
will be the easiest to develop and market initially. It is for these reasons
that the initial emphasis will be in this area with ELECTROPURE's major
responsibility being that of insuring that adequate funds are available for the
program without delay.
PHASE 1A - Feasibility confirmation (funded by ELTP with equipment and technical
support from WTC) of parasite detector.
Objective: Confirm that multiangle light scattering (MALS) measurements
of individual Cryptosporidium and Giardia cysts can be identified with a
certainty > 90% in the presence of various background algal (algae) species. Use
existing instrumentation and (some) software supplied by WYATT. Develop required
software and analytical packages.
<PAGE> 27
EXHIBIT 10.52; PAGE 27
The presence of these parasites in many drinking water sources in the U. S.
poses a continuing threat to the health of consumers. Many such outbreaks are
reported each year. The ultimate objective for ELECTROPURE will be to develop
systems incorporating WYATT's detector and software systems capable of
monitoring these two parasites at very low concentrations.
The proposed system would monitor the MALS properties of each particle passing
through the detector region. Once the MALS measured data were available, a real
time software program would examine the measurements and decide whether or not
the particle was one of the two test parasites. A positive confirmation would be
made only if the software considered the data unequivocal; otherwise no
identification would be attempted. Of the particles chosen by the software to
identify, 90% of such identifications must be correct for the proposed program
to move forward. This 90% figure is a major objective. Should the classification
scheme fall below this value, suitable statistical analyses will have to be
initiated to examine the reliability of and risks associated with such lesser
numbers
Staffing: This project (and all subsequent related programs [if
initiated] performed during the term of his employment) would be under
the direction of Dr. Gregory M. Quist. Details of his hiring are listed
below.
Duration: Five months. During this period, the feasibility of the MALS
detection concept will be confirmed.
Financial Details: Quist SALARY: $11K per month
BENEFITS: HMO or equivalent for Quist and dependents,
$500K term insurance
TITLE (Temporary position): General Manager of ELECTROPURE
LASER Division.
ADDITIONAL: Aggregate of $20K for temporary staff and
up $5K travel over five month project feasibility
study.
STOCK OPTION: 300,000 shares at a 25% discount to
current market value for 6 years with a 5
year vesting schedule at 20% per year on the
anniversary of the option.
Facilities and equipment: All facilities for these studies will be at
ELECTROPURE which will provide all secretarial, telephone, computers,
utilities, etc., required to conduct such studies. WYATT will transfer
to ELECTROPURE, at no cost, certain equipment as may be required
throughout the five-month term, including, but not limited to
instrumentation, autoclave, lab supplies, and available software. WYATT
will provide also periodic consultations in accordance with terms of the
Technology Transfer Agreement.
<PAGE> 28
EXHIBIT 10.52; PAGE 28
Ancillary activities: As the experiments and analytical software are
being developed, a market validation program for the planned parasite
detectors will be conducted. Its purpose is to determine the market
size, sales method (sale vs. service contract, etc.), pricing,
profitability, etc. From these data, a business plan will be developed.
As soon as successful conclusions are established, a staffing strategy
program will be started and suitable candidates identified.
SBIR proposal: As time permits, an SBIR (small business innovative
research program) proposal (20 pages) will be prepared and submitted (i)
to provide augmented funds from the Federal Government; (ii) assist
indirectly in familiarizing the appropriate Federal Agency (e. g. the
EPA) of the on-going ELECTROPURE developments in this field; and (iii)
provide and cultivate contacts within regulatory agencies such as EPA
that will assist ELECTROPURE in the placement of early beta site systems
and, eventually, make such equipment mandatory.
Upon the successful (>90%) completion of above within 5 months, Quist will
receive a new employment agreement.
PHASE 1b Soluble toxicant screening program.
Should the five month confirmation study prove only partially successful
(i. e. less than a 90% correlation), then (at the mutual election of all
parties) Dr. Quist would receive a new employment contract for an extended
period to perform a market validation study of the WYATT patents and "know-how"
as they relate to a viable business for the screening of drinking water supplies
for the presence of dissolved toxins, viz. carcinogens, mutagens, and metabolic
poisons. Quist would study also the equipment requirements for the
commercialization of the screening concept. Once again, the funding of this
sub-phase would be by ELECTROPURE. Quist benefits and stock option would
continue.
