Exhibit 10.11
AGREEMENT
THIS AGREEMENT is entered into as of December 23, 1997, between
INTERNATIONAL DISPENSING CORPORATION, a Delaware corporation with principal
offices at 000 Xxxxxxx Xxx., Xxxxx 0000, Xxx Xxxx, XX 00000 ("IDC"), and WELL
MEN INDUSTRIAL COMPANY LIMITED, a Hong Kong registered company with principal
offices at Wah Ha Industrial Building, 00X, 0 Xxxxxxxx Xxxx, Xxxxxx Xxx, Xxxx
Xxxx ("Well Men").
BACKGROUND
A. IDC is engaged in international marketing of new products;
B. Well Men, directly or through its subsidiary, the Dongguan Well Men
Family-Use Electrical Appliance Co. Limited manufactures consumer products for
both the Chinese and overseas markets;
C. IDC and Well Men have entered into a Provisional Agreement dated
November 7, 1997 which outlines their desire to develop, promote and market Well
Men products in the Chinese and other overseas markets;
D. IDC and Well Men desire to transform the Provisional Agreement into a
formal agreement pursuant to the terms hereof;
IN CONSIDERATION OF THE MUTUAL PROMISES AND COVENANTS CONTAINED HEREIN, AND
OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH IS
HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS
1.1 "Chops" shall mean the chops, seals or other instruments which legally
bind or obligate the Chinese Corporation.
1.2 "Patents" shall mean the patents listed on Exhibit A annexed hereto,
including all applications therefor, and all other patents relating to the
Products and granted to Well Men whether issued in the United States or other
countries.
1.3 "Products" shall mean the following items manufactured by Well Men: (i)
water heater; (ii) filter pitcher; and (iii) filters for the filter pitcher.
1.4 "Shareholders" shall mean Mr. Pan, Xx. Xxx and Xx. Xxxx.
1.5 "Territory" (i) for the Products (as defined in Section 1.3 above),
shall mean the People's Republic of China and a right of first refusal to IDC
for any other territory and (ii) for any other products shall mean the People's
Republic of China or any other territory that is mutually agreed to in writing
by the parties.
2. ESTABLISHMENT OF REPRESENTATIVE OFFICE OF IDC
2.1 IDC agrees to establish and register a Representative Office in
Guangzhou, People's Republic of China. IDC agrees to use its best efforts to
establish and obtain a Registration Certificate for such Representative Office
no later than December 31, 1997. Well Men agrees to assist IDC in all aspects of
establishing the Representative Office including without limitation preparation
of any necessary documentation, applications, authorizations or registration
forms. In addition, Well Men shall act as authorized host and sponsor for IDC's
Representative Office. Notwithstanding the foregoing, IDC shall be solely
responsible for all costs, fees and expenses related to the establishment of the
Representative Office, including without limitation the payment of registration
fees, if necessary, to the local foreign economic and trade committee, the local
state administration for industry and commerce, the public security bureau, the
local customs authority and the local tax bureau. The parties acknowledge that
the Representative Office may not directly generate income or execute contracts
that generate income. The Representative Office may provide consultation and
market research relating to this Agreement.
3. FORMATION OF CHINESE CORPORATION
3.1 Simultaneously with the establishment of the Representative Office,
Well Men shall assist in the establishment of a corporation registered and
licensed in China (the "Chinese Corporation"). The name of the Chinese
Corporation shall be IDC Guangzhou Trading Corporation. The business of the
Chinese Corporation may be conducted under such other names as is necessary to
comply with the laws of any particular jurisdiction in which the Chinese
Corporation does business.
3.2 The principal place of business of the Chinese Corporation shall be the
same location of the Representative Office in Suite 2808 Peace World Plaza,
Guangzhou, People's Republic of China.
3.3 The purpose and scope of the Chinese Corporation (with the guidance,
advice and consultation of the Representative Office) shall be to sell, promote,
market, advertise, and
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solicit orders for the Products in the territory of China. The Chinese
Corporation shall use its best efforts and facilities, and shall make adequate
advertising expenditures, to promote and secure the maximum sale and
distribution of the Products in the People's Republic of China. Well Men gives
IDC and the Chinese Corporation all rights to its trade name and trademarks for
use in connection with the sale of the Products in the People's Republic of
China. The Chinese Corporation shall be responsible for all commercial efforts
regarding the sales of the Products within the People's Republic of China.
3.4 The initial ownership interests in the Chinese Corporation shall be:
Percentage Capital
of Corp. # of Shares Contribution
Mr. Pan 50% ___ $32,500 USD
Xx. Xxx 30% ___ $19,500 USD
Xx. Xxxx 20% ___ $13,000 USD
Notwithstanding any other provision of this Agreement to the contrary, at
all times commencing on the date hereof and throughout the term of this
Agreement, the percentage interests of the Shareholders shall remain unchanged.
