EXCLUSIVE DISTRIBUTION AND MANUFACTURING AGREEMENT
Exhibit
10.1
This
Exclusive Distribution Agreement (the "Agreement") is made by and between
Sequiam Biometrics Inc. with offices at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇, hereinafter referred to as "Manufacturer"), and CJCC from ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇.(▇▇▇▇▇▇▇), ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.▇. (hereinafter referred to as
“Distributor").
Whereas,
the parties hereto enter into an agreement on an exclusive basis to govern
the
distribution of Manufacturer's products and services as listed in Exhibit
A attached
and sale to this Agreement (hereinafter called "Product”).
Now
therefore, in consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which hereby acknowledged, the parties hereto agree, intending to be legally
bound, as follows:
Article
1 - Appointment
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1.1
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Manufacturer
Appointment:
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Manufacturer
hereby appoints Distributor for the term of this Agreement, as its
exclusive Distributor for the Products in (the "Territory"). Distributor
hereby accepts such appointment and agrees to purchase from Manufacturer
all of its requirements for the Products for sale in the territory
in the
terms of this Agreement. The Territory is defined to include the
following
regions: Asia.
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Distributor
Appointment:
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Distributor
hereby appoints Manufacturer for the term of this Agreement, as its
exclusive biometric design and manufacturer and to design and manufacture
the Products. Manufacturer hereby accepts such appointment and agrees
to
design and build biometric products for the distributor beginning
with the
products listed in Exhibit A.
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1.2
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Distributor
agrees not to modify/change or alter Products without prior written
approval of Manufacturer.
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Article
2 - Term,
Performance and Payment
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2.1
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The
terms of this Agreement shall be from April 15th,
2006 until April 15th,
2011.
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Thereafter,
this agreement shall be renewed for additional terms of twenty-four
(24)
consecutive months, unless one party provides the other written notice
of
termination at least ninety (90) days prior to the expiration of
the then
current term. Any expiration or termination shall not modify or alter
any
of the rights or obligations of the parties which arose prior to
such
expiration or termination.
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2.2
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Distributor
shall invest the sum of $150,000 USD in exchange for an equally valued
sum
of Sequiam Corporation Common Stock. The purchase price of the stock
shall
be based on the average of the last 5 trading days the stock was
actively
traded.
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2.3
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Manufacturer
will provide 3 working prototypes of the Product on or before June
30th
2006.
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Article
3 - Termination
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3.1
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Events
of Default.
Either party may terminate this Agreement
if:
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3.1.1
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The
other party breaches any material term or condition of this Agreement
and
fails to cure such breach within sixty (60) days after the due date
(with
respect to any payment default) or within ninety (90) days after
receipt
of written notice for any other
breach;
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3.1.2
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The
other party files a voluntary or is subject to an involuntary petition
in
bankruptcy, commences a liquidation and dissolution or voluntarily
assigns
its assets for the benefit of creditors. In this event Manufacturer
becomes insolvent technical documentation will be provided to Distributor,
documentation will only be sufficient to provide technical support
not
build compatible or similar hardware
units.
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3.2.1
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No
Damages for Termination.
Neither party will be liable to the other for damages of any kind,
including incidental or consequential damages, on account of the
termination or expiration of this agreement in accordance with its
terms.
Both manufacturer and Distributor waives any right it may have to
receive
any compensation or reparations on termination or expiration of this
agreement, other than as expressly provided in this Agreement.
Manufacturer ownership rights of the products shown in Exhibit A
survive
this agreement.
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3.2.2
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All
material provided by Manufacturer in possession by Distributor should
be
Returned to the Manufacturer within 14 days of contract terminating.
These
include but not limited to computer equipment, design documents,
test and
diagnostic equipment. Distributor can retain any inventory that has
been
paid for in full on or before the date of termination.
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Article
4 - Distributor’s
Duties
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4.1
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Delivery.