<PAGE> 29
EXHIBIT 10.52; PAGE 29
EXHIBIT "D"
DRINKING WATER SCREENING PROJECT
PHASE 2
This Phase describes the development, marketing and sales strategies following
the successful confirmation of the parasite and/or toxicant detection programs
of Phase 1. Details will be generated during the Phase 1 program.
<PAGE> 30
EXHIBIT 10.52; PAGE 30
EXHIBIT "E"
- -------------------------------------------------------------------------------
NON-DISTRIBUTION AND REGISTRATION RIGHTS AGREEMENT
- -------------------------------------------------------------------------------
THIS NON-DISTRIBUTION AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made and entered into as of October 25, 1997, by and between
Electropure, Inc. ("Electropure") and Wyatt Technology Corporation
("Shareholder"), with respect to the following facts:
Electropure has issued to Shareholder, pursuant to the terms of a
Technology Transfer Agreement With License of even date, Two Million One Hundred
Thousand (2,100,000) shares of Common Stock of Electropure (the "Stock").
NOW, THEREFORE, in consideration of the foregoing facts and the
mutual covenants and agreements contained herein, the parties hereby agree as
follows:
1. ISSUANCE OF THE SHARES. Electropure hereby issues the Stock to
Shareholder, and Shareholder hereby accepts the Stock.
2. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.
Shareholder represents and warrants to Electropure:
2.1 The Stock will be acquired by Shareholder for investment
for an indefinite period, for Shareholder's own account, not as a nominee or
agent, and not with a view to the sale or distribution of any part thereof, and
Shareholder has no present intention of selling, granting participation in, or
otherwise distributing the same expect as may be permitted by the Securities Act
of 1933 as amended (the "Act").
2.2 Shareholder does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer, or grant
participation to such person or to any third person, with respect to the Stock.
2.3 Shareholder understands that the Stock has not been
registered under the Act, in reliance upon the exemptions from the registration
provisions of the Act contained in Section 4 (1) thereof, and any continued
reliance on such exemption is predicated on the representations of the
Shareholder set forth herein.
2.4 Shareholder understands that the Stock must be held
indefinitely unless the sale or other transfer thereof is subsequently
registered under the Act, or an exemption from such registration is available.
Shareholder further understands that Electropure is under no obligation to
register the Stock on its behalf or to assist it in complying with any exemption
from registration, except as provided in Section 3.1 hereof.
2.5 Shareholder will not transfer the Stock without registering
them under applicable federal or state securities laws unless the transfer is
exempt from registration. Shareholder acknowledges
<PAGE> 31
EXHIBIT 10.52; PAGE 31
that Electropure may not allow a transfer of Stock unless the transferee meets
certain conditions. Shareholder understands that legends will be placed on
certificates representing the Stock, with respect to the above restrictions on
resale or other disposition of the Stock and that stop transfer instructions
have or will be placed with respect to the Stock so as to restrict the
assignment, resale or other disposition thereof.
2.6 Electropure will direct its transfer agent to place such a
stop transfer order in its books respecting transfer of the Stock, and the
certificate or certificates representing the Stock will bear the following
legend or a legend substantially similar thereto:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1993. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF: (1) AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
THAT ACT, OR (2) AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
2.7 Shareholder understands that Rule 144, promulgated by the
Securities and Exchange Commission under the Act, may not be currently available
for sale of the Stock, and there is no assurance that it will be available at
any particular time in the future. Such sales in reliance upon Rule 144 may only
be (i) in limited quantities after the securities have been held for one (1)
year after being issued by Electropure or an affiliate of Electropure, or (ii)
in unlimited quantities by non-affiliates after the securities have been held
for two (2) years after being issued by Electropure or an affiliate of
Electropure, in each case in accordance with the conditions of the Rule, all of
which must be met (including the requirement, if applicable, that adequate
information concerning Electropure is then available to the public).
