EXHIBIT 10.9
CONFIDENTIAL
NON EXCLUSIVE DISTRIBUTOR
CONTRACT
THIS CONTRACT IS ENTERED INTO BY AND BETWEEN:
BRIDGETECH HOLDING INTERNATIONAL INC., "HEALTH CARE PILOT" ("DISTRIBUTOR")
a corporation having its principal place of 000 Xxxx Xxxxxxxx 00xx Xxxxx Xxx
Xxxxx, XX 00000.
AND
SOVEREIGN TRACKING SYSTEMS, L.L.C. ("STS"), a limited liability company, or
its assignee, with its main place of business at, 0000 XXXXXXXXXX XXXXXXX,
XXXXX, XXX XXXXXX 00000
Jointly referred to hereafter as the parties.
PREAMBLE
Distributor is in Healthcare technology Marketing and integration business.
STS is in the business of offering an asset tracking system that works on radio
frequency under the trade name "PalTrack". PalTrack and related products
designated by STS as available for sale by Distributor are referred to as the
"Products". Distributor wishes to purchase from STS PalTrack units and to market
such units ".
Distributor has technical expertise in marketing and RFID technology and
provides its customers with before and after sales support, know how, specific
marketing and packaging solutions. Distributor is a Value Added Reseller,
meaning a party with technical expertise, training experience and market
relationships that offer it the ability to properly (as determined by STS)
represent and market products.
The parties have decided to work together to develop market opportunities
based on the Distributor and STS's expertise, in order for the Distributor to
sell. Specifically, the parties contemplate Distributor's resale and
distribution of PalTrack as a stand-alone system.
The development, sale or adaptation of Products into other technologies of
Distributor shall be subject to separate agreement between STS and Distributor.
STS shall have sole discretion in approving any suggested application of
Distributor.
This contract takes into consideration the above with the purpose of
facilitating relationship between the Distributor and STS.
ARTICLE 1 - SCOPE OF CONTRACT
Subject to the terms and limitations of this Contract, STS grants the
Distributor, and Distributor accepts the non-exclusive right to sell STS's
Products. The Distributor has the right to sell the Products according to the
terms and conditions agreed upon between the parties and stated in the following
Articles 2 to 13.
ARTICLE 2 - TERM
This contract will come into force on latest of the dates of signature by
either party and will expire on February 3, 2007 providing all distributor fees
have been paid to STS for initial and during anniversary date of each subsequent
follow on years. See Attachment "A" for Fee schedule.. It will be renewed
automatically as provided for in Attachment "B,2".
CONFIDENTIAL
NON EXCLUSIVE DISTRIBUTOR
CONTRACT
ARTICLE 3 - LEGAL POSITION OF THE DISTRIBUTOR
The Distributor will sell, in its own name and on its own behalf, the
Products, which it purchases from STS. Upon completion of Distributor's training
pursuant to Article 4.2 and upon STS's determination that Distributor has
demonstrated expertise sufficient to properly market and or install the
Products, the Distributor shall be authorized to perform marketing and or
installation of the Products. As a material inducement to STS's granting the
right to Distributor to perform marketing and or installation, Distributor shall
indemnify and hold STS harmless from any errors, omissions, neglect or
consequences resulting from Distributor's installations, and shall purchase and
maintain for its benefit and the benefit of STS, its principals, agents and
employees, who shall each be named parties insured, general and product
liability and malpractice insurance reasonably satisfactory to STS. Distributor
shall provide STS with evidence that insurance is at all times in place as noted
above, delivering any time upon STS 's request and at least annually, not more
that thirty (30) days prior to expiration of policies, certificates of insurance
showing the same to be in place for the following year. Policies shall be with
national reputable insurance companies licensed to do business in all states
where installation is to take place, such companies having a Best Rating of at
least A, XIV. Policies shall not be cancelable except upon thirty -(30) days
written notice to STS. Distributor may not perform installations when insurance
as required hereunder, is not in place to STS's satisfaction.
Distributor's installations shall be in accordance with guidelines and
procedures established by STS. STS shall sell Products to Distributor at its
then-published wholesale price list, as modified from time to time but not more
than annually, and on terms set forth in Article 7 below. STS responsibilities
are restricted to those defined in this contract.
