Distribution Rights Agreement
Exhibit
10.J
AGREEMENT
(the
“Agreement”) dated as of April 1, 2006, by and between ABMS Health Care Pvt.
Ltd. (hereinafter referred to as ABMS) having its principal offices at 61-B
Xxxxxxxx Xxxxx, Xxxxxx 000000 (Madhya Pradesh) India and SEYCHELLE
ENVIRONMENTAL PRODUCTS INC. (“SEYCHELLE”),
having its principal offices at 00000 Xxxxx Xxxxxxxx, Xxx Xxxx Xxxxxxxxxx,
XX
00000.
WHEREAS,
ABMS
now desires to be designated by SEYCHELLE as a distributor within India of
the
water filtration products manufactured and sold by SEYCHELLE which products
are
described on Exhibit “A” hereto (and are each herein referred to individually as
a “PRODUCT” and, collectively, as the (“PRODUCTS”), and thereby to have and hold
the right to distribute and sell each of the PRODUCTS within India during
the
time periods provided herein; and
WHEREAS,
ABMS now desires to set up a manufacturing operation in India to make certain
of
Seychelle’s PRODUCTS: and
WHEREAS,
SEYCHELLE is willing to designate and empower ABMS as a distributor and
manufacturer of the PRODUCTS in India on the terms and conditions and set
forth
herein.
NOW
THEREFORE,
in
consideration of the mutual covenants herein contained, and for other and
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree
as
follows:
1.
Grant
of Distribution Rights.
| A. |
SEYCHELLE
hereby grants to ABMS the right to distribute and sell each of the
PRODUCTS within India on an on-going basis, and for a minimum of
ten (10)
years.
|
| B. |
ABMS
shall have the right of first refusal to handle sales of any third
party
orders provided that they can meet the terms and conditions of such
a
transaction within thirty (30) days of receipt of
order.
|
| C. |
ABMS
shall have the right to represent itself as a distributor for each
of the
PRODUCTS within India in printed communications, public marketing
and
promotional materials and in any discussions with private parties
or
governmental agencies within India.
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2. Obligations
of ABMS as Distributor.
| A. |
In
consideration of the grant of Distribution Rights made to ABMS in
Section
1., above, ABMS hereby agrees that it will undertake, at its own
reasonable expense and using reasonable best efforts, to obtain all
necessary governmental licenses, permits and approvals required to
allow
the sale of the PRODUCTS within India prior in each case to its
commencement of distribution and sale activities of that PRODUCT
in India.
|
| B. |
In
addition, ABMS agrees that it will use reasonable best efforts, at
its own
expense, to open distribution channels for each of the PRODUCTS within
the
private, governmental, education and military sectors within
India.
|
| C. |
ABMS shall
be exclusively responsible for all sales, promotion and marketing
expenses
relating to its distribution and sale of PRODUCTS in India.
|
| D. |
ABMS
covenants and agrees that it will not distribute or resell any PRODUCTS
purchased directly from SEYCHELLE, or manufactured by ABMS in India,
other
than in India, without first advising SEYCHELLE of its intention,
and
receiving SEYCHELLE’S prior written approval to do
so.
|
3. Obligations
of ABMS as Manufacturer.
The
intent of this Agreement is to enter into a business relationship whereby
manufacturing for the PRODUCTS is done in India exclusive of SEYCHELLE’S
proprietary filters, ozone reactors, Ultra Filtration (UF) membranes, and
Vending Machines (which will be covered by a separate Agreement). This is
further covered in Section
5, below
(Understanding
The Business Relationship).
In the
event that ABMS purchases PRODUCTS from SEYCHELLE which are manufactured
in the
USA, the following applies:
A.
Price
of PRODUCTS to ABMS:
(i)
SEYCHELLE hereby agrees to sell to ABMS, on presentment of written purchase
orders therefore, such quantity or quantities of each PRODUCT as XXXX shall
request, in each case at the per unit price for such PRODUCT established
by
SEYCHELLE from time to time for purchase orders based upon current OEM pricing.
(A schedule of such prices as currently offered by SEYCHELLE is annexed as
Exhibit “B” hereto.) In addition, SEYCHELLE agrees to afford to ABMS the benefit
of any volume discount(s) offered to any SEYCHELLE customers with respect
to
each PRODUCT on a “most favored nation” basis.
(ii)
ABMS
shall be responsible for all costs of shipping the purchased PRODUCTS from
point
of manufacture.
B. Commitment
to Supply Products:
SEYCHELLE represents and agrees that SEYCHELLE will use all commercially
reasonable efforts to manufacture and deliver any PRODUCTS ordered by ABMS
on a
priority basis, but in all events in a timely fashion.
X.
