Seychelle 10-KSB Amend 1 Ex 10J ABMS Agreement


    Exhibit
      10J

    


    Distribution
      Rights Agreement

    


    


    AGREEMENT
      (the
“Agreement”) dated as of April 1, 2006, by and between ABMS Health Care Pvt.
      Ltd. (hereinafter referred to as ABMS) having its principal offices at 61-B
      Kasturba Nagar, Bhopal 462024 (Madhya Pradesh) India and SEYCHELLE
      ENVIRONMENTAL PRODUCTS INC. (“SEYCHELLE”),
      having its principal offices at 33012 Calle Perfecto, San Juan Capistrano,
      CA
      92675.

    


    WHEREAS,
      ABMS
      now desires to be designated by SEYCHELLE as a distributor within India of
      the
      water filtration products manufactured and sold by SEYCHELLE which products
      are
      described on Exhibit “A” hereto (and are each herein referred to individually as
      a “PRODUCT” and, collectively, as the (“PRODUCTS”), and thereby to have and hold
      the right to distribute and sell each of the PRODUCTS within India during the
      time periods provided herein; and

    


    WHEREAS,
      ABMS now desires to set up a manufacturing operation in India to make certain
      of
      Seychelle’s PRODUCTS: and

    


    WHEREAS,
      SEYCHELLE is willing to designate and empower ABMS as a distributor and
      manufacturer of the PRODUCTS in India on the terms and conditions and set forth
      herein. 

    


    NOW
      THEREFORE,
      in
      consideration of the mutual covenants herein contained, and for other and good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto, intending to be legally bound hereby, agree
      as
      follows:

    


    1.
      Grant
      of Distribution Rights.
      

    


    	A.  	
            SEYCHELLE
              hereby grants to ABMS the right to distribute and sell each of the
              PRODUCTS within India on an on-going basis, and for a minimum of ten
              (10)
              years. 

          


    	B.  	
            ABMS
              shall have the right of first refusal to handle sales of any third
              party
              orders provided that they can meet the terms and conditions of such
              a
              transaction within thirty (30) days of receipt of
              order.

          


    	C.  	
            ABMS
              shall have the right to represent itself as a distributor for each
              of the
              PRODUCTS within India in printed communications, public marketing and
              promotional materials and in any discussions with private parties or
              governmental agencies within India.

          


     

     

    2. Obligations
      of ABMS as Distributor.

    


    	A.  	
            In
              consideration of the grant of Distribution Rights made to ABMS in Section
              1., above, ABMS hereby agrees that it will undertake, at its own
              reasonable expense and using reasonable best efforts, to obtain all
              necessary governmental licenses, permits and approvals required to
              allow
              the sale of the PRODUCTS within India prior in each case to its
              commencement of distribution and sale activities of that PRODUCT in
              India.
              

          


    


    	B.  	
            In
              addition, ABMS agrees that it will use reasonable best efforts, at
              its own
              expense, to open distribution channels for each of the PRODUCTS within
              the
              private, governmental, education and military sectors within
              India.

          


    


    	C.  	
            ABMS shall
              be exclusively responsible for all sales, promotion and marketing expenses
              relating to its distribution and sale of PRODUCTS in India.
              

          


    


    	D.  	
            ABMS
              covenants and agrees that it will not distribute or resell any PRODUCTS
              purchased directly from SEYCHELLE, or manufactured by ABMS in India,
              other
              than in India, without first advising SEYCHELLE of its intention, and
              receiving SEYCHELLE’S prior written approval to do
              so.

          


    


    3. Obligations
      of ABMS as Manufacturer.

    


    The
      intent of this Agreement is to enter into a business relationship whereby
      manufacturing for the PRODUCTS is done in India exclusive of SEYCHELLE’S
      proprietary filters, ozone reactors, Ultra Filtration (UF) membranes, and
      Vending Machines (which will be covered by a separate Agreement). This is
      further covered in Section
      5, below
      (Understanding
      The Business Relationship).
      In the
      event that ABMS purchases PRODUCTS from SEYCHELLE which are manufactured in
      the
      USA, the following applies:

    


    


    A.
      Price
      of PRODUCTS to ABMS: 

    


    (i)
      SEYCHELLE hereby agrees to sell to ABMS, on presentment of written purchase
      orders therefore, such quantity or quantities of each PRODUCT as AMBS shall
      request, in each case at the per unit price for such PRODUCT established by
      SEYCHELLE from time to time for purchase orders based upon current OEM pricing.
      (A schedule of such prices as currently offered by SEYCHELLE is annexed as
      Exhibit “B” hereto.) In addition, SEYCHELLE agrees to afford to ABMS the benefit
      of any volume discount(s) offered to any SEYCHELLE customers with respect to
      each PRODUCT on a “most favored nation” basis.

