General Terms and Conditions

for R&D and Sale

Article 1. General

1. The agreement shall come into force by the general terms and conditions at hand together with the confirmation of order signed by the principal and HYDITEX CORPORATION.

2. These general terms and conditions shall be applicable to any and all offers, quotations and agreements between HYDITEX CORPORATION and a principal, insofar as the parties not explicitly deviate from these general terms and conditions.

3. The applicability of any purchasing terms and conditions and/or any other terms and conditions of the principal is expressly denied.

Article 2. Coming into effect of the agreement and quotations

1. Quotations by HYDITEX CORPORATION shall be based on the information supplied by the principal. The principal warrants that he has timely and truthfully supplied all information that is essential for the planning, execution, and completion of the order.

2. All quotations and offers by HYDITEX CORPORATION shall be free of obligations unless the quotation states an acceptance term. If no acceptance term is stated, no right in any manner whatsoever can be derived from the quotation or offer.

3. The agreement shall come into effect as per the day of signing by HYDITEX CORPORATION or the day of sending the written confirmation of order by HYDITEX CORPORATION to the principal respectively.

4. The agreement shall be entered into for an indefinite period, unless the content, nature or purpose of the order determines that it has been entered into for a fixed period.

Article 3. Execution by third parties

1. HYDITEX CORPORATION shall have the right, insofar as this is required for a proper execution of the agreement, to have the order partly carried out by third parties. HYDITEX CORPORATION shall only proceed thereto after consultations with the principal

Article 4 – Execution of the order

1. HYDITEX CORPORATION shall observe the care of a good supplier in the execution of its activities.

2. By force of the agreement, HYDITEX CORPORATION undertakes a best-efforts obligation and therefore does not provide any guarantees concerning the results of the order, unless explicitly determined otherwise.

Article 5. Rejection of the order

1. Changes in the order by the principal that could not have been foreseen by HYDITEX CORPORATION and that entail additional work, shall be paid by the principal to HYDITEX CORPORATION pursuant the rate agreed in the agreement. Additional work shall furthermore be the rescheduling of activities by HYDITEX CORPORATION if this is required as a result of supplying incorrect or incomplete data by the principal. HYDITEX CORPORATION shall invoice the costs for additional work to the principal on the basis of a subsequent calculation.

2. The principal shall timely inform HYDITEX CORPORATION in writing of any changes in the execution of the order requested at a later time by the principal after confirmation of the order. In the event that these changes are not supplied in writing, the risk of the execution of such changes shall be to the account of the principal.

3. Changes made in an order that has already come into effect, may result in the fact that the originally agreed delivery time shall be exceeded by HYDITEX CORPORATION.

Article 6. Cooperation of the principal

1. The principal shall at all times, thereto requested and at his own initiative, supply all relevant information to HYDITEX CORPORATION that is required for a correct execution of the order granted.

2. If information required for the execution of the agreed order, is not or not timely or not in agreement with the arrangements entered into made available, or if the principal has not met his (information) obligations, HYDITEX CORPORATION  shall have the right to suspend the execution of the agreement.

3. In order to let the execution of the order proceed orderly and as far as possible according to the time schedule, the principal shall timely make staff from his own organization available, unless the nature of the order determines otherwise. The principal shall ensure that his staff has the proper skills and experience to carry out the activities.

4. If and insofar as HYDITEX CORPORATION requests such, the principal shall supply HYDITEX CORPORATION at his premises and free of charge a private workspace with telephone and, if so desired, a fax and/or data net connection, unless the nature of the order determines otherwise.

5. If there are ensuing costs to HYDITEX CORPORATION as a result of the fact that the principal has not, not timely or not properly made staff, requested data, documents and facilities available, such costs shall be to the account of the principal.

Article 7 - Confidentiality

1. The principal and HYDITEX CORPORATION shall be held to secrecy of all confidential information that they have acquired from each other within the framework of the agreement or from any other source. Information shall be considered confidential when this has been indicated as such by the other party or when this ensues from the nature of the information.

2. If HYDITEX CORPORATION, on the grounds of a legal condition or a court order, is held to supply confidential information to a third party appointed thereto by law or the competent court and HYDITEX CORPORATION cannot appeal to any entitlement to refuse to give evidence, HYDITEX CORPORATION shall not be held to any compensation or redress for damages and the principal shall not have the right to annul the order on the grounds of any resulting damages.

3. The principal and HYDITEX CORPORATION shall impose their obligations on the grounds of this article to any other third parties to be commissioned by them.

Article 8. Intellectual property

1. All models, works and/or inventions developed by HYDITEX CORPORATION on behalf of the principal are and shall remain the property of HYDITEX CORPORATION. This shall include all intellectual property rights including but not limited thereto, any copyrights, model rights and or patent rights.

2. All documents, such as reports, computer programmers, system designs, methods, advice and contracts issued by HYDITEX CORPORATION on behalf of the principal, may be used by the principal and may be multiplied by the principal for his own use within the own organization. The documents supplied by HYDITEX CORPORATION may not be made public, multiplied and/or exploited or made known to any third parties by the principal unless the nature of the supplied documents determines otherwise.

Article 9. Rates

1. If, after the agreement has come into effect, but before the order has been completed, rate-determining factors (e.g. wages and/or prices) are subject to change, HYDITEX CORPORATION shall be entitled to change the previously agreed rate accordingly.

2. The principal shall have the right to annul the order if the increase constitutes more than 10%. If the authority to increase the rate ensues from an authority pursuant the law, the principal shall not have the right to annul the order.

3. The fee of HYDITEX CORPORATION is exclusive of: expenses of HYDITEX CORPORATION, invoices by commissioned third parties, VAT and other levies that are or may be imposed by the authorities.

