Exhibit 10.4
 
MANUFACTURING AGREEMENT

 
This Manufacturing Agreement (“Agreement”) dated 4th of April, 2011, is entered
into by Innovative Wireless Technologies, Inc., a corporation organized and
existing under the laws of the State of Delaware, USA (“IWT”), and CJSC
“Innovation Weapons Technologies”, a closed joint-stock corporation organized
and existing under the laws of Russian Federation (“Manufacturer”) and, each of
whom is individually referred to as a “Party” and both of whom are sometimes
collectively referred to as “Parties.”

 
RECITALS

 
A.
IWT is engaged in the business of inventing, engineering, and marketing
innovative products and technologies, including the products described herein.
Manufacturer has experience and expertise in manufacture of such products or its
parts.

 
B.
Upon and subject to the terms and conditions of this Agreement, IWT has retained
Manufacturer’s services to provide production of various products or its parts
(the “Product”) described in appendix I.

 
C. 
IWT grants the right to exercise intellectual property in its possession for
manufacturing purposes to the Manufacturer. No Product or its parts shall be
produced by the Manufacturer for resale or distribution purposes outside of the
Russian Federation other than by IWT. In exchange, Manufacturer shall
manufacture the Product or its parts exclusively for IWT to be sold and
distributed by IWT throughout the world, shall not disclose any information on
inventions, improvements, discoveries, designs, data, concepts, ideas,
processes, methods, techniques, know-how, and information, including schematics,
and engineering drawings respecting the Products conceived, made or produced by
Manufacturer during the course of performing design, engineering, fabrication or
manufacturing services under this Agreement, or made or produced as the result
of the joint efforts of Manufacturer and IWT pursuant to this Agreement to third
parties.

 
AGREEMENT

 
Now therefore, in consideration of the mutual promises and covenants made herein
by each Party to the other, the Parties hereby agree as follows:
 
ARTICLE I

 
1.1
DESIGN AND DEVELOPMENT — REVIEW AND CHANGES. IWT and Manufacturer will hold
ongoing design reviews in accordance with its standard development operating
procedures, via email. Changes in Project Specifications will be by mutual
consent. Manufacturer agrees to use its best efforts to accommodate IWT on such
changes in scope and/or specifications as may be reasonably requested by IWT
with appropriate changes (as pre-approved by IWT) in the purchase orders.

 
 
1

--------------------------------------------------------------------------------

 
 
1.2 
VERIFICATION TESTING.  For all Products or its parts specification, Manufacturer
shall draft appropriate verification protocol and perform the testing in
accordance with that protocol. IWT shall author the system verification protocol
and IWT shall accomplish verification and validation of the Product
(“Verification Testing”). Third party (independent qualified testing facility)
testing, in addition to related test materials, as shall be approved in advance
by IWT, shall be paid by IWT, and shall be an agent of IWT. Test materials shall
be the exclusive property of IWT. IWT will collect and/or prepare for
Manufacturer data including vibration, shock, temperature, etc. of the actual
environment where the product will be used. IWT will also perform operation
verification during and at the end of development, operation verification on the
actual test drive (field test), life and durability test, and the final
acceptance tests.

 
1.3 
REJECTION OF WORK.  Should IWT determine that any verification or testing of
Manufacturer’s work does not conform to applicable specifications, then IWT
shall (i) notify Manufacturer of such problems; and (ii) permit Manufacturer a
reasonable opportunity to make any necessary corrections. Manufacturer shall
resubmit to IWT revised testing or other work corrected to meet the relevant
specifications within thirty (30) days of notice to Manufacturer. IWT shall have
thirty (30) days after such resubmittal within which to notify Manufacturer in
writing of IWT’s approval of the corrected work or of IWT’s discovery of any
additional discrepancies between that work and the relevant specifications. If
discrepancies still exist, IWT and Manufacturer shall decide the appropriate
action to be taken by mutual Agreement, in advance.

