EXHIBIT 10.19
TECHNOLOGY TESTING AND CONTINGENT PURCHASE AGREEMENT FOR
BIOSENTRY
This Agreement is entered into by and between the Olivenhain Municipal
Water District, a Municipal Water District organized and operating pursuant to
Water Code Sections 71000 et seq. (hereinafter the District) and JMAR
Technologies, Inc., a Delaware corporation operating in the State of California
(hereinafter "JMAR").
R-E-C-I-T-A-L-S
1. The District is a public agency organized and operating pursuant to
Water Code Sections 71000 et seq., which provides water and sewer service within
certain areas of Northern San Diego County.
2. JMAR is a leading innovator in the development of laser-based equipment
for imaging, analysis and fabrication and, in conjunction with The LXT Group,
has developed the BioSentry(TM) system, a laser-based, early-warning system for
detecting and classifying potentially harmful microorganisms in water supplies;
3. JMAR has successfully completed a proof of concept and alpha versions
of its BioSentry(TM) units, and has offered to install three beta BioSentry
units in the District's water treatment facilities for the purposes of testing
the operation of these beta units in a water facility environment;
4. The District's goal with regard to testing and ultimate purchase of the
BioSentry(TM) units is to receive a waiver from the California Department of
Health Services ("CDHS") of the requirement for a 0.5 log reduction in Giardia
now required for the District's treatment system.
5. JMAR and the District desire to engage in a joint effort to test the
operation and effectiveness of the BioSentry units in order to allow the
District to obtain the approval and waiver from the CDHS. If successful, the
District has agreed to purchase 3 BioSentry(TM) units on the terms set forth
herein.
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C-O-V-E-N-A-N-T-S
1. Services to Be Performed. JMAR agrees to install BioSentry beta units
at the District's facility and to operate and perform testing of such units in
accordance with the BioSentry Test Program Proposal and Test Plan attached
hereto as Exhibit A and Exhibit A-1 and incorporated herein by reference. All
work performed by JMAR shall be subject to review and approval by the District.
The District shall have no obligation to approve any work found defective by the
District, in its sole discretion.
2. Installation and Testing of Beta Units. JMAR agrees to a) supply and
install three BioSentry(TM) Beta units at the District's treatment facility and
b) operate and test the Beta units in accordance with Exhibit A at no cost to
the District. JMAR agrees to bear the cost of the three Beta units and its own
costs for installing, operating and testing the units. The District agrees to
make available its facility to JMAR at no additional cost to JMAR for the
purpose of the installation and testing of the three BioSentry(TM) Beta units.
The District also agrees to make its personnel available to JMAR at the
District's cost to support the installation and testing of the Beta units in
accordance with Exhibit A.
3. Contingent Purchase Order. The parties must obtain approval by the CDHS
for installation and operation of the BioSentry(TM) units at the District's
treatment plant. The parties also intend to seek a waiver by the CDHS of the
requirement for a 0.5 log reduction in Giardia currently required by the CDHS
for the District's water treatment plant. The obligation of the District to
purchase any BioSentry(TM) units is expressly conditional upon CDHS approval of
both installation of the BioSentry(TM) units at the Districts's treatment plant
and CDHS approval of a waiver of the requirement for 0.5 log reduction in
Giardia at the District's water treatment plant. Upon receipt by the District of
written approval from the CDHS for the installation and operation of the
BioSentry(TM) units and CDHS approval of a waiver of the 0.5 log reduction in
Giardia, the District will issue a binding Purchase Order obligating the
District to purchase at least three production units of the BioSentry(TM)
system. The Purchase Order will contain the terms and conditions set forth in
the Quotation attached hereto as Exhibit B and incorporated herein by reference.
Following the purchase of the production units by the District, the parties
agree to
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continue to work together to obtain the desired CDHS waiver. If CDHS does not
approve installation of the BioSentry(TM) system in the District's treatment
plant or the DDHS does not approve a waiver of 0.5 log reduction in Giardia at
the District's water treatment plant, the District shall have the unilateral
right to terminate this agreement by written notice to JMAR. JMAR shall remove
all BioSentry(TM) units in the plant at is sole cost and expense without causing
any damage to the District's water treatment plant and JMAR will not receive any
compensation from the District.
