ex10_5.htm


    
      

    

    Exhibit
10.5

     

    MANUFACTURING
AGREEMENT

     

    This
Manufacturing Agreement (hereinafter “Agreement”) is entered into by and
between:

    


    AXIS TECHNOLOGIES, INC., a
Delaware corporation, with it principal place of business at 2055 South Folsom
Street, Lincoln, Nebraska, 68522, and Shanghai Gold Lighting Co., Ltd. a Peoples
Republic of China Company with its principal place of business at No. 218 Minhe
Road, Shanghai, PRC 200070, with reference to the following facts:

    


    
      	
               
      

            	
              A.

            	
              Shanghai
      Gold is engaged in the development, manufacture and sale of certain
      electrical energy saving products, including the Products defined in this
      Agreement;

            


    

    


    
      	
               
      

            	
              B.

            	
              Axis
      wishes to source the Products from a qualified party and wishes to
      authorize such party to manufacture the Products for and to supply the
      Products exclusively to Axis.

            


    

    


    
      	
               
      

            	
              C.

            	
              Manufacturer
      is willing to manufacture the Products and supply them to Axis and has
      represented to Axis that it has the requisite manufacturing facilities,
      personnel and expertise.

            


    

    


    In
consideration of the foregoing, the mutual promises set forth below and the
mutual benefits to be derived therefrom, Axis and Manufacturer hereby agree as
follows:

    


    For
purposes of this Agreement, the following terms shall have the meanings and
definitions set forth below:

     

    
      
        
           


        

        
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    ARTICLE
1

    


    Definitions

    


    1.1           “Affiliate”:
of a party shall mean any company or other business entity controlled by,
controlling or under common control with Axis and Shanghai Gold. “Control” shall
mean the direct or indirect ownership of more than fifty per cent (50%) of the
voting rights or income interest in a company or other business entity or such
other relationship as, in fact, constitutes actual control.

    


    1.2           “Confidential
Information” shall mean and include the Product Specifications, customer
lists and all other trade secrets, know—how, data and other information not in
the public domain that relate to, are embodied in or are associated with, the
Products and/or the present or future products, technology, services, business,
customers and/or affairs of Axis and Shanghai Gold. Confidential Information may
be disclosed orally, in writing or in any other recorded or tangible form. Trade
secrets, know—how, data and information shall be considered to be Confidential
Information hereunder (a) if they have been marked as such; (b) if Manufacturer
has been advised orally or in writing of their confidential nature; or (c) if,
due to their character or nature, a reasonable person in a like position and
under like circumstances as Manufacturer would treat them as
confidential.

    


    1.3           “Improvements
and Modifications” shall mean any and all changes in the design or
specifications of any of the Products including the addition of new features or
capacities.

    


    1.4           “Intellectual
Property Rights” shall mean any and all trademarks, patents, licenses,
copyrights and other proprietary rights owned or used by Axis and Shanghai Gold
or its affiliates in connection with the Products.

    


    1.5           “Product
Specifications” shall mean and include any and all designs, drawings,
blueprints, formulations, models, specifications, manufacturing data,
techniques, processes, procedures, performance data, know—how and other
technical information relating to the design, manufacture and/or operation of
the Products, which are provided by Axis to Manufacturer for the purpose of
manufacturing Products pursuant to this Agreement, or provided by Manufacturer
to Axis for the purpose of confirming same to Axis.

    


    1.6           “Third
Party Right” shall mean and include any patent, copyright, trademark,
trade secret or other proprietary right of any third person or entity in the
Territory that conflicts with the activities contemplated under this
Agreement.

    


    1.7           “Trademarks”
shall mean any and all trademarks, whether registered or not, owned or used by
Axis for the Products and any and all trade names used by Axis and its
affiliates in connection with the sale of the Products including, without
limitation, any non—English language variants of such trademarks and
tradenames.

     

    
      
        
           


        

        
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    ARTICLE
2

    


    SUPPLY
OF PRODUCTS

    


    2.1           Sale
and Purchase. Subject to the terms and conditions set forth in this
Agreement, Manufacturer agrees to sell to Axis, and Axis agrees to purchase from
Manufacturer, such products as Axis may order from time to time.

