EXHIBIT
10.17
DISTRIBUTOR
AGREEMENT
BETWEEN
GUARDIAN TECHNOLOGIES
INTERNATIONAL, INC.
AND
EGC International
Corp
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Guardian
Technologies International, Inc.
Confidential
TABLE OF
CONTENTS
1.
TERM
3
2.
APPOINTMENT
4
3.
MUTUAL OBLIGATIONS
4
4.
DISTRIBUTOR’S
OBLIGATIONS
4
5.
DISTRIBUTOR’S REPRESENTATIONS
AND WARRANTIES
7
6.
GDTI’S
OBLIGATIONS
8
7.
PRICE TERMS
9
8.
ORDERING PROCEDURE, PAYMENT TERMS,
DELIVERY
9
9.
TITLE AND SHIPPING
12
10.
PRODUCT SPECIFICATION
CHANGES
13
11.
SOFTWARE LICENSE
13
12.
INTELLECTUAL AND INDUSTRIAL PROPERTY
RIGHTS
13
13.
PATENT, COPYRIGHT AND TRADE SECRET
INFRINGEMENT
14
14.
PRODUCT WARRANTY
15
15.
DISCLAIMER OF EMPLOYMENT
RELATIONSHIP
16
16.
NO ASSIGNMENT
16
17.
TERMINATION
16
18.
EFFECT OF TERMINATION
17
19.
FORCE MAJEURE
17
20.
MISCELLANEOUS
17
21.
DEFINITIONS
19
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Guardian
Technologies International, Inc.
Confidential
DISTRIBUTOR
AGREEMENT
THIS DISTRIBUTOR
AGREEMENT (this “ Agreement ”) is made effective
the ____day of February, 2005 (the “ Effective Date
”)
B E T W E E
N:
Guardian
Technologies International, Inc., a corporation organized and
existing under the laws of the state of Delaware (hereinafter
called " GDTI "),
and
EGC International
Corp, a corporation organized and existing under the laws of the
state of Florida (hereinafter called " Distributor
").
WHEREAS GDTI has
developed and owns the Intelligent Imaging Informatics (3i) suite
of software, the source code and object code relating thereto, as
well as considerable know-how and expertise relating
thereto.
WHEREAS GDTI and
Distributor desire that Distributor be appointed to actively
promote the licensing and distribution of the GDTI products listed
in Schedule A attached hereto and any updates, upgrades or new
releases or versions thereof (the " Products ") and to
provide support to licensees of the Products.
NOW THEREFORE, in
consideration of the mutual premises and agreements hereinafter
contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto mutually covenant and agree as
follows:
1.
TERM
This Agreement shall
remain in effect for a period of three years from the Effective
Date. It shall be automatically renewed thereafter for
successive one year periods, unless terminated in accordance with a
provision contained herein, or unless either party gives written
notice to the other of its intention to terminate or re-negotiate
the Agreement no less than one hundred and twenty (120) days prior
to the end of the then-current period, in which case this Agreement
shall terminate at the end of its then-current period unless the
parties subsequently amend the Agreement to provide for an
extension of the term.
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2.
APPOINTMENT
A.
Subject to all of
the terms and conditions of this Agreement, GDTI hereby appoints
Distributor as distributor of the Products in the territory defined
in Schedule B attached hereto (the "Authorized Area") .
Distributor shall license and distribute the Products to end
users intending to use the Products in the Authorized Area.
Distributor shall have the exclusive right (except as
specified in Section 20.A) to license and distribute the
Products in territories designated “exclusive” in
Schedule B. Distributor shall have the non-exclusive
right to license and distribute the Products, and GDTI may grant
rights to third parties to license and distribute the Products or
may license or distribute the Products directly, in other
territories defined in Schedule B.
B.
Due to the need to
maintain high standards for support of the Products, Distributor
agrees not to (i) license, distribute or support the Products
anywhere outside the Authorized Area or (ii) knowingly license or
distribute the Products, directly or indirectly through one or more
intermediaries, to end users who intend to use the Products outside
the Authorized Area, in each case without the prior written consent
of GDTI, which may be withheld in GDTI’s sole discretion.