 
1.4 
CONFIDENTIAL INFORMATION.  “Confidential Information” means, without limitation,
all information pertaining to the business of IWT and Manufacturer including,
but not limited to, the Product invention, ideas, trade secrets, know-how,
research and development, training, software, programs, hardware configuration
information, price lists, data, manuals, handbooks, sponsors, investors,
business strategies and plans, marketing, sales records, drawings,
specifications, designs, materials, parts lists, customer lists, consumer
information, suppliers, contract terms, test criteria, vendor lists, financial
information, intellectual property, and all other information or data of any
kind or character relating to the business of IWT or Manufacturer, including but
not limited to, any invention, writing, idea, discovery, or improvement made or
conceived by IWT or Manufacturer directly or indirectly as a result of
performing work for IWT pursuant to this Agreement, whether or not reduced to
writing, and which is not generally available to the public. However,
Confidential Information shall not include any of the foregoing which has become
publicly known and made generally available through no wrongful act of
Manufacturer or any third party. Prior to execution of this Agreement; the
parties have executed the Mutual Nondisclosure Agreement attached hereto as
Appendix I. In the event there is a conflict between the terms of the Mutual
Nondisclosure Agreement and this Agreement, this Agreement shall govern.

 
1.5 
TECHNOLOGY OWNERSHIP.  The parties agree as follows:

 
 
2

--------------------------------------------------------------------------------

 
 
 
(a)
IWT shall own all “Project Technology” which shall be defined as: all
inventions, improvements, discoveries, designs, data, concepts, ideas,
processes, methods, techniques, know-how, and information, including schematics,
and engineering drawings respecting the Products conceived, made or produced by
Manufacturer during the course of performing design, engineering, fabrication or
manufacturing services under this Agreement, or made or produced as the result
of the joint efforts of Manufacturer and IWT pursuant to this Agreement.  The
term “Project Technology” shall exclude any of Manufacturer’s or IWT’s
proprietary processes used in the manufacture of the Product.

 
 
(b)  
Manufacturer shall own all of its “Technology and Manufacturing Processes” which
shall be defined as follows:  its proprietary electronic technology and
processes and know-how and assembly and manufacturing processes and technology
and know-how developed or acquired by Manufacturer prior to the exercise of this
Agreement.

 
 
 
(c) 
Nothing in this Agreement shall be deemed to prevent Manufacturer from engaging
in the design, engineering, fabrication or manufacture of products embodying or
using Manufacturer’s Technology and Manufacturing Processes; provided that such
products do not embody or use any of IWT’s confidential information or Project
Technology. Manufacturer shall not produce, or allow to be produced Product with
the scope of IWT’s Core Technology, without IWT’s prior approval, and if
approved, the payment of a patent fee (royalty fee) shall be payable to IWT, as
defined by IWT. Manufacturer shall put the production of the Product out to
subcontractors as needed, as pre-approved by IWT.

 
1.6 
PRIORITY AMONG CONTRACT DOCUMENTS.  The whole of this Agreement and Appendixes
attached hereto are to be taken together so as to give effect to very part
thereof to the maximum extent practicable, with each document helping to
interpret the other.  In the event of any conflict or inconsistency between the
terms of this Agreement and the terms of any other document, the terms of this
Agreement shall prevail.

 
ARTICLE 2

MANUFACTURING OBLIGATIONS

 
2.1 
MANUFACTURING.  During the term of this Agreement, Manufacturer shall timely
manufacture the Product or its parts in compliance with the Product
Specifications described in Appendix I (the “Product”).  Both during the term
and following termination of this Agreement, in perpetuity, Manufacturer shall
not supply the Product (or any prototype thereof), or Product Specifications, to
any third party whatsoever.