After acceptance of the present contract by both parties, the Distributor is
authorized to publicly define its activity with the following statements:
"AUTHORIZED SELLER AND DISTRIBUTOR OF PALTRACK". Upon satisfactory completion of
training and delivery of evidence that insurance requirements of STS are met,
Distributor may also represent it as an "authorized installer of PalTrack".
ARTICLE 4 - RIGHTS AND OBLIGATIONS OF STS
4.1 SALES
Subject to compliance by Distributor with the terms and conditions of this
Agreement and payment of invoices issued by STS for Products, STS undertakes to
honor orders received and to comply with the delivery periods mutually agreed
upon, subject to Excused Delay.
When giving quotations, the delivery periods, which vary according to the type
of Product and any customization which may be attached thereto are provided only
as an indication by STS of the expected time frame and are subject to
confirmation on a case-by-case basis.
STS reserves the right to cease or restrict the production and delivery of
any Product and to redesign or modify any Product without incurring obligations
towards the Distributor other than those of meeting purchase orders already
received, provided that: (a) the Distributor will be notified in writing of a
Product withdrawal at least three (3) month's in advance, and (b) at the end of
this three (3) month's period, the Distributor will be able to send to STS a "
Last Buy Order ". Notwithstanding the foregoing, STS can immediately withdraw a
Product in case of an error, a change required or recommended under applicable
law, court order or by STS's attorneys. In such case, any orders outstanding
shall be deemed cancelled or, at the option of Distributor, modified to be for
the new or alternative product recommended by STS then available at a price and
upon terms then in effect for the new or alternative product.
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NON EXCLUSIVE DISTRIBUTOR
CONTRACT
4.2 TRAINING
The signature of this Agreement by the Distributor entitles the Distributor
to technical and commercial training sessions for people representing both the
commercial staff and the technical staff of the Distributor. Such training
sessions shall take place at STS's premises. Any additional training shall be
available at mutually agreeable dates and times.
The date of the initial training sessions will be fixed by mutual consent.
The training will be organized by STS and at STS's facility. Should the
Distributor wish the initial training sessions be presented on its site, or
should the number of persons the Distributor seeks trained be greater than seven
(7), STS may require additional compensation for training, the terms and
conditions of such training to be furnished by STS in advance for the
Distributor's approval and will include acceptable locations, travel and lodging
expense reimbursement.
The parties acknowledge that the Distributor's understanding of the
Product, its functions and applications is a material inducement to STS's
continuing into this Agreement and that it is important that the Distributor
remain current in its knowledge. Accordingly, after initial training, STS may
propose future training to the Distributor, on reasonable terms and conditions
to be agreed upon at such time. STS may condition the continuance of the
Distribution Agreement upon the Distributor's undertaking such additional
training.
4.3 TECHNICAL SUPPORT
STS may condition further Product sales to Distributor if it determines
technical support provided by Distributor for the installation and sale of the
Products to its customers is not sufficient.
STS agrees to assist Distributor by providing a technical hotline service
during regular business hours.
STS may elect to provide such additional necessary technical support not
provided by Distributor to Distributor and in such case, STS will quote the
price for such technical support according to the needs of the Distributor.
STS undertakes to keep the Distributor informed of the launching of new
types of Products for which it wishes to entrust sales to the Distributor so
that Distributor can prepare for their installation and sale.
4.4 MARKETING SUPPORT
The signature of this Contract by the Distributor entitles the Distributor
to a Welcome Kit consisting of existing marketing materials respecting the
Products. The Welcome Kit will be delivered in the form of a CD. Any updated
promotional materials will be made available to Distributor at STS's cost in the
form of a CD. Distributor shall be responsible for production of such marketing
materials provided by STS on CD. Any desired change to marketing materials shall
be subject to STS approval, not to be unreasonably withheld. STS retains sole
copyright in the Welcome Kit and all other marketing materials produced by STS.