    


    (ii)
      ABMS
      shall be responsible for all costs of shipping the purchased PRODUCTS from
      point
      of manufacture.

     

    B.  Commitment
      to Supply Products:
      SEYCHELLE represents and agrees that SEYCHELLE will use all commercially
      reasonable efforts to manufacture and deliver any PRODUCTS ordered by ABMS
      on a
      priority basis, but in all events in a timely fashion. 

    


    C.
      AMBS as a Manufacturer: SEYCHELLE
      will help ABMS set up local manufacturing under the terms and conditions set
      forth in EXHIBIT “C.”

    


    


    4. Further
      Covenants.

    


    The
      parties hereto understand and agree that their mutual cooperation will be
      important and integral to the success that ABMS may achieve in opening sales
      and
      distribution channels for the PRODUCTS in India. Accordingly:

    


    A.
      SEYCHELLE hereby covenants and agrees that it shall cooperate with marketing,
      sales, public relations and other personnel of ABMS in support of it’s efforts
      to manufacture, distribute and sell PRODUCTS in India. 

    


    	B.  	
            SEYCHELLE
              further covenants and agrees that, at ABMS’s request, upon reasonable
              advance notice, SEYCHELLE shall make available a representative of
              its
              senior management who will travel to India, for a period of up to one
              (1)
              week, to promote the PRODUCTS and support ABMS’s sales and distribution
              efforts at the start of our business relationship. ABMS will be solely
              responsible for all expenses of such travel (including, but not limited
              to, airfare (business class), hotel accommodations, local transportation
              and meals), but will not be required otherwise to compensate SEYCHELLE
              for
              the time or participation of its representative in such
              visits.

          


    


    


    	C.  	
            ABMS
              covenants and agrees that it shall bear its own expenses in the
              performance of its duties hereunder.

          


    


    	5.  	
            Understanding
              the Business Relationship.
              ABMS
              and SEYCHELLE agree to enter into this Agreement for the purpose of
              manufacturing and distributing the PRODUCTS in India and its sub-continent
              and in other such regions where there may be non-conflicting business
              opportunities.

          


    


    For
      Vending Machines, the parties agree to detail the terms and conditions in a
      separate Agreement, with the intent to manufacture and distribute them in India
      with an ownership split of 60% to ABMS and its investors, and 40% to SEYCHELLE.
      

    


    6.
      Termination
      of the Agreement

    


    If
      the
      parties to this Agreement shall at any time commit any breach of any provision,
      covenant or condition of this Agreement, and shall fail to remedy such within
      ninety (90) days of written notice by the other party, that party shall be
      in
      material breach of this Agreement. In such an event, the non-breaching party
      may
      at its option, and without limitation, cancel and terminate this Agreement
      by
      notice in writing to such effect and claim damages owing to it. 

    


    For
      purposes of this Agreement, “breach” shall be defined as:

    


    FOR ABMS:

    


    


    
      	 	
              1.

            	
              Failure
                to perform any obligations under this
                Agreement.

            


    

    
      	 	
              2.

            	
              Is
                declared insolvent or bankrupt or makes a bankruptcy filing or an
                assignment or similar arrangement for the benefit of its creditors
                or
                ceases active business operations.

            


    

    
      	 	
              3.

            	
              Attempting
                to copy any or all SEYCHELLE technologies with the idea of competing
                directly against SEYCHELLE, or avoiding any payments due
                SEYCHELLE.

            


    

    


    FOR SEYCHELLE:

    


    	1.  	
            Willfully
              refuses or is unable to supply filters or technology as set forth in
              this
              Agreement.

          


    	2.  	
            Failure
              to perform any other obligations or covenants set forth in this
              Agreement.

