EX-10.8
AGREEMENT
THIS AGREEMENT is entered into this day of August, 1999 by and between
NORTHERN LEASING SYSTEMS, INC. ("NLSI"), a New York corporation, and
INTELLI-CHECK, INC. ("ICI"), a New York corporation.
WHEREAS, the parties wish to make certain agreements regarding
distributorship rights of ICI's products as more fully set forth below;
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other valuable consideration, the receipt of which are hereby acknowledged,
the parties hereby agree as follows:
1. Distributorship Rights. ICI hereby grants to NLSI the exclusive right to
distribute, market, lease and sell ICI's current and future products based upon
its ID-Check technology ("ID-Check Products") through the independent sales
organization ("ISO") market in the entire United States and its Territories
("Approved Market Area"). As used in this Agreement the terms "independent sales
organization" and "ISO" shall mean any person, corporation, organization or
entity that markets credit card processing equipment or whose primary business
is marketing equipment using equipment lease financing. ICI will not be required
to distribute through NLSI or its affiliated ISO's ID-Check Products sold to
integrators of POS/cash register systems.
2. Term; Termination.
2.1 Initial Term. The initial term of this Agreement shall begin on the
date on which ICI begins production (the "Production Commencement Date") of
ID-Check Products, which are available for sale or lease through ISO's or NLSI.
The Production Commencement Date shall be confirmed in writing by the parties to
this Agreement.
2.2 Automatic Renewal of Term. The term of this Agreement shall continue
and shall be automatically renewed thereafter if NLSI shall have purchased,
either directly or through ISO's, the following minimums of ID-Check Products
for sale or lease during the time period specified:
Minimum Number of
Time Period Units to be purchased
----------- ---------------------
By the end of the first year
after the Production Commencement Date 2,500
By the end of the second year
after the Production Commencement Date 12,000
Thereafter, a new one-year term shall commence and each year thereafter the term
shall be automatically renewed for an additional one year period provided that
NLSI shall have purchased, either directly or through ISO's, a minimum of
fifteen thousand (15,000) ID-Check Products for sale or lease during the
previous year. For purposes of the minimums established by this Section, upgrade
cards shall not be included in ID-Check Products.
2.3 Termination. In the event NLSI fails to satisfy the
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purchase requirements set forth in Section 2.2, ICI may review its relationship
with NLSI and terminate that aspect of this Agreement that relates to NLSI's
exclusive distributorship, upon 30 days written notice to NLSI. It is understood
and agreed that, in consideration of NLSI introducing ICI to the ISO's, the
provisions of Sections 3.1 and 5 relating to NLSI acting as exclusive lease
finance source of ICI shall continue, even if its exclusive distributorship
rights are terminated. It is further understood and agreed that ICI will provide
such training for the ISO's as NLSI shall reasonably require and shall provide
marketing and sales support, as well as sufficient production to enable NLSI to
meet the purchase requirements set forth in Section 2.2 hereof. In the event ICI
shall fail to comply with the preceding sentence, the purchase requirements of
Section 2.2 hereof will not be applicable. Furthermore, in the event ICI fails
to fulfill orders placed by NLSI or the ISO's, such orders shall be counted
toward the purchase requirements set forth in Section 2.2 hereof.
2.4 Bankruptcy. ICI may terminate this Agreement immediately: (i) upon the
commencement by NLSI of any voluntary proceeding under any bankruptcy,
insolvency or similar law, (ii) upon the commencement of any involuntary
proceeding against NLSI under any such law, in the event such proceeding shall
not be dismissed within 90 days of the commencement thereof, (iii) upon the
appointment of a receiver, liquidator, assignee, trustee or similar official of
NLSI, or any substantial part of its assets,
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or (iv) in the event NLSI makes a general assignment for the benefit of
creditors or admits in writing to a court of competent jurisdiction its
inability to pay debts as they mature.
3. ICI Obligations.
3.1 Referrals.
3.1.1 ICI agrees that in the event any ISO in the Approved Market Area
contacts ICI in connection with purchasing or leasing ID-Check Products, ICI
shall refer such ISO to NLSI. ICI shall not sell ID-Check Products directly to
an ISO without NLSI's consent nor will ICI refer such ISO to any other lease
finance company.
3.1.2 ICI acknowledges the importance of equipment lease financing to its
marketing strategy for ID-Check Products and agrees to promote the use of
equipment lease financing to its customers and other distributors. ICI agrees to
recommend NLSI to ICI's customers and other distributors in the Approved Market
Area interested in using such financing for ID-Check Products. ICI shall not
recommend any other lease finance company to its customers and other
distributors.
3.1.3 It is understood and agreed that NLSI shall have complete discretion
to decline to enter into any lease finance arrangement with any customer or
distributor, including a customer or distributor referred to it by ICI.
3.2 Pricing. ICI agrees that it will sell ID-Check Products to NLSI and
the ISO's at prices no higher than the lowest price ICI sells such ID-Check
Products to other
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distributors. NLSI or the ISO shall be responsible for any shipping charges for
ID-Check Products purchased from ICI.