3.5 The initial capital contributions described above shall be made by each
of the Shareholders with the proceeds of a loan by IDC to each of the
Shareholders in the amounts shown in Section 3.4 above. Such loan shall be
evidenced by a Demand Note made payable by the Shareholder to the order of IDC.
In order to secure the payment and performance by each of the Shareholders of
such loan and Demand Note, each Shareholder shall grant to IDC a first lien and
security interest in the outstanding shares of the Shareholder in the Chinese
Corporation by pledging to IDC all of the outstanding shares of the capital
stock of the Chinese Corporation owned by him. The Shareholders shall execute
and deliver to IDC a Pledge Agreement together with the certificates evidencing
the capital stock pledged by them accompanied by stock powers and proxies or
other transfer documents endorsed in blank to be held by IDC. IDC shall have
recourse only against the pledged shares of the Chinese Corporation and shall
not have recourse against any other assets of the Shareholders nor against the
Shareholders individually for the loan or the obligations under the Demand Note.
3.6 The overall management and control of the day-to-day business and
affairs of the Chinese Corporation shall be vested in a board of directors (the
"Board"). The Board may exercise all such powers of the Chinese Corporation and
do all such lawful acts as permitted by law and by this Agreement. The Board
shall be composed solely of Xx. Xxxx Xxxxxxxxx, Mr. Xxx Xxxxxxx and Mr. Pan. Mr.
Pan's title shall be Vice President. Xx. Xxxx Xxxxxxxxx shall be Chairman.
3.7 The Chinese Corporation shall directly recruit all personnel, employees
and agents required to carry out its business. The Chinese Corporation shall
open accounts at the same bank and branch as the accounts for the Representative
Office of IDC. The authorized signatory
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for the handling of the Chinese Corporation's bank accounts shall be Mr. Pan.
All Chops shall at all times be under the exclusive control of Mr. Xxx Xxxxxxx
or IDC's designee.
3.8 IDC shall be solely responsible for all costs and expenses of the
Chinese Corporation until such time as the Chinese Corporation is profitable.
4. RIGHTS AND OBLIGATIONS OF WELL MEN AND IDC
4.1 Well Men grants to IDC the exclusive right to market and sell the
Products in the Territory as contemplated by this Agreement. IDC accepts its
exclusive appointment to market and sell the Products in the Territory as
contemplated by this Agreement. IDC shall resell the Products solely to the
Chinese Corporation for purposes of selling and marketing in the People's
Republic of China. IDC may resell the Products to any affiliate or other entity
for purposes of selling and marketing in the Territory other than the People's
Republic of China. IDC shall not market or sell any products similar to or
competitive with the Products. Sales of the Products may not be made in the
Territory except as contemplated by this Agreement.
4.2 As an initial order pursuant to this Agreement, IDC shall purchase from
Well Men the following: 2,750 Water Heater units and 11,000 Pitcher units. The
purchase price shall be $60.00 per Water Heater Unit F.O.B. Hong Kong and $6.00
per Pitcher unit F.O.B. Hong Kong. Payment shall be made by irrevocable,
transferable Letter of Credit for the benefit of Well Men or any assignee of
Well Men.
4.3 All future orders that IDC places with Well Men for the People's
Republic of China will be in sufficient quantities and based primarily on actual
orders received by IDC from the Chinese Corporation. The form of payment for
such future orders shall be either by (i) irrevocable, transferable Letter of
Credit established by IDC for the benefit of Well Men or any assignee of Well
Men or (ii) on open account supported by a Standby Letter of Credit in an amount
to be mutually agreed upon. The prices per Product for such future orders will
also be mutually agreed upon and set forth in written sales orders.
4.4 Well Men (or XX Xxxx) assigns and transfers to IDC, without charge but
only for the purpose of marketing the products in the Territory, the entire
right, title and interest in and to the Patents, including but not limited to
all reissues, divisions, continuations and extensions of the Patents and all
rights of action arising from the Patents, all claims for damages by reason of
past infringement of the Patents and the right to xxx and collect damages for
such infringement to be held and enjoyed by IDC for its own use and benefit and
for its successors and assigns as the same would have been held by Well Men had
this assignment not been made. Well Men and XX Xxxx agree to execute all such
further instruments, documents or agreements to further evidence the foregoing
assignment of Patents.
4.5 Well Men grants to IDC a right of first refusal for exclusive rights in
the Territory to all new products developed by Well Men and not covered by this
Agreement.