    


    2.2           Exclusive
Supply. During the term of this Agreement, neither Manufacturer nor its
employees or agents shall manufacture or supply the Products to any purchaser
other than Axis. During the term of this Agreement, neither Manufacturer nor its
employees or agents shall solicit business from any of Shanghai Gold’s existing
customers of the Products or otherwise market the Products without Axis’s prior
consent.

    


    2.2(a)      Exclusive
Manufacturing Rights. During the term of this Agreement, neither Axis nor
its employees or agents shall purchase the Products from any manufacturer other
than Shanghai Gold. During the term of this Agreement, neither Axis nor its
employees or agents shall solicit manufacturing services of the Products by any
manufacturer other than Shanghai Gold without Shanghai Gold’s prior
consent.

    


    2.3           Minimum
Commitments. During the initial five—year term of this Agreement and each
renewal term thereafter, Axis expects to purchase from Manufacturer, and
Manufacturer shall supply to Axis, an amount of Products valued at no less than
$ 1,500,000.00 (U.S. dollars) annually, based on the prices then in effect for
the Products. At the request of Manufacturer, Axis shall prepare and submit to
Manufacturer periodic forecasts of Product orders and requirements estimates for
the Products. On the basis of such forecasts and Manufacturer’s performance
under the Agreement, the parties shall periodically reassess the reasonableness
of the minimum commitment. By mutual written consent, the parties may establish
a new minimum commitment for any annual term, calendar quarter or other period
in which the Agreement is in effect.

    


    2.4           Independent
Contractors. The parties agree that, in the performance of this Agreement
they are and shall be independent contractors. Nothing herein shall be construed
to constitute either party as the agent of the other party for any purpose
whatsoever, and neither party shall bind or attempt to bind the other party to
any contract or the performance of any obligation or represent to any third
party that it has any right to enter into any binding obligation on the other
party’s behalf.

    


    
      
        
           


        

        
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    ARTICLE
3

    


    PROCESSING
MID MANUFACTURE OF PRODUCTS

    


    3.1           Product
Specifications. Unless already in possession of Manufacturer, Axis shall
promptly deliver to Manufacturer, or grant Manufacturer access to, copies of all
data and documents embodying the product specifications required to permit
Manufacturer to manufacture the Products. If the product specifications are
improved, enhanced or otherwise revised by Axis or Shanghai Gold during the
effective period of this Agreement, Axis or Shanghai Gold shall promptly provide
each other a data package, which shall include all such revised product
specifications. Thereafter, Manufacturer shall utilize all such revised product
specifications. Thereafter, Manufacturer shall utilize all such revised product
specifications in the manufacture of Products.

    


    3.2           Sourcing
of Parts, Components and Materials. Manufacturer shall purchase all
parts, components and materials necessary to manufacture the Products ordered by
Axis hereunder. Individual product labeling, coding, and packaging shall be
provided by Manufacturer per Axis’ s specifications.

    


    3.3           Production.
The product specifications to be supplied by Axis or Shanghai Gold hereunder
shall include data, know-how and other technical information concerning
manufacturing procedures that have been used by Shanghai Gold or its
representatives to manufacture the Products. Manufacturer may adopt any existing
manufacturing processes or establish its own new production methods; provided,
however, that Manufacturer shall employ proper equipment, machinery and
production methods to ensure that the Products will at all times meet the
production specifications.

    


    3.4           Monitoring
of Production. Upon reasonable notice and during Manufacturer’s regular
hours of business, Axis (or its representatives) shall have the right to (a)
examine Manufacturer’s purchasing records to determine whether parts, components
and materials acquired for use in the Products have been purchased from approved
vendors; (b) inspect work in progress to determine the adequacy of production
methods and equipment employed by Manufacturer, and (c) conduct spot inspections
of finished Products to verify that the Products have been manufactured in
accordance with the product specifications. All representatives of Axis
conducting such inspections shall comply with all applicable safety and security
rules of Manufacturer.

    


    3.5           Testing.
The finished Products shall be tested by Manufacturer in accordance with
procedures established by the parties from time to time. Axis shall assume
responsibility for all required testing for code compliance and certification
standards to promote and sell the product. Axis and Shanghai Gold shall design
or contract all product tests and testing equipment and shall provide each other
with all technical instruction and information necessary for the performance of
Product testing.