XXXX as a Manufacturer: SEYCHELLE
will help ABMS set up local manufacturing under the terms and conditions
set
forth in EXHIBIT “C.”
4. Further
Covenants.
The
parties hereto understand and agree that their mutual cooperation will be
important and integral to the success that ABMS may achieve in opening sales
and
distribution channels for the PRODUCTS in India. Accordingly:
A.
SEYCHELLE hereby covenants and agrees that it shall cooperate with marketing,
sales, public relations and other personnel of ABMS in support of it’s efforts
to manufacture, distribute and sell PRODUCTS in India.
| B. |
SEYCHELLE
further covenants and agrees that, at ABMS’s request, upon reasonable
advance notice, SEYCHELLE shall make available a representative of
its
senior management who will travel to India, for a period of up to
one (1)
week, to promote the PRODUCTS and support ABMS’s sales and distribution
efforts at the start of our business relationship. ABMS will be solely
responsible for all expenses of such travel (including, but not limited
to, airfare (business class), hotel accommodations, local transportation
and meals), but will not be required otherwise to compensate SEYCHELLE
for
the time or participation of its representative in such
visits.
|
| C. |
ABMS
covenants and agrees that it shall bear its own expenses in the
performance of its duties hereunder.
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| 5. |
Understanding
the Business Relationship.
ABMS
and SEYCHELLE agree to enter into this Agreement for the purpose
of
manufacturing and distributing the PRODUCTS in India and its sub-continent
and in other such regions where there may be non-conflicting business
opportunities.
|
For
Vending Machines, the parties agree to detail the terms and conditions in
a
separate Agreement, with the intent to manufacture and distribute them in
India
with an ownership split of 60% to ABMS and its investors, and 40% to SEYCHELLE.
6.
Termination
of the Agreement
If
the
parties to this Agreement shall at any time commit any breach of any provision,
covenant or condition of this Agreement, and shall fail to remedy such within
ninety (90) days of written notice by the other party, that party shall be
in
material breach of this Agreement. In such an event, the non-breaching party
may
at its option, and without limitation, cancel and terminate this Agreement
by
notice in writing to such effect and claim damages owing to it.
For
purposes of this Agreement, “breach” shall be defined as:
FOR ABMS:
|
1.
|
Failure
to perform any obligations under this
Agreement.
|
|
2.
|
Is
declared insolvent or bankrupt or makes a bankruptcy filing or
an
assignment or similar arrangement for the benefit of its creditors
or
ceases active business operations.
|
|
3.
|
Attempting
to copy any or all SEYCHELLE technologies with the idea of competing
directly against SEYCHELLE, or avoiding any payments due
SEYCHELLE.
|
FOR SEYCHELLE:
| 1. |
Willfully
refuses or is unable to supply filters or technology as set forth
in this
Agreement.
|
| 2. |
Failure
to perform any other obligations or covenants set forth in this
Agreement.
|
7.
Indemnification.
A.
SEYCHELLE warrants and represents to ABMS that (i) SEYCHELLE has full power
and
authority to grant the Distribution and Manufacturing Rights to ABMS, (ii)
no
approval or consent of any third party is required to enable SEYCHELLE to
make
such grant or for ABMS thereupon to be entitled to exercise the full rights
and
benefits intended thereby, and (iii) the grant thereof will not breach any
license, patent or other right or agreement to which SEYCHELLE is a party
with
respect to SEYCHELLE’S rights and authority to manufacture and sell each of the
PRODUCTS.
B.
SEYCHELLE shall defend and indemnify ABMS and hold its members, managers,
officers, employees and agents harmless against all claims and losses (including
reasonable attorney’s fees and costs incurred in investigating or defending
against any such claims) suffered by ABMS in connection with or as a result
of a
breach of the representation and warranty made by SEYCHELLE in subsection
A.
above.
C.
Conversely, ABMS agrees that it shall defend and indemnify SEYCHELLE and
hold
its, managers, officers, employees and agents harmless against all claims
and
losses (including reasonable attorney’s fees and costs incurred in investigating
or defending against any such claims) suffered by SEYCHELLE in connection
with
or as a result of the gross negligence, misrepresentation, or willful misconduct
of ABMS or its personnel in the performance of ABMS’s duties hereunder.
D.
SEYCHELLE further shall defend and indemnify ABMS and hold its members,
managers, officers, employees and agents harmless against all claims and
losses
(including reasonable attorney’s fees and costs incurred in investigating or
defending against any such claims) suffered by ABMS in connection with or
as a
result of any claim of breach of implied warranty or of product liability
with
respect to any PRODUCT manufactured by SEYCHELLE, purchased by ABMS and
thereafter distributed.
8.
Miscellaneous
Provisions.
A.
Modification:
No
modification, waiver or amendment of any term or condition of this Agreement
shall be effective unless and until it shall be reduced to writing and signed
by
both of the parties hereto or their legal representatives.
