AGREEMENT
Exhibit
99.1
AGREEMENT
This
Agreement
(this “Agreement”) is made and entered into this 4th day of January, 2008 by and
between Implant Sciences Corporation (“IMX” or “the Company”) on the one hand
and OSI Systems, Inc. (“OSI”) and Rapiscan Systems, Inc. (“Rapiscan”) on the
other, with reference to the following:
A. WHEREAS,
in
March 2005, IMX and Rapiscan entered into that certain Development,
Distribution, and Manufacturing Agreement (“the DDM Agreement”);
B. WHEREAS,
between March 2005 and March 2006 certain disputes arose between IMX on
the one
hand and Rapiscan and OSI on the other arising out of, among other things,
the
parties’ respective performance, rights and obligations, if any, under the DDM
Agreement;
C. WHEREAS,
as
a consequence of the foregoing disputes, IMX and Rapiscan each filed a
lawsuit
in March 2006. In IMX’s lawsuit, it named Rapiscan and OSI as defendants; in
Rapiscan’s lawsuit, it named IMX as a defendant. Those lawsuits subsequently
were consolidated and have proceeded as the civil action entitled Implant
Sciences Corporation v. Rapiscan Systems, Inc. and OSI Systems, Inc.,
United States District Court for the Central District of California, Case
No. CV
06-1765 GAF (Ex) (“the Pending Action”);
D. WHEREAS,
IMX, Rapiscan, and OSI (the “parties”) desire to resolve the Pending Action and
to enter into additional agreements, on the terms set forth herein.
NOW,
THEREFORE, the
parties agree as follows:
1. Definitions.
As used in
this Agreement, the following definitions shall apply:
A. “Effective
Date” shall mean the date this Agreement has been signed and executed by the
authorized representatives for the respective parties to this Agreement
and
fully-executed copies of this Agreement have been exchanged.
B. “Component”
shall mean any component IMX purchases from a vendor for incorporation
into,
assembly into, or installation in any commercially available IMX product
(provided that until January 4, 2009 components of products other than
security
products shall be excluded). Component shall not mean the proprietary Ion
Source/Drift Tube Assembly utilized in the IMX products and subsequent
iterations or derivatives of said Ion Source/Drift Tube Assembly, the Vortex
attractor assembly, and any form of aerosol dispersant. Within 60 days
of the
effective date, and at least annually thereafter, the parties shall confer
for
the purpose of identifying the Components that OSI is interested in supplying
pursuant to Section 6 hereof.
C. “Passenger
Portal” shall mean (a) the device described in section 4.02 of the DDM Agreement
as the “QS™ Passenger Portal Prototype” (as to which IMX received an award of
funding in August 2005 of approximately $2.2 million from the Transportation
Security Administration), (b) any improvements to, subsequent iterations
of or
derivatives of, that device, and (c) the developed products described in
section
5.01 of the DDM Agreement as the “Passenger Portal Trace Subsystem” and
“Passenger Portal.”
2. Mutual
Rescission of DDM
Agreement. As of the Effective Date of this Agreement, IMX and Rapiscan
mutually rescind and terminate the DDM Agreement and agree that the DDM
Agreement shall have no further force and effect. As of the Effective Date
of
this Agreement, OSI and Rapiscan agrees that any and all rights they had
or may
have had under the DDM Agreement are terminated.
3. Issuance
Of IMX Stock To
OSI.
A. Upon
the Effective Date, IMX shall reimburse to OSI
$200,000 (the “Payment”). OSI agrees to accept the Payment in the form of the
issuance by IMX to OSI of the Specified Shares. As used in this paragraph
3.A.,
the Specified Shares shall mean: (a) the number of IMX common shares equal
to
$200,000 divided by the 5-day trailing average closing price of the shares
of
IMX common stock (such 5-day trailing average on any given date being the
“Market Price” on such date), which, as of the Effective Date, is 221,729
shares. Within 30 days after the Effective Date, IMX shall deliver to Rapiscan
a
stock certificate evidencing such shares bearing the appropriate restrictive
legend pursuant to Rule 144. If, at the end of the 180th day after the
Effective
Date, the Market Price of IMX shares is lower than the Market Price of
such
shares at the end of the Effective Date, then, within five business days
thereafter, (a) IMX shall issue a number of shares of IMX common shares
(bearing
appropriate “Rule 144” legends) calculated as follows: $200,000 divided by the
Market Price of IMX shares at the end of the 180th day after the Effective
Date,
less the number of IMX shares issued to OSI within five days after the
Effective
Date; or (b) IMX shall pay OSI an equivalent amount in cash. Notwithstanding
the
times specified for the issuance of shares, all share issuances provided
hereunder shall be subject to the rules of the American Stock Exchange,
provided
that IMX shall file any documentation required to obtain the approval of
the
American Stock Exchange for such issuance within five business days of
the date
of issuance contemplated in this paragraph, and use its best efforts to
effectuate such issuances at the earliest practicable time.