 
2.2 
PURCHASE ORDERS. Purchase orders shall be described separately in appendix III
(Purchase Order)

 
2.3 
SHIPMENT.  The delivery of each Purchase Order shall be within the time
specified in the Purchase Order.  All deliveries to IWT are F.O.B. in Moscow,
Russian Federation, at point of manufacture using carriers and billing account
numbers as specified in writing by IWT. All risk of loss after shipment by
Manufacturer is borne by IWT. Manufacturer agrees to properly label all shipping
documents with the U.S. Classification Codes as supplied by IWT to expedite
processing through U.S. Customs. If Manufacturer fails to properly note said
U.S. Classification Codes, resulting in import taxes due by IWT, Manufacturer
shall be responsible to reimburse IWT for all such taxes, due and payable upon
evidence shown to Manufacturer by IWT.

 
 
3

--------------------------------------------------------------------------------

 
 
2.4 
PURCHASE ORDER CANCELLATION.  IWT shall not cancel a purchase order once any
down payment has been made to the Manufacturer.

 
2.5 
PRICING.  IWT shall pay for production of the Product as defined in the Payment
for Products and Services as described in Appendix III (Product Order).

 
2.6
  PAYMENT.  IWT shall pay Manufacturer in accordance with attached Payment for
Products and Services as described in Appendix III (Product Order).

 
2.7
WARRANTY.  Manufacturer warrants and represents that it shall strictly adhere to
the Product Specifications set forth in Appendix I attached hereto and by
reference made a part hereof. Manufacturer warrants and represents that it has
the requisite and necessary experience, all necessary licenses and permits,
equipment, facilities and personnel to properly perform the manufacturing
services in accordance with the Product Specifications, and further warrants and
represents that it is not a party to any other Agreement that would in any way
conflict with, or restrict, its ability to perform the manufacturing services.
During the term of the warranty. Manufacturer assumes full responsibility for
the repair or replacement of units in the field whereby greater than 10% of
units exhibit one specific failure mechanism (“Catastrophic Failure”).

 
2.8 
DEFECTIVE PRODUCTS.  Manufacturer warrants for a period of 18 (eighteen) months
from shipment that all Products sold to IWT shall be free from any defects in
Manufacturer materials, and workmanship, and shall conform to Product
Specifications. Warranty repair services shall be provided at Manufacturer’s
manufacturing facilities in Moscow, free of charge, F.O.B. Manufacturer shall
within two weeks of receipt of returned products provide a report to IWT
detailing those products accepted under warranty and any that are not accepted
under warranty due to physical damage or improper use. Manufacturer will use its
best efforts to repair defective products as quickly as possible with
“turnaround time” (time for repair after receipt of units) to be four (4) weeks
from receipt at the Manufacturer facility. Shipment of the repaired or replaced
warranted products to IWT’s location shall be at the expense of Manufacturer.
Shipment of the repaired or replaced non-warranted products to IWT’s location
shall be at the expense of IWT. IWT shall establish Customer Service Center, to
respond to customer complaints and provide repairs where practical. Manufacturer
shall provide IWT with technical information necessary for such repairs. In the
event a product modification shall become necessary, Manufacturer shall make
such modifications, as approved by IWT, at a separate cost borne by IWT. For
non-warranted repairs, Manufacturer shall report to IWT an estimated time to
repair failed units, and shall not proceed with repairs until such time that IWT
has provided approval for said repairs. For problems due to incorrect use of the
Product, or factors external to the Product, or repairs for unwarranted units,
Manufacturer shall repair at a separate cost borne be IWT. Manufacturer shall
repair or exchange, and ship to IWT, the returned Product within four (4) weeks
of receipt of Product by Manufacturer.

 
 
4

--------------------------------------------------------------------------------

 
 
ARTICLE 3

REGULATORY RESPONSIBILITY; TRADEMARKS; SALES

 
3.1
REGULATORY APPROVALS.  IWT shall undertake and be responsible for the
procurement of any and all regulatory approvals and/or registrations and customs
approval necessary for sale of the Product.  Manufacturer shall aid and
cooperate with, where appropriate, IWT in fulfilling the responsibilities set
forth in this Section.

