EXHIBIT 10.3
Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as **. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.
EXCLUSIVE DISTRIBUTION AGREEMENT
This Exclusive Distribution Agreement (the "AGREEMENT"), effective as
of September 1, 2002 (the "EFFECTIVE DATE"), is entered into by and between
Water$avr Global Solutions Inc.. (hereinafter "WATER$AVR GLOBAL SOLUTIONS INC.),
an Illinois corporation, a wholly owned subsidiary of Flexible Solutions Inc. a
Nevada corporation ("Flexible Solutions"), having its principal place of
business at X.X. 000, Xxxxxxxxxx XX 00000 and Ondeo Nalco Company, (hereinafter
"ONDEO NALCO") a Delaware corporation, having a place of business at Xxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000. Water$aver Global Solutions, Inc. and Ondeo Nalco
are sometimes each referred to herein as a "Party" and together as the
"Parties".
RECITALS
A. Water$avr Global Solutions Inc. has developed and sells chemical products for
the reduction of water evaporation from water reservoirs;
B. Ondeo Nalco markets and sells water treatment and related chemicals and
services; and
C. Water$avr Global Solutions Inc. wishes to appoint Ondeo Nalco as an exclusive
distributor of its chemicals in certain markets and non-exclusive in other
markets and Ondeo Nalco wishes to accept such appointment.
AGREEMENT
In consideration of the mutual promises contained herein, the Parties
agree as follows:
1. DEFINITIONS. All definitions used herein shall apply to both the single
and plural forms, as context may require. The following terms when used
herein shall have the following meanings:
1.1 "AFFILIATES" shall mean any parent or majority-owned subsidiaries,
whether direct or indirect, of Ondeo Nalco or Water$avr Global Solutions Inc.,
as applicable.
1.2 "CHEMICALS" shall mean those Water$avr Global Solutions Inc.
chemical products and improvements thereto listed in EXHIBIT A.
1.3 "CONFIDENTIAL INFORMATION" shall mean information, material and
trade secrets proprietary to Water$avr Global Solutions Inc. or Ondeo Nalco
(each, in such capacity, the "Disclosing Party") or to any related or affiliated
entity of such party or designated as confidential by such party, whether or not
owned or developed by such party, which the "Receiving Party" (defined as Ondeo
Nalco, if Water$avr Global Solutions Inc. is the Disclosing Party, or Water$avr
Global Solutions Inc., if Ondeo Nalco is the Disclosing Party) or any Affiliate
of the Disclosing Party may obtain knowledge of or access to, through or as a
result of its relationship with the Disclosing Party or with any related or
affiliated entity thereof, or through physical access to any property of the
Disclosing Party. Without limiting the generality of the foregoing, Confidential
Information shall include, but is not limited to, the following types of
information and other information of a similar nature (whether or not reduced to
writing or still in development): customer lists, business strategies,
discoveries, ideas, inventions, concepts, software in various states of
development, designs, drawings, specifications, outlines, techniques, models,
source code, object code, documentation, diagrams, flow charts, research,
economic and financial analyses, developments, processes, procedures, know how,
marketing techniques and materials, marketing and development plans, customer
names and other information related to customers, price lists, pricing policies,
financial information and employee files. Confidential Information shall also
include any information described above which the Disclosing Party obtains from
another party and which the Disclosing Party treats as proprietary or designates
as Confidential Information, whether or not owned or developed by the Disclosing
Party.
1.5 "DOCUMENTATION" shall mean any marketing materials, reference
materials, regulatory materials or other information describing or relating to
the Chemicals.
1.6 "END-CUSTOMER" shall mean a third party to whom Ondeo Nalco sells
the Chemicals.
1.7 "EXCLUSIVE MARKETS" shall mean End-Customer as shown on Exhibit B.
1.8 "IMPROVEMENTS" shall mean any improvements, enhancements or
modifications made to the Chemicals.
1.9 "INTELLECTUAL PROPERTY RIGHTS" collectively means any and all
patents, patent registrations, business processes, data rights, copyrights,
trade names, trademarks, trade secrets, know-how, mask works, or any other
proprietary rights, whether registered or unregistered, arising or enforceable
under U.S. law or the law of any other jurisdiction or international treaty
regime.