3. REGISTRATION RIGHTS.
3.1 Electropure will file by November 15, 1997, a registration
statement pursuant to the Act, to the end that up to, but no more than, Six
Hundred Thirty Thousand (630,000) shares of the Stock (the "Shares") requested
to be registered by the Shareholder may be sold under the Act and Electropure
will use its best efforts to cause such registration to become effective and to
continue to be effective (current) (including the taking of such steps as are
necessary to obtain the removal of a stop order) for a period of nine (9) months
from the effective date of the registration statement, or if shorter, until
Shareholder has sold all of the Shares; provided, however, that Shareholder
shall furnish Electropure with appropriate information (relating to Shareholder
and the intention of Shareholder to sell the Shares) in connection therewith as
Electropure shall reasonably request in writing; and provided further, that if
the managing underwriter of any underwritten public offering then being
contemplated by Electropure request that Shareholder delay any sales for up to
sixty (60) days, Shareholder will delay such sale of the Shares for the period
so requested by such underwriter. Shareholder may at any time request
Electropure to deregister any Shares included in a registration statement under
this Section 3.1.
3.2 The following provision of this Section 3 shall also be
applicable:
<PAGE> 32
EXHIBIT 10.52; PAGE 32
A. Following the effective date of such registration
statement, Electropure shall upon the request of Shareholder forthwith supply
such a number of prospectuses meeting the requirements of the Act, as shall be
requested by such owner to permit such holder to make a public offering of all
the Shares from time to time offered or sold to such holder, provided that such
holder shall from time to time furnish Electropure with such appropriate
information (relating to Shareholder and Shareholder's intentions to sell the
Shares) in connection therewith as Electropure shall request in writing.
Electropure shall also use its best efforts to qualify the Shares for sale in
such states as Shareholder shall reasonable designate, but in no case more than
five (5) states.
B. Electropure shall bear the entire cost and expense of
any registration of securities initiated by it under Section 3.1 hereof,
notwithstanding that Shares may be included in any such registration.
Shareholder shall, however, bear the fees of its own counsel and any
registration fees, transfer taxes or underwriting discounts or commissions
applicable to the Shares sold by it pursuant thereto.
C. Electropure shall indemnify and hold harmless such
Shareholder and each underwriter, within the meaning of the Act, who may
purchase from or sell for any such holder any Shares from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement or any post-effective amendment thereto under the Act or any
prospectus included therein required to be filed or furnished by reason of this
Section 3 or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or alleged untrue statement
or omission or alleged omission based upon information furnished or required to
be furnished in writing to Electropure by Shareholder or underwriter expressly
for use therein, which indemnification shall include each person, if any, who
controls any such underwriter within the meaning of such Act; provided, however,
that Electropure shall not be obliged so to indemnify any such underwriter or
controlling person unless such underwriter shall at the same time indemnify
Electropure, its directors, each officer signing the related registration
statement and each person, if any, who controls Electropure within the meaning
of such Act, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or any prospectus required
to be filed or furnished by reason of this Section 3 or caused by any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission based upon information furnished in writing to Electropure
by any such underwriter expressly for use therein.
D. In the event counsel to Electropure issues its
opinion that the Shares may, at the time of such proposed registration and sale
under this Section 3.1 hereof, be sold by Shareholder under Rule 144 promulgated
under the Act without limitation as to the amount of securities that may be
sold, then, in such event, Electropure need not comply with the registration
provision of this Section 3.1 hereof.
E. Neither the giving of any notice by any Shareholder
nor the making of any request for prospectus shall impose upon Shareholder any
obligation to sell any Shares.
<PAGE> 33
EXHIBIT 10.52; PAGE 33
F. Notwithstanding any other provisions of this Section
3, Shareholders will limit his sales of the Shares pursuant to a registration
statement to the minimum number of Shares needed to pay any federal and state
income taxes associated with Shareholders entering into the Technology Transfer
Agreement with License referred to above.
G. If Electropure fails to register the Shares requested
by Shareholder by the time Shareholder has to pay, including any and all
available extensions, the federal and state income taxes related to the
Shareholder entering into the Technology Transfer Agreement with License and the
issuance of the Stock, then Electropure shall pay any penalties and interest
related to such federal and state income taxes (but not the taxes) for the
period beginning on the due date for such respective payments and ending on the
date the Shares request are covered for resale by the Shareholder in an
effective and current registration statement.