B. With
respect to the issuance of IMX stock under this
paragraph 3, Rapiscan provides the following representations:
(1) OSI
is acquiring the Shares for investment purposes only,
for OSI’s own account, and not as nominee or agent for any other person, and not
with the view to, or for resale in connection with, any distribution
thereof;
(2) OSI
is familiar with the definition of “accredited
investor” as set forth in Regulation D of Securities and Exchange Commission,
and OSI is an accredited investor under that definition; and
(3) OSI
has not received, nor is OSI aware of, any
publication or advertisement to the general public of the sale of the Specified
Shares.
(4) OSI
has been given an opportunity to ask any question
about IMX and obtain answers from IMX and has reviewed the filings made
by IMX
on XXXXX.
4. Grant
of Non-Exclusive
Distribution Rights. IMX hereby appoints Rapiscan as a non-exclusive
distributor of certain IMX products on the terms and conditions set forth
in the
Distribution Agreement attached hereto as Exhibit “A”.
5. Technology
Exchange Fee On Sales
Of Passenger Portal. If and when IMX shall introduce a commercially
available version of the Passenger Portal, IMX shall pay to OSI a technology
exchange fee in the amount of two percent (2%) of the gross price received
by
IMX on all sales of the Passenger Portal (the “Technology Exchange Fee”). The
Technology Exchange Fee shall be due and payable to OSI quarterly after
IMX’s
receipt of payment in connection with each and every sale of a Passenger
Portal.
IMX shall have an ongoing and affirmative obligation to advise OSI regarding
the
status of the commercialization (provided that such disclosure is not
inconsistent with IMX’s confidentiality obligations to the U.S. federal
government) of the Passenger Portal (which shall be held in strict confidence
by
OSI and Rapiscan) and of any sales of the Passenger Portal, including the
purchase price realized for any and all sales of the Passenger Portal during
the
term of the Technology Exchange Fee obligation under this Agreement. IMX’s
obligation to pay a Technology Exchange Fee on sales of the Passenger Portal
shall cease upon the earlier to occur of: (a) the fifth anniversary of
the first
commercial sale of a Passenger Portal (including a commercial sale to a
government entity); or (b) IMX’s payment to OSI of a total of $1 million in
Technology Exchange Fees pursuant to this paragraph 5. If IMX shall license
to
any third party the right to produce and sell the Passenger Portal, IMX
shall
ensure that such licensee shall be jointly obligated to pay to OSI the
Technology Exchange Fee (calculated on the basis of gross price received
either
by IMX or the licensee) as set forth in this paragraph (with the understanding
that the total joint obligation to pay the Technology Exchange Fee shall
not
exceed $1 million, nor shall the obligation extend beyond the fifth anniversary
of the first commercial sale).
6. Obligation
On The Part Of IMX To
Offer OSI An Opportunity To Supply Components. Beginning on July 1,
2008, and for a period of five (5) years commencing at the Effective Date,
IMX
shall, whenever it is contemplating or planning to purchase more than fifteen
(15) of any Component, notify OSI of such contemplated or planned purchase,
whereupon OSI shall have the right, but not the obligation, to offer to
supply
such Components to IMX within the same period of time required of other
vendors
to make such offer. Any notification by IMX pursuant to this paragraph
6 shall
contain sufficient detail to enable OSI to formulate pricing, delivery,
quality,
and functionality. In the event OSI offers to supply the Components and
its
pricing, delivery, quality, and functionality is equivalent to or better
than
the pricing, delivery, quality, and functionality IMX receives from other
potential suppliers, IMX shall purchase the Components from OSI. If, on
the
other hand, OSI offers comparable delivery, quality, and functionality,
but its
pricing is not the lowest, IMX shall inform OSI, within 5 business days
after
receiving bids from other vendors, of the amount of the lowest bid. If,
within 3
business days after being notified by IMX of the amount of the lowest bid
on a
Component, OSI informs IMX that OSI is willing to supply such Component
at no
more than 99% of the lowest quote, IMX shall have the obligation to purchase
such Components from OSI. OSI shall maintain the confidentiality of any
and all
related information and shall only use such information for the express
purposes
outlined herein.
7. Audit
Rights. At its
principal offices IMX shall maintain detailed books and records concerning:
(a)
the rights provided under Section 6, as well as sales prices for the Products
as
defined in the Distribution Agreement, during the period beginning on the
Effective Date and ending on the sixth anniversary of the Effective Date;
and
(b) sales of the Passenger Portal during the period beginning on the date
of the
first commercial sale and ending on the sixth anniversary of the first
commercial sale as described in Section 5 above. Such books and records
shall be
so maintained until the first anniversary after the end of the Technology
Transfer Fee obligation, whereupon OSI’s audit rights shall cease. OSI or OSI’s
representative may, for the sole purpose of verifying compliance with this
Agreement, examine such books and records. Such examinations may take place
only
during IMX’s normal business hours, and only with at least 10 business days’
written notice. OSI shall bear the costs of such audits; provided, however,
that
if a discrepancy of $10,000 or more is discovered in the course of an audit,
IMX
shall reimburse OSI for its direct costs of that audit (but of no prior
or
subsequent audit). A discrepancy shall be defined as follows: (a) In the
case of
the Passenger Portal, a discrepancy in favor of IMX in the Technology Transfer
Fee due to OSI; (b) in the case of the rights provided in Section 6, the
denial
of an opportunity to supply components to IMX under Section 6 for orders
totaling of $10,000 or more; and (c) in the case of pricing under the
Distribution Agreement, an overcharge to Rapiscan of $10,000 or more.