3.3 Sales Literature. ICI will furnish NLSI, without charge, a reasonable
supply of price lists, sales literature, books, catalogs, and the like, as ICI
may prepare for national distribution and shall also provide NLSI with technical
and sales assistance to assist NLSI in effectively carrying out its activities
under this Agreement.
3.4 Fulfillment. ICI shall use reasonable efforts to fulfill all orders
issued by NLSI and the ISO's.
4. Representations.
4.1 Independent Contractors. NLSI and ICI agree that in all matters they
are and shall be acting as independent contractors. Neither NLSI nor ICI is, and
shall not hold itself out as, an agent, employee, partner or joint venturer of
the other.
4.2 Non-Compete. At all times during the term of this Agreement, and for a
period of one (1) year following the termination of this Agreement by NLSI, NLSI
agrees that it will not, directly or indirectly, sell, represent or solicit
orders for products, which are in ICI's reasonable opinion, competitive with the
ID-Check Products, within the Approved Market Area, provided, however, that the
foregoing shall not be deemed to prohibit NLSI from financing equipment leases
of competing products.
5. Excess Funding Factor. In the event that (a) ICI refers or
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recommends a customer to NLSI, and (b) ICI quotes to such customer a "Funding
Factor" which is higher than the Funding Factor then in use by NLSI for
equivalent leases and (c) such customer enters into a lease agreement with NLSI
with such higher Funding Factor, NLSI shall pay to ICI the difference between
the amounts collected from such customer pursuant to the higher Funding Factor
and the amounts which would have been collected pursuant to the Funding Factor
generally in effect when the lease was made. It is understood that the foregoing
shall not apply to any lease under which the lessee shall be in default.
6. Scope and Limitation of Rights and Authority.
6.1 No Licenses. No rights to manufacture any of ICI's products including
ID-Check Products or to duplicate software or firmware are granted by this
Agreement. Moreover, no licenses are granted for use of ICI's patents,
trademarks, trade secrets, know-how and the like. ICI will permit NLSI to use
such confidential information as is necessary for NLSI's performance under this
Agreement.
6.2 Resale Prices. All resales of the ID-Check Products by NLSI shall be
strictly for the account of NLSI at prices which NLSI shall establish on its
own, not in combination with ICI or any competitor of ICI or NLSI.
7. Trademark and Warranty.
7.1 Limited License. In connection with the sale, promotion or advertising
of the ID-Check Products, NLSI shall use the name and model number designated by
ICI for each ID-Check
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Product. NLSI shall not in any way alter ICI's labels or other identifying marks
on its ID-Check Products. NLSI further agrees not to use the word Intelli-Check
or any other of ICI's name or trademarks or any name or trademarks similar
thereto, without the expressed written permission of ICI except as hereinafter
provided. ICI hereby grants to NLSI a non-exclusive, non-transferable license
solely during the term of this Agreement to use ICI's trademarks, service marks,
trade name or other symbols, all without alteration and only in connection with
NLSI's promotion and sale of the ID-Check Products and in NLSI's advertising and
promotional materials related thereto.
7.2 Infringement. NLSI agrees to inform ICI of any infringement or
imitation of ICI's trademarks, service marks, trade names or other symbols, or
the use of any trademark, service mark, trade name or other symbol that is
confusingly similar to ICI's of which NLSI becomes aware. If ICI, in its sole
discretion decides to undertake any legal proceeding or action to protect or
enforce its trademarks, service marks, trade names or other symbols, NLSI shall
render any assistance reasonably requested by ICI.
7.3 Warranty. ICI's only warranty obligation with respect to ID-Check
Products sold by NLSI shall be as set forth in ICI's standard printed warranty
as applicable to the particular ID-Check Product (the "Express Product
Warranty"). Any Express Product Warranty shall commence from the date of
shipment from NLSI. The Express Product Warranty shall be subject to the
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following additional limitations and disclaimers of warranties:
(i) Any Express Product Warranty shall become null and void if the
ID-Check Products are used other than under normal conditions, not
properly serviced, or used other than in accordance with relevant
instructions, design and data issued by ICI or NLSI. The ISO's shall be
liable for providing sufficient instruction and demonstrating the proper
use of the ID-Check Products to its customers so that the ID-Check
Products are capable of being used properly in compliance with
instructions and good business practice. The ISO's shall ensure that the
ID-Check Products are sold with all necessary documentation.
(ii) ICI's sole obligation under any Express Product Warranty given
in connection with the ID-Check Products sold hereunder shall be limited
to the repair or replacement (at ICI's option) of the ID-Check Products or
parts thereof which proves not to conform to such warranty, and ICI shall
have forty-five (45) days to make such repair or replacement after its
receipt of notice and proof of such non-conformity.
NLSI shall use its best efforts to make the ISO's aware of ICI's
aforesaid limitations and disclaimers of warranties.
7.4 Disclaimer. EXCEPT FOR THE EXPRESS PRODUCT WARRANTY DESCRIBED IN
SECTION 7.3, ICI MAKES NO WARRANTY, REPRESENTATION
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OR GUARANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING BUT NOT
LIMITED TO, ANY WARRANTY OF SUITABILITY FOR A PARTICULAR PURPOSE, OR
MERCHANTABILITY. IN NO EVENT SHALL ICI BE LIABLE FOR CONSEQUENTIAL OR SPECIAL
DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS.
