EXHIBIT 3.1 Amended Marketing, Distribution and License Agreement dated
August 30, 2008 between HydroDynex, Inc. and Hydrosystemtechnik, GmbH.
AMENDED MARKETING, DISTRIBUTION and LICENSE AGREEMENT
This AMENDED MARKETING, DISTRIBUTION and LICENSE AGREEMENT, effective
September 3rd, 2007, and amended August 30, 2008, is entered into by
Hydrosystemtechnik GmbH, a German corporation, with its principle place of
business at Gewerbepark 13, D-83052 Bruckmuehl, Germany, (herein called
GRANTOR) and HydroDynex, Inc., a Nevada corporation, with its principal place
of business at 8800 Blue Wolf Street, Las Vegas, NV 89123, (herein called
GRANTEE).
RECITALS:
A. GRANTOR is engaged in the business of developing, manufacturing,
selling and maintaining water treatment plants, particular according to the
proprietary electrochemical process of Anodic Oxidation (AO- System(R)) in
wide variety of applications throughout the world.
B. The principal of GRANTOR is Meinolf Schoeberl who is the inventor and
the owner of the Patents and who has provided to Hydrosys the exclusive
benefit for the utilisation of the Patents, proprietary technology and the
Know- How.
C. GRANTOR has developed patented proprietary technology and designed an
innovative water treatment system to be utilized for purifying and treating
water. GRANTOR is in the business of: 1) manufacturing integrated water
treatment systems, 2) developing innovative technology related to water
treatment systems, and 3) designing custom systems for a wide variety of
water treatment applications and purposes ("Products").
D. GRANTEE was organized to market water treatment systems in North
America and desires to represent GRANTOR initially for selling finished AO
Units on an exclusive basis in all markets of the territory defined below
except the dental market and subject to confirming the market demand for the
Products and meeting certain objectives defined in the Agreement, GRANTEE
will have the right to continue to sell finished AO systems on an exclusive
basis and purchase components from GRANTOR to manufacture AO Units for
distribution in all markets of North America, with the exception of the
dental market, on an exclusive basis.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, the parties agree as follows:
1. BASIS FOR THE AGREEMENT
GRANTOR represents that it is the legal owner of issued patents, of the
right to file Patents, Patents Pending and Improvements, Provisional Patent
Applications, Proprietary Information, Trade Secrets, Technical and
Scientific information and Know-How, all pertaining to several designs of
what is commonly referred to as the Anodic Oxidation Water Treatment System.
GRANTOR is prepared to grant exclusive marketing rights to GRANTEE, subject
to certain terms and conditions.
1.1 GRANTEE wishes to acquire the exclusive marketing rights of the
Product pursuant to two issued US- patents and the issuance of future US-
Patents for the express purpose selling GRANTOR'S products on an exclusively
basis in all markets of North America, excluding the dental market. Subject
to reaching certain goals defined in Exhibit B, GRANTEE will be authorized to
continue to sell GRANTOR'S Products on an exclusive basis for the term of
this Agreement or to initiate manufacturing of the AO- Systems and sell in
the Territory on an exclusive basis.
1.2 GRANTEE does not wish to acquire any right, title and interest in
any U.S. patents or patent applications filed as of the date of this
agreement that relate to the Anodic Oxidation water purification and
treatment systems designed and owned by GRANTOR. GRANTEE initially desires to
purchase and resell completed AO- Systems in North America. At a future date
and subject to meeting certain objectives defined in this AGREEMENT as
Exhibit B, GRANTEE can automatically continue to market the PRODUCTS on an
exclusive basis or purchase components from GRANTEE and manufacture AO Units
for selling in North America on an exclusive basis.
2. DEFINITIONS
As used herein, the following capitalized terms or other capitalized terms
defined elsewhere in this Agreement, will have the meanings ascribed thereto
wherever used in this Agreement:
2.1 "Confidential Information" means any business, marketing, technical,
scientific or other information disclosed by any Party which, at the time of
disclosure, is designated as confidential or proprietary.
2.2 "Effective Date" shall be September 3rd, 2007.
2.3 "Gross Production" means the number of AO Units commercially
assembled or manufactured by the GRANTEE, which utilize components or
technology owned by the GRANTOR and sold to customers of GRANTEE or sold by
Distributors of GRANTEE.
2.4 "Intellectual Property Rights" shall mean all intellectual property
rights, including without limitation, any rights in any invention, patent,
discovery, improvement, know-how, utility model, trade-mark, copyright,
industrial design, trade secrets and all rights of whatsoever nature in
materials processing, Confidential Information, and all intangible rights or
privileges owned by Hydrosystemtechnik, GmbH, whether or not registered, and
shall include all rights in any applications and granted registrations for
any of the foregoing.
