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EXHIBIT 10(a)
AGREEMENT
THIS AGREEMENT, effective November 17, 1998, by and between Technology
Guardian, Inc. ("TGI"), a Nevada corporation, with principal place of business
at 00000 Xxxxxx Xxxxxxxxx, Xxxxxxxx X, Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000, and
Galaxy Internet, Inc. ("Galaxy") an Indiana corporation, having its principal
place of business at 0000 Xxxxx Xxxx, Xxxxx X, Xxxxxxxxxxxx, Xxxxxxx, 00000.
WHEREAS, TGI is in the business of developing and manufacturing
products, including but not limited, internet access via satellite ("Products");
and
WHEREAS, Galaxy is in the business of marketing and distributing the
Products to its customers; and
WHEREAS, Galaxy has devoted substantial time and expense to market the
Products to its customer, CompUSA; and
WHEREAS, TGI and Galaxy acknowledge that it is in their mutual best
interest for CompUSA to sell the Products through its retail locations and
through CompUSA's other sales channels; and
WHEREAS, Galaxy has now developed a unique relationship with CompUSA
through its efforts to market the Products to CompUSA.
NOW THEREFORE,in consideration of the mutual covenants, terms and
conditions herein, the parties now agree as follow:
1. SCOPE OF AGREEMENT
A. TGI agrees that Galaxy shall have the exclusive right to
sell the Products, whether now existing or hereafter
developed, to CompUSA.
B. Galaxy agrees that, during the term of this agreement,
so long as Galaxy has the exclusive right to sell TGI
Products to CompUSA, Galaxy, its assigns,
successors-in-interest, subsidiaries, or any company or
organization controlled, owned, or managed in whole or
in part by Galaxy or its officers or directors, will not
sell to CompUSA any system, device, or product designed
to provide satellite access to the Internet, other than
Products supplied by TGI.
C. TGI agrees to take all reasonable and necessary steps to
supply Products sold
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by Galaxy to CompUSA.
2. GALAXY OBLIGATIONS
A. Galaxy shall use its best efforts to sell the Products
to CompUSA during the term of this Agreement.
B. Galaxy will work with TGI to develop unique and
exclusive branding for the Products sold to CompUSA.
Galaxy will work with TGI to develop a distinguished
cosmetic change to the server utilized in the Products
and to develop specific specifications for the server,
including possibly elevating the bandwidth exclusively
for Products sold to CompUSA.
C. Galaxy will ensure that the TGI logo supplied by TGI
will be on all Products and marketing materials utilized
by Galaxy for sale of Products to CompUSA. Galaxy shall
provide copies of all marketing materials to TGI prior
to sending same to CompUSA. Galaxy agrees that all
servers incorporated in the Products sold to CompUSA
will display "POWERED BY TGI".
D. Galaxy will assist TGI in the development and issuance
of press releases regarding sales of Products to
CompUSA. Galaxy will provide TGI with appropriate input
as to the time, nature and relative content of such
press releases.
E. Galaxy shall ensure that its sales of Products to
CompUSA, as contemplated by this agreement, shall at all
times meet or exceed the performance requirements set
forth in Exhibit "A", attached hereto and incorporated
by this reference as though fully set forth herein.
3. TGI OBLIGATIONS
A. TGI will use its continuing best efforts to timely
provide Products sold to CompUSA when and as required by
Galaxy. TGI agrees that it will drop ship Products to
CompUSA as required by Galaxy.
B. TGI will not sell Products to CompUSA, either directly
or indirectly, other than through Galaxy, pursuant to
this Agreement.
C. TGI will work with Galaxy to develop a unique and
exclusive branding for the Products sold to CompUSA by
Galaxy pursuant to this Agreement.
D. TGI agrees to purchase its server related products
directly from CompUSA to incorporate in the Products to
be sold by Galaxy to CompUSA for resale to CompUSA's
customers, so long as such products are priced at a
level equal to
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or lower than that price generally available in the
trade for equivalent products. TGI will cause the
outside of any such server to display "POWERED BY TGI".
The TGI logo shall appear on all marketing materials
used by Galaxy, including in store posters and displays.
TGI will bear the cost of labeling and producing such
materials, posters and displays. TGI will field test HP,
IBM and Compaq servers for those unique customers of
CompUSA who may require these particular brands of
server when purchasing Products through CompUSA. Any
such Products incorporating HP, IBM or Compaq servers
will require an appropriate price adjustment.
E. TGI will work with Galaxy to develop a unique and
exclusive branding for Products sold to CompUSA by
Galaxy pursuant to this Agreement. TGI will use the
brand name "Diginxt" or some other brand name developed
by TGI. TGI will work with Galaxy to develop a
distinguished cosmetic change in the server incorporated
in the Products sold to CompUSA pursuant to this
Agreement. The branding and cosmetic changes referred to
herein will be exclusively for Products sold to CompUSA
and to no other customers.