8. Mutual
Release.
A. Release.
Effective as of the Effective Date, and except for the rights, duties and
obligations created by or arising under this Agreement, IMX, on the one
hand,
and OSI and Rapiscan, on the other hand, on behalf of themselves and their
past
and present members, managers, principals, officers, directors, shareholders,
partners, employees, trustees, trust beneficiaries, representatives, agents,
attorneys, administrators, executors, heirs, assigns, predecessors and
successors-in-interest (the “Releasing Parties”), hereby release and forever
discharge (a) each other and, (b) each of the other’s or others’ respective past
and present members, managers, principals, officers, directors, shareholders,
partners, employees, trustees, trust beneficiaries, representatives, agents,
attorneys, administrators, executors, heirs, assigns, predecessors and
successors-in-interest (collectively, the “Released Parties”) from all past,
present and future claims, demands, obligations, and causes of action of
any
nature whatsoever, whether in tort (including, without limitation, acts
of
active negligence), contract or any other theory of recovery in law or
equity,
whether or not wrongful, whether for compensatory or punitive damages,
equitable
relief or otherwise, and whether now known or unknown, suspected or unsuspected,
which are based upon or arise out of or in connection with any matter,
cause or
thing existing at any time prior to the Effective Date or anything done,
omitted
or suffered to be done or omitted at any time prior to the Effective Date
hereof
(the “Released Matters”). Notwithstanding the foregoing, no claim of any party
against any other party arising from or related to any right, duty or obligation
created by or arising from the executory provisions of this Agreement is
released hereby.
B. Covenant
Not to Xxx. Effective as of the Effective Date, each party hereby agrees,
for
itself and each of the other Releasing Parties related to or affiliated
with it,
that (a) neither it nor they will ever file, commence, join in or in any
manner
further prosecute or enforce, or assert any defense, offset or cross-claim
with
respect to, or otherwise assert, defend or seek relief through, any lawsuit
or
action arising out of, based upon or relating to any of the Released Matters
and
(b) neither it nor they will ask any other person to initiate such a lawsuit
on
his, her or its behalf. The filing or bringing by any Releasing Party of
any
claim, demand, obligation or cause of action against any Released Party
in
connection with any of the Released Matters shall constitute a breach of
this
Agreement.
9. Waiver
Of California Civil Code §
1542. Each Party, having been informed, and having read the provisions,
of California Civil Code § 1542, knowingly and intentionally waives any
protection afforded to such Party by Civil Code § 1542, which provides as
follows:
A
general release does not extend to claims which the creditor
does not know or suspect to exist in his or her or their favor at the time
of
executing the release, which if known by him must have materially affected
his
or her or their settlement with the debtor.
This
Agreement is intended to cover all claims or possible claims
arising out of or related to those matters referred to in the foregoing
releases, whether such claims or possible claims are known, unknown, or
hereafter discovered or ascertained, and the provisions of Section 1542
of the
California Civil Code and any successor statute to it are hereby expressly
waived. The Parties hereto expressly acknowledge that they have been advised
by
their counsel of the contents and effect of such section, and with such
knowledge they hereby expressly waive whatever benefits they may have pursuant
to such section.
10. Consultation
With
Counsel. Each party represents and warrants that it has been advised
that this Agreement is a final and binding legal document, that it has
had
reasonable and sufficient time and opportunity to consult with an independent
legal representative of its own choosing before signing this Agreement,
that it
has in fact so consulted with an independent legal representative of its
own
choosing before signing this Agreement, and that in signing this Agreement
it
has acted voluntarily of its own free will and has not relied upon any
representation made by any other party regarding this Agreement’s subject matter
or its effect.
11. Authority.
Each party
represents and warrants that it has not transferred or assigned to any
person or
entity any rights, claims and/or causes of action released herein. Each
party
further represents and warrants that each, respectively, has not sold,
assigned,
transferred, conveyed, or otherwise disposed of any rights, claims, demands,
obligations, or causes of action referred to in this Agreement. Each party
represents and warrants that it has full legal authority to execute this
Agreement and to bind itself to the Agreement by execution thereof and
that each
party has obtained all necessary legal approvals to enter into this Agreement.
Each representative executing this Agreement on behalf of a corporation
or legal
entity represents and warrants that he is empowered to do so and thereby
binds
the respective corporation or legal entity.
12. Confidentiality.
Except
as otherwise agreed, each party covenants, represents and warrants that
it will
not, without compulsion of legal process, disclose to others the terms
of this
settlement, the amounts referred to in this Agreement, or the fact of the
payment of said amounts, except that each party may disclose said information
on
a need to know basis to its respective attorneys, accountants, existing
or
prospective lenders, or other professional advisors to whom the disclosure
is
necessary to effect the purposes for which said party has consulted such
professional advisors. If a party reasonably concludes that it is required
by
law to make a filing with the Securities and Exchange Commission, or other
form
of public disclosure, disclosing the existence of, or any contents of,
this
Agreement, it shall provide the other party or parties with the final form
of
the filing or disclosure no less than one business day prior to the filing
or
disclosure. The parties hereby agree that they shall keep confidential
and shall
not use or disclose any proprietary, non-public information, including,
but not
limited to, information concerning pricing, customers, prospects, business
plans
or strategies, technological developments, products, proposed products,
or
development plans, received from any other party during the course of
performance of the executory provisions of this Agreement. The parties
hereby
reaffirm their obligations pursuant to the Confidentiality Stipulation
executed
in the Pending Action.