ARTICLE 5 - RIGHTS AND OBLIGATIONS OF THE DISTRIBUTOR
5.1 THE DISTRIBUTOR UNDERTAKES TO:
- Use STS as the sole source of supply for Products. Distributor shall not
manufacture, distribute nor offer for sale, installation or integration for its
own account or that of others, any product which is competitive with the
Products
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NON EXCLUSIVE DISTRIBUTOR
CONTRACT
without the written consent of STS, which may be withheld, conditioned or
delayed in STS's sole discretion. Violation of this covenant shall constitute,
at STS's sole election, an incurable breach allowing, in addition to other
remedies, immediate termination of Distributor's rights to buy and resell or
install Products.
5.2 TRADEMARKS AND LOGO/INDUSTRIAL PROPERTY
The Distributor is only entitled to use the specific STS logo for the sale
of Products supplied to the Distributor by STS. This specific logo will be
provided by STS in PC format to which the Distributor shall not make any
modification.
The Distributor shall not make any reference to, STS, STS's business, its
Products and the relationship between Distributor and STS except through
labeling programs agreed to by the parties and press releases approved by both
STS and Distributor, each party agreeing not to unreasonably withhold such
consent. Notwithstanding the foregoing, STS may inform the public of the
identities of its distributors.
5.3 STOCKS OF PRODUCTS AND DEVELOPMENT SYSTEM SAMPLES
In consultation with STS, and with due consideration given to existing and
future estimates of Product orders from Distributor's customers, Distributor
agrees to maintain a sufficient stock of the Products, in order to be able to
rapidly supply its customers. Sovereign transmitters, transceivers and XXX units
require minimum purchases as provided for in Attachment "B,7".
To adequately present the STS product to the customer, the distributor must
purchase at least one STS XXX Demo case. The distributor price for the initial
XXX demo case is $950.00 USD; any additional XXX Demo case purchased by the
distributor will be discounted to $750.00 USD.
5.4 QUALIFICATION OF PERSONNEL
The Distributor undertakes to assign qualified personnel to the sale,
service and installation of the Products. Any new member joining the Distributor
and assigned to the installation of STS's Products shall be trained by the
people who have been trained according to the terms and conditions set forth in
article 4.2 above.
5.5 PROMOTION
In communication with third parties, the Distributor shall specify that it
is one of STS's distributors. Distributor shall promote the Products and STS,
through its sales force, through exhibitions, web sites, showrooms, press
releases, and brochures, all of which shall be subject to review and approval of
STS, such approval not to be unreasonably withheld.
ARTICLE 6 - CONFIDENTIALITY
In providing its services, each Party will have access to commercial, financial,
technical or strategic information, hereinafter referred to as "Confidential
Information" which shall be treated as confidential.
Each Party gives formal assurance to the other that such Confidential
Information will be safeguarded and will, under no
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CONFIDENTIAL
NON EXCLUSIVE DISTRIBUTOR
CONTRACT
circumstances, be disclosed to another party without previous approval of the
disclosing Party in writing.
Even after the expiry of this contract, both parties undertake to treat as
strictly confidential any and all Confidential Information received from either
party.
ARTICLE 7 - PRICE AND PAYMENT CONDITIONS
The Products will be sold by STS to the Distributor according to its
then-current wholesale price list. STS may impose certain minimum purchase
requirements as provided for in Attachment "B,7".
STS will invoice the Distributor in US$. Payment arrangements shall as
provided for in Attachment "B,7", FOB, STS offices (unless otherwise arranged);
for foreign (Non-US) purchase orders, 100% of purchase order must be wired
transferred at time of purchase order placement. Payment not made when due shall
be subject to interest at eighteen percent (18%) per annum. STS may withhold
pending orders and/or refuse new orders until past due payments are made and
satisfactory evidence of payment for future orders is provided to STS.
ARTICLE 8 - WARRANTY
SUBJECT TO LIMITATIONS AND CONDITIONS HEREIN PROVIDED, STS warrants to the
Distributor that all PalTrack units sold to Distributor hereunder will be free
from defects in material and workmanship, will conform to all specifications for
the units, and will be fit for the purpose for which they were designed.
STS further warrants that its Products shall comply with their functional
specifications. STS's warranty is strictly limited to the replacement or repair
of the Products (at STS's election) considered as defective by STS.