4. Work Performance Standards. JMAR agrees to perform all work and
services required by this Agreement in a manner which complies with all federal
and state health and safety standards, in a manner that complies with all permit
requirements for the District's water treatment plant, in a manner that complies
with all CDHS requirements, and in a manner which avoids damage or injury to any
real or personal property of any person or entity, including any real or
personal property of the District. JMAR agrees to perform the work at all times
in a manner which avoids the creation of any trespass or private or public
nuisance during conduct of the work.
5. Liability for Work of Agents, Independent Contractors, and
Subcontractors. JMAR shall be solely liable and responsible for all labor and
materials provided by any director, officer, agent, employee, subcontractor,
supplier, or independent contractor hired or retained by JMAR to perform any
work or to provide any materials or supplies. The District shall have no
liability whatsoever for any work or services performed or any materials or
supplies provided by JMAR or its directors, officers, agents, employees,
subcontractors, suppliers, or independent contractors.
6. Time for Completion of Services. As a material term of this Agreement,
JMAR agrees to complete all work and services required by this Agreement by no
later than December 31, 2005.
7. Termination Right. Either party shall have the express right to
terminate this Agreement at any time by giving thirty (30) consecutive days
advance written notice to the other party upon the occurrence of any of the
following events: a) the failure of the BioSentry Beta units to perform in
accordance with the Test Plan set forth in Exhibit A-1 for a period of 120
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days after installation; or b) the receipt of an unconditional refusal by CDHS
to grant the requested approval or waiver. Upon receipt of such a termination
notice, JMAR shall promptly cease its testing and operation of the BioSentry
units, shall remove the BioSentry units from the District's treatment plant
within 30 days at its sole cost and expense and shall avoid any injury or damage
to any part of the District's treatment plant in removing the units. The
District shall be responsible for restoring the premises to its previous
condition.
8. Hazardous and Toxic Waste. For purposes of this section, the term
"hazardous or toxic waste" means any solid, liquid, or gaseous product
classified as a hazardous or toxic waste under any federal, state, or local
laws, rules, regulations, or ordinances, and all gas and oil products and
by-products of every kind or nature. JMAR shall be solely liable and responsible
for the proper clean-up and removal of all hazardous or toxic waste used,
handled, stored, or spilled by JMAR or any director, officer, agent, employee,
subcontractor, independent contractor or representative of JMAR. JMAR shall pay
all fees, costs, expenses and fines necessary to clean-up or remediate any
hazardous or toxic waste for which JMAR is liable under this paragraph in strict
accordance with all federal, state and local laws, rules and regulations at
JMAR's sole cost and expense. JMAR shall not be liable for any hazardous or
toxic waste used, handled, stored or spilled by the District or its directors,
officers, employees or contractors.
In the event any third party, including any regulatory agency, brings any
claim or cause of action against the District to clean-up or remediate any
hazardous or toxic waste for which JMAR is liable under this section, JMAR shall
also indemnify and hold harmless the District and its directors, officers,
agents, and employees from all claims, actions, losses, costs, fees, expenses,
fines, and penalties, of whatever type or nature, including all costs of defense
and attorneys fees, upon written demand for indemnity from the District.
In the event any third party, including any regulatory agency,
brings any claim or cause of action against JMAR to clean-up or remediate any
hazardous or toxic waste for which District is liable under this section,
District shall also indemnify and hold harmless JMAR and its directors,
officers, agents, and employees from all claims, actions, losses, costs, fees,
expenses, fines, and penalties, of whatever type or nature, including all costs
of defense and attorneys fees, upon written demand for indemnity from JMAR.
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9. Independent Contractor. As a material term of this Agreement, it is
expressly agreed between the parties that JMAR is performing all work and
services for the District pursuant to this Agreement as an independent
contractor and not as an agent or employee of the District. The parties further
agree and acknowledge that the District expects JMAR to make its own independent
determination of the means and methods to perform all work required by this
Agreement, and will not be directed as to any of these means or methods by the
District.
10. Conflicts of Interest Prohibited. As a material term of this
Agreement, JMAR shall not in any way attempt to use its position to influence
any decision of the District in which it knows, or has reason to know, it has a
financial interest other than the compensation provided in this agreement. As a
material term of this Agreement, JMAR warrants and represents that it does not,
to the best of its knowledge, have any economic interests which would conflict
with any of its duties under this Agreement. JMAR agrees not to secure any
economic interest during the performance of this Agreement which conflicts with
its duties to the District under this Agreement.
