**Exhibit10.11**

 

EXCLUSIVE SALESAND MARKETING AGREEMENT

 

THIS EXCLUSIVE SALES ANDMARKETING AGREEMENT (“Agreement”) is made and entered into this 8thday of June, 2005, by and between Munters Corporation, a New York corporation (“Company”),and Aquair, Inc., a California corporation (“Reseller”). Company and Resellershall hereinafter sometimes be referred to as the “Party” and collectively asthe “Parties.”

 

RECITALS

 

WHEREAS, Company is amanufacturer of certain machines and products that are used to control humiditywhile producing water in the process (“Products”).

 

WHEREAS, Company is theowner of certain copyrighted work and trademarks regarding its technologies.

 

WHEREAS, Company is theowner of certain issued and pending patents of products that condition air,control humidity, produces water from air, oxygenate water by using ozone andconvert contaminated water into pure drinking water.  Such issued and pending patents are listed asfollows:

 

•                  HumidityControl Units, HCU Patent 6,557,365

 

•                  HumidityControl Units, HCU Patent 6,711,907B2

 

•                  Methodsand Apparatus to Produce Drinking Water, application number 11/011,872 (SeeSchedule F)

 

WHEREAS, Reseller desiresto become an authorized sales and marketing contractor for Company, and Companywishes to engage Reseller to promote and facilitate sales of the Products (“Services”).

 

NOW, THEREFORE, inconsideration of the foregoing Recitals, which are incorporated into theoperative provisions of this Agreement by this reference, and for other goodand valuable consideration, the receipt and adequacy of which are herebyacknowledged, the Parties hereto agree as follows:

 

Article 1.Appointment

 

1.01         The Parties agree that Reseller shallhave a worldwide exclusive right to solicit sales of the Products to customersin the oil and gas industry (drilling and refinery), residential buildingindustry, private and commercial shipping industry, and government agencies asrequested by Reseller (“Territory”). During the term of this Agreement, Companyshall not, either directly or indirectly, appoint or use any person or entityother than Reseller for the marketing, sale or distribution of Products in theTerritory with the exception of the countries and projects in work listed inSchedule D.

 

1

----

 

1.02         The Reseller shall have the exclusiveright to bottle water for sale and to sell the water generating only productsto Companies that wish to engage in the business of water bottling.  The Company shall retain the right to sellair and water products to their customers that may choose to bottle water. TheReseller must invest a portion of the $5,000,000 mentioned in 5.06 to build andoperate a water bottling operation in the United States to retain this exclusivitywith in 12 months after the signing of this agreement.

 

1.03         The Reseller agrees not to engage withany other company in the selling of Products that might compete with theCompany Products during the term of this agreement and for a period of five (5)years after the termination of this agreement.

 

1.04         If Reseller desires to solicit sales ofCompany’s Products to customers other than those set forth in paragraph 1.01 (“UnlistedCustomers”), Reseller must first submit in writing the name of the UnlistedCustomers to Company for approval.  Ifthe Company is not selling to or has no active contact to the UnlistedCustomer, the Reseller shall be given the opportunity to do so.

 

1.05         Reseller may appoint sub-resellers,distributors, or agents to represent Reseller within the Territory.

 

1.06         The relationship between the Partiescreated by this Agreement shall not be construed as one of agency, partnership,joint venture, franchise or employer/employee. The Parties acknowledge thatReseller shall be and remains an independent contractor and shall not have theauthority to represent or bind Company except with the express prior written authorizationof Company. Further, Reseller represents and warrants that it will notrepresent itself to any third parties, including without limitation, customers,potential customers, lenders, or investors, that it is an agent of Company orin any way authorized to act on behalf of or obligate Company. Reseller shallthoroughly instruct its employees, agents, servants, officers, directors, and contractorson the fact that Reseller is not an agent for Company and should not be representedas an agent for Company. Reseller’s employees and independent contractors shallbe employed at Reseller’s own risk, expense, and supervision, and Reseller’semployees and independent contractors shall not have any claim against Companyfor salaries, commissions, items of cost, or other form of compensation orreimbursement, and Reseller represents, warrants, and covenants that Reseller’semployees and independent contractors shall be subordinate to Reseller andsubject to each and all of the terms, provisions, and conditions applying toReseller hereunder.

 

1.07         Company reserves the right to makealterations, add to, or discontinue any or all of its Products at any time, inthe Company’s sole discretion. In the event that Company decides to makealterations, add to, or discontinue any or all of its Products, Company shall provideReseller with thirty (30) days notice prior to making alternations, adding to,or discontinuing the Products. Upon receipt of notification that the Companywill discontinue a

 

2

----

 

product line that the Reseller is actively selling,the Reseller shall notify Munters in writing that such products are needed andif Munters declines to build such products, the Reseller has the right toproceed to find another manufacturer to manufacture these products.