F. TGI will provide continuous Internet satellite access as
part of the Products sold to CompUSA pursuant to this
Agreement.
G. If Galaxy sells 1000 Product units to CompUSA by January
15, 2000, then TGI will grant to Galaxy an option to
purchase 100,000 shares of the common stock of TGI at a
purchase price of $11.50 per share, based on a pre-split
evaluation: e.g., if stock splits two for one, then
Galaxy will have an option to purchase 200,000 shares at
purchase price of $5.75 per share.
4. PRICING
A. The Products purchased by Galaxy for sale to CompUSA
pursuant to this Agreement shall be at the prices and
terms reflected on Exhibit "B" attached hereto, and
incorporated by this reference as though fully set forth
herein. The prices shown on Exhibit "A" shall not be
increased during the first year, and thereafter the
prices will not be increased without a ninety (90) day
prior written notice. In any event, the prices for
monthly internet satellite access for Products sold to
CompUSA shall not exceed the then current price per
month existing on the inception date of any CompUSA
customer agreement during the term of any given CompUSA
customer agreement whether or not such CompUSA customer
agreement extends beyond the termination date of this
agreement.
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B. Galaxy has the sole right to determine its selling price
for Products sold to CompUSA under the terms of this
Agreement.
5. TERM
A. The term of this Agreement (hereinafter "Term") is five
(5) years, commencing on January 13, 1999. Galaxy shall
have the right to extend the Term of this Agreement for an
additional five (5) years upon written notice to TGI prior
to the expiration of the Term.
B. Prior to the expiration of the Term, this Agreement can be
terminated for any reason by written agreement signed by
TGI and Galaxy.
C. This Agreement may be terminated by TGI at any time upon
written notice to Galaxy upon the occurrence of any of the
following events:
(i) the assignment by Galaxy of any interest in this
Agreement without TGI's prior written consent,
which consent shall not be unreasonably withheld.
(ii) any sale, transfer, or relinquishment, voluntary
or involuntary, by operation of law or otherwise
of any majority interest in the direct or
indirect ownership of Galaxy's business, without
the prior written approval of TGI, which
approval shall not be unreasonably withheld.
(iii) Galaxy's insolvency or a composition among
Galaxy's creditors, or the filing of a voluntary
petition in bankruptcy, or the appointment of a
referee, trustee, conservator, or a receiver for
a substantial portion of Galaxy's assets.
D. This Agreement may be terminated by Galaxy at any time
upon written notice to TGI upon the occurrence of any of
the following events:
(i) any assignment by TGI of any interest in this
Agreement without Galaxy's prior written
consent.
(ii) any sale, transfer, or relinquishment, voluntary
or involuntary, by operation of law or
otherwise, of any majority interest in the
direct or indirect ownership of TGI's business
or any material change in TGI's management,
without prior written approval from Galaxy,
which approval shall not be unreasonably
withheld.
(iii) TGI's insolvency, or a composition among TGI's
creditors, or the filing of a voluntary petition
in bankruptcy, or the appointment of a referee,
trustee, conservator or receiver for a
substantial portion of TGI's
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assets.
E. Upon termination of this Agreement, Galaxy shall account
for and return to TGI all unsold Products previously
delivered to Galaxy, and written materials which were
provided to Galaxy by TGI pursuant to this Agreement.
F. Upon termination of this Agreement, Galaxy agrees to
immediately cease selling Products to CompUSA.
G. Termination of this Agreement will have no effect upon
TGI's continuing obligation to provide internet
satellite access for Products previously sold to
customers of CompUSA. TGI acknowledges that its Products
will be sold to customers for stated periods of time,
such as twelve (12) months, twenty-four (24) months or
thirty-six (36) months. Customers of CompUSA will
purchase Products which will include the necessary
server and other hardware as well as ongoing internet
satellite access for a stated term. Whether or note this
Agreement has terminated, TGI will have the obligation
to continue to provide internet satellite access to such
customers, provided that TGI is paid the monthly
satellite access fee for each such Product through the
balance of the term of any such customer agreement.
6. COVER
A. TGI and Galaxy agree that should TGI default in its
obligations to provide Products to Galaxy for sale to
CompUSA, or should TGI fail in its obligations to
provide continuing internet satellite service for
Products sold to customers of CompUSA, Galaxy shall have
the right to cover any such breach by TGI. Prior to
exercising such right to cover as to purchase of
hardware, Galaxy shall first provide notice of such
alleged default to TGI and TGI shall have a thirty (30)
day grace period to cure any such default. Prior to
exercising such right to cover as to Internet satellite
service interrupted for reasons other that Acts of God,
Galaxy shall provide 48 hours prior written notice to
TGI.
