Exhibit 10.7
COOPERATION AND PROJECT FUNDING AGREEMENT
-----------------------------------------
(for full-scale or pilot R&D projects)
This Agreement is made this 19th day of November 2001, by and among
(1) SINGAPORE-ISRAEL INDUSTRIAL RESEARCH AND DEVELOPMENT, a company
incorporated in Singapore and having its principal place of business at 000
Xxxxx Xxxxxx Xxxx, #00-00 Xxxxxxx Xxxx Xxxxx, Xxxxxxxxx 000000 ("SIIRD",
which expression shall where the context so admits include SIIRD's
successors in title and assigns);
(2) ORGANITECH LIMITED, a [company incorporated in Israel] and having its
principal place of business at Xxxxxxx Xxxx Xxxxxxxx X X Xxx 000, Xxxxxx
00000, Xxxxxx ("ORGANITECH", which expression shall where the context so
admits include ORGANITECH's successors in title and assigns); and
(3) AGRONAUT PTE LTD, a company incorporated in Singapore and having its
principal place of business at 000X Xxxxxxxxx Xxxx, #00-00, Xxxxxxxxx
000000 ("AGRONAUT", which expression shall where the context so admits
include AGRONAUT's successors in title and assigns).
ORGANITECH and AGRONAUT shall hereinafter collectively referred to as the
"Participants" and individually as the "Participants".
WHEREAS:
A. The Ministry of Foreign Affairs for the Government of the State of Israel
and National Science Technology Board of Singapore, did, on the 10th day of
December, 1996, sign an Agreement concerning bilateral cooperation in
private sector industrial research and development through the
establishment of a Singapore-Israel Industrial R&D program.
B. The National Science and Technology Board of Singapore has been provided
authority to make a grant of US$1,000,000 annually starting from 1997 to
the Singapore-Israel Industrial Research and Development.
C. The Ministry of Finance of the Government of Israel has provided authority
to the Office of the Chief Scientist, OCS, to make a yearly grant of the
equivalent of US$1,000,000 in New Shekels, annually starting 1997, to the
Singapore-Israel Industrial Research and Development.
D. SIIRD has examined and duly approved the Proposal (as hereinafter defined)
and is willing to provide certain funding for the implementation of the
Proposal on the terms and conditions hereinafter set forth.
NOW IT IS HEREBY AGREED, in accordance with the terms and subject to the
conditions herein contained as follows
1. DEFINITIONS & GENERAL TERMS
1.1 In this Agreement unless the context shall otherwise require the following
words and expressions shall have the following meanings:
"Advance" shall have the meaning ascribed to it in paragraph 1 of
Annex B
"Agreement" means this agreement, as amended, revised, modified,
supplemented, novated or otherwise altered from time to time
"Approved Program means the approved program plan set forth in Annex C
Plan"
"Approved Project means the approved project budget set forth in Annex A
Budget"
"Grant" shall have the meaning ascribed to it in Clause 2.1
"Gross Sales" shall have the meaning ascribed to it in Clause 3.2
"Innovation" means any products, processes, inventions, technology,
discoveries, improvements, modifications, methods, software,
specifications, or any form of technical information
developed or arising from the Proposal.
"Other Sums" means any sums of money other than the Grant actually
awarded to the Participants by SIIRD in connection with the
subject matter of the Proposal
"Projected means the aggregate of all dollar figures under the heading
Expenditure" "Cost To Project" in the Approved Project Budget for both
ORGANITECH and AGRONAUT, as may be amended from time to
time.
"Proposal" means the Proposal, dated the 19th day of April, 2001,
stamped with SIIRD's approval on the 25th day of July, 2001,
as set forth in Schedule 1. For the avoidance of doubt,
should any provision of the said Proposal be inconsistent
with any other provision of this Agreement, the provisions
otherwise set forth in this document shall prevail.
"Qualifying Cost" means, in relation to each Qualifying Item, the dollar
figure as reflected opposite such Qualifying Item in the
Approved Project Budget.
"Qualifying Item" means the item as listed under the heading "Qualifying
Item" in the Approved Project Budget.
"Repayment Rate" shall have the meaning ascribed to it in Clause 3.1(a)
whichever is applicable.
"SIIRD's pro rata means the percentage of the actual expenditures of
share" the project in the implementation of the Proposal
which SIIRD provides under this Agreement
1.2. (a) any reference to any statute or statutory provision includes a
reference to that statute or statutory provision as from time to time
amended, extended, consolidated or replaced by the same and any
regulations, instruments or subordinate legislation made thereunder;
(b) any reference in this Agreement to "writing" or cognate expressions
includes a reference to telex, cable, facsimile transmission or
comparable means of communication;
(c) words importing the singular number shall include the plural and vice
versa, words importing the masculine shall include the feminine and
neuter gender and vice versa, and words importing persons shall
include bodies corporate, unincorporated associations and
partnerships;
(d) reference to Clauses, Schedules and Recitals are reference to Clauses,
Schedules and Recitals of this Agreement, and
(e) the headings to the Clauses and paragraphs are inserted for ease of
reference only and shall not affect the interpretation thereof or of
this Agreement.
1.3 The Recitals, Schedules and the Annexes to this Agreement are incorporated
into and form an integral part of this Agreement.
1.4 The Participants shall be bound and obliged jointly and severally and any
reference to the obligations and liabilities of the Participant(s) shall
mean the joint and several obligations and liabilities of the Participants,
as herein provided.
1.5 The General Manager of SIIRD is empowered by its Board of Directors to
execute this Agreement and to perform all acts under the terms hereof on
behalf of SIIRD.
2. PROJECT FINANCING
2.1 SIIRD hereby agrees to fund the implementation of the Proposal by the
Participants by providing a grant (the "Grant") of up to fifty per cent.
(50%) of the actual expenses incurred for each Qualifying Item provided
that in respect of all Qualifying Items, the aggregate amount of the Grant
shall not exceed US$599,649 or 40% of the Qualifying Expenditure, whichever
is lesser.
2.2 The Grant shall be provided to the Participants at the times as set forth
in the manner as set forth in Annex B.
2.3 The Participants shall bear the expenditures incurred for the
implementation of the Proposal in a timely fashion in excess of those
provided under the Grant.
2.4 Notwithstanding anything above, SIIRD shall have the right to revoke the
award of the Grant and/or terminate this Agreement at any time if there
shall have been any adverse material change (as reasonably determined by
SIIRD) in the implementation of the Proposal. In the event of any such
revocation, the Participants shall forthwith return to SIIRD any unexpended
portion of the Advance. If not repaid forthwith, such sum shall bear
interest in accordance with Clause 3.9.
3. REPAYMENT OF GRANT
Sale of products of the Innovation
3.1 Each Participant shall, jointly and severally, make payments to SIIRD based
on Gross Sales derived from the sale, leasing or other marketing or
commercial exploitation of the Innovation, including service or maintenance
contracts, commencing with the first such commercial transaction. Such
payments shall be based on either of the following:
(a) The Participants may repay the Grant and any Other Sums in US Dollars
at the rate of 2.5% ("Repayment Rate") per year of the Gross Sales for
that year, until 100% of the Grant and Other Sums have been repaid; or
(b) The Participants may repay the Grant and Other Sums in any amount in
the years following the first commercial transaction as set out below,
until the maximum percentages as stated below have been satisfied in
which event no additional payments to SIIRD on account of the Grant
and Other Sums shall be required.
Years Following First Maximum Percentage of Grant and
Commercial Transaction Other Sums to be Repaid
1 68%
2 76%
3 82%
4 91%
5 98%
6 or more 100%
3.2 The term "Gross Sales" shall mean the gross invoiced sales value of the
products of any Innovation sold by the Participant. In the computation of
the Gross Sales, no costs incurred by the Participant in the development,
design, manufacture, sale, distribution or exploitation of the products
shall be deducted from the Gross Sales. In any sale or disposal of any
products of the Innovation or part thereof otherwise than in an arm's
length transaction or otherwise than for money, the Gross Sales shall be
the fair market value (if higher) of such products in the relevant country
of sale or disposal, The term "Gross Sales" shall also include all specific
export incentives or bonuses paid to the Participant on account of sale of
the products of Innovation for export, but shall not include sums paid for
commissions, brokerage, value added and sales taxes on the sale of the
finished product, or transportation and associated insurance costs, if same
have been included in the gross sales price.
3.3 The Innovation shall be deemed to have been sold, marketed or otherwise
commercially exploited if the Innovation, or any improvement, modification
or extension of it is put to the benefit of a third party, whether directly
or indirectly, and whether standing alone or incorporated into or co-joined
with other hardware or processes, and for which benefit the said third
party gives something of value. This provision shall not apply to
transactions between the Participants or between the Participants and their
parents or subsidiaries. Should such parent or subsidiary resell the
Innovation separately identified or incorporated in a system, the Gross
Sales price shall be the price to third parties from the parent or
subsidiary making
the sale, such Gross Sales price being defined by the same criteria as
safes are defined for purposes of "Gross Sales" in Clause 3.2.
3.4 If the Innovation is a part of a product sold, marketed or otherwise
commercially exploited, the Gross Sales price for purposes of payments
according to Clause 3 shall be the Gross Sales price of that product
multiplied by a factor whose numerator is the manufacturing cost of the
Innovation and whose denominator is the manufacturing cost of the product.
Notwithstanding the aforesaid, if there shall have been established a
market price for the Innovation, such price shall be the basis for payments
according to Clause 3, notwithstanding the incorporation of the Innovation
in another product.
3.5 In the event a Participant obtains a patent in accordance with Clause 8 in
respect of an Innovation and such patent is licensed to other third parties
for the sales of any products embodying the Innovation or made by
practicing the Innovation, unless such Participant is making payments to
SIIRD under the other sub-clauses of Clause 3, the Participant shall pay to
SIIRD a grant repayment on sales of such products, in accordance with Annex
D.
3.6 Assignment of technology or Innovation
--------------------------------------
Should any portion of the Innovation or technology developed in whole or in
part under this Agreement be assigned or sold outright to a third party,
one-half of all proceeds of the assignment or sale as received by the
Participants shall be applied to repay SIIRD until there has been full
repayment to SIIRD of a sum equal to the percentage indicated in Clause
3.1(b) of the Grant and Other Sums actually received by Participants
hereunder, in equivalent dollars valued at time of repayment.
3.7 Licensing of technology or Innovation
-------------------------------------
If any Innovation or any technology developed under this Agreement becomes
the subject of any licensing, the Participant shall pay to SIIRD a grant
repayment in accordance with Annex E.
3.8 All payments due to SIIRD under this Agreement shall be calculated on a
semiannual calendar basis, and statements, consistent with generally
accepted accounting procedures and with the standard accounting procedures
of the Participant and signed by an officer of the Participant, rendered
with payment within 90 calendar days following the end of each semiannual
period. Payments to SIIRD under Clause 3 shall commence at the end of the
semiannual period during which the first sale or commercialization was
made.
3.9 All payments due to SIIRD and not paid by the Participants under this
Agreement shall bear interest at 1% more than the average prime rate
prevailing at Chase Manhattan Bank, Singapore, during the period from the
date payment was due until the date actually made.
3.10 This Clause 3 shall survive termination of this Agreement, and to the
extent of any obligation to make royalty payments under this Agreement,
such obligation shall continue for the life of the last-to-expire patent
issued on any invention made in whole or in part arising from the
implementation of the Proposal,
4. CONDUCT OF THE PROJECT
4.1 Each Participant agrees to implement the Proposal in accordance with good
standards relevant to such undertakings, and shall expend funds received
hereunder only in accordance with such Proposal and the requirements of
this Agreement.
4.2 Each Participant agrees to comply with the Approved Program Plan for the
Innovation in accordance with the Approved Program Plan. Each Participant
shall, in furtherance of the implementation of the Proposal, carry out the
tasks and contribute all necessary funds, resources and facilities for the
implementation of the Proposal.
4.3 ORGANITECH hereby appoints Xx. Xxxx Xxxxxx as the Israel Project Manager
and AGRONAUT hereby appoints Mr. Xxxxx Xxx as the Singaporean Project
Manager for the implementation of the project during the period of this
Agreement and in accordance with the Approved Program Plan.
4.4 The Participant shall not make substantial transfers of funds from one
budget item to another, change key personnel or their duties and
responsibilities or diminish their time allocated to the proposed work
hereunder without prior written approval by SIIRD, which approval shall not
be unreasonably withheld.
