PROPRIETARY SOFTWARE LICENSE AGREEMENT

PROPRIETARY SOFTWARE LICENSE AGREEMENT

This is an Proprietary Software License Agreement (“Agreement”) dated as of June 26, 2007  (the “Effective Date”) by and between NAST (“Client”), a security company having a place of business at 8/1 Ak. Koroleva Ul, Moscow 129515 and Guardian Technologies International (“Licensor”), a Deleware corporation having its principal place of business at 516 Herndon Parkway, Herndon, Virginia 20170 via its Russian Distributor Terralink Technologies International located at 57 Profsoyuznaya, Office 800, Moscow Russia 117420                                                  

1.

SOFTWARE LICENSE

A.

Software License.  Licensor hereby grants to Client a perpetual, nonexclusive, nontransferable license commencing on the Effective Date to use the Guardian Technologies International, Inc.’s (“Guardian”) computer software components (the “Software”) and documentation (collectively, the “Documentation”) listed in Exhibit A on the terms and conditions of this Agreement.  The term “Software” as used in this Agreement includes any maintenance releases to the Software that may be provided to Client from time to time under pursuant to this Agreement, but specifically excludes any other modifications or customizations to the Software.

B.

License Limitation.  Client may use the Software only at the specific facilities identified in Exhibit A and only on the terms and conditions of this Agreement.  Client may not use the Software as part of a commercial time-sharing or service bureau operation or in any other resale capacity.  Client may use the Documentation solely in support of the Software.  Client agrees not to reverse engineer, decompile, disassemble or extract, as applicable, any ideas, algorithms or procedures from the Software or Documentation for any reason.  Client may not use the System as a guide or template for the purposes of determining specifications or requirements for or in any way developing a similar or competing product.  Client may not reverse engineer or decompile the Software.  

C.

Copies.  Client may not copy the Software.  Client may copy the Documentation to support Client’s licensed use of the Software in accordance with this Agreement, subject to any restrictions specified in Exhibit A.  Any copies Client makes of the Documentation, in whole or in part, are Licensor’s property.  Client agrees to reproduce and include Licensor’s and Guardian’s copyright, trademark, and other proprietary rights notices on any copies of the Documentation, including partial copies.

D.

Ownership.  This Agreement does not convey to Client title or ownership of the Software and Documentation, but only a right of limited use in accordance with this Agreement.  All terms and conditions of this Agreement are material terms of the license granted by this Agreement.

E.

Third Party Software.  All third party software provided by Licensor to Client as a part of the Software is also subject to the terms and conditions of the applicable third party license agreement.  Changes in the Software that Licensor may make from time to time may make it necessary for Client to acquire, at its own expense, updated versions of the third party software or additional third party products.  Licensor will have no warranty or maintenance obligations for any Third Party Products or additional third party products.

2.

HARDWARE LEASE

A.

Lease of Hardware.  Licensor leases to Client, and Client leases from Licensor, the hardware listed or described in Exhibit A (the “Hardware”).  This Agreement does not convey to Client title or ownership of the Hardware, but only a right of limited use in accordance with this Agreement.  

B.

Subleases.  Client may not sublease any or all of the Hardware or assign, transfer or encumber Client’s rights, interests or obligations under this Agreement.  Any attempted sublease, assignment, transfer or encumbrance in violation of the preceding sentence will be null and void.  

C.

True Lease.  Licensor retains full legal title to the Hardware notwithstanding the possession and use of the Hardware by Client.  It is the intent of the parties that the transaction contemplated by this Agreement (1) constitutes an lease from Licensor to Client for purposes of Client's financial reporting pursuant to generally accepted accounting principles, and (2) constitutes a true lease, and not a sale of Hardware, for federal and state law, income tax, bankruptcy and other purposes.  Each of the parties to this Agreement agrees that it will not, nor will any person controlled by it, or under common control with it, directly or indirectly, at any time take any action or fail to take any action with respect to the filing of any income tax return, including an amended income tax return, inconsistent with Licensor’s status as owner and lessor of the Hardware.  Title to the Hardware will at all times

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remain in Licensor, and Client acquires no ownership, title, property, right, equity, or interest in the Hardware other than its leasehold interest solely as lessee subject to all the terms and conditions of this Agreement.  