Before giving such consent, GDTI reserves the right to
require Distributor to provide such information as GDTI requires in
order to determine Distributor's ability to adequately license,
distribute and support the Products outside the Authorized
Area.
C.
Unauthorized
shipment, licensing or distribution by Distributor of Products
outside the Authorized Area will invalidate the warranty set forth
in Section 14 and shall give GDTI the right to terminate this
Agreement immediately upon notice to Distributor.
3.
MUTUAL OBLIGATIONS
In performing its duties under this
Agreement, GDTI and Distributor, respectively, will:
A
Not do anything that would tend to
discredit, dishonor, reflect adversely or unfavorably upon, or in
any manner injure the reputation of, the other;
B.
Endeavor to promote the licensing and
distribution of the Products by providing leads to each other, as
applicable;
C.
At all times adhere to the highest
standards of ethics in conducting its activities
hereunder;
D. At each party’s sole
expense, comply with good business practices; and
E.
At each party’s own expense,
comply with the provisions of all federal, state and local laws,
regulations, ordinances, requirements and codes that are applicable
to or in connection with the performance of its duties and
obligations hereunder.
4.
DISTRIBUTOR'S
OBLIGATIONS
4.1
Distributor
agrees:
A.
To use its best
efforts to effectively market the Products;
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B.
To maintain an
adequate inventory of the Products to ensure rapid customer
delivery.
C.
To make the minimum
annual payments to GDTI specified in Schedule C.
D.
To promote the
licensing and distribution of the Products through regular contact
with customers in the Authorized Area.
E.
To keep
Distributor's customers in the Authorized Area advised of new GDTI
products, as may be advised by GDTI from time to time and to
distribute promptly to its customers any updates, upgrades, patches
or revisions to the Products provided by GDTI.
F.
To cooperate with
and assist in advertising and sales campaigns instituted by GDTI
for the Products in the Authorized Area. This applies only in
Authorized Area coverage. Distributor will develop promotional
materials and make copies available at no charge to GDTI, subject
to GDTI’s prior approval of any such materials. GDTI
may use, reproduce, distribute, publish, display and make
derivative works of such materials as it sees fit.
G.
To provide, at its
sole expense, an effective means of demonstrating the capabilities
of the Products to potential and existing customers.
H.
To distribute to its
customers technical material related to the Products, provided that
all such material not provided directly by GDTI must be approved in
writing by GDTI prior to distribution. Such approval will not
be unreasonably denied or delayed. To request approval
pursuant to this subsection, Distributor shall send copies of such
material and a request for approval to the attention of GDTI
President at the address specified in paragraph 20H.
I.
To conduct
advertising and sales campaigns with respect to the Products using
all kinds of promotional material including, but not limited to,
press releases, exhibition panels, show boards and catalogues.
Distributor agrees to refrain from making any claim, representation
or warranty concerning the Products in excess of those made by
GDTI, and shall not create any cartons, packaging or labels for the
Products without GDTI's prior written approval of such cartons,
packaging or labels. GDTI shall have the continuing right to
inspect and review Distributor's advertising and sales material,
and packaging, and to disapprove it or require such modification as
GDTI deems advisable. In the event GDTI exercises its
approval rights hereunder, Distributor, upon written notice, shall
modify such material and/or packaging to comply with GDTI's
instructions. Distributor shall display the Products at those
trade shows at which it exhibits any other products.
J.
To prominently
display on all advertisements and sales material related to the
Products, current GDTI trademarks and logos supplied or approved by
GDTI. All goodwill arising from such display of GDTI
trademarks shall accrue to GDTI.
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Technologies International, Inc.
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K.
Within 30 days
following the end of each calendar quarter during the term of this
Agreement, to furnish to GDTI a certified statement for such
calendar quarter disclosing (i) the volume of each Product licensed
and the types of license under which the Product was licensed, (ii)
the gross revenue received by Distributor from licensing and
distributing each Product and performing the Support Services
during such calendar quarter, and (iii) the amount payable to GDTI
with respect to the licensing and distribution of each Product and
the performance of Support Services, in each case during such
calendar quarter. Concurrently with the delivery of such a
statement, Distributor shall pay GDTI any amounts payable to GDTI
with respect to such calendar quarter not previously paid to GDTI.