4.5 Should any key person be absent from his work or should such absence be
expected for 90 days or more, or should there be any significant reduction
in the total personnel force assigned under the Proposal, the Participant
shall forthwith notify SIIRD.
4.6 Each Participant shall:
(a) co-operate in ensuring that the implementation of the Proposal is
carried out on its part by properly qualified personnel;
(b) procure that authorised representatives of SIIRD are allowed
reasonable access to the work carried out by it in connection with the
Proposal and to the, records, accounts, reports and any form of
documentation relating to, and personnel involved in the
implementation of the Proposal from time to time; and
(c) promptly notify SIIRD if there is any unforeseen technical or
scientific problem which is likely to cause a material delay or
difficulty in achieving any of the objectives of the Proposal or
result in any material increase in the costs of implementing the
Proposal.
4.7 If at any time the Participant believes that:
(a) there is no reasonable likelihood of success of the project of the
Proposal;
(b) substantial costs will have to be additionally incurred or amount of
funding will have to be additionally provided to complete the
implementation of the Proposal;
(c) there has been a failure to achieve any of the material steps or
milestones as set out in the Approved Program Plan and the Proposal;
or
(d) the objectives of the Proposal have been substantially achieved by
research outside the Proposal,
SIIRD and the Participants shall negotiate in good faith to re-define the
Proposal or terminate this Agreement.
5. REPORTING REQUIREMENTS
5.1 The Participant shall submit to SIIRD, in writing, the following reports:
(i) First fiscal and technical reports within 60 days following the
expiration of the first 7 month period; and
(ii) Final fiscal and technical reports within 90 days following revocation
of the Grant or termination of this Agreement or completion of the
implementation of the Proposal, whichever is earlier.
Such reports shall be in form and substance as provided in Formats for
Technical and Fiscal Reports, SIIRD Information Handbook, Chapters IV.A.
and B.
The Participant shall give a presentation to SIIRD on the fiscal and
technical reports and on the progress of the implementation of the Proposal
upon or as soon as practicable after the submission of the above reports to
SIIRD.
5.2 In the event of failure by the Participants to comply with the requirements
under Clause 5.1, SIIRD reserves the right to terminate this Agreement
without notification, and/or to withhold all subsequent reimbursements of
the Grant and demand repayment of the Advance, upon which the Participants
shall within 30 days of the demand repay SIIRD the Advance. All late
payments shall bear interest at 1% more than the average prime rate
prevailing at Chase Manhattan Bank, Singapore, during the period from the
date payment was due until actually made.
5.3 The Participants shall provide, at its expense, briefings on the progress
of the work hereunder within 45 days following request by SIIRD. Such
briefings shall accord with the form and depth as SIIRD may reasonably
request.
6. PUBLICATIONS
6.1 In any publication in scientific or technical journals of data or other
information derived from the work under the Proposal, or any publication
related to such work, but not including product literature or manuals, the
support of SIIRD shall be acknowledged.
6.2 To the extent so required the Participants shall permit SIIRD free
dissemination of such publications or information under Clause 6.1 subject
to the limitation of Clause 7. The Participants shall be deemed hereby to
waive any claim with respect to such dissemination for infringement of any
copyright it may have or may obtain.
6.3 The Participants shall furnish to SIIRD two (2) copies of all publications
resulting from SIIRD-supported work as soon as possible after publication.
MTBF, MTTR
The machine parts are still fragile and need continuous service. When the
machine malfunctions, time is needed to repair it and put it back into
operation. The problem exists in the mechanical moving parts, the floats and the
software that supports the operation of the machine. The machine should change
from an MTBF of a few days to a MTBF of two weeks. This will be achieved by the
following steps:
o The software will be revised to include a better GHI (Xxxxxx Human
Interface) that will enable easier operation and allow for the operator
to be less skilled and trained.
o Mechanical parts will need to be redesigned.
o The robot will be modified to meet the dimensions of the new plants and
its end effectors will be restructured.
o Float rotation mechanisms will be upgraded.
o Firmer construction of the polystyrene floats will be conducted for
endurance purposes. Watertight design will be applied for a longer
lasting operational capability.
o The software will also be modified to better detect and avoid hazardous
situations.
o Automatic calibration will assist to detect changes in the machine
environment.
o The machine will be upgraded for automatic initialization.
o Log files of errors and status will be built in the software for
detection of statistical decay of mechanical system.
Machine Cost
As a Beta machine development, cost is a second priority. Many parts of the
machine will be designed to make them cheaper to manufacture and easier to
assemble. The machine's hardware and software cost should decrease from
$100,000 to $60,000. The machine's cost reduction will be by:
Reducing the cost of purchased parts through finding secondary sources and
appointing suppliers in the Far East.
Reduction of the complexity in manufacturers' parts.
Locating cheaper manufacturers in the Far East.
Searching for technological subsystems that are designed for mass production.
Operation Cost
The cost of operation is the key factor in the commercial success of the
machine. The main cost is the electricity. The engineers will tackle this
problem by developing a cost effective solution to the lighting system and the
air-conditioning system. The machine's operational cost needs to be reduced by
25%. This can be achieved through:
The research for more efficient lighting ballasts for the fluorescent lamps.
Testing of other cooling methods such as water-cooling or by using a centralized
approach.
Improve Yield
The machine is designed to produce about 400 heads of lettuce per day.
Increasing the daily yield of the machine will automatically influence the cost
of production per head.
The machine's daily yield should increase from 400 to 600 heads per day.
The yield increase can be affected by two ways. One is by the agronomical
approach, which is by speeding the plant growth through means of an improved
environmental and mineral state. The other is through engineering, by optimizing
the machines space volume. This is possible by performing one or two more
transplanting activities.
Meeting Standards
The project will include the implementation of standard requirements for the
various markets in the region. The redesign/modifications of the machine will
enable meeting these standards. The work with the Far East standard authorities
will be conducted from Singapore by Agronaut.
Agronomic
The agronomic activities will set the guidelines for the engineering
developments for adapting the GrowTECH(TM) system for the intensive growth of
leafy vegetables and herbs in demand in the Singaporean and other Far East
markets. Research will be conducted in the search for various growth elements
for the optimum production of high quality plants in the GrowTECH(TM) system.
The subjects to be researched and developed are:
1. Develop germination substrate.
Select substrate that will increase germination rates beyond 90%.
o Germination medium for high germination percentage and assurance for
the continuous growth in the hydroponics system.
2. Select products: find plants that have a better price.
Tests have been conducted by both companies on PakChoi, Kailan, Arugula,
Basil.
3. Optimize nutrition solutions.
Select a Solution that will increase weight by more then 5%.
o Creating the fertilizing solutions for the different stages of the
plant's growing cycle.
4. Artificial climate & Air mixture optimization.
Select a climate that will increase weight by more than 5%.
o Establishment of the climatic conditions in the system to meet the
needed temperatures and humidity.
o Creating the most plant mass possible by controlled input of C02.
5. Photosynthesis optimization:
Select lightings that will increase weight by more than 5%.
o Test various wavelengths, photoperiod durations and intensity.
o Select optimal Electric cost Vs, crop weight.
o Adjusting the lighting system to provide the optimum spectrum needed by
the various plants.
After all previous tests, select mixture of all parameters: climate, nutrition
and lightings for best results.
Target: select a mixture that will increase weight by more than 10%.
6. Environmentally friendly insect rejection mechanisms.
o Development of plant immunity by strengthening the plant's immune
system through additives in the fertilizing solution.
o Creating an insect and disease free environment by creating conditions
hostile to them while remaining environmentally friendly.
PROGRAM PLANNED
---------------
Budget
----------------------------------------------------------
Total
Start End Cost
total cost 1731
----------------------------------------------------------
Beta Machines 15/7/01 14/7/02
Ship Betas to Singapore
M1 2/7/01 1/2/02 250
Define M1 Spec 2/7/01 27/7/01 20
M1 spec sign 27/7/01 27/7/01 0
design M1 30/7/01 24/8/01 50
Build M1 27/8/01 9/11/01 100
pass CE xxxx 12/11/01 4/1/02 35
Ship M1 to Singapore 7/1/02 1/2/02 45
----------------------------------------------------------
M2 2/7/01 10/1/03 1002
improve machine cost 2/7/01 25/1/02 165
reduce operation cost 2/7/01 25/1/02 180
Increase MTBF of robot 2/7/01 12/10/01 150
Increase MTBF of System 2/7/01 2/11/01 135
Increase Yield 28/1/02 31/5/02 85
Define M2 Spec 1/7/02 26/7/02 15
design M2 29/7/02 23/8/02 45
M2 spec sign 23/8/02 23/8/02 0
Build M2 26/8/02 13/12/02 180
Ship M2 to Singapore 16/12/02 10/1/03 47
----------------------------------------------------------
Agronomics 2/7/01 4/7/03 466
Select products 2/7/01 14/12/01 10
Germination substrate 17/12/01 31/5/02 67
Nutrition solutions 3/6/02 15/11/02 62
Insect rejection mechanisms 18/11/02 13/6/03 77
Climate & Air mixture 2/7/01 25/1/02 82
Artificial lighting 28/1/02 27/9/02 83
Photosynthesis optimization 30/9/02 4/7/03 77
project end 4/7/03 4/7/03 8
----------------------------------------------------------
Israel 1171
------------------------------------------------------------------------------------------------------------------------------------
Purchase & Project Mech. Soft Chief OverSeas
Start End Degradable Contractors Manager Engineer Engineer Technician Agronom Flights
total cost 375 274 59 257 75 60 55 16
------------------------------------------------------------------------------------------------------------------------------------
Beta Machines 15/7/01 14/7/02
Ship Betas to Singapore
M1 2/7/01 1/2/02
Define M1 Spec 2/7/01 27/7/01 10 5
M1 spec sign 27/7/01 27/7/01
design M1 30/7/01 24/8/01 5 40 5
Build M1 27/8/01 9/11/01 60 20 20
pass CE xxxx 12/11/01 4/1/02 20 3 7
Ship M1 to Singapore 7/1/02 1/2/02 2
------------------------------------------------------------------------------------------------------------------------------------
M2 2/7/01 10/1/03
improve machine cost 2/7/01 25/1/02 50 60 5 40 5 5
reduce operation cost 2/7/01 25/1/02 70 50 5 40 10 5
Increase MTBF of robot 2/7/01 12/10/01 40 40 5 40 20 5
Increase MTBF of System 2/7/01 2/11/01 20 40 5 20 20 5 5
Increase Yield 28/1/02 31/5/02 20 10 5 20 10 5 5
Define M2 Spec 1/7/02 26/7/02 5 5
design M2 29/7/02 23/8/02 5 30 10
M2 spec sign 23/8/02 23/8/02
Build M2 26/8/02 13/12/02 60 20 20
Ship M2 to Singapore 16/12/02 10/1/03 2
------------------------------------------------------------------------------------------------------------------------------------
Agronomics 2/7/01 4/7/03
Select products 2/7/01 14/12/01 5
Germination substrate 17/12/01 31/5/02 10 5 2
Nutrition solutions 3/6/02 15/11/02 10 5 2
Insect rejection mechanisms 18/11/02 13/6/03 10 5 5 2
Climate & Air mixture 2/7/01 25/1/02 5 5 5 5 2
Artificial lighting 28/1/02 27/9/02 15 4 3 5 5 2
Photosynthesis optimization 30/9/02 4/7/03 5 5 2
project end 4/7/03 4/7/03 3
------------------------------------------------------------------------------------------------------------------------------------
Singapore 662
---------------------------------------------------------------------------------------------------------------------------------
Purchase & Mech. Project Tech. OverSeas
Start End Degradable Contractors Engineer Manager Agronoms Support Flights
total cost 335 59 16 50 100 90 12
---------------------------------------------------------------------------------------------------------------------------------
Beta Machines 15/7/01 14/7/02 100
Ship Betas to Singapore 15
M1 2/7/01 1/2/02
Define M1 Spec 2/7/01 27/7/01 5
M1 spec sign 27/7/01 27/7/01
design M1 30/7/01 24/8/01
Build M1 27/8/01 9/11/01
pass CE xxxx 12/11/01 4/1/02 5
Ship M1 to Singapore 7/1/02 1/2/02 20 10 3 10
---------------------------------------------------------------------------------------------------------------------------------
M2 2/7/01 10/1/03
improve machine cost 2/7/01 25/1/02
reduce operation cost 2/7/01 25/1/02
Increase MTBF of robot 2/7/01 12/10/01
Increase MTBF of System 2/7/01 2/11/01 20
Increase Yield 28/1/02 31/5/02 10
Define M2 Spec 1/7/02 26/7/02 5
design M2 29/7/02 23/8/02
M2 spec sign 23/8/02 23/8/02
Build M2 26/8/02 13/12/02 60 20
Ship M2 to Singapore 16/12/02 10/1/03 20 10 3 10 2
---------------------------------------------------------------------------------------------------------------------------------
Agronomics 2/7/01 4/7/03
Select products 2/7/01 14/12/01 5
Germination substrate 17/12/01 31/5/02 20 5 10 10 5
Nutrition solutions 3/6/02 15/11/02 20 5 10 10
Insect rejection mechanisms 18/11/02 13/6/03 25 5 5 10 10
Climate & Air mixture 2/7/01 25/1/02 20 5 5 5 10 10 5
Artificial lighting 28/1/02 27/9/02 15 4 5 5 10 10
Photosynthesis optimization 30/9/02 4/7/03 20 5 20 20
project end 4/7/03 4/7/03 5