2.5 "Know-How" means that special knowledge, skill and experience, as
applied to the design or manufacturing of AO Units that is possessed by the
GRANTOR.
2.6 "Product(s)" means the Anodic Oxidation water treatment plant (AO-
System) inclusive supplementary products or any successor products and all
technology required to commercially resell or manufacture from GRANTEE in the
Territory and which are utilized to treat water for any and all applications
except dental applications in the Territory.
2.7 "Licensed Technology" means any and all process or proprietary
technology, engineering and design features or components related to the AO-
System, supplementary products or any other successor products ,which were
developed by the GRANTOR.
2.8 "Territory" shall mean North America and comprise the countries of
Canada, the United States and Mexico.
2.9 "GRANTEE" means HydroDynex, Inc., a corporation domiciled in the
state of Nevada.
2.10 "GRANTOR" means Hydrosystemtechnik, GmbH., a corporation domiciled
in the country of Germany.
2.11 Minimum Annual Sales Volume" means the annual net purchase value of
complete AO- Systems or components, defined in Appendix D, purchased at that
value by GRANTEE from GRANTOR.
2.12 "Net Selling Price" means the net sales value of any complete AO-
System sold by GRANTEE or subcontractors of GRANTEE in the Territory,
excluding taxes, customs, fees, transportation and installation expenses,
independent from whether the unit has been purchased totally from GRANTOR or
has been partially manufacture by GRANTEE.
2.13 "Parties" means Hydrosystemtechnik, GmbH and HydroDynex, Inc.
2.14 "Patent(s)" means Provisional Patent(s) Application(s) or Patent
Application(s) means any Patent(s) granted or Patent Application(s) made by
GRANTOR pursuant thereto, and all divisions, continuations, continuations in
part, reissues, substitutes, and extensions thereof.
2.15 "Private Label" means the exclusive labeling, trade name and/or
trademark for the AO- Systems marketed in the Territory.
2.16 "Product Royalty" means a royalty payment made by the GRANTEE to
the GRANTOR on the products assembled or manufacture and sold by GRANTEE in
the Territory, which utilize the GRANTOR's components or technology.
2.17 "Trademarks" means all registered and unregistered trademarks,
service marks, trade names, business names, brand names, product names and
any other indicators of origin, whether registered or unregistered, belonging
to either Party.
2.18 "The Exclusive License" means the right, to the exclusion of any
other entity including GRANTOR, for GRANTEE within the Territory to:
Purchase and import the Products and component parts of Products from GRANTOR
or an entity approved of by GRANTOR, to market, distribute, and sell the
assembly, or manufacture according the defined conditions, for installation,
application and maintenance of the Products in the name of GRANTEE or any
related body corporate.
2.19 "The Non- Exclusive License" means the right, to the non- exclusion
of any other entity including GRANTOR, for GRANTEE within the Territory to:
Purchase and import the Products and component parts of Products from GRANTOR
or an entity approved of by GRANTOR, to market, distribute, and sell the
assembly or manufacture according the defined conditions, for installation,
application and maintenance of the Products in the name of GRANTEE or any
related body corporate.
3. GRANT OF MARKETING RIGHTS
3.1 GRANTOR hereby grants to GRANTEE the right to sell finished units of
the Product(s) in the Territory in all markets but the dental market on an
exclusive basis for a period of three years from the effective date, subject
to obtaining independent certification and verification as outline in the
Water Treatment Standard 61, completing ETV testing by NSF International,
Inc., and approval of the United States Environmental Protection Agency, as
defined in Appendix A attached hereto. As a condition of the granting of this
License, the Grantee agrees to undertake the filing of a joint submission in
the name of both the GRANTOR and GRANTEE with the intention of having the
GRANTOR being able to utilize any approval to enhance its credibility in all
markets outside the Territory defined in this agreement.
At the end of each business year, beginning with anniversary year three
after the effective date of this agreement, if the GRANTEE has satisfied the
defined objectives of sales defined in Table 1 of Appendix B of this
Agreement, the GRANTEE will have the right to continue to sell finished AO
Units on an exclusive basis in the territory. In the event the objectives
defined in years three through five of Table 1 in Appendix B are not attained
at the end of each business year, this agreement shall, at the option of the
GRANTOR, automatically revert to a non-exclusive marketing agreement [and the
GRANTEE will not have the authority to engage in manufacturing of AO
Systems].