Manufacturer will use all commercially reasonable efforts to deliver
the
Products in accordance with any purchase order. Risk of loss or damage
to
the Products delivered by Manufacturer passes to Distributor on delivery
by the Manufacturer to the common
courier.
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4.2
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Price.
The price to be paid by Distributor for any Product purchased from
Manufacturer will as outlined in Distributor price list. Unless otherwise
stated, prices are listed and are payable in United States Dollars.
Prices
are inclusive of those items specifically identified on Exhibit
A and
exclusive of any item not so specified or described. In addition
to the
purchase price, Distributor will pay any costs which Manufacturer
may
incur or pre-pay (without any obligation on Manufacturer to do so)
on
behalf of or for the benefit of Distributor, including, without
limitation, and export duties, shipping
handling.
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4.3
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Price
Changes.
Except as otherwise agreed, the prices are subject to change from
time to
time at the sole discretion of Manufacturer. Manufacturer agrees
to use
its reasonable effort to inform Distributor of any anticipated price
changes in advance. Any price change will be effective thirty (30)
days
after written notice from Manufacturer and will apply to all the
Products
ordered by Distributor after the effective date of the change. If
Manufacturer reduces any product price or offers increased discounts,
Manufacturer will credit Distributor within thirty 30 days the difference
between the original product price and the reduced product price
for
Distributor's product inventory, including and limited to: (i) any
Manufacturer product in transit to Distributor, (ii) any product
in
Distributor inventory that was purchased within the previous thirty
(30)
day period. In the event that Manufacturer increases the price of
the
product to Distributor, Manufacturer has the right to limit the purchase
quantities.
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4.31
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Pricing.
Product pricing for products not described or priced within Exhibit
A
shall be priced to Distributor as described in the following formula:
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((Product
cost + 16% manufacturers burden) +
19%)
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4.32
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Cost
Disclosure.
Manufacturer will fully disclose the cost of all the materials that
comprise products manufactured under this agreement.
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4.4
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Payment.
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4.4.1
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Distributor
must pay for and must accept all the Products shipped by Manufacturer
pursuant to Distributor purchase orders.
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4.4.2
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Payment
of any sums due to Manufacturer hereunder must be made by wire transfer
or
cleared check in United States Dollars. Unless otherwise agreed in
writing, Distributor must pay in full to Manufacturer the applicable
purchase price plus all additional costs (including such items as
duties,
tax, freight, etc.).
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4.5
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Promotion.
Distributor will actively promote the sale of the Products in the
Territory to the best of its ability. Distributor will provide information
and advice to promote the sale of the Products in the Territory.
The
Distributor shall provide a schedule of planned events (for the duration
of this Agreement) to the Manufacturer within sixty (60) days of
the date
hereof. The Manufacturer will coordinate with the Distributor joint
participation at certain events as deemed necessary by the
Distributor.
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4.6
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Reporting.
Distributor shall keep Manufacturer informed of Distributor activities
and
of market conditions within the Territory through monthly sales reports
that provide Customer identity and
location.
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4.7
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Support
Services.
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4.7.1
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Distributor
shall provide and maintain, at its own expense, adequate customer
service
facilities and properly trained staff to carry out first line support
of
the Products in the Territory, including but not limited to, reasonable
telephone support of Customers, diagnosis of reported problems with
the
Products purchased by the Customer. Distributor will also implement
all
support programs and upgrade procedures for the Products as required
by
Manufacturer from time to time. Manufacturer will provide hardware
support
as described in the warranty section of this agreement.
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Article
5 - Manufacturer's
Rights
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5.1
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Right
of Inspection.
Manufacturer shall have the right, at reasonable times during business
hours, to inspect the sales and customer records of Distributor with
2
working days prior written notice.
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5.2
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Change
of Design.