L.
To provide to GDTI
within the 60 days following the Effective Date, a forecast of
licensing and distribution by Product for the initial twelve (12)
month period following the Effective Date, at the address specified
in paragraph 20H. Monthly rolling forecasts of licensing and
distribution by Product will be provided by Distributor thereafter
every quarter.
M.
To assign an
individual who will act as account coordination manager for GDTI
and the Products. This individual will assist GDTI and its
representatives in the creation and dissemination of all necessary
reports, policies and procedures in the fulfillment of this
Agreement.
N.
To extend to
customers any express warranty given by GDTI to Distributor
relating to the Products. Distributor itself may not provide
any additional warranties relating to the Products for or on behalf
of GDTI to customers.
O.
To use its best
efforts to enforce or to assist GDTI in enforcing the terms and
conditions of subdistributor agreements and end user license
agreements.
P.
To provide support
services to end users other than
Tier 3 Support Services (as defined below), including on-site
installation of the Products, the training of end users in the use
of the Products, and the provision of technical assistance in the
use and operation of the Products by telephone twenty-four (24)
hours per day, seven days per week, three hundred sixty-five (365)
days per year (collectively, the “ Support Services
”).
Q.
Not to license, sell, lease, rent,
license, sublicense or otherwise distribute
in the Authorized Area any product that performs functions
substantially similar to those performed by any
Product.
4.2
Distributor acknowledges that GDTI may
disclose to Distributor information, data, programming, systems,
technical information, designs, ideas, data formats and files,
plans, lists of customer and potential or prospective customers,
specifications, formulas, drawings, sketches, prototypes, tools,
samples, reports and notes, operating instructions, source code and
similar information, whether of a technical, engineering, operating
design or economic nature, forming part of or relating to the
Products or otherwise relating to the subject matter of this
Agreement, all of which Distributor agrees are confidential and
proprietary to GDTI (collectively, the “ Licensor
Confidential Information ”). Distributor hereby
acknowledges and agrees that:
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A.
The Licensor Confidential Information
has been disclosed to it solely and exclusively for the purposes
contemplated herein; and
B.
GDTI shall be materially injured by
reason of any breach by Distributor of the provisions of this
Section 4.2, and GDTI shall be entitled to injunctive relief to
restrain any such breach or anticipated breach hereof and to
specifically enforce the provisions hereof. Distributor
further acknowledges that the foregoing rights and remedies of GDTI
are in addition to the rights and remedies otherwise available to
GDTI in equity or at law.
C.
Distributor hereby covenants and
agrees that it (i) shall treat the Licensor Confidential
Information as strictly confidential, (ii) shall not disclose
the Licensor Confidential Information to any third party except for
its employees and independent contractors who need to know the
Licensor Confidential Information in order to fulfill the
obligations of Distributor under this Agreement, and
(iii) shall make use of same solely and exclusively for the
purpose of fulfilling the obligations of Distributor hereunder.
Without in any way limiting the generality of the foregoing,
Distributor hereby undertakes that it shall not use, provide,
furnish, disclose or permit the use, provision, furnishing or
disclosure of any part of the Licensor Confidential Information
except for the purposes expressly permitted
hereunder.
5.
DISTRIBUTOR'S REPRESENTATIONS AND
WARRANTIES
Distributor
represents and warrants that:
A.
Distributor is a corporation duly
incorporated, organized and validly existing in good standing under
the laws of its jurisdiction of incorporation;
B.
Distributor has all necessary power,
authority and capacity to enter into this Agreement and consummate
the transactions contemplated hereby. Neither the execution
and delivery of this Agreement nor the performance of the
transactions contemplated hereby will, with or without the giving
of notice and/or the passage of time, or both, (i) conflict with,
or constitute a default under, any applicable law in respect of
Distributor, or require any action, consent, approval or
authorization of, or any declaration, filing or registration with
or notification to, any person, government agency or entity or any
action, consent, approval or authorization under applicable law,
(ii) result in the loss of any right under, conflict with or
constitute a default under, or accelerate the date of performance
of, any covenant, obligation or agreement to which GDTI may be a
party or by which Distributor or any of its assets, rights or
properties may be bound or (iii) conflict with or constitute a
default under any of the charter documents or by-laws of
Distributor. This Agreement constitutes a valid and binding
obligation of Distributor enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency and other
similar laws relating to or affecting the enforcement of creditors'
rights generally, and principles of equity.