 
3.2 
MANUFACTURER’S QUALIFICATIONS.  Manufacturer is ISO 9001 certified and shall
notify IWT of any change in that status during the term of this
Agreement.  Should Manufacturer lose its status as ISO 9001 certified, it shall
have a period of 30 days to have the certification reinstated and if not
reinstated within this cure period, IWT shall have the right to terminate this
Agreement in accordance with Section 5.3.

 
3.3 
TRADEMARKS.  IWT shall have the sole right to prepare, file, prosecute and
maintain trademark applications or registrations with respect to the Product
throughout the world excluding Russian Federation.  All such applications and
registrations shall be at IWT’s expense.  IWT shall retain ownership of these
applications and registrations throughout the term of this Agreement and
thereafter.

 
3.4
PUBLIC RELEASE OF INFORMATION.  Any public statement, verbal or written,
regarding the other party shall be approved by the other party in advance.  The
foregoing shall not prevent either party from issuing a press release or making
a public filing where required by law.

 
ARTICLE 4

PRODUCT LIABILITY

 
4.1 
NOTICE OF PRODUCT LIABILITY CLAIMS.  Each Party shall notify the other promptly
in writing of any product liability claim brought with respect to the Product
based on alleged defects in the design, manufacture, packaging, or labeling of
the Product or other adverse claim regarding the Product.  Upon receiving such
written notice, IWT shall assume and have sole control of the defense of any
such claim, including the power to conduct and conclude any and all
negotiations, compromises or settlements.  Manufacturer shall promptly comply
with all reasonable requests from IWT for information, materials or assistance
with respect to the conduct of such defense.

 
5

--------------------------------------------------------------------------------

 
 
4.2 
NOTICE OF INVESTIGATION.  Manufacturer and IWT shall promptly notify each other
of any potential or actual investigation or governmental activity relating to
the Product.

 
4.3 
Manufacturer agrees to reimburse IWT for any and all monies paid to Manufacturer
by IWT for inventory which is lost or damaged due to a natural disaster which
destroys inventory owned by IWT at Manufacturer’s facility.

 
ARTICLE 5

TERM AND TERMINATION; FORCE MAJEURE

 
5.1 
INITIAL TERM.  Unless terminated sooner pursuant to the further provisions of
this Article, this Agreement shall expire in 5 (five) years from the date
hereof.

 

 
5.2 
EXTENSIONS.  IWT has three successive options to extend the term of Agreement
for a period of one (1) additional year (an “Extension Period”).  IWT’s right to
exercise each option to extend the Agreement for another year is expressly
conditioned upon IWT not being in default under this Agreement at the time the
option is exercised and not being in default between the time the option is
exercised and the start of the Extension Period.

 
5.3 
TERMINATION BY IWT.  IWT shall have the right to terminate this Agreement if
Manufacturer fails to perform in accordance with this Agreement and its
appendices and fails to cure such default within sixty (60) days of written
notice.

 
5.4 
TERMINATION BY Manufacturer.  Manufacturer shall have the optional right to
terminate this Agreement on written notice to IWT if IWT (a) has failed to make
any payments required by this Agreement in the time provided therefore and (b)
following sixty (60) days’ notice of such failure from Manufacturer, IWT does
not pay all delinquent sums in full.