1.10 "PRICES" shall mean those prices for the Chemicals supplied by
Water$avr Global Solutions Inc. to Ondeo Nalco or any Ondeo Nalco Affiliate
pursuant to the terms of this Agreement, as detailed in EXHIBIT C. In no event
shall Prices offered under this Agreement to Ondeo Nalco ever be greater than
Prices offered to other distributors or re-sellers for the Services and
Improvements sold by Water$avr Global Solutions Inc. to third parties or
End-Customers for application Exclusive Field of Use.
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1.11 "SHARE OPTION AGREEMENT" shall mean an Agreement between Flexible
Solutions and Ondeo Nalco for the grant of share options in the shares of
Flexible Solutions Inc. (FXSO) as outlined in EXHIBIT D.
1.12 "SPECIFICATIONS" shall mean those specifications for the Chemicals
described in EXHIBIT E.
1.13 "TERRITORY" shall mean Worldwide.
1.14 "THRESHOLD AMOUNTS" shall mean those net amounts paid by Ondeo
Nalco to Water$avr Global Solutions Inc. in the time frames indicated in EXHIBIT
F.
1.15 "TRADEMARKS" shall mean Water$avr, W$.
2. APPOINTMENT OF ONDEO NALCO.
2.1 APPOINTMENT. Water$avr Global Solutions Inc. hereby appoints Ondeo
Nalco as a distributor of Chemicals in the Territory, and Ondeo Nalco hereby
accepts such appointment. This appointment shall be exclusive for the Exclusive
Markets and non-exclusive for all other markets. If at any time during this
Agreement, Ondeo Nalco does not make purchases that meet the Thresholds in the
18 month time frame outlined in Exhibit F, the exclusive appointment for the
Exclusive Markets shall convert to non-exclusive. Ondeo Nalco may delegate to or
subcontract its Affiliates to perform its obligations under this Agreement
without the consent of Water$avr Global Solutions Inc. As part of this
Appointment, Water$avr Global Solutions Inc. shall provide the Documentation and
all reasonable training and support necessary for Ondeo Nalco to distribute the
Chemicals and shall regularly update such Documentation and training services as
reasonably requested by Ondeo Nalco. Ondeo Nalco shall have no rights to sell
Chemicals to customers in the agricultural industries or customers operating
large retail businesses.
2.2 FORECASTS. Nothing in this Agreement shall be interpreted to impose
an obligation on Ondeo Nalco to make minimum sales or purchases.
2.3 INCENTIVE PAYMENT. If Ondeo Nalco meets the Threshold requirements,
Water$avr Global Solutions, Inc. shall pay Ondeo Nalco [____**_________________]
Dollars ($______) (the "Incentive Payment"). The Incentive Payment shall be made
no later than thirty (30) days after Ondeo Nalco meets the Threshold requirement
of having sold **__ million pounds of Chemicals during the first 18 months of
the Agreement. Interest shall accrue on the Incentive Payment at 1.5% per month
for each month it is overdue. Water$aver shall not offset any amounts which it
claims is owed by Ondeo Nalco against the Incentive Payment.
** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
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3. WATER$AVR GLOBAL SOLUTIONS INC. OBLIGATIONS
3.1 DELIVERY. Water$avr Global Solutions Inc. shall sell and deliver
the Chemicals to Ondeo Nalco at the destination specified by Ondeo Nalco or
Ondeo Nalco's Affiliate, as applicable, by no later than fourteen (14) days
after receipt of (1) a written purchase order of Ondeo Nalco or Ondeo Nalco's
Affiliate or (2) a Ondeo Nalco or Ondeo Nalco's Affiliate's electronically
transmitted purchase order. Delivery of the Products to Ondeo Nalco or Ondeo
Nalco's Affiliate shall be F.O.B. at the manufacturing site or distribution
center, as applicable. Time is of the essence of this Agreement.
3.2 LEGAL COMPLIANCE. Water$avr Global Solutions Inc. will: (i) comply
with all applicable international, national, state, regional and local laws and
regulation with regard to the Chemicals and its other activities under this
Agreement, (ii) obtain at its own expense all necessary permits, licenses,
registration and approvals needed in connection with the Products and Services,
(iii) not engage in any illegal or unethical practice in designing,
manufacturing or otherwise supplying the Products and Services.
3.3 LABELING. Water$avr Global Solutions Inc. shall label the Chemicals
sold to Ondeo Nalco hereunder in accordance with Ondeo Nalco's reasonable
labeling instructions.