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C.
Distributor and its
affiliates are not involved in any litigation which would
materially affect Distributor's performance under this Agreement,
excepting those matters previously disclosed to GDTI by Distributor
in writing.
D.
Distributor
shall maintain a high degree of financial integrity, service
excellence and ethical conduct in its relations with end users of
the Products.
6.
GDTI'S OBLIGATIONS
A.
GDTI agrees to
license and deliver to Distributor the Products ordered by
Distributor and any associated documentation to the extent that
GDTI may accept Distributor's purchase orders in accordance with
the terms of this Agreement. GDTI reserves the right to add
or delete Products from Schedule A, provided, however, that if GDTI
intends to delete a Product from Schedule A it shall provide
Distributor with ninety (90) days written notice of such action.
GDTI agrees that any Product cancellation from the current
Schedule A shall be replaced by product or sub product of equal or
greater functionality than the Product being
canceled.
B.
Sales
literature will be offered on a no charge basis in such quantities
as GDTI deems advisable. Product information such as, but not
limited to, system documentation and other material related to the
Products will be available at GDTI's then-current list price,
subject to change with ninety (90) days written notice. GDTI
agrees to provide price protection to the Distributor on all valid
signed contracts in which Products have not been delivered and
would be affected by proposed price change. All sales literature
will be offered by GDTI in the applicable country language (Spanish
or Portuguese). GDTI agrees to provide the first copy of all
product information, system documentation and other material
related to the Products for each country within the Authorized Area
at no cost to the Distributor.
C.
GDTI and its
affiliates are not involved in any litigation which would
materially affect GDTI’s performance under this Agreement,
excepting those matters previously disclosed to Distributor by GDTI
in writing.
D.
GDTI agrees to
provide Distributor with current samples of GDTI's trademarks and
logos for use, where appropriate and subject to the terms and
conditions of this Agreement, by Distributor in Distributor's
advertising and sales material related to the
Products.
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E.
GDTI agrees to
support Distributor at local trade shows with additional Product
literature and support personnel as is mutually agreed to by GDTI
and Distributor.
F.
All sales leads from
GDTI advertising and sales programs will be provided to Distributor
for the exclusive territories covered in Schedule B of this
Agreement.
G.
GDTI agrees to
maintain the confidentiality of customer information provided to it
by Distributor.
H.
GDTI agrees to provide Tier 3 Support
Services to Distributor between the hours of 9 a.m. and 5 p.m.
Eastern time on weekdays other than standard U.S. holidays.
“ Tier 3 Support Services ” shall mean the
provision of commercially reasonable efforts to assist Distributor
with the substantial failure of any Product to operate as a result
of defective coding or other defects in the Product.
7.
PRICE TERMS
A.
Distributor will pay
GDTI an amount for each Product ordered by Distributor and
delivered by GDTI equal to GDTI's then-current applicable list
price for the type of license under which such Product is licensed.
The initial list prices for Products are set forth in
Schedule A. In addition to the foregoing, Distributor shall
pay GDTI an amount equal to twenty percent (20%) of all fees for
Support Services received by Distributor in each calendar month,
such payment to be made to GDTI within thirty (30) days after the
end of such calendar month.
B.
GDTI has the right
to change the applicable list price for any Product at any time
provided that GDTI notifies Distributor in writing ninety (90) days
prior to the effective date of such change.
C.
All prices are FCA
GDTI shipping point (Incoterms 1990). Freight will be collect
and shown separately. The
price payable by Distributor shall be the price in effect as of the
date of acceptance of the purchase order.
8.
ORDERING PROCEDURE, PAYMENT TERMS,
DELIVERY
A.
Distributor shall
order the Products by delivery to GDTI of a written purchase order.
Each purchase order shall include the quantity of Product,
the type of license under which such Product will be licensed to an
end user, a requested ship date for each item, the method of
shipment (which shall be mutually agreeable to the parties) and the
location to which the Product should be shipped.