In the event GRANTEE has attained an annual minimum sales volume of
500.000 EUR at the end of any year, the GRANTEE will have the right to
continue to sell finished AO Units on an exclusive basis in the territory or
to purchase components from the GRANTOR and assemble or manufacture AO Units
for its own account and to sell in the Territory on an exclusive basis. If
the minimum annual sales volume for the year is at 500.000 EUR and the
GRANTEE falls below this 500.000 EUR sales level in two consecutive years,
the right to manufacture will expire automatically in the subsequent year,
unless GRANTOR agrees to extend the right for any reasonable term by written
notice. It being understood that the decision to initiate manufacturing
under this Agreement must be approved in writing by the GRANTOR and such
approval shall not be unreasonably withheld.
(a) The Parties agree that any Improvements, design changes,
modifications or developments of the Product, made by GRANTOR shall be
available to GRANTEE in the Territory at no additional cost. In the event
GRANTOR makes application for any new Patent, GRANTEE shall have the right,
during the term of this agreement, to use the Patent for $1.00 and other good
and valuable consideration, regarding any newly developed product, process or
technology under this Agreement.
(b) The Parties further agree that any Improvements, design changes,
modifications, discoveries or developments related to the Product made by
GRANTEE, may, at the sole option of the GRANTOR, be patented by the GRANTOR
and may be utilized in the Territory by the GRANTEE, so long as the nature of
this Agreement remains exclusive. In this regard, the agent or employee of
the GRANTEE who is responsible for the improvement, design changes,
modifications, discoveries or developments of the Product agrees to execute
any and all documents required to assign all right, title and interest to
Improvements to the GRANTOR for $1.00 and other good and valuable
consideration. GRANTEE shall promptly inform GRANTOR of any such Improvements
and take all necessary steps to assist the GRANTOR in filing an application
for a new patent or a continuation in part of an existing patent. GRANTOR
shall grant to GRANTEE, for no consideration and pursuant a standard Product
Royalty, a license for Improvements in the Territory. Any Improvements,
design changes, modifications or developments of the Product or Technology by
GRANTEE are construed to be a part of this Agreement and GRANTEE shall be
bound to all terms and conditions contained in this Agreement.
3.2 GRANTOR further grants to GRANTEE, the right to use any registered
or not reregistered Trademark, owned, acquired, developed or filed for by the
GRANTOR, relating to the Product or Technology.
3.3 The rights granted pursuant to Section 3 are subject to meeting the
criteria defined in Exhibit B attached, shall be exclusive in nature, for a
period of Ten (10) years with an option by the GRANTEE to extend for an
additional Ten (10) years, so long as the minimum sales volume is maintained,
as outlined in Exhibit B. GRANTEE does not have the right to grant
Sublicenses during the term of this Agreement without first receiving prior
written approval from the GRANTOR.
3.4 Subject to mutual agreement and meeting the criteria defined in
clause 3.1 of this agreement, the GRANTEE has the right to assemble and
manufacture AO systems for exclusive marketing in the Territory. A condition
of this Agreement requires the GRANTEE to purchase all components listed on
Appendix D from the GRANTOR during the term of this Agreement. GRANTOR hereby
agrees to provide components to GRANTEE on terms no less favorable that
supplied to any other third party or other GRANTEE of the GRANTOR. It being
understood that the decision to initiate manufacturing under this Agreement
must be approved in writing by the GRANTOR and such approval shall not be
unreasonably withheld.
4. LICENSE FEES AND ROYALTIES
4.1 GRANTEE shall, within 120 days of the Effective Date, as a one time
only Fee, pay to GRANTOR, Ten Thousand Euros (10,000 EUR), which shall be
non-refundable and credited against the Product Royalty called for under
Section 4.2. .
A Second Fee in the amount of Twenty Thousand Euros (20,000 EUR), which
shall be non-refundable and credited against the Product Royalty, will be due
to GRANTOR on November 30, 2008.
A Third Fee in the amount of Twenty Thousand Euros (20,000 EUR) which
shall be non-refundable and credited against the Product Royalty, will be due
to GRANTOR after the GRANTEE has been certified and approved by the United
States Environmental Protection Agency for selling AO-Systems on a commercial
basis in the United States.
4.2 GRANTEE shall pay to GRANTOR a Product Royalty on the products
actually assembled or manufactured and sold by GRANTEE to any non-affiliated
third party, which utilize the Licensed Technology and components paid for by
customers of the GRANTEE. The Product Royalty shall be Ten Percent (10%) of
the Net Selling Price on all AO water treatment systems assembled or
manufactured by GRANTEE or a subcontract manufacture utilized by the GRANTEE
and paid for by customers of GRANTEE. GRANTEE is not obligated to pay a
royalty on finished units purchased from GRANTOR and resold to customers of
GRANTEE. The Product Royalty will remain due in perpetuity and continue to be
paid beyond the life of any Patents. Payments and accounting are to be made
quarterly, within 30 days of the quarter just ending.