STS's warranty is a one year parts valid from the date of signature of the
acceptance certificate for hardware Products requiring installation or from the
date on which the hardware Products are supplied to the Distributor for those
hardware Products which do not require installation, excluding travel and
accommodation expenses in the case of on-site attendance; the Distributor
bearing the cost of transportation of the defective hardware Products in the
case of a workshop return. In this latter case, the defective Products shall be
returned to STS in good condition.
The above warranty does not cover:
- Engineering samples.
- Products which have been damaged by the Distributor or any third-party or
which have been stored under conditions which do not comply with STS
specifications or normal usage.
- Products not integrated (where authorized) or installed properly.
- Products submitted to abnormal conditions (mechanical, electrical,
thermal); abnormal conditions being defined as any conditions exceeding the
ones stated in the product specifications ones stated in the Product
specifications.
- Products which are incorrectly adjusted or defective when this results from
use in excessive operating conditions (sundry temperatures, voltage and
supply limits) as defined by STS, or from an incorrect choice of
application (where authorized) by the Distributor or its customers.
- Products that are sold to distributor as a Sovereign module and
incorporated in a further end-item either hardware or software.
Defective Products must be sent back to STS following STS's return
procedures.
Distributor shall notify STS of the defects within 15 working days after
the defects are discovered.
THE REMEDY PROVIDED ABOVE IS IN LIEU AND TO THE EXCLUSION OF ALL OTHER
REMEDIES, OBLIGATIONS OR LIABILITIES ON THE PART OF STS FOR DAMAGES, WHETHER IN
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CONFIDENTIAL
NON EXCLUSIVE DISTRIBUTOR
CONTRACT
CONTRACT, TORT OR OTHERWISE, AND INCLUDING BUT NOT LIMITED TO, DAMAGES FOR ANY
DEFECTS IN THE PRODUCTS OR FOR ANY INJURY, DAMAGE, OR LOSS RESULTING FROM SUCH
DEFECTS OR FROM ANY WORK DONE IN CONNECTION THEREWITH OR FOR CONSEQUENTIAL LOSS,
WHETHER BASED UPON LOSS OF ASSETS, THEFT, LOST GOODWILL, LOST RESALE PROFITS,
IMPAIRMENT OF OTHER GOODS OR ARISING FROM CLAIMS BY THIRD PARTIES OR OTHERWISE.
DISTRIBUTOR ACKNOWLEDGES AND AGREES THAT THE PRODUCTS AND PALTRACK SYSTEM DO NOT
CONSTITUTE SECURITY PRODUCTS/SYSTEMS AND ARE NOT DESIGNED TO PREVENT THEFT,
DAMAGE OR VANDALISM TO PERSONS OR PROPERTY. THE PALTRACK SYSTEM IS DESIGNED TO
GENERALLY TRACK MOVEMENT OF ITEMS WITHIN A SPECIFIED AREA, NOTHING MORE, AND
THIS WILL NOT OCCUR UNLESS INSTALLED PROPERLY IN STRICT ACCORDANCE WITH ALL
SPECIFICATIONS OF STS. THIS MAY ALSO NOT OCCUR WHERE THERE EXISTS INTERFERENCE
OR DISRUPTING FACTORS AFFECTING RADIO WAVES. WHILE THE PALTRACK SYSTEM AND
PRODUCTS MAY AID IN SECURITY, THEY DO NOT CONSTITUTE A SECURITY SYSTEM AND STS
MAKES NO REPRESENTATION OR WARRANTY AS TO THE PALTRACK OR PRODUCTS FUNCTIONALITY
OR EFFECTIVENESS AS A SECURITY SYSTEM. DISTRIBUTOR AGREES TO NOTIFY CUSTOMERS OF
THE PROVISIONS OF THIS SECTION, AND THE LIMITATION OF WARRANTIES AND LIABILITY,
HEREIN STATED, AND CUSTOMERS ACKNOWLEDGMENT AND ACCEPTANCE OF THIS ARTICLE 8 AND
AGREEMENT TO LOOK SOLELY TO DISTRIBUTOR FOR ANY CLAIMS SHALL BE A MANDATORY
CONDITION OF SALE.