    


    
      
        
           


        

        
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    ARTICLE
4

    


    ORDER
PROCEDURE AND SHIPMENT

    


    4.1           Purchase
Orders. All purchase orders shall be placed by Axis in writing and shall
be subject to the terms and conditions set forth in this Agreement. Manufacturer
shall acknowledge the receipt of and accept Axis’s purchase orders within ten
(10) calendar days of receipt. Axis acknowledges that Manufacturer is producing
Products solely at the order and direction of Axis and that, therefore, all
purchase orders shall be non-cancelable.

    


    4.2           Delivery
Schedule and Inventory. Manufacturer shall use its best efforts to fill
all purchase orders of Axis within sixty (60) calendar days after the receipt of
Axis’s purchase orders.

    


    4.3           Shipment.
Manufacturer shall ship the Products in accordance with Axis’s instructions to
the destination specified by Axis. Title to the Products and risk of loss shall
pass from Manufacturer to Axis f.o.b. Manufacturer’s facility in Los Angeles,
California, U.S.A. or at such other point of delivery designated in Axis’s
purchase order. All freight and insurance charges and other costs, expenses,
fees, duties, imposts, value—added taxes and charges of whatever kind or nature
arising from the shipment of the Products to the destination specified by Axis
shall be for Shanghai Gold’s sole account.

    


    


    ARTICLE
5

    


    PAYMENT
OF OBLIGATIONS OF AXIS

    


    5.1           Purchase
Price. Axis shall purchase the Products at the prices set forth in
Appendix A to this Agreement which may be amended by agreement of the parties
from time to time. The parties acknowledge and agree that the prices set forth
in Appendix A are intended to provide Manufacturer with a reasonable margin on
profit on its manufacturing costs incurred in producing the Products and
reimbursement for all non- recoverable national, provincial, municipal and other
taxes (including sales, use, property or similar taxes assessable on or with
respect to the Products or parts, materials and components thereof, but
excluding taxes on the net income of Manufacturer), and all customs duties,
imposts and similar charges incurred by Manufacturer in acquiring parts,
materials and components of the Products.

    


    5.2           Currency.
Manufacturer shall invoice the purchase prices payable by Axis in United States
of America dollars and Axis shall make payments in such currency.

    


    
      
        
           


        

        
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    5.3           Due
Dates and Interest. Axis shall pay the total purchase price for each
order per agreement between Shanghai Gold and Axis. Axis’s obligation to make
payment to Manufacturer shall not be suspended by the failure of Axis’s
customers to pay Axis for any shipment of Products. By. mutual written consent,
the parties may establish payment due dates and interest for any annual term,
calendar quarter or other period in which the Agreement is in
effect.

    


    5.4           Reporting.
At all times during the term of this Agreement, Manufacturer shall maintain at
its principal place of business full, complete and accurate books of account and
records with regard to its activities under this Agreement, and to maintain
compliance and certification to ISO 9002 standards. Upon reasonable advance
notice, Manufacturer shall grant Axis access during regular business hours to
Manufacturer’s books and records in order to allow Axis to verify, at its own
expense, Manufacturer’s compliance with its obligations under this
Agreement.

    


    


    ARTICLE
6

    


    WARRANTIES
AND LIABILITIES

    


    6.1.           Warranties.
Manufacturer warrants that the Products, at the time of their delivery to the
common carrier designated by Shanghai Gold or Axis will conform to the product
specifications. Manufacturer shall promptly replace, at its own expense, any
quantity exceeding one (1) percent of the total number of ballasts supplied on
the related purchase order of defective or non-conforming Products supplied to
Axis, provided Axis shall notify Manufacturer in writing upon discovery of any
defect or non—conformity and provide Manufacturer a reasonable period of time in
which to evaluate Axis’s claim. Axis is solely responsible for any replacement
labor costs relative to warranty claims and defective products. MANUFACTURER’S OBLIGATION TO REPLACE
NON-CONFORMING PRODUCTS AS PROVIDED IN THIS ARTICLE 6.1 IS THE SOLE AND
EXCLUSIVE WARRANTY MADE BY MANUFACTURER WITH RESPECT TO THE PRODUCTS. ANY AND
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED BY LAW, INCLUDING, BUT NOT LIMITED TO,
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE OR
NON-INFRINGEMENT ARE HEREBY SPECIFICALLY EXCLUDED. UNDER NO CIRCUMSTANCES SHALL
MANUFACTURER BE LIABLE FOR ANY DAMAGES INCLUDING, WITHOUT DAMAGES, RESULTING
FROM, OR ATTRIBUTABLE TO, THE FAILURE OF ANY OF THE PRODUCTS TO CONFORM TO THE
PRODUCT SPECIFICATIONS, UNLESS SUCH DAMAGES RESULT FROM MANUFACTURER’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT, PERSONAL INJURY, CONCEALED DEFECTS THAT ARE
NOT TEE RESULT OF DEFECTIVE PRODUCTS SUPPLIED BY SHANGHAI GOLD, OR ACTS WHICH
VIOLATE THE PUBLIC OFFER AND GOOD MORALS OF AXIS