5. NO RIGHT TO PURCHASE PATENTS AT THE TIME OF GRANT
5.1 In the event GRANTOR is granted domestic Patents covering the
Product or Licensed Technology, GRANTEE has no right or option to purchase
the Patents. It being understood that so long as this AGREEMENT remains
effective, GRANTOR and GRANTEE agree to assume financial responsibility to
pay for all direct costs related to preparing and prosecution of patent
applications within the defined market territory of this Agreement on a
fifty-fifty basis, including but not limited to: legal fees, filing fees,
maintenance fees and translation costs. Fees paid by the GRANTEE in
connection with direct costs related to all patent expenses will be credited
toward future royalties due GRANTOR for the sale of AO units assembled or
manufactured by GRANTEE.
6. EXPORTATION
6.1 GRANTEE shall be limited to the selling the Product in the
Territory. GRANTEE shall not export the Product outside the Territory without
prior written consent and authorization by GRANTOR.
7. CONFIDENTIALITY
7.1 GRANTEE, GRANTEE's agent and affiliates and GRANTEE's employees
shall not disclose any Proprietary Information, Trade Secrets, Technical and
Scientific information, Know-How or other Confidential Information expressly
or implied disclosed by GRANTOR to GRANTEE without the expressed written
permission of GRANTOR.
7.2 GRANTEE at the option of the GRANTOR shall sign a separate
Confidentiality Agreement relative to any Proprietary Information, Trade
Secrets, Technical and Scientific information, Know-How or other Confidential
Information disclosed by GRANTOR to GRANTEE.
8. PRIVATE LABELS
8.1 All Product(s) used pursuant to this Agreement, may be used under
any Trademark(s) developed or owned by the GRANTOR or a Trademark developed
and owned by the GRANTEE. In the event that any Trademark utilized by the
GRANTEE, is in conflict with another company operating within the Territory,
any different such Private Label selected by GRANTEE may be used.
8.2 The Private Label of the Product shall comply with the appropriate
regulations of all governmental agencies of the countries within the
Territory.
8.3 As long as this AGREEMENT or any modification or extension thereof
remains in force and effect, GRANTEE shall own each such Private Label or
trademark to be used exclusively by GRANTEE on the Product in the Territory.
9. PAYMENTS and REPORT
9.1 Not later than the last day of each January, April, July and
October, GRANTEE shall furnish to GRANTOR a written statement in such detail
as GRANTOR may reasonably require of all amounts due pursuant to Sections 4.2
for the quarterly periods ended the last days of the preceding March, June,
September and December and shall pay to GRANTOR, all amounts due to GRANTOR.
9.2 Payments provided for in this Agreement, when overdue, shall bear
interest at a rate per annum equal to two percent (2%) in excess of the
"Prime Rate" published by the U.S. Edition of "The Wall Street Journal" at
the time such payment is due, and for the time period until payment is
received by GRANTOR.
9.3 If this Agreement is for any reason terminated before all of the
payments herein provided for have been made, GRANTEE shall immediately submit
a terminal report, and pay to GRANTOR any remaining unpaid balance even
though the due date as above provided has not been reached.
10. REPRESENTATIONS AND DISCLAIMER OF WARRANTIES
10.1 Nothing in this AGREEMENT shall be deemed to be a representation or
warranty by GRANTOR of the validity of any Patents, Provisional Patent
Applications, Patents that may issue, Patent Applications and Improvements.
GRANTOR shall have no liability whatsoever to GRANTEE on account of any
injury, loss or damage of any kind or nature, sustained by, or any damage
assessed or asserted against, or any other liability incurred by or imposed
upon GRANTEE arising out of or in connection with, or resulting from:
(a) The transport, manufacture, assembly, installation, use, sale or
maintenance of the finished Product or single components of it, or:
(b) Any advertising or other promotional activities with respect to any
of the foregoing.
GRANTEE shall hold GRANTOR, and its partners, agents or employees harmless
in the event GRANTOR, or its officers agents or employees, is held liable.
10.2 GRANTOR shall have the right to file, prosecute and maintain Patent
Applications, Provisional Patents and Improvements that are the property of
GRANTOR and shall have the right to determine whether or not, and where to
file a patent application or to abandon the prosecution of any patent or
patent application.