 

Article 2. Pricing

 

2.01         Reseller shall have sole discretion indetermining the prices Reseller charges customers it obtains for the Services(Reseller’s “Customers”). Company shall provide to Reseller a price list forCompany’s Products (“Price List”), which is attached hereto as Schedule A. ThePrice List shall constitute Confidential Information as defined in Section 9.01.Company, at its sole discretion, may amend, modify or revise the Price List bysixty (60) days written notice to Reseller. During the sixty (60) day periodafter Company gives the notice to amend, modify or revise the Price List, Resellershall be entitled to place orders for Products at the then existing price.

 

2.02         Company agrees to protect Reseller’sprofit margin by maintaining the pricing of Company Products at the same levelas offered to other resellers or representatives of the Company that mightcompete in the same market as Reseller.

 

Article 3. ProductOrders

 

3.01         Reseller may order from Company bytelephone, facsimile, mail or electronic mail (“Order”). Acceptance by Companyof the Order shall occur (a) when the Order is entered into Company’s system;(b) when an Order number is provided to Reseller by facsimile or electronicmail, if requested by Reseller; or (c) when assembly of the Products commences,whichever occurs first.

 

3.02         Each Order shall be deemed an offer byReseller to purchase the Company Products listed therein and when accepted byCompany shall constitute a contract in accordance with the terms and conditionsof the Order and this Agreement. If a conflict arises between the two, thisAgreement shall take precedence.

 

3.03         Order submitted by Reseller pursuant tothis Agreement shall include the quantity and type of Product(s) ordered,Product descriptions, Product specifications, and Reseller’s order number, andthe Agreement number.

 

3.04         The Company’s terms and conditionsconcerning purchase orders, as attached in Schedule E shall apply to thisAgreement unless specifically accepted or approved in writing and signed by anappropriate senior manager or executive of Reseller and Company. A general formacknowledgment of any such order or any communication with respect to such anorder, or the making of deliveries with respect thereto, shall in no case beconstrued as an acceptance or approval of the type required by this paragraph.

 

3

----

 

3.05         Changes to orders will only be acceptedprior to the order entering Company’s manufacturing queue. Reseller mayinitiate such changes or additions to previously accepted Orders by submittinga modification of the Order to Company with appropriate reference to the originalOrder. Upon Company’s written acceptance of the modification or addition,Company shall process the Order in accordance with the pricing terms andconditions of this Agreement.

 

3.06         Company shall arrange for freight todeliver Products directly to customers upon written instruction by Reseller.The Company’s terms are FOB manufacturing plant.

 

Article 4.Remuneration

 

4.01         Upon Reseller’s ordering of Productswith Company, Reseller shall either (1) pay Company a down payment of 25% ofthe purchase price of the ordered Products via wire transfer to a bank accountdesignated by Company and pay the remainder of the purchase price in full whenReseller is notified by the Company that the Products are ready for delivery;or (2) at the time Reseller place the order, issue an irrevocable andtransferable at sight letter of credit (“Letter of Credit”) issued by a primebank to Company for the full amount of the purchase price payable at the timeReseller is notified by Company that the ordered Products have been shipped byCompany.

 

4.02         All expenses incurred by Reseller inconnection with its activities hereunder shall be borne by Reseller.

 

Article 5. Dutiesof Reseller

 

5.01         Reseller shall use reasonable sales andmarketing efforts to promote the sales of Company’s Products. Resellerrepresents and warrants that it is familiar with the Internet and the Productsand that it is presently qualified to promote the sale and provide salessupport for such Products.

 

5.02         Reseller shall follow such proceduresand use such contracts and forms in placing orders with Company as Companyrequests, and as Company may request from time to time in its sole discretion.

 

5.03         Upon notification by Customer orReseller of any damages to or unconformities of Products, Company shall repairor replace the Products in accordance with its standard warranty policyattached hereto in Schedule C (“Warranty”).

 

5.04         Reseller shall be solely liable for thepayment of any sales tax, use tax, occupational tax or any other taxes assessedor duties levied, imposed or collected by any governmental authority arisingfrom the sale or storage of Products purchased by Reseller.