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5.2.1
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Manufacturer
may, at any time and without liability to Distributor, improve, modify
or
discontinue any Product or feature of any Product. Manufacturer will
not
be obliged to make any change or upgrade in any Product shipped to
Distributor prior to the official introduction of any change to the
same.
Manufacturer may, without liability to Distribute, fill any order
placed
by Distributor for any given Product by substituting therefore a
modified
or changed version of the same, so long as there is no significant
loss of
performance and/or functionality by reason of the
substitution.
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5.3
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Distributors
will have no access to Manufacturers
servers.
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5.4
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All
customer lists related to the Product will be shared by the Manufacturer
and the Distributor. Both parties will be granted reasonable access
to
this information if and when
necessary.
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Article
6 -Returns
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6.1
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Defective
Product.
Distributor may return any Product to Manufacturer that Distributor
or its
customer finds defective. If Distributor has insufficient inventory
to
replace customers defective merchandise Distributor shall immediately
place an offsetting purchase order greater or equal to the return
amount.
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Article
7 -Trademarks,
Copyrights And Trade Secrets
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7.1
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Use.
All of the Products which are sold by Distributor directly or indirectly
must bear an authorized trademark of the Manufacturer. Distributor
may
private label product at Distributors own expense as long as the
Manufacturer’s trademark is still present on the product.
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7.2
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Copying
Prohibited.
Distributor may not modify, copy or otherwise reproduce in any way
or form
any Product Software or Hardware (including materials and any other
documentation) supplied with any Product sold hereunder. Distributor
shall, and shall cause all Customers to, maintain the integrity of
all
copyright and trademark notices of Manufacturer imbedded in the Products
including use, duplication.
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7.3
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Distributor's
obligations under this license shall survive the termination of this
Agreement, regardless of the cause of
termination.
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7.4
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Copyright
Protection. Distributor acknowledges that the product firmware is
entitled
to protection under the copyright laws of the United States of America
and
other jurisdictions in the Territory (collectively, the "Copyright
Laws").
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7.5
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Confidentiality.
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Each
party shall keep all proprietary and confidential information of
the
delivering party, including, without limitation, its business,
prospects,
technical know-how, methods, procedures, data, specifications,
designs,
software code, and formulas not previously disclosed (the "Information")
received by it or its agents, affiliates, representatives or employees
confidential and shall not, without the delivering party's prior
written
consent, disclose or use, or permit the disclosure or use by its
agents,
affiliates, representatives or employees of, any such Information,
other
than in connection with its duties under this Agreement. Moreover,
each
party agrees to reveal the Information to its agents, affiliates,
representatives and employees more solely for the purpose of performing
this Agreement, to inform such persons of the confidential nature
of the
Information and obtain the agreement of such persons to act in
accordance
with the terms and conditions of this Section.
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Article
8 - Intellectual
Property Infringement
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8.1
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Notice.
Each party will promptly notify the other in writing if the party
has
notice of:
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8.1.1
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any
infringement of any patent, trademark, copyright, trade secret or
other
intellectual property rights vested in the Manufactures (the "Intellectual
Property Rights") related to the Products;
and/or
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8.1.2
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any
actual or potential claim which use of the Products may infringe
on the
actual or alleged Intellectual Property Rights of any other person
or
entity.
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8.2
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Indemnity.
Manufacturer shall have no liability whatsoever with respect to any
alleged infringement where the Product sold by Distributor has been
used
in a manner for which it was not intended by Manufacturer or where
any
alleged infringement results from a modification of any of such Product,
or parts thereof, after its sale by Manufacturer to
Distributor.
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Article
9 - Manufacturer's Warranties
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9.1
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Manufacturer's
Warranties.
Manufacturer warrants to Distributor, and not its customers, end
users,
agents or representatives, that the Products will perform in accordance
with Manufacturer's Warranty Policy as in effect from time to time.