          


     

    


    7.
      Indemnification.

    


    A.
      SEYCHELLE warrants and represents to ABMS that (i) SEYCHELLE has full power
      and
      authority to grant the Distribution and Manufacturing Rights to ABMS, (ii)
      no
      approval or consent of any third party is required to enable SEYCHELLE to make
      such grant or for ABMS thereupon to be entitled to exercise the full rights
      and
      benefits intended thereby, and (iii) the grant thereof will not breach any
      license, patent or other right or agreement to which SEYCHELLE is a party with
      respect to SEYCHELLE’S rights and authority to manufacture and sell each of the
      PRODUCTS.

     

    B.
      SEYCHELLE shall defend and indemnify ABMS and hold its members, managers,
      officers, employees and agents harmless against all claims and losses (including
      reasonable attorney’s fees and costs incurred in investigating or defending
      against any such claims) suffered by ABMS in connection with or as a result
      of a
      breach of the representation and warranty made by SEYCHELLE in subsection A.
      above. 

    


    C.
      Conversely, ABMS agrees that it shall defend and indemnify SEYCHELLE and hold
      its, managers, officers, employees and agents harmless against all claims and
      losses (including reasonable attorney’s fees and costs incurred in investigating
      or defending against any such claims) suffered by SEYCHELLE in connection with
      or as a result of the gross negligence, misrepresentation, or willful misconduct
      of ABMS or its personnel in the performance of ABMS’s duties hereunder.


    


    D.
      SEYCHELLE further shall defend and indemnify ABMS and hold its members,
      managers, officers, employees and agents harmless against all claims and losses
      (including reasonable attorney’s fees and costs incurred in investigating or
      defending against any such claims) suffered by ABMS in connection with or as
      a
      result of any claim of breach of implied warranty or of product liability with
      respect to any PRODUCT manufactured by SEYCHELLE, purchased by ABMS and
      thereafter distributed.  

    


    8.
      Miscellaneous
      Provisions.

    


    A.
      Modification:
      No
      modification, waiver or amendment of any term or condition of this Agreement
      shall be effective unless and until it shall be reduced to writing and signed
      by
      both of the parties hereto or their legal representatives.

    


    B.
      Waiver:
      Failure
      by either party at any time to require performance by the other party or to
      claim a breach of any term of this Agreement will not be construed as a waiver
      of any right under this Agreement, will not affect any subsequent breach, will
      not affect the effectiveness of this Agreement or any part thereof, and will
      not
      prejudice either party as regards any subsequent action.

    


    C.
      Severability:
      If
      any
      term or provision of this Agreement should be declared invalid by a court of
      competent jurisdiction, the remaining terms and provisions of this Agreement
      shall be unimpaired.

    


    D.
      Complete
      Agreement: This
      Agreement constitutes the entire Agreement between the parties with respect
      to
      the subject matter hereof and supersedes in all respects all prior proposals,
      negotiations, conversations, discussions and agreements between the parties
      concerning the subject matter hereof.

    


    E.
      Assignment:
      This
      Agreement may not be assigned, in whole or in part, by either party hereto
      without prior written consent shall not be unreasonably withheld. 

    


    F.
      Governing
      Law 

    This
      agreement shall be constituted according to the laws of India as the entire
      manufacturing process and the establishment of units and the distribution and
      sale of the PRODUCTS are subjected to India and its sub-continent. In case
      of
      any dispute between the parties, the same shall be referred to an Independent
      Arbitrator appointed with the mutual consent of the parties and the place of
      arbitration would be in Mumbai (India) and the provisions of the Arbitration
      and
      Reconciliation Act, 1996 would be applicable to the proceedings before the
      Arbitrator and the decision of the Arbitrator shall be binding on both the
      parties.

    


    G.
      Compliance
      with Laws: The
      parties hereto represent and agree each for itself that they and their
      respective employees, agents and subcontractors will comply with all applicable
      local laws, ordinances, regulations and codes in the performance of their
      respective services, duties and obligations under this Agreement.