13. No
Pending Or Known Threats Of
Other Claims Or Litigation Against Defendant Parties. Each party
represents and warrants to the others that as of the Effective Date of
this
Agreement and other than the Pending Action, none of them is aware of any
pending litigation, threatened litigation, or asserted or unasserted claims,
facts, occurrences, or circumstance of any kind, that would constitute,
support,
or relate in any way to any claim on behalf of any of them against any
other
party.
14. Dismissals.
Within five
(5) business days of the Effective Date of this Agreement the parties shall
file
in the Pending Action a stipulation of dismissal with prejudice, without
costs,
and with all rights to appeal waived, of all claims asserted in the Pending
Action.
15. Fees/Costs.
Each party
shall pay that party’s own attorneys’ fees and costs incurred in connection with
the Pending Action through the dismissal of the Pending Action.
16. Miscellaneous.
A. Applicable
Law. This Agreement shall be interpreted, enforced and governed by the
laws of
the State of California, without regard to the principles of the conflicts
of
laws thereunder.
B. Dispute
Resolution. It is understood and agreed that if, at any time, a violation
of any
term of this Agreement is asserted by any Party hereto or any dispute arises
hereunder or related hereto, the Parties shall submit such dispute first
to
non-binding mediation in Boston, Massachusetts, before a mediator acceptable
to
all parties. If such mediation does not successfully resolve the dispute,
the
parties shall submit such dispute to binding arbitration administered by
the
American Arbitration Association (AAA) in accordance with its then-applicable
Commercial Arbitration Rules and heard before a neutral arbitrator in Denver,
Colorado (provided, however, that the arbitrator shall not have the authority
to
award punitive damages). The Parties agree that judgment upon any such
award may
be ordered in a Court properly having jurisdiction. The Parties further
agree
that the fees (not including the parties’ attorneys’ fees) associated with any
dispute arising hereunder or in any way related to the subject matter hereof
shall be borne fifty percent (50%) by IMX, on one hand and fifty percent
(50%)
by OSI and Rapiscan, on the other.
C. Attorneys’
Fees. Should any Party to this Agreement institute any action or proceeding
(including, without limitation, any arbitration proceeding, but not including
the mediation provided for in section 16.B above) to enforce any provision
hereof, or for damages by reason of any alleged breach of any provision
of this
Agreement, or for a declaration of such Party’s rights or obligations hereunder,
or for any other judicial remedy, the prevailing Party shall recover from
the
losing Party all attorneys’ fees, costs and expenses actually incurred by the
prevailing Party to its attorneys for the services rendered in connection
with
such action or proceeding to the Party prevailing in any such action or
proceeding; provided, however, that any payment under this paragraph by
the
non-prevailing party shall be capped at the amount of its own attorneys’ fees,
as confirmed by reasonable documentation.
D. Drafting
Of
Agreement: The Parties acknowledge and agree that they participated equally
in
the drafting of this Agreement. It is further agreed and understood that
the
general rule pertaining to construction of contracts that ambiguities are
to be
construed against the drafter shall not apply to this Agreement.
C. Notices:
Any and all notices or other communications provided for or discussed herein
shall be given in writing and delivered either in person; by facsimile
or email
transmission and confirmed by mail or hand delivery; or by registered mail,
which shall be addressed as follows:
If
To IMX:
Xxxxxxx
X. Xxxxxx
IMPLANT
SCIENCES CORPORATION
000
Xxxxxxx Xxxx
Xxxxxxxxx,
XX 00000
(000)
000-0000 (phone)
(000)
000-0000 (facsimile)
With
Copies To:
Xxxxx
X. Xxxxxxx, Esq. (XXxxxxxx@xxxx-xxxxxxx.xxx)
HARE
&
XXXXXXX
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx,
XX 00000
(000)
000-0000 (phone)
(000)
000-0000 (facsimile)
If
To OSI or Rapiscan:
Xxxxxx
Xxx, Esq.
OSI
SYSTEMS, INC.
00000
Xxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
(000)
000-0000 (phone)
(000)
000-0000 (facsimile)
With
Copies To:
Xxxxx
X. Xxxxxx, Esq. (xxxxxxx@xxxx.xxx)
LOEB
&
LOEB
LLP
00000
Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx
0000
Xxx
Xxxxxxx, XX 00000
(000)
000-0000 (phone)
(000)
000-0000 (facsimile)
D. Severability:
The Parties agree that if
any provision of this Agreement is declared or determined by any tribunal
of
competent jurisdiction to be illegal, invalid, or unenforceable, the legality,
validity, and enforceability of the remaining parts, terms, or provisions
shall
not be affected thereby, and said illegal, unenforceable or invalid part,
term,
or provision shall be deemed not to be part of this Agreement.