The
current version of such Warranty Policy is shown in Exhibit
B hereto
and shall be the only warranty under this Agreement until a new warranty
is provided to Distributor in writing signed by an authorized officer
of
Manufacturer. Any replacement warranty will be provided in advance
to
distributor for approval who will not unreasonably withhold a response.
Distributor will provide a response within 3 business days.
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Article
10- Manufacturer's
Liability
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10.1.1
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Manufacturer
shall not have any liability to Distributor or any Customer, in tort,
contract or otherwise, for claims, losses, damages or injuries arising
out
of the design, manufacture, sale, use, licensing or performance of
any of
the Products or in connection with any matter of any nature arising
out of
or in connection with this
Agreement.
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NOTWITHSTANDING
THE FOREGOING, MANUFACTURER SHALL NOT BE LIABLE TO DISTRIBUTOR OR CUSTOMERS,
FOR
ANY INDIRECT, CONSEQUENTIAL, OR SPECIAL DAMAGES WHATSOEVER WHICH ARISE OUT
OF OR
IN CONNECTION WITH THIS AGREEMENT, THE DESIGN, MANUFACTURE, SALE, USE, LICENSING
OR PERFORMANCE OF ANY OF THE PRODUCTS, INCLUDING, WITHOUT LIMITATION, DAMAGES
ARISING FROM DELAY OF DELIVERY OR FROM LOSS OF PROFITS, DATA, BUSINESS OR
GOODWILL, EVEN IF MANUFACTURER IS ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
Article
11 - Distributor's
Warranties
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11.1
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Warranties
to Manufacturer.
Distributor represents and warrants to Manufacturer
that:
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11.1.1
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Distributor
is duly incorporated and existing in good standing under the laws
of China
with all requisite power, authority and license to own, operate,
license
and lease its properties and to carry on its business as now being
and is
contemplated to be conducted under this Agreement and is qualified
to do
business in every jurisdiction where such qualification is required.
Distributor is not in default in the performance, observance or
fulfillment of its articles of incorporation or
bylaws.
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11.2
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Indemnity.
Distributor shall, at its sole expense, indemnify, defend and hold
Manufacturer harmless against any and all claims, losses or damages
(including without limitation, penalties, punitive damages and lost
profits), together with all costs and expenses related thereto (including
without limitation, attorneys' fees and costs and business interruption
expenses), arising from, related to or in connection with: (a) the
inaccuracy or breach of any representation or warranty of Distributor
contained in this Agreement; (b) any representations or warranties
made by
Distributor or any of its employees or agents to Customers as to
the
performance of the Products, which representations or warranties
were not
expressly made under Manufacturer's then current Warranty Policy;
and (c)
the activities of Distributor or its employees in the distribution
of the
Products. Such indemnification shall extend to any and all actions,
suits
or proceedings incidental to any such claims, losses or
damages.
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11.3
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Remedies.
The rights and remedies provided to the parties in this Agreement
shall be
each party's exclusive rights and remedies for breach of
contract.
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Article
12 - Import/export
Restrictions
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12.1
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Compliance.
Distributor shall comply, at its sole cost, with the terms of its
import
license or import documentation and Manufacturer's corresponding
export
license and with all countries within the defined Territory, foreign
and
local laws and regulations, and International Agreements and Treaties
(including, without limitation, laws regarding or limiting export
of
strategic and/or high technology products to certain countries) in
performing its obligations and duties hereunder and in any of its
dealings
with or relating to Manufacturer and/or any
Product.
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Distributor
will use its best efforts to ensure that Customers will similarly
comply
with said laws and export licenses.
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Article
13 - Taxes
and Other Deductions
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13.1
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No
Withholding.
No deductions of any kind shall be made from any payment of monies
to
Manufacturer by Distributor under this Agreement, including the deduction
or withholding of any taxes or duties imposed by the government(s)
or tax
authorities in the Territory.
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13.2
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Adjustments.
