[LOGO] SOLUCORP LETTERHEAD
Exclusive Licensing Agreement
This Exclusive Licensing Agreement, dated as of September 15, 1997, (this
"Agreement" hereinafter) by and between Smart International Ltd. with its
principal offices located at 901 Kwong Sang Hong Center, 151-153 Hoi Bun Road,
Kwun Tong, Kowloon, Hong Kong, The People's Republic of China, ("SMART") and EPS
Environmental, Inc., doing business as Solucorp Industries, a British Columbia
corporation with its principal offices located at 250 West Nyack Road, West
Nyack, NY 10994 U.S.A. ("SOLUCORP").
WITNESSETH
WHEREAS, SOLUCORP is the owner of a patent-pending process named Molecular
Bonding System ("MBS" hereinafter) used for the stabilization of heavy metals
contaminated soils, sludge, industrial slag, ash and other such materials by the
addition of proprietary reagents to the contaminated materials under moisture
controlled conditions;
WHEREAS, SMART is involved in the remediation business and is interested in
obtaining an Exclusive License to market and apply MBS technology from SOLUCORP;
AND WHEREAS, SOLUCORP and SMART entered into an Agreement in Principle on June
6, 1997, and wish to supersede that agreement with this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1.0 Territory: The territory covered by this Exclusive License is
The People's Republic of China ("China" hereafter).
Under no circumstances can SMART operate or solicit
business outside of China without the written
permission from SOLUCORP. Breach of this clause
shall give SOLUCORP reason to pursue termination of
this Agreement.
2.0 License: SOLUCORP grants to SMART the Exclusive License to
make, use, market and Sub-license the MBS process
to stabilize heavy metal contaminated soils,
industrial slag, sludge, ash, etc. in the
Territory.
2.1 License Extension: In the event that another company, including a
Licensee for MBS in another region or country, has
access to a project within China which is not
available to SMART, SMART has the automatic right
as the exclusive licensee to enter into an
Agreement of its chosen form with that company to
complete the project.
SMART's rights in this include the option to
Sub-license any such company for a period of one
(1) year with the discretion to grant a further one
(1) year option for renewal.
3.0 Currency: Throughout this agreement the currency is U.S.
DOLLARS ($US).
4.0 License Fee: Throughout the entire term of this contract, SMART
will pay SOLUCORP an annual license fee as follows:
In year one of this Agreement (June 1, 1997 through
May 31, 1998), SMART agrees to pay SOLUCORP
$2,000,000.00 ($200,000 by July 31, 1997; $200,000
by September 30, 1997; $200,000 by November 30,
1997; $400,000 by January 31, 1998; $500,000 by
March 31, 1998; and $500,000.00 by May 31, 1998.)
In years two (2) through ten (10) of the Agreement
SMART agrees to pay SOLUCORP $2,000,000.00 each
year in quarterly
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installments ($500,000 on August 31; $500,000 on
November 30; $500,000 on February 28; and $500,000
on May 31.)
4.1 Royalty Fee: Throughout the entire term of this contract SMART
will pay SOLUCORP a royalty of $5.00 per processed
ton in excess of 100,000 tons for each contract
year.
These royalties become due and payable at the end
of each calendar quarter after the minimum tonnage
requirements are met. (Refer Clause 7.1 - Market
Obligations)
All processed tonnage must be identified by SMART
on a project by project basis and SOLUCORP, with
reasonable notification, shall have access to all
substantiating material relevant to these projects.
5.0 Term: Except on the occurrence of significant default by
either party, the Term of this Agreement is ten
(10) years, commencing on June 1, 1997, with an
automatic renewal for an additional ten (10) years,
unless both parties agree in writing to terminate.
6.0 Chemicals SOLUCORP acknowledges that its separate contractual
agreement with SMART to manufacture the primary
chemical ingredient of MBS allows SMART to produce
that chemical ingredient for its own remediation
projects in China.
SOLUCORP also acknowledges the commercial
efficiency of SMART sourcing and blending all
additional chemical ingredients required for the
manufacture of MBS in China without the need to
purchase them from or via SOLUCORP.
SMART will maintain and supply to SOLUCORP accurate
records of the amounts of both the primary chemical
ingredient and the blended MBS used on each
project. These records will be supplied to SOLUCORP
within the first week of each month, and cover the
work effected during the previous month.
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6.1 Chemical Manufacture: SMART will continue to manufacture MBS exclusively
for sale to SOLUCORP and for its own remediation
projects, based on the agreement that all supplied
will be matched to SOLUCORP's defined
specifications.
SOLUCORP agrees to not use or sell the chemicals in
any way which could be construed to be competitive
to SMART in the Territory of China.