---------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
ID Task Name Duration Start Finish Pred
------------------------------------------------------------------------------------------
1 M1 155 day 02/07/01 01/02/01
------------------------------------------------------------------------------------------
2 Define M1 Spec 4 wk 02/07/01 27/07/01
------------------------------------------------------------------------------------------
3 M1 Spec sign 0 day 27/07/01 27/07/01 2
------------------------------------------------------------------------------------------
4 design M1 4 wk 30/07/01 24/08/01 3
------------------------------------------------------------------------------------------
5 Build M1 11 wk 27/08/01 09/11/02 4
------------------------------------------------------------------------------------------
6 pass CE xxxx 8 wk 12/11/02 04/01/02 5
------------------------------------------------------------------------------------------
7 Ship M1 to Singapore 4 wk 07/01/02 01/02/02 6
------------------------------------------------------------------------------------------
8 M2 400 day 02/07/01 10/01/03
------------------------------------------------------------------------------------------
9 improve machine cost 30 wk 02/07/01 25/01/02
------------------------------------------------------------------------------------------
10 reduce operation cost 30 wk 02/07/01 25/01/02
------------------------------------------------------------------------------------------
11 Increase MTBF of robot 15 wk 02/07/01 12/10/01
------------------------------------------------------------------------------------------
12 Increase MTBF of System 18 wk 02/07/01 02/11/01
------------------------------------------------------------------------------------------
13 Increase Yield 18 wk 28/01/02 31/05/02 11-12
------------------------------------------------------------------------------------------
14 Define M2 Spec 4 wk 01/07/02 26/07/02 13
------------------------------------------------------------------------------------------
15 design M2 4 wk 29/07/02 23/08/02 14
------------------------------------------------------------------------------------------
16 M2 spec sign 0 day 23/08/02 23/08/02 15
------------------------------------------------------------------------------------------
17 Build M2 16 wk 28/08/02 13/12/02 16
------------------------------------------------------------------------------------------
18 Ship M2 to Singapore 4 wk 16/12/02 10/01/03 17
------------------------------------------------------------------------------------------
19 Agronomics 625 day 02/07/01 04/07/03
------------------------------------------------------------------------------------------
20 Select products 24 wk 02/07/01 14/12/01
------------------------------------------------------------------------------------------
21 Germination substrate 24 wk 17/12/01 31/05/02 20
------------------------------------------------------------------------------------------
22 Nutrition solutions 24 wk 03/06/02 15/11/02 21
------------------------------------------------------------------------------------------
23 Insect rejection mechanisms 30 wk 18/11/02 13/06/03 22
------------------------------------------------------------------------------------------
24 Climate & Air mixture 30 wk 02/07/01 25/01/02
------------------------------------------------------------------------------------------
25 Artificial lighting 35 wk 28/01/02 27/09/02 24
------------------------------------------------------------------------------------------
26 Photosynthesis optimization 40 wk 30/09/02 04/07/03 25
------------------------------------------------------------------------------------------
[GRAPH OMITTED]
THE MARKET
----------
The GrowTECH(TM) system technologies aim to automate the 'food in the field'
side of the food chain. By automating the repetitive and many times injury prone
motions of cultivation, The GrowTECH(TM)'s cultivation platforms eliminate most
of the human cost of production - a large component of overall input costs.
The result is an environment designed to boost productivity several multiples
that of traditional, manual mechanized processes.
Productivity is the key to success in today's agricultural economy. Automation
technologies will drive agricultural productivity in this new century. That's
why OrganiTECH's highly innovative and experienced engineers spent thousands of
man hours developing the Company's automation technologies. The result; the
innovation of a multitude of new, proprietary robotic subcomponents ranging from
pneumatic end effectors to sensory components - many results in patents been
sought for their protection.
With worldwide demand for grain expected to triple in the next 50 years,
automation technologies must do more than automate the navigation of fossil
driven equipment. They must move beyond conventional concepts, addressing all
deficiencies in the entire process. While the newest precision farming
technologies such as yield mapping systems are reducing inputs and raising
productivity, these technologies only take cultivators part of the way toward
reaching sustainable agriculture.
The GrowTECH(TM) automation solutions were designed to solve the deficiencies of
precision farming and other emerging agro-automated technologies by completely
redesigning the physical makeup of the field. By moving the field into a new,
compact environment, The GrowTECH(TM) platform provides conditions and
efficiencies in the automation process that are unachievable in the automation
of the open dirt field.
The greatest risks of crop loss are many times unmanageable in the field.
Weather, pests, and even soil variables determine yield and profit of a field.
To eliminate these environmental variables and produce pesticide free, low cost
produce, The GrowTECH(TM) moves the field into a complete climate controlled
hydroponics environment. Utilizing a sealed insulated container for its housing
and computer systems for complete control of irrigation and environment, the
system offers space age control of the growth environment. High cost inputs such
as fertilizers are reduced dramatically while pesticide application is pushed to
zero. Water consumption is also efficiently reduced to a fraction of
conventional usage. And with the use of 24 hour growth lighting and temperature
optimization technologies, the growth cycle is reduced by as much as 50% from
germination to harvest. The GrowTECH(TM) is a low input - high output
revolutionary solution.
The GrowTECH(TM) was designed to overcome the challenges facing the 21st century
xxxxxx. It is engineered to improve cultivation and extraction productivity,
raise the quality of produce, reduce environmental impacts, mitigate
distribution inefficiencies, virtually eliminate labor, and lower costs of
production and other inputs across the entire process.
By providing these unique advantages, the GrowTECH 200O(TM) allows the world
xxxxxx to once again create enormous value in the production pipeline that
extends downstream to benefit consumers worldwide.
GrowTECH 200O(TM)
Revolutionary Advantages
o Herbicide & Pesticide Free
o Extremely Water Efficient
o Environment Friendly Technology
o Contained Environment: Eliminates Abiotic Conditions
o Crop Yield Productivity Up To 1000 Times Greater
o Advanced Hydroponics Technology
o Space Efficiency: Stackable Machines
o Completely Automatic: From Planting To Harvest
x Xxxxx-kosher Standard: No Insects or Worms Present
o Optimum Growth Conditions, Shortened Growth Cycle
o Nominal Bacterial Threat Allowing Fast, Safe Packing
o Steady Production Cost Year-Round
o Portable: Distribution Efficiencies
o Modular: Computer & Robot Controlled
Modern advances in agriculture have increased food production, but they have
also introduced large-scale use of pesticides and fertilizers. Distribution
inefficiencies and rising adverse growing conditions are compounding the crisis.
In order to meet the rising world demand for food and pesticide free produce,
producers will require radically new, cost effective platforms that mutually
conform to the demands of consumer and the demands of the ecosystem. These new
technologies must grow robust crops without the use of pesticides, yet lower the
typical cost associated with cultivation. Technologies that reduce labour costs
and increase yield without pesticides will drive the market. The GrowTECH(TM) is
the only sustainable technology to offer a complete, cost effective, automated
solution for the production process of green leaf vegetables, herbs, and other
valuable plants.
Since 1945, insecticide use in the United States has increased tenfold, reaching
an estimated 911 million pounds per year for agricultural crops. As a result of
this increased reliance on dangerous insecticides, food crops are now treated
with an average seventy-one known carcinogenic chemicals. Further concerning
scientists and consumers is the effectiveness of insecticides, which appears to
be declining at a time when Americans already ingest 167 times more dioxin every
day than the acceptable daily level. It is the rising dangers from pesticides
combined with an increasing awareness of the nutritional benefits of hydroponic
foods that have consumers demanding safer produce.
The world agricultural and food biotechnology market has the potential to grow
to US$ 46 billion by the year 2000, according to a report by Ernst & Young. The
firm further predicts that the agricultural biotechnology sector in North
America will experience 55% annual growth rates to the year 2004! Biotechnology
is transforming the world of agriculture, opening up immense new opportunities
at a greatly accelerated rate for agricultural technology developments such as
the GrowTECH(TM) system.
The worldwide market for lettuce represents an annual multi-billion dollar
industry. As the second most popular fresh vegetable, the worldwide lettuce
production is constantly rising, reaching close to 18 million tons per year. The
U.S. market for lettuce alone generates $10 billion in annual revenue with $3
billion spent on so-called added-value lettuce (i.e. ready-to-eat, clean,
organic, freshly cut or hydroponic). Current data suggests that this added value
market is growing at a rapid pace of 30% per year. The GrowTECH 2000(TM) is
designed to capitalize on the long-term trend and enormous demand for hydroponic
lettuce - a clean, ready-to-eat product that contains no insecticide or
pesticide residues typically used in the cultivation process. If the current
trend continues and the company can capture 10% of the equipment market over the
next 10 years, the Company believes sales of the GrowTECH 2000(TM) could exceed
four hundred million dollars only in the U.S. (Projection based on Xxxxxxx & New
Hope 1998 data).
The Far East market has enormous potential for use of the GrowTECH(TM)
technology. The cost of production in the Far East of leafy vegetables is
extremely high due to lack of proper land and climate conditions. The markets
are very strict on quality control and therefore utilize expensive growing
methods using advanced hydroponics and greenhouses that are operated by costly
manual labor and utilities. To supplement the market's growing demand, the Far
East relies on the import of leafy vegetables. The shipping costs and
requirements to qualify for strict quality control cause very high pricing to
end consumers.
California's vegetable growers are finding expanding markets in the Far East:
More than $100 million worth of California broccoli and lettuce was exported to
Asia in 1995. Japan is easily the largest export market for California
agriculture, with more than $3 billion in goods measured by the exporter's cost,
according to the California Department of Food and Agriculture. But the top 10
markets for California agriculture also include six other countries in the Far
East. These top seven Asian markets account for more than 60 percent of
Californian's agricultural exports. While the Japanese market looks to have
stabilized, the emerging Asian markets are growing at staggering rates. China
entered the top 10 list with a six-fold increase from 1992 to 1995. During those
same three years, exports to Singapore tripled, exports to Indonesia nearly
doubled, while the South Korea and Hong Kong markets continued to grow at
healthy rates.
"The worldwide market is exploding and it will continue to explode," said Xxxx
Xxxxxxx, who is a salesman with Xxxxx of Salinas. "The world is a smaller
place." Xxxxx is a leading international exporter of California and Arizona
grown lettuce.
The Asian market is growing and the prices are the best of any market, foreign
or domestic. But the Asian market is a world of its own that requires
specialized knowledge of markets, regulations and even production.
Only the highest quality agricultural produce can be sold in Asia. Agricultural
produce must be able to travel for 15 to 20 days before it reaches the market.
"They want a higher quality, mainly because of the shipping time," said Xxxxxxx
Xxxxxxx, who is the international sales manager for Xxxx Fresh. "By the time it
gets to the market, it's quite a bit older."
In addition to the quality that will survive the trip around the globe, the
produce must also meet highly particular standards that not only differ from
those of the domestic market, but can also differ from country to country within
Asia. The specifications of the Asian market can translate into yields that are
substantially below those in fields harvested for the domestic market. "We
inspect for insects, or other invertebrates, or diseases the country has
indicated they don't want coming in with that crop," Colveric said. When asked
how many different sets of rules an Asian exporter must follow, Colveric
answered, "How many countries are you exporting to--each country has its own
rules." Once the product passes inspection in this country, it still faces what
can be a difficult entry into its Asian destination.
While the GrowTECH 2000(TM) is sophisticated technology; it is competitively
priced to compete against traditional technologies in the conventional lettuce
market worldwide. All industrialized and developing nations, which lack the
climate and labor conditions necessary to grow lettuce in an economical and
reliable manner are prime target markets for the GrowTECH 2000(TM).
