WATERGEEKS LABORATORIES
INC.
- AND -
FRESHWATER TECHNOLOGIES
INC.
EXCLUSIVE WORLDWIDE DISTRIBUTION AGREEMENT
October 9, 2008
EXCLUSIVE WORLDWIDE DISTRIBUTION
AGREEMENT
THIS EXCLUSIVE WORLDWIDE
DISTRIBUTION AGREEMENT (the “ Agreement ”) is made
this 9th day of October, 2008.
B E T W E E N:
WATERGEEKS LABORATORIES INC., a
company duly incorporated under the laws of Canada and having its
head office located at 300-2130
Leckie Place, Kelowna, British
Columbia.
- and –
FRESHWATER TECHNOLOGIES INC., a
company duly incorporated under the laws of the State of Nevada,
and having its head office located at 30 Denver Crescent, Suite
200, Toronto, Ontario.
RECITALS:
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1.
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Company is the owner or has an
interest in Patents, Products, Names and Marks as described herein
and has the right to appoint an exclusive distributor of its
Products;
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2.
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Company wishes to appoint and
Distributor wishes to accept the appointment of the exclusive,
worldwide right to distribute and sell the Products, and the rights
to otherwise Use the Products, Names and Marks to accomplish this
Purpose, subject to the terms of this Agreement and upon the
satisfaction of certain conditions by Company or the waiver of such
conditions by Distributor.
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NOW THEREFORE
, in consideration of the mutual
covenants set forth in this Agreement and the exchange of other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as
follows:
ARTICLE 1 DEFINITIONS AND
INTERPRETATION
Wherever used in this Agreement,
unless there is something in the subject matter or context
inconsistent therewith, and unless otherwise defined in this
Agreement, the following terms shall have the following
meanings:
" Affiliate " means any
business organization, present or future that controls, is
controlled by, or is under common control with a Party. "Control"
for this definition is defined as directly or indirectly holding or
controlling at least a majority of voting power or operating
control (at least fifty percent (50%) of the voting stock or other
ownership interest of the corporation or entity), whether through
ownership of voting securities, by contract or
otherwise;
“ Applicable Laws
” means the laws, regulations, rules, notices, and other
legislative, executive or judicial decisions or pronouncements
binding on either Party or in relation to the subject matter of
this Agreement;
" Business Day " means a day,
other than a Saturday or Sunday, on which the principal commercial
banks located in the City of Toronto, Canada are open for business
during normal banking hours;
“ FOB Destination
” stands for "Freight on Board" and means that for an order
submitted to Company by Distributor, Company will pay shipping
costs and remain responsible for the goods, including
insurance
and replacement of lost or damaged
Products, until Distributor or other party designated by
Distributor takes possession of the Products;
“ Closing ” means
the closing of the Agreement, in accordance with Article 6
herein;
“ Closing Date ”
means, subject to Articles 7 and 8 herein, January 4th or such
earlier or later date as agreed to in writing by the
Parties;
“ Company ” means
Watergeeks Laboratories Inc.;
“ Defaulting Party
” has the meaning ascribed to it in Section 10.2
herein;
" Dispute " has the meaning
ascribed to it in Section 9.1(a);
“ Distributor ”
means Freshwater Technologies Inc.;
“ Due Diligence Period
” means a period commencing on the Effective Date and ending
on January 3, 2009, unless such period is reduced at the sole
election of Distributor following its written notification of the
change in the Due Diligence Period to Company;
“ Effective Date
” means the date of this Agreement first stated
above;
“ Infringement Claim
” means any suit, claim, or proceeding brought against
Distributor alleging that Distributor’s use of the Patents
constitutes an infringement of any third party’s Intellectual
Property Rights;
“ Intellectual Property
Rights ” means any and all rights in any invention,
discovery, improvement, utility model, copyrightable work,
industrial design or mask work, algorithm, data structure, trade
secrets or know-how, or any idea having commercial value and
includes (i) any trademark, trade dress, trade name, domain name,
or other marks that serve to identify and distinguish goods or
services as coming from, or falling under the control of, a single
source; and (ii) all rights of whatsoever nature in computer
software and data, all intangible rights or privileges of a nature
similar to any of the foregoing in every case in any part of the
world and whether or not registered, and all rights in any
applications and granted registrations for any of the foregoing
rights.