 

5.05         Upon execution of this Agreement, theReseller shall pay the Company a $50,000

 

4

----

 

deposit towards the Reseller’s commitment to purchaseup to $500,000 of demo units (“Demo Units”) within 120 days of this signedAgreement. The $50,000 deposit shall be credited to the Reseller toward theorder and purchase of the Demo Units. In the event that the Reseller does notplace an order for the Demo Units within 120 days of this agreement, Companyshall retain the $50,000 deposit with no recourse to the Reseller. The Reselleralso agrees to clearly identify, within sixty (60) days of the execution ofAgreement, the Demo Units to be purchased to allow the Company to begin thedesign engineering prior to the 120 day period. Each Demo Unit shall bemanufactured by Company in accordance with industry specifications as submittedby Reseller in writing. Reseller shall (1) at the time Reseller places theorder for the Demo Units, pay Company a down payment of 25% of the purchaseprice of the Demo Units via wire transfer to a bank account designated byCompany and pay the remainder of the purchase price in full when Reseller isnotified by the Company that the Demo Units are ready for delivery; or (2)issue a Letter of Credit issued by a prime bank to Company for the full amountof the purchase price payable at the time that Reseller is notified by theCompany that the Demo Units are ready for delivery. Failure of the Reseller topurchase the $500,000 of demo units within the above allotted time frame willresult in the termination of this agreement.

 

5.06         In addition, Reseller shall provide$5,000,000 in funding to Reseller’s commercial division to promote, advertise,and market the Products pursuant to this Agreement. Reseller shall also submitto Company a list of potential customers that Reseller has contacted since the EffectiveDate.

 

5.07         Reseller shall employ at least one HVACengineer to handle the applications engineering work required by Reseller’scustomers within ninety (90) days of the execution of this Agreement.

 

Article 6. Dutiesof Company

 

6.01         Company shall provide Reseller withsuch technical information, marketing data, and marketing tools as is necessaryfor Reseller to market the Services in accordance with this Agreement.

 

6.02         Company shall provide technical andsupport training regarding the Products to Reseller upon request by Reseller.

 

6.03         Company shall assign a competent HVACengineer to support Reseller through the first ninety (90) days of thisAgreement until such time that Reseller’s own engineers have the capacity toprovide such technical support and customer service to Reseller and Customer. Atsuch time, Reseller shall notify Company in writing that Reseller no longerrequires technical support and customer service from Company.

 

6.04         Company shall manufacture Productsordered by Reseller with the mark “Aquair manufactured by Munters” (“the Mark”)branded on the Products, Reseller shall submit to

 

5

----

 

Company and maintain the artwork for the Mark.

 

Article 7.Intellectual Property; Sales and Marketing Materials

 

7.01         Company grants Reseller an exclusive,non-transferable and royalty free right and license to use Company’strademarks, service marks, trade dress or other designations (“Marks”), solelyin connection with the promotion of Company and the Products to prospective customersand in accordance with Company’s instructions and policies as communicated to Resellerin writing from time to time. Reseller’s use of the Marks, and all goodwillgenerated thereby, shall inure to the benefit of Company. Except as otherwiseprovided in this Section 7.01, Reseller shall acquire no right, title orinterest in such Marks. All rights to use the Marks shall cease upon expirationor termination of this Agreement.

 

7.02         In promoting Company and the Products,Reseller is not limited to use advertising or marketing materials prepared byCompany or approved by Company.

 

7.03         Company acknowledges that “Aquair” is atrademark being registered by Reseller.

 

Article 8. Company’sWarranties

 

8.01         Company represents and warrants asfollows:

 

(a)          Company is in compliance with allapplicable federal and state laws pertaining to the manufacture, production anddistribution of Products.

 

(b)          Company maintains product and generalliability insurance policies and is in full compliance with all product andgeneral liability insurance policies maintained by Company. Company shall takeall such action necessary to maintain such policies or substantially equivalentpolicies in full force and effect throughout the terms of this Agreement.

 

(c)          The Products shall be covered underthe Company’s standard Warranty, a copy of which is attached hereto as ExhibitC. Reseller shall provide a copy of the Warranty to Reseller’s Customers, butshall not represent or promise any additional warranties over and above thoseprovided in the Warranty. Company agrees to indemnify and hold Resellerharmless from the full amount of any and all liabilities, obligations, damages,expenses, or other adverse consequences related to, or arising in connectionwith any defects in the manufacturing of the Products, any claims of patentinfringement, ownership infringement, trade secret violations, or any othernegligent act or omission committed by Company or any of its agents in relationto the Products. However, Company shall have no obligation to indemnifyReseller for any claims arising from misrepresentations about the Products orfrom any misapplication of the use of the Products.

