HEADS OF AGREEMENT DATED 1999
BETWEEN ELAST TECHNOLOGIES INC., OF
("ETI")
AND RIVERPLATE SECURITIES PTY LTD ACN 002 992 690, of
or its nominee ("Riverplate")
1. The purpose of this Heads of Agreement ("HoA") is to set out the principal
aspects of an investment which Riverplate intends to make in ETI and a
license which ETI intends to grant to a nominee of Riverplate, intended to
be established and named Elast Technologies Australia Asia Pty Ltd or
similar ("ETAA"), on terms which the parties intend will be reflected in a
formal agreement to be entered into between them.
2. Riverplate will, upon the signing of this HoA, subscribe US$0.25 million
cash for 250,000 shares of US$1.00 each in ETI and 250,000 options in ETI.
In addition, upon the signing of this HoA, ETI will issue to Riverplate a
further 250,000 shares of US$1.00 each in ETI and 250,000 options in ETI
and Riverplate will pay for those additional shares and options a total
amount of US$0.25 million in accordance with a payment plan to be mutually
agreed having regard to ETI's capital requirements, budget plan and timing
of the proposed NASDAQ listing for ETI. All 500,000 shares in ETI will have
special registration rights which will ensure that they will be freely
tradable after the expiration of three months from their date of issue.
3. After the issue to Riverplate of the 500,000 shares and 500,000 options in
ETI referred to in paragraph 2 above, ETI will procure a consolidation of
all of its stock (including options) on the basis of a 5 for 1 reversal of
stock, reducing Riverplate's holding to 100,000 shares and 100,000 options.
4. The options in ETI referred to in paragraph 2:
(a) will be exercisable into fully paid shares in ETI on a one for one
basis at any time within 5 years after the date on which they are
issued at an exercise price (post consolidation of ETI stock) of
US$12.00 each:
(b) will be freely tradable after the expiration of three months from
their date of issue.
5. ETI will procure a listing of its stock and options on NASDAQ using
mutually agreed brokers and underwriters prior to December 1999.
6. Whilst it remains a stockholder in ETI, Riverplate shall have the right to
appoint and remove one director, and to nominate an alternate director
during any absences of that director.
7. Riverplate will participate and provide strategic and working input for the
business of ETI. That input will include such things as:
(a) contributing to the development of business strategies, including
international strategic planning;
(b) development of corporate structures, particularly in relation to
international expansion;
(c) development of business operating models, including manufacturing, IT,
communications, customer service and distribution;
(d) assisting in the management of patent applications and registrations
and protection of patents generally;
(e) review, feedback and input into tester design and new model releases;
(f) involvement in tester design review and customer feedback.
8. ETI will grant to ETAA an exclusive licence in respect of its products for
Australia and New Zealand. The licence will be a licence to manufacture,
supply, sell and support all products of ETI or any of its associated
companies, including an electronic allergy sensitivity tester, in return
for a royalty of sales revenue or as otherwise mutually agreed. In
connection with that licence:
(a) ETI will provide product design specifications and advice in relation
to manufacturing the products, data processing and communications,
design and protocol and all other relevant and available business
information and processes.
(b) ETI will initially supply products requested by ETAA for sale by ETAA
on terms to be mutually agreed and set out in the licensing agreement.
(c) the initial term will be 10 years with ETAA having the right to extend
for 2 additional periods of 5 years each.
9. ETI and Riverplate will together in good faith consider, plan and negotiate
the terms on which ETI might grant to ETAA first options to take up
exclusive licences in respect of the Asian region and Europe (being
licences to manufacture, supply, sell and support all products of ETI or
any of its associated companies, including and electronic allergy products
of ETI or any of its associated companies, including and electronic allergy
sensitivity tester) and the timetable which will apply to the establishment
of the Asian region and European businesses.
10. In the event that ETI requires further capital, Riverplate will be given
the first right to provide that capital (but will be under no obligation to
do so).
11. The initial shareholders of ETAA will be David Mortimer, Peter Bradfield,
Ted Hamilton, Nick Spencer and Graham Kelly. It is the intention of the
parties that ETI will have a shareholding in ETAA via a share swap or as
otherwise mutually agreed.
12. Each of the parties shall keep in confidence all information of a material
and
necessary to be provided to advisers and financiers in the course of
progressing the proposals contemplated in this HoA and except as required
by law.
Signed for and on behalf of ELAST Signed for and on behalf of Riverplate
Technologies Inc. Securities Pty Ltd.
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
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(Signature) (Signature)
/s/ PETER CALVIN BRADFIELD
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(Full name) (Full name)
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
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(Signature) (Signature)
/s/ [ILLEGIBLE]
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(Full name) (Full name)