B.
Waiver:
Failure
by either party at any time to require performance by the other party or
to
claim a breach of any term of this Agreement will not be construed as a waiver
of any right under this Agreement, will not affect any subsequent breach,
will
not affect the effectiveness of this Agreement or any part thereof, and will
not
prejudice either party as regards any subsequent action.
C.
Severability:
If
any
term or provision of this Agreement should be declared invalid by a court
of
competent jurisdiction, the remaining terms and provisions of this Agreement
shall be unimpaired.
D.
Complete
Agreement: This
Agreement constitutes the entire Agreement between the parties with respect
to
the subject matter hereof and supersedes in all respects all prior proposals,
negotiations, conversations, discussions and agreements between the parties
concerning the subject matter hereof.
E.
Assignment:
This
Agreement may not be assigned, in whole or in part, by either party hereto
without prior written consent shall not be unreasonably withheld.
F.
Governing
Law
This
agreement shall be constituted according to the laws of India as the entire
manufacturing process and the establishment of units and the distribution
and
sale of the PRODUCTS are subjected to India and its sub-continent. In case
of
any dispute between the parties, the same shall be referred to an Independent
Arbitrator appointed with the mutual consent of the parties and the place
of
arbitration would be in Mumbai (India) and the provisions of the Arbitration
and
Reconciliation Act, 1996 would be applicable to the proceedings before the
Arbitrator and the decision of the Arbitrator shall be binding on both the
parties.
G.
Compliance
with Laws: The
parties hereto represent and agree each for itself that they and their
respective employees, agents and subcontractors will comply with all applicable
local laws, ordinances, regulations and codes in the performance of their
respective services, duties and obligations under this Agreement.
H.
Force
Majeure: Either
party is excused from performance and shall not be liable for any delay in
performance or delivery or for non-performance or non-delivery, in whole
or in
part, caused by the occurrence of any contingency beyond the control of the
parties including, but not limited to, work stoppages, fires, civil
disobedience, riots, rebellions, accident, explosion, flood, storm, acts
of God
and similar occurrences. Either party may terminate or suspend its obligations
under this Agreement if such obligations are prevented by any of the above
events to the extent such events are beyond the reasonable control of the
party
whose reasonable performance is prevented.
I.
Counterparts:
This
Agreement may be executed in counterparts each of which shall be deemed an
original, but all of which together shall constitute one and the
same.
J.
Notices:
All
notices to be given and payments to be made to ABMS hereunder shall be sent
to
ABMS 61-B Xxxxxxxx Xxxxx, Xxxxxx 000000 (Madhya Pradesh), India attention:
Xx.
Xxxxxx Xxxxx, Director. All notices to SEYCHELLE, to be made hereunder shall
be
given or made to SEYCHELLE at 00000 Xxxxx Xxxxxxxx, Xxx Xxxx Xxxxxxxxxx,
XX
00000. Attention: Mr. Xxxxxxx Xxxxxxx, Executive VP. All notices shall be
sent
by registered or certified mail or by a nationally recognized overnight delivery
service and shall be deemed to have been given at the time such notice is
received.
8.
Survival
Provisions.
The
terms
and provisions of the Agreement that by their sense and context to survive
the
performance hereof by either party or by other parties hereto shall so survive
the completion of performance and termination of this Agreement, including
without limitation the making of any and all payments due hereunder unless
otherwise noted.
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9.
Confidentiality.
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A.
The
information furnished or disclosed by either party to the other in connection
with this Agreement and the performance of the respective party’s services,
duties and obligations hereunder, may contain or reflect confidential
information with respect to the business operations and practices of the
parties, any selling properties and/or buying sponsors (“Confidential
Information”). Confidential Information furnished by either party to the other
shall be used exclusively and only in connection with this
Agreement.
B.
The
parties hereto acknowledge and agree that the unauthorized disclosure of
use of
any Confidential Information may cause immediate and irreparable injury to
the
party which has disclosed that Confidential Information to the other party,
injury which can not be adequately compensated by monetary damages. Accordingly,
each party hereto authorizes the other party to seek any temporary or permanent
injunctive relief necessary to prevent such disclosure or use, or threat
thereof. Further, each party hereto consent to the jurisdiction of any federal
or state court sitting in the State of California for purposes of any suit
seeking such injunctive relief, and consents to the service of process therein
by certified or registered mail, return receipt requested.
