PARTNERSHIP CONTRACT
Between
BLUE INDUSTRIES, company under American law, whose head office is at
00 xxx xx Xxxxx
XX 0000 Xxxxxx - XXXXXXXXXXX
represented by its president Xx. Xxxxxxx Xx XXXXXX
And
DESERT BLUE, a limited company under Swiss law, whose head office is at
00 xxx xx Xxxxx
XX 0000 Xxxxxx - XXXXXXXXXXX
represented by its president Xx. Xxxxxxxx Xxxx YAMANI
The following has been agreed:
Preliminaries:
BLUE INDUSTRIES has developed a series of apparatus for water treatment.
BLUE INDUSTRIES has been asked by the company DESERT BLUE to ensure the
development and distribution of its products in the following countries:
SAUDI ARABIA, YEMEN, U.A.E., OMAN, QATAR, BAHRAIN, IRAQ, SYRIA,
LEBANON, JORDAN, SUDAN, EGYPT, LIBYA, MOROCCO, TUNISIA and
ALGERIA.
The parties have agreed to divide their contractual relations into three
sectors:
- technology transfer
- the distribution of products
- purchases and sales
The present contract will therefore, in addition to the general provisions,
include these three sectors with the obligations of each of the parties for each
sector.
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CHAPTER I: GENERAL PROVISIONS
Article 1 - Subject of the contract
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The aim of the present contract is to organize the following between the parties
1. the technology transfer needed for assembling the apparatus,
2. the organisation of product marketing,
3. a supply contract.
INTELLECTUAL PROPERTY RIGHTS: BLUE INDUSTRIES is the owner of all the models,
plans, documents, studies, developments and other elements relating to the
present contract.
Article 2 - Duration
-----------------------
The contract will come into effect on 01 February 2002 and will terminate on 30
January 2011 and will therefore last for ten years.
If it has not been cancelled in the six months preceding its termination, it
will be automatically renewed by one of the parties, by registered letter, for a
further period of ten years.
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CHAPTER II: PROVISIONS CONCERNING THE TECHNOLOGY TRANSFER NEEDED FOR ASSEMBLING
THE APPARATUS
Article 1 - Exclusivity
--------------------------
BLUE INDUSTRIES undertakes to transfer the products mentioned in the annex
exclusively to DESERT BLUE:
- Territory: MENA (Middle East and North African countries) and IRAN.
---------
- Sector of activity: Drinking water and wastewater treatment, Food and
--------------------
Agricultural Industries
The exclusivity signifies that BLUE INDUSTRIES will not divulge information
enabling the products to be manufactured in the territory in question to any
other manufacturer.
The exclusivity also signifies that BLUE INDUSTRIES will forbid other
manufacturers in the world from selling products within the MENA and IRAN
without the agreement of both parties.
Article 2 - Obligations of BLUE INDUSTRIES
------------------------------------------------
a) Provision of "know-how" enabling manufacture
- Provision of prototype equipment that can be copied.
- Provision of all the plans, and assembly diagrams, enabling the equipment
to be made.
- Provision of technical documents facilitating the manufacture of
equipment.
- Provision of lists of components needed for manufacture.
- Instructions for using the apparatus written in English and French.
- The Manufacturing Licence.
BLUE INDUSTRIES indicates that the products are patented and trade xxxx
registered.
b) Training obligation
- BLUE INDUSTRIES must train the engineers or other suitably qualified
personnel provided by the beneficiary of the technology.
- BLUE INDUSTRIES will pay for the transport and accommodation costs of the
BLUE INDUSTRIES technician providing the training.
- The partner will pay for the living costs of any additional BLUE
INDUSTRIES technicians requested by the partner.
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- Ongoing training: BLUE INDUSTRIES is obliged to provide further training
whenever a new model is launched.
c) Obligation to provide technical assistance
BLUE INDUSTRIES is obliged to provide technical assistance to the beneficiary of
the technology.
- Assistance in the design of the manufacturing unit or the search for
sub-contractors.
- Assistance in the organisation of manufacturing processes.