    


    H.
      Force
      Majeure: Either
      party is excused from performance and shall not be liable for any delay in
      performance or delivery or for non-performance or non-delivery, in whole or
      in
      part, caused by the occurrence of any contingency beyond the control of the
      parties including, but not limited to, work stoppages, fires, civil
      disobedience, riots, rebellions, accident, explosion, flood, storm, acts of
      God
      and similar occurrences. Either party may terminate or suspend its obligations
      under this Agreement if such obligations are prevented by any of the above
      events to the extent such events are beyond the reasonable control of the party
      whose reasonable performance is prevented.

    


    I.
      Counterparts:
      This
      Agreement may be executed in counterparts each of which shall be deemed an
      original, but all of which together shall constitute one and the
      same.

    


    J.
      Notices:
      All
      notices to be given and payments to be made to ABMS hereunder shall be sent
      to
      ABMS 61-B Kasturba Nagar, Bhopal 462024 (Madhya Pradesh), India attention:
      Mr.
      Sarang Bhand, Director. All notices to SEYCHELLE, to be made hereunder shall
      be
      given or made to SEYCHELLE at 33012 Calle Perfecto, San Juan Capistrano, CA
      92675. Attention: Mr. Richard Parsons, Executive VP. All notices shall be sent
      by registered or certified mail or by a nationally recognized overnight delivery
      service and shall be deemed to have been given at the time such notice is
      received. 

    


    8.
      Survival
      Provisions. 

    


    The
      terms
      and provisions of the Agreement that by their sense and context to survive
      the
      performance hereof by either party or by other parties hereto shall so survive
      the completion of performance and termination of this Agreement, including
      without limitation the making of any and all payments due hereunder unless
      otherwise noted.

    


    
      	 	 	
              9.
                Confidentiality.

            


    

    


    A.
      The
      information furnished or disclosed by either party to the other in connection
      with this Agreement and the performance of the respective party’s services,
      duties and obligations hereunder, may contain or reflect confidential
      information with respect to the business operations and practices of the
      parties, any selling properties and/or buying sponsors (“Confidential
      Information”). Confidential Information furnished by either party to the other
      shall be used exclusively and only in connection with this
      Agreement.

    


    B.
      The
      parties hereto acknowledge and agree that the unauthorized disclosure of use
      of
      any Confidential Information may cause immediate and irreparable injury to
      the
      party which has disclosed that Confidential Information to the other party,
      injury which can not be adequately compensated by monetary damages. Accordingly,
      each party hereto authorizes the other party to seek any temporary or permanent
      injunctive relief necessary to prevent such disclosure or use, or threat
      thereof. Further, each party hereto consent to the jurisdiction of any federal
      or state court sitting in the State of California for purposes of any suit
      seeking such injunctive relief, and consents to the service of process therein
      by certified or registered mail, return receipt requested. 

    


     

    


    ACCEPTED
      AND AGREED TO:

    


    ABMS
      

    


    By:
      ________________________    Date
      ___________________

    Sarang
      Bhand, Director

     

    


    SEYCHELLE
      

    


    By:
      _________________________   Date:
      ___________________

    Richard
      Parsons, Executive VP 

    


    


    


    


    


    EXHIBIT
      “A”

    


    The
      PRODUCTS covered by this Agreement include, but are not limited to, the
      following:

    


    For
      Local Manufacturing:

    


    	-  	
            Portable
              filter bottles (Flip Top and Bottoms Up)

          


    	-  	
            Portable
              canteens

          


    


    For
      Importing:

    


    	-  	
            In-line
              hydration filters and packs

          


    	-  	
            Pure
              water bags and pumps

          


    	-  	
            Shower
              filters

          


    	-  	
            Countertop
              filter systems

          


    	-  	
            Pitchers

          


    	-  	
            Straws

          


    


    Note:
      PRODUCTS
      noted as imports may later be included for local manufacturing.

    


    


    EXHIBIT
      “B”

    


    


    ABMS
      purchase of PRODUCT from SEYCHELLE will be priced as follows:

    


    


    	1.  	
            Portable
              Bottles

          


    


    -
      Flip
      Tops
      (Advanced Filters- no sleeves): $6.00 

    -
      Flip
      Tops with sleeve: 6.25

    -
      Bottoms
      Up and Canteens “same as above”

    


    Pricing
      of other products will be covered by separate correspondence as
      needed.