ACCEPTED
AND AGREED TO:
ABMS
By:
________________________ Date
___________________
Xxxxxx
Xxxxx, Director
SEYCHELLE
By:
_________________________ Date:
___________________
Xxxxxxx
Xxxxxxx, Executive VP
EXHIBIT
“A”
The
PRODUCTS covered by this Agreement include, but are not limited to, the
following:
For
Local Manufacturing:
| - |
Portable
filter bottles (Flip Top and Bottoms Up)
|
| - |
Portable
canteens
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For
Importing:
| - |
In-line
hydration filters and packs
|
| - |
Pure
water bags and pumps
|
| - |
Shower
filters
|
| - |
Countertop
filter systems
|
| - |
Pitchers
|
| - |
Straws
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Note:
PRODUCTS
noted as imports may later be included for local manufacturing.
EXHIBIT
“B”
ABMS
purchase of PRODUCT from SEYCHELLE will be priced as follows:
| 1. |
Portable
Bottles
|
-
Flip
Tops
(Advanced Filters- no sleeves): $6.00
-
Flip
Tops with sleeve: 6.25
-
Bottoms
Up and Canteens “same as above”
Pricing
of other products will be covered by separate correspondence as
needed.
| 2. |
Advanced
Filters
|
Quantity
Pricing
1
to
149,999 $2.75
150,000
to 249,999 2.50
250,000
plus 2.25
| 3. |
Terms
and Conditions
|
| - |
FOB
our plant in San Juan Capistrano, CA.
|
| - |
Payment
in US dollars.
|
| - |
Prices
subject to change with sixty (60) days written
notice.
|
| - |
Irrevocable
Letters of Credit written as follows: release of 50% of the funds
to
SEYCHELLE upon the placement of the order; 50% released by the Bank
upon
presentation of Xxxx of Lading and all other documents when shipment
is
released by SEYCHELLE to the freight
forwarder.
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EXHIBIT
“C”
SEYCHELLE
will help ABMS set up manufacturing in India as follows:
| 1. |
Payment
|
SEYCHELLE
will be paid $250,000 (US) for setting up local manufacturing for
ABMS.
| 2. |
Payment
Schedule
|
Payments
will be as follows:
| - |
$150,000
when molds are ordered.
|
| - |
$100,000
when SEYCHELLE personnel deliver the molds and work with ABMS to
set up
assembly (approximately 45 to 60 days
later).
|
| - |
Both
payments are to be wire transfers.
|
| 3. |
Products
|
PRODUCTS
will be the Flip Top, Bottoms Up and Military Style Canteen.
| 4. |
Plan
detail.
|
| A. |
SEYCHELLE
will order (and pay its suppliers cash up front) molds
for:
|
| - |
Flip
Top Bottle:
which consists of a bottle and cap (cap, mouthpiece, gasket, stem
for
filter and O-ring). This consists of 5 molds.
|
| - |
Bottoms
Up Bottle:
which consists of a bottle and cap (same as Flip Top) as well as
filter
stem extender and bottom cap (tether, tether insert, cap, gasket,
and
plastic Chlorine tablet housing). This consists of a total of 11
molds - 6
for the top assembly, and 5 for the bottom cap.
|
| - |
Military
Canteen:
which consists of a bottle, cap (pull top and screw-in filter for
replacement) poppett top and male adapter. This will be a total of
3
molds.
|
| - |
Check
Valve: if
we supply these out of China, they are at $.12
each.
|
| B. |
India
manufacturing capability.
|
Prior
to
ordering molds, SEYCHELLE will need to understand the injection and blow
molding
capability of manufacturing companies in India to insure compatibility with
the
molds before manufacturing. SEYCHELLE will work with ABMS to search out and
set
up local sourcing if necessary.
When
SEYCHELLE orders the molds, SEYCHELLE will also order jigs, tooling (such
as
fixtures for putting on sleeves), hot pots for filter gluing and bulk glue
(SEYCHELLE uses a special blend).
| C. |
Timetable
|
Upon
receipt of order and payment, the molds will be ordered and delivery should
be
in 45 days. It will take an additional 15 days to tune the tooling to insure
that the finished product meets production specifications.
As
the
molds are being made, SEYCHELLE will work with ABMS personnel to set up assembly
operations in your facility. This will include storage, product picking,
inventory control, training, assembly (SEYCHELLE will provide a detailed
plant
layout), quality control and shipping. This should commence in the first
45 days
which means that ABMS will have to build the infrastructure beforehand.
SEYCHELLE will send to India its Operations Manager for this purpose. SEYCHELLE
will pay for his salary and transportation, and we ask that ABMS pay for
his
room and board.
| D. |
Getting
started.
|
Recognizing
that the above may well take 90 days to execute, SEYCHELLE will send to ABMS
parts and filters for 5,000 Flip Tops and 5,000 canteens (or whichever ABMS
wants) at SEYCHELLES cost so that assembly can begin (with all of the above
details) and sales can be “jump started.” This will enable ABMS to serve some of
ABMS’S customers without typical “start-up” worries and help train ABMS
production and management people in the product line.
