GK INTELLIGENT SYSTEMS, INC
SOFTWARE DISTRIBUTION AGREEMENT
This software distribution agreement ("Agreement") is entered into this
10th day of October 2003 is by and between GK Intelligent Systems, Inc., a
Delaware corporation located at 2602 Yorktown Place, Houston, TX 77056 ("GKIS")
and NPI Management Group, Inc., corporation located at 6836 Bee Caves Road,
Suite 242, Austin, TX 78746 ("NPI").
Recitals
A. GKIS desires to appoint NPI to sell, market and distribute on an exclusive
worldwide basis, for a period of forty-eight (48) months, the GKIS
software, known as "Around the Web in 80 Minutes," and as further described
in Exhibit A ("Software").
B. NPI desires to sell, market and distribute the Software under the terms and
conditions of this Agreement.
Agreement
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 "Authorized Users" shall mean any user of the Software to whom NPI
sells a copy of the software or a license to use.
1.2 "Effective Date" shall mean October 10, 2003.
1.3 "Software" shall mean the shrink wrapped boxed software program known
as "Around the Web in 80 Minutes," its source code, object code and concepts
embodied therein, manuals and applications as set forth in Exhibit A hereto.
1.4 "Source Code" shall mean a human readable list of computer instruction
sequences readily comprehended by an individual having skill in assembly level
computer programming and from which such individual can readily "paraphrase" or
modify the Software without undue difficulty.
1.5 "Software Copy" or "Software Copies" shall mean an object code copy of
any of the Software, together with the copy or copies of any user manual or
other documentation necessary for distribution and use of the Software.
1
ARTICLE 2
APPOINTMENT AND FEES
2.1 Exclusive Appointment. GKIS hereby appoints NPI as its exclusive
worldwide distributor and reseller of the Software for a period of forty-eight
(48) months from the effective date.
2.2 Fees and Royalties.
(a) Product Upgrade Fee. Within ninety (90) days of the execution of
this Agreement NPI shall invest into GKIS a minimum of fifty thousand
dollars ($50,000) to be used solely for the upgrading of the product for
market readiness. Additional investments of cash from NPI to GKIS, up to a
maximum of one hundred and fifty thousand dollars ($150,000) may be
necessary and will be determined by mutual consent of the parties to this
agreement based on the expert opinions of the contractors performing the
product upgrades. This Product Upgrade Fee is to be used in GKIS's sole
discretion in conjunction with the upgrade to the software.
(b) Royalties. In addition to the Product Upgrade Fee, NPI shall pay
to GKIS a royalty of fifteen percent (15%) of all gross revenues for the
Software sold, licensed, delivered or otherwise transferred pursuant to
this Agreement by NPI or anyone acting on its behalf, for its benefit or
through a grant of rights from it.
The Royalties shall be payable quarterly within ten (10) days
following the close of the quarter during which the royalties accrued with
adjustments following a year-end audit. Additionally, NPI agrees to pay an
additional charge of 5% of the gross revenue relating to the sale of the
software for which any royalties were not paid when due.
(c) FAILURE TO PAY ANY FEE DESCRIBED IN THIS SECTION 2.2 CONSTITUTES
BREACH OF THIS AGREEMENT AND SHALL BE THE BASIS FOR THE IMMEDIATE
TERMINATION OF ALL RIGHTS GRANTED UNDER THIS AGREEMENT.
2.3 Taxes. NPI shall, in addition to other amounts payable under this
Agreement, pay all local, state, and federal taxes (but excluding taxes imposed
on GKIS's income) levied or imposed by reason of the transactions contemplated
in this Agreement. NPI shall promptly pay to GKIS an amount equal to any such
taxes actually paid or required to be collected or paid by GKIS.
2
ARTICLE 3
TERMS AND CONDITIONS
3.1 Software and Packaging. GKIS shall deliver the Software to NPI on or
before November 10, 2003, or such other date as the parties shall mutually
agree, with user manual as more fully set forth in Exhibit A.
3.2 Order Size, Pricing & Terms. NPI will be solely responsible for
determining resale terms such as: minimum order size, price and applicable
payment terms.
3.3 Returns.
(a) End Users. All undertakings to end-users respecting replacement of
defective or damaged Software are as fully set forth in the Software
end-user license included in the Software text files, manual or packaging
("End-User License").
(b) NPI. NPI shall return to GKIS all software not complying with the
End-User License or returned to NPI due to customer rejection of the
End-User License. NPI at its costs shall replace any such non-complying
units.
3.4 Service & Support. NPI shall provide any necessary end-user service and
support.
3.5 Advertising & Trademark Usage. NPI shall obtain GKIS's advance written
consent to any use of GKIS's trademarks or tradenames in any advertising or
promotion.