4.6 Well Men hereby warrants that the Products will conform to the
applicable specifications for the Products for a period of five (5) years after
delivery to any customer or
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enduser. In the event any of the Products fail to perform as warranted within
the warranty period, Well Men shall without charge replace such Product with a
new one which is free of defects or correct the defect. Well Men agrees to
provide full support on after sales service for the products sold to IDC and
resold by the Chinese Corporation in the People's Republic of China.
5. TERM AND TERMINATION
5.1 This Agreement shall continue for a term of ten years from the date
hereof and for successive periods of ten years thereafter unless terminated by
either party by written notice sent at least sixty days prior to the expiration
of any ten year period.
6. REPRESENTATIONS
Each party represents to the other that it has the legal rights and power
to enter into this Agreement, and to fully perform its obligations hereunder,
and that neither has made nor will make any commitments to others in conflict
with or in derogation of such rights or this Agreement. Each party further
represents to the other that it is not aware of any legal obstacles, including
patent rights of others, which could prevent either party from carrying out the
provisions of this Agreement. Well Men represents that it has (or will have )
the exclusive rights to all Patents for the Products.
7. INDEMNIFICATION
Each party, upon receipt of prompt notice and opportunity to defend, shall
indemnify and hold the other party harmless, and hereby forever releases and
discharges the other party from and against all claims, demands, liabilities,
damages and expenses (including attorneys' fees) arising out of the negligence
of the indemnifying party or its affiliates in connection with the work
performed in connection with this Agreement. Well Men agrees to save IDC
harmless and indemnify IDC against any loss by way of infringement claims with
respect to any products of Well Men.
8. GENERAL PROVISIONS
8.1 Except for Section 2 which shall be governed by Chinese law, this
Agreement will be governed by and construed under the laws of the State of New
York, United States of America.
8.2 All disputes arising in connection with the present contract shall be
finally settled under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce in Paris, France by one or more arbitrators
appointed in accordance with the said Rules.
8.3 Each party represents that it and its affiliates are, and further
covenants that all times during the term of this Agreement each shall remain, in
full compliance with all applicable laws, rules, and regulations governing its
and their activities and conduct, including, but not limited to, any such laws,
rules and regulations requiring registration with appropriate government
agencies.
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8.4 This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter herein and merges all prior discussions
between them. No modification of or amendment to this Agreement, nor any waiver
of any rights under this Agreement, will be effective unless in writing signed
by the party to be charged. This Agreement shall constitute the legal, valid,
binding and enforceable agreement of the parties.
8.5 Nonperformance of either party will be excused to the extent that
performance is rendered impossible by strike, fire, flood, governmental acts,
orders or restrictions, or any other reason where failure to perform is beyond
the control and not caused by the negligence of the non-performing party.
8.6 This Agreement may not be assigned or transferred, nor, except as
expressly provided herein, may any right or obligation hereunder be assigned or
transferred, to a third party by either party without the prior written consent
of the other party hereto. Notwithstanding the foregoing, either party may
transfer or assign its rights and obligations under this Agreement to a
successor to all or substantially all of its business or assets relating to this
Agreement whether by sale, merger, operation of law or otherwise. Subject to the
foregoing, this Agreement will be binding upon and inure to the benefit of the
parties hereto, their successors and assigns.
8.7 No modification of or amendment to this Agreement, nor any waiver of
any rights under this Agreement, will be effective unless in writing signed by
the party to be charged, and the waiver of any breach or default will not
constitute a waiver of any other right hereunder or any subsequent breach or
default.
8.8 In the event that it is determined by a court of competent jurisdiction
as part of a final nonappealable ruling, government action or binding
arbitration, that any provision of this Agreement (or part thereof) is invalid,
illegal, or otherwise unenforceable, such provision will be enforced as nearly
as possible in accordance with the stated intention of the parties, while the
remainder of this Agreement will remain in full force and effect and bind the
parties according to its terms. To the extent any provision (or part thereof)
cannot be enforced in accordance with the stated intentions of the parties, such
provision (or part thereof) will be deemed not to be a part of this Agreement.
8.9 This Agreement may be executed in two or more counterparts, each of
which will be deemed an original.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the day and year first above written.
WELL MEN INDUSTRIAL COMPANY LIMITED
By:/s/ X.X. Xxxx
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Name: X.X. Xxxx
Title: Chairman
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INTERNATIONAL DISPENSING CORPORATION
By:/s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx
Title: President
As to Section 4.4, agreed to and Acknowledged:
/s/ X.X. Xxxx
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X.X. Xxxx
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Exhibit A
Well Men Industrial Company Limited Patents
Patents covering USA, China and other countries for the following products, are
being applied for by Well Men:
1. Water Heater
2. Filter Pitcher with Filter