E. Binding
Agreement: It is understood and agreed that this Agreement shall be binding
upon
and shall inure to the benefit of the Parties hereto, and their respective
agents, employees, officers, directors, managers, members, shareholders,
representatives, divisions, subsidiaries, affiliates, attorneys, heirs,
administrators, attorneys, executors, successors, and assigns.
F. Entire
Agreement: Other than as expressly stated herein, this Agreement and the
agreements and attachments expressly incorporated by reference as though
fully
set forth herein set forth the entire agreement between the Parties relating
to
the rights herein and the duties and obligations herein assumed, and supersedes
any and all previous negotiations, agreements and/or understandings of
any kind
relating to the subject matter hereof. Any oral representations or modifications
concerning this Agreement shall be of no force or effect. This Agreement
can be
modified only in the form of a writing signed by all Parties hereto.
G. Headings
and Titles: Headings, titles, and captions are for ease of reference only
and
shall not be used in the interpretation of this Agreement.
H. Execution
In Counterparts: This Agreement may be executed in separate counterparts,
each
of which shall be deemed an original, and, when taken together with other
signed
counterparts, shall constitute one and the same Agreement, which shall
be
binding upon and effective as to all Parties.
HAVING
READ the foregoing, the Parties hereby voluntarily affix
their signatures and execute this Agreement.
IMPLANT
SCIENCES
CORPORATION
DATED:
January 4, 2008 /s/
Xxxxxxx X.
Xxxxxx
Xxxxxxx
X.
Xxxxxx
OSI
SYSTEMS,
INC.
DATED:
January 4, 2008 /s/
Xxxx Xxxxxx
Xxxx
Xxxxxx
RAPISCAN
SYSTEMS, INC.
DATED:
January 4, 2008 /s/
Xxxx Xxxxxx
Xxxx
Xxxxxx
EXHIBIT
“A”
DISTRIBUTION
AGREEMENT
This
Distribution Agreement (this “Agreement”) is entered into as of January 4, 2008,
by Implant Sciences Corporation (“Manufacturer”) a Massachusetts corporation,
and Rapiscan Systems, Inc. (“Distributor”), a California corporation, with
reference to the following facts:
A. Manufacturer
develops, manufactures and markets security equipment, and desires to
appoint
Distributor as a reseller on the terms hereof;
B. Distributor
has expertise in the sales, distribution and service of security products,
and
desires to be appointed as a distributor of Manufacturer’s
products.
Now,
therefore, the parties agree as follows:
1 Appointment.
1.1. Appointment.
On the
terms of this Agreement, Manufacturer appoints Distributor as a non-exclusive
distributor of the Products set forth on Appendix “A” attached hereto.
Distributor accepts such appointment.
Products
purchased by Distributor may be sold, re-sold, transferred, delivered
or
distributed by Distributor to any and all end-users, customers, distributors
or
any other person or entity in the world, except where exclusive Distributor
agreements are in effect with the Manufacturer as of the date of this
Agreement.
Manufacturer shall provide, within 30 business days of the date of this
Agreement, a list of such exclusive agreements, including dates upon
which such
agreements expire. Upon expiration of such pre-existing exclusive agreements,
Rapiscan shall have the right to sell Products in the territory previously
covered in the expiring agreement. Distributor may effectuate such sales,
re-sales, transfer, delivery or distribution on such terms, prices and
conditions as it may determine. However, Distributor shall not transfer
Products
in contravention of U.S. export laws. Distributor shall fully comply
with all
aspects of the Foreign Corrupt Practices Act (FCPA) and other relevant
U.S.
laws.
1.2. Pricing.
The
prices at which Distributor shall purchase the Products from Manufacturer
shall
be as set forth on Appendix “A”.
1.3. No
Agency.
Unless
Manufacturer specifically authorizes in writing, Distributor shall not
have the
authority to represent or otherwise speak for Manufacturer, or to otherwise
bind
Manufacturer in any way, and shall not hold itself out as possessing
such
authority.
1.4. Private
Label.
Distributor shall sell the Products under its own brand, labeled with
Distributor’s name. Distributor shall provide artwork to Manufacturer necessary
to label the Products with Distributor’s name, but Manufacturer shall not have
any obligation to label the Products in a manner inconsistent with the
manner in
which Manufacturer labels such Products with Manufacturer’s name.
2 Certain
Duties upon Manufacturer and Distributor.
2.1. Upon
delivery of a written purchase order from Distributor specifying a Product,
the
number of units ordered, and the address of delivery and recipient name,
Manufacturer shall, within 30 days of such purchase order, deliver the
ordered
units to Distributor, FOB Wakefield.
2.2. Manufacturer,
or its Designee, shall provide its standard warranty on all units sold
to
Distributor, provided that such warranty shall cover parts and labor
for a
period ending the earlier of: (a) one year following the delivery of
the
warranted unit to the end user; or (b) fifteen months after the delivery
of the
warranted unit to Distributor. The benefits of such warranty shall extend
collectively to Distributor and Distributor’s sub-distributors and end-user
customers. Manufacturer reserves the right to determine, in its sole
discretion,
the means to fulfill its warranty obligation, including return to
factory.