ARTICLE 4
TERM AND TERMINATION
4.1 Term. This Agreement shall take effect on the Effective Date and
continue in effect for a period of forty-eight months ("Initial Term") unless
terminated earlier by either party because of the default of the other party in
any obligation under this Agreement.
Thereafter, the Agreement shall be automatically renewed for one (1) year
terms upon the continued payment of the royalties by NPI unless either party
notifies the other in writing of its intent to terminate at least sixty (60)
days prior to the expiration of the then current term.
4.2 Termination. If either party is in default of any of its obligations
under this Agreement, the other party may give written notice of such default,
and if the defaulting party has not cured the default within thirty (30) days of
such notice, the other party shall have the right to terminate this Agreement.
3
4.3 Effect of Termination. Upon termination of this Agreement for whatever
reason, the rights granted under this Agreement to distribute, market and sell
the Software are immediately revoked. Within five (5) days after the expiration
or termination of this Agreement for any reason, NPI shall return to GKIS all
copies of the Software, updates and user manuals in NPI's possession.
TERMINATION SHALL NOT RELIEVE NPI AND AUTHORIZED USERS OF THEIR OBLIGATIONS
REGARDING THE CONFIDENTIALITY OF THE SOFTWARE AND UPDATES.
4.4 Payments Not Excused. Notwithstanding any of the foregoing, in the
event of termination as a result of the NPI's failure to comply with any of its
obligations under this Agreement, NPI shall continue to be obligated for any
payments due as of the date of termination.
ARTICLE 5
REPRESENTATIONS, WARRANTIES & DISCLAIMER
5.1 GKIS hereby represents and warrants to NPI as follows:
(a) Authorization. GKIS has full legal authority to enter into this
Agreement, to consummate the transactions contemplated hereby and to
perform its obligations hereunder.
(b) Consents and Approvals. No consent, approval or authorization or
declaration, filing or registration with any governmental or regulatory
authority, or any other person or entity, is required to be made or
obtained by GKIS in connection with the execution, delivery and performance
of this Agreement and consummation of the transactions contemplated hereby.
(c) Disclosure. To the best of GKIS's knowledge no representation or
warranty of GKIS contained in this Agreement, and no statement contained in
any exhibit furnished to NPI pursuant hereto, contains any untrue statement
of a material fact or omits to state a material fact.
5.2 NPI hereby represents and warrants to GKIS as follows:
(a) Authorization. NPI has full legal authority to enter into this
Agreement, to consummate the transactions contemplated hereby and to
perform its obligations hereunder.
(b) Consents and Approvals. No consent, approval or authorization or
declaration, filing or registration with any governmental or regulatory
authority, or any other person or entity, is required to be made or
obtained by NPI in connection with the execution, delivery and performance
of this Agreement and consummation of the transactions contemplated hereby.
(c) Disclosure. To the best of NPI's knowledge no representation or
warranty of NPI contained in this Agreement, and no statement contained in
any exhibit furnished to GKIS pursuant hereto, contains any untrue
statement of a material fact or omits to state a material fact.
4
5.3 Non-infringement. GKIS represents and warrants to the best of its
knowledge that during the term of this Agreement the Software does not infringe
the proprietary rights of any third party.
5.4 Disclaimer. NPI acknowledges that the only warranties applicable to the
Software are those set forth in this Agreement or the End-User license.
5.5 Indemnity. GKIS shall defend, indemnify and hold NPI harmless against
all liability, loss, damage, cost and expense, including attorney fees, paid or
incurred by NPI by reason of GKIS's breach of any of the foregoing
representations and warranties.
5.6 Limitation of Liability. Notwithstanding any other provision of this
Agreement, the parties' aggregate liability to each other under this Agreement
shall be limited to a sum equal to the total payments made by NPI to GKIS under
this Agreement in the most recent calendar year preceding imposition of such
liability.
5.7 Consequential Damages. The parties shall under no circumstances be
liable to each other for any loss of use, interruption of business, or any
indirect, special, incidental or consequential damages of any kind, including
lost profits, regardless of the form of action, be it in contract, tort
(including negligence) or otherwise.
5.8 Confidentiality. NPI and GKIS shall each respect and strictly preserve
the confidentiality of all information of consequence obtained in the course of
performance of this Agreement ("Confidential Information"). Confidential
Information shall include, among others, the technologies, trade secrets,
business plans and activities, customers, and finances of either party.
5.9 Covenant Not To Compete. For the period of this Agreement, GKIG
covenants that it will not directly or indirectly compete, with NPI in regard to
the sales, marketing and distribution of the Software.