 
5.5 
TERMINATION BY EITHER PARTY.  In addition to their respective rights set forth
in Sections 5.3 and 5.4, either party shall have the right to terminate this
Agreement on written notice to the other party under the following
circumstances:

 
 
(a) 
by mutual Agreement;

 
 
(b)
if the other party materially defaults in the performance of any material
obligation hereunder, and such default continues for more than thirty (30)
business days after receiving written notice from the other party of such
default; provided, however, there shall be no default under this provision if
the defaulting party has cured the default within sixty (60) business days after
the giving of notice;

 
 
(c)
in the event that the other party is declared insolvent, or bankrupt by a court
of competent jurisdiction, or a voluntary petition of bankruptcy is filed in any
court of competent jurisdiction by such other party, or such other party shall
make or execute an assignment for the benefit of creditors, or a receiver is
appointed by a court of competent jurisdiction over all or a substantial portion
of the other party’s assets and such receivership is not dismissed within 30
days of appointment, or

 
 
6

--------------------------------------------------------------------------------

 
 
 
(d) 
in the event of the issuance of a final order, decree or other action by any
competent judicial authority or governmental agency which restrains, enjoins or
prohibits the sale or introduction into interstate commerce of the System and
such restraint, injunction or prohibition is not vacated within 30 days
thereafter.

 
5.6 
SURVIVAL.  The termination or expiration of this Agreement shall be without
prejudice (a) to the rights of any party to receive upon its request all
payments accrued and unpaid, or all documents, data and deliverables not
delivered, as of the date of such expiration or termination; (b) the rights and
remedies of either party with respect to any previous breach or default under
any representation, warranty or covenant herein contained; (c) rights under any
other provision of this Agreement which expressly and necessarily calls for
performance after expiration or termination, and (d) Manufacturer shall not
produce, nor allow to be produced, the Product.

 
5.7 
FORCE MAJEURE.  If the performance of this Agreement or of any obligation
hereunder is prevented, or restricted or interfered with by reason of any event
of Force Majeure, the Party so affected, upon prompt notice to the other Party,
shall be excused from performance, but only for the duration of such inability,
provided that the Party so affected shall use its best effort to avoid or remove
such causes of nonperformance, and shall continue performance hereunder with the
utmost dispatch whenever such causes are removed.

 
ARTICLE 6

INDEMNITY

 
6.1 
MANUFACTURER INDEMNITY.  Manufacturer agrees to indemnify, defend and hold
harmless IWT or any of their respective customers, against any claim arising out
of or relating to any loss or damage, including bodily injury or death, incurred
by reason of or resulting from a defect in the product caused by Manufacturer’s
design, engineering, fabrication, manufacture, packaging or labeling thereof;
provided that the Product is used for its intended purpose. Manufacturer shall
not be required to pay any compensation for damages, loss or cost, which are due
to loss of sales opportunity. Manufacturer shall not be responsible for the loss
of recorded data unless due to Product defect which was made intentionally or
due to gross negligence by Manufacturer.

 
ARTICLE 7

MISCELLANEOUS

 
7.1 
NOTICES.  Any notices required or permitted to be given to a Party hereunder
shall be in writing and shall be delivered or sent to such Party at its address
given below:

 
 
(a)
if to Manufacturer:

 
 
7

--------------------------------------------------------------------------------

 
 
 
CJSC “Innovation Weapons Technologies”

 
General Director: Evgeniy Spiridonov

 
Tel: +7(495) 921-21-50

 
fax: +7(495) 921-32-19

 
Address: 115088, Moscow, 2nd-Yuzhnoportoviy pr. - 20а/4

 
 
(b)
if to IWT: Innovative Wireless Technologies, Inc.

 
Address: 3655 Nobel Drive, San Diego, CA 92122 US Nobel Executive Center, Suite
520 Tel. +1 858 735 88 65 begin_of_the_skype_highlighting   

 
or such other address as such Party may hereafter specify; and shall be deemed
given (i) when personally delivered to such Party; (ii) when transmitted by
facsimile and receipt of such transmission is confirmed by facsimile; (iii)
after air courier service confirm the receipt via an established air courier
service; or (iv) if mailing via certified airmail, after receipt is confirmed.
 
