PURCHASE AGREEMENT
AGREEMENT MADE THIS 9th day of April, 2002 between XXXXXXX
X. XXXXXXX, an individual, with his principal place of business
at Xxxxx 0, Xxx 000, Xxxxxxxxxx, Xxxxxxx 00000, herein referred
to as "Seller", and EMISSION CONTROLS CORP., a corporation
organized under the laws of the State of Delaware, having its
principal place of business at 0000 Xxxxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxxx 00000-0000, herein referred to as "Buyer".
RECITALS
A. Seller is the owner of the entire right, title and
interest in that certain technology entitled Hydrogen
(H2) Power on Demand System (H2PODS). The invention is
described generally as a fuel system that extracts
hydrogen from water on demand for combustion in an
internal combustion engine.
B. Buyer desires to purchase the H2PODS invention form
Seller and to use, manufacture, sell and otherwise
practice the invention.
IN CONSIDERATION of the covenants and obligations
hereinafter set forth, the parties agree as follows:
SECTION ONE: DEFINITIONS
In the interpretation of this Agreement, the following
definitions shall apply:
1.1 "Technology" means the specific invention cited in
the above recitals and as to which Seller has the right
at any time to sell said technology, together with all
its improvements.
1.2 "Invention" means that apparatus described in
above Section 1.1.
1.3 "Product" means that apparatus describe in above
Section 1.1.
1.4 "Term of Agreement" means the protected period of the
technology.
1.5 "Apparatus" means the invention described in above
Section 1.1.
1.6 "Units" means each manufactured apparatus described in
above Section 1.1.
1.7 "Device" means the manufactured apparatus described in
above Section 1.1.
SECTION TWO: GRANT OF SALE
2.1 Seller hereby agrees to sell to Buyer all rights,
including intellectual property rights, all title
and interest in the H2PODS.
2.2 Seller assures Buyer that Seller has no patent rights
relevant to, or similar to, the H2PODS, and that the
sale hereof divests Seller of all rights, title and
interest thereto.
SECTION THREE: COMPENSATION
As consideration for the purchase under this Agreement Buyer
shall purchase the H2PODS under the following terms and
conditions:
3.1 Buyer shall pay to Seller Six Hundred Thousand
($600,000) shares of Emission Controls Corp. stock at a
price of Nine Dollars ($9.00) per share within forty-
five (45) days fo execution of this Agreement. Said
purchase price shall be paid in the following manner:
a. One Hundred Thousand (100,000) shares within
fifteen (15) days after execution of this
Agreement; and
b. Five Hundred Thousand (500,000) shares within
forty-five (45) days after execution of this
Agreement.
3.2 Buyer shall pay to Seller a Royalty of Three
Percent (3%) of gross sales of each manufactured
apparatus shopped to purchasers.
3.3 Buyer shall pay to Seller a Three Percent (3%) markup
over cost of manufacturing on all replacement parts
manufactured for Buyer by Seller.
3.4 Royalties will be paid to Seller for a minimum of
eighteen (18) years after execution of this Agreement,
or through any period whereby the invention may be
protected by a Letter of Patent, or any extension
thereof, whichever may be the longer period in time.
3.5 Payment of Royalties shall be to Xxxxxxx X. Xxxxxxx, as
inventor, or order, at his address given in Section
12.6.
3.6 Buyer will pay the first Royalty payment within sixty
(60) days after the first shipment of manufactured
product. Thereafter, Royalties will be paid quarterly
during the first month following the end of each
quarter.
3.7 ECC will provide Seller operating capital for Seller's
own purposes in the amount of Sixteen Thousand
($16,000) dollars a month commencing November 1, 2002
and continuing until April 15, 2003 when the ECC stock
can be registered as free trading stock. At said date,
Seller will return to Buyer a number of shares which
would equate to the operating capital provided and
valued at the market value of the stock at that date.
SECTION FOUR: USE OF INVENTION
4.1 Buyer has the right to license the use, manufacture,
practice or sale of the invention to others.
4.2 Licenses will be in writing and on such terms and
conditions as Buyer in Buyer's sole discretion may
determine. However, each such license must include
that language so as to protect elements of the
Agreement and must include the provision to allow
Seller access so to inspect books of account of any
Licensee with specificity to production and to
apparatus identification.
4.3 Buyer will insure that all units manufactured, whether
by Buyer or by a Licensee, will be stamped or marked
with an identifying xxxx or with a patent number.
4.4 Production of the apparatus by a Licensee will be
numbered in reporting as Buyer's own production,
regardless of the Buyer's relationship with any
Licensee.
SECTION FIVE: COOPERATION
5.1 Seller shall provide to Buyer all information,
documentation, test results of every kind, data revenue
projections, inventory, work in progress and other
material in possession of Seller concerning the subject
matter of the technology which may assist Buyer in
manufacture or marketing the product, and Seller will
assist Buyer in the technical and commercial
development of the technology as is within the scope
and capability of the Seller.