If Internet satellite service is interrupted due to Acts
of God, the TGI shall have a reasonable time, not to
exceed 21 days, to cure such interruption in service,
during which time, Galaxy will be credited for that loss
in service. In the event that TGI cannot cure such
interruption in service, TGI will use its best efforts
to assist Galaxy to secure alternate Internet satellite
service.
For purposes of this Agreement, Galaxy's right to cover
will include but not be limited to the right to sell any
substantially similar Internet satellite access product
through CompUSA, as developed or manufactured by an
entity other than TGI, or to otherwise provide
substitute internet satellite access to customers of
CompUSA that have purchased Products.
7. TRADEMARKS AND TRADE NAMES
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A. No rights or interests in the trademarks or the trade names
owned by TGI is conferred upon Galaxy. Such trademarks or
trade names may not be used in any manner contrary to the
established policies of TGI.
B. No rights in the trademarks or the trade names owned or
licensed by Galaxy shall be conferred upon TGI. TGI shall
have no right to use any such trademarks or trade names
except as approved by Galaxy in writing.
8. APPLICABLE LAW
A. All transactions between TGI and Galaxy shall be deemed to
take place in the State of California. All such
transactions and all questions of construction,
interpretation and performance of this Agreement and any
amendments and supplements hereto shall be governed by the
laws of the State of California without regard to conflict
of law provisions. The federal and state courts located in
California shall have exclusive jurisdiction and venue
concerning any and all matters and disputes related to or
arising out of this Agreement, or the relationship between
the parties or any transaction between the parties premised
upon or related to this Agreement. Should any provision of
this Agreement in any way violate any law, such provision
shall be deemed deleted, and the remainder of the Agreement
shall remain in full force and effect.
9. WAIVER
A. No waiver of any provision of this Agreement shall act as a
waiver of any other provision or as a continuing waiver.
10. NOTICES
A. Any notices given under this Agreement shall be deemed to
have been sufficiently given when sent by the United States
registered or certified mail as provided herein or as
subsequently changed by prior written notice duly given.
B. Any notices to TGI shall be addressed as follows:
Technology Guardian, Inc.
Attn: Xxxx Xxxxxxx, Executive V.P. and C.O.O.
00000 Xxxxxx Xxxx., Xxxx. X
Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000
C. Any notices to Galaxy shall be addressed as follows:
Galaxy Internet, Inc.
Attn: Xxxxx Xxxxxxxxx, President
0000 Xxxxx Xxxx, Xxxxx X,
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Xxxxxxxxxxxx, Xxxxxxx, 00000
D. Three (3) business days following the date of mailing shall
be deemed the date on which notice has been given.
11. COOPERATION
A. The parties hereto pledge to work together in a friendly,
close and conscientious manner for mutual benefit and to
adhere to both the letter and spirit of this agreement.
12. INTERPRETATION
A. If any part of this agreement should be determined to be
invalid, illegal or inoperative, for any reason, it is the
intention of the parties that the remaining parts, so far
as possible and reasonable, shall be effective and fully
operative. In the event of litigation, the parties hereby
request the Court to interpret and enforce this agreement
in a manner so as to effectuate and carry out, as nearly as
may be possible the intent of the parties and the spirit of
this agreement as shown by the terms hereof, specifically
including the term held invalid, illegal or inoperative.
13. MEDIATION AND ARBITRATION
A. Should any dispute arise with respect to this agreement,
the parties agree to first submit such dispute to mediation
in a good-faith attempt to resolve the dispute; should
mediation be unsuccessful, or if the parties are unable to
agree upon a suitable mediator, the parties further agree
to submit the dispute to binding arbitration pursuant to
the Commercial Arbitration Rules of the American
Arbitration Association.
14. ADDITIONAL DOCUMENTS
A. Each party hereto agrees to promptly execute such further and
additional documents as may be reasonably required or desirable to
fully and properly effectuate this terms of this agreement both in
letter and in spirit.
15. ASSIGNMENT
A. TGI shall not assign this Agreement without Galaxy's
consent.
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B. Galaxy shall not assign this Agreement without TGI's
consent, which consent shall not be unreasonably withheld.
16. RELATIONSHIP WITH PARTIES
A. In the performance of its obligation under this Agreement,
Galaxy will operate solely as an independent contractor and
will not have the authority to act for, represent or bind
TGI except as provided in this Agreement.
B. In the performance of its obligation under this Agreement,
TGI will operate solely as a independent contractor and
will not have the authority to act for, represent or bind
Galaxy except as provided in this Agreement.