Article 10. Terms of payment

1. Payment shall be effected within fourteen days from invoice date in a manner to be indicated by HYDITEX CORPORATION denominated in USD, unless agreed otherwise. Any objections against invoice amounts do not suspend the payment obligation by the principal. 2. If the principal fails to timely pay an invoice, the principal shall be legally in default and the legal interest is due by the principal. In such a case the principal shall pay interest on each month or any part thereof, whereby any part of a month is considered an entire month. The interest on the amount due shall be calculated from the time that the principal is in default until the time of payment of the entire amount that is due.

3. In the event of liquidation, bankruptcy (filing), attachment or (preliminary) suspension of payment of the principal or when the Debt Repayment Natural Persons Act (“WSNP) has been declared applicable to the principal, the claims of HYDITEX CORPORATION on the principal shall immediately become payable. 4. Payments shall in the first place serve to reduce the costs, secondly to reduce the arrear interest and finally to reduce the principal amount and the accrued interest.

5. If the principal assigns a different order for the attribution of the payment, HYDITEX CORPORATION shall have the right to refuse an offer to pay, and this shall not constitute an omission on his part. HYDITEX CORPORATION may refuse the full payment of the principal amount, if this payment does not include the arrear and accrued interest and collection costs.

6. The principal shall never be entitled to settlement of what he is due to HYDITEX CORPORATION.

7. If the principal is in default or fails to (timely) fulfil his obligations, all reasonable costs for the out of court collection shall be to the account of the principal. The out of court costs shall be calculated on the basis of what is customary in the Vanuatu collection practice.

8. HYDITEX CORPORATION may at all times require further security, in the absence whereof HYDITEX CORPORATION may suspend the execution of the agreement. If this requirement is not met to the satisfaction of HYDITEX CORPORATION, HYDITEX CORPORATION shall have the right to suspend the execution of, or to refuse all agreements with the principal, without being held to any compensation for damages and without prejudice to any other of his right in this agreement or by law.

Article 11. Complaints and investigations

1. HYDITEX CORPORATION has to be informed in writing of complaints with respect to activities carried out and/or with respect to the invoice amount within two weeks on completion of the activities at the latest date, in default of which any claim against HYDITEX CORPORATION shall become void.

2. Complaints as referred to in paragraph 1 of this article, do not suspend the payment obligations of the principal.

3. If and insofar as a complaint is accepted, the principal may choose between adjusting the invoiced fee or improving or once again carrying out the rejected activities free of charge. If carrying out the activities has verifiably become useless, the principal is entitled to a pro rata restitution of the fee already paid by the principal.

Article 12. Time for performance

Article 13. Annulment

Article 14 - Liability

1. HYDITEX CORPORATION shall not be liable for any damages of whatever nature that arise from the fact that HYDITEX CORPORATION has based himself on incorrect and/or incomplete data supplied by principal.

2. Should HYDITEX CORPORATION be liable for any damages whatsoever, the liability of HYDITEX CORPORATION shall be limited to the invoice amount, at least to that part of the amount to which the liability is related.

3. The liability of HYDITEX CORPORATION shall in each case always be limited to the amount paid up by his insurer in such an event.

4. HYDITEX CORPORATION shall exclusively be liable for direct damages.

5. Direct damages shall exclusively be the reasonable costs to establish the cause and the scope of the damage, insofar as the establishment relates to damages in the sense of these general terms and conditions, any reasonable costs incurred to bring the faulty performance by HYDITEX CORPORATION in line with this agreement, insofar as these may be attributed to HYDITEX CORPORATION, and reasonable costs, incurred to prevent or limit the damage insofar as the principal proves that these costs have resulted in a limitation of the direct damages as referred to in these general terms and conditions.

6. HYDITEX CORPORATION shall never be liable for indirect damages, including consequential damage, loss of profit, missed savings and damage through stagnation of work.

Article 15. Indemnification of third parties

1. The principal indemnifies HYDITEX CORPORATION against any possible claims by third parties who incur losses in relation to the execution of the agreement and the cause of which cannot be attributed to HYDITEX CORPORATION.

2. The principal shall be held to support HYDITEX CORPORATION in and out of court in the event that HYDITEX CORPORATION is addressed on the grounds of the first paragraph of this article and to immediately take all actions that may be expected from him in such a case. When the principal is in default with respect to taking adequate measures, HYDITEX CORPORATION, without any requirement for a notice of default, shall be entitled to proceed thereto himself. All costs and damages on the side of HYDITEX CORPORATION and third parties resulting thereof, shall fully be to the account and risk of HYDITEX CORPORATION.

Article 16. Time limit

1. In deviation of the legal time limits, the time limit of all claims and defenses with respect to HYDITEX CORPORATION shall be one year.

Article 17. Contract transfer

1. The principal shall not have the right to transfer any obligation from the agreement to third parties without the written consent of HYDITEX CORPORATION. Insofar as HYDITEX CORPORATION may have given written permission for a contract transfer, the principal shall at all times be jointly liable with such third party for the obligations from the agreement of which these general terms and conditions constitute a part.

2. Furthermore, insofar as HYDITEX CORPORATION may have given written permission for a contract transfer, the principal shall inform HYDITEX CORPORATION in advance thereof and HYDITEX CORPORATION shall have the right to terminate the agreement as per the date on which the transfer comes into effect. HYDITEX CORPORATION shall not be held to pay any compensation for damages in such an event.

Article 18. Applicable law

1. This agreement shall be governed by the law of Vanuatu.

2. All disputes concerning the agreement at hand and the execution thereof arising between the parties, shall exclusively be submitted to the competent court of the place of residence of HYDITEX CORPORATION.