    


    6.2           Insurance.
Axis shall obtain and maintain during the term of this Agreement product
liability insurance with respect to all casualties including, but not limited
to, bodily harm and death caused by any defective Products. Such insurance shall
be adequate in scope and coverage considering the potential liability exposure
and shall include Manufacturer as an insured party.

    


    
      
        
           


        

        
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    ARTICLE
7

    


    INTELLECTUAL
PROPERTY RIGHTS

    


    7.1           Ownership.
Manufacturer acknowledges Axis and its affiliates’ exclusive right, title and
interest in and to the intellectual property rights to all of North America and
will not at any time do, or cause to be done, any act or thing impairing said
rights. Manufacturer agrees that the intellectual property rights of Axis and
its affiliates shall remain the exclusive property of such parties and that,
except as specifically provided hereunder, Manufacturer shall not acquire any
rights or interest in the intellectual property rights in North
America.

    


    7.2           Infringement.
Axis represents and warrants to Manufacturer that it has no knowledge of any
claim that the performance by Manufacturer of its obligations under this
Agreement will result in the infringement of any third party right.

    


    7.3           Cooperation.
Manufacturer shall promptly notify Axis (1) of any claims or objections that the
performance of its obligations under this Agreement may or will infringe any
third party rights; and (2) of any and all infringements, imitations, illegal
use or misuse by any person or entity of the intellectual property rights which
come to its attention; provided, however, that Manufacturer will not take any
legal action relating to the protection of the intellectual property rights
without the prior written approval of Axis; provided further that Manufacturer
shall render Axis all reasonable assistance in connection with any matter
pertaining to the protection of the intellectual property rights whether in the
courts, administrative agencies or otherwise.

    


    7.4           Improvements
and Modifications. Manufacturer agrees that any and all improvements and
modifications to the intellectual property rights or the product specifications
will be deemed part of the intellectual property rights or product
specifications to be used by Manufacturer in the manufacture of Products and
will constitute the property of Axis or an affiliate. At the request of Axis,
Manufacturer will execute such documents and take such other steps as may be
required to perfect and protect Axis’s or an affiliate’s proprietary rights in
and to such improvements and modifications including those improvements and
modifications that may be developed at Manufacturer’s facility during the term
of this Agreement which shall be the property of Axis or an
affiliate.

    


    
      
        
           


        

        
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    ARTICLE
8

    


    CONFIDENTIAL
INFORMATION

    


    8.1           Ownership.
Axis and Shanghai Gold, at their sole discretion, shall disclose to each other
certain confidential information to enable Manufacturer to perform its
obligations under this Agreement. Without obtaining each other’s prior written
consent, Axis or Manufacturer shall neither copy nor duplicate any such
confidential information by any means or technique. All files, lists, records,
documents, drawings, specifications, equipment and tapes delivered to or
received from Manufacturer which incorporate or refer to all or a portion of the
confidential information shall remain the sole property of Axis and Shanghai
Gold, and Manufacturer and Axis shall have possession of such property solely on
a loan for use basis. Manufacturer shall return to Axis, and Axis shall return
to Manufacturer, any and all documents of any type which contain confidential
information and shall destroy any copies thereof upon the termination of this
Agreement except that Manufacturer and Axis may retain such records pertaining
to Products manufactured for Axis as may be required under any applicable laws
and/or regulations. All intellectual property rights will remain unchanged upon
the termination of this Agreement, unless otherwise mutually agreed upon in
writing by Axis and Shanghai Gold.