Return on investment for the customer of the GrowTECH 2000(TM) is the main
factor of determining its price. As a result Organitech will separate and divide
its market segments to the different global regions, depending on their climatic
conditions and their agricultural technological abilities. The client is to
obtain a return on his investment within three years of operations. According to
a market research conducted in the U.S., the machines will sell for
$120,000-$150,000 each enabling the customer a return on his investment in a
maximum of three years time. This calculation includes operating costs,
maintenance, service, and other relevant costs for marketing the harvested
products. Due to the above-mentioned factors relating to the Far East market, we
expect to market the GrowTECH(TM) system for around $150,000 and up. The
estimated cost of mass production of the GrowTECH(TM) system is designated to
reach $60,000-$80,000 per machine. This estimation is based on Organitech's
experience of constructing 3 prototype machines and 2 beta site machines. The
added costs for implementing the needed modifications and technologies to create
a system that meets the needs of the targeted markets in this project, are a
one-time expense streamed to the engineering and agronomic Research &
Development and the creation of a newly designed manufacturing guide by both
parties.
This is feasible in a time frame of 1-3 years. This would put Organitech in a
position where they can sell both containers and non-GMOs seeds.
Organitech has a potential for numerous applications in research, in particular
in the field of mutant screening, genomics and transgenic plants. One of the
advantages of the Organitech system is that it represents a confined environment
that in my opinion (I am responsible for safety with transgenic plants in the
Weizmann Institute) fits the requirements for P3, i.e. a high level of
containment and safety. This means that many academic or industrial groups which
work with transgenic plants could be interested to purchase such facility. It
would be good for Organitech to obtain from the Israeli authorities and then
from Europeans and US, a "teudat hekhsher", i.e. a certificate that your stuff
is P3 (I am in contact with the Israeli national safety officer and can help
you with that). Another field of high interest is screening of mutants. This
requires growth and screens of tens of thousands of plants. Mutants can be
chemically induced or physically induced (irradiation) or genetically induced
through insertion of mobile DNA (transposons or T-DNA). From what I saw it would
be feasible to adapt some of the robot's functions to the requirements of such
mutant screen. Mutant screen is important for breeding (using new traits, e.g.
the long shelf life mutants) it is also important to identify the genes and
their function and patent these genes. The field of functional genomics today is
largely based on the ability of high-throughput screen of mutants. There are
many academic facilities as well as private companies that are involved in these
fields and would be interested either to purchase a container or more likely to
purchase services from experts in mutant screens. The candidate plants species
are Arabidopsis, tomato, lettuce, strawberry and some flowers (petunia,
carnation?).
Organitech should either open a "Genetics" department or, as you suggested,
create a daughter company that would deal with breeding and with genomics
application. Providing new crops or new applications adapted to the container
would obviously open many more prospects for sales of containers. Providing
services for genomics is another source of income and on the long range it puts
Organitech in a unique position for gene discovery and Ag-Biotech.
Personally, I would be glad to be involved in such endeavour, It fits my
expertise in the field of genetics, genomics, mutant screens and my experience
with miniaturized crops and my interest in gene discovery and biotechnology. I
also believe that your technology can advance my own research. Last but not
least, your technology is quite mind boggling and I was seduced. I do share your
enthusiasm and expectations for a great future. I can help with supervising the
research program of Organitech-genetics; with finding the right people and as I
told you on the phone, I can help with the submission of applications to public
research programs (European and Israeli) that provide funding for the kind of
research that "Organitech-genetics" could do.
Best regards,
Avi
Xxxxxxx X. Xxxx
Professor of Genetics
Plant Sciences Department
The Weizmann Institute of Sciences
Rehovot, 00000 Xxxxxx
Tel (W) 000 0 000 0000
Fax 000 0 000 0000
Tel (H) 000 0 000 0000
Application for funding from The SIIRDF
By Organitech Limited of Israel and Agronaut Agricultural Services of Singapore
/s/ Xxxx Xxxxxx /s/ Xxxxx Xxx
-------------------------------------- --------------------------------------
Xxxx Xxxxxx Xxxxx Xxx
President General Manager
Organitech Limited Agronaut Agricultural Services
EXECUTIVE SUMMARY
-----------------
The GrowTECH(TM) 2000 is a self-contained, fully automated, portable, robotic
growing machine that can automatically seed, transplant and harvest commercial
quantities of fresh, clean, pesticide-free, hydroponic green leaf vegetables on
a daily basis anywhere in the world, 365 days a year.
The GrowTECH platform fully automates the entire cultivation process: Seeding-->
Germination --> Growing --> Harvesting. By utilizing advanced hydroponic systems
coupled with 24 hour lighting systems, the GrowTECH(TM) 2000 accelerates the
growth cycle of plants to levels that greatly exceed those produced by
traditional 'in the field' processes. At present, test results show a single
GrowTECH platform produce hundreds of heads of lettuce per day, 365 days a year
- a yield of up to 200 times higher than that of arable farming land. Due to the
stackable nature of the platform, it offers even higher levels of space
efficiency. So radical a 'breakthrough' is this platform that it has already
caught the attention of the international press, global companies, and even
government organizations.
Prototype alpha testing of the GrowTECH 200O(TM) in the production of lettuce
has provided strong value propositions for the platform's commercial
feasibility. Based on these initial results, Organitech secured a beta site
agreement for two machines, to be operated in Singapore, with Agronaut
Agricultural Services.
Agronaut is the company who has partnered with Organitech for the execution of
the pilot farm stage in Singapore. Agronaut Agricultural Services is a new
company set up in September 1999 to bring promising agricultural technology to
the East and Southeast Asian Region as:
1. This region will have very strong population and economic growth in the
coming years.
2. Economies that have jobs moving away from agriculture therefore will have a
very tight agricultural labour market.
3. Current methods of farming produce low yield, high chemical usage and soil
degradation leaving much room for improvement.
4. As disposable income increases, consumption of non-traditional 'exotic' foods
will increase, as is the case with many of the 'new' lettuces currently
available. Lettuce Romaine is one good example that had moved from high-end
supermarket shelves to the neighbourhood wet markets. These new vegetables
usually cannot be cultivated year round in this region, if at all.
5. Increased tourism will also see a growing demand for high end leaves that are
currently imported.
6. Lack of land and water resources.
Preliminary research around the region showed a very promising market in the
consistent production of high quality high-end vegetables.
Comparison with Competitors
-------------------------------------------------------------------------------------------
Conventional Farming Hydro/aeroponics GrowTech 2000
-------------------------------------------------------------------------------------------
XXXXXXX 6-8 per 80ton/ha 8-10 per 1 per 100 ton
100ton/ha
XXXXXXX 80ton/ha 100ton/ha 25ton/machine
-------- --------- -------------
XXXXXXX
XXXXXXX Produce Inconsistent High High
XXXXXXX Inconsistent standard Sprayed Constant
High Quality
XXXXXXX Cycle Weather/Season Dependent Weather/Season Around the Year
Dependent
--------------------------------------------------------------------------------------------
Agronaut Agricultural Services' plans are to
* Market Agricultural solutions from Israel to the region.
* Participate in setting up farms around the region. All farms must:
1. Increase yield per hectare.
2. Adaptable to commonly consumed as well as exotic leaves.
3. Free of chemicals harmful to the consumer and the environment.
4. Reduce dependence of manual labour or increase tons per worker spread.
The commercial deployment of the GrowTECH systems will be executed using a pilot
farm for comprehensive preparation of the technology to meet the various
markets' needs and for learning the best methods for commercial penetration of
the targeted markets.
The goals of this beta site farm is to accurately and quickly assess the
viability of the technology and to obtain technical improvement data for a
speedy response to the demand of the targeted markets.
The pilot farm is an important stage for Organitech and for Agronaut in
introducing the technology to the market. The conclusions will assist the two
companies in giving the engineering solutions and marketing solutions for the
most successful and rapid penetration of the designated markets with lettuce
varieties grown in the GrowTECH system. This project has two fundamental
objectives. One, is to acclimatize the GrowTECH lettuce to the market of the Far
East region, utilizing the advantages of a clean, fresh, ready-to-eat and steady
priced product. The second is to adapt and modify the system, enabling it to
produce the local market green leaf vegetation and other crops as well. In the
past few months, the two firms have conducted preliminary tests in growing
popular local varieties using Organitech's platform technologies.
Currently, Organitech has a staff of over 25 highly skilled employees in the
fields of Agronomy, Mechanical Engineering, Software, Robotics and Electrical
Engineering. Many of them work on research and development projects beyond the
GT 2000(TM). The team is highly qualified and experienced, simplifying the
implementation of this project by only optimizing and modifying the developed
technologies to fit this project's objective.
The Engineering R&D department is headed by Dr. David Bar-On, the company's
Chief Technology Officer.
Dr. Bar-On is a X.Xx. in intelligent control of robotics from the Technion and
holds a Ms.c in Electrical Engineering and a BSc in Computer Engineering. Dr.
Bar-On has more then fifteen years experience in the High-Tech industry. His
last position was Development Manager in a semiconductor equipment manufacturer.
The Agronomic department is headed by Xx. Xxxxx Hai, the company's Chief
Agronomist. Mr. Hai holds a MSc in agronomy from the Hebrew University of
Jerusalem. Mr. Hai also holds a MSc in Biology from Tel-Aviv University. He held
a senior executive marketing and R&D position at Zeraim Gedera, Israel, a seed
processing company.
Far East Sales
Forecast Revenue Projection
--------------------------------------------------------------------------------
Year: 2001 2002 2003 2004 2005
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Sales:
--------------------------------------------------------------------------------
GrowTECH 2000
(Units) 0 0 50 60 70
--------------------------------------------------------------------------------
GrowTECH 2000
($1000) $0 $0 5,000 $6,000 $7,000
--------------------------------------------------------------------------------
THE INNOVATION
--------------
The GrowTECH 2000(TM) is a revolutionary technological breakthrough in the field
of agriculture. The Company believes the design of the platform - incorporating
proprietary robotics, a 40 ft. standard shipping container, and advanced
hydroponics - is an extraordinary and novel approach that provides unique and
powerful benefits to processes and applications requiring cultivation. It uses
proprietary robotics, an advanced environment control system and a powerful
computerized terminal. The GrowTECH 2000(TM) can automatically seed, transplant
and harvest commercial quantities of fresh, pesticide-free, hydroponic,
ready-to-eat green leaf vegetables on a daily basis. The current design of the
GrowTECH could produce hundreds of heads of lettuce per day, all around the year
- regardless of location and climate.
For the first time ever in agriculture, these stackable, self-contained machine
units allow cultivators the ability to create a hydroponics farm with the
capability to cost effectively produce the highest quality lettuce in large,
natural quantities, yet without high quantities of labor, water, power and land.
To the Company's knowledge, there is no other agricultural system commercially
available that produces fresh, clean, ready-to-eat produce at such a consistent
and effective manner. Furthermore, the company has been unable to identify any
machine capable of fully automating the production process of plants and
vegetables.
The GrowTECH 2000(TM) is designed to deliver high levels of reliability and
efficiency, thus making it one of the most advanced and competitive agricultural
growing systems in the world. The platform not only provides an ideal solution
for regions lacking sufficient growing conditions, land availability or water
resources, but also provides a fresh and clean product to a consumer segment
exhibiting strong and rising demand worldwide. Plant growth so far is done in
the open field or in greenhouses. These are well-established systems, however,
they do not offer full control of the growth conditions and therefore cannot be
used all year round and usually give products of variable and unpredictable
quality depending on the environmental conditions.
The state of the art in fully controlled growth systems is that there are
several types of commercially available plant growth xxxxxxxx. However, these
are usually small walk-in xxxxxxxx where only a small amount of plants can be
grown. These xxxxxxxx are used almost exclusively for academic needs to study
the effect of day length, temperature, light, etc. on plant growth. They are
not adapted to commercial growth of crops and they are not economical at all
since they contain only a few (tens or at best hundreds) of plants. To date,
none of the systems on the market have performances comparable to the
GrowTECH(TM) system.
Market research has revealed that Organitech currently has no direct
competitors. There is no other industrial system commercially available that
produces fresh, clean, ready-to-eat, and hydroponics vegetables at such a
consistent reasonable cost. Furthermore, no other machine exists capable of a
fully automated production of vegetables devoid of human involvement in the
process.