STS DISCLAIMS ANY EXPRESS WARRANTY NOT PROVIDED HEREIN AND ANY IMPLIED
WARRANTY, GUARANTY OR REPRESENTATION AS TO PERFORMANCE, QUALITY AND ABSENCE OF
HIDDEN DEFECTS, AND ANY REMEDY FOR BREACH OF CONTRACT, WHICH BUT FOR THIS
PROVISION, MIGHT ARISE BY IMPLICATION, OPERATION OF LAW, CUSTOM OF TRADE OR
COURSE OF DEALING, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
NO COMPENSATION SHALL BE PAID BY STS IN RESPECT OF DEPRIVATION OF
ENJOYMENT. STS'S ENTIRE LIABILITY, IF INCURRED, WHETHER IN CONTRACT, TORT OR
OTHERWISE, SHALL BE LIMITED TO THE AMOUNT OF THE DEFECTIVE PRODUCT ORDER.
ARTICLE 9 - INTELLECTUAL PROPERTY RIGHTS
STS and/or its licensors, as applicable, shall retain title and full
ownership of its Products and technology, and more generally of any industrial
and/or intellectual property rights pertaining to its Products and technology,
including any integration, application, alteration or modification of or
utilization of the Products, regardless of the party performing same, and
regardless whether such was done with STS's consent or performed without STS's
consent in violation of this Agreement.
Nothing in this Contract shall be construed as granting to the Distributor
or implying any rights, by license, grant or otherwise, under any intellectual
and/or industrial property rights of or concerning any of the Products or any
integration, application, modification of or utilizing the Products, regardless
of the party performing same, or information transmitted by STS. No source code
will be transmitted to the Distributor. The Distributor shall not make any
copies, reverse engineer, disassemble, or decompile any Product, any software
contained in or used with any Product or purchased from STS as a stand alone
Product. Distributor agrees, without charge to STS but at STS's expense, to
execute and deliver all documents necessary, including original applications and
applications for renewal, extension or re-issue of such patents, trademark
registrations or copyright registrations in any and all countries to vest title
in STS or its licensors (as applicable and as their interests may appear), their
successor and assigns.
The Distributor shall not modify any hardware or software provided by STS
without STS prior written consent. Software incorporated into the Product is
licensed to end users pursuant to separate agreement
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CONFIDENTIAL
NON EXCLUSIVE DISTRIBUTOR
CONTRACT
ARTICLE 10 - TRANSFER
Distributor agrees not to assign, sublicense, transfer or sell any rights and/or
obligations, skills and duties arising from this contract to third parties
without prior mutual consent in writing. Such consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the sale of stock or substantially all
of a Distributors' assets or a merger or corporate reorganization, assignment by
operation of law or assignment or transfer of this Agreement to entities under
common ownership or control ("affiliates") shall not be an assignment requiring
the other parties' consent.
Furthermore, Distributor hereby agrees to inform STS without delay and in
writing of any change in the management or control of their Company.
This Agreement is personal to both parties and entered into based on the
experience, market presence knowledge and representations made by each party.
For this reason, Distributor acknowledges that STS may grant or withhold consent
to a transfer in its sole business judgment.
ARTICLE 11 - TERMINATION IN ADVANCE
Notwithstanding the provisions of Article 2 above, STS reserves the right to
terminate this Contract immediately without the issue of prior notice in the
following cases:
- any total or partial transfer by the Distributor of its rights under
this contract without STS's prior consent in writing,
- and, any change in the control of the Distributor which STS considers
to be against its interests.
- any sale of products compatible with the Products or PalTrack.
- any violation of the provisions of Article 9 of this Agreement.
Each of the Parties also reserves the right to terminate this Contract in
advance and without compensation with notice by registered letter or national
overnight delivery with acknowledgment or refusal of receipt in the case where
the other Party has failed to comply with its non-monetary contractual
obligations and has failed to remedy such breach within a period of thirty (30)
STS shall be entitled to recover its cost of enforcing its rights under this
Agreement (including reasonable legal fees).
