EXHIBIT 10.54
HIENERGY TECHNOLOGIES, INC.
INTERNATIONAL DISTRIBUTION AGREEMENT
HiENERGY TECHNOLOGIES, INC. PH: 949.757.0855
1601 ALTON PARKWAY, UNIT B FAX: 949.757.1477
IRVINE, CA 92606
This AGREEMENT, dated as of the 25th day of July, 2003 , between HIENERGY
TECHNOLOGIES, INC., a Delaware USA corporation. (hereinafter called "Company")
and ELECTRONIC EQUIPMENT MARKETING COMPANY (EEMCO), a corporation duly
registered in Riyadh, Saudi Arabia (hereinafter called "Dealer").
This consideration of the mutual promises herein contained, it is agreed as
follows:
1. SCOPE OF AGREEMENT
Dealer agrees to act as a Dealer of Company on a exclusive basis and in that
capacity Dealer shall purchase for resale or arrange for the sale of car bomb
detection products and services provided by Company of a type listed as follows:
HiEnergy CarBomb Finder Beta-models 301, 302, and 303 (such products and
services hereinafter called the "Products"), within the territory described as
follows: Kingdom of Saudi Arabia Land Forces, Signal Corps, RSAF, Ministry of
Interior and Navy AND the Middle-East countries of Saudi Arabia, , Kuwait,
Qatar, Bahrain, Oman, UAE, Iraq, Yemen, Syria, Jordan, and Lebanon AND North
African countries including Sudan, Libya, Egypt, Morocco, Tunis, Algeria, and
Mauritania (hereinafter called the "Territory"), in accordance with the terms
and conditions set forth in this Agreement. Company will sell to Dealer, or on
Dealer's order as herein set forth.
2. DEALERS OBLIGATIONS
a. The Dealer agrees to promote the sale of the Products in the Territory
aggressively; to contact all potential users and customers and to sell as large
a quantity as possible; to avoid transactions which might call upon Company to
accept obligations inconsistent with Company's terms and conditions of sale or
at unreasonable prices; to refrain from representing, promoting, selling, or
arranging to sell products, accessories, or lines competitive with the Products
in the Territory within the term hereof; and to avoid any and all activity
inconsistent with the foregoing.
b. Dealer will maintain a sales organization, conduct promotional activities,
advertise and distribute promotional material as may be mutually agreed upon
from time to time.
c. Dealer will supply Company with the resale prices for the Territory and will
provide assistance in contract negotiations if and when orders are placed by
Dealer for direct contracting by Company with Dealer's customers.
d. Dealer agrees to actively work on and use all reasonable efforts in securing
the release of bid bonds, performance bonds, bank letters of guarantee and
customer holdbacks in connection with orders placed by Dealer, or directly by
customers with Company.
In the event that the Dealer requires Company's assistance in securing the
releases of the above, Company will provide Dealer with reasonable support and
assistance in securing any such releases. In such event Dealer and Company with
mutually agree upon cost sharing for such assistance.
e. In situations where Company is selling directly to a foreign government or
government agency, Dealer will not represent Company unless Dealer warrants to
Company that neither Dealer nor any employee or sub-agent of Dealer holds an
official position with said government or government agency.
f. In order to further promote and support the sale of the Products, Company
may, from time to time, wish to provide technical, marketing, or other support
in the Territory to assist the Dealer organization in such activities. It is
envisioned that such support by Company shall be provided on a cost sharing
basis, to be mutually determined on a case-by-case basis.
g. In certain situations, in addition to the normal responsibilities set forth
above, Company may direct Dealer to perform additional services such as
assisting in market surveys; providing maintenance or technical services,
support and assistance; assisting Company personnel traveling in the Territory;
reviewing and editing sales literature for suitability in the Territory; and/or,
providing reasonable assistance to customers not within Dealer's Territory as
defined herein. Dealer agrees to provide such additional services or assistance,
for which Dealer may request reasonable compensation for such services or
assistance.
3. PRICES AND DISCOUNTS
a. Prices to Dealer shall be Company's suggested international list prices, less
international discounts, as may be established by Company from time to time.