7.2 
ATTORNEYS’ FEES.  In the event of any litigation, arbitration, judicial
reference or other legal proceeding involving the Parties to this Agreement to
enforce any provision of this Agreement, to enforce any remedy available upon
default under this Agreement, or seeking a declaration of the rights of either
Party under this Agreement, the prevailing Party shall be entitled to recover
from the other such attorneys’ fees and costs as may be reasonably incurred,
including the costs of reasonable investigation, preparation and professional or
expert consultation incurred by reason of such litigation, arbitration, judicial
reference, or other legal proceeding.

 
7.3 
ARBITRATION. All disputes, controversies, or claims arising out of or relating
to this contract shall be submitted binding arbitration in accordance with the
applicable rules of the American Arbitration Association then in effect.

 
7.4
GOVERNING LAW. This Agreement shall be governed by and interpreted in accordance
with the substantive laws of the State of California without regard to that
state’s choice of law provisions.

 

 
[Signature Page follows]

 
 
8

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Manufacturer and IWT have executed or caused this
Agreement to be executed as of the Effective Date set forth above.

 
CJSC “INNOVATION WEAPONS
TECHNOLOGIES”
 
INNOVATIVE WIRELESS TECHNOLOGIES, INC.
       
By: Evgeniy Spiridonov
 
By: Pavel Alpatov
         
/s/ Evgeniy Spiridonov
 
/s/ Pavel Alpatov
 
General Director
 
Chief Executive Officer, President
 

 
 
9

--------------------------------------------------------------------------------

 
 
Appendix I

Product and Parts Specification

 
This Product and Parts Specification dated 4th of April, 2011, is specified by
Innovative Wireless Technologies, Inc., a corporation organized and existing
under the laws of the State of Delaware, USA (“IWT”), and CJSC “Innovation
Weapons Technologies”, a closed joint-stock corporation organized and existing
under the laws of Russian Federation (“Manufacturer”) and, each of whom is
individually referred to as a “Party” and both of whom are sometimes
collectively referred to as “Parties.”
 
In consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Parties intend to
define “Product” as a list of products and corresponding Product Specification
described in 2011 catalogues listed and available for download on IWT’s web
site:
 
www.kellaniwt.com

 
Parties accept Product names listed in these catalogues and shall refer to them
for their reference whenever Product Order is produced. If Product Order
consists of Product parts, than such are defined separately in Product Order.
 
CJSC “INNOVATION WEAPONS
TECHNOLOGIES”
 
INNOVATIVE WIRELESS TECHNOLOGIES, INC.
       
By: Evgeniy Spiridonov
 
By: Pavel Alpatov
         
/s/ Evgeniy Spiridonov
 
/s/ Pavel Alpatov
 
General Director
 
Chief Executive Officer, President
 

 
10

--------------------------------------------------------------------------------

 
 
Appendix II

 
Mutual Nondisclosure Agreement

 
This Mutual Non-Disclosure Agreement (the “NDA”) is made and entered effective
as of 4th of April 2011, by and between CJSC “INNOVATION WEAPONS TECHNOLOGIES”,
a Russian closed join-stock corporation, and INNOVATIVE WIRELESS TECHNOLOGY, a
Delaware corporation, to assure the protection and preservation of the
confidential and/or proprietary nature of information to be disclosed or made
available to each other in connection with the Manufacturing Agreement.
 
In reliance upon and in consideration of the following undertakings, the parties
agree as follows:
 
1.           Subject to the limitations set forth in paragraph 2, all
information disclosed to the other party, whether marked confidential or not,
shall be deemed to be “Proprietary Information.”  In particular, Proprietary
Information shall be deemed to include any technology, content, trade secret,
information, process, technique, training manual, workbook, algorithm, computer
program (source and object code), design, drawing, formula, business plan or
test data relating to any research project, work in process, future development,
engineering, manufacturing, marketing, servicing, financing, strategic
partnership or personnel matter relating to the disclosing party, its present or
future products, services, sales, suppliers, clients, customers, employees,
investors, business plans, business strategies, cost of operations, and
strategic relationships, whether in oral, written, graphic or electronic
form.  If Proprietary Information is disclosed in oral form, the disclosing
party shall thereafter summarize it in writing and transmit it to the other
party within thirty (30) days of the oral disclosure.
 