“ Marks ” means
all trademarks worldwide registered in the name of Company or
licensed to Company;
“ Names ” means
all trade names worldwide used by Company;
“ Parties ” means
collectively, Company and Distributor;
“ Party ” means
individually, Company or Distributor;
" Patents " means all classes
or types of patents and patent applications (including all
divisions, continuations, continuations-in-part, reissues,
renewals, and extensions thereof and any counterparts claiming
priority therefrom), inventions, methods, processes and discoveries
that may be patentable, and utility models, patents of
importation/confirmations, and certificates of invention and the
like and statutory rights for the aforementioned of all countries
of the world that Company owns or holds an interest in as of the
Effective Date or thereafter;
" Person " means any natural
person, sole proprietorship, partnership, corporation, trust, joint
venture, any governmental authority or any incorporated or
unincorporated entity or association of any nature;
" Products " means all
products manufactured, offered or controlled by the Company or
those products for which the Company has the right to manufacture,
offer or control, on or after the Effective Date including but not
limited to the Products specified in Schedule “A”
hereto;
“ Purpose ” means
the exclusive right to offer to sell, sell, export or otherwise
disposing of Products in the Licensed Territory for the
Term;
“ Tax ” means all
taxes imposed by the relevant tax authorities in accordance with
Applicable Laws;
“ Territory ”
means every region and territory worldwide;
" Term " has the meaning
ascribed to it in Section 10.1 herein;
“ Terminating Party
” has the meaning ascribed to it in Section 10.2 herein;
and
" Use " means any form of
practice or utilization of Products, Names and Marks, other than
the distribution or sale of the Products.
“ Year ” means
any twelve-month period ending on each anniversary of the Closing
Date for the duration of the Term
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1.2
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Rules of
Interpretation.
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In this Agreement:
(a) When
calculating the period of time within which or following which any
act is to be done or step taken, the date which is the reference
day in calculating such period will be excluded. If the last day of
such period is not a Business Day, the period will end on the next
Business Day;
(b) A
reference to any Applicable Laws or to any legislation or to any
provision of Applicable Laws or of any legislation includes a
reference to such Applicable Laws or legislation as amended or
modified from time to time;
(c) The
division of this Agreement into separate articles, sections,
subsections and schedules, the provision of a table of contents,
the Agreement’s title and the insertion of headings are for
convenience of reference only and will not affect the construction
or interpretation of this Agreement;
(d) Any
reference to any government authority or department includes such
authority or department at federal, state, provincial, municipal
and other levels;
(e) Any
references in this Agreement to government ministries, bureaux,
departments, commissions, agencies, etc. shall include all
successor entities thereto;
(f) In
this Agreement, the masculine form includes the feminine form and
the singular form includes the plural form, and vice
versa;
(g) Any
reference to any Party to this Agreement or to any other party to
any contract, agreement or document includes a reference to that
party’s successors and permitted assigns;
(h) Unless
specified otherwise, all statements of or references to dollar
amounts in this Agreement refer to Canadian dollars;
(i) Words
or abbreviations which have well known or trade meanings are used
herein in accordance with their recognized meanings;
and,
(j) The
words “includes” or “including” mean
“includes without limitation” and “including
without limitation” respectively.
The following Schedules annexed to
this Agreement are integral to, and form part of, this
Agreement:
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Schedule A
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Description of the
Products
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Schedule B
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[Blank]
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Schedule C
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[Blank]
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Schedule D
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Quotas
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Schedule E
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Prices
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ARTICLE 2
DISTRIBUTOR
Subject to the terms and conditions
of this Agreement, Company hereby grants to Distributor the
exclusive right to offer to sell, sell, export or otherwise
disposing of Products in the Licensed Territory for the Term (the
“Purpose”) and the non-exclusive right to Use the
Patents, Products, Names and Marks in the Licensed Territory for
the Term in relation to carrying out the Purpose.