3.4 WARRANTIES. In addition to those other warranties stated herein,
Water$avr Global Solutions Inc. represents and warrants as follows: (a) the
Chemicals shall be non-defective and shall meet the Specifications, (b) the
Chemicals will, upon delivery and for sixty (60) days thereafter, (i) be of
merchantable quality; (c) be fit for particular purpose for the Chemicals; and
(d) be produced and all services performed in compliance with applicable local,
state and federal law, rule, regulation, standard or code including, but not
limited to, environmental protection and occupational health and safety; and (e)
title to the Product is free from any lien or encumbrance of any nature. All
warranties shall survive inspection and acceptance of the Chemicals by Ondeo
Nalco or the End Customer and no express warranties may be modified except by
written agreement of the parties. If the Product does not conform to any of
these warranties, then, in addition to all other remedies available at law or in
equity, at Ondeo Nalco's option, Ondeo Nalco may return the Chemicals to
Flexible Solutions for full credit or reimbursement or require Water$avr Global
Solutions Inc. to repair or replace the defective Chemicals, at Water$avr Global
Solutions Inc.' expense. The foregoing warranties and obligations shall also
apply to the Chemicals supplied by Seller in such repair, replacement or
re-performance. All warranties and
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indemnities provided in this Agreement shall survive any subsequent transfer of
title to the Chemicals and shall be enforceable by the End Customer in every
circumstance.
4. ORDERS, SHIPMENT AND PAYMENT
4.1 ORDERS. To order Chemical must deliver a written purchase order
(each, an "ORDER").
4.2 PAYMENT. Ondeo Nalco will pay the Prices for the Chemicals. For
clarity, Ondeo Nalco shall have no obligation to pay for the Documentation and
any training.
4.3 SHIPMENT. Time is of the essence of this Agreement. Any additional
packaging not specified in the Specifications, required by Ondeo Nalco, shall be
at the expense of Ondeo Nalco.
4.4 CHANGES. Water$avr Global Solutions Inc. may modify the Prices
annually, but at no time may an increase in the Prices be greater than the
relative increase in manufacturing costs as specified in the Manufacturing
Agreement entered between Ondeo Nalco and Flexible Solutions on April 10, 2002.
4.5 TAXES. All amounts invoiced hereunder exclude any applicable taxes.
Ondeo Nalco agrees to pay, and to indemnify, and hold Water$avr Global Solutions
Inc. harmless from, any sales, use excise, import or export, value added or
similar tax or duty not based on Water$avr Global Solutions Inc.'s income, as
well as the collection or withholding thereof, including penalties and interest,
arising from payment of amounts due hereunder, and all government permit or
license fees and all customs and similar fees levied upon the performance of the
services performed hereunder and any costs associated with the collection of any
of the foregoing. If Ondeo Nalco is required under applicable law to withhold
taxes from any payment due under this Agreement, Ondeo Nalco will promptly
notify Water$avr Global Solutions Inc. in writing of such obligation and provide
Water$avr Global Solutions Inc. with official receipts evidencing the payment of
the amount withheld to the appropriate government authority.
4.6 LATE PAYMENTS. If Ondeo Nalco fails to make any payment when due,
Water$avr Global Solutions Inc. may, without prejudice to its other rights,
charge a late payment fee on the outstanding balance of one and one-half percent
per month or the maximum rate allowed by law, whichever is less. All payments
made by Ondeo Nalco must be made in U.S. dollars in immediately available funds.
5. INTELLECTUAL PROPERTY
5.1 LICENSE GRANTS.
(A) Water$avr Global Solutions Inc. grants to Ondeo Nalco the
paid-up right during the term of this Agreement to use the Trademarks in
conjunction with its sales and marketing activities hereunder. Ondeo Nalco shall
not, without Water$avr Global Solutions Inc.'s prior written consent, use any of
the Trademarks in Ondeo Nalco's business name or in any other manner that
suggests an affiliation between Ondeo Nalco and Water$avr Global Solutions Inc.
other than that of independent Ondeo Nalco and supplier or in any manner that
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may give rise to a combination xxxx. Water$avr Global Solutions Inc. makes no
representation or warranty as to the ownership, enforceability or validity of
the Trademarks. Ondeo Nalco acknowledges and agrees that it does not have, and
by virtue of this Agreement will not acquire, any right or title to, or goodwill
or interest in, any Trademark, and that all use of the Trademarks by Ondeo Nalco
will inure to the exclusive benefit of Water$avr Global Solutions Inc.. Ondeo
Nalco shall not challenge or take any action inconsistent with Water$avr Global
Solutions Inc.'s rights in the Trademarks and shall not do anything that may
adversely affect the validity or enforcement of the Trademarks. Ondeo Nalco will
not register or attempt to register any Trademark in any jurisdiction in the
world, without the prior written consent of Water$avr Global Solutions Inc..