    


    8.2           Confidentiality.
Manufacturer shall keep all confidential information segregated from other
materials in its control so as to maintain the confidentiality of Axis and
Shanghai Gold’s materials and shall not allow any samples of those materials to
be used or examined by any person not under its direct supervisory control for
any purpose. Manufacturer shall neither disclose nor facilitate disclosure of
the confidential information except to its representatives with a need to know
and shall not otherwise exploit and/or jeopardize the secrecy and value of the
confidential information. Manufacturer shall establish appropriate employment
policies.

    


    8.3           Exceptions.
The provisions of this Article 8 shall not apply to data and information
supplied by Axis if they (1) were already known by Manufacturer, prior to
disclosure; (2) have come into the public domain without breach of confidence by
the Manufacturer, its representatives or any other person; (3) were received by
the Manufacturer from a third party without restrictions on their use in favor
of the disclosing party; or (4) are required to be disclosed pursuant to any
statutory requirements or court order; provided, however, that Manufacturer
shall have the burden of establishing any of the above exceptions.

    


    
      
        
           


        

        
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    ARTICLE
9

    


    INDEMNIFICATION

    


    9.1           By
Shanghai Gold: Shanghai Gold agrees to defend, indemnify and hold Axis
harmless against any and all actions, claims, losses, liabilities and damages
(collectively referred to as “Claims” and including, but not limited to, any
special, incidental or consequential damages such as economic losses, legal
expenses, reasonable attorneys’ fees and liability for property damage, bodily
injury and death), incurred by Axis, its suppliers, agents, employees and/or
contractors or by any other third party if such Claims result from, arise out of
or in connection with:

    


    (a)       
    Design Defects. Any defect of the Products caused
by their faulty design or inaccurate or incomplete Product
specifications;

    


    (b)       
    Violation of Laws. Any violation by Shanghai Gold
of the laws and regulations applicable to the manufacture and sale of the
Products;

    


    (c)       
    Acts and Omissions. Any fault or intentional or
negligent act or omission by Shanghai Gold or its employees; and

    


    (d)       
    Intellectual Property Law. Any infringement of
third party rights based on the distribution and sale of the
Products.

    


    9.1(a) By Axis: Axis agrees to
defend, indemnify and hold Shanghai Gold harmless against any and all actions,
claims, losses, liabilities and damages (collectively referred to as “Claims”
and including, but not limited to, any special, incidental or consequential
damages such as economic losses, legal expenses, reasonable attorneys’ fees and
liability for property damage, bodily injury and death), incurred by Shanghai
Gold, its suppliers, agents, employees and/or contractors or by any other third
party if such Claims result from, arise out of or in connection
with:

    


    (a)      
     Violation of Laws. Any violation by Axis of
the laws and regulations applicable to the manufacture and sale of the
Products;

    


    (b)       
    Acts and Omissions. Any fault or intentional or
negligent act or omission by Axis or its employees; and

    


    (c)       
    Intellectual Property Law. Any infringement of
third party rights based on the distribution and sale of the
Products.

    


    
      
        
           


        

        
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    9.2           Defense
of Claims. If any claims shall be brought against either party as to
which this indemnification applies, each party shall, as soon as reasonably
practicable, inform the other thereof and the indemnifying party and/or its
insurers shall assume direction and control of the defense against such claim
including, without limitation, the settlement thereof at the sole option of the
indemnifying party or its insurer. Either party may, at its option and expense,
have its own counsel participate in any proceeding which is under the direction
and control of the indemnifying party. The indemnified party shall cooperate
with the indemnifying party and its insurer fn the disposition of any such
matters.

    


    


    ARTICLE
10

    


    COMPLIANCE
WITH GOVERNING LAW

    


    10.1         General
Compliance. Each party shall at all times and at its own expense (a)
strictly comply with all applicable laws, rules, regulations and governmental
orders, now or hereafter in effect, relating to its performance of this
Agreement; (b) pay all fees and other charges required by such laws, rules,
regulations and orders; and Cc) maintain in full force and effect all licenses,
permits, authorizations, registration and qualifications from all applicable
governmental departments and agencies to the extent necessary to perform its
obligations hereunder.

    


    10.2         U.S.
Export Control Requirements. Without limiting the generality of Article
10.1 hereof, the parties specifically acknowledge that each Product and all
technical data (as defined in 15 C.F.R. Part 779 of the Export Administration
Regulations) related to each Product (the “technical data”) are subject to the
United States export controls, pursuant to the Export Administration
Regulations, 15 C.F.R.R. Parts 768—799. The parties shall comply strictly with
all requirements of the Export Administration Regulations and all licenses and
authorizations issued thereunder with respect to the export and/or re-export of
each Product and all technical data and shall fully cooperate with each other in
securing the necessary export licenses and authorizations required
thereby.