5.2 Seller will provide to Buyer the assignment of a)
current contracts with any individual or entity
presently utilizing the product, whether under test
mode or revenue providing mode, b) revenues that may be
derived therefrom, c) tentative executed contracts not
yet under consummation, d) revenues that may derive
therefrom, and e) provision of pertinent contact
information relative to any individual or entity with
whom ongoing communications or negotiations are in
progress.
5.3 Seller will provide a working prototype of the H2PODS
upon payment as cited in Paragraph 3.1a of this
Agreement.
5.4 Any improvements related to the invention are hereby
included within the scope of this Purchase Agreement.
5.5 Seller (Inventor) will apply for a Patent Application
for the H2PODS, which patent therefor will be assigned
to the Buyer. Said application is to be made at the
Buyer's discretion. Buyer will pay for said application
and will choose the time and country(s) in which to
apply.
SECTION SIX: REPORTING AND INSPECTION
6.1 Buyer shall submit to Seller detailed reports to
include the number of units manufactured, the number of
units shipped to any assembler, installer, distributor,
vendee or end user of every nature; the invoiced
shipping price of each shipment; and the name and
address to whom shipped or released for payment. Said
report shall be prepared to include each six month (6)
period subsequent to the date of execution of this
Agreement.
6.2 Buyer shall cause its books of account to be available
for inspection by Seller, or any representative of
Seller, during normal business hours of each when
reasonable written notice is given. Such inspection
shall be limited to transactions pertaining to the
technology, including patent identification, if any, of
each manufactured unit.
SECTION SEVEN: INFRINGEMENT
7.1 Buyer shall promptly cause applications to be made to,
and diligently prosecuted before the relevant
governmental authorities for any authorizations or
approvals that may be required in connection with the
manufacture and/or sale of the technology.
7.2 Should a third party infringe the invention, Buyer
shall, at Buyer's own expense, take all reasonable
steps in order to terminate or xxxxx the infringement.
7.3 Buyer has the right to institute and prosecute at
Buyer's own expense suite for infringement of the
technology.
7.4 Seller may determine, but is not obligated to so do, to
join with Buyer, including any shared expense, in any
suit filed by Buyer against a third party deemed as
infringing upon the cited technology.
SECTION EIGHT: WARRANTIES AND DEFAULT
8.1 Neither party makes any representation, extends any
warranties, or assumes any responsibilities whatever
with respect to the manufacture, use, sale or other
disposition of the product.
8.2 Any suspected breach of default with respect to any of
the provisions of this Agreement shall be noticed in
writing to the offending party within thirty (30) days
of suspected breach or default. Should the offender
not cure such suspected breach or default within thirty
(30) days after notice the matter shall be submitted to
arbitration.
8.3 Seller warrants that Seller fully owns all right, title
and interest for the technology cited, and has the
right to enter into this Agreement.
SECTION NINE: ARBITRATION
9.1 All disputes that may arise in connection with the
Agreement that the parties do not settle themselves
shall be submitted under rules and regulations of the
American Arbitration Association in the United States
of America. All costs of arbitration shall be divided
equally between the parties, and the parties agree to
abide by the award.
SECTION TEN: TRANSFERABILITY
10.1 Buyer shall not sell the cited invention except with
full written disclosure to Seller. Any sale hereof
must include and protect all elements of this
Agreement.
SECTION ELEVEN: MISCELLANEOUS
11.1 The purchase of the H2PODS under this Agreement is
specific and shall not be construed otherwise.
11.2 This Agreement shall be interpreted and construed under
the laws of the State of Florida, United States of
America.
11.3 This Agreement is the whole agreement and supercedes
any previous intent or statement, written or oral.
11.4 This Agreement may be amended in writing executed by
both parties.
11.5 If Seller's equity in ECC drops below One Million Eight
Hundred ($1,800,000) dollars for a continued period of
sixty (60) days within twelve (12) months of execution
of this Agreement, then Seller, at his discretion, may
cancel this Agreement with a thirty (30) day written
notice. If the Agreement is cancelled, the H2PODS
technology shall be returned to Seller and the Six
Hundred Thousand (600,000) shares of ECC stock shall be
returned to Buyer.
11.6 Notice given and payment of fees and royalties under
this Agreement shall be mailed to the parties at the
addresses herein given.
Emission Controls Corp. Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxx Xxxxx 0, Xxx 000
Xxxxxx, XX 00000-0000 Xxxxxxxxxx, XX 00000
11.7 Facsimile signatures are considered valid and lawful
for the execution of this Agreement and are binding
upon the parties hereto.
11.8 This Agreement may be signed in whole or in part, each
part representing the whole.
IN WITNESS WHEREOF, the parties are deemed to have executed
this Agreement in Blaine, Washington, whether in whole or in
part, the day and year first above written.
EMISSION CONTROLS CORP. XXXXXXX X. XXXXXXX
By: Xxx X. Xxxxx, President By: Xxxxxxx X. Xxxxxxx