    


    	2.  	
            Advanced
              Filters

          


    


    Quantity
      Pricing

    


    1
      to
      149,999 $2.75

    150,000
      to 249,999 2.50

    250,000
      plus 2.25

    


    	3.  	
            Terms
              and Conditions

          


    


    	-  	
            FOB
              our plant in San Juan Capistrano, CA.

          


    	-  	
            Payment
              in US dollars.

          


    	-  	
            Prices
              subject to change with sixty (60) days written
              notice.

          


    	-  	
            Irrevocable
              Letters of Credit written as follows: release of 50% of the funds to
              SEYCHELLE upon the placement of the order; 50% released by the Bank
              upon
              presentation of Bill of Lading and all other documents when shipment
              is
              released by SEYCHELLE to the freight
              forwarder.

          


    


    


    EXHIBIT
      “C”

    


    


    SEYCHELLE
      will help ABMS set up manufacturing in India as follows:

    


    	1.  	
            Payment

          


    


    SEYCHELLE
      will be paid $250,000 (US) for setting up local manufacturing for
      ABMS.

    


    


    	2.  	
            Payment
              Schedule

          


    


    Payments
      will be as follows:

    


    	-  	
            $150,000
              when molds are ordered.

          


    	-  	
            $100,000
              when SEYCHELLE personnel deliver the molds and work with ABMS to set
              up
              assembly (approximately 45 to 60 days
              later).

          


    	-  	
            Both
              payments are to be wire transfers.

          


    


    	3.  	
            Products

          


    


    PRODUCTS
      will be the Flip Top, Bottoms Up and Military Style Canteen.

    


    	4.  	
            Plan
              detail.

          


    


    	A.  	
            SEYCHELLE
              will order (and pay its suppliers cash up front) molds
              for:

          


    


    	-  	
            Flip
              Top Bottle:
              which consists of a bottle and cap (cap, mouthpiece, gasket, stem for
              filter and O-ring). This consists of 5 molds.


          


    	-  	
            Bottoms
              Up Bottle:
              which consists of a bottle and cap (same as Flip Top) as well as filter
              stem extender and bottom cap (tether, tether insert, cap, gasket, and
              plastic Chlorine tablet housing). This consists of a total of 11 molds
              - 6
              for the top assembly, and 5 for the bottom cap.


          


    	-  	
            Military
              Canteen:
              which consists of a bottle, cap (pull top and screw-in filter for
              replacement) poppett top and male adapter. This will be a total of
              3
              molds.

          


    	-  	
            Check
              Valve: if
              we supply these out of China, they are at $.12
              each.

          


    


    	B.  	
            India
              manufacturing capability.

          


    


    Prior
      to
      ordering molds, SEYCHELLE will need to understand the injection and blow molding
      capability of manufacturing companies in India to insure compatibility with
      the
      molds before manufacturing. SEYCHELLE will work with ABMS to search out and
      set
      up local sourcing if necessary.

    


    When
      SEYCHELLE orders the molds, SEYCHELLE will also order jigs, tooling (such as
      fixtures for putting on sleeves), hot pots for filter gluing and bulk glue
      (SEYCHELLE uses a special blend). 

    


    	C.  	
            Timetable

          


    


    Upon
      receipt of order and payment, the molds will be ordered and delivery should
      be
      in 45 days. It will take an additional 15 days to tune the tooling to insure
      that the finished product meets production specifications.

    


    As
      the
      molds are being made, SEYCHELLE will work with ABMS personnel to set up assembly
      operations in your facility. This will include storage, product picking,
      inventory control, training, assembly (SEYCHELLE will provide a detailed plant
      layout), quality control and shipping. This should commence in the first 45
      days
      which means that ABMS will have to build the infrastructure beforehand.
      SEYCHELLE will send to India its Operations Manager for this purpose. SEYCHELLE
      will pay for his salary and transportation, and we ask that ABMS pay for his
      room and board. 

    


    	D.  	
            Getting
              started.

          


    


    Recognizing
      that the above may well take 90 days to execute, SEYCHELLE will send to ABMS
      parts and filters for 5,000 Flip Tops and 5,000 canteens (or whichever ABMS
      wants) at SEYCHELLES cost so that assembly can begin (with all of the above
      details) and sales can be “jump started.” This will enable ABMS to serve some of
      ABMS’S customers without typical “start-up” worries and help train ABMS
      production and management people in the product line.