- Assistance in the organisation of personnel, material flows, procurement,
and dispatching finished products, etc.
- Collaboration in commercial organisation: order taking, delivery,
procedures, etc.
- Assistance during manufacture by provision of technical teams.
- BLUE INDUSTRIES will provide a catalogue of assembled and tested
sub-assemblies. In case of difficulties in the final assembly, BLUE
INDUSTRIES could supply assembled apparatus.
d) Information on improvements
BLUE INDUSTRIES is obliged to inform the beneficiary of the technology of any
improvements that it has discovered either in terms of technical or commercial
aspects.
In technical terms: - change in materials,
- change in processes
- change of names.
In commercial terms: - change of price
- logistical improvements.
e) Guarantee
BLUE INDUSTRIES undertakes to guarantee the product against any operating
defects for a period of 2 years, under the following four conditions:
- that the manufacture of the apparatus complied with the plans and
instructions,
- that the use of the apparatus complied with prescribed standards,
- that the defect was not caused by normal wear and tear,
- that the defect occurred in the first two years.
BLUE INDUSTRIES will choose how to fulfill its guarantee, by:
- Either sending a member of BLUE INDUSTRIES to inspect the fault.
- Or asking the apparatus to be sent back to its factories for inspection.
If the measurement or analysis reveals that the defect originated from an error
by BLUE INDUSTRIES, the company undertakes to immediately replace or repair the
defective parts. If it appears that the defect originated from other
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causes than those mentioned above, the transport costs of ether the goods or
personnel will be payable in full by the purchaser.
Article 3 - Obligations of manufacturing partner
a) Manufacture
- The manufacturer is obliged to assemble the apparatus in compliance with
the instructions provided, the model and any proposed improvements.
- It is obliged to use the components listed in the BLUE INDUSTRIES list of
parts or similar components after the latter have been validated by
BLUE INDUSTRIES.
- It is obliged to ask for BLUE INDUSTRIES approval for any technical
changes that it may want to make to the apparatus; BLUE INDUSTRIES will
remain the owner of intellectual property rights on any changes.
- BLUE INDUSTRIES reserves the right to conduct controls on procedures,
manufacturing and documents relating to the present contract, without
prior warning.
b) Training
It undertakes to take part in training programmes:
- By recruiting qualified staff who meet with BLUE INDUSTRIES requirements
and making them available.
- By paying for the training costs.
c) Stock
The manufacturer undertakes to comply with the prescriptions of BLUE INDUSTRIES
concerning stocks and the organisation of material flows in the factory. It
must at all times be able to satisfy the demands for products in the markets
that are assigned to it by the provisions of the present contract.
d) Sanctions
Non-compliance with the requirements mentioned in paragraph C.3 can lead BLUE
INDUSTRIES to cancel the assembly exclusivity granted by the present contract.
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e) Sale of products
The manufacturer is forbidden to sell products to other distributors not
belonging to the territory conceded by BLUE INDUSTRIES, except with express
authorisation of BLUE INDUSTRIES, the conditions being defined on a case-by-case
basis in the codicil to the present contract.
All export of products is prohibited, except with the express agreement of BLUE
INDUSTRIES, the conditions will be defined on a case-by-case basis.
f) After-sales service
The manufacturer undertakes to provide an after-sales service for its products
if defects occur. This compulsory technical assistance will then, depending on
the nature of the fault, bring into play the guarantees granted by BLUE
INDUSTRIES.
Article 4 - Royalties and services
a) Royalties for the provision of know-how
- The amount of the royalty fee is 1 000 000 US$.
- The royalties to be paid on each apparatus for provision of know-how
and manufacturing dossiers is fixed in relation to the product and the
volume of the transfer. This royalty is calculated on the basis of 10
% of the manufacturing price of the apparatus.
b) Invoicing of services
The manufacturer will come to an agreement with BLUE INDUSTRIES before each
provision of technical assistance and before each special request on agreed
prices to be negotiated with BLUE INDUSTRIES.
c) Invoicing of supplies and services
The manufacturer is obliged to pay for materials ordered from listed suppliers,
for the prototype apparatus and sub-assemblies supplied by BLUE INDUSTRIES, and
also for the various paid services provided by BLUE INDUSTRIES at the agreed
price and within the agreed deadlines.