 

6

----

 

Article 9.Confidentiality and Customer Ownership

 

9.01         All documents, data, information andother materials made available to Reseller in connection with this Agreement,including without limitation all information regarding the Services, Companycustomers (including those customers and potential customers using the Servicesand/or referred to Company by Reseller), marketing data, business plans,technical information and information relating to Company’s business developedby Reseller during the term of this Agreement (collectively “ConfidentialInformation”) shall be deemed to have been furnished to Reseller in confidenceand shall remain the exclusive property of Company during and after the term ofthis Agreement. Reseller shall treat as trade secrets and keep in strictconfidence all Confidential Information and Reseller will not at any timeduring the term of this Agreement or at any time thereafter use suchConfidential Information, either directly or indirectly, for its own benefit ordisclose or permit any of its employees, agents, or representatives todisclose, directly or indirectly, through any medium such ConfidentialInformation to any other person or entity without the prior written consent ofCompany. Reseller shall further require that its employees, agents, andrepresentatives acknowledge in writing that the Confidential Information isproprietary to Company and that they agree, both during and after theiremployment, not to disclose any Confidential Information or use same for theirbenefit. Upon termination of this Agreement or upon request, Reseller shallreturn all Company Confidential Information to Company and certify in writingthat it has returned all such information to Company and has not kept copiesthereof in any medium.

 

Article 10.Indemnification

 

10.01       The Parties shall defend, indemnify andhold the other Party and the other Party’s agency, subsidiaries, partners,affiliates, successors, licensees and assigns, and their respective directors,officers, employees and agents, from and against any and all claims, costs,damages, losses or expenses, including reasonable attorneys’ fees, incurred bythe Party as a result of or in connection with (i) any breach of this Agreementby the other Party; (ii) any action or omission by the other Party or any ofthe other Party’s employees or agents; or (iii) any representation by Reseller,its employees, agents or representatives that Reseller is an agent for Company.

 

Article 11. Termand Termination

 

11.01       This Agreement shall commence on the datefirst stated above and shall continue in effect for a period of five (5) years,with automatic renewals of five (5) years each unless terminated under Section11.02.  For year one of this Agreement,the Reseller must have shipments to its customers valued in aggregate of atleast $1,000,000 and orders from its customers in aggregate of at least $3,000,000.In the remaining four (4) years of this Agreement, the Reseller must placeorders with the Company in the aggregate amount of at least $5,000,000 peryear. A minimum of **10%** of theabove quotas must come from each market segment assigned to Reseller. If theminimum order is not received, all provisions pertaining to the exclusivity ofthis Agreement shall terminate.

 

7

----

 

If the minimum of 10% isnot received from each market segment, the Company has the right to retractthis market segment from the reseller.

 

Notwithstanding thetermination of exclusivity under this Agreement in the event that Reseller failsto meet the quotas specified under this paragraph, all other provisions of thisAgreement shall remain effective regardless of whether Reseller met the quotas.

 

11.02       This Agreement may be terminated upon theoccurrence of any of the events of default listed below, after thirty (30) dayswritten notice to the other party, provided the grounds for termination (whichshall be clearly stated in any written notice) are not cured within the thirty(30) day period. For purposes of this provision, notice shall be given inwriting at the address listed on the signature page of this Agreement or to anyaddress subsequently provided by either party. The events of default whichwould entitle a Party to terminate this Agreement are as follows:

 

(a)           a material breach of any covenant,term or condition of this Agreement by the other Party; or

 

(b)           an assignment by the other Party forthe benefit of creditors or the other Party becomes bankrupt or insolvent, ortakes benefit of, or becomes subject to any legislation in force relating tobankruptcy or insolvency, it being understood that the appointment of areceiver or trustee of the property and assets of the Reseller are conclusiveevidence of insolvency; or

 

(c)           insolvency of the other Party, thefiling of a voluntary petition by the other Party in Bankruptcy Court,reorganization or any similar proceedings by the other Party, the filingagainst the other Party an involuntary petition in bankruptcy that is notvacated within sixty (60) days from the date of filing, or the rendition of ajudgment against the other party that remains unsatisfied and subject toexecution, provided such judgment is substantial in relation to the otherParty’s assets or may materially affect the other Party’s performance underthis Agreement.

 

11.03       The provisions of Sections 1.02 and 1.03and Articles 7, 9, 10, 11, and 12 of this Agreement shall survive terminationof this Agreement or any part thereof.

 

Article 12.General Provisions

 

12.01       Force Majeure. Company shall notbe liable for, and is excused from, any failure to perform or for delay in theperformance of its obligations under this Agreement due to causes beyond itscontrol, including without limitation, interruptions of power ortelecommunications services, failure of Company’s suppliers or subcontractors,acts of nature, governmental actions, fire, flood, natural disaster, or labordisputes.

 

12.02       Waiver. No failure of either Partyto pursue any remedy resulting from a breach of this Agreement shall beconstrued as a waiver of that breach or as a waiver of any subsequent or otherbreach unless such waiver is in writing and signed by the non-breaching Party.