D.

Restrictions on Use of the Hardware.  Client may not install, or remove any software on the Hardware, or make any other modifications to the Hardware without Licensor’s prior written consent.  Client may not modify the Hardware in any way.

E.

Risk of Loss and Damage.  Client is responsible for any damage to or loss of the Hardware that may occur during the Term or return shipment of the Hardware from Client to Licensor.  Client shall use commercially reasonably efforts to keep the Hardware in the same condition as when received, except for normal wear and tear.  Client must reimburse Licensor for the replacement value of any Hardware damaged or lost during either the Term or return shipping to Licensor.

3.

MAINTENANCE

During the Term, Licensor will provide the following maintenance services for the System.  

A.

Licensor will consult with Client for a reasonable amount of time by telephone during Licensor’s normal business hours to assist Client in the use of the System;

B.

Licensor will supply computer program code to correct any Errors (as defined in section 6.A of this Agreement) in the Software.  If a suspected Error is attributable to a cause other than the Software as delivered by Licensor, then Client will pay for Licensor’s work on a time-and-materials basis.  If the Software module containing the Error has been modified by non-Licensor personnel, Licensor will charge Client on a time-and-materials basis at Licensor’s then-current hourly rates for analyzing and fixing the Error in Client’s version, and for any installation assistance Client requires;

C.

Licensor will provide Client with all enhancements to the Software that Licensor develops and generally makes available at no charge to other licensees of the Software (“Enhancements”);

D.

If the Hardware does not conform with its manufacturer’s specifications, Client may return such Hardware unit (the “Returned Hardware”) for repair or exchange as provided in this Section 3.D.  Upon Client’s valid request, Licensor will issue an Return Material Authorization (“RMA”) within one business day.  Client may not make, and Licensor will not accept, returns of Hardware for repair or exchange unless Client first obtains an RMA.  Upon issuance of an RMA, Licensor will ship a replacement Hardware unit (the “Replacement Hardware”) to Client within one business day, freight pre-paid.  Client will ship the Returned Hardware to Licensor, freight pre-paid, on the next business day after receiving the replacement unit.  Licensor will test the Returned Hardware upon receipt and verify that it is defective.  

(1)

If the Returned Hardware is defective, (i) Licensor will credit Client for the cost of the freight to return the Returned Hardware; and (ii) Client may retain the Replacement Hardware as a replacement for the Returned Hardware and the Replacement Hardware will become a part of the Hardware under this Agreement.  

(2)

If the Returned Hardware is not defective, Licensor will return it to Client and (i) Client will return the Replacement Hardware to Licensor at Client’s expense; and (ii) Licensor may invoice Client for a sum not to exceed $60.00 per man-hour for the time and personnel required to test the Returned Hardware, as well as the shipping and handling fees to return the Returned Hardware to Client.  

4.

CHARGES

A.

Fees.  As compensation for the Software license provided under Section 1, Client will pay the fees specified to be paid in accordance with Exhibit A.  As compensation for the Software Maintenance provided under Section 1, Client will pay the fees specified to be paid with respect to the initial Term (“Initial Term Fees”) in accordance with Exhibit A.  Client’s ability to extend the Term of this Maintenance Agreement for additional one year periods pursuant to Section 9.A is expressly conditioned upon Client’s payment of the fees specified to be paid with respect to each extension of the Term (“Additional Term Fees”) in accordance with Exhibit A.  

5.

NONDISCLOSURE

A.

“Confidential Information” means any and all information that is confidential or a trade secret and is furnished or disclosed to Client under this Agreement, including, without limitation, information owned by Guardian or Licensor.  The Software and Documentation are Confidential Information of Guardian.  In addition, Confidential Information includes the specific business

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terms of this Agreement and any other information that is marked as “Confidential,” “Proprietary,” “Trade Secret,” or in some other manner to indicate its confidential, proprietary or trade secret nature.

B.