SMART'S right to manufacture MBS for its own
remediation projects is dependent on SOLUCORP, as
the sole owner of the MBS process, maintaining the
right of final arbitration and/or veto on all
matters relating to ensuring compliance with
production protocols and Quality Assurance/Quality
Control standards, as are, or may be defined by
SOLUCORP through the full Term of this Agreement.
6.2 Ownership of MBS: The ownership of the MBS formulas, processes and
techniques for its application remains the
exclusive property of SOLUCORP. Any derivation or
modification of the MBS process, whether devised or
developed by SOLUCORP or SMART, remains the
proprietary property of SOLUCORP.
6.3 Equipment: SOLUCORP will provide SMART with equipment
specifications to enable SMART to source
appropriate equipment to operate the MBS process.
SOLUCORP will additionally provide SMART with
training by SOLUCORP's Director of Field
Operations or an appropriate Consultant Engineer
in the operation of the equipment.
7.0 Marketing Support: At all times during the terms of this agreement,
SOLUCORP will provide sufficient technical and/or
marketing support, as limited to SOLUCORP's
capabilities, to SMART.
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Upon SMART'S request, SOLUCORP shall, within
reason, promptly make available several of its
officers and personnel so as to enable SMART to
perform its obligations as set forth in this
Agreement.
7.1 Market Obligations: SMART will act on SOLUCORP's behalf in China to
effect such operational matters as: reviews and
compliance with all relevant environmental
regulations; obtaining all pertinent permits and
authorizations, and representations to all
regulatory authorities.
SMART will make every endeavor to achieve an
annual processed tonnage target of 100,000 tons for
each year (June through May) throughout the full
Term of this Agreement. (Refer also to Clause
20.0 - Other)
8.0 Termination: Either party will have the right to terminate the
license in the event of the other party declaring
bankruptcy, or by mutual agreement after meeting to
review the contract terms.
8.1 Fundamental Breach: On the occurrence of significant default by either
party under the terms of this Agreement, and in
such event, the defaulting party shall receive
notice in writing to rectify the situation within
90 days or risk termination. Such notification
shall acknowledge that all existing terms are
applicable throughout that period.
8.2 Merger/Acquisition: It is further agreed in the event of a merger or
acquisition of either party, and only in such an
event, that party shall ensure that both the terms
and spirit of this agreement will continue to
operate for the full term of the contract.
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It is further agreed, in the event of a merger or
acquisition of either party or adverse market
change in China (as determined by SMART), any
monies owed to SOLUCORP for licenses or royalties
either past, present, or future by SMART can be
converted, at SMART's option, to pre-paid inventory
of the primary MBS ingredient. Demand for delivery
of pre-paid inventory cannot exceed ten percent
(10%) of SMART's monthly production unless agreed
in writing by SMART.
9.0 Termination Consequence: On the expiry or other terminations of this
Procedure: Agreement SMART agrees to:
9.1 Return to SOLUCORP all samples, publicity
promotional and advertising materials, and all
confidential data.
9.2 Sign such notification of cessation of use of the
Patent Applications as is required by SOLUCORP.
9.3 Return to SOLUCORP all originals and copies of all
documents and information in any form containing or
covering in any way any part of the Patent
Applications.
9.4 Cease carrying on the activities permitted by this
Agreement.
10.0 Existing Rights The termination of this Agreement shall be without
prejudice to any rights which have already accrued
to either of the parties under this Agreement.
11.0 Force Majeure: If either party is prevented from fulfilling its
obligations under this Agreement by reason of any
supervening event beyond its control, including but
not by way of limitation, war, national emergency,
flood, earthquake, strike or lockout (other than a
strike or lockout induced by the party so
incapacitated) the party unable to fulfill its
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obligations shall immediately give notice of this
to the other party and shall do everything in its
power to resume full performance.
11.1 On such notice being given neither party shall be
deemed to be in breach of its obligations under
this Agreement.
11.2 If and when the period of incapacity exceeds six
(6) months, then this Agreement shall automatically
terminate unless the parties first agree otherwise
in writing.
12.0 Confidentiality: With the exception of acknowledging that this
exclusive license for the Territory has been
established for a minimum period of ten (10) years,
all other terms relating to this contract shall
remain confidential between the parties and there
will be no disclosure of them by a party without
the written consent of the other party.
12.1 The parties acknowledge that, in order to further
the purposes of this Agreement, information
containing or consisting of trade secret, customer
list and other confidential information may be
communicated by either party to the other. Such
information may take the form of plans, drawings
and data, and will be deemed confidential unless
otherwise designated by SOLUCORP or SMART as
appropriate. SOLUCORP shall have the right to apply
and obtain from the Court a restraining order to
prevent SMART from disclosing or using such
confidential information to third parties either
during the Term or for a period of 12 months
thereafter.