 

 

8

----

 

12.03      Severability. In the event anyprovision of this Agreement shall be invalid, illegal or unenforceable in anyrespect, such a provision shall be considered separate and severable from theremaining provisions of this Agreement, and the validity, legality orenforceability of any of the remaining provisions of this Agreement shall notbe affected or impaired by such provision in any way.

 

12.04      Non-assignment. This Agreement maynot be assigned by Reseller, in whole or in part, without the express writtenconsent of Company. Company may assign this Agreement without consent ofReseller (i) to any entity controlled by or under common control with Company;(ii) pursuant to any sale or transfer of substantially all of the assets ofCompany; or (iii) pursuant to merger or other reorganization of Company.

 

12.05      Governing Law. This Agreement shallbe construed and enforced under, and is to be governed by the laws of the Stateof Texas. Each of the Parties to this Agreement irrevocably consents to anysuit, action, or proceeding with respect to this Agreement being brought in anycourt of competent jurisdiction in Guadalupe County, Texas.

 

12.06      Entire Agreement. All exhibits tothis Agreement shall be incorporated in and constitute parts of this Agreement.This Agreement constitutes the entire understanding between the Parties in relationto the subject matter hereof and supersedes all prior discussions, agreements,and representations, whether oral or written and whether or not executed byCompany or Reseller. Unless otherwise provided in this Agreement, nomodification, amendment or other change may be made to this Agreement or anypart thereof unless reduced to writing and executed by authorizedrepresentatives of both Parties.

 

12.07      Attorneys’ Fees. In the event ofany litigation or arbitration to enforce the terms of this Agreement, theprevailing Party in the litigation or arbitration is entitled to recover fromthe other Party the prevailing Party’s costs of litigation or arbitration,including without limitation reasonable attorneys’ fees.

 

12.08      Modification. No modifications tothis Agreement shall be effective without the written consent of the all theParties.

 

12.09      Arbitration Clause. Should anycontroversy arise between the Parties hereto concerning this Agreement, thepayment and/or the delivery of any Products, or the rights and duties of eitherParty under this Agreement, the controversy shall be resolved by arbitrationpursuant to the arbitration rules then in effect with the American ArbitrationAssociation in Guadalupe County, Texas. The decision of the award shall bebinding on both Parties and may be established as a judgment in any court inGuadalupe County, Texas, having jurisdiction thereof, and shall includeattorneys’ fees and costs for the prevailing Party.

 

IN WITNESS WHEREOF, theParties hereto have executed this Agreement on the date

 

 

9

----

 

stated above.

 

COMPANY:

 
|      | Munters Corporation, a New York corporation  ADDRESS |
|-----------|------------------------------------------------------|
|      |                                                 |
|      |                                                 |
|      | By:                                                  | /s/ Chuck Campbell |   |
|      | (signature of authorized officer)                    |
|      |                                                 |
|      |                                                 |
|      | /s/ Chuck Campbell                                   |   |
|      | Chuck Campbell, VP Commercial Division               |
|      |                                                 |
|      |                                                 |
| RESELLER: |                                                 |
|      |                                                 |
|      | Aquair, Inc., a California corporation  ADDRESS      |
|      |                                                 |
|      |                                                 |
|      | /s/ Louis L. Khilkenbocken                           |   |
|      | (signature of authorized person)                     |
|      |                                                 |
|      |                                                 |
|      | /s/ Louis L. Khilkenbocken                           |   |
|      | (print name and capacity)                            |
|      |                                                 |
|      |                                                 |
|      | ###-##-####                                          |   |
|      | (SSN or EIN)                                         |
|           |                                                      |  |  |

 

----

 

**SCHEDULEE**

** **

**TERMSAND CONDITIONS**

 

STANDARDCONDITIONS OF SALE

 

(1)                                  **AGREEMENT AND LIMITATIONS.** The agreement between Company andPurchaser, the “sales contract”, with respect to the sale of goods described onthe other side hereof, the “goods” shall consist of the terms appearing hereonand on the other side hereon together with the company’s acknowledgment letterindicating acceptance of Purchaser’s order and the Company shall not be boundby any additional or different terms whether printed or otherwise inPurchaser’s purchase order or**inany other communication from Purchaser to Company unless specifically agreed toby Company in writing. The sales contract shall be for the benefit of theCompany and Purchaser and not for benefit of any other person.

 

(2)                                  **SHIPMENT AND DELIVERY.** Unless otherwise specifically agreed,all prices are for material commercially packed for domestic shipment and fordelivery F.O.B. point of origin. Shipping dates are approximate and arecontingent upon prompt receipt of all necessary information.