Each of the Parties reserves the right to terminate this Contract
immediately without the issue of prior notice in the case of any state of
insolvency, receivership or compulsory liquidation of the other Party.
ARTICLE 12 - RULES APPLYING DURING THE EXPIRY OF TERMINATION OF THE CONTRACT
Except as otherwise agreed in writing by, STS, the Distributor must:
- immediately cease using STS's name, address and logo in any form
whatsoever.
- return to STS, within 30 days of the end of this contract, all promotional
and advertising documents and materials which may have been available for
its execution.
All sums due by the Distributor to STS will be payable within thirty days from
the date of expiry or termination of this Contract.
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CONFIDENTIAL
NON EXCLUSIVE DISTRIBUTOR
CONTRACT
This Agreement shall be governed by, construed, interpreted and the rights
of the parties determined in accordance with the applicable laws of the United
States and the State of New Jersey, notwithstanding its choice of law rules. The
parties stipulate to the personal and subject matter jurisdiction of the courts
of the State of New Jersey, provided the parties further agree in any litigation
between them, to proceed with non-binding mediation or arbitration prior to
fully litigating its respective claims.
ARTICLE 13 - MISCELLANEOUS
All notices, requests, demands, and other communications shall be in
writing and shall be deemed to have been duly given if personally delivered,
sent by facsimile transmission or overnight courier, or if mailed, by certified
or registered mail, postage paid, to the parties at the following address:
IF TO STS:
Xxxxxxx X. Xxxxxxxx, President
Sovereign Tracking Systems LLC
0000 Xxxxxxxxxx Xxxxxxx
Xxxxx, Xxx Xxxxxx 00000
With a copy (which shall not constitute notice) to:
Xxxxxx X. Xxxxxxxx, Esquire
Silver, Xxxxxxxx & Xxxx, L.L.P.
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
IF TO DISTRIBUTOR
Name: Xxxxxxx Xxxxxxx, President and CEO
000 Xxxx Xxxxxxxx 00xx Xxxxx
Xxx Xxxxx, XX 00000.
SOVEREIGN TRACKING SYSTEMS, L.L.C., A LIMITED LIABILITY COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx, as AGENT ONLY
Date: 2/8/06
DISTRIBUTOR:
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------
Xxxxxxx Xxxxxxx
President and CEO
Date 2/8/06
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NON EXCLUSIVE DISTRIBUTOR
CONTRACT
ATTACHMENT - A
NON-EXCLUSIVE DISTRIBUTOR
FEE
SCHEDULE
Non-Exclusive Fee Schedule
Annual Distributor STS Purchases Standard Annual Fee
-------------------------------- -------------------
$4,000,000 --
$2,000,000 --
$1,000,000 --
$ 500,000 --
$ 250,000 --
$ 100,000 $5,000
$ 50,000 $5,000
Initial Non-Exclusive Distributor $5,000
ALL DOLLARS ARE IN US CURRENCY.
INITIAL NON-EXCLUSIVE DISTRIBUTOR FEE PAYMENT IS DUE ON DISTRIBUTOR CONTRACT
EXECUTION
FEE PAYMENT IS DUE ON CONTRACT ANNIVERSARY DATE
ON ALL SUBSEQUENT CONTRACT YEARS
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ATTACHMENT - B
TERM SHEET
Final
In follow-up to our telephone conversation of this morning, please
find below a term sheet outlining terms and conditions that STS would consider
in settlement of claims:
1. The exclusive distributor agreement dated July 22, 2005 ("Exclusive
Distributor Agreement") is acknowledged as terminated, subject to
STS's rights to enforce rights and remedies for default arising under
said agreement, as modified by the terms contained below.
2. Bridgetech will be allowed to continue as a non-exclusive distributor
for a term of one year, which will renew automatically on a
year-to-year basis unless either party notifies the other 90 days in
advance of the expiration date of its determination not to renew.
Bridgetech will execute and deliver a new non-exclusive distribution
agreement in form and content similar to that of the Exclusive
Distributor Agreement, except minimum dollar purchase requirements
(however, minimum unit requirements for orders will remain), exclusive
rights and certain minimum guaranteed payments will be eliminated. A
copy of the form non-exclusive distributor agreement is attached,
which agreement will be deemed amended by the terms of this proposal.