2.3. Manufacturer,
or its Designee, agrees to use commercially diligent efforts to provide
reasonable aftermarket support, consistent with industry standards, to
Distributor or any of their respective end-users or sub-distributors
for all
products sold, re-sold, transferred, delivered or distributed by Distributor
pursuant to this Agreement. This includes stocking and selling spare
parts and
providing out-of warranty service, additional training, and other technical
assistance to Distributor or any of its end-user customers or sub-distributors,
regardless of whether the applicable warranty period for any such product
or
unit has lapsed.
2.4. Distributor
shall provide installation and industry-standard end user support for
the
Products, with aforementioned support from Manufacturer. At Distributor’s
discretion, Distributor may sell service agreements for periods beyond
the
initial Manufacturer’s warranty period.
2.5. Manufacturer
shall supply Distributor with such technical manuals and documentation
of the
Products, in the English language, as Distributor may reasonably request.
Such
materials may be printed or in digital format, as determined by Manufacturer.
2.6. Manufacturer
shall provide Distributor with reasonable training at Manufacturer’s principal
U.S. facility at mutually agreed times, provided that Distributor shall
be
responsible for expenses incurred by Distributor’s personnel, including travel
and lodging.
2.7. If
any
Product is “certified” or otherwise approved or licensed by any governmental
agency, entity or subdivision (whether U.S. or foreign) for use for a
particular
purpose, or for distribution within a territory, Manufacturer shall ensure
that
Distributor receives the full benefits of such certification, approval
or
license. For privately labeled products, Distributor may be required
to obtain
its own certifications from applicable government agencies if no certification
previously exists; Manufacturer shall provide reasonable assistance in
obtaining
such additional certifications.
2.8. Distributor
shall provide, on a rolling monthly basis, a forecast representing the
anticipated demand for Manufacturer’s Products from Distributor’s network of
sales agents; the lack of a forecast shall be deemed a forecast of zero
units.
2.9. Manufacturer
shall be responsible for 100% of the delivery requirements for the first
30 days
of the aforementioned forecast, 75% of the second 30 days, and 50% of
the final
30 days of the rolling 90 day forecast.
3 Payments.
Unless
otherwise agreed in writing, terms of sale shall be net 30 days from
date of
shipment in U.S. currency.
4 Deviations.
Deviations from the terms of this Agreement, including any terms contained
in
purchase orders, shall not be binding upon the parties unless made in
writing
and signed by both parties.
5 Intellectual
Property Protection.
5.1. Reporting.
Distributor shall promptly report to Manufacturer any infringement of
Manufacturer’s intellectual property that may come to Distributor’s attention,
including any unauthorized use of Manufacturer’s trademarks, or the marketing of
Manufacturer’s products under the trademarks of others.
5.2. Sale
of Goods/License of Intellectual Property.
This
Agreement provides for the sale of goods consisting of the tangible materials
comprising finished units of the Products and Components, but the parties
understand and agree that use of the intellectual property associated
with the
Products, including software, is under license to Distributor, any other
parties
in the chain of distribution, and the end users.
6 Confidentiality.
In
furtherance of our respective performance under this Agreement, the parties
have
disclosed and will disclose “Confidential Information” (as defined below) to
each other. The party receiving such Confidential Information (the “Receiving
Party”) from the disclosing party (the “Disclosing Party”) shall maintain the
confidentiality of the Confidential Information, on the terms set forth
below.
For the purposes of this Agreement, “Confidential Information” means all
information that can reasonably be construed to be confidential and that
relates
to Disclosing Party’s business. “Confidential Information” does not include
information that at the time of disclosure Disclosing Party has previously
made
available to the general public. After giving prior notice to Disclosing
Party,
Receiving Party may use and disclose Confidential Information: (a) to
the extent
necessary to assert any right or defend against any claim arising under
this
Agreement or pertaining to Confidential Information and its use or disclosure;
(b) to the extent necessary to comply with any applicable statute, constitution,
treaty, rule, regulation, ordinance or order; or (c) if Receiving Party
receives
a request to disclose any Confidential Information under the terms of
a
subpoena, order, civil investigative demand or similar process issued
by a court
of competent jurisdiction or by a governmental body or agency (provided,
however, that Receiving Party shall promptly provide written notice to
Disclosing Party of such pending disclosure).
7 Representations
And Warranties.
7.1. Manufacturer
Representations and Warranties.
Manufacturer makes the following representations and warranties:
7.1.1. Authority.
Manufacturer has the required authority and capacity to enter into this
Agreement and all documents required to be entered into pursuant to this
Agreement. All corporate and other actions required to be taken by Manufacturer
to authorize the execution, delivery and performance of this Agreement
and all
transactions contemplated in this Agreement have been duly and effectively
taken. Upon the full execution and delivery of this Agreement, this Agreement
will become a valid, binding and enforceable obligation upon
Manufacturer.
7.1.2. No
Conflicts.
Manufacturer’s execution, delivery and performance of this Agreement will not
result in the breach of any term or provision of, or constitute a default
under,
any agreement by which Manufacturer is bound, nor will such actions result
in
the violation of any obligation, law, ordinance, regulation, order or
decree
applicable to Manufacturer.
7.2. Distributor
Representations and Warranties.
Distributor represents and warrants:
7.2.1. Authority.
Distributor has the required authority and capacity to enter into this
Agreement
and all documents required to be entered into pursuant to this Agreement.
