DISTRIBUTOR AGREEMENT

Exhibit 10.4

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DISTRIBUTOR AGREEMENT

This Distributor Agreement (the “Agreement”) is entered into and effective as of December 09, 2003 (the “Effective Date”) by and between Applied Precision, LLC, a Delaware limited liability company located at 1040 - 12th Avenue NW, Issaquah, Washington 98027 U.S.A. (“AP”), and Image Solutions, Ltd., a corporation located at IMSOL House, Cable Court, Pittman Way, Preston PR2 9YW, United Kingdom (“Company”). AP and Company may be referred to individually as a “Party” and collectively as the “Parties.”

BACKGROUND

A. AP manufactures and sells the Products.

B. Company desires to purchase Products from AP for resale in the Territory.

C. Pursuant to the terms and conditions of this Agreement. AP desires to sell the Products to Company for resale in the Territory.

NOW, THEREFORE, in consideration of the foregoing premises and of the mutual covenants and agreements contained in this Agreement, the Parties hereby agree as follows:

AGREEMENT

 

1.	DEFINITIONS

“Affiliate” means, with respect to any legally recognizable entity, any other such entity directly or indirectly Controlling, Controlled by, or under common Control with such entity. “Control,” as used in this definition, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a legally recognizable entity, whether through the ownership of voting shares or other voting interests, by contract, or otherwise. Where such entity is a partnership, limited liability company, corporation or similar entity and has partners, members, or shareholders with equal ownership interests or equal control interests, by contract or otherwise, then each such partner, member, or shareholder will be deemed to possess, directly or indirectly, the power to direct or cause the direction of the management and policies of that entity.

“Confidential Information” means all non-public information that AP designates as confidential at the time of the disclosure or that, based on the nature of the information or circumstances surrounding its disclosure, Company should in good faith treat as confidential. Confidential Information does not include information Company can establish by written evidence: (i) entered or subsequently enters the public domain without Company’s breach of any obligation owed AP; (ii) became known to Company

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prior to AP’s disclosure of such information to Company; (iii) became known to Company from a source other than AP other than by the breach of an obligation of confidentiality owed to AP; or (iv) is independently developed by Company without reference to any Confidential Information.

“Product(s)” means those Product(s) listed in Exhibit A as such Exhibit A may be updated from time to time by AP upon written notice to Company.

“Territory” means the territory described in Exhibit B.

“Trademark(s)” means those trademarks listed in Exhibit C, and that Exhibit C may be updated by AP from time to time upon written notice to Company.

 

2.	DISTRIBUTORSHIP

2.1 Appointment. Subject to Company’s continued compliance with the terms and conditions of this Agreement, AP hereby appoints Company as an [*] of the Products within the Territory and Company hereby accepts such appointment.

2.2 Sub-Distributorships. Company may not appoint sub-distributor(s) for any of the Product(s) without AP’s prior written approval which may be given or withheld in AP’s sole discretion. Notwithstanding any such approval by AP of any such sub-distributorship, Company will at all times remain fully responsible for its performance of its obligations under this Agreement, and will unconditionally and irrevocably guaranty its sub-distributors’ full compliance with all terms and conditions of this Agreement applicable to such sub-distributors.

2.3 [*] [*]

2.4 All Rights Reserved. AP expressly reserves all rights not expressly granted to Company by this Agreement. Without limiting the generality of the foregoing sentence, AP specifically reserves the right to, in its sole discretion: discontinue any Product(s); change the specifications of any Product(s), introduce new Product(s); alter the pricing of any Product(s); and otherwise adjust its Product offerings in its sole discretion.

 

3.	PURCHASE AND SALE OF PRODUCTS

3.1 Purchase Orders. Company will submit all orders for Product(s) to AP in the form of written purchase orders which may be submitted by fax or electronically. Each purchase order must clearly specify the Product part number and quantities for each Product ordered. All purchase orders will be subject to this Agreement.

 

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3.2 Other Terms Excluded. This Agreement will exclusively govern all orders of Product(s) under this Agreement and, except for the Product part number and quantities for each Product ordered, any other terms contained on any purchase order or other document or form or stated orally will be of no effect.

3.3 Acceptance of Purchase Orders. Within a reasonable time after receiving a purchase order from Company, AP will notify Company in writing whether it accepts such purchase order and, if so, the anticipated shipment date for the Product(s) ordered. Purchase orders accepted by AP may be cancelled only by mutual written agreement of the Parties. However, AP reserves the right to reschedule the shipment date for all or any part of any purchase order for Product(s) that are not then available in sufficient quantities or on schedule to fill such purchase order.

3.4 Prices. The prices for Products sold by AP to Company under this Agreement will be the then current price for such Product as set forth in Exhibit D (“Distributor Pricing”). During the Term, AP will provide Company with an updated Exhibit D not less frequently than on a semi-annual basis. All prices are stated in US dollars.