 

The Company shallnot be liable for delays in delivery or failure to manufacture or deliver dueto causes beyond its reasonable control whether or not of the same generalcharacter as those herein specifically enumerated, including, but not limitedto, acts of God, acts of the Purchaser, acts of civil or military authority,priorities, fires, strikes, floods, epidemics, war, riot. Delays intransportation or car shortages, or inability to obtain necessary labor,materials, components or manufacturing facilities. In the event of any suchdelay, the date of delivery shall be extended for a period equal to the time lostby reason of the delay.

 

Partial shipmentsmay be made and payments, therefore, shall become due in accordance with theterms hereof or as shipments are made and invoices tendered.

 

The Companyassumes no responsibility for delays, breakage or damage after having madedelivery to a carrier, at which time all risk of loss for any cause passed toPurchaser.

 

(3)                                  **CLAIMS.** No claim for variances from or shortages in orderswill be considered by the Company unless presented to it in writing withinthirty (30) days after receipt of goods. All claims for breakage or otherdamage due to shipment or handling shall be made to the common carrier by thePurchaser.

 

(4)                                  **PAYMENT AND CREDIT.** Unless otherwise provided herein,payment terms will commence from date of invoice. If materials are ready forshipment and delayed by purchaser, the Company shall be entitled to payment atstated terms, and will submit invoices accordingly.

 

The terms of saleherein are subject to credit approval and Company may at any time modify theterms of payment originally specified to include payment in advance added to theprice.

 

In the event theCompany is forced to resort to legal action to collect accounts due, allreasonable costs and expenses including attorney’s fees and interest shall beadded to the price.

 

The Companyreserves the right to add to any account outstanding beyond the due date, aservice charge of 1 1/2% of the principal amount due at the end of each month,or the maximum allowable legal interest rate, if a lesser amount.

 

For orders outsidethe Continental United States, Canada or Puerto Rico, the Company will requirean Irrevocable Letter of Credit or similar guarantee of payment as defined bythe Company. The terms of payment are due on presentation of shippingdocuments, Retainage of any kind is unacceptable.

 

(5)                                  **TAXES.** The prices do not include, except as expressly statedin the quotation, any present or future sales, use, excise, similar taxes orany**increase in such taxes. Consequently,in addition to the price specified herein, the amount of any present or futuresales, use, excise, or similar taxes or increase in such taxes applicable tothe sale or use of the equipment hereunder shall be paid by the purchaser, orin lieu thereof the Purchaser shall provide the Company with the tax-exemptioncertificate acceptable to the taxing authorities.

 

(6)                                  **CANCELLATION CHARGES.** Once accepted by the Company, an orderis not subject to cancellation or change except on terms acceptable andsatisfactory to the Company. Direction by Purchaser to cancel may be treated as**a**repudiationmaking the Purchaser immediately liable of loss, expense and other damages. Itis understood that a cancellation charge will be due from Purchaser to Companycomputed on the basis of costs (direct and indirect) accumulated, includingwithout limitation, labor materials and engineering related to this agreementand the articles described herein, plus 10% of the total contract price asliquidated damages, and not as a penalty of such cancellation. The cancellationcharge shall be due and payable at the time of receipt of Purchaser’s writtennotice of cancellation at Company’s office. In the event that Purchaser causesor requests (i)**changes to be madewhich affect delivery, installation, specifications, completion dates orotherwise or (ii) the work to be delayed, whether directly or by othercontractors or because the facilities, including utilities, electrical hookup, sitepreparation, governmental permits, approvals or licenses, apparatus or otherconditions to be provided or arrange 1 by Purchaser are lacking orinsufficient, Purchaser will reimburse Company for any expense incurred byCompany in respect of or resulting from any such charge or delay uponpresentation by Company of a simple invoice. Any additional services orequipment not specifically set forth herein shall be at Purchaser’s additionalexpense.

 

(7)                                  **STORAGE.** If shipment of any materials is postponed bydirection of the Purchaser, the Company may at any time after original scheduledate of shipment, pack, hold and invoice such material as if then shipped, same being then heldat Purchaser’s risk and subject to Company’s storage charges, and upon fullpayment shall become the property of the Purchaser.

 

(8)                                  **WARRANTY.** The Company warrants all equipment manufactured byit to be free from defects in workmanship and materials for a period of oneyear commencing thirty (30) days from date of shipment of equipment by theCompany.