All the tasks proposed in this project are straightforward. Organitech has hired
and trained a team of experts in all the aspects of engineering, software
development and agronomics applications. The construction and design of the
first GrowTECH(TM) system has been a learning period during which Organitech's
experts have acquired the extensive skills necessary to carry this research.
The main potential difficulties lie in the commercialization of the product. The
operational costs with the GrowTECH(TM) system are relatively high, essentially
because of high-energy consumption. This means that in order to be competitive,
the system will have to produce high yields. We estimate that under commercial
conditions the costs of growth are around $40,000 per year. We therefore expect
that with targeted selection for high yield we may be able to reach levels of
added value culinary plants. Our optimistic forecast is that we could grow about
130,000 plants per year at a yield of about 150-180 gr. per plant. Under such
scenario, the producer may generate an annual income of about $100,000 per year
per container. The pessimistic scenario is that yield will be low (100-200 gr.
per plant) and that the plant number will remain around 130,000 per year.
In that case the price per plant might be lower for the system operator.
One way to overcome the profitability pitfall is to genetically select plants
with added value, e.g. special, luxury products (special colors, shape, taste
and health food) and plants with a rapid life cycle that enables the growth of
more plants per year and thus increase yield. Note that the products derived
from the GrowTECH are pesticides, insecticides and herbicides free and qualify
as higher priced products. Moreover, the GrowTECH(TM) system enables the growth
of plants outside of the natural season when production costs are also
high and sometimes growth is impossible in greenhouses. Therefore it is
almost certain that the system will remain attractive despite its high
production cost as it enables the growth of leafy vegetables in all the seasons
of the year, without having to pay expensive costs of transportation that affect
the quality and end cost of the product. The GrowTECH(TM) system not only
facilitates the marketing of chemical-free, food but also very fresh food,
directly from production to consumption, without sacrificing taste and quality
that are normally associated with varieties that carries long shelf-life.
SYSTEM DESCRIPTION
------------------
The GrowTECH 2000(TM) components can be divided into five main categories,
Climate Control system, Mechanical system, Biological system,
Electricity/Electronics system and a central computer. Each system interacts
with the other systems to form the GrowTECH 200O(TM) machine.
Climate Control System
The climate control system is responsible to maintain the correct temperature
and CO2 level. A powerful air-conditioning unit keeps the air inside the
container at a constant temperature. A set of fans circulates the air between
the growing beds to ensure an even temperature in all parts of the machine. The
CO2 controller keeps the CO2 level inside the container at a ppm (Parts Per
Million) value, which is required for optimum growth. When the CO2 level drops
under a certain level the controller opens a valve, letting a flow of pure
CO2 enter the container's atmosphere.
[GRAPHIC OMITTED which depicts illustrates how each water bed is divided into
two lanes of Styrofoam containers in which the plants are grown. Each lane is 12
Styrofoam containers long, however, one Styrofoam container is omitted from
opposite ends of each lane allowing the containers to rotate counterclockwise.]
Mechanical system
The mechanical system plays the role of "working hands" in the GrowTECH
2000(TM), performing all the duties of handling the seeds and plants. The
mechanical system is divided into three sub-systems Robot, Seeder, and rotating
system. The robot performs two duties; transporting small plants from the
germination beds to the growing beds and harvesting the fully-grown plants. To
accomplish these tasks, the robot is equipped with two sets of arms; one for
transporting and one for harvesting. By moving up and down, the robot can reach
all of the beds in the GrowTECH 2000(TM). To maximize the growing area, the
GrowTECH 2000(TM) robot is stationary. An electrical & pneumatic system of
conveying the plants is used to bring the plants into reach of the robotic arm.
The plants are grown inside Styrofoam containers floating on the waterbed. Each
waterbed is divided into two "lanes", by leaving one empty space (the size of
the Styrofoam container) in each lane, the Styrofoam containers can be rotated.
A set of pneumatic pistons and electric motors are responsible for pushing the
containers around using the water as a conveyor belt. All beds rotate at the
same time with the exception of the germination beds that have a separate set of
pistons and motors. The seeder system's duty is to place seeds inside the
Styrofoam germination pods. The seeder uses a vacuum pump to lift three seeds at
a time from a vibrating tray filled with seeds, and transports them to their
assigned positions in the containers.
Biological System
The biological aspect plays a major role in the operation of the GrowTECH
2000(TM). The plants are encouraged to grow at a rapid rate. To enable them to
do that, they must get optimal growing conditions. The GrowTECH 2000(TM) pumps
nutrients into the water. The water is circulated between the beds to ensure an
even distribution of nutrients, CO2 and oxygen, through a circulating pump.
Controllers monitor and maintain the PH and nutrients' levels in the water. The
interior of the GrowTECH 2000(TM) is lit using special fluorescent lights. The
lights are turned on for pre-determined periods of time to simulate the desired
length of daylight for the plants.
Electronics/Electrical
The electronic system in the GrowTECH 2000(TM) is made out of six electronic
PCBs (Printed Circuit Boards). The electronic system's duties are to collect
information from all motor and pistons sensors, transmit them to the computer,
and execute the computer's instructions of moving the motors. The electronic
system uses 5V and 24V circuits. The electrical system provides the main power
for the GrowTECH 2000(TM) for operating the lights, pumps and air-conditioning
unit. The electrical system requires 3x90Amp on 380V in 3Ph. The electrical
system is operated through the back main electric box.
Computer
The GrowTECH 2000(TM) computer performs two tasks: User interface and machine
operation. The computer uses a special program to operate and synchronize all of
the machine components, making the GrowTECH 2000(TM) a fully automatic machine.
The software user interface, let's the user know the machine statutes and
instruct the machine to start or stop certain procedures.
PATENTS
Since its formation, the company had rapidly executed its initial business plan,
developed new products, and filed for U.S. patent claims on 161 different
technological applications. The company is not violating any intellectual
propriety. Oganitech has retained the legal council of the local leading patent
house of Dr. Xxxx Xxxxxxxx Ltd., for all issues concerning intellectual
propriety. This includes planning the patent strategy, the screening of patents
and registering the applications for the company's intellectual propriety
through the US Patent Office. During the project the patent claims will be
updated according to the developments and modifications, which are structured in
the process. Organitech has no patent obligations to any firm or individual. All
relevant claims on the patents are the sole intellectual propriety of
Organitech.
PROPOSED R&D PROGRAM
--------------------
ANALYSIS OF PROBLEM
-------------------
The GrowTECH system is at its beta stage. The project's main purpose is
to reach the commercial deployment stage of the system by creating a
more functional and reliable machine that will meet the needs of
a specific market region.
The project's objectives are as follows:
1. To improve the machine's operational reliability and
transforming it from a beta machine to a fully operational
product.
2. Adaptation of the technological platform to meet the market
trends in Singapore and other countries in the Far East. The
current GrowTECH(TM) system has been designed to produce
lettuce. In order to broaden its market, Organitech has to
expand its applications to new crops. The plant varieties of
leafy vegetables consumed in Singapore and the Far East are
different from those consumed in the western market. The
system today has yet to be engineered to supply the
agronomic and technological conditions for growing the
various plants consumed in Singapore.
3. Lowering the production costs of the machine, thereby
reaching an efficient and optimal solution for the
automatic, reliable and year round production of chemical
free culinary and pharmaceutical plants.
4. To lower the operational costs by reducing the electrical
power consumption of the system and upgrading the daily
yield causing lower costs per plant production.
PROPOSED APPROACH
-----------------
The tasks will be divided into two main areas, Engineering and
Agronomic. The engineering tasks will be headed by Dr. David Bar-On,
Organitech's Chief Technology Officer. The Agronomic tasks will be
headed by Xx. Xxxxx Hai, Organitech's Chief Agronomist.
Engineering
-----------
The purpose of the engineering activity is to improve the machine's
operations and transform it from a Beta version machine to a fully
operational and reliable product. The engineering part of the project
is divided into five main tasks:
1. MTBF (mean time between failure), MTTR (mean time to
repair): To improve the reliability of the machine and
minimize the machine's down time by simplifying and
standardizing service procedures.
2. Machine Cost: To minimize the machine manufacturing cost.
3. Operational Cost: To minimize the cost of operation.
4. Improve Yield: This will directly influence the cost per
product grown in the machine.
5. Meeting the Far East standards. This is a basic requirement
of today's advanced markets and is a necessary condition
prior to commercialization.
APPROVED PROJECT BUDGET - Organitech
QUALIFYING ITEM
COST TO QUALIFYING
PROJECT COST
Gross Annual % on Project US$ US$
Salary (Direct Labour)
I DIRECT LABOUR
Chief Agronom 54,996 50 54,996 54,996
Software Manager 54,000 40 43,200 43,200
Software Engineer 31,800 50 31,800 31,800
Mechanical group mgr 66,000 50 66,000 66,000
Mechanical CAD designer 50,400 80 80,640 80,640
Snr mechanical engineer 54,000 60 64,800 64,800
Mechanical engineer 37,800 60 45,360 45,360
Project Manager 58,992 50 58,992 58,992
Technician 60,000 0
Overheads (O/H) @ 25% 126,500 111,447
----------------------------
TOTAL DIRECT LABOUR & O/H 632,500 557,235
II EQUIPMENT 0
----------------------------
TOTAL EQUIPMENT 0
----------------------------
III TRAVEL EXPENSES 16,000 16,000
Spore (6 trips x 1 person)
----------------------------
TOTAL TRAVEL 16,000 16,000
----------------------------
IV OTHERS
Contractors* 274,000 125,000
Purchase & Degradable* 375,000 305,000
----------------------------
TOTAL OTHERS 649,000 430,000
General & Administrative Expenses
@ 5% total company budget 64,875 50,162
----------------------------
TOTAL BUDGET 1,362,375 1,053,397
----------------------------
---------------------------------------------------------------------------------------------------------------
US$ SIIRDF Funding
TOTAL QUALIFIED BUDGET @ 40%
1,053,397 421,359
---------------------------------------------------------------------------------------------------------------
PROJECTED EXPENDITURE, (30%) 126,407
FIRST PAYMENT (ON SIGNING OF CONTRACT)
---------------------------------------------------------------------------------------------------------------
PROJECTED EXPENDITURE, (30%)
SECOND PAYMENT (1-12 MTHS) 126,408
After the first project review, receipt & approval of 1st technical & fiscal reports
---------------------------------------------------------------------------------------------------------------
PROJECTED EXPENDITURE, (40%)
FINAL PAYMENT (13-24 MTHS)
After the final project review, receipt & approval of final technical & fiscal reports together 168.544
with an audit statement from the external auditor cerfifying that the accounts of the project
expenses are in accordance with the generally accepted accounting principles.