    


    
      
        
           


        

        
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    ARTICLE
11

    


    TERM
AND TERMINATION

    


    11.1         Term.
This Agreement shall enter into full force and effect as of the date of signing
and shall remain in effect for a period of five (5) years unless terminated in
accordance with this Article 11. This Agreement shall be automatically renewed
for successive periods of one (1) year, unless one of the parties hereto
provides the other party with written notice of non—renewal at least ninety (90)
calendar days prior to the end of the initial term of this Agreement of any
renewal term thereof.

    


    11.2         Termination.
This Agreement may be terminated in the following circumstances:

    


    (a)         
  Axis may terminate this Agreement immediately upon notice of
termination to Manufacturer if Manufacturer breaches or defaults under any of
its obligations set forth in Articles 7 or 8 hereof.

    


    (b)         
  Shanghai Gold may terminate this Agreement immediately upon
notice of termination to Axis if Axis breaches or defaults under any of its
obligations set forth in Articles 7 or 8 hereof.

    


    (c)         
  In the event of any other material breach of, or material default
under, this Agreement by Axis or Manufacturer, the non—breaching or
non—defaulting party shall give the other party notice of such breach or
default, specifically delineating the nature of such breach or default and the
action required to cure it. The other party shall have a period of ninety (90)
days from the date of receipt of such notice within which to cure the breach or
default. In the event of failure to cure, this Agreement may be terminated by
notice of the non—breaching or non—defaulting party’s election to terminate to
the other party.

    


    (d)        
   Axis or Shanghai Gold, upon mutual agreement only, may
terminate this Agreement at any time, without cause, upon ninety (90) days
notice of termination to each other.

    


    
      
        
           


        

        
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    ARTICLE
12

    


    CONSEQUENCES
OF TERMINATION

    


    12.1         Termination
of Product Manufacturing. Upon termination of this Agreement for any
reason, Manufacturer shall immediately terminate production of the Products and
all use of the product specifications and intellectual property rights, unless
otherwise allowed in writing from Axis.

    


    12.2         Confidential
Information. Upon the termination of this Agreement for any reason,
Manufacturer shall, at the request of Axis, promptly return to Axis or its
designated representative or otherwise dispose of as Axis may instruct, all
materials that contain confidential information in written, recorded or other
tangible form (other than correspondence between Axis and Manufacturer) which
Manufacturer may have in its possession, custody or under its direct or indirect
control.

    


    12.3         Outstanding
Payments. The termination of this Agreement shall not release Axis from
its obligation to pay any sums then owing to Manufacturer or from the
obligations to perform any other duty or to discharge any other liability that
has been incurred prior thereto. Subject to the foregoing, however, neither
party shall, by reason of the expiration or termination of this Agreement, be
liable to the other for compensation or damages on account of the loss of
present or prospective profits on sales or anticipated sales, or expenditures,
investments or commitments made in connection therewith. Manufacturer hereby
waives all rights to compensation which Manufacturer might otherwise be entitled
to receive under applicable law upon expiration or termination of this
Agreement.

    


    12.4         General
Effect. Notwithstanding the termination of this Agreement, Manufacturer
shall continue to abide by the terms of its obligations under Article 7, 8, 9
and 10 herein.

    


    


    ARTICLE
13

    


    GENERAL
PROVISIONS

    


    13.1         Non—Transferability.
Except as specifically provided in

    this
Agreement, Manufacturer shall not assign any of its rights or delegate any of
its duties under this Agreement without the prior written consent of Axis. In
the event that either party is purchased by another party, all provisions under
the terms of this agreement shall remain in effect.

    


    13.2         Entire
Agreement. This Agreement constitutes the entire agreement between the
parties and supersedes all prior agreements, understandings and communications
between the parties with respect to the subject matter hereof. No modifications
or amendment of this Agreement shall be binding upon a party unless in writing
and executed by a duly authorized representative of that party.

    


    
      
        
           


        

        
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    13.3         Waiver.
The failure of either party to assert any of its rights hereunder including, but
not limited to, the right to terminate this Agreement for cause, shall not be
deemed to constitute a waiver by that party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.