Confidential Information will remain the property of Guardian or Licensor, as applicable, and Client will not be deemed by virtue of this Agreement or any access to Confidential Information to have acquired any right, title or interest in or to the Confidential Information.  Client agrees: (i) to hold the Confidential Information in strict confidence; (ii) to limit disclosure of the Confidential Information to Client’s own employees having a need to know the Confidential Information for the purposes of this Agreement; (iii) not to disclose any Confidential Information to any third party; (iv) to use the Confidential Information solely and exclusively in accordance with the terms of this Agreement in order to carry out its obligations and exercise its rights under this Agreement; (v) to afford the Confidential Information at least the same level of protection against unauthorized disclosure or use as Client normally uses to protect its own information of a similar character, but in no event less than reasonably care; and (vi) to notify Guardian and Licensor promptly of any unauthorized use or disclosure of the Confidential Information and to cooperate with and assist Licensor in every reasonable way to stop or minimize such unauthorized use or disclosure.

C.

Client agrees that if a court of competent jurisdiction determines that Client has breached, or attempted or threatened to breach, its confidentiality obligations or Guardian’s or Licensor’s proprietary rights, money damages will not provide an adequate remedy.  Accordingly, Guardian will be entitled to seek appropriate injunctive relief and other measures restraining further attempted or threatened breaches of such obligations.  Such relief or measures will be in addition to, and not in lieu of, any other rights and remedies available to Licensor.

6.

WARRANTY.  

A.

Licensor warrants during the first one (1) year after the Effective Date (the “Warranty Period”), that performance of the Software will not deviate materially from the specifications identified in Exhibit A (the “Specifications”).  A material deviation of the Software from its Specifications is referred to in this Agreement as an “Error.”  If Client believes there has been a breach of this warranty it must notify Licensor in writing within the Warranty Period describing the Error in sufficient detail to enable Licensor to recreate it.  If there has been a breach of this warranty, then Licensor’s sole obligation, and Client’s exclusive remedy, will be for Licensor to correct the Error at no charge.  However, if Licensor is unable to correct an Error after repeated efforts, Client will also be entitled to an equitable adjustment in the Initial Term Fees to reflect any reduction in the value of the Software as a result of the uncorrected Error.  If a reported breach of warranty is attributable to a cause other than a breach of this warranty, then Licensor will be entitled to payment for its investigation and correction efforts on a time and materials basis at Licensor’s then-current rates.

B.

Licensor warrants during the Warranty Period, that performance of the Hardware will not deviate materially from the manufacturer’s specifications.  If Client believes there has been a breach of this warranty it must notify Licensor in writing within the Warranty Period describing the alleged breach in sufficient detail to enable Licensor to recreate it.  If there has been a breach of this warranty, then Licensor’s sole obligation, and Client’s exclusive remedy, will be for Licensor to repair or replace the Hardware so that it conforms to its specifications.  However, if Licensor is unable to correct any breach of warranty after repeated efforts, Client will also be entitled to an equitable adjustment in the Initial Term Fees to reflect any reduction in the value of the Hardware as a result of the uncorrected breach of warranty.  If a reported breach of warranty is attributable to a cause other than a breach of this warranty, then Licensor will be entitled to payment for its investigation and correction efforts on a time and materials basis at Licensor’s then-current rates.

C.

Licensor warrants that the Software does not, to Licensor’s knowledge, infringe any third party copyrights, patents or trade secrets that exist on the Effective Date and that arise or are enforceable under the laws of the United States of America.

(1)

If a third party brings an action against Client making allegations that, if true, would constitute a breach of this warranty, then Licensor will, at its own expense and subject to the provisions of section 8.B, defend, indemnify and hold Client harmless in such proceeding, and Licensor will pay all settlements, costs, damages and legal fees finally awarded.

(2)

If such a proceeding is brought or appears to Licensor to be likely to be brought, Licensor may, at its sole option and expense, either obtain the right for Client to continue using the allegedly infringing item(s) or replace or modify the item(s) to resolve such proceeding.  If Licensor finds that neither of these alternatives is available to it on commercially reasonable terms, Licensor may require Client to return the System, in which case Client will receive a refund of the amounts paid by it for the System, less a reasonable adjustment for depreciation.

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This section 6.C states Licensor’s entire obligation to Client and Client’s exclusive remedy with respect to any claim of infringement and is in lieu of any implied warranties of non-infringement or non-interference with use and enjoyment of information.

D.

Licensor is not responsible for any claimed breaches of the foregoing warranties caused by:  (i) modifications made to the System by anyone other than Licensor and its subcontractors working at Licensor’s di