INTERNATIONAL DISTRIBUTION AGREEMENT

 

                           HiENERGY TECHNOLOGIES, INC.

 

                      INTERNATIONAL DISTRIBUTION AGREEMENT

 

 

 

HiENERGY TECHNOLOGIES, INC.          PH:      949.757.0855

1601 ALTON PARKWAY, UNIT B           FAX:     949.757.1477

IRVINE, CA 92606

 

This AGREEMENT, dated as of the 25th day of July, 2003 , between HiENERGY

TECHNOLOGIES, INC., a Delaware USA corporation. (hereinafter called "Company")

and Electronic Equipment Marketing Company (EEMCO), a corporation duly

registered in Riyadh, Saudi Arabia (hereinafter called "Dealer").

 

 

This consideration of the mutual promises herein contained, it is agreed as

follows:

 

1. SCOPE OF AGREEMENT

 

Dealer agrees to act as a Dealer of Company on a exclusive basis and in that

capacity Dealer shall purchase for resale or arrange for the sale of car bomb

detection products and services provided by Company of a type listed as follows:

HiEnergy CarBomb Finder Beta-models 301, 302, and 303 (such products and

services hereinafter called the "Products"), within the territory described as

follows: Kingdom of Saudi Arabia Land Forces, Signal Corps, RSAF, Ministry of

Interior and Navy AND the Middle-East countries of Saudi Arabia, , Kuwait,

Qatar, Bahrain, Oman, UAE, Iraq, Yemen, Syria, Jordan, and Lebanon AND North

African countries including Sudan, Libya, Egypt, Morocco, Tunis, Algeria, and

Mauritania (hereinafter called the "Territory"), in accordance with the terms

and conditions set forth in this Agreement. Company will sell to Dealer, or on

Dealer's order as herein set forth.

 

2. DEALERS OBLIGATIONS

 

a. The Dealer agrees to promote the sale of the Products in the Territory

aggressively; to contact all potential users and customers and to sell as large

a quantity as possible; to avoid transactions which might call upon Company to

accept obligations inconsistent with Company's terms and conditions of sale or

at unreasonable prices; to refrain from representing, promoting, selling, or

arranging to sell products, accessories, or lines competitive with the Products

in the Territory within the term hereof; and to avoid any and all activity

inconsistent with the foregoing.

 

b. Dealer will maintain a sales organization, conduct promotional activities,

advertise and distribute promotional material as may be mutually agreed upon

from time to time.

 

c. Dealer will supply Company with the resale prices for the Territory and will

provide assistance in contract negotiations if and when orders are placed by

Dealer for direct contracting by Company with Dealer's customers.

 

d. Dealer agrees to actively work on and use all reasonable efforts in securing

the release of bid bonds, performance bonds, bank letters of guarantee and

customer holdbacks in connection with orders placed by Dealer, or directly by

customers with Company.

 

 

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In the event that the Dealer requires Company's assistance in securing the

releases of the above, Company will provide Dealer with reasonable support and

assistance in securing any such releases. In such event Dealer and Company with

mutually agree upon cost sharing for such assistance.

 

e. In situations where Company is selling directly to a foreign government or

government agency, Dealer will not represent Company unless Dealer warrants to

Company that neither Dealer nor any employee or sub-agent of Dealer holds an

official position with said government or government agency.

 

f. In order to further promote and support the sale of the Products, Company

may, from time to time, wish to provide technical, marketing, or other support

in the Territory to assist the Dealer organization in such activities. It is

envisioned that such support by Company shall be provided on a cost sharing

basis, to be mutually determined on a case-by-case basis.

 

g. In certain situations, in addition to the normal responsibilities set forth

above, Company may direct Dealer to perform additional services such as

assisting in market surveys; providing maintenance or technical services,

support and assistance; assisting Company personnel traveling in the Territory;

reviewing and editing sales literature for suitability in the Territory; and/or,

providing reasonable assistance to customers not within Dealer's Territory as

defined herein. Dealer agrees to provide such additional services or assistance,

for which Dealer may request reasonable compensation for such services or

assistance.

 

3. PRICES AND DISCOUNTS

 

a. Prices to Dealer shall be Company's suggested international list prices, less

international discounts, as may be established by Company from time to time.