Distributor may not sublicense to
any Person for the Term, including Company, to carry out the
Purpose except in accordance with the terms of this
Agreement.
Subject to the terms and conditions
of this Agreement, Distributor agrees:
(a) to
purchase Products in such minimum quantities as set out in Schedule
“D” hereto per twelve-month period ending on each
anniversary of the Closing Date for the duration of the Term
(“Year”).
(b) that
during any Year, it may vary the quantity of units per type of
Product that it purchases from Company if the total dollar amount
spent by Distributor for the purchase of Products from Company in
that Year equals the dollar amount that Distributor would have
spent had it purchased the quantity of units per type of Product
set out in Schedule “D” hereto.
Subject to the terms and conditions
of this Agreement, Company agrees that in satisfaction of each
order for Products from Distributor:
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(a)
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Company shall deliver all Products
to Distributor promptly and FOB Destination;
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(b) Company
shall deliver to Distributor only Products that meet or exceed the
Health and Safety, bottling and labelling laws, regulations and
standards of all jurisdictions of North America.
(c) Company
shall deliver to Distributor only Products that are of first class
commercial quality and manufactured strictly in accordance with the
Products’ specifications.
ARTICLE 3 PAYMENTS
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3.1
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Payment and Delivery of
Shares.
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(a) Subject
to the terms and conditions of this Agreement, the Parties agree
that Distributor shall pay Company Thirty Million (30,000,000)
restricted common shares (the “Shares”) upon Closing of
this Agreement.
(b) The
Distributor shall issue the shares from Treasury within seven days
of the Effective Date. The shares will be held in escrow as a
condition of the issuance of the Shares and released according to
the terms and conditions of an escrow agreement governing the
escrow and delivery or cancellation of the Shares to be agreed to
and executed by the Parties.
(c) Upon
the delivery of notice of satisfaction of the Due Diligence review
from Distributor to Company, Distributor shall pay the Shares to
Company.
Company acknowledges and agrees that
it is responsible for all Taxes imposed on it in respect of the
signing or performance of this Agreement and the receipt of the
Shares.
Company acknowledges and agrees that
it has obtained legal advice from its own advisors with respect to
the potential tax impact on it of in respect of the signing or
performance of this Agreement and the receipt of the
Shares.
ARTICLE 4 REPRESENTATIONS AND
WARRANTIES
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4.1
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Company Representations and
Warranties.
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Company represents, warrants and
covenants as follows and acknowledges and agrees that the
representations and warranties herein shall survive for the a
period of one year from the Effective Date hereof:
(a) Company
is the lawful owner of all right and title to and interest in the
Patents, free and clear (except security granted to the lenders of
Company in its ordinary course of business) of all rights,
interests in, mortgages, liens, charges, security interests,
adverse claims, options, pledges, encumbrances and demands
whatsoever in favour of any Person whomsoever including, without
limiting the generality of the foregoing, any current or former
employee or contractor of Company, or any lender to
Company;
(b) Company
has all rights necessary to appoint the Distributor in accordance
with the terms and conditions of this Agreement;
(c) the
Patents are in full force and effect and have not been used or
enforced or failed to be used or enforced in a manner that would
reasonably result in abandonment, cancellation or unenforceability;
and,
(d) Company
has obtained or completed all necessary approvals and registrations
to export the Patents hereunder.
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4.2
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Distributor
Acknowledgements
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Distributor acknowledges and agrees
as follows:
(a) that
it may describe itself as a Distributor of the Company’s
products for the duration of the Term of this Agreement but that it
shall not describe or characterize itself or enter into any
transaction as an agent for the Company;
(b) it
shall use its commercially reasonable best efforts to sell the
Products for the duration of the Term of this Agreement;
(c)