8. No Offset. NLSI shall not have the right to set off or withhold any amounts
due to ICI hereunder arising out of, or based upon, any counterclaim, breach of
contract, tort or other action against ICI.
9. Cure Period. If NLSI shall have received an ID-Check Product that is
defective, in any way, or of a quantity less than the quantity ordered, NLSI
shall notify ICI within thirty (30) days after receipt of such ID-Check Product
or shall have been deemed to have waived its right to bring a claim for any such
defect or deficiency.
10. Merchandising Program. NLSI shall not use any advertising or promotional
materials, which are not provided by the ICI with respect to the ID-Check
Products without the prior approval of ICI. NLSI shall not make any
representation with respect to the ID-Check Products nor behave in any manner,
which could be deemed to be an implied representation or warranty, unless such
representation is explicitly contained in the Express Product Warranty.
11. Rescheduling, Cancellation or Reconfiguration. Orders which have been
accepted by ICI may be canceled, rescheduled or reconfigured by NLSI or the ISO
subject to the following:
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Days Remaining Rescheduling or
Until Scheduled Cancellation Reconfiguration
Ship Terms Terms
- ---- ----- -----
0-30 days Rescheduling for No reconfiguration
30 days. No permitted
cancellation
permitted.
31-60 days 25% of purchase $100 shall be paid
price shall be by NLSI to
paid to ICI by ICI per order
NLSI for can- change.
cellation.
61 plus days No Charge No Charge
12. Risk of Loss. NLSI or the ISO, as the case may be, shall accept all risk of
loss or damage to ID-Check Products from the time of delivery of such ID-Check
Products F.O.B. ICI's plant of manufacture.
13. Force majeure. Neither ICI nor the NLSI shall be liable for any loss,
damage, penalty or in any other way because of any delay in or failure of
performance hereunder (or failure to give notice of any such delay) due to force
majeure. Any pending delivery schedule under an order or release shall be
considered extended by a period of time equal to the time lost because of any
delay excusable under this section. Should such inability to perform continue
for more than 90 days on the part of one party, the other party may at its
discretion terminate, without liability, such order or release.
14. Indemnity against Claims. Each of the parties hereto shall indemnify and
hold the other party harmless from and against, and shall defend the other party
against, any and all liabilities,
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claims, causes of action, suits, costs, expenses (including reasonable
attorneys' fees), and damages of every kind for injury to or death of any person
or entity and for damage to or loss of property, arising out of or attributed,
directly or indirectly, to any breach of this Agreement.
15. Confidentiality. Each of the parties hereto agrees that it will not disclose
or use at any time either during or subsequent to the term of this Agreement
confidential business information of the other party. Such confidential
information shall include all information, know-how, advice, data and other
technical and business information received in connection with this Agreement,
including, but not be limited to, customer lists, contracts, trade secrets,
trade practices, pricing formulas and policies, sales training development and
marketing techniques and manufacturing techniques, processes and methods.
16. Notices. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given if personally delivered or if mailed by first class registered
or certified mail return receipt requested, or by first class mail if received,
addressed to the parties at their respective addresses set forth on the
signature page hereof or at such other address as such party may designate by
written notice to the other.
17. Assignment; Parties in Interest.
17.1 This Agreement may not be assigned without the prior
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written consent of the other, provided, however, that such consent shall not be
required for an assignment of this Agreement by either party (i) to an affiliate
or subsidiary of such party or (ii) in connection with a sale of substantially
all its assets, provided, however, that such assignee shall agree to be bound by
the terms and conditions hereof.
17.2 This Agreement shall be binding upon, and shall inure to the benefit of and
be enforceable by, the parties hereto and their respective legal
representatives, successors and permitted assigns, but no other person shall
acquire or have any rights under this Agreement.
18. Entire Agreement; Modification; Waiver. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings between them or any of them
as to such subject matter. Neither this Agreement nor any provisions hereof may
be modified, amended, waived, discharged or terminated, in whole or in part,
except in writing signed by the party to be charged. Any party may extend the
time for or waive performance of any obligation of any other party or compliance
by any other party with any of the provisions of this Agreement. No waiver of
any such provision or of any breach of or default under this Agreement shall be
deemed or shall constitute a waiver of any other provision, breach or default,
nor shall any such waiver constitute a continuing waiver.
19. Governing Law. This Agreement shall be governed and construed
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and enforced in accordance with the laws of the State of New York applicable to
contracts made and to be performed exclusively in that State without giving
effect to the principles of conflict of laws.
20. Headings; Counterparts. The section headings in this Agreement are for
reference purposes only and shall not define, limit or affect the meaning or
interpretation of this Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NORTHERN LEASING SYSTEMS, INC.
By_______________________________
Jay Cohen, President
Address: 132 West 31st Street
14th Floor
New York, New York 10001
INTELLI-CHECK, INC.
By_______________________________
Frank Mandelbaum, Chairman
Address: 775 Park Avenue
Suite No. 340
Huntington, New York 11743