---------------------------------------------------------------------------------------------------------------
* See attached
Organitech
------------------------------------------------------------------------------------------------------------------------------------
Contractors Amount Amount Total Qualifying Cost
------------------------------------------------------------------------------------------------------------------------------------
Sea Land & air transportation 10,000 0
------------------------------------------------------------------------------------------------------------------------------------
Cranes 15,000 0
------------------------------------------------------------------------------------------------------------------------------------
NRE & Electronics Design 45,000 45,000
------------------------------------------------------------------------------------------------------------------------------------
Electricity 30,000 0
------------------------------------------------------------------------------------------------------------------------------------
Engineering Design 80,000 80,000
------------------------------------------------------------------------------------------------------------------------------------
Polystring & Plastic Custs Molds 20,000 0
------------------------------------------------------------------------------------------------------------------------------------
Professionals (scaling, welding etc) 74,000 0
------------------------------------------------------------------------------------------------------------------------------------
Total 274,000 125,000
------------------------------------------------------------------------------------------------------------------------------------
Purchases Degradables 1st year 2nd year
------------------------------------------------------------------------------------------------------------------------------------
Electricity 20,000 20,000 0
------------------------------------------------------------------------------------------------------------------------------------
Agronomic materials 30,000 30,000 60,000
------------------------------------------------------------------------------------------------------------------------------------
Mechanical parts 55,000 55,000 110,000
------------------------------------------------------------------------------------------------------------------------------------
Robot parts 40,000 40,000 80,000
------------------------------------------------------------------------------------------------------------------------------------
Comp & CCD monitoring 19,000 19,000
------------------------------------------------------------------------------------------------------------------------------------
Electronic parts 10,000 10,000 20,000
------------------------------------------------------------------------------------------------------------------------------------
Light bulbs 8,000 8,000 16,000
------------------------------------------------------------------------------------------------------------------------------------
Lab equipment 5,000 5,000 0
------------------------------------------------------------------------------------------------------------------------------------
Working tools 10,000 10,000 0
------------------------------------------------------------------------------------------------------------------------------------
Total 178,000 197,000 375,000 305,000
------------------------------------------------------------------------------------------------------------------------------------
Agronauts
------------------------------------------------------------------------------------------------------------------------------------
Contractors Amount Amount Total Qualifying Cost
------------------------------------------------------------------------------------------------------------------------------------
Sea land air freight/transport 20,000 0
------------------------------------------------------------------------------------------------------------------------------------
Cranes 4,000 0
------------------------------------------------------------------------------------------------------------------------------------
Control room 8,000 8,000
------------------------------------------------------------------------------------------------------------------------------------
Utilities infra-structure
(electric box, water pipings, etc.) 15,000 0
------------------------------------------------------------------------------------------------------------------------------------
Professionals
(welding, ground preparating) 12,000 0
------------------------------------------------------------------------------------------------------------------------------------
Total 59,000 59,000 8,000
------------------------------------------------------------------------------------------------------------------------------------
Purchases & Degradables 1st year 2nd year
------------------------------------------------------------------------------------------------------------------------------------
Electricity 50,000 50,000 0
------------------------------------------------------------------------------------------------------------------------------------
Agronomics materials
(nutrient solution, humidifier,
filters, etc) 10,000 10,000 20,000
------------------------------------------------------------------------------------------------------------------------------------
Mechanicals parts 20,000 20,000 40,000
------------------------------------------------------------------------------------------------------------------------------------
Packing materials 15,000 15,000 0
------------------------------------------------------------------------------------------------------------------------------------
Robot parts 20,000 20,000 40,000
------------------------------------------------------------------------------------------------------------------------------------
Computer & CCD monitoring equipment 19,000 19,000
------------------------------------------------------------------------------------------------------------------------------------
Electronic parts 10,000 10,000 20,000
------------------------------------------------------------------------------------------------------------------------------------
Lighting 8,000 8,000 16,000
------------------------------------------------------------------------------------------------------------------------------------
Laboratory equipment 1,000 1,000 0
------------------------------------------------------------------------------------------------------------------------------------
Floats 12,000 12,000 24,000
------------------------------------------------------------------------------------------------------------------------------------
Refrigeration Unit 5,000 5,000
------------------------------------------------------------------------------------------------------------------------------------
Working tools 5,000 0
------------------------------------------------------------------------------------------------------------------------------------
C02 3,500 3,500 7,000
------------------------------------------------------------------------------------------------------------------------------------
Seeds 3,000 3,000 6,000
------------------------------------------------------------------------------------------------------------------------------------
Water 500 500 0
------------------------------------------------------------------------------------------------------------------------------------
Total 163,000 172,000 335,000 197,000
------------------------------------------------------------------------------------------------------------------------------------
ANNEX B - PAYMENT OF GRANT
1 The first payment of the Grant (the "Advance") shall be disbursed to the
Participants on the date of this Agreement such that US$126,407 shall be
paid to Organitech and US$53,487 to Agronaut;
2. The second payment of the Grant shall be disbursed upon satisfaction of
the following conditions:-
(i) Upon SIIRD being reasonably satisfied with its first project review
on the implementation of the Proposal by the Participants; and
(ii) After receipt and approval of the 1st technical and fiscal reports
by SIIRD for the first seven month period.
3. Final Payment of the Grant shall be disbursed upon satisfaction of the
following conditions:-
(i) Upon SIIRD being reasonably satisfied with its final project review
on the implementation of the Proposal by the Participants; and
(ii) After receipt and approval of the final technical and fiscal reports
by SIIRD.
4. Notwithstanding the above conditions, the Participants may by written
notice to SIIRD request the waiver of the satisfaction of any of the
conditions. If at the required time of submission of the first technical
and fiscal reports, work on the project prove to be materially behind the
Approved Program Plan or the expenditures fall substantially below the
Approved Project Budget, SIIRD will review the project with the
Participants and determine a suitable course of action with respect to
further payments of the Grant.
ANNEX C- APPROVED PROGRAMME PLAN
ANNEX D - ROYALTY PAYMENTS ON SALE OF PATENTED PRODUCTS
1. ROYALTY RATE: The Royalty Rate in accordance with Clause 3.5 shall be
1.5%.
2. ROYALTY BASE:
(a) Where the product sold by the Third Party consists of the Innovation and
such Innovation consists essentially of, or depends primarily on, a
patented invention or inventions made in whole or in part during the
performance of SIIRD-supported work on the project, the Royalty Base shall
be the selling price of the product as defined in Clause 3.2.
(b) Where the product sold consists of an assemblage of subsystems or
entities, the Royalty Base shall be the selling price of the product
multiplied by a fraction the numerator of which shall be the manufacturing
cost of those subsystems or entities which incorporate a patented
invention or inventions made in whole or in part on the implementation of
the Proposal, and the denominator of which shall be the manufacturing cost
of the product sold.
(c) If, however, a market price shall have been established for any subsystem
or entity which incorporates a patented invention or inventions made in
whole or in part under this project and which is sold separately, sold as
part of the Innovation, or sold as part of any other product, such market
price shall be the Royalty Base.
3. ROYALTY: The Royalty due shall be the Royalty Rate multiplied by the
appropriate Royalty Base.
4. ROYALTY PAYMENTS:
(a) Save as provided in sub-paragraph (c) of this paragraph 4, no Royalty
payments shall be made on sales between Participants and the Third Party.
(b) Each Participant shall make Royalty payments, as computed according to
paragraphs 1., 2., and 3. of this Annex D, only when there is outstanding
obligation of the Participant with respect to payments under Clause 3 of
this Agreement. (c) However, in no event shall the Participants obligation
with respect to payments be greater than the amounts indicated in Clause
3.1(b) of this Agreement. Should Participants obligations for payment to
SIIRD under Clause 3.1(b) not be fully discharged, any such deficiency
shall be made up from Royalty payments on sales of the products between
the Participants and the Third Party under sub-paragraph (a) of this
paragraph 4, if any.
5. TERMS OF ROYALTY PAYMENTS:
The obligation to make Royalty payments in the full amount under this
Agreement shall continue for the life of the last-to-expire patent issued
on any invention made in whole or in part under this SIIRD-supported
project.
6. Royalty payments shall be made on a semiannual calendar basis, commencing
at the end of the semiannual period during which any royalty first becomes
due.
7. DEFINITIONS:
The terms "Royalty Rate", "Royalty Base" and "Royalty" shall have the
meanings as respectively provided in paragraphs 1, 2 and 3 of this Annex
D, and "Third Party" shall mean such third party person(s) who is granted
the right for the sales of any products embodying the Innovation or made
by practicing the Innovation under a licence of a patent obtained for the
Innovation.
ANNEX E - LICENSE AGREEMENTS
1. If any patented invention or inventions made in whole or in part during
this project becomes the subject of any license agreement between the
Participants, or either Participant, and a third party, such
licensor-Participant shall pay to SIIRD 30% of all payments received by it
under such license agreement.
2. If any technology developed, but not including any patented invention or
inventions made in whole or in part during this SIIRD-supported project,
becomes the subject of any license agreement between the Participants, or
either Participant, and a third party, such licensor-Participant shall pay
to SIIRD 30% of all payments received by it under such license agreements.
3. In no event shall this Annex E be construed as requiring payments of any
amounts greater than those indicated in Clause 3.1 of this Agreement.
4. "License Agreement" as defined in paragraphs 1. and 2. of this Annex E
shall comprise only license agreements under which the Participants, or
either Participant, cedes to third parties the rights to use any patents
or technology arising from this SIIRD-supported project for purposes of
using said patents or technology for engendering sales or products
developed hereunder. "License Agreements" shall not include any license
agreements which the Participants, or either Participants, enters into as
a necessary, common or convenient means by which said products are sold to
end-users in the ordinary course of business.
7. PROPRIETARY INFORMATION
7.1 Proprietary information, clearly identified as such, submitted to SIIRD in
the Proposal, in any report or verbally, or obtained by the observation of
SIIRD personnel pursuant to any request or briefing, shall be treated by
SIIRD as confidential. At the request of either Participant, the parties
may separately enter into a confidential disclosure agreement. The
foregoing restriction shall not apply to:
(a) information which at the time of disclosure is generally available
to the public;
(b) information which after disclosure becomes generally available to
the public through no fault of SIIRD;
(c) information which SIIRD can show was in its possession prior to the
disclosure and which was not acquired directly or indirectly from
any Participant;
(d) information which SIIRD can show was received by it after the time
of disclosure from any party without any obligation of
confidentiality and which was not acquired directly or indirectly
from any Participant(s); and
(e) information which SIIRD is compelled by order of a court of
competent jurisdiction or other authority having jurisdiction over
SIIRD to disclose.
7.2 The confidentiality obligations set out in this clause shall survive the
termination of this Agreement.
7.3 Nothing contained in this Clause 7 shall restrict the right of SIIRD to
make public the fact of SIIRD's support for the project, and the
identification of the Participants therein. The details of any such
publication, however, shall be subject to approval by the Participants.
8. PATENTS
8.1 If either Participant elects to apply for letters patent on any or all
inventions resulting in whole or in part from the implementation of the
Proposal, such Participant shall, at its own expense, so apply in
Singapore and in Israel, and in such other countries and at such times as
it may deem appropriate.
9. TERM, EXPIRATION & TERMINATION
9.1 The effective date of this Agreement shall be the date of signing of this
Agreement. Unless sooner terminated by SIIRD hereunder, this Agreement
shall continue to be binding until each Participant has completed and
settled all its obligations and liabilities under this Agreement.
9.2 Notwithstanding Clause 9.1, SIIRD may terminate the Agreement forthwith by
written notice ("Termination Notice") to the Participants in any of the
following circumstances:-
(a) if any Participant has committed any material breach of any of its
obligations under this Agreement and (in the case of a breach which
is capable of remedy) has failed to remedy the same within a period
of thirty (30) days after receipt of written notice giving full
particulars of the breach and requiring it to be remedied;
(b) if any Participant makes any arrangement or composition with its
creditors or goes into liquidation (except for the purposes of
amalgamation or reconstruction in such manner that the company
resulting therefrom effectively agrees to be bound by or assume the
obligations imposed on that Participant under this Agreement) or if
an encumbrancer takes possession of, or a receiver or administrative
receiver is appointed over, the whole or any substantial part of the
property or assets of such Participant; or
(c) if any Participant ceases, or threatens to cease, to carry on
business.
In the event of any such notice, the Participants shall cease to have
any rights of any kind to the funding provided by SIIRD.
9.3 Notwithstanding any other provision in this Agreement to the contrary, on
the occurrence of the event stated under Clause 9.2(a), SIIRD shall not be
obliged to provide any further funding of the Grant after the issue of the
Termination Notice until and unless the said default is cured and so
demonstrated to the reasonable satisfaction of SIIRD.
9.4 If SIIRD shall terminate the Agreement as aforesaid, all funds given to
the Participants hereunder, after deduction of any repayments by the
Participants of the Grant and Other Sums under this Agreement, shall
become due immediately without the need for demand. Such funds which do
not, by terms of this Agreement, bear interest, shall be repaid with
interest at 1% more than the average prime rate prevailing at Chase
Manhattan Bank, Singapore, from date of Termination Notice.
9.5 The Participant may not terminate this Agreement or abandon the project
under the Proposal without the prior written consent of SIIRD, which
consent shall not be unreasonably withheld.
9.6 If upon termination of this Agreement for any reason, the budgeted sum has
not been fully expended, the Participants shall forthwith return to SIIRD
such SIIRD's pro rata share of such unexpended portion. If not repaid
forthwith, such sum shall bear interest in accordance with Clause 3.9.
9.7 Termination of this Agreement shall be without prejudice to any rights or
remedies available or accrued to any of the parties at the time of
termination, or which thereafter may accrue.
10. FINANCIAL RECORDS
10.1 Each Participant shall maintain the business and financial records and
books of account for the work hereunder separate and apart from other
business records of the Participant. Such books and records shall be in
the usual and accepted form in accordance with standard accounting
practices of the applicable jurisdictions.
10.2 Books and records of the work hereunder shall show the Participant's
contribution. Upon request by SIIRD, the Participant shall provide
evidence of his compliance hereunder.