13.0 Indemnification: SMART shall not incur any liability or indebtedness
in the name of SOLUCORP, nor do or suffer any act
or thing which may render SOLUCORP liable for the
payment of money whatsoever to any third person for
any purpose whatsoever, except as herein otherwise
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13.1 provided.
SMART agrees that the following paragraphs shall
appear verbatim in any agreement SMART makes with
any organization or individual that is in any way
relevant to or connected to the use of this
license; and that SMART shall make no contact or
anything similar thereto with any party that is
not memorialized or executed in a writing that
contains the following one (1) paragraph.
"SMART is a licensee of Solucorp Industries' MBS
technology. Both parties to this Agreement agree
that SOLUCORP, except for its own default, will not
be held liable or in any way responsible for a
default under this Agreement or as a result of the
performance of this Agreement by either party."
14.0 Jurisdiction: This contract shall be governed by New York State
law and both parties shall agree to submit to the
jurisdiction of an independent international
arbitrator in the event of disputes arising which
can not be settled by discussion between the
parties.
15.0 Notices: Any notice consent or the like (in this clause
referred to generally as 'notice') required or
permitted to be given under this Agreement shall
not be binding unless in writing, and may be given
personally or sent to the party to be notified by
pre-paid first class post or by telex or by
facsimile transmission at its address as set out
above or as otherwise notified in accordance with
this clause.
15.1 Notice given personally shall be deemed given at
the time of delivery.
15.2 Notice sent by post in accordance with this clause
shall be deemed given at the commencement of
business on the fifth business day next following
its posting.
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15.3 Notice sent by telex or facsimile transmission in
accordance with this clause shall be deemed given
at the time of its actual transmission.
16.0 Reservation of Rights: All rights currently exclusive to SOLUCORP but not
specifically and expressly granted to SMART by this
Agreement are reserved to SOLUCORP for further
negotiation with SMART as warranted.
17.0 Waiver: The failure by either party to enforce at any time
or for any period any one or more of the terms of
conditions or this Agreement shall not be a waiver
of them or of the right at any time subsequently to
enforce all terms and conditions of this Agreement.
18.0 Interpretation: Unless the context otherwise requires:
18.1 Words importing the singular number shall include
the plural and vice versa.
18.2 Words importing any particular gender shall include
all other genders.
18.3 Reference to persons shall include bodies of
persons whether corporate or incorporate.
18.4 Any reference in this Agreement to any statute or
statutory provision shall be construed as referring
to that statute or statutory provision as the same
may from time to time be amended, modified,
extended, reenacted or replaced (whether before or
after the date of this Agreement) and including all
subordinate legislation made under it from time to
time.
19.0 No Agency or The parties are not partners or joint ventures, nor
it SMART
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Partnership: entitled to act as SOLUCORP's agent nor shall
SOLUCORP be liable in respect of any
representation act or omission of SMART of
whatever nature.
20.0 Other: SOLUCORP agrees that no automatic penalty or
revocation of the license will be imposed in the
event of SMART's failure to meet the targeted
annual processed tonnage. However, after the
agreement goes into effect for 24 months, in the
event there is a failure to process 50% of the
targeted processed tonnage in any two consecutive
years, both parties shall meet to review the
entire China License. The primary purpose of such
a review will be to modify the contract to a
mutually accepted terms.
21.0 Whole Agreement: This Agreement contains the whole agreement between
the parties and supersedes any prior written or
oral agreement between them in relation to its
subject matter and the parties confirm that they
have not entered into this Agreement on the basis
of any representations that are not expressly
incorporated into this Agreement. Should any
provisions of this Agreement be determined to be
unenforceable or prohibited by any applicable law,
this Agreement shall be considered divisible after
such provision which shall be inoperative and the
remainder of this Agreement shall inure to the
benefits of both parties and be valid and binding
as though such provisions were not included herein.
22.0 No Modification: This Agreement may not be modified except by an
instrument in writing signed by both of the parties
or their duly authorized representatives.
23.0 Joint and Several: All agreements on the part of either of the parties
which comprises more than one person or entity
shall be joint and several.
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of
the date first set forth herein and hereby warrant that the persons whose
signature appear below have the authority to enter into this Agreement on behalf
of their respective parties:
For SOLUCORP INDUSTRIES: For SMART INTERNATIONAL Ltd.:
For and on behalf of
[ILLEGIBLE]
SMART INTERNATIONAL LIMITED
/s/ [ILLEGIBLE]
--------------------------------
Authorized Signature(s)
/s/ Peter R. Mantia
- ---------------------------------- --------------------------------
Peter R. Mantia Q.B. Zheng
President Chairman & Managing Director
9-15-97 9-15-97
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Date: Date:
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