In case of any conflict between the terms of this proposal and the
non-exclusive distributor agreement, the terms of this proposal shall
control.
3. At any time either party would have right to terminate the
non-exclusive distribution agreement by giving 90 days prior written
notice. However, even if such notice is given, STS would allow
Bridgetech to service any customers placing orders for products for
delivery during the 90 day period and would afford Bridgetech the
option of continuing to sell products and provide support to its
existing customers that have bought product for so long as such
customers have and operate the system sold to them during the term (as
opposed to any new systems or products for which no rights shall be
reserved to Bridgetech). In lieu thereof, Bridgetech may request that
STS or any other distributor designated by STS, assume these support
obligations on a going forward basis.
4. No rights of exclusivity will be agreed to at this time. The volume of
product sales by Bridgetech and its ability to serve its customers as
measured over time will determine if and when STS, in its sole
business judgment, will enter into further discussions regarding
exclusive rights. However, once Bridgetech secures a contract with a
customer for Products, STS will notify other distributors that orders
for Products from such customers are to be served by Bridgetech.
Bridgetech will honor similar rights of other STS distributors and
agree not to serve accounts of other STS distributors unless otherwise
agreed in advance by STS and the other distributor. Bridgetech agrees
to notify STS of any contracts with Customers so as to allow STS to
notify its other Distributors of the relationship. Bridgetech also
recognizes that STS may reserve certain accounts from time to time and
agrees not to solicit such accounts, absent the prior written consent
of STS. Bridgetech's exclusive rights with respect to its customers
shall expire with the expiration or sooner termination of the
non-exclusive distribution agreement, subject to the rights afforded
Bridgetech to continue to support and supply systems sold during the
term to Bridgetech's customers in accordance with paragraph 3 above.
5. All future purchase orders shall be paid in full at the time the order
is placed with STS. Alternatively, Bridgetech may deliver along with
the order, a 50% cash deposit and an irrevocable letter of credit for
the balance from a financial institution acceptable to STS that may be
drawn upon at the time the Products under the order are shipped. In no
event shall STS be required to ship less than the minimum number of
units per order. Partial payments shall be accrued and credited
against orders shipped once payment for the
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full order is received or the balance of the order is less than the
letter of credit held by STS. The minimum number of units per order is
currently as follows: 3,000 units for transmitters, 250 units for
transceivers, and 20 units for the XXX systems. The minimum number of
units per order is subject to change if STS manufacturers require
different quantities to maintain present pricing levels.
6. Bridgetech will pay to STS cash in the amount of $50,000, payable as
follows: $20,000 at the time of execution of the non-exclusive
distribution agreement, $20,000 on or before February 15, 2006 and
$10,000 on or before March 1,2006, The foregoing sum shall be in
consideration of STS' entering into the non-exclusive distribution
agreement and shall not be credited against inventory purchases of
Bridgetech. In addition, Bridgetech will deliver to STS a Promissory
Note in the amount of $237,620.00 (representing the balance of the
amount that was due under the Exclusive Distributor Agreement as of
December 31, 2005). The note shall be for a term of one year and shall
bear interest at 10% per annum. The note will secure Bridgetech's
orders of additional inventory and payments made by Bridgetech for
inventory over the term of the note will be deducted from first the
interest and than the principal amount of the note. If at the end of
the term of the note, Bridgetech has not put forth and paid purchase
orders equal to the accrued interest and principal remaining on the
note, the balance shall be immediately due and payable. This will
allow Bridgetech to catch up on its past due obligations as it builds
its business over time. STS will agree not to exercise its rights
under the note until the earlier of: (i) a breach by Bridgetech of its
obligations under the non-exclusive agreement (ii) the termination or
expiration of the non-exclusive agreement or (iii) the first
anniversary of the date of the note, (any remaining principal balance
and accrued and unpaid interest would be paid at that time).
7. Bridgetech will covenant to maintain staffing, marketing and
promotional efforts (including the HIMSS show) at all times throughout
the term of the non-exclusive agreement and not to distribute any
other competing products or systems.
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