ARTICLE 6
TITLE IN SOFTWARE
6.1 Proprietary Rights. All applicable common law and statutory rights and
title in and to the Software and updates of the Software, including, but not
limited to, rights in confidential and trade secret material, source code,
object code, trademarks, service marks, patents, and copyrights, are and will
remain the property of GKIS. NPI shall have no right, title, or interest in such
proprietary rights.
6.2 Restrictions. NPI is prohibited (i) from distributing, transferring
possession of, or otherwise making available copies of the Software to any
person, other than the Authorized Users pursuant to the terms of this Agreement.
NPI shall advise all Authorized Users that they are prohibited from reproducing,
distributing, transferring possession of, or otherwise making available copies
of the Software to any person other than an Authorized User. NPI and Authorized
Users are prohibited from making any modifications, adaptations, enhancements,
changes or derivative works of the Software without the prior written consent of
GKIS, and NPI shall advise all Authorized Users that they are prohibited from
making any modifications, adaptations, enhancements, changes, or derivative
works of the Software.
5
6.3 Further Documentation. To protect the GKIS's rights in the Software,
NPI shall, at the reasonable request of GKIS, promptly execute and assign any
and all applications, including, but not limited to, copyright applications, any
and all assignments, and any other instruments which GKIS deems necessary to
protect or maintain GKIS's rights in the Software. NPI hereby irrevocably
appoints GKIS as attorney-in-fact for NPI with full power and authority to
execute and deliver in the name of NPI any such instrument or instruments.
ARTICLE 7
MISCELLANEOUS
7.1 Assignability. Unless otherwise agreed to in writing by both parties
hereto, the rights, obligations and benefits established by this Agreement shall
be non-assignable by either of the parties hereto and any attempt of assignment
shall be null and void and of no effect whatsoever.
7.2 Relationship of the Parties. The management and employees of NPI shall
not be considered employees of the GKIS. Furthermore, the parties agree that NPI
shall not be deemed to be an employee, servant, partner or joint venturer of the
GKIS.
7.3 Entire Agreement. This Agreement contains the entire agreement of the
parties with respect to the subject matter hereof, and may not be changed except
by a writing signed by the party against whom enforcement or discharge is
sought.
7.4 Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach by the other party.
7.5 Construction of Language. The language used in this Agreement shall be
construed as a whole according to its fair meaning, and not strictly for nor
against either party.
7.6 Captions and Headings. The paragraph headings throughout this Agreement
are for convenience and reference only, and shall in no way be deemed to define,
limit or add to the meaning of any provision of this Agreement.
7.7 State Law. The laws of the State of Texas shall govern this Agreement,
its interpretation and its application.
7.8 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. Execution and delivery of this Agreement
by exchange of facsimile copies bearing facsimile signature of a party shall
constitute a valid and binding execution and delivery of this Agreement by such
party. Such facsimile copies shall constitute enforceable original documents.
6
7.9 Costs. If this Agreement gives rise to a lawsuit or other legal
proceeding between any of the parties hereto, the prevailing party shall be
entitled to recover court costs, necessary disbursements (including expert
witnesses' fees) and reasonable attorneys' fees, in addition to any other relief
such party may be entitled.
7.10 Notices and Waivers. Any notice or waiver required or permitted to be
given by the parties hereto shall be in writing and shall be deemed to have been
given, when delivered, three (3) business days after being mailed by certified
or registered mail return receipt requested, when faxed during regular business
hours of the recipient and there is confirmation of receipt with hard copy by
regular mail, or when sent by prepaid full rate telegram to the following
addresses:
NPI: GKIS:
--- ----
NPI Management Group, Inc. GK Intelligent Systems, Inc.
6836 Bee Caves Road 2602 Yorktown Place
Austin, TX 78746 Houston, Texas 77056
7.11 Public Statements. Other than any requisite regulatory filing or
disclosure, NPI will not issue any press release, or make or authorize any other
public statement, oral or written, that includes GKIS's name without prior
written approval, which will not be unreasonably withheld if NPI is advised such
disclosure is required under applicable laws.
IN WITNESS WHERE OF, the parties have executed this Agreement to be
effective as of the day and year first above written notwithstanding the actual
date of signatures.
NPI GKIS
NPI Management Group, Inc GK Intelligent Systems, Inc.
/S/ Kurt Spenkoch /Gary F. Kimmons
- -------------------------- --------------------------
By: Kurt Spenkoch By: Gary F. Kimmons
Title: Its: President
7
Exhibit A
1. Software: Around the Web in 80 Minutes, version ____ and its updates.
2. Software Packaging:
2.1 GKIS Deliverables: ___________ with label
English language user manual
2.2 NPI Deliverables:any additional packaging, including box
End-User License
user registration cards
3. Pricing: $____/unit
4. Approval Cycle: GKIS to promptly submit
manual text and Software for review by NPI
GKIS to promptly implement reasonable edits/fixes proposed by NPI
8