11. PRODUCTION LIABILITY INSURANCE
11.1 GRANTEE will purchase Product Liability Insurance before selling
any AO-Systems for a minimum cover of One Million Dollars ($1,000,000) for
personal and material damages and list GRANTOR as an additional insured party
on the policy, at no additional expense to GRANTOR. In the event the GRANTOR
become a co-defendant in any legal action filed in the Territory, GRANTEE
will at its sole expense retain a legal firm to represent both the GRANTOR
and the GRANTEE. GRANTEE assumes any and all legal costs related to the legal
action. GRANTEE will indemnify the GRANTOR to the fullest extent possible by
law and pay all costs related to any legal action whereby the GRANTOR is
named as a co-defendant.
12. TERMINATION
12.1 This Agreement shall terminate in 10 years with an option to
prolong for 10 additional years on written request of the GRANTEE, upon sixty
(60) days in advance to the 3rd of September 2017, so long as the GRANTEE is
in good standing with all terms and conditions contained in this agreement.
12.2 GRANTEE may terminate this Agreement at any time upon sixty (60)
days written notice in advance to the GRANTOR.
12.3 GRANTOR may at its option terminate this Agreement if GRANTEE upon
14 days prior written notice and after giving GRANTEE 30 days from receipt of
such notice to cure the breach which is the basis of the notice of
termination:
(a) shall be in default of any obligation hereunder; or
(b) shall be adjudged bankrupt; or
(c) shall become insolvent; or
(d) shall make an assignment for the benefit of creditors; or
(e) shall be placed in the hands of a receiver or a trustee in
bankruptcy, the other party may terminate this Agreement by giving
thirty (30) days notice by Registered Mail to the other party,
specifying the basis for termination. If within thirty (30) days
after the receipt of such notice, the party receiving notice shall
remedy the condition that formed the basis for termination, such
notice shall cease to be operative, and this Agreement shall
continue in full force.
(f) does not perform a minimum annual sales volume of 100.000 EUR in
each business year subsequent to the third anniversary year after
the effective date (that means commencing the evaluation at the end
of year 4)
12.4 The word "termination", used elsewhere in this agreement, is to
read, except where the contrary is specifically indicated, as omitting from
their effect, the following rights and obligations, all of which survive any
termination to the degree necessary to permit their complete fulfillment or
discharge:
(a) GRANTEE's obligation to supply a terminal report as specified in
this Agreement;
(b) GRANTOR's right to receive or recover, and GRANTEE's obligation to
pay royalties, including accrued or accruable for payment at the time of any
termination;
(c) GRANTEE's obligation to maintain records under Section 15.00 of
this Agreement;
(d) licenses, releases and agreements of non-assertion running in favor
of customers or transferees of GRANTEE in respect to products sold or
transferred by GRANTEE prior to any termination and on which Royalties shall
have been paid as provided in paragraph 4.2 of this Agreement;
(e) Any cause of action or claim of GRANTOR accrued or to accrue,
because of any breach or default by GRANTEE.
(f) GRANTEE`s right or obligation to maintain the Product in terms of
this agreement unless GRANTEE informs GRANTOR that it wishes to discontinue
the exercise of such rights.
13. DISPUTES AND ARBITRATION
13.1 INITIAL CONSULTATION AND NEGOTIATION. In the event a dispute
between GRANTOR and GRANTEE rises under the Agreement or a party's
performance there under, the matter shall first be escalated to GRANTORS's
President and GRANTEES's President in an attempt to settle such dispute
through consultation and negotiation in good faith and a spirit of mutual
cooperation.
13.2 ESCALATION. If the Presidents are unable to resolve the dispute, it
shall be referred to a conflict resolution committee comprised of one
representative designated by each party. The initial members of the conflict
resolution committee shall be:
For the GRANTOR: Meinolf Schoeberl
For the GRANTEE: Jerod Edington
13.3 CONTINUED PERFORMANCE. Except where prevented from doing so by the
matter in dispute, the parties agree to continue performing their obligations
under this Agreement while any good faith dispute is being resolved unless
and until such obligations are terminated by the termination or expiration of
this Agreement.
13.4 ARBITRATION. Any controversy or dispute arising out of or in
connection with this Agreement, its interpretation, performance, or
termination, which the parties are unable to resolve within a reasonable time
after written notice by one party to the other of the existence of such
controversy or dispute, may be submitted to arbitration by either party and
if so submitted by either party, shall be finally settled by arbitration
conducted in accordance with the rules of conciliation and arbitration of the
Chamber of Commerce in effect on the date hereof. Arbitration will be done by
three arbitrators, one each to be proposed by Hydrosystemtechnik and
HydroDynex, and the third to be proposed by the Chamber of Commerce. Any such
arbitration shall take place in the City of Munich, Germany. Such arbitration
shall be conducted in either German or English language and the arbitrators
shall apply the laws of the Country of Germany.
13.5 The institution of any arbitration proceeding hereunder shall not
relieve GRANTEE of its obligation to make payments accrued hereunder pursuant
to Sections 4.00 hereof to GRANTOR during the continuance of such proceeding.
