DISTRIBUTOR
AGREEMENT
BETWEEN
GUARDIAN TECHNOLOGIES
INTERNATIONAL, INC.
AND
EGC International
Corp
1
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
22.
SCHEDULE
A……………………………………………………………………22
23.
SCHEDULE
B……………………………………………………………………28
24.
SCHEDULE
C……………………………………………………………………29
25.
SCHEDULE
D……………………………………………………………………30
26.
SCHEDULE
E……………………………………………………………………31
27.
SCHEDULE F
2
DISTRIBUTOR
AGREEMENT
THIS DISTRIBUTOR
AGREEMENT (this “ Agreement ”) is made effective
the 30 th day of March, 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.
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
3
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;
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.
4
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. 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.
H.
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.
I.
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.
J.
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.
K.
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
5
of licensing and
distribution by Product will be provided by Distributor thereafter
every quarter.
L.
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.
M.
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.
N.
To use its best efforts
to enforce or to assist GDTI in enforcing the terms and conditions
of sub distributor agreements and end user license
agreements.
O.
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
”).
P.
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 GDTI
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:
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
6
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.
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
7
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.
E.
GDTI agrees to provide
Distributor with a reasonably sufficient supply of Products to
assist Distributor in its sales efforts. Should a sufficient
supply of Products not be available, and the failure to provide the
Products inhibits sales by the Distributor, Distributor shall have
the right to reset the start date of the first year’s revenue
guarantee.
8
F.
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.
G.
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.
H.
GDTI agrees to maintain
the confidentiality of customer information provided to it by
Distributor.
I.
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.
J.
GDTI agrees to complete the development
within one hundred and eighty (180) days of PinPoint for small
scale use in office buildings, terminals, and other low volume
areas. Deployment of PinPoint on these smaller scanner
machines will require that the scanners be able to produce a
minimum image quality and possess the necessary intelligence to
communicate with PinPoint.
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,
9
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 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 six (6) months from 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 a 10% penalty on the balance not achieved in
“Year 1” and the balance of the “Year 1 Minimum
Payment” not achieved will be additive to the next subsequent
year and 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 a 10%
10
penalty on the balance
not achieved in “Year 2” and the balance of the
“Year 2 Minimum Payment” not achieved will be additive
to the next subsequent year and 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 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 sha