2.           The term “Proprietary Information” shall not be deemed to include
information which:  (a) is now, or hereafter becomes, through no act or failure
to act on the part of the receiving party, generally known or available; (b) is
known by the receiving party at the time of receiving such information as
evidenced by its records; (c) is hereafter furnished to the receiving party by a
third party, as a matter of right and without restriction on disclosure; (d) is
independently developed by the receiving party without any breach of this NDA;
or (e) is the subject of a written permission to disclose provided by the
disclosing party.
 
3.           Each party shall maintain all Proprietary Information in trust and
confidence and, except as expressly set forth herein, shall not disclose to any
third party or use any Proprietary Information for any unauthorized
purpose.  Each party may use such Proprietary Information only to the extent
required to accomplish the purposes of the Manufacturing Agreement executed
between the parties as of even date herewith.  Proprietary Information shall not
be used for any purpose or in any manner that would constitute a violation of
any laws or regulations, including without limitation, the export control laws
of the United States.  No rights or licenses to trademarks, inventions,
copyrights or patents are implied or granted under this NDA.
 
 
11

--------------------------------------------------------------------------------

 
 
4.           Proprietary Information shall not be reproduced in any form except
as required to accomplish the intent of this NDA.
 
5.           Each party under this NDA shall advise its employees who might have
access to Proprietary Information of the confidential nature thereof and agrees
that its employees shall be bound by the terms of this NDA.  No Proprietary
Information shall be disclosed to any employee who does not have a need for such
information.  The receiving party shall not disclose any Proprietary Information
to any third party without the disclosing party's express, written consent.
 
6.           All Proprietary Information (including all copies thereof) shall
remain the property of the disclosing party and shall be returned to the
disclosing party after the receiving party's need for it has expired, or upon
request of the disclosing party, and in any event, upon completion or
termination of this NDA.
 
7.           Notwithstanding any other provision of this NDA, disclosure of
Proprietary Information shall not be precluded if such disclosure:
 
(a)           is in response to a valid order of a court or other governmental
body of the United States or any political subdivision thereof; provided,
however, that the responding party shall first have given notice to the other
party hereto and shall have made a reasonable effort to obtain a protective
order requiring that the Proprietary Information so disclosed be used only for
the purposes for which the order was issued;
 
(b)           is otherwise required by law; or
 
(c)           is otherwise necessary to establish rights or enforce obligations
under this NDA, but only to the extent that any such disclosure is necessary.
 
8.           This NDA shall continue in full force and effect for so long as the
parties continue to exchange Proprietary Information.  This NDA may be
terminated by either party at any time upon thirty (30) days written notice to
the other party.  The termination of this NDA shall not relieve either party of
the obligations imposed by Paragraphs 3, 4, 5, 6 and 11 of this NDA with respect
to Proprietary Information disclosed prior to the effective date of such
termination and the provisions of those Paragraphs shall survive the termination
of this NDA for a period of five (5) years from the date of such termination.
 
9.           Any dispute or claim hereunder between the named Parties, shall be
resolved by binding arbitration before the American Arbitration Association in
Orange County, California under the laws of the State of California. This shall
be the exclusive remedy between the Parties, and both parties hereby give up any
rights to trial by jury, court, appeal, or any other judicial mechanism for
resolving disputes.
 
10.           This NDA contain the final, complete and exclusive NDA of the
parties relative to the subject matter hereof and supersedes all prior and
contemporaneous understandings and NDAs relating to its subject matter.  This
NDA may not be changed, modified, amended or supplemented except by a written
instrument signed by both parties.
 