Ondeo Nalco will not use any Trademark in any manner that would tend to allow it
to become generic or lose distinctiveness. Ondeo Nalco will comply with all
reasonable policies and guidelines (including quality control guidelines)
concerning use of the Trademarks that Water$avr Global Solutions Inc. may adopt
from time to time.
5.2 INDEMNIFICATION. Water$avr Global Solutions Inc. warrants that it
owns or has rights to the Water$avr Global Solutions Inc. Confidential
Information, Trademarks, Chemicals and Intellectual Property Rights relating to
the Chemicals and Improvements. Water$avr Global Solutions Inc. shall defend,
indemnify and hold harmless Ondeo Nalco, its agents, employees and
representatives from any and all claims, demands, lawsuits, charges, losses or
expenses that the Water$avr Global Solutions Inc. Confidential Information,
Trademarks or Intellectual Property Rights infringe the rights of any third
party. Water$avr Global Solutions Inc. warrants that no third party is
infringing its rights in its Confidential Information, Trademarks, Chemicals and
Intellectual Property Rights relating to the Chemicals and Improvements
6. DOCUMENTATION
6.1 DOCUMENTATION. Water$avr Global Solutions Inc. will provide Ondeo
Nalco with one master copy of each item of the Documentation, in both hard copy
and machine readable text. At Ondeo Nalco's sole expense, Ondeo Nalco will make
copies of the Documentation, in whole or in part, or incorporate the
Documentation into Ondeo Nalco's documentation but without any modification.
Ondeo Nalco will make only the number of copies of the Documentation, or Ondeo
Nalco's documentation, necessary for the purposes of this Agreement. Ondeo Nalco
shall not modify the Documentation without Water$avr Global Solutions Inc.'s
express written consent. Water$avr Global Solutions Inc. hereby grants to Ondeo
Nalco a limited, non-exclusive, nontransferable license, without right to
sublicense, during the Term to reproduce and distribute the Documentation to
End-Customers in the Territory solely in connection with the marketing and sale
of the Services and Web-Hosting Services.
7. CONFIDENTIALITY
7.1 CONFIDENTIAL INFORMATION. The parties acknowledge that in the
course of performance of their obligations under this Agreement, each party (the
"RECIPIENT") may obtain certain Confidential Information of the other party (the
"DISCLOSING PARTY.) All such Confidential Information shall be protected and
held in the strictest confidence and trust by the Recipient and not disclosed to
any third parties; provided however, that Recipient may disclose the Disclosing
Party's Confidential Information to employees, agents, consultants or
subcontractors who have executed non-disclosure agreements with terms at least
as restrictive as those set forth herein and
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who have a need to know such Confidential Information without the prior written
permission of the Disclosing Party. Further, Confidential Information shall only
be used for the purpose of performing obligations under this Agreement.
7.2 EXCLUSIONS. Notwithstanding the foregoing, Confidential Information
shall not include any information which the Recipient can prove is: (i)
available to the public other than by breach of this Agreement by the Recipient;
(ii) rightfully received by the Recipient from a third party without
confidential limitations; (iii) entirely and independently developed by
employees or subcontractors of the Recipient having no access to or without the
use of the Disclosing Party's Confidential Information; (iv) known to the
Recipient prior to its first receipt of same from the Disclosing Party; (v)
approved for release by written authorization of the Disclosing Party; or (vi)
disclosed by reason of legal, accounting or regulatory requirements beyond the
reasonable control of the Recipient or the Disclosing Party, provided however
that if Recipient is required to disclose Confidential Information, Recipient
shall promptly notify the Disclosing Party of the order or request and permit
the Disclosing Party (at its own expense) to seek an appropriate protective
order. Recipient shall reasonably cooperate with the Disclosing Party in seeking
such protective order.
7.3 PUBLICITY. Except as otherwise provided herein neither party shall
disseminate any publication, news release or other public announcement, written
or oral, whether in the public press, or stockholders' reports (if applicable),
or otherwise, which references this Agreement, or the relationship embodied
herein, without first securing the written permission of the other party, such
permission not to be unreasonably withheld.