Prices and discounts currently in effect have heretofore been conveyed to Dealer
(Appendix A),
b. For installation, or special products, services or projects where no
suggested list prices or discounts are available, Company shall quote to Dealer
the prices to be received by Company net of any discounts or allowances, and
such prices quoted to Dealer shall apply as between HiEnergy and Dealer
regardless of whether Company sells to Dealer, or receives an order directly
from a customer of Dealer, and regardless of the price quoted to, or agreed on
by contract with, such customer.
c. Dealer shall establish prices to customers and, in case of direct contract
between Company and a customer or Dealer, Company shall quote to Dealer's
customer the prices so established by Dealer. Dealer's discount shall be reduced
if prices to such customer are below Company's suggested international list
prices, it being understood that Dealer shall receive from any payments from the
customer only the excess over the net prices due to Company.
4. ORDERS AND ACCEPTANCE
All orders and contracts shall be forwarded to Company at its office in the
United States at the address specified herein. Company reserves the right in its
sole discretion to accept or reject any such order or contract, and normally
will not accept unless specifications, terms of payment, deliveries, terms and
conditions, credit and shipping arrangements are satisfactory to Company. Except
as otherwise agreed in writing, terms and conditions of sale, warranties,
express or implied, and provisions for damages shall be limited as set forth in
Company's Standard Terms and Conditions of Sale in effect at date of order
applicable to the Products.
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5. PAYMENT
a. Payment of the price due Company shall be made in U.S. dollars by a letter of
credit acceptable to Company, payable in sixty (60) days from the date of
shipment against normal shipping documents at a United States bank. Advance
payments or letters of credit from Dealer's customer may be accepted if the
amount due Company or the full resale price is payable to Company, or to an
independent bank or escrow holder satisfactory to Company which guarantees
payment to Company upon its order of the net amount due Company. Any balance due
Dealer from Company or any such bank or escrow holder shall be remitted to
Dealer in accordance with the escrow agreement or as mutually agreed upon.
b. Company may hold back or retain payments due Dealer, or any portions of
Dealer's discount, in an amount necessary to offset Company's exposure for
bonds, guarantees, and customer payment retention which are outstanding.
c. Dealer will reimburse Company for all fees and expenses incurred by the
Company in the said Territory, including cable and confirmation fees incurred by
Company in connection with posting, filing, and maintenance of bonds and letters
of credit and letters of guarantee.
6. WARRANTY
Until otherwise stated, Product shall be sold as a beta-model and not be
warranted by Company unless defect occurs prior to delivery or can be determined
to be a preexisting fault particular to the single unit in question. This
warranty shall not apply to any defect, failure or damage caused by improper use
or improper or inadequate care. Company shall not be obligated to provide
service under this warranty if:
a) Damage has been caused by a failure to make a full and proper inspection
of the Product (as described by the documentation enclosed with the
Product at the time of shipment) on initial receipt of the Product
following shipment;
b) Damage has been caused by the attempts of individuals, other than
Company-certified staff, to repair or service the Product;
c) Damage has been caused by the improper use or a connection with
incompatible equipment or product including software applications.
This limited warranty on defects shall remain valid for a period of twelve (12)
months beginning on the day of installation/acceptance of Product. Company shall
replace such defective equipment or parts at no cost to buyer, inclusive of
freight/customs, etc. Service and maintenance will be provided by the Dealer for
beta-models at the expense of the buyer, unless otherwise specified or agreed
upon at time of purchase or thereafter, given the proper amendment is made to
Company's Standard Terms and Conditions of Sale and agreed on by all parties.
Any disputes concerning the warranty shall be settled according to the
APPLICABLE LAW/DISPUTES subsection of this Agreement.