B.
In the event
Distributor is in default of any obligation under this Agreement,
GDTI need not accept any purchase order issued by Distributor and
will not be liable to Distributor or
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to any other person
if it decides not to accept a purchase order as a result of such
default or for products not covered under Schedule A of this
Agreement.
C.
GDTI will use its
commercially reasonable efforts to meet the requested ship date in
Distributor's purchase order but will not be liable to Distributor
or to any other person if it fails to meet the requested ship date.
Orders without requested ship date will be processed for
shipment within five business days.
D.
GDTI has the right
to reject a purchase order or part thereof for late payment of
invoices, or failure to provide adequate assurances of
Distributor's ability to make the required payments in a timely
fashion or to meet its other obligations under this
Agreement.
E.
GDTI will invoice
Distributor for Products shipped at the time of shipment or after
shipment. Distributor shall pay to GDTI the applicable price
for any item within thirty (30) days after delivery to Distributor
of the invoice for such item. In the event that Distributor
fails to make any payments required hereunder on a timely basis,
GDTI may require that payment of subsequent invoices be made by
certified check made payable to "Guardian Technologies
International, Inc." or by bank wire transfer to a bank account
specified by GDTI, or as otherwise determined by GDTI. Late
payment charges shall be the lesser of two percent (2%) per month
(24% per annum) or the highest rate allowable under applicable law.
All payments made under this Agreement shall be in U.S.
dollars.
F.
Minimum Annual
Payments.
(i)
In the event that
the aggregate amount actually paid by Distributor to GDTI under
this Agreement with respect to the licensing and distribution of
the Products and performance of the Support Services during the
twelve (12) month period commencing on the Effective Date (“
Year 1 ,” and such aggregate amount, the
“ Year 1 Actual Payment ”) is less than
the minimum annual payment for Year 1 shown on Schedule C (the
“ Year 1 Minimum Payment ”), Distributor
shall pay GDTI the amount by which the Year 1 Minimum Payment
exceeds the Year 1 Actual Payment, such payment to be made to GDTI
within forty-five (45) days after the end of Year 1.
(ii)
In the event that
the aggregate amount actually paid by Distributor to GDTI under
this Agreement with respect to the licensing and distribution of
the Products and performance of the Support Services during the
twelve (12) month period immediately following Year 1 (“
Year 2 ,” and such aggregate amount, the
“ Year 2 Actual Payment ”) is less than
the minimum annual payment for Year 2 shown on Schedule C (the
“ Year 2 Minimum Payment ”), Distributor
shall pay GDTI the amount by which the Year 2 Minimum Payment
exceeds the Year 2 Actual Payment, such payment to be made to GDTI
within forty-five (45) days after the end of Year 2.
(iii)
In the event that
the aggregate amount actually paid by Distributor to GDTI under
this Agreement with respect to the licensing and distribution of
the Products and
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performance of the
Support Services during any twelve (12) month period after Year 2
(each such period, a “ Subsequent Year ,”
and such aggregate amount, the “ Subsequent Year Actual
Payment ”) is less than the minimum annual payment
for each Subsequent Year shown on Schedule C (the “
Subsequent Year Minimum Payment ”), Distributor
shall pay GDTI the amount by which the Subsequent Year Minimum
Payment exceeds the Subsequent Year Actual Payment for the
applicable Subsequent Year, such payment to be made to GDTI within
forty-five (45) days after the end of the applicable Subsequent
Year.
(iv)
In the event that
Distributor grants a Rental License to an end user pursuant to this
Agreement, then, upon the payment to GDTI of the initial monthly
payment with respect to such Rental License, (i) Distributor
shall be deemed to have paid GDTI the aggregate license fees for
the initial three (3) year term of such Rental License solely for
the purpose of determining whether Distributor has paid GDTI the
applicable minimum annual payment under this Section 8.F with
respect to the twelve (12) month period in which Distributor grants
the Rental License to the end user, and (ii) in each
subsequent twelve (12) month period, the actual payments made by
Distributor to GDTI with respect to such Rental License shall not
be considered in determining whether Distributor has paid GDTI the
app