8. FORCE MAJEURE
8.1 FORCE MAJEURE. The parties agree and acknowledge that there shall
be no liability arising out of this Agreement attributable to forces beyond
their reasonable control, including, without limitation, acts of God, riots,
acts of terrorism, revolutions, war, power outages, government acts, fires,
flood, epidemics, lockouts, strikes, or slowdowns.
9. INDEMNIFICATION
9.1 BY WATER$AVR GLOBAL SOLUTIONS INC.. Water$avr Global Solutions Inc.
hereby agrees to indemnify, defend and hold harmless Ondeo Nalco and its
officers, directors, employees and agents from and against any and all claims,
demands, causes of action, damages, costs, expenses, penalties, losses and
liabilities (whether under a theory of negligence, strict liability, contract or
otherwise) incurred by any such party (including, without limitation, reasonable
attorney's and other third party fees) arising out of or related to any: (a)
breach of representation or covenant stated herein, (b) its negligence or
willful actors or omissions and (c) any third party claim that use of the
Software or any Product by Ondeo Nalco or any End-Customer infringes any
Intellectual Property Right of such third party. Should any product become, or
in Water$avr Global Solutions Inc.'s opinion be likely to become, the subject of
any such suit or action for infringement or if Ondeo Nalco or any End-Customer
is enjoined from using any product, Water$avr Global Solutions Inc. may, at
Water$avr Global Solutions Inc.'s sole option and expense: (a) procure for Ondeo
Nalco the right to continue using such product; (b) replace or modify such
Product so that it becomes non-infringing; or (c) if Water$avr Global
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Solutions Inc. reasonably determines that (a) and (b) are not commercially
feasible, then Water$avr Global Solutions Inc. may terminate this Agreement with
no further obligation to Ondeo Nalco and refund any amounts prepaid by Ondeo
Nalco for Services not actually rendered.
9.2 BY ONDEO NALCO. Ondeo Nalco hereby agrees to indemnify, defend and
hold harmless Water$avr Global Solutions Inc. and its officers, directors,
employees and agents from and against any and all claims, demands, causes of
action, damages, costs, expenses, penalties, losses and liabilities (whether
under a theory of negligence, strict liability, contract or otherwise) incurred
by any such party (including without limitation, reasonable attorneys' and other
third party fees) arising out of or relating to: (i) any breach by Ondeo Nalco
of its obligations or responsibilities under this Agreement; (ii) any claim of
any End-Customer or any other third party arising from or related to the use,
operation or performance of the System or any component thereof; or (iii) any
claim by any third party arising out of or related to any of Ondeo Nalco's
dealings with any End-Customer.
9.3 PROCEDURES. For purposes of this Section 10, the party obligated to
provide the indemnity described in this Section 10 will be referred to as the
"INDEMNITOR" and the party receiving the benefit of such indemnity will be
referred to as the "INDEMNITEE." The Indemnitor's obligations set forth in this
Section 10 are conditioned on (i) the Indemnitor's prompt written notice of any
indemnified claim; (ii) the Indemnitee permitting the Indemnitor to assume and
control the defense of the action, with counsel chosen by the Indemnitor (who
must be reasonably acceptable to the Indemnitee); and (iii) Indemnitor not
entering into any settlement or compromise that imposes liability on or affects
the rights of Indemnitee of any such claim without the Indemnitee's prior
written approval, not to be unreasonably withheld. Notwithstanding the
Indemnitor's obligations to handle and defend all claims as set forth above,
Indemnitee may, at its sole option, take whatever action it deems reasonable and
appropriate in the handling, defense, or settlement of any claim, at
Indemnitor's expense. However, the Indemnitee must notify the Indemnitor in
writing of any proposed settlement of a claim.
10. INSURANCE. Upon execution of this Agreement, Water$avr Global
Solutions Inc. shall provide to Ondeo Nalco copies of insurance certificates for
the policy coverage and insurance limits set forth below:
Coverage Policy Limit
-------- ------------
Workers' Compensation statutory requirements
Employer's Liability to the extent included under
Workers' Comp policy
Comprehensive General Liability
- bodily injury $4 million each occurrence
- property damage $4 million each occurrence
Property Damage $4 million each occurrence
Comp Auto Liability
- Bodily injury $1 million per person/$1 million
each occurrence
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- Property damage $1 million each occurrence
Product Liability $2 million each occurrence
Umbrella Policy $2 million aggregate
The Comprehensive General Liability, Product Liability and Umbrella Policy
policies of insurance evidenced by the certificates described above shall
contain a provision or endorsement stating that Ondeo Nalco shall be named as
additional insured. Each certificate of insurance provided hereunder shall
include a provision for ten (10) days prior written notice to Ondeo Nalco in
advance of the cancellation thereof.