 

This warrantyapplies only to equipment that is properly installed, maintained and operatedunder normal conditions with competent supervision in accordance with the equipmentinstruction manual and Company recommendations, if any, made in the proposalgoverning purchase of said equipment. The Company’s obligation under thiswarranty is limited to repair or replacement at our option, at our factory, ofany part returned to us prepaid which upon examination shall prove to be

defective. Freightcharges incurred for shipment of warranty repair or replacement parts will bethe responsibility of the purchaser.

 

This warrantyshall be void in the case of any equipment which has been disassembled,repaired or tampered with in any way, except when such work has been done withCompany’s written approval. THE COMPANY WILL NOT BE LIABLE FOR ANY INDIRECT ORCONSEQUENTIAL DAMAGES OF ANY KIND ARISING FROM THE USE OF THIS PRODUCT.

 

this warranty shall be voided iF payment is not made in accordancewith the terms as set forth by the company.

 

THIS WARRANTY ISEXPRESSLY IN LIEU OF ALL OTHER WARRANTIES EXPRESSED OR IMPLIED INCLUDING ANYWARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND THECOMPANY NEITHER ASSUMES NOR AUTHORIZES ANY PERSON TO assume for it any other liability in connection with theconstruction, delivery, and operation of this equipment except ASAFORESAID.

 

(9)                                  **PATENTS.** It is understood and agreed that Company shallassume all responsibility for and save Purchaser from any and all damages,costs, royalties and claims arising out of charges of infringement of patentswhich may be alleged to cover articles supplied hereunder, excepting thosepatents covering the manufacture, sale, or use in articles supplied hereunder,of designs, devices, parts, arrangements specialties and equipment furnished orspecified by Purchaser and as to such excepted patents Purchaser shall in likemanner assume responsibility and save Company harmless. Prompt notice inwriting shall be given by each party to the other of any claim of patent

 

----

 

infringement presented tosuch party with respect to articles supplied hereunder, and the partresponsible for such infringement as above provided, shall promptly undertakeand assume the defense thereof.

 

(10)                            **DEFAULT.** In the event that at any time Purchaser is indefault under any terms of any order arising out of this proposal or any otherorder, Company reserves the right to withhold construction or**delivery and to cancel and terminate anyor all orders and to hold Purchaser liable for any damages and expense incurredby Company. The Company also reserves the right to declare all charges andaccounts to be immediately due and payable.

 

(11)                            **CLERICAL ERRORS.** The Company reserves the right to correctclerical, arithmetical or stenographic errors**or omissions in quotations, order acknowledgments, invoices, orother documents.

 

----

 

**SCHEDULEA**

 

**PricingVolume Discount Schedule For Annual Sales**

 
| **Annual  Sales**                      | ** ** | **Discount** | ** ** |
|----------------------------------------|------------|--------------|------------|
| **  Sales  over $1,000,000** | ** ** | **5**        | **%**      |
| **  Sales  over $3,000,000** | ** ** | **7.5**      | **%**      |
| **  Sales  over $5,000,000** | ** ** | **10**       | **%**      |

 

----

 

**SCHEDULEF**

 

**Patentinformation on atmospheric water generator to be supplied by Michael Morgan**

 

----

 

**SCHEDULEB**

** **

**DEMOUNITS**

 

**DemoUnits valued up to $500,000 are to be identified within 60 days and purchasedwithin 120 days of execution of this Agreement.**

 

----

 

**SCHEDULEC**

 

**WARRANTY**

 
| **Munters Corporation –  Dehumidification Division** | ** ** | **3/1/2000** |
|-----------------------------------------------------------|------------|--------------|
| **WARRANTY**                                              |       |         |

 

**EQUIPMENTWARRANTY**

 

Munters warrants all its equipment to be free fromdefects in workmanship and material for a period of one year commencing thirty(30) days from date of shipment by Munters. Munters will repair or replace, atits option, any such equipment determined to be defective during this one-yearperiod.

 

The foregoing warranty does not apply to:

 

1.               Any equipment orpart that has been misused, used for any purpose other than its intendedpurpose, or that has not been installed, maintained and operated under normalconditions with competent supervision in accordance with the equipmentinstruction manual and Munters’ recommendations; or

 

2.               Any equipment orpart that has been disassembled, repaired or tampered with in any way, exceptwhen such work has been done [by an authorized service representative] inaccordance with Munters’ service guidelines.

 

This warranty covers replacements and repairs oradjustments made at the Munters’ factory only. If the services of a MuntersService Technician are required at the site where the equipment or part isinstalled, or at any other location other than Munters’ factory, buyer will beresponsible for the cost thereof and a purchase order shall be issued toMunters.