10.3 SIIRD may examine, or cause to be examined, the financial books, vouchers,
records and any other documents of the Participant relating to this
Agreement at reasonable times and intervals during the term of this
Agreement and for the period of [one (1)] year following termination, or
for so long as payments under Clause 3 are due, or may become due SIIRD,
whichever shall be the later.
10.4 The audited accounts of each Participant and the reports by the auditors
of the Participant shall be submitted to SIIRD within 30 days of receipt
of the audited accounts by the Participant.
11. SUITS AGAINST SIIRD
11.1 Each Participant shall defend all suits brought against SIIRD, its
officers or personnel, indemnify them for all liabilities and costs and
otherwise hold them harmless on account of any and all claims, actions,
suits, proceedings and the like arising out of, or connected with or
resulting from the performance of this Agreement by the Participants, or
from the manufacture, sales, distribution or use by the Participants of
the Innovation, whether brought by the Participant(s) or its personnel or
by third parties.
11.2 Each Participant agrees that persons employed by it in connection with the
research project shall be deemed to be solely its own employees and that
no relationship of master and servant shall be created between such
employees and SIIRD, either for purposes of tort liability, social
benefits, or for any other purpose. Each Participant shall indemnify the
SIIRD and hold it harmless from court costs and legal fees, and for any
payment which SIIRD may be obliged to make on a cause of action based upon
an employee-employer relationship as aforesaid.
12. LIMITATIONS ON PAYMENTS
12.1 Notwithstanding anything to the contrary under this Agreement, the
Participants' total obligation hereunder (excluding the liability to pay
interest under Clause 3.9) for payments to SIIRD shall not exceed the
percentages indicated in Clause 3.1 hereto of the Grant and Other Sums
actually provided by SIIRD to the Participants hereunder, in year dollars.
13. MISCELLANEOUS
13.1. SIIRD makes no representation, by virtue of its funding the work
hereunder, or receiving payments or royalties as a result of this
Agreement, as to the safety, value or utility of the Innovation or the
work undertaken, nor shall the fact of participation of SIIRD, its funding
or exercise of its rights hereunder be deemed an endorsement of the
Innovation or of the Participants, nor shall the name of SIIRD be used for
any commercial purpose or be publicized in any way by the Participant
except within the strict limits of this Agreement.
13.2. The Participant may not assign this Agreement or any of the work
undertaken pursuant to it without the prior written consent of SIIRD,
which consent shall not be unreasonably withheld. The provisions hereof
shall be binding upon and inure to the benefit of the parties, their
successors and permitted assigns.
13.3 This Agreement shall be construed under the laws of the Republic of
Singapore. The forum for the resolution of any dispute arising from this
Agreement shall be the State of Israel or the Republic of Singapore as the
moving party may elect. Execution of this Agreement shall be taken as
submission to the forum selected pursuant to this Clause.
13.4 Unless the parties to a dispute shall agree otherwise, the dispute shall
be referred to arbitration under the rules of the Israel Arbitration Law
if the forum is Israel, and under the Arbitration Rules of the Singapore
International Arbitration Centre if the forum is in Singapore which rules
are deemed to be incorporated by reference into this Clause. All
arbitration proceedings shall be in the English language. The decision of
the arbitrator shall be final and binding on all the parties.
13.5 Each Participant undertakes to comply with all applicable Republic of
Singapore laws, rules and regulations, and those of the State of Israel,
and will apply for and obtain all necessary licenses and permits for
carrying out of its obligations hereunder.
13.6 Each party shall bear its own legal and other costs and expenses incurred
by it in connection with this Agreement. Under Israeli law, no stamp duty
is required on SIIRD Cooperation and Project Funding Agreements.
13.7 Any demand, consent, notice or other communication ("notice") authorised
or required to be made hereunder shall be in writing and may be given by
facsimile, courier, post or hand to a party addressed as follows:-
a. SIIRD, Singapore-Israel Industrial Research and Development
000 Xxxxx Xxxxxx Xxxx
#00-00 Xxxxxxx Xxxx Tower
Xxxxxxxxx 000000, Xxxxxxxxx
Facsimile : [ 65 3381797 ]
Attn : [ Teo Xxxx Xxxx ]
b. ORGANITECH LIMITED
Science Park Technion,
P 0 Boc 212 Nesher 00000
Xxxxxx
Facsimile : [ 972 4 8308344 ]
Attn : [ Xx Xxxx Xxxxxx ]
C. AGRONAUT PTE LTD
000X Xxxxxxxxx Xxxx, #00-00
Xxxxxxxxx 000000
Facsimile : [ 65 2342868 ]
Attn : [ Mr Xxxxx Xxx ]
or such other address as the recipient may designate by notice given in
accordance with the provision of this Clause.
A notice:-
(i) if delivered by facsimile transmission shall be deemed to be
received on the date of transmission on production of a transmission
report by the machine from which the facsimile was sent which
indicates that the notice was sent in its entirety to the facsimile
number of the recipient;
(ii) if delivered by courier, shall be deemed to be received upon receipt
by the addressee;
(iii) if sent by prepaid registered post (airmail, if appropriate), shall
be deemed to have been received on the second day after the day on
which it was posted if sent to an address within the country of
posting and on the seventh day after the day on which it was posted
if sent to an address outside the country of posting; and
(iv) if delivered by hand during normal business hours on a business day,
shall be deemed to be given on that day, or in any other case of
hand delivery, shall be deemed to be given on the business day
following the date of delivery.
13.8 Nothing herein shall create a partnership, joint venture or agency between
the parties.
13.9 Save as otherwise specifically provided herein. this Agreement shall not
be altered, changed, supplemented or amended except by written instruments
signed by all parties or their authorised representatives.
13.10 No remedy conferred by any of the provisions of this Agreement is intended
to be exclusive of any other remedy which is otherwise available at law,
in equity, by statute or otherwise, and each and every other remedy shall
be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law, in equity, by statute or
otherwise. The election of any one or more of such remedies by a party
shall not constitute a waiver by such party of the right to pursue any
other available remedies.
13.11 The provisions contained herein shall constitute the entire agreement
between the parties with respect to the subject matter and the Schedule
and Annexes, and shall supersede any pre-existing or other agreement, and
merge all prior negotiations and discussions or any oral and written
communications between the parties concerning the subject matter hereof.
No party shall be bound by any statements, inducements, conditions,
representations or warranties (whether oral or written) with respect to
the subject matter hereof by any party or its agents or representatives
other than as expressly set forth herein or subsequently set forth in
writing executed by both parties hereto.
13.12 If any of the terms or provisions in this Agreement or the Schedules or
Annexes shall be held to be illegal, invalid or unenforceable by any court
of competent jurisdiction, in whole or in part, it shall not invalidate
the rest of this Agreement which shall remain full force and effect as if
such terms or provisions had not been a part of this Agreement. Such terms
or provisions held to be illegal, invalid or unenforceable by any court of
competent jurisdiction in any state or city shall not affect their
legality, validity and enforceability in other states or cites.
13.13 No failure to exercise and no delay in exercising on the part of the
parties hereto any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right,
power, or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
Any waiver by either party of a breach of any provision of this Agreement
shall not be considered as a waiver of any subsequent breach of the same
or any other provisions.
13.14 This Agreement may be signed in multiple counterparts, each of which is an
original and all of which, taken together, constitutes one and the same
instrument.
IN WITNESS WHEREOF the parties have executed this Agreement the day and year
first above written.
Signed for and on behalf of )
SINGAPORE-ISRAEL INDUSTRIAL RESEARCH )
AND DEVELOPMENT ) By: /s/ Teo Xxxx Xxxx
-----------------------
Name: Teo Xxxx Xxxx
Title: General Manager
Signed for and on behalf of )
ORGANITECH LIMITED )
) By: /s/ Xxxx Xxxxxx
-----------------------
Name: Xxxx Xxxxxx
Title: Director
Signed for and on behalf of )
AGRONAUT PTE LTD )
) By: /s/ XXXX Xxxxx
-----------------------
Name: XXX XXXX Xxxxx
Title: Director
APPROVED PROJECT BUDGET--Agronaut
QUALIFYING ITEM
COST TO QUALIFYING
PROJECT COST
Gross Annual % on Project US$ US$
Salary (Direct Labour)
I DIRECT LABOUR
Agronoms 50,000 100 100,000 100,000
Project Manager 25,000 100 50,000 50,000
Mechanical Engineer 8,000 100 16,000 16,000
Technical Support x 3 45,000 100 90,000 0
Overheads (O/H) @ 25% 64,000 41,500
----------------------------
TOTAL DIRECT LABOUR & O/H 320,000 207,500
II EQUIPMENTS 0
----------------------------
TOTAL EQUIPMENT 0
III TRAVEL EXPENSES
Israel (4 trips x 1 person) 12,000 12,000
----------------------------
TOTAL TRAVEL 12,000 12,000
IV OTHERS
Contractors* 59,000 8,000
Purchase & Degradable* 335,000 197,000
----------------------------
TOTAL OTHERS 394,000 205,000
General & Administrative Expenses
@ 5% company budget 36,300 21,225
----------------------------
TOTAL BUDGET 762,300 445,725
----------------------------
* See-attached
---------------------------------------------------------------------------------------------------
US$ SIIRDF Funding
@ 40%
TOTAL QUALIFIED BUDGET 445,725 178,290
---------------------------------------------------------------------------------------------------
PROJECTED EXPENDITURE. (30%) 53,487
FIRST PAYMENT (ON SIGNING OF CONTRACT)
---------------------------------------------------------------------------------------------------
PROJECTED EXPENDITURE. (30%)
SECOND PAYMENT (1-12 MTHS) 53,487
After the first project review, receipt & approval of 1st technical
& fiscal reports
---------------------------------------------------------------------------------------------------
PROJECTED EXPENDITURE. (40%)
FINAL PAYMENT (13-24 MTHS)
After the final project review, receipt & approval of final technical & fiscal
reports together with an audit statement from the external auditor certifying that 71,316
the accounts of the project expenses are in accordance with the generally accepted
accounting principles.
---------------------------------------------------------------------------------------------------
COMMERCIALIZATION - PLANS AND PROSPECTS
---------------------------------------
Organitech has upgraded its manufacturing capacity by moving into a 250 sq.
meter facility adjoining the Technion Entrepreneurial Incubator, where its
initial business offices were established. The new facility allows the assembly
of up to 4 systems simultaneously. Organitech anticipates a significant increase
in manufacturing activities over the next couple of years, based on commercial
deployment of the GrowTECH 2000(TM). In order to support this expansion, the
Company has identified and is negotiating to lease an 1800 sq. meters
manufacturing facility in Yokneam, Israel. The identified site is in a tax free
zone and is equipped with facilities including a 20-ton crane, docking
facilities, power management systems, advanced telecommunications
infrastructures, and management offices. Organitech has received the authority's
approval for tax holidays on its future manufacturing facility and activities.
The current facility will be transformed into a full time research center and
laboratory.
Organitech systems comprises hundreds of diverse and complex technological
components required for the operation of the computer, hydraulics, electrical
power, and other mechanical system functions. In terms of materials production,
Organitech does not currently fabricate any materials used to assemble system
components in its platforms. Instead, it relies on various independent suppliers
to supply pre-fabricated materials such as metal housings, electrical
components, hydroponics trays, metal and plastic tubings, shipping containers,
and various other materials.
The manufacturing operations involve primarily the assembly of materials,
components and technologies for integration into its products and platforms.
Upon the completion of assembly, products are then transferred to a testing
station located within the manufacturing facility.
The strategy is to use the data collected from the operation of the first two
beta site machines for the creation of the most efficient and reliable
manufacturing plan for the GrowTECH(TM) to meet the targeted markets of this
project.
During this project, Argronaut will equip itself with the technical support and
maintenance abilities of the developed systems. Agronaut will market and
eventually support, maintain and service the commercialized products to the
Asian markets and will have the responsibility of sustaining the needed parts
and supplemental material for the proper operation of the system by their
clients.
Simultaneous to this project, the companies will engage in laying out the
foundation of the marketing strategy and of the service and support network. By
operating, modifying and servicing the beta sites in Singapore, Agronaut's
personnel will be completely trained by Organitech in the assembly, installment,
operation, service, maintenance and technical support of the systems. When the
beta machines reach optimal satisfaction of operation, they will be used as
demonstration showpieces for introduction to potential consumers in the targeted
markets.
COOPERATION AND BENEFITS
------------------------
The project contains many tasks that cover different subjects (software,
mechanical, agronomics, etc.), which must be fulfilled to modify the technology
to achieve a successful product launch, penetrating the Far East market.