All
corporate and other actions required to be taken by Distributor to authorize
the
execution, delivery and performance of this Agreement and all transactions
contemplated in this Agreement have been duly and effectively taken.
Upon the
full execution and delivery of this Agreement, this Agreement will become
a
valid, binding and enforceable obligation upon Distributor.
7.2.2. No
Conflicts.
Distributor’s execution, delivery and performance of this Agreement will not
result in the breach of any term or provision of, or constitute a default
under,
any agreement by which Distributor is bound, nor will such actions result
in the
violation of any obligation, law, ordinance, regulation, order or decree
applicable to Distributor.
8 Export
Compliance.
This
Agreement is made expressly subject to the export laws, regulations,
orders and
other restrictions imposed by the United States Government or by any
other
governmental entity on the Products or any related information (“Export Laws”).
Without first obtaining all required licenses or other governmental approvals,
Distributor shall not import, export or re-export, directly or indirectly,
any
Products or related information to or from any country, group, company,
organization, or individual to which such import, export or re-export
is
restricted or prohibited, or as to which any such government or any agency
thereof requires an export license or other governmental approval at
the time of
such import, export or re-export. Distributor agrees to indemnify Manufacturer
for any breach by Distributor of such Export Laws.
9 Term
and Termination.
9.1. Term.
This
Agreement shall expire on the fifth anniversary of the date first above
written.
9.2. Defaults.
A party
hereto shall be in Default if:
9.2.1. That
party materially breaches any covenant, representation or warranty it
makes in
this Agreement, or if any representation or warranty is untrue in any
material
respect, and such breach or untruth is not cured within 30 days after
written
notice of such breach or untruth.
9.2.2. That
party is the subject of proceedings for such party to be adjudicated
voluntarily
bankrupt, the consent by such party to the filing of a bankruptcy proceeding
against it, the filing by such party of a petition or answer or consent
seeking
reorganization under any bankruptcy or similar law or statute, the consent
by
such party to the filing of any such petition or to the appointment of
a
custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
insolvency relating to such party or any substantial part of its assets
or
property, the making by such party of a general assignment for the benefit
of
creditors, or the taking by such party of any corporate action in furtherance
of
any of the foregoing.
9.3. Change
of Control.
If more
than 50% of the voting interest in a party, or all or substantially all
assets
of that party, is/are acquired by a single party or a group acting in
concert in
a single transaction, then upon such event, the party having such a change
in
control shall have the right to terminate this Agreement upon 180 days’ prior
written notice.
9.4. Rights
of Termination.
Upon
any Default, the non-defaulting party may terminate this Agreement by
written
notice, with immediate effect.
9.5. Effect
of Termination.
9.5.1. Sell-Off.
In the
event of a termination of this Agreement resulting from Manufacturer’s Default,
Distributor shall have a sell-off period of 180 days from the date of
termination during which Distributor shall have the right to sell any
inventory
of Products or components thereof in Distributor’s possession or en route to
Distributor from Manufacturer on the date of the termination.
9.5.2. Surviving
Provisions.
The
provisions of Sections
5.2-, 6, 8, 9.5.1, and 10
shall
survive the expiration or termination of this Agreement; provided, however,
the
duration of any Manufacturer’s warranty on Products sold hereunder shall not be
affected by the termination of this Agreement.
10 Miscellaneous.
10.1. Applicable
Law. This Agreement shall be interpreted, enforced and governed by the
laws of
the State of California, without regard to the principles of the conflicts
of
laws thereunder.
10.2. Dispute
Resolution. It is understood and agreed that if, at any time, a violation
of any
term of this Agreement is asserted by any Party hereto or any dispute
arises
hereunder or related hereto, the Parties shall submit such dispute first
to
non-binding mediation in Boston, Massachusetts, before a mediator acceptable
to
both parties. If such mediation does not successfully resolve the dispute,
the
parties shall submit such dispute to binding arbitration administered
by the
American Arbitration Association (AAA) in accordance with its then-applicable
Commercial Arbitration Rules and heard before a neutral arbitrator in
Denver,
Colorado (provided, however, that the arbitrator shall not have the authority
to
award punitive damages). The Parties agree that judgment upon any such
award may
be ordered in a Court properly having jurisdiction. The Parties further
agree
that the fees (not including the parties’ attorneys’ fees) associated with any
dispute arising hereunder or in any way related to the subject matter
hereof
shall be borne fifty percent (50%) by IMX, on one hand and fifty percent
(50%)
by Rapiscan, on the other.
10.3. Attorneys’
Fees. Should either Party to this Agreement institute any action or proceeding
(including, without limitation, any arbitration proceeding, but not including
the mediation provided for in section 10.2 above) to enforce any provision
hereof, or for damages by reason of any alleged breach of any provision
of this
Agreement, or for a declaration of such Party’s rights or obligations hereunder,
or for any other judicial remedy, the prevailing Party shall recover
from the
losing Party all attorneys’ fees, costs and expenses actually incurred by the
prevailing Party to its attorneys for the services rendered in connection
with
such action or proceeding to the Party prevailing in any such action
or
proceeding; provided, however, that any payment under this paragraph
by the
non-prevailing party shall be capped at the amount of its own attorneys’ fees,
as confirmed by reasonable documentation.