3.5 Payment. AP will invoice Company for each shipment of Product(s) and all invoices will be due and payable [*] after the date of the invoice. All payments will reference the relevant invoice number and be sent by wire transfer iii US dollars as instructed by AP. At the same time Company wires its payment to AP, Company will also send AP a written statement by fax or email including the following remittance information: the name of Company, date of the wire transfer, applicable invoice number and amount of wire transfer. A finance charge equal to the [*] or the maximum amount allowed by applicable law will accrue on all past due amounts until paid in full.

3.6 Shipment Terms. All Product(s) sold under this Agreement are sold FCA (as defined by Incoterms 2000), AP’s facilities located at Issaquah, Washington. All Product(s) must be shipped from such location directly to the Territory, and all shipping documents must reflect such direct shipment.

 

4.	OTHER COMPANY DUTIES

4.1 Marketing and Promotion. Company will, at its own expense, use its best efforts to market and promote the sales of the Products in the Territory, such efforts to include, without limitation: (i) actively and diligently marketing and promoting the Products; (ii) featuring the Products at all appropriate trade shows within the Territory; (iii) maintaining a qualified, competent and professional sales, marketing and service staff and regularly training such staff with respect to the Products; (iv) actively encouraging its sales and marketing staff to market and promote sales of the Products; and (v) regularly advertising the Products in appropriate media within the Territory.

4.2 Promotional Materials. Before publication, distribution, display or other use of any advertising, marketing or promotional materials (“Promotional Materials”)

 

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containing any of the Trademarks and/or referring to any of the Product(s), Company will submit such Promotional Materials to AP for its review and approval, and Company will not use any Promotional Materials without AP’s prior written approval. Company acknowledges that all Promotional Materials must be consistent with the high-quality image, reputation and standards of AP and the Product(s) and protect the good will associated with the Trademarks.

4.3 Sales Restricted to Territory. Company will not directly or indirectly sell, distribute, market or ship any Product(s) outside of the Territory or to any customer within the Territory that Company knows or should know may resell or ship the Product(s) outside of the Territory. Company will immediately report to AP any and all inquiries regarding the Product(s) from persons outside the Territory or from persons within the Territory regarding delivery outside the Territory. If Company discovers that any of its customers have shipped any Product(s) outside of the Territory, Company will immediately notify AP and provide AP with the name and address of such customer, a detailed list of all Product(s) and quantities sold to such customer and the destination of the Product(s).

4.4 Training. Company will, at its own expense, send qualified Company employees to attend sales and service training meetings at AP’s headquarters at least twice each year as such meetings are scheduled by AP.

4.5 Customer Approval. Company will not directly or indirectly sell, distribute, market or ship any Product(s) to any customer that AP notifies Company in writing is not authorized to purchase the Product(s).

4.6 [*] Reports and Information. During the first week of each month during the Term, Company will provide AP with [*]. Company will provide AP with monthly reports of its marketing activities, sales and sales prospects for the following month and reports of successful and unsuccessful sales activities and orders won and lost during the prior month. Company will provide additional reports and information as AP may reasonably request from time to time.

4.7 No Changes to Product(s). Except as expressly authorized by AP in its sole discretion and in writing, Company will resell the Product(s) exactly as shipped by AP without alteration or modification, removal of components or substitution or installation of components.

4.8 Compliance with Law. At all times during the Term, Company will comply with any and all applicable laws and regulations, and maintain in full force and effect all permits, approvals and licenses required for Company to lawfully enter into, and perform its obligations under, this Agreement. Company will promptly provide AP with copies of any and all communications relevant to any of the Product(s) and/or Trademarks that Company receives from any governmental or regulatory body within the Territory (and

 

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certified English language translations of any of the foregoing issued in any language other than English).

4.9 Insurance. Throughout the Term, and for a period of two (2) years after the expiration or termination (for any reason) of the Term, of this Agreement Company will maintain in force insurance policies with reputable insurers sufficient in coverage and amounts to secure its obligations and potential liabilities under this Agreement. Company will be solely responsible for all premiums, deductibles and/or retentions associated with such insurance. At the request of AP, Company will provide to AP certificates of insurance evidencing such coverage and naming AP as an additional insured under such policies. Failure by AP to request, or by Company to furnish, such certificates will not constitute a waiver by AP of any insurance requirement. If AP so requests, Company will also provide to AP, or make available for its review, copies of the insurance policies.

4.10 [*] As a condition to [*] under this Agreement, Company agrees to purchase from AP under this Agreement, the [*].

4.11 Customer Support and Service. Company will be solely responsible to provide, at its own expense, customer support services any and all support and/or services as may be required by Company’s customers that purchase Product(s) including, instruction in Product(s) use, installation, maintenance, and any other professional consultation and/or services normally necessary or desirable to provide for customer satisfaction and to maintain good customer relations. Company will provide such support and perform such services in a professional, competent and timely manner. Company will provide AP with monthly written reports of all service activities including the name of the customer, time of receipt of service request, service performed, result and/or status of service call and root cause of problem requiring service. During the effective period of the end-user Limited License & Limited Warranty, AP will provide replacement parts, however, Company is solely responsible for any and all support and/or services required by Company’s customers. After the expiration of such end-user warranty, AP will provide replacement parts pursuant to then applicable service agreements and/or at its then current prices.