The decision by the arbitrators shall be binding and conclusive upon the
parties, their successors, and assigns and they shall comply with such
decision in good faith, and each party hereby submits itself to the
jurisdiction of the courts of the place where the arbitration is held, but
only for the entry judgment with respect to the decision of the arbitrators
hereunder. Notwithstanding the foregoing, judgment upon award may be entered
in any court where the arbitration takes place, or any court having
jurisdiction.
14. LITIGATION
14.1 Each party shall notify the other party in writing of any suspected
infringement(s) of any Patent(s) or Patent(s) that may issue, Patent
Applications, Provisional Patent Applications and Improvements and registered
Trademarks in the Territory, and shall inform the other party of any evidence
of such infringement(s).
14.2 GRANTOR shall have the first right to institute suit for
infringement(s) in the Territory. GRANTEE agrees to join as a party plaintiff
in any such lawsuit initiated by GRANTOR, if requested by GRANTOR, with all
costs, attorney fees, and expenses to be paid by GRANTOR. However, if GRANTEE
does not institute suit for infringement(s) within ninety (90) days of
receipt of written notice from GRANTEE of GRANTOR's desire to bring suit for
infringement in its own name and on its own behalf, then GRANTEE may, at its
own expense, bring suit or take any other appropriate action.
14.3 If this Agreement is non-exclusive at the time of infringement(s),
the sole right to institute suit for infringement and to recover damages
shall rest with GRANTOR.
14.4 GRANTEE shall be entitled to any recovery of damages resulting from
a lawsuit brought by it pursuant to paragraph 14.1. GRANTOR shall be entitled
to recovery of damages resulting from any lawsuit brought by GRANTOR to
enforce any patent that may issue pursuant to paragraph 14.1.
14.5 Either party may settle with an infringer without the prior
approval of the other party if such settlement would not affect the rights of
the other party under any existing Patent, Patent that may issue, Patent
Applications, Improvements, Provisional Patent Applications and registered
Trademarks.
15. RECORDS
15.1 GRANTEE shall keep accurate records of all operations affecting
payments hereunder, and shall permit GRANTOR or its duly authorized agent to
inspect all such records and to make copies of or extracts from such records
during regular business hours throughout the term of this Agreement and for a
reasonable period of not less than three (3) years thereafter.
16. PATENT MAINTENANCE FEES
16.1 Pursuant to Patent(s) granted within the defined territory of this
License Agreement and in the event that patents issue on Patent Applications
and Improvements, described in Section 2, or other patents granted within the
defined territory of this License Agreement subsequently issued related to
the Licensed Product and Licensed Technology, maintenance fees shall be paid
by Fifty Percent (50%) by GRANTOR and Fifty percent (50%) by GRANTEE and all
documentation of payments shall be provided to both Parties. GRANTOR, upon
request by GRANTEE, shall provide GRANTEE with records and schedule of
maintenance fee due dates.
17. NON-ASSIGNABILITY
17.1 The parties agree that this agreement imposes personal obligations
on GRANTEE. GRANTEE shall not assign any rights under this Agreement not
specifically transferable by its terms without the written consent of
GRANTOR. GRANTOR may assign their rights hereunder.
18. SEVERABILITY
18.1 The parties agree that if any part, term or provision of this
Agreement shall be found illegal or in conflict with any valid controlling
law, the validity of the remaining provisions shall not be affected thereby.
18.2 In the event the legality of any provision of this agreement is
brought into question because of a decision by a court of competent
jurisdiction, GRANTOR, by written notice to GRANTEE, may revise the provision
in question or may delete it entirely so as to comply with the decision of
said court.
19. NON-USE OF GRANTOR'S NAME
19.1 In publicizing anything used under this Agreement, GRANTEE shall
not use the name of GRANTOR or otherwise refer to any organization related to
GRANTOR, except with the written approval of GRANTOR. GRANTEE is authorized
to make public the name of the GRANTOR and describe the contractual
relationship between the GRANTOR and GRANTEE, if GRANTEE becomes a publicly
traded company and the disclosures are a requirement and pursuant to the
requirements of the Securities Act of 1933 and 1934.
20. WAIVER, INTEGRATION, ALTERATION
20.1 The waiver of a breach hereunder may be affected only by a written
notification signed by the waiving party and shall not constitute a waiver of
any other breach.
20.2 A provision of this Agreement may be altered or a missing provision
may be added only by a writing signed by both parties.