    


    13.4         Force
Majeure. If either party is unable to fulfill any of its obligations
under this Agreement because of any natural calamity, act of God, labor
difficulty, act of public enemy, war, riot, embargo, rebellion, invasion,
insurrection, disruption of utilities, act or omission of government of similar
cause beyond the reasonable control of such party, other than an obligation to
pay money (collective, “Force Majeure Event”), the party so affected shall
immediately notify the other party and shall do everything possible to resume
performance. Upon the other party’s receipt of such notice, the obligations of
the party affected by such Force Majeure Event shall be suspended until
performance can be resumed.

    


     If
the period of non-performance exceeds ninety (90) days from the receipt of such
notice, either party may terminate this Agreement upon notice to the other
party. Termination pursuant to this Article 13.4 shall not be deemed a breach
of, or default under, this Agreement by either party, but shall not extinguish
any rights accrued or obligations owed prior to the occurrence of the Force
Majeure Event.

    


    13.5         Notices.
Unless specified to the contrary by the parties, all notices, purchase orders,
statements and other communications between the parties shall be sent by
registered mail, postage prepaid and return receipt requested, or by facsimile,
addressed as follows:

    


    
      	
              If
      to Axis Technologies:

            	
              Axis
      Technologies Inc.

            
	 
      	
              2055
      5. Folsom Street

            
	 
      	
              Lincoln,
      NE 68522

            


    

    


    


    
      	 
      	
              Phone:

            	
              402
      476—6006

            
	 
      	
              Facsimile:

            	
              866
      458—9881

            
	 
      	
              Email:

            	
              info@axistechnologyinc.com

            
	 
      	
              Attention:

            	
              Mr.
      Jim Erickson

            
	 
      	 
      	
              Mr.
      Kip Hirschbach

            
	 
      	 
      	
              Mr.
      Mark Gruenewald

            
	 
      	 
      	 
      
	
              If
      to Manufacturer:

            	
              Shanghai
      Gold Lighting Co. Ltd.

            
	 
      	 
      	
              NO.
      218 Minhe Road

            
	 
      	 
      	
              Shanghai,
      PRC 200070

            
	 
      	 
      	 
      
	 
      	
              Facsimile:

            	
              86—21—65104686

            
	 
      	
              Attention:

            	
              Mr.
      Zheng Di

            


    

    


    All
notices, purchase orders, statements and other communications shall be deemed
received: (1) if sent by registered mail ten days after the date of mailing; and
(2) if sent by facsimile 24 hours after the date and time of
transmission.

    


    
      
        
           


        

        
          -13-

          
            

          

        

        
           


        

      

    

    


    ARTICLE
14

    


    GOVERNING
LAW AND DISPUTE RESOLUTION

    


    This
Agreement shall be governed by and interpreted in accordance with the laws of
California excluding its rules governing conflicts of laws. All disputes arising
out of or in connection with this Agreement shall be submitted to the State of
California, which shall have jurisdiction to adjudicate such disputes. Axis and
Manufacturer hereby expressly consent to the jurisdiction of such
court.

    


    The
prevailing party in any legal proceeding brought by one party against the other
and arising out of or in connection with this Agreement shall be entitled to
recover its legal expenses including court costs and reasonable attorneys’ fees
incurred in such proceeding.

    


    IN
WITNESS HEREOF, the parties have caused this Agreement to be executed by their
duly authorized representatives on this _________ day of ___________________,
19___.

    


    
      	 
      	 
      	 
      	 
      


    

    


    


    
      	
              By
      Axis Technologies Inc.

            	
              By
      Shanghai Gold Lighting Co. Ltd.

            
	 
      	 
      	 
      	 
      
	
              /s/
      Jim Erickson

            	 
      	/s/
      Zheng Di	 
      
	
              Jim Erickson

            	 
      	
              Zheng Di, Director & General
      Mgr.

            	 
      
	 
      	 
      	 
      	 
      
	
              /s/ Kip Hirschbach

            	 
      	 
      	 
      
	
              Kip
      Hirschbach

            	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              /s/ Mark Gruenewald

            	 
      	 
      	 
      
	
              Mark
      Gruenewald

            	 
      	 
      	 
      


    

     

     

    -14-