4.12 Demonstration Products and Reference Accounts. Customer must purchase demonstration Products from AP and must update such demonstration Products not less than annually. Company will provide AP with recommendations of Company customers

 

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that might serve as reference accounts for AP. AP may, in its sole discretion, offer discounts and/or special products for such reference accounts.

 

5.	OTHER AP DUTIES

5.1 Product(s) Information. AP will provide Company with such Product(s) information as AP generally makes available to its distributors, and such additional Product(s) information as Company may reasonably request.

5.2 Training and Support. AP will provide Company with such Product(s) training and support as AP generally makes available to its distributors.

5.3 [*]

 

6.	INTELLECTUAL PROPERTY RIGHTS

6.1 Ownership. Nothing contained in this Agreement will be deemed or construed as a transfer, assignment or license to Company of any patent, copyright, trade secret or other intellectual property right in any of the Product(s), and Company expressly acknowledges and agrees that all rights, title and interest in all of the foregoing remain vested in AP and its suppliers. Company will not take or permit any action that will infringe, diminish or interfere with any of AP’s or its suppliers rights in any of the Product(s).

6.2 Notices. Company will not remove, modify or obscure any copyright, patent or trademark notices that appear on any of the Product(s), and will market the Product(s) only under the names indicated by AP.

6.3 Counterfeiting. Company will immediately inform AP in writing of any counterfeiting of any of the Product(s) of which Company becomes aware. AP hereby reserves the exclusive right to introduce and pursue suits and/or actions against any such counterfeiting. To accomplish this objective, AP may use the name of Company as plaintiff or co-plaintiff, either separately or in conjunction with AR.

6.4 Licenses. All sales of Products under this Agreement, and all resale of Products by Company, are subject to the Limited License and Limited Warranty attached to this Agreement as Exhibit F. Company must obtain its customer’s written agreement to such Limited License and Limited Warranty as a condition to all sales of Products by Company.

 

7.	TRADEMARKS

7.1 Ownership. Company will not claim ownership of any of the Trademark(s), use any of the Trademark(s) as part of Company’s tradename(s) or trademark(s), or otherwise use any of the Trademark(s) in any manner that may give the impression that such

 

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Trademark(s) belongs to Company All uses of the Trademark(s) will accrue to the benefit of AP, and Company will not acquire any rights in or to the Trademark(s). In the event that by operation of any law or regulation of the Territory Company acquires any right, title or interest of any kind in the Trademark(s), Company hereby agrees that AP will be the beneficial owner thereof, and Company hereby irrevocably and unconditionally assigns such right, title or interest to AP. At APIs request, Company will immediately execute or any instrument, document, approval or registration that AP may deem be necessary or appropriate to perfect or protect AP’s rights in the Trademark(s).

7.2 Use. Company will market the Product(s) only under the Trademark(s) indicated by AP and will not associate any other trademark, logo, tradename or other descriptor with any .f the Product(s) or Trademark(s). Company will not take or permit any action that will infringe, interfere with or dilute any of AP’s rights in any of the Trademark(s).

7.3 Protection. Company will fully cooperate with AP in securing and preserving AP’ rights in the Trademark(s) within the Territory including without limitation, in the execution, submission and/or prosecution of any applications for registration of any of the Trademark(s) within the Territory.

7.4 Infringement. Company will be responsible to monitor the Territory for infringement or misuse of the Trademark(s) and will immediately inform AP in writing of any such infringement or misuse of which Company becomes aware. AP hereby reserves the exclusive right to introduce and pursue suits and/or actions against any such infringement and Company agrees to fully cooperate with AP in pursuing such suits and/or actions within the Territory.

 

8.	WARRANTIES

8.1 Mutual Representations and Warranties. Each Party hereby represents and warrants that (i) this Agreement has been duly and validly executed and delivered by such Party and constitutes a legal and binding obligation of such Party, enforceable against such Party in accordance with its terms; (ii) such Party has all necessary power and authority to execute and perform in accordance with this Agreement; and (iii) such Party’s execution, delivery and performance of this Agreement will not conflict with or violate any provision of law, rule or regulation to which such Party is subject, or any agreement or other obligation directly or indirectly applicable to such Party or binding upon its assets.

8.2 Disclaimer. AP ON BEHALF OF ITSELF AND ITS SUPPLIER EXPRESSLY DISCLAIMS ALL PRODUCT WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, REASONABLE CARE, WORKMANLIKE EFFORT, RESULTS, LACK OF NEGLIGENCE, LACK OF VIRUSES, ACCURACY