10.4. Amendments
and Modifications.
No
amendment or modification of this Agreement shall be valid unless made
in a
writing executed by all parties.
10.5. Binding
Effect.
All
provisions of this Agreement shall inure to the benefit of, and be binding
upon,
the parties and their successors-in-interest, permitted assigns, administrators,
and devisees.
10.6. Counterparts.
This
Agreement may be executed in counterparts.
10.7. Descriptive
Headings.
Descriptive headings in this Agreement are for convenience only and shall
not
control or affect the meaning or construction of any provision of this
Agreement.
10.8. Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter hereof.
10.9. Force
Majeure.
A party
shall be excused from performing its obligations under this Agreement
if its
performance is delayed or prevented by any cause beyond such party’s control,
including but not limited to, acts of God, fire, explosion, disease,
weather,
war, insurrection, civil strife, terrorism, riots, government action,
or power
failure. Performance shall be excused only to the extent of and during
the
reasonable continuance of such disability.
10.10. Further
Documents.
Each
party shall execute and deliver all such further instruments, documents
and
papers, and shall perform any and all acts, necessary to give full force
and
effect to all the terms and provisions of this Agreement.
10.11. Interpretation.
No
uncertainty or ambiguity herein shall be construed or resolved against
any
party, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been negotiated by all parties and shall be construed
and
interpreted according to the ordinary meaning of the words used so as
to fairly
accomplish the purposes and intentions of the parties.
10.12. Limitations
on Liability.
Neither
party will under any circumstances be liable to the other party for any
consequential, incidental or special loss or damages arising out of this
Agreement, the termination or expiration of this agreement in accordance
with
its terms or with respect to the installation, use, operation or support
of the
Products, even if apprised of the likelihood of such damages occurring.
10.13. Limitations
on Waiver.
No
waiver by any party of any term or condition of this Agreement shall
be
construed to be a waiver of such term or condition in the future, or
of any
preceding or subsequent breach of the same or any other term or condition
of
this or any other agreement, nor shall any such waiver be binding unless
written. All remedies, rights, undertakings, obligations and agreements
contained in this Agreement shall be cumulative, and none of them shall
be in
limitation of any other remedy, right, undertaking, obligation or agreement
of
any party to this Agreement.
10.14. No
Assignments.
Distributor may not assign this Agreement, or any part of this Agreement,
without Manufacturer’s prior written consent. For purposes of this Agreement,
“assignment” shall include any transaction or series of related transactions by
which Distributor’s owner or owners prior to such transactions shall hold less
than a majority ownership of Distributor after such transactions.
10.15. No
Partnership or Joint Venture.
This
Agreement does not create a partnership or joint venture between the
parties,
and shall not be construed as doing so. This Agreement does not create
any right
by either party to bind the other party.
10.16. No
Third Party Beneficiaries.
No
person other than the parties hereto and their permitted successors and
assigns
shall receive any benefits of this Agreement.
10.17. Notices.
All
notices, statements and other documents that any party is required or
desires to
give to any other party shall be given in writing and shall be served
in person,
by express mail, by certified mail, by overnight delivery, or by facsimile
at
the respective addresses set forth in the Agreement to which this Distribution
Agreement is an exhibit, or at such other addresses as may be designated
in
writing by such party. Delivery shall be deemed conclusively made (i)
at the
time of service, if personally served, (ii) five days after deposit in
the
United States mail, properly addressed and postage prepaid, if delivered
by
express mail or certified mail, (iii) upon confirmation of delivery by
the
private overnight deliverer, if served by overnight delivery, and (iv)
at the
time of electronic transmission (as confirmed in writing), provided a
copy is
mailed within 24 hours after such transmission.
10.18. Severability.
Any
provision of this Agreement that is found by a court of competent jurisdiction
to be void, invalid or unenforceable shall be curtailed and limited only
to the
extent necessary to bring such provision within the requirements of the
law, and
such finding and curtailment shall not affect the validity or enforceability
of
any other provision of this Agreement.
In
witness whereof, the parties have executed this Agreement as of the date
first
above written.
|
“MANUFACTURER”
|
“DISTRIBUTOR”
|
|
By: /s/
Xxxxxxx X. Xxxxxx
Xxxxxxx
X. Xxxxxx
|
By: /s/
Xxxx Xxxxxx
Xxxx
Xxxxxx
|
|
|
|
|
Its:
CEO
|
Its: EVP
|
APPENDIX
“A”
Products
and Pricing
“Products”
means all current commercially available security products and software
and
hardware improvements to or subsequent iterations of such products that
become
commercially available during the term of this Agreement.
Pricing
for the Products shall be, for a given Product, the lowest price at which
IMX
sells the Product to any distributor, exclusive of sales of demonstration
units,
as measured at the time of Rapiscan’s order and based on the lowest price of any
sale of that Product during the six-month period preceding any Rapiscan
order,
with the initial look-back period ending April 1, 2008. Such pricing
shall
specifically exclude strategic deals provided, however, that in the event
IMX
concludes a strategic deal, Distributor shall receive comparable terms
in
connection with a Rapiscan order of comparable quantity.