4. RIGHT OF FIRST REFUSAL. If Shareholder, prior to Electropure filing a
registration statement covering the Shares under Section 3, proposes to engage
in a bonafide sale, directly or indirectly, to an unaffiliated, bonafide third
party, any or all of such Shares, then prior to taking any such action,
Shareholder shall deliver to Electropure a statement in writing (the
"Statement") setting forth (i) the date of the Statement (the "Statement Date"),
(ii) the manner in which the sale is proposed to occur including whether or not
the Shares are intended to be sold in the over-the-counter market; (iii) the
consideration for the sale, which if the sale is to take place in the
over-the-counter market, shall be the mean between the average of the closing
bid and asked prices for the Common Stock of Electropure for the ten (10)
trading days prior to the date of the Statement, (iv) the purchaser's name,
address and telephone number, if the sale is not in the over-the-counter market,
(v) the purchaser's willingness to supply any additional information about
himself as may be reasonably requested by Electropure, if the sale is not in the
over-the-counter market, and (vi) a copy of a legally binding offer to purchase,
if the sale is not in the over-the-counter market. Electropure shall thereupon
have the irrevocable and exclusive option, but not the legal obligation (the
"Option") to purchase any or all of the Shares subject to the Option upon the
same terms and conditions set forth in the Statement. The Option shall be
exercisable by giving written notice by facsimile or e-mail or overnight
delivery service (the "Option Notice") to Shareholder within two (2) business
days following the date of the Statement, that Electropure elects to exercise
the Option. Upon exercise of the Option, Shareholder shall have the obligation
to consummate the sale on the terms set forth in the Statement and subject to
the terms and conditions set forth in the Statement. Failure by Electropure to
(i) exercise the Option, (ii) to give the Option Notice or (iii) to tender the
exercise price against the tender of the Shares duly endorsed for transfer with
signature guarantees and free and clear of any liens, claims or encumbrances,
shall be deemed an election by it not to exercise the Option. Shareholder shall
tender the Shares to Electropure, duly endorsed with signature guarantees and
free and clear of any liens, claims or encumbrances with ten (10) days of
receipt of the Option Notice, and give Electropure two (2) business days advance
written notice of the date of tender. Electropure may assign its rights under
this Section 4 to a third party.
5. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings relating to such subject matter.
<PAGE> 34
EXHIBIT 10.52; PAGE 34
6. CHOICE OF LAW AND VENUE. This Agreement shall be governed by
and construed under the laws of the State of California in force from time to
time. Any proceeding arising out of this Agreement shall be brought in Orange
County, California.
7. ATTORNEY'S FEES. In any action to enforce this Agreement, the
prevailing party shall be entitled to recover from the non-prevailing party all
reasonable costs, including, without limitation, attorneys' fees.
8 PARTIES BOUND.This Agreement is binding on and shall inure to
the benefit of the parties and their respective successors, assigns, heirs, and
legal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Electropure: ELECTROPURE, INC.
BY: /S/ FLOYD PANNING
-------------------------------------------------
NAME: FLOYD PANNING
TITLE: PRESIDENT
ADDRESS: 23251 VISTA GRANDE, SUITE A
LAGUNA HILLS, CALIFORNIA 92653
Shareholder: WYATT TECHNOLOGIES CORPORATION
BY: /S/ FLOYD PANNING
-------------------------------------------------
NAME: PHIL WYATT
TITLE: PRESIDENT
ADDRESS: 802 E. COTA STREET
SANTA BARBARA, CALIFORNIA 93103
<PAGE> 1
EXHIBIT 10.52.1
JOINT FILING AGREEMENT
The undersigned agree that the attached Schedule 13D and any amendments
thereto and any Forms 3, 4 or 5 required to be filed by the undersigned
relating to the Common Stock of Electropure, inc., a California corporation,
may be jointly filed.
November 4, 1997
/S/ PHILIP J. WYATT
-------------------------------------------------
Philip J. Wyatt
WYATT TECHNOLOGY CORPORATION
By /S/ PHILIP J. WYATT
--------------------------------------------
Philip J. Wyatt, President