Prices and discounts currently in effect have heretofore been conveyed to Dealer

(Appendix A),

 

b. For installation, or special products, services or projects where no

suggested list prices or discounts are available, Company shall quote to Dealer

the prices to be received by Company net of any discounts or allowances, and

such prices quoted to Dealer shall apply as between HiEnergy and Dealer

regardless of whether Company sells to Dealer, or receives an order directly

from a customer of Dealer, and regardless of the price quoted to, or agreed on

by contract with, such customer.

 

c. Dealer shall establish prices to customers and, in case of direct contract

between Company and a customer or Dealer, Company shall quote to Dealer's

customer the prices so established by Dealer. Dealer's discount shall be reduced

if prices to such customer are below Company's suggested international list

prices, it being understood that Dealer shall receive from any payments from the

customer only the excess over the net prices due to Company.

 

4. ORDERS AND ACCEPTANCE

 

All orders and contracts shall be forwarded to Company at its office in the

United States at the address specified herein. Company reserves the right in its

sole discretion to accept or reject any such order or contract, and normally

will not accept unless specifications, terms of payment, deliveries, terms and

conditions, credit and shipping arrangements are satisfactory to Company. Except

as otherwise agreed in writing, terms and conditions of sale, warranties,

express or implied, and provisions for damages shall be limited as set forth in

Company's Standard Terms and Conditions of Sale in effect at date of order

applicable to the Products.

 

 

 

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5. PAYMENT

 

a. Payment of the price due Company shall be made in U.S. dollars by a letter of

credit acceptable to Company, payable in sixty (60) days from the date of

shipment against normal shipping documents at a United States bank. Advance

payments or letters of credit from Dealer's customer may be accepted if the

amount due Company or the full resale price is payable to Company, or to an

independent bank or escrow holder satisfactory to Company which guarantees

payment to Company upon its order of the net amount due Company. Any balance due

Dealer from Company or any such bank or escrow holder shall be remitted to

Dealer in accordance with the escrow agreement or as mutually agreed upon.

 

b. Company may hold back or retain payments due Dealer, or any portions of

Dealer's discount, in an amount necessary to offset Company's exposure for

bonds, guarantees, and customer payment retention which are outstanding.

 

c. Dealer will reimburse Company for all fees and expenses incurred by the

Company in the said Territory, including cable and confirmation fees incurred by

Company in connection with posting, filing, and maintenance of bonds and letters

of credit and letters of guarantee.

 

6. WARRANTY

 

Until otherwise stated, Product shall be sold as a beta-model and not be

warranted by Company unless defect occurs prior to delivery or can be determined

to be a preexisting fault particular to the single unit in question. This

warranty shall not apply to any defect, failure or damage caused by improper use

or improper or inadequate care. Company shall not be obligated to provide

service under this warranty if:

 

      a)     Damage has been caused by a failure to make a full and proper

            inspection of the Product (as described by the documentation

            enclosed with the Product at the time of shipment) on initial

            receipt of the Product following shipment;

 

      b)     Damage has been caused by the attempts of individuals, other than

            Company-certified staff, to repair or service the Product;

 

      c)     Damage has been caused by the improper use or a connection with

            incompatible equipment or product including software applications.

 

This limited warranty on defects shall remain valid for a period of twelve (12)

months beginning on the day of installation/acceptance of Product. Company shall

replace such defective equipment or parts at no cost to buyer, inclusive of

freight/customs, etc. Service and maintenance will be provided by the Dealer for

beta-models at the expense of the buyer, unless otherwise specified or agreed

upon at time of purchase or thereafter, given the proper amendment is made to

Company's Standard Terms and Conditions of Sale and agreed on by all parties.

Any disputes concerning the warranty shall be settled according to the

APPLICABLE LAW/DISPUTES subsection of this Agreement.

 

7. COSTS AND EXPENSES

 

Dealer shall bear all its own costs and expenses, including without limitation

all costs, fees, discounts, wages and salaries of any employees, agents,

sub-agents or experts, except as otherwise specifically authorized in advance in

writing by a duly authorized official of Company. Company's prices do not

include, and Dealer shall pay or cause to be paid, any and all expenses within

the territory related to sales taxes, any other local taxes, license or other

fees, assessments or other charges incident to sale of the Products or levied

against Company's products in Dealer's possession, whether or not title thereto

is in Dealer or Company.

 

 

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8. SUB-