Exhibit 10.4
JULY 9, 2000
Memorandum of Understanding (MOU)
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1. 1.1 Pursuant to this MOU to be signed by the parties ("MOU"),
Agronaut will purchase two (2) 40 foot GrowTech 2000 for
automatic growing of lettuce (hereinafter "Initial Machines")
for US$50,000 each, for beta-site tests.
1.2 The terms of payment for the Initial Machines will be a 50%
down payment upon placement of the order, not later than 10
days from signing of this MOU, and the balance by an
irrevocable letter of credit, approved by Bank Leumi, payable
FOB.
1.3 The two Initial Machines will be shipped FOB from Israel
during January 2001.
2. 2.1 A six-month experimental stage for the growing of lettuce (the
"Experimental Stage") will commence upon the arrival of the
two Initial Machines in Singapore.
2.2 OrganiTech will provide full support, including the services
of an engineer, as long as necessary during the Experimental
Stage.
2.3 Argonaut will fully finance all the costs and expenses during
the Experimental Stage including the living cost, expenses and
three flights to and from Israel of the OrganiTech employee in
Singapore,
3. Model Farm
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3.1 Agronaut is committed to purchase an additional fifteen (15)
Machines ("Model Farm Machines") for the model farm that
Agronaut will establish in Singapore for experiments, further
beta-site tests and marketing (hereinafter: "Model Farm"). The
price for the Model Farm Machines will be US$75,000 for each
Model Farm Machine.
3.2 The Model Farm Machines will be fully paid by an irrevocable
Letter of Credit ("Additional LC") LC, approved by Bank Leumi,
payable FOB.
Agronaut is committed to provide Organitech with this
Additional LC not later than six months from the date of
arrival of the two Initial Machines to Singapore (referenced
in Section I above). Agronaut will make all efforts to provide
the Additional LC as soon as possible.
3.3 If Agronaut is not satisfied with the two Initial Machines due
to reasonable technical reasons or the machines are not to the
satisfaction of Agronaut, from the tests performed by the
Initial Machines, Agronaut will be released from the
commitments in sections 3.1, 3.2 above upon written notice by
Agronaut to Organitech of their dissatisfaction.
In this case, Agronaut will return the two Initial Machines to
Organitech within 30 days of said notification, Organitech
will return US$75,000 to Agronaut upon receipt of the two
Initial Machines and Agronaut will lose all its rights
pursuant to this MOU and the Agreement (defined in section 6).
3.4 OrganiTech will support the Model Farm for five years from the
signing of this MOU at a price calculated on the basis of cost
plus 10% profit.
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4. Agronaut will have exclusive rights for sales and marketing of the
Machines in Singapore for six years, effective the day of signing of
this MOU, subject to the purchasing of the two Initial Machines and the
fifteen Model Farm Machines during the next 18 months.
5. The price and payment conditions for any additional Machines are as
follows:
5.1 Each additional Machine will cost Agronaut US$100,000 each
(FOB price), excluding those Machines for sale in Japan.
5.2 The terms of payment for any of the Machines will be a 50%
down payment upon placement of the order and the balance by an
irrevocable letter of credit, approved by Bank Leumi, payable
FOB.
6. 6.1 A final and detailed agreement will be signed by the end of
December 2000 ("Agreement").
6.2 The Agreement shall contain references to warranties,
disclaimers, specifications, normal wear and tear, negligence
and terms regarding the usual manner and custom in the
business in determining the amount to be repaid to Agronaut
including but not limited to the terms in Section 3.3 above.
7. The following rights will be granted to Agronaut in Japan and China
only if Agronaut will purchase and operate the two Initial Machines and
the fifteen Model Farm Machines in accordance with this MOU by July 1,
2001, and thirteen additional Machines by June 1, 2002:
7.1 During the first five years after the signing of this MOU
Agronaut will be allowed to perform marketing actions in
Japan. However, contract and sales shall be conditioned upon
the advance written approval of OrganiTech.
7.2 If OrganiTech will decide to market the Machines in Japan
without Agronaut, OrganiTech, during the first five years
after the signing of this MOU, will pay Agronaut 3% of its
income derived and received from the Japanese market (after
reduction of insurance cost and shipping cost) up to aggregate
amount of US$1 Million. After that sum is reached, OrganiTech
will pay Agronaut 1.5% of its income derived and received from
the Japanese market (after reduction of insurance and shipping
costs).
8. Agronaut will be entitled to non-exclusive marketing rights in
Indonesia, Malaysia, Thailand, Hong-Kong, Taiwan, Brunei, Palau, East
Timor and Micronesia from the date of the signing of this MOU until
July 1, 2002. If by that date (July 1, 2002) Agronaut has purchased an
aggregate of thirty (30) Machines (including the two Initial Machines
and the fifteen Model Farm Machines) their non-exclusive marketing
rights shall be extended until July 1, 2003.
If by that date (July 1, 2003) Agronaut has purchased thirty five (35)
additional Machines their non-exclusive marketing rights shall be
extended until June 1, 2004.
If by that date (July 1, 2004) Agronaut has purchased thirty five (35)
additional Machines their non-exclusive marketing rights shall be
extended until July 1, 2005.
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9. In the event that Agronaut will be entitled to the non-exclusive rights
as set forth above, Organitech, if it sells Machines to any other firms
in the nine above mentioned countries during the period of said
non-exclusivity, will be required to sell those Machines for FOB price
that will be no lower than ten percent (10%) above the price paid by
Agronaut for said Machines.
10. Organitech will be entitled to send customers from Europe, USA and
other countries to the Model Farm for demonstration.
11. 11.1 Agronaut undertakes to secure the secrecy of Organitech's Know-
how and technology.
11.2 Agronaut undertakes not to compete, directly or indirectly,
with Organitech's product lines for a period of ten years.
12. Agronaut will provide full service and customer support to Agronaut's
clients.
13. This MOU cancels all prior written and or verbal agreements and
understandings between the parties.
14. Agronaut will share with Organitech all the commercial and technical
information that Agronaut will gain. Agronaut will provide a written
report to Organitech every month.
/s/ Agronaut /s/ OrganiTech
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Agronaut OrganiTech
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