11. Insurance. At all times during the term of this Agreement, JMAR shall
maintain workers compensation insurance and a commercial general liability
insurance policy in strict accordance with all terms of this paragraph. The
insurance required by this paragraph shall be provided as follows:
11.1 Workers Compensation Insurance. Immediately following execution
of this Agreement and prior to commencement of any work by JMAR, JMAR shall
provide the District with certificates of insurance showing that JMAR has
obtained, for the full period of this Agreement, workers compensation insurance
coverage for no less than the statutory limits covering all persons whom JMAR
employs or may employ in carrying out any work under this Agreement. This
workers compensation insurance shall remain in full force and effect at all
times during performance of any work required by this Agreement; and
11.2 Liability Insurance. Promptly following execution of this
Agreement, and prior to commencement of any work, JMAR shall provide the
District with certificates of insurance and such endorsements as may be required
by the District, demonstrating that JMAR has in full force and effect a broad
form commercial general liability insurance policy or policies
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covering bodily injury, property damage, products-completed operations, and
personal injury in an amount of not less than $2,000,000.00 per occurrence with
a deductible not to exceed $50,000. This liability insurance policy or policies
shall be with an insurance company licensed to do business in the State of
California and acceptable to the District. All liability insurance shall include
an occurrence coverage (except for products liability insurance which shall be
"claims made" coverage) and shall include a "cross-liability" or "severability
of interest" clause. The insurance certificate and any endorsements shall be
non-cancelable without thirty (30) days prior written notice to the District.
The District shall be named as additional named insureds on all policies
required by this paragraph. The insurance afforded to the District shall be
primary insurance. If the District has other insurance which might be applicable
to any loss, the amount of the insurance provided under this section shall not
be reduced or prorated by the existence of such other insurance.
12. Job Site Safety. JMAR shall be solely liable and responsible for the
job site safety and complying with all federal, state and local laws, rules and
regulations pertaining to job safety for all agents, employees, subcontractors,
suppliers, and independent contractors retained by JMAR to perform any work or
services or to provide any materials required by this Agreement. However, JMAR
shall not be liable or responsible for job site safety for any workers or agents
employed by the District in connection with the installation and operation of
the BioSentry units.
13. Indemnity. As a material term of this Agreement, JMAR agrees to hold
harmless, indemnify, and defend the District and its directors, officers,
employees, agents, and representatives from and against any and all liability,
claims, causes of action, suits, actions, damages, losses, costs, fees,
expenses, fines, and penalties, of whatever type or nature, including all costs
of defense and attorney fees, caused in whole or in part, or claimed to be
caused in whole or in part by the action, inaction, passive or active
negligence, or intentional misconduct of JMAR or its directors, officers,
employees, agents, subcontractors, sub-consultants, suppliers, or independent
contractors, except claims and causes of action caused by the sole active
negligence or intentional misconduct of the District or its directors, officers,
employees or agents. The District agrees to hold harmless, indemnify, and defend
JMAR and its directors, officers, employees, agents, and representatives from
and against any and all claims, causes of action, suits, actions, damages,
losses, costs, fees, expenses, fines, and penalties, of whatever type or
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nature, including all costs of defense and attorney fees, caused by the sole
active negligence or intentional misconduct of the District or its directors,
officers, employees, agents, subcontractors, sub-consultants, suppliers, or
independent contractors. In the event that any administrative proceeding,
litigation or arbitration is instituted naming an indemnified party as a
defendant, the indemnified party shall be entitled to appoint its own
independent counsel to represent it, and the indemnifying party agrees to pay
all reasonable attorneys fees, expert fees and costs, and litigation costs
associated with this defense within thirty (30) days of any billing.
14. Miscellaneous Provisions.
14.1 California Law Governs. This Agreement shall by governed by
California law.
14.2 Jurisdiction and Venue. In the event of any legal or equitable
proceeding to enforce or interpret the terms and conditions of this Agreement,
the parties agree that jurisdiction and venue shall lie only in the state courts
located in the North County Judicial District, County of San Diego, State of
California.