11. LIMITATION OF LIABILITY. IN NO EVENT WILL EITHER PARTY BE LIABLE TO
THE OTHER OR ANY THIRD PARTY FOR ANY LOST PROFITS, LOSS OF DATA, EQUIPMENT
DOWNTIME, OR ANY OTHER SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR INCIDENTAL
DAMAGES, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, ARISING OUT OF OR
RELATED TO THIS AGREEMENT, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.
TERM AND TERMINATION
12.1 TERM. The term of this Agreement will end on the fifth anniversary
of the Effective Date, unless Ondeo Nalco notifies Water$avr Global Solutions
Inc. that it wishes to extend the Term (the "TERM").
12.2 TERMINATION. This Agreement may be terminated by either party
effective immediately upon written notice to the other party if the other party:
(i) breaches any provision of this Agreement or and fails to cure such breach to
the satisfaction of the terminating party within thirty (30) days after notice
thereof from the terminating party; (ii) files a voluntary petition under any
bankruptcy, insolvency or similar law, has an involuntary petition under any
such law filed against it which is not dismissed within forty-five (45) days, or
has a receiver, custodian or similar authority appointed to manage or dispose of
its assets; (iii) becomes insolvent or is generally not paying its debts as such
debts become due; or (iv) ceases to function as a going concern or to conduct
its operations in the normal course of business.
12.3 ONDEO NALCO TERMINATION RIGHT. Ondeo Nalco may terminate this
Agreement at any time upon six (6) months written notice to Water$avr Global
Solutions Inc..
12.4 SURVIVAL. Notwithstanding the expiration or termination of this
Agreement, the representations and warranties, indemnification and
confidentiality obligations shall survive and continue.
12.5 SHARE OPTION AGREEMENT. Upon expiration and/or termination of this
agreement, all unexercised shares rights under the Share Option Agreement
(Exhibit D) shall become null and void.
13. GENERAL PROVISIONS
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13.1 RELATIONSHIP OF THE PARTIES. Water$avr Global Solutions Inc. is an
independent contractor and is not an agent, joint venturer, partner or
employee of Ondeo Nalco. The detailed manner and method of performing
the Services are under the sole control of Water$avr Global Solutions
Inc.
13.2 CONFLICT. Any purchase order or other documents issued by Ondeo
Nalco is for administrative convenience only. In the event any such
purchase order or other document issued by Ondeo Nalco is in addition
to or conflicts with any term or provision of this Agreement, this
Agreement shall prevail and the additional or conflicting term is
hereby rejected.
13.3 SEVERABILITY. If any provision of this Agreement is found to be
invalid, unlawful or unenforceable by a court of competent
jurisdiction, such invalid term will be severed from the remaining
portion of this Agreement, which will continue to be valid and
enforceable to the fullest extent permitted by law.
13.4 NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed
given when delivered personally, transmitted via facsimile transmission
(fax) with verification of delivery or five (5) days after being
deposited in the United States registered mail, postage prepaid and
addressed as follows, or to such other address as each party may
designate in writing:
If to WATER$AVR GLOBAL SOLUTIONS INC.:
Water$avr Global Solutions Inc.
X.X. Xxx 000
Xxxxxxxxxx, XX 00000
ATTN: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
If to ONDEO NALCO:
ONDEO NALCO COMPANY
Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
-----------------------
Attention: General Counsel
Facsimile:000-000-0000
13.5 GOVERNING LAW. This Agreement will be governed by and construed solely and
exclusively under the laws of the State of Illinois, without reference to
conflict of law principles. Both parties agree to submit to exclusive
jurisdiction in the State of Illinois, and further agree that any and all
disputes arising under or related to this Agreement shall be brought and
resolved solely and exclusively in the State of Illinois.
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13.6 ENTIRE AGREEMENT. This Agreement and the Exhibit contain the entire
agreement and understanding between the parties with respect to the subject
matter hereof and merges and supersedes all prior or contemporaneous agreements,
understandings, and representations. No addition or modification to this
Agreement is valid unless made in writing and signed by both parties hereto.