7. COSTS AND EXPENSES
Dealer shall bear all its own costs and expenses, including without limitation
all costs, fees, discounts, wages and salaries of any employees, agents,
sub-agents or experts, except as otherwise specifically authorized in advance in
writing by a duly authorized official of Company. Company's prices do not
include, and Dealer shall pay or cause to be paid, any and all expenses within
the territory related to sales
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taxes, any other local taxes, license or other fees, assessments or other
charges incident to sale of the Products or levied against Company's products in
Dealer's possession, whether or not title thereto is in Dealer or Company.
8. SUB-DEALERS AND REPRESENTATIVES
Subject to Company's advance written approval which shall not be unreasonably
withheld, Dealer may appoint, sub-dealers or representatives within the
Territory provided that: (1) no such arrangement; or any consent of Company
thereto shall in any way modify this Agreement; (2) Dealer shall be fully
responsible for such sub-dealer or representatives, and any agreement between
them shall contain terms consistent with the terms hereof; and (3) Dealer shall
compensate them from its discounts without any cost or liability to Company. If
Dealer should authorize or direct Company to pay to any such sub-dealer any sums
due by Company to Dealer, Company shall deduct any such payment from the amounts
then due to Dealer.
9. REPORTS
Company will require Dealer to submit monthly written reports for each country
or other information with respect to Products sold in the Territory or other
relevant business information. Specifically, describe (1) the sales effort
during the month, (2) the potential buyers, and (3) those that were approached,
but were determined not to be potential buyers and the reasons why.
10. RESTRICTIONS ON EXCLUSIVITY
Dealer agrees that exclusivity shall be cancelled for any country, kingdom, or
other sovereign state within said Territory in which:
1. During year one (1) of Agreement, ending August 1, 2004, there is
either:
a. No evident sales contact or effort within the first two (2)
months; or
b. No identifiable potential buyers with expressed interest within
the first six (6) months; or
c. No sales within year one (1).
or;
2. During year two (2) of Agreement, ending August 1, 2005, there are
less than 3 sales.
11. TERM AND TERMINATION
a. This Agreement shall commence on the date specified above and shall remain in
effect for a period of one (1) year, unless terminated earlier as provided
herein. After the first year this Agreement shall automatically renew for
successive one year periods, unless either party expresses in writing its
intention not to in advance of the renewal date.
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b. This Agreement may be terminated at any time by either party, effective upon
sixty (60) days written notice by either party to the other. Furthermore, either
party may terminate this Agreement immediately in the event that the other party
has materially breached any of its obligations under the Agreement; or, has been
adjudged a bankrupt, has become insolvent by any test, has filed any petition in
any court of bankruptcy or equivalent court for receivership, reorganization,
bankruptcy, arrangement or relief from debts or creditors, or for any other
relief whatsoever, has had any such petition filed against it, or has made any
assignment for the benefit of creditors or has any substantial part of its
assets subjected to any involuntary lien which is not removed within thirty (30)
days after notice thereof.. In addition Company may terminate the Agreement
effective immediately in the event that Dealer's authorized representative
identified to Company as representing Dealer in the Territory ceases to
represent Dealer.
c. Company agrees to fill all Dealer's orders accepted by Company prior to
termination to the extent the payment provisions hereof can be fully complied
with and Dealer agrees to accept shipment and make payment for such orders, all
in accordance with the provisions of this Agreement; to the same extent as if
termination had not occurred. In the event of termination by reason of cessation
of employment of Dealer's authorized representative, Company shall have the
right to terminate any and all further obligations unless it receives assurances
satisfactory to Company that further obligations of Dealer will be performed.
d. The parties recognize, and acknowledge, that certain provisions contained
herein may conflict with or differ from the laws of the Territory. To the extent
that any provision contained herein is different from, or conflicts with, any
laws of the Territory, the parties hereby waive their rights with respect to
such laws, because it is the express intent of the parties to relay exclusively
on the contractual provisions bargained for and agreed to herein.