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Article 5 - Counterfeiting - secrecy - confidentiality - information -
intellectual property rights
a) Counterfeiting
The manufacturer is forbidden to counterfeit the products whose plans and
details have been provided by BLUE INDUSTRIES or to promote or permit
counterfeiting by third parties.
It also undertakes to inform BLUE INDUSTRIES of any counterfeiting that it
discovers or could become aware of.
b) Secrecy - Confidentiality
The manufacturer undertakes to maintain the greatest confidentiality over all
the information provided by BLUE INDUSTRIES, on the manufacturing methods, on
the company's accounts, etc.
c) Information
Every three months the manufacturer will send BLUE INDUSTRIES the following
information:
- its production volume,
- the number of products assembled in each series,
- the destination of these products,
- the difficulties encountered.
d) Intellectual property rights
BLUE Industries will always remain the owner of all of its methods, graphics and
other documents that it provides to the manufacturer within the framework of the
present contract.
The transfer of know how concern:
- the manufacture of cartridge.
- the manufacture of clarifier.
This transfer can only be made with the joint ventures.
The joint venture can transfer this right only with 100% of shareholder
agreement of the joint venture.
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CHAPTER III: PROVISIONS CONCERNING THE MARKETING OF PRODUCTS
-------------------------------------------------------------------
BLUE INDUSTRIES grants to the partner the right to market and the possibility of
manufacturing BLUE INDUSTRIES products.
Article 1 - Exclusivity
Marketing will take place exclusively within the MENA and IRAN and for the
industrial sectors mentioned in the present contract.
This signifies that BLUE INDUSTRIES is forbidden from nominating other main
distributors for this product within the granted territory.
This distribution is also exclusive in the sense that BLUE INDUSTRIES will
prohibit other manufacturers, who are authorised in other geographical areas,
from exporting products to the exclusive territory granted by the present
contract.
This exclusivity is however dependent on sales results. To this end, the
parties have agreed sales targets for 6 months, 12 months and 18 months, both by
type of equipment and by zone. If these quotas, that are considered by both
parties to be reasonable, are not reached, BLUE INDUSTRIES will be free to
maintain or suspend the exclusivity granted either in terms of industrial sector
and/or geographical area.
The exclusivity granted is dependent on the compulsory annual quotas defined in
an annexe.
Article 2 - BLUE INDUSTRIES obligations
Obligation to provide technical assistance
BLUE INDUSTRIES will give or will inform the distributor of the various
marketing methods, the organisation by means of which it could sell the products
and the obligations that it could have in this respect.
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Article 3 - The distributor's obligations
a) The distributor is obliged to market the products in compliance with
the instructions provided by BLUE INDUSTRIES.
b) The distributor must maintain an advance stock of products, in such a
manner that it can quickly respond to demand.
c) The distributor is obliged to conduct marketing operations within its
sectors of activity and within the MENA and IRAN.
These marketing activities will consist of:
- advertising: budget, timing, frequency.
- promotional operations: budget, timing, frequency.
- prospecting by sales agents: timing, frequency, number
of staff employed.
The distributor will be free to charge whatever price it wants for the products
sold.
It should however attempt to stay within market prices so as not to tarnish the
image of the manufacturer or the inventor of the process.
d) The distributor will not be responsible for collecting the money for
products that it sells and for any bad debts.
e) The distributor is authorised to provide an after-sales service guarantee
for purchasers.
f) Confidentiality
The distributor is prohibited from giving any information concerning the nature
of the products, the marketing methods, etc.
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CHAPTER IV: PROVISIONS CONCERNING THE SUPPLY CONTRACT
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In addition to the mechanical components, treatment cartridges, an operating
microchip and an electronic circuit board controlling the apparatus are needed
to use the products.