13.7 HEADINGS AND REFERENCES. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to Sections and
Exhibits will, unless otherwise provided, refer to Sections hereof and Exhibits
hereto, all of which are incorporated herein by this reference.
13.8 AUTHORITY. The parties executing this Agreement on behalf of Water$avr
Global Solutions Inc. and Ondeo Nalco warrant that they have the authority to
enter into this Agreement and to bind their respective company to all of the
terms and conditions of this Agreement.
13.9 WAIVER. The failure of either party to require performance by the other
party of any provision hereof will not affect the full right to require such
performance at any time thereafter; nor will the waiver by either party of a
breach of any provision hereof be taken or held to be a waiver of the provision
itself.
13.10 NON-EXCLUSIVITY. Except as otherwise indicated herein, Ondeo Nalco
acknowledges and agrees that Water$avr Global Solutions Inc. has the right to,
may be and could be performing services for businesses other than Ondeo Nalco
including, without limitation, other companies engaged in businesses or with
applications similar to that of Ondeo Nalco. Except as otherwise prohibited
herein, this Agreement shall not prohibit Water$avr Global Solutions Inc. from
performing services for such other businesses wherever located or related to
such applications or from utilizing any Water$avr Global Solutions Inc.
technology or Intellectual Property Rights for such purpose.
13.11 ASSIGNMENT. Neither party shall assign or delegate this Agreement, in
whole or in part, without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed; provided, however, that
Water$avr Global Solutions Inc. may delegate certain of its obligations
hereunder to independent subcontractors; provided, further, however that either
party may assign this Agreement to a parent, subsidiary, or
successor-in-interest to its business (whether by merger, acquisition,
consolidation, or sale of substantially all of the assets of such party) if such
assignee assumes in writing all of the obligations of the assignor hereunder.
Any attempted assignment or delegation in violation of the preceding sentence
will be null and void. Subject to the foregoing, this Agreement shall be binding
on and inure to the benefit of the parties and their respective successors and
permitted assigns.
13.12 INJUNCTIVE RELIEF. Notwithstanding any other provision of this Agreement,
a breach of Section 7.1 or 9 will cause irreparable harm to the non-breaching
party. Therefore, any such attempted or actual breach shall entitle the
non-breaching party to seek, wherever it deems appropriate, injunctive relief in
addition to all other remedies available.
13.13 BOARD APPROVAL CONDITION. This Agreement is conditioned upon the approval
of the Board of Directors of Flexible Solutions being obtained on or before
September 1, 2002. In the
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event that such approval is not obtained by that date, and written notice of
such approval provided to Ondeo Nalco, this Agreement shall be considered null
and void.
GUARANTEE
In consideration for Ondeo Nalco entering into this Agreement, Flexible
Solutions hereby absolutely and unconditionally guarantees the obligations and
commitments of Water$avr Global Solutions, Inc. to be performed in strict
accordance with the terms stated herein. Flexible Solutions waives any notice of
the acceptance of this guaranty and the incurring of obligations, and waives
presentment, demand, protest or notice of dishonor, nonpayment or other default.
There shall be no requirement for, and Flexible Solutions waives any
requirement, for Ondeo Nalco to make any demand on or pursue or exhaust any
rights against Water$avr Global Solutions, Inc.
[SIGNATURE PAGE TO FOLLOW]
12
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the Effective Date.
FLEXIBLE SOLUTIONS INC. ONDEO NALCO COMPANY
By: By:
------------------------------------ ---------------------------------
Name: Name:
---------------------------------- --------------------------------
Title: Title:
--------------------------------- -------------------------------
WATER$AVR GLOBAL SOLUTIONS, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT A
---------
Chemicals
Initial Product Specifications and Packaging (subject to review based on
subsequent manufactured batches; provided that any changes shall be agreed in
writing)
RAW MATERIALS:
Hydrated Lime (90% by weight)
NSF 60 or Food Grade
Minimum CA (OH)2 content of 95%
Minimum % Passing through a 200 mesh screen of 90%
Cetyl Alcohol (5% by weight)
Food Grade or Pharmaceutical Grade
Minimum C-16 content of 90%
Stearyl Alcohol (5% by weight)
Food Grade or Pharmaceutical Grade
Minimum C-18 content of 90%
PACKAGING:
50 pound Kraft paper / HDPE multi wall bags to be palletized at 40 bags per
pallet (2,000 lbs. per pallet)
Polypropylene Super Sacks to contain 2,000 lbs. each.