21. MARKING
21.1 If the GRANTEE initiates assembly or manufacturing of the AO
Systems, it shall place in a conspicuous location on the Product, a patent
notice, in accordance with the Statutes of U.S. Patent Law. GRANTEE agrees to
mark any Product covered by any Patent(s), with the serial number of each
such patent.
22. APPLICABLE LAW
22.1 This Agreement shall be constructed in accordance with the
substantive laws of the country of Germany.
22.2 The language under which this Agreement shall be interpreted,
arbitrated or litigated shall be either English or German.
23. NOTICES UNDER THE AGREEMENT
23.1 For the purpose of all written communications and notices between
the parties, their addresses shall be:
GRANTOR: Hydrosystemtechnik GmbH
Gewerbepark 13
D-83052 Bruckmuehl, Germany
Phone: +49 (0)8062-80 220
Fax: +49 (0)8062-80 221
E-mail: meinolf.schoeberl@hydrosys.de
Attention: Dr. Meinolf Schoeberl, CEO
GRANTEE: HydroDynex, Inc.
8800 Blue Wolf St.
Las Vegas, NV 89123
Phone: +1 702-884-2150
E-mail: jerod@hydrodynex.com
Attention: Jerod C. Edington, President
or any other addresses of which either party shall notify the other party in
writing.
24. RESPONSIBILITY OF TRAINING, TRANSFER AND ASSISTANCE
The GRANTEE agrees to provide the necessary funds to cover all costs
associated with the training of GRANTEE's employees, transfer of Know How and
data, as well as any kind of special assistance, whether traveling to the
GRANTOR's place of business, preparation and adaptation of documents and
technology or financing the travel, wages, and associated costs of the
GRANTOR'S employee(s) in coming to the GRANTEE's chosen place of business.
25. INTERRUPTION OF PRODUCTION
The GRANTEE realizes that it meeting the terms of this License Agreement,
particularly the territorial sales requirements to maintain exclusivity, is
dependent upon the GRANTOR's ability to manufacture, test, and deliver AO-
Systems and AO-System Components to the GRANTEE in a timely matter. If the
thresholds indicated in Table 1 of Appendix B cannot be met by the GRANTEE
due to the non-performance or unreasonable performance of the GRANTOR, this
shall not be deemed a breach of responsibility on the part of the GRANTEE and
it shall not impact GRANTEE's right to maintain exclusivity or terminate this
Agreement hereto.
When orders and 50% down-payments for AO-Systems are provided to the
GRANTOR by the GRANTEE, and the orders are not completed and delivered within
12 weeks, then at that time the potential sale price of that unit in the U.S.
territory, as determined by the GRANTEE, will be supplemented to the yearly
sales total for satisfying the terms of Table 1 in Appendix B until the real
sale is made and substituted.
If four or more separate and/or combined plant orders and their
corresponding 50% down payments are provided from the GRANTEE to the GRANTOR
at any given time, and four or more of those orders at any one time are late
in meeting the production and delivery schedule deadline of 12 weeks, then
the GRANTEE shall automatically have the length of time in which the license
hereto remains exclusive extended by one year for every one month of this
aforementioned tardiness by the GRANTEE, the extended years superseding all
other terms of this agreement.
26. PRICE FIXING
GRANTOR must provide AO-Systems and/or AO-System components to the GRANTEE
at equal to or less than historical sales prices of these systems and
components to GRANTOR's customers. Prices must remain reasonable and not
increase more than 5% per annum unless agreed upon by the GRANTEE.
IN WITNESS WHEREOF the parties have caused this Amended Marketing,
Distribution and License Agreement to be executed by their duly authorized
officers and/or agents on the respective dates and at the respective places
hereinafter set forth.
EXECUTED
Executed on behalf of
Hydrosystemtechnik GmbH, HYDROSYS
by the authorised person whose signature appears below pursuant to
Corporations Law
Signed at: Bruckmuehl Date: August 30, 2008
/s/ Meinolf Schoeberl
- --------------------------
Dr.-Ing. Meinolf Schoeberl
Managing Director
Executed on behalf of
HydroDynex, Inc.
by the authorised person whose signature appears below pursuant to
Corporations Law
Signed at: Spokane Date: August 30, 2008
/s/ Jerod Edington
- ------------------
Jerod Edington
President
APPENDIX A
Below is a description of the procedure to be implemented by HydroDynex
with regard to making application and receiving regulatory approval to
commercially sell AO Water Treatment System in the United States. NSF
International (NSF) and the U.S. Environmental Protection Agency (EPA)
jointly manage the Environmental Technology Verification (ETV) Drinking Water
Systems (DWS) Center. NSF International's Drinking Water Treatment Unit
(DWTU) Certification Program will most likely be used.