14.3 Modification. This Agreement may not be altered in whole or in
part except by a written modification approved by the Board of Directors of the
District and executed by all the parties to this Agreement.
14.4 Attorneys' Fees. In the event any arbitration, action or
proceeding is initiated to challenge, invalidate, enforce or interpret any of
the terms of this Agreement, the prevailing party shall be entitled to all
attorneys' fees, all expert fees and costs, and all litigation fees, costs, and
expenses in addition to any other relief granted by law. This provision shall
apply to the entire Agreement.
14.5 Entire Agreement. This Agreement, together with all exhibits
attached hereto, contains all representations and the entire understanding
between the parties with respect to the subject matter of this Agreement. Any
prior correspondence, memoranda, or agreements, whether or not such
correspondence, memoranda or agreements are in conflict with this Agreement, are
intended to be replaced in total by this Agreement and its exhibits. JMAR
warrants and represents that no District representative has made any oral
representations or oral
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agreements not contained in this Agreement. JMAR further warrants and represents
that JMAR has not relied upon any oral statements or promises made by any
District representative or agent in executing this Agreement. The parties
mutually declare that this Agreement and its exhibits constitute a final,
complete and integrated agreement between the parties.
14.6 Prohibition on Assignment. JMAR shall not be entitled to assign
or transfer all or any portion of its rights or obligations in this Agreement
without obtaining the express prior written consent of the District. The
District shall have no obligation to give its consent to any assignment and may
deny any requested assignment, in its sole discretion.
14.7 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties and on their respective purchasers, successors,
heirs and assigns.
14.8 Unenforceable Provisions. The terms, conditions, and covenants
of this Agreement shall be construed whenever possible as consistent with all
applicable laws and regulations. To the extent that any provision of this
Agreement, as so interpreted, is held to violate any applicable law or
regulation, the remaining provisions shall nevertheless be carried into full
force and effect and remain enforceable.
14.9 Representation of Capacity to Contract. Each party to this
Agreement represents and warrants that he or she has the authority to execute
this Agreement on behalf of the entity represented by that individual. This
representation is a material term of this Agreement.
14.10 Opportunity to be Represented by Independent Counsel. Each of
the parties to this Agreement warrants and represents that it has been advised
to consult independent counsel of its own choosing and has had a reasonable
opportunity to do so prior to executing this Agreement.
14.11 No Waiver. The failure of either party to enforce any term,
covenant or condition of this Agreement on the date it is to be performed shall
not be construed as a waiver of that party's right to enforce this, or any
other, term, covenant, or condition of this Agreement at any later date or as a
waiver of any term, covenant, or condition of this Agreement. No waiver shall
occur unless the waiver is expressly stated in writing and signed by the person
for the party
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having the authority to expressly waive the benefit or provision, in writing. No
oral waivers shall be effective against either party.
14.12 No Joint Venture and No Third Party Beneficiaries. Nothing in
this Agreement is intended to create a joint venture, partnership or common
enterprise relationship of any kind between the District and JMAR. No third
parties shall be construed as beneficiaries of any term, covenant or provision
of this Agreement.
14.13 Time of Essence. The parties agree that time is of the essence
as to all matters specified in this Agreement. The parties mutually declare that
this is a material term of this Agreement.
14.14 Notices. All letters, statements, or notices required pursuant
to this Agreement shall be deemed effective upon receipt when personally served,
transmitted by facsimile machine, or sent certified mail, return receipt
requested, to the following addresses or facsimile numbers:
To: "JMAR"
JMAR Technologies, Inc.
Attention: General Counsel
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
To: "District"
Olivenhain Municipal Water District
Attn: Xxxxx X. XxXxxxxx, General Manager
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
14.15 Effective Date. The effective date of this Agreement executed
in counterparts in Olivenhain, California, within the North County Judicial
District, County of San Diego, State of California, is March 4, 2005.
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Dated: Xxxxx 0, 0000 XXXXXXXXXX MUNICIPAL WATER DISTRICT,
a public agency
By: /s/ XXXXX X. XxXXXXXX
Xxxxx X. XxXxxxxx
General Manager
Dated: Xxxxx 0, 0000 XXXX TECHNOLOGIES, INC.
By: /s/ XXXX XXXXXXX
Title: Vice President of Sensor Products
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