12. INDIRECT SALES INTO THE TERRITORY AND HEADQUARTERS ACCOUNTS
a. Notwithstanding any other provisions hereof, this agreement shall not apply
to: (1) sales of services, equipment or goods other than the Products; (2)
United States Government purchases from Company for reshipment into the
Territory; (3) governmentally sponsored or funded military or AID-type programs
conducted under the auspices and/or assistance of the United States Government
or other international agencies, except where Dealer is legally permitted to and
does at the request of Company participate in such programs but in such even
subject to all conditions and limitations thereof.
b. If sales of the Products are made into the Territory by dealers located
outside the Territory, or sales originate in the Territory for delivery outside
the Territory, or sales result front promotional activity of more than one
authorized Company dealer or representative, Company may in its sole discretion
allocate total discount, or other compensation, among one or more of the dealers
or representatives responsible in whole or in part for such sales or orders, but
in no event shall the total amount thereof reduce the company's net price after
discounts below that specified to be received by Company in connection with such
orders or sales.
13. LIABILITIES AND DAMAGES
Company shall not be liable to Dealer, or to any third party claiming through
Dealer for the failure of performance of any obligation under this Agreement
except as specifically set forth herein, or otherwise agreed to in writing.
Additionally, Company shall not, under any circumstances, be liable hereunder
for indirect, special, incidental or consequential damages resulting from its
failure of performance. Any
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failure to perform any obligation under this Agreement except payment of monies
due, shall be excused if such failure is caused by acts of God, acts of public
authorities, wars and war measures, fires, casualties, labor difficulties and
strikes, shortages of material or fuel, failure or delays of suppliers or
carriers, shortage of transportation, or other causes beyond the failing party's
control.
14. INSTALLATION AND SPECIAL PROJECTS
It is recognized that from time to time certain orders or projects may call for
installation, construction, facilities or services of a continuing nature within
the Territory, where more than a sale of Company's standard products may be
specified or standard terms of sale, F.O.B. U.S.A., may be applied. For such
special projects, upon Company's written request or pursuant to special written
contract, Dealer may furnish additional services or facilities, serve as a prime
contractor, engage in a protracted pre sales effort, or provide continuing
support during a prolonged performance period, all upon terms and conditions to
be mutually agreed upon.
15. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES
a. It is expressly understood that this Agreement, and all obligations arising
hereunder, are subject to U.S. Government export control laws and regulations,
including without limitation, the requirement to obtain necessary approvals and
licenses prior to the acceptance of any orders, or the export of Products,
hereunder. Such shall also apply, by way of example only, to spare parts,
warranty items delivered by Company in connection with the Products and the
transfer or re-export of any such Products by Dealer or Dealer's customer
thereafter. During the term of this Agreement, and thereafter, any Products
purchased by or provided Dealer hereunder, including any technical data or
documentation pertaining thereto, shall not be sold, leased, released, assigned,
transferred, conveyed or in any manner disposed of, either directly or
indirectly, without the prior written approval of the United States Government,
in accordance with U.S. law.
b. Company agrees to use its best efforts to obtain all necessary U.S.
Government approvals or licenses for export of the Products hereunder. Dealer
agrees to use its best efforts to provide timely and accurate Non-transfer and
Use Certificates (including Form DSP-83 if necessary) to Company, as
appropriate, prior to Company's application for export license and submission of
this Agreement to the appropriate U.S. Government Department to secure the
appropriate export approval.
c. Company shall be excused from performance, and not be liable for damages,
including the assessment of late delivery penalties, for failure to deliver
Products hereunder resulting from the U.S. Government's denial or withdrawal of
approval to export Products to Dealer or Dealer's customers.
d. If Company has reason to believe that Dealer has misrepresented, or failed to
properly disclose, any fact with regard to end users to country of ultimate
destination, Company shall terminate this Agreement for default immediately and
discontinue all performance hereunder.
e. Dealer agrees to comply in all respects with the U.S. Foreign Corrupt
Practices Act of 1977 (FCPA), as amended, which provides generally that: under
no circumstances will foreign officials, representatives, political parties or
holders of public offices be offered, promised or paid any money, remuneration,
things of value, or provided any other benefit, direct or indirect, in
connection with obtaining or maintaining contracts or orders hereunder. When
sub-dealers, representatives or other individuals or organizations associated
with Dealer are required to perform any obligations related to or in connection
with this Agreement the substance of this provision shall be flowed-down and
included in any
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agreement between Dealer and any such sub-dealers and representatives. The
failure of Dealer to comply in all respects with the provisions of the FCPA
shall constitute a material breach by Dealer of its obligations hereunder; and,
shall entitle Company to terminate the Agreement immediately.