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13.2.1
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If
Distributor is required by the government or taxing authority of
the
Territory to deduct or withhold any taxes or duties from the monies
payable to Manufacturer by Distributor under this Agreement, then
Distributor shall pay Manufacturer the gross amount of such monies,
so
that the net amount received by Manufacturer (after withholding or
deducting the required amount) is equal to the amount originally
owed or
invoiced.
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13.3
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Taxes.
Except as otherwise expressly provided in this Agreement, Distributor
shall pay directly, and indemnify Manufacturer against and repay
Manufacturer on demand for, any and all income, franchise, sales,
use,
personal property, ad valorem, value-added, stamp or other taxes,
levies,
customs, duties or other imposts or fees, together with any loss,
liability, claim, costs or expenses, interest and penalties incurred
by
Manufacturer as a result of Distributor's failure to pay any such
taxes
when due.
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Article
14 - Mediation
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14.
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Mediation.
The parties shall endeavor to resolve any dispute arising out of
or
relating to this Agreement by mediation. Unless otherwise agreed,
the
parties will each select a mediator and the 2 mediators will select
a
third.
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Article
15 - Entire
Agreement
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15.
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Entire
Agreement.
This Agreement, together with its attached Exhibits (all of which
are
incorporated herein by this reference and made a part hereof), contains
the entire agreement between the parties hereto, and supersedes all
other
oral or written representations, statements, promises, agreements
and
letters or other expressions of intent of any kind with respect to
the
subject matter hereof. This Agreement may not be modified or amended
without the prior written consent of the parties and any subsequent
purchase orders or standard business forms or agreements of either
Manufacturer or Distributor shall not be an amendment hereto or revision
hereof, whether or not received, accepted, approved or signed by
Manufacturer and/or Distributor. However, the foregoing shall not
limit
the right of Manufacturer to amend, from time to time in its sole
discretion, the Prices or the Warranty
Policy.
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Article
16 - Force
Majeure
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16.
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Force
Majeure.
Neither party hereto shall have any liability for delay or non-fulfillment
of any terms of this Agreement caused by any cause not within such
party's
direct control (but excluding financial inability) such as act of
God,
force Majeure, war, riots or civil disturbance, strikes, accident,
fire,
transportation conditions, labor and/or material shortages, governmental
controls, regulations and permits and/or
embargoes.
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ACCEPTED
BY THE UNDERSIGNED FULLY AUTHORIZED AGENTS OF BOTH
PARTIES.
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| For and on behalf of: CJCC | ||
| (Who warrants her/his authority hereto) | ||
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DATE
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| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||
| President | ||
| For and on behalf of: Sequiam Biometrics, Inc. | ||
| (Who warrants his/her authority hereto) | ||
Product
Description & Product Pricing
EXHIBIT
A (Part 1)
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Components
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Cost
per unit to distributor
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BIOMETRIC
PDA (HDT)
This
device consists of a fully functional personal digital assistant
equipped
with at least 64Mb RAM, 802.11b wireless networking, optional smartcard
or
RFID interfaces, integrated biometric sensor, Windows Mobile 5,
and a
touch screen.
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TBD
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EXHIBIT
B
Manufacturer's
Warranty
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I.
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Limited
Warranty.
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(A)
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Manufacturer
warrants to Distributor that it has right, title, and interest in
Product(s) to rightfully transfer to the Distributor free of any
liens and
that Product(s) furnished will be new, merchantable, free from defects
in
material and workmanship, and will conform to and perform in accordance
with respective Product specifications for one (1) year from the
date of
delivery. Should the Products not perform according to applicable
Product
specifications Manufacturer shall repair replace the Product, at
Manufacturer's sole cost and
expense.
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(B)
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Disclaimer
of Warranties.