1. Application
-Vendor submits application package for a commercially-ready product to
the DWS Center with the following:
o Specific Operating and Maintenance Manual for the product,
o Previous test performance data, and
o Patent information.
-NSF International reviews the application and discusses the verification
process with the vendor.
-When vendor agrees to ETV testing and signs a contract, a Product
Specific Test Plan (PSTP) is developed.
2. PSTP Development
-ETV protocols and Technology Specific Test Plans (TSTPs) require
laboratory and/or field testing. When field testing is required, an NSF-
qualified FTO may be selected to perform the field test and develop the PSTP.
-A PSTP is developed by the testing entity.
-NSF and the EPA review the PSTP.
-Once the PSTP is approved, testing begins after a shakedown period and
the vendor agrees to testing.
3. Verification Testing
-ETV protocols and TSTPs require laboratory and/or field testing. When
field testing is required, an NSF-qualified FTO may perform the verification
test.
-NSF performs an audit of the verification test.
4. Report Preparation
-A draft verification report is developed by the testing entity.
-NSF and the EPA review the report.
-A technical expert reviews the report.
-The vendor reviews the report.
-Other reviews possible with funding partners.
-The report is reviewed for editorial clarity.
-The testing entity revises report to reflect reviewer comments.
-The EPA performs a final clearance review.
5. Final Verification Report
-The final verification statement (VS) is signed by the EPA and NSF, and
the VS and report are posted on both the EPA and NSF websites.
-An email announcement is sent to the DWS Center mailing list announcing
the new verification report.
-The vendor receives ten copies of the verification report and is able to
post the report on their company's web site.
CPM = Certification Project Manager
APPENDIX B
To retain the benefit of the "Exclusive License", GRANTEE must in each
subsequent year of the Term, beginning in the third anniversary year after
the effective date (which means commencing evaluation at the end of 2009),
sell in the Territory, to customers of GRANTEE, Products to the net purchase
value specified in column 2 of Table 1.
Table 1
YEAR EUR OF SALE THRESHOLDS
---- ----------------------
3 EUR 30,000
4 EUR 100,000
5 EUR 300,000
6 EUR 500,000
Thereafter EUR 500,000
in each year
APPENDIX C
In order to continue the exclusive nature of this agreement:
1. Hydrodynex will lease or buy an AO System reactor from Hydrosystemtechnik
to be used for U.S. technology verification within fourteen months of the
signing of this agreement, assuming the unit can be delivered timely. This
term would be automatically extended to a date that is mutually agreeable
between the two parties in the event that the GRANTOR is not capable of a
timely delivery of the test unit.
2. Both verification approval and State certification are required to permit
the legal sale of water purifying technological units in the U.S. Each
individual State certifies the unit(s) independently and licenses the
distribution of water purification units in their particular municipality. In
most States, independent laboratory testing is required on various standards,
technological claims, and industrial applications. States, including
California, recognize the standards set forth by the U.S. Environmental
Protection Agency (USEPA) and the independent laboratory companies it
recognizes, such as NSF International. HydroDynex will engage in the process
of securing verification approval by the USEPA for the AO System through NSF
International or other independent laboratory and reach compliance with
America National Standards Institute (ANSI) Water Treatment Standard 61 and
Environmental Technology Verification (ETV) testing. Verification and
certification of the AO System necessary for commercializing and selling
systems in whole or in part within the United States shall be accomplished
within 30 months of the Effective Date.
3. At such time as HydroDynex retains NSF and EPA verification through this
process, it will within 90 days make application to the States of California,
Nevada, Oregon, Washington, Idaho and Arizona for certification and pay the
applicable fees required by each state.
4. HydroDynex will take responsibility to translate the owner's manual,
provided by Hydrosystemtechnik, and all other technical information and
documentation, which is a requirement of NSF to properly install and test the
AO system. HydroDynex will also assume responsibility for translating an
installation manual, engineering schematics, replaceable parts cost and part
numbers, all of which will be required by each state in order to secure
certification
5. HydroDynex agrees to provide the necessary funds to follow the
verification protocol outlined in Appendix A.
6. HydroDynex will demonstrate financial responsibility in the form of a
bank credit line or equity funding of not less than $500,000 to accomplish
the objective outlined above.
7. HydroDynex will sell, deliver and install at least one AO System in the
U.S in the two year exclusive period following verification.
APPENDIX D
In the event HydroDynex is granted the right to assemble and manufacture
the AO Systems for their own account, HydroDynex agrees that it will utilize
Hydrosystemtechnik GmbH as the sole provider of the following components.
1. AO- Reactor of each type and size, complete mounted and equipped
2. AO- Control cabinet inclusive software of each type and size, complete
mounted and equipped
3. Different custom made sensors and transmitters