 
12

--------------------------------------------------------------------------------

 
 
11.           Each party hereby acknowledges and agrees that in the event of any
breach of this NDA by the other party, including, without limitation, the actual
or threatened disclosure or unauthorized use of a disclosing party's Proprietary
Information without the prior express written consent of the disclosing party,
the disclosing party will suffer an irreparable injury, such that no remedy at
law will afford it adequate protection against, or appropriate compensation for,
such injury.  Accordingly, each party hereby agrees that the other party shall
be entitled to specific performance of the receiving party's obligations under
this NDA, as well as such further relief as may be granted through binding
arbitration.
 
12.           The parties’ rights and obligations under this NDA will bind and
inure to the benefit of their respective successors, heirs, executors and
administrators and permitted assigns.
 
13.           If any provision of this NDA is found by a proper authority to be
unenforceable, that provision shall be severed and the remainder of this NDA
will continue in full force and effect.
 
14.           Any notices required or permitted hereunder shall be given to the
appropriate party at the address specified below or at such other address as the
party shall specify in writing. Such notice shall be deemed given upon the
personal delivery, or sent by certified or registered mail, postage prepaid,
three (3) days after the date of mailing.

 
In Witness Whereof, the parties hereto have executed this NDA as of the date set
forth in the first section hereof.
 
CJSC “INNOVATION WEAPONS
TECHNOLOGIES”
 
INNOVATIVE WIRELESS TECHNOLOGIES, INC.
       
By: Evgeniy Spiridonov
 
By: Pavel Alpatov
         
/s/ Evgeniy Spiridonov
 
/s/ Pavel Alpatov
 
General Director
 
Chief Executive Officer, President
 

 
13

--------------------------------------------------------------------------------

 
 
Appendix III

Product Order №1 04.20.2011

This initial Product Order (the “PO”) is made and entered effective as of 20th
of April 2011, by and between CJSC “INNOVATION WEAPONS TECHNOLOGIES”
(“Manufacturer”), a Russian closed join-stock corporation, and Innovative
Wireless Technologies, Inc., a corporation organized and existing under the laws
of the State of Delaware, USA (“IWT”), to assure timely and appropriate advance
production to enter the world market.
 
In reliance upon and in consideration of the following undertakings, IWT places
the initial Product Order to the Manufacturer for the product parts described
below:
 
Product part name:
Quantity
total price in USD
price in USD per unit
IWT STLED ULTRA (1LED) receiver + remote, body
1500
133,877.21
89.25
IWT STLED ULTRA II (4LED) receiver + remote, body
1000
119,084.12
119.08
IWT LED RF (1LED) receiver + remote
500
43,804.31
87.61
KOMAK (AK mounting bracket, grip remote, IWT STLED RF receiver), body
1000
226,020.05
226.02
interchangeable heads:
     
1 LED green body
100
3,631.55
36.32
1 LED red body
100
3,497.97
34.98
1 LED IR 850 body
25
978.05
39.12
1 LED IR 940 body
25
978.05
39.12
1 LED UV body
50
1,902.17
38.04
3 LED white body
100
5,892.66
58.93
3 LED IR 850 body
10
743.03
74.30
3 LED IR 940 body
10
743.03
74.30
4 LED white body
100
6,321.34
63.21

 
Total cost: 547,474 USD (five hundred forty seven thousand four hundred and
seventy four US dollars and 0/100 cents).
 
All prices are FOB Moscow, Russian Federation
 
All payables shall be due upon delivery without any down payments.
 
CJSC “INNOVATION WEAPONS
TECHNOLOGIES”
 
INNOVATIVE WIRELESS TECHNOLOGIES, INC.
       
By: Evgeniy Spiridonov
 
By: Pavel Alpatov
         
/s/ Evgeniy Spiridonov
 
/s/ Pavel Alpatov
 
General Director
 
Chief Executive Officer, President
 

 
14

--------------------------------------------------------------------------------