EXCEPT FOR THE LIMITED WARRANTIES SET FORTH IN SECTION 10.1 AND IN
THIS
EXHIBIT B, MANUFACTURER MAKES NO WARRANTIES OR REPRESENTATIONS TO
DISTRIBUTOR OR TO ITS END-USER CUSTOMERS WITH RESPECT TO THE PRODUCTS,
THE
PERFORMANCE OF THE PRODUCTS, THE DOCUMENTATION PROVIDED WITH RESPECT
TO
THE PRODUCTS, OR ANY SERVICES PROVIDED HEREUNDER. MANUFACTURER EXPRESSLY
DISCLAIMS ANY AND ALL OTHER WARRANTIES OF ANY KIND, CONCERNING THE
PRODUCTS, DOCUMENTATION AND SERVICES, WHETHER EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR ANY OTHER EXPRESS OR IMPLIED WARRANTY,
WHETHER
ARISING IN LAW, CUSTOM, CONDUCT OR
OTHERWISE.
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(C)
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Neither
Distributor nor its sales representatives, agents or third party
Distributors or marketers has the authority to make or bind Manufacturer
to any affirmation, warranty, guarantee,, or representation, whether
written or oral, concerning the
Products.
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(D)
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Defective
Product(s) in warranty will be returned to Manufacturer for repair
or
replacement at no charge to Distributor. The Distributor shall notify
the
Manufacturer's Customer Service Organization to describe the nature
of the
defective product. The Manufacturer will assess the problem and provide
shipping instructions including assigning an return goods authorization
number (RGA) to facilitate the shipment of the defective Product
back to
the Manufacturer. Unless otherwise agreed by the Manufacturer and
the
Distributor, Manufacturer shall complete repairs and ship repaired
Product(s), or replace Product(s), within fifteen (15) business days
of
receipt of defective Product(s) at Manufacturer factory location
in the
Continental United States. The Distributor shall bear the risk of
in-transit loss or damage up to the point the Product(s) is placed
in the
possession of the carrier and Manufacturer shall bear the cost of
transportation charges for shipment to Manufacturer of the Product(s)
to
be repaired or replaced. For return shipments from Manufacturer to
Distributor, Manufacturer shall bear the risk of in-transit loss
or damage
and shall prepay and bear the cost of transportation charges for
shipment
of the Product(s) which has been repaired or replaced. If the Product(s)
returned is not defective or is not in warranty, Manufacturer shall
promptly advise Distributor in writing of this. In such cases,
Manufacturer shall either (1) return the Product(s) to Distributor
at
Distributor's expense and risk in its "as-received" condition or
(2)
repair the Product(s) if so instructed by Distributor in writing
and
charge Distributor for labor, parts, and shipping in accordance with
Article II "Repairs Not Covered under
Warranty."
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(E)
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Any
replacement, repair, modification, installation, or other service
performed by Manufacturer shall be warranted, commencing with the
date
upon which repaired Product(s) is returned to Distributor for the
remainder of the unexpired period of the warranty or ninety (90)
days,
whichever is greater.
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| (F) |
The
warranties herein do not extend to Product(s) to the extent that
such
Product(s) have
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(1)
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been
subject to misuse, neglect, accident, or abuse not caused by
Manufacturer;
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(2)
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been
wired, repaired, or altered by anyone other than Manufacturer without
Manufacturer's approval;
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(3)
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been
improperly used by any personnel, including Distributor and
Customer;
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(4)
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been
used in violation of the appropriate written instructions furnished
to
Distributor; or
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(5)
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been
subjected to improper temperature, humidity, or other environmental
conditions, and such action is the cause of the damage or
malfunction.
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II.
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Repairs
Not Covered under Warranty
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(A)
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In
addition to repairs provided for under the "Warranty" section of
this
policy, Manufacturer agrees to provide repair services on all Product(s)
ordered hereunder during the respective periods during which Product(s)
is
manufactured by Manufacturer, and for a period of one (1) year after
Product(s) has been manufacturer
discontinued.
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(B)
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Repair
pursuant to this Article II shall be performed and billed at
Manufacturer's prevailing repair charge
rates.
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