 

**FIVEYEAR WARRANTY FOR MUNTERS HONEYCOMBE WHEELS**

 

Munters warrants its Honeycombe Titanium enhancedSilica Gel, Molecular Sieve, and HPX Honeycombe wheels to be free fromstructural defects in workmanship and material for a period of five yearscommencing thirty (30) days from date of shipment by Munters.

 

The foregoing does not apply to:

 

1.               Lithium Chloridewheels that have not been maintained under a Munters Service-Caire Agreement continuouslythroughout the five-year period;

 

2.               Damage caused bymisuse or any improper maintenance or contamination of the Honeycombe wheel media;or

 

3.               Damage caused byother component malfunction or operation of the equipment beyond the specified conditions

 

STEAM REACTIVATED SYSTEMS: Munters will only repair orreplace leaking steam coils under warranty when accompanied by a water qualityreport from an independent, qualified laboratory showing the chemical analysisof the steam associated with these coils. These tests must show pH values andsulfur content within the ranges associated with proper steam operating ranges.Proper steam piping, per manufacturer’s recommendations,

 

----

 

must be applied to any steam coil installations toprevent contamination and possible water hammering that could lead to leaks.

 

**LABORWARRANTY**

 

Munters’ obligation under this warranty for labor islimited to correcting any improperly performed start-up labor, for a period ofninety (90) days. Customer is responsible for providing clear access toequipment.

 

**CLAIMPROCEDURES**

 

If any defect appears in the equipment during theapplicable warranty period:

 

1.               Buyer shall notifyMunters of the defect in writing, including in such written notice the model,serial number and part number of such equipment or defective part thereof, anda description of the nature of the defect.

 

2.               After receipt ofsuch information, Munters will ship a replacement, F.O.B. Munters factory, andwill invoice the buyer therefore, and for shipping charges, if applicable.

 

3.               Upon receipt ofwritten authorization from Munters, buyer shall return the defective equipmentor part to Munters with shipping charges prepaid.

 

4.               Upon receipt of theequipment or part by Munters, the cause of the failure will be analyzed and, ifequipment or part is found to be defective in workmanship or material, a creditwill be issued for the cost of the replacement or repair of said equipment orpart.  Any special shipping requests suchas “Next Day Air” will be the customer’s responsibility and will be sent “freightcollect”.

 

Munters assumes no responsibility for any incidentalor consequential damage to structures (including, but not limited to, anyductwork, roofing materials, outbuildings or piping) or any other equipmentcaused by any defective equipment or part or the removal or replacementthereof.

 

This warranty does not include delivery of materialsto the job site or rigging, scaffolding, lifts or labor necessary to installreplacement equipment or parts. Buyer is responsible for lifting requirements,cranes, unpacking, etc., as well as removal of previously supplied or installedmaterials.

 

**EXCLUSIVEREMEDY**

 

MUNTER’S OBLIGATION, AND BUYER’S SOLE AND EXCLUSIVEREMEDY UNDER THIS WARRANTY, IS LIMITED TO REPAIR OR REPLACEMENT, AT MUNTERS’OPTION, OF ANY EQUIPMENT DETERMINED TO BE DEFECTIVE IN WORKMANSHIP OR MATERIALDURING THE APPLICABLE WARRANTY PERIOD.

 

THIS WARRANTY IS EXCLUSIVE AND IN LIEU OF ALL OTHERWARRANTIES, EXPRESSED OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTYOF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THEGENERALITY OF THE FOREGOING, MUNTERS DISCLAIMS AND BUYER HEREBY WAIVES, ANYOTHER CLAIM AGAINST MUNTERS (WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE),INCLUDING ANY CLAIM

 

----

 

OR LIABILITY FOR SPECIAL, INDIRECT OR CONSEQUENTIALDAMAGES OF ANY KIND RELATING TO OR ARISING OUT OF THE EQUIPMENT OR ANY PARTTHEREOF, OR THE BUYER’S USE THEREOF.

 

MUNTERS NEITHERASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME FOR IT ANY OTHER LIABILITY INCONNECTION WITH THE MANUFACTURE, SALE, DELIVERY, INSTALLATION AND OPERATION OFTHE EQUIPMENT OR ANY PART THEREOF EXCEPT AS AFORESAID

 

----

 

**SCHEDULED**

** **

**TERRITORITY**

 

**Thefollowing are being excluded from the Resellers territory:**

 

**Countries:**

**Thailand(water bottling and unit sales)**

**Indonesia(water bottling and unit sales)**

**Malaysia(water bottling and unit sales)**

**Singapore(water bottling only)**

 

**CurrentCustomers:**

 

**Logis-Tech(Kuwait project and other projects as identified in writing and approved byAquair. Aquair agrees to allow Logis-Tech to sell into any military projectthat they are not currently involved in.)**

 

----