17. CONFIDENTIALITY
A. Galaxy agrees that the Terms of this Agreement and all
information relating to this Agreement and the business of
TGI are confidential and proprietary and will not be
disclosed to any third party without the prior written
consent of TGI. Information need not be marked
"Confidential" to be treated as such. This obligation of
confidentiality shall survive the termination of this
Agreement.
B. TGI agrees that the terms of this Agreement all information
relating to this Agreement and the business of Galaxy are
confidential and proprietary and will not be disclosed to
any third party without the prior written consent of
Galaxy. Information need not be marked "Confidential" to be
treated as such. This obligation of confidentiality shall
survive the termination of this Agreement.
18. INDEMNIFICATION
A. Each party will indemnify, defend and hold harmless the
other party and its officers, directors, employees,
affiliates and agents from any against any and all claims,
costs, damages, expenses and liabilities, including
attorney fees, resulting from or relating to a party's
performance of or failure to perform its obligations under
this Agreement.
B. This obligation of indemnification shall survive the
termination of this Agreement.
19. ENTIRE AGREEMENT
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A. This Agreement represents the only understanding between
TGI and Galaxy concerning the subject matter hereof. This
Agreement terminates and supersedes all prior agreements
(except the Mutual Non-disclosure Agreement), if any,
between the parties hereto and their predecessors.
B. This Agreement may not be extended, supplemented, amended
or modified in any way except by a document in writing
signed by TGI and Galaxy.
20. AUTHORITY AND COUNTERPARTS
A. The individuals executing this Agreement on behalf of TGI
and Galaxy represent that they are fully and duly
authorized and empowered to do so for and on behalf of
their respective principals.
B. This Agreement may be executed in counterparts, and upon
execution of this Agreement in counterparts, shall become
a binding an enforceable agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.
GALAXY INTERNET, INC. TECHNOLOGY GUARDIAN, INC.
By: By:
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Title: Title:
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Date: Date:
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EXHIBIT "A" TO JANUARY 13, 1999 AGREEMENT
BETWEEN TECHNOLOGY GUARDIAN, INC.
AND GALAXY INTERNET, INC.
PERFORMANCE REQUIREMENTS
Galaxy will sell a minimum of 500 Product units per year. In the event that
Galaxy has not sold 500 products units by April 1, 2000, then Galaxy shall have
an additional l80 days in which to sell sufficient numbers of Product units to
reach a sales rate of 500 Product units per year, i.e., Galaxy must then have
sold 750 Product units by October 1, 2000.
Galaxy is required to sell a minimum of forty-one (41) units per month. After
each quarter, TGI will review Galaxy's sales of Product units for that quarter.
If, in that quarter, Galaxy has not sold 123 units, then Galaxy will pay to TGI
an offset sum of money equivalent to number of units sold that quarter
multiplied by $150. If, in that quarter under consideration, Galaxy has sold
more than 123 units, then TGI will rebate to Galaxy, a sum of money equal to the
number of units in excess of 123 units sold multiplied by $150. In calculating
the number of Product units sold, TGI will count all Product units sold by
Galaxy to CompUSA, regardless of whether a given transaction is a purchase
(Option A, Exhibit "B) or lease (Option B, Exhibit "B") from TGI to Galaxy.
In recognition of the fact that Galaxy needs time to develop its market before
sales "ramp up", the initial quarter to be reviewed for purposes of offset or
rebate will be that quarter ending December 31, 1999.
TGI and Galaxy agree to meet and confer from time to time, but not less than one
time per contract year, for the purpose of adjusting the Performance Requirement
up or down as necessary to address changing market conditions. The parties agree
that they will negotiate in good faith and act reasonably, and that any
adjustment to this Performance Requirement will be in a writing signed by the
parties, and become part of this Agreement as an amendment.
GALAXY INTERNET, INC. TECHNOLOGY GUARDIAN, INC.
By: By:
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Title: Title:
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Date: Date:
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EXHIBIT "B" TO JANUARY 13, 1999 AGREEMENT
BETWEEN TECHNOLOGY GUARDIAN, INC.
AND GALAXY INTERNET, INC.
PRICING FOR DIGINXT
OPTION A:
Purchase all equipment from TGI, including server,
dish, LNB, mount, software, with appropriate license $4597
Monthly Internet Access $293 per mo.
OPTION B:
TGI will lease and license to Galaxy, equipment,
software, and Internet Access
12 month contract $600 per mo.
24 month contract $600 per mo. For mos. 1 thru 12
$400 per mo. For mos. 13 thru 24
36 month contract $600 per mo. For mos. 1 thru 12
$400 per mo. For mos. 13 thru 24
$400 per mo. For mos. 25 thru 36
GALAXY INTERNET, INC. TECHNOLOGY GUARDIAN, INC.
By: By:
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Title: Title:
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Date: Date:
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