Agronaut's main investment lies in the costs of setting up and operating the
machines in Singapore. This includes initial beta machines cost and the training
of personnel for technical support and service. Organitech will lead the
engineering and agronomy developments of the machine. This includes the costs of
hardware and trained personnel needed to develop the product to its commercial
state.
A successful commercial deployment of the machines will benefit both companies
mutually. Organitech, on the one hand, will reach a point of being a commercial
company, that generates income from the sale of its machines. Agronaut will have
the exclusive distribution rights to the mentioned markets of this project. It
will serve as a sales representative and agent to correspond with the customer's
needs for technical support, service and maintenance. All sales and maintenance
services to the region will be included in Agronaut's business structure.
In order to withstand the demand of its products, Organitech will need to expand
its manufacturing and R&D operations. Organitech has received the authority's
approval for tax holidays on its future manufacturing facility and activities.
The tax holiday will be given when Organitech moves its production facility to a
development zone where the Government has an interest to expand employment
opportunities.
Singapore has restricted water sources for its agricultural production. This
has made it a dependant nation when it comes to natural resources. Singapore
has focused its role in the Eastern region as the gateway for businesses
entering that market. The success of this project will benefit Singapore in
employment opportunities for technical oriented personnel, sales people and
other administrative positions. The country will be able to utilize the
technology as a solution for independently producing agricultural products using
the minimal use of water and land.
ORGANIZATION AND MANAGEMENT PLAN
--------------------------------
+----------------+
| Xxxx Xxxxxx |
+------------------------+ Program +----------------------+
| | Manager | |
| +----------------+ |
| |
| |
+-------+---------+ +-----+----------+
| Xxxx Xxxxxx | | Xxxxx Xxx |
+---------+ Organitech +---------+ +--------+ Agronaut +------+
| | Project Leader | | | | Project Leader | |
| +----------------+ | | +----------------+ |
| | | |
| | | |
+-------+--------+ +--------+-------+ +------------+ +-----+------+
| XXXXXXXXXX | | Jacob Hai | | Agronomy | | Mechanical |
| XXXXXXXXXX | | Agronomy | +------------+ | Engineer |
| XXXXXXXXXX | | | +-----+------+
+-------+--------+ +--------+-------+ |
| | |
+--------+-------+ +-------+-------+ +-----+------+
| | | | | System |
+------+-----+ | +------+-----+ +-----+------+ | Technician |
| XXXXXXXXX | | | Laborant | | Consultant | +------------+
+------+-----+ +------+-----+ +------------+ +------------+
| | Software |
+------+-----+ +------------+
| XXXXXXXXX |
+------------+
Xx. Xxxx Xxxxxx will head the project. Xx. Xxxxxx is the Founder and President
of Organitech. He will direct and supervise the assignments of the two
companies. OrganiTECH's project leader will be Xx. Xxxx Xxxxxx. Ohad is the Vice
President at Organitech and he will work parallel to Xx. Xxxxx Xxx, who will
lead the project on Agronaut's side. Dr. David Bar-On is OrganiTECH's Chief
Technology Officer and he will lead all of the engineering objectives of the
project. Xx. Xxxxx Hai is OrganiTECH's Chief Agronomist and he will lead the
agronomic aspects involved in the project. OrganiTECH's personnel will train
their counterparts from Agronaut to fill these positions with the systems
arrival in Singapore. The two companies will work together through constant
communication between the project leader's reporting to each other with their
achievements and future assignments.
THE COMPANIES AND THE PROJECT PERSONNEL
---------------------------------------
Organitech was founded in 1999. It is an Israeli corporation and a wholly
owned subsidiary of Organitech USA, Inc. a Delaware corporation.
Organitech is an applied engineering solutions company that has set out to
develop advanced technologies that cost effectively and completely
automate the method by which many foods, plants, and extracts are
cultivated, thereby increasing factors of productivity, yield, and quality
to levels once unachievable.
Company History
---------------
March 2000 - Organitech Ltd. formed in Israel by founders Xx. Xxxx Xxxxxx
and Xxxx Xxxxxx at the Technion Entrepreneur Incubator Company.
April 1999 - Organitech conducts experiments and mechanical tests.
May 1999 - Organitech designs new prototype for cultivation of lettuce -
The GrowTECH 2000(TM).
July 1999 - Organitech announces system assembly of The GrowTECH 2000(TM)
Prototype, a revolutionary robotic cultivation platform designed for the
cultivation of lettuce.
September 1999 - Organitech files a Patent Application with the United
States Patent and Trademark Office (PTO) covering 56 intellectual
properties developed by Organitech, Ltd.
April 2000 - Organitech announces plans to move all operations into a new
state-of-the-art facility adjacent to The Science Park of the Technion
(250 square meters).
May 2000 - Organitech reaches a 20 employees base.
June 2000 - Organitech installs first two alpha machines.
July 2000 - Organitech receives order for two beta machines by Agronaut
Agricultural Services.
August 2000 - Organitech hires renowned robotics expert to join the
Company's management team and serve as Senior Director of Research &
Development.
August 2000 - The GrowTECH 2000 receives Kosher approval by the top
authority in the world, for the cleanliness of the product.
February 2001 -_ Organitech hires Xx. Xxxx Xxxxx to serve as the company's
Chief Executive Officer.
February 2001 - Organitech collaborates with the Weizmann Institute to
develop a GrowTECH(TM) system for the intensive culture of miniature
tomato plants. The project will be steered by Professor Xxx Xxxx of the
Plant Sciences Department at the Weizmann Institute.
The GrowTECH 2000's application design is currently for the cultivation of
a variety of lettuces such as iceberg and romaine, a multibillion-dollar
market worldwide. Due to the products flexible design features, the
Company is also developing new versions of the GrowTECH 2000(TM) that are
designed for the automated cultivation of other vegetables, herbs, fruits
etc. The company is structured, and operates, with the objective of
applying its revolutionary technology for producing specific products for
different markets. This is achievable through modifying the engineering
procedures and environmental control systems to correspond with the needs
of the plant being grown in the system.
Xx. Xxxx Xxxxxx - Program Manager
Xx. Xxxxxx is the founder of Organitech. He is a graduate of the
Agricultural Engineering Department of Technion, The Israel Institute of
Technology, and holds degrees in both Mechanical Engineering and Business
Management. Xx. Xxxxxx has more than 7 years experience in the technology
development sector with a strong background in robotics. Lior began his
professional career as a Product Engineer at Kulicke & Xxxxx.
From 1995 to 1998 he was a Research and Development Team Manager at Jordan
Valley Applied Radiation.
Xxxx Xxxxxx - Project Leader, Organitech
Xx. Xxxxxx is the co-founder of Organitech. He serves today as Vice
President of Operations.
Dr. David Bar-On - Head of Engineering, Organitech
Dr. Bar-On is OrganiTECH's Chief Technology Officer. He holds a X.Xx. in
intelligent control of robotics from the Technion and holds a Ms.c in
Electrical Engineering and a BSc. in Computer Engineering. Dr. Bar-On has
more then fifteen years experience in the High-Tech industry. His last
position was Development Manager at Jordan Valley Applied Radiation. From
1996 to 1998 Dr. Bar-On was the Ethernet Hardware Manager at LanOptics
Ltd. He founded and managed an engineering consulting firm, which
developed multi-processor hardware and software of Ethernet testing
platforms.
He is a frequent expert speaker at seminars and conventions on topics of
Robot Controls. Dr. Bar-On has released two major publications, called
"The TRACK" and "The TRACK II", describing Robotics and Automation of the
Technion Robot And Controller Kit.
Xx. Xxxxx Hai - Head of Agronomy, Organitech
Mr. Hai is Organitech's Chief Agronomist. He steers all of OrganiTECH's
agronomic applications and solutions. He holds an X.Xx in Agronomy from
the Hebrew University of Jerusalem. Mr. Hai also holds an X.Xx in Biology
from Tel-Aviv University. Mr. Hai began his professional career as the
Regional Adviser for the Israeli Agriculture Ministry (1973-1983).
From 1983 to 1991 he was the Vice President of "Prinir Ltd". He later
founded and managed the Izrael Valley Branch of the "Hamashbir", which
sells agricultural materials and equipment.
Prior to joining the Organitech Management team, Mr. Hai was the Head of
Marketing and R&D at "Zeraim Gedera", Israel, a seed processing company.
Beta-Site Project Manager - Xxxxx Xxx
Educated in Singapore in Engineering and in the University of Oklahoma City with
a BSc. In Business Administration, Edwin's work experience includes both local
and multinational corporations.
Singapore Automotive Engineering Pte. Ltd.'s Product Engineering and
Planning/Control Departments where his duties include
1. Projects Control & Management facilitating the progress of major
projects.
2. Planning workshop layouts to ensure the ease of production for new
projects.
3. Orientate process flows to maximize efficiency.
4. Design tools, fixtures and test benches for the assembly and
disassembly of military vehicles.
Leica Instruments (S) Pte. Ltd.- Manufacturing of High-Tech scientific
instruments and precision optical parts. Duties include:
1. Compute Standard Cost and transfer prices for parts and instruments
manufactured.
2. Generate quotations for and participation in tender negotiations
3. Conduct cost and price reviews on strategic instruments and groups
4. Compute essential monthly assessment reports on performance and
productivity of all departments
5. Core member of Leica Instruments MRP II Implementation Team.
Whirlpool Southeast Asia Pte. Ltd.- Renowned manufacturer of household
appliances.
1. Seek and evaluate potential joint venture partners in India and
China. Work include the estimation of product costs of potential
companies, inventory analysis, financial justification and research.
2. Provide continued financial analysis to the new ventures including
financial analysis, capital investment justification analysis and
cost benchmarking studies of competitors' products.
3. Assist design team in setting configuration of products.
4. Train staff of venture on operational model and standard costing,
financial analysis, budgeting and setting long term strategies.
Agronomic Support
The Agri-food & Veterinary Authority of Singapore (AVA), with its
established expertise in local and regional agriculture, will provide
initial agronomic support and laboratory testing. Thereafter, a suitable
candidate of local origins will be appointed.
Expenses Cash Flow
------------------
================================================================================================
Year: 2001 2002 2003 Total
================================================================================================
Sales:
------------------------------------------------------------------------------------------------
GrowTECH 2000 (Units) 0 20 150
------------------------------------------------------------------------------------------------
Expenses:
================================================================================================
Singapore
================================================================================================
Over Seas Flights 2.5 7.5 2 12
------------------------------------------------------------------------------------------------
Technical Support 10 45 35 90
------------------------------------------------------------------------------------------------
Agronomist 30 45 25 100
------------------------------------------------------------------------------------------------
Project Manager 17.5 19.5 13 50
------------------------------------------------------------------------------------------------
Mechanical Engineer 5 8 3 16
------------------------------------------------------------------------------------------------
Contractors 9 35 15 59
------------------------------------------------------------------------------------------------
Purchase and Degradable 150 135 50 335
================================================================================================
662
================================================================================================
Israel
================================================================================================
Over Seas Flights 2 8 6 16
------------------------------------------------------------------------------------------------
Chief Agronomist 25 20 10 55
------------------------------------------------------------------------------------------------
Technician 35 25 60
------------------------------------------------------------------------------------------------
Software Engineer 55 20 75
------------------------------------------------------------------------------------------------
Mechanical Engineer 197 60 257
------------------------------------------------------------------------------------------------
Project Manager 38 18 3 59
------------------------------------------------------------------------------------------------
Contractors 235 34 5 274
------------------------------------------------------------------------------------------------
Purchase & Degradable 245 115 15 375
------------------------------------------------------------------------------------------------
1,271
================================================================================================
Total Expenses $956 $595 $182 $1,833
================================================================================================
Accumulate Cash Flow -$1,056 -$1,551 -$1,833
================================================================================================
The following is a excerpt from an e-mail from renowned genetics researcher
Xxxxxxx X. Xxxx of the Weizmann Institute of Science.
Dear Udi,
Following our discussions, I describe below the way that I think we could
collaborate towards the development of applications derived from Organitech
technologies.
Organitech should develop a strong Genetics program whose goal would be to breed
crops that are adapted to the "container" environment. While lettuce is a good
start, as you are already doing, I am convinced that one can develop cultivars
even better adapted than the existing ones. For tomato, there is already a good
genetic basis that should enable by combining traits from different cultivars to
breed for miniature, rapidly growing, tasty and high yielding tomatoes. The same
is true for many other species (strawberries, flowers etc?).