16. SUBSIDIARIES OF COMPANY INCLUDED
For purposes of this Agreement the term "Company" shall include subsidiaries, if
any, of HiEnergy Technologies, Inc. which manufacture, sell, distribute, install
or service the Product.
17. APPLICABLE LAW/DISPUTES
This Agreement has been entered into and shall be governed in accordance with
the laws of the State of California, U.S.A. Any differences or disagreements
between the parties arising out of or in connection with the performance by
either party of its obligations under this Agreement will be resolved by mutual
agreement of the parties. Any such differences which cannot be resolved through
management intervention shall be deemed a dispute and be adjudicated by a court
of competent jurisdiction in the State of California. Venue shall lie in County
of Orange, California, and the parties shall submit to personal jurisdiction in
the State of California.
18. GENERAL PROVISIONS
a. Neither party is authorized to act for or bind the other, except as expressly
provided herein. Dealer agrees not to represent itself as an employee, agent, or
commission representative of Company or that its relationship with the Company
is other than that of Dealer, or to enter into any agreement or contract in the
place of Company. Dealer may use Company sales literature and documents
applicable to the Products consistent with compliance with it identification as
a Dealer.
b. Notice and payment to either party shall be sent by cable or telex (confirmed
by registered airmail) addressed to the parties at their addresses above set
forth or at such other address as a party may from time to time designate by
written notice. Any notice shall be deemed to have been given when sent.
c. This Agreement is personal to the parties hereto and shall not be assignable
by either party without the prior written consent of the other.
d. This Agreement shall be governed in all respects by the laws of the State of
California, and any actions for the resolution of disputes arising hereunder
shall be brought in a court of competent jurisdiction located in the State of
California, U.S.A.
e. Dealer agrees to insure at its expense, for the benefit of the Company at the
full insurable value, all Products in Dealers possession, covering all insurable
hazards including without limitation, fire, flood, tornado, collision, riot and
other civil disturbances.
f. The name HiEnergy Technologies, Inc. or any derivative thereof, and any
trademarks or logos associated with the Products are the property of the Company
and may be used only as authorized by Company in writing.
g. The Dealer will not, during or following the terms of this Agreement,
disseminate, disclose or publish information relating to the design or
manufacturing techniques employed by the Company in the
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production of the Products, or information relating to research, development,
marketing or sales of the Products of the Company.
h. Should any of the Products incorporate software or firmware belonging to
Company, Company hereby grants to Dealer a non-exclusive license to use any such
software/firmware with the Products, in accordance with Company's standard
license agreement then in effect. Pursuant to the terms of such standard license
terms, Dealer shall have the right to sub-license a customer of the Products in
the normal use of the software/firmware with the Products.
i. This Agreement cancels and supersedes all prior agreements, understandings,
representations, written or oral, and contains the entire understanding and
agreement of the parties with respect to its subject matter. It states Dealer's
total right to discounts, compensation and reimbursement applicable to any
purchase and resale by Dealer or direct sale by the Company to any customer. No
amendment, modification, waiver or release with respect to this Agreement shall
be effective unless it is in writing signed by a duly authorized representative
of each party and no failure to enforce to take advantage of any provision
hereof shall constitute a waiver.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and year
written.
EEMCO HiEnergy Technologies, Inc. by
By /s/ Meqbil Al Tamimi /s/ Bogdan C. Maglich
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Meqbil Al Tamimi Bogdan C. Maglich
General Manager CEO
Date /s/ 7/28/03 Date 7/25/03
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*PLEASE NOTE THAT THIS AGREEMENT MUST BE APPROVED BY HIENERGY'S MEMBERS OF THE
BOARD PRIOR TO ITS GOING INTO EFFECT.
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