FINISHED PRODUCT:
Particle Size Minimum of 80% pass through a 100 mesh screen using a Ro-Tap
Machine
Friability Particles not passing the 100 mesh screen should be
pressed/rolled with 1" diameter steel roller to
ensure remaining particles are friable
EXHIBIT B
---------
Exclusive Markets
Exclusive Markets assigned to Ondeo Nalco:
Municipal Market in Canada and the United States of America
Mineral & Mining Industries in all countries except:
India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Mauritius,
Malaysia & Singapore
Non-Exclusive Markets Assigned to Ondeo Nalco include all markets in all
countries with the exception of the following countries:
India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Mauritius,
Malaysia & Singapore
In the event that Water$avr Global Solutions Inc. negotiates an exclusive
distributorship with another distributor in a non-exclusive market and/or
country, Water$aver Global Solutions, Inc. shall provide Ondeo Nalco notice of
such pending exclusive distributorship and permit Ondeo Nalco a thirty day right
to accept the exclusive arrangement on the same terms and conditions, before
Water$aver Global Solutions, Inc. enters into the agreement with the third
party. If Water$aver Global Solutions, Inc. enters into an exclusive
distributorship with a third party for the municipal markets outside of North
America in all or most of the material first-world countries in Europe and Asia,
then the Thresholds shall be reduced by 25% for purposes of this Agreement and
the Share Option Agreement. If Water$aver Global Solutions, Inc. enters into an
exclusive distributorship for any smaller municipal territory outside of North
America, for each such agreement the Thresholds shall be reduced by 5%, up to a
total reduction of 25%, for purposes of this Agreement and the Share Option
Agreement.
EXHIBIT C
---------
Prices
Water$avr all packages $**/# F.O.B. Plant
** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
EXHIBIT D
---------
Share Option Agreement
1. Upon the Effective Date of the Distribution Agreement - Ondeo Nalco has
the option to purchase 1,000,000 shares of FXSO common stock at
$4.25/share. To exercise this option , Ondeo Nalco has to meet the
following covenants:
a. The Distributorship Agreement has not been terminated for reason
of a default by Ondeo Nalco.
b. If the price of FXSO stock reaches $6.75/share, and closes at or
above $6.75/share for five consecutive business days, Ondeo Nalco
must exercise this option or forfeit rights to option within 60
calendar days of the fifth consecutive day specified above.
2. If the threshold sales levels specified in Exhibit F, are attained by
Ondeo Nalco during the initial term covered by this agreement, then an
option for 1,000,000 shares of FXSO will be granted to Ondeo Nalco with
a strike price of $5.50/share. To exercise this option, Ondeo Nalco has
to meet the following covenants:
a. The Distributorship Agreement has not been terminated for reason
for a default by Ondeo Nalco.
b. If the share price of FXSO closes above $8.00/share for five
consecutive business days, then Ondeo Nalco must exercise this
option within 60 calendar days or forfeit its option. If the price
of FXSO shares is already above $8.00/share for five consecutive
days at the time this option ripens, Ondeo Nalco shall have 90
calendar days from the time the option ripens to exercise.
The parties will promptly, and in good faith after the execution of this
Agreement prepare a written agreement to reflect the terms and conditions of
this option, and if such written option agreement is not executed on or before
October 1, 2002, Ondeo Nalco shall have the right to terminate this
Distributorship Agreement.
EXHIBIT E
---------
Specifications
FINISHED PRODUCT:
Particle Size Minimum of 80% pass through a 100 mesh screen using a
Ro-Tap Machine
Friability Particles not passing the 100 mesh screen should be
pressed/rolled with 1" diameter steel roller to
ensure remaining particles are friable
The Products shall be fit for their intended purpose.
EXHIBIT F
---------
Threshold Amounts
The following threshold pounds are required to maintain this agreement as
exclusive:
(Time frame starting with the effective date of this agreement)
Time Frame Period Amount Cumulative Total Amount
6 Months **_______# **_______#
12 Months **_______# **_______#
18 Months **_______# **_______#
18 - 30 Months **_______# **_______#
31 Months - 42 Months **_______# **_______#
43 Months - 54 Months **_______# **_______#
55 Months - 60 Months **_______# **_______#
** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