Accordingly, the distributor undertakes to purchase the powder cartridges and
control electronics exclusively from BLUE INDUSTRIES under the conditions
defined in the annexe attached to the present contract.
Article 1 - Prices
The treatment cartridges, the electronics and components will be sold at the
prices quoted in the BLUE INDUSTRIES price list.
BLUE INDUSTRIES undertakes to maintain these prices and to give 3 months notice
of any changes.
Article 2 - Obligations of BLUE INDUSTRIES
BLUE INDUSTRIES is obliged to deliver within 90 days of receiving the
corresponding order
Deliveries are made ex-works.
BLUE INDUSTRIES is responsible for export customs formalities.
The manufacturer is responsible for import customs formalities, insurance and
transport.
In the event of factors beyond the control of the parties (such as acts of God,
civil disturbance or war), the contract will be suspended and will come into
force again when these factors have ceased.
Article 3 - Obligations of the purchaser
a) The purchaser undertakes to pay the price agreed in the price lists
within the times stated in the sales terms and conditions given in the annexe.
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b) Reservation of ownership clauses
It is agreed between the parties that the products remain the property of BLUE
INDUSTRIES until payment is made in full.
c) Taking possession of the products
The distributor undertakes to collect the products as soon as they are delivered
and to ensure them against risks from this time.
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CHAPTER V: FINAL PROVISIONS
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Article 1 - Hardship
In the event of unpredictable risks occurring during the execution of the
contract that could endanger the balance of economic relations that were
predicted by the parties, the parties agree to meet immediately and adapt the
contract to the new economic situation.
This meeting should take within two weeks of an information note being sent by
registered mail by the party that considers that the balance has been upset.
This balance could be upset if the economic circumstances are such that there is
no longer any value in the operation for at least one of the parties (e.g. no
profit margin).
If the parties do not manage to find a new agreement, and if the economic
situation is such that one of the parties is unable to make any profit in the
contractual relation, the contract will become null and void.
Article 2 - Cancellation of the contract
If one or other of the parties does not fulfil its obligations, the other party
will have the right to ask for the contract to be cancelled in all its clauses
without the possibility of separating the annexed articles.
The request for cancellation must be sent by registered mail in which the
damaged party will ask for the contract to be correctly executed within a period
of one month.
If after this period of one month the contract has not been regularised, the
other party will be able to enforce cancellation.
Article 3: Transfer of the contract
The contract cannot be transferred by the manufacturer/distributor except by
agreement between the parties. In contrast, BLUE INDUSTRIES can transfer the
benefits of the contract to any company of its group, without needing the
agreement of the co-contractor.
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Article 4 - Legal competence
a) Law applicable
In the event of litigation, the parties agree that only Swiss law will apply.
b) Arbitration
In the event of dispute, cancellation or annulment of the agreement, the parties
agree to resolve their dispute using the rules of arbitration.
To this end, they agree to refer to the rules of the International Chamber of
Commerce.
c) Indivisibility of the contract
All the articles are indivisible in all respects whatsoever.
Signed at Paris 12-2-2002
/s/ Dr. M. - X. Xxxxxx /s/ Xxxxxxx LeLoroux
DESERT BLUE BLUE Industries
Dr. M. - X. Xxxxxx X. XX XXXXXX
President President
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CODICIL No.1 TO CONTRACT No. BI/ME/0202-1
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Quotas & Sales Targets
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CODICIL No.2 TO CONTRACT No. BI/ME/0202-1
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CATALOGUE & PRICE LIST
See BLUE INDUSTRIES catalogue.
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CODICIL No.3 TO CONTRACT No. BI/ME/0202-1
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Sales Terms and Conditions
I. PAYMENT
II. DELIVERY.
The delivery conditions are: ex-works for volumes of less than one 20 ft
container and delivery to a bonded warehouse, by a transporter designated by the
distributor or the coordinator, departing from a French, Belgian or Netherlands
port or by Swiss, French, German, Belgian or Netherlands air freight for all
dispatch by full container load(s).
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