SUB-DISTRIBUTION AGREEMENT
THIS SUB-DISTRIBUTION AGREEMENT (this "Agreement") is made as of this 13th day
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of July, 1998, by and between Global Cybersystems, Inc., a Nevada
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Corporation (the "Distributor") and Financial Electronic Systems, Inc., a
California Corporation ("Sub-distributor" or "Finet").
RECITALS
A. UltraCard and Distributor have entered into a Distribution Agreement
dated as of May 27, 1998 (the "Master Agreement"), pursuant to which UltraCard
has granted Distributor an exclusive distributorship with respect to certain
applications of the UltraCard Products in certain Territories. Capitalized terms
used herein and not defined herein shall have the meanings assigned in the
Master Agreement.
B. Finet wishes to acquire a sub-distributorship with respect to
worldwide gaming/applications, and Distributor is willing to enter into such
sub-distributorship on the terms and conditions set forth herein.
Now, therefore, in consideration of the premises, and the
representations, covenants and agreements hereinafter contained and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
SECTION 1. DEFINITIONS
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1.1 "Ultracard Products" shall mean the cards, read/write units,
technology and any or all other products listed on Exhibit "A" attached hereto
and incorporated herein. "UltraCard Products" shall also include any and all
improvements, replacements, refinements, derivatives or modifications to any
such Product as developed, acquired or implemented by UltraCard or Distributor
from time to time, and provided further that such Exhibit "A" may be revised
from time to time by mutual written consent of both parties. Distributor
reserves the right to eliminate any UltraCard Products for which production is
discontinued; provided, however, that such discontinued products shall be
replaced on Exhibit "A" at such time as production of such products is
recommenced and made available to any other person. Distributor will give
Sub-distributor written notice of the discontinuance of any products at least 55
days in advance of such discontinuance, and shall use all commercially
reasonable efforts to replace such products prior to their discontinuance.
1.2 "Territory" shall mean the world.
<PAGE>
1.3 "Application" shall mean any applications of the UltraCard Products
and/or Distributor Technology that include or relate to wagering, gaming, games
of chance, lottery, bingo, betting, sports event wagering, or any other
circumstances wherein there is an accumulation of losses or winnings.
1.4 "Distributor Technology" shall mean any enhancements,
modifications, know-how, software, hardware or other intellectual property
developed or acquired by Distributor with respect to the UltraCard Products.
SECTION 2. APPOINTMENTS AND ACCEPTANCE
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2.1 Distributor hereby appoints Sub-distributor as the exclusive
Sub-distributor of UltraCard Products for the Application within the Territory
and grants all the rights to develop software applications, distribute, and
exploit the UltraCard Products and Distributor Technology in connection with
such appointment.
2.2 Sub-distributor accepts such appointment.
2.3 Sub-distributor is hereby authorized to develop, create, modify,
enhance and/or acquire such software, know-how and other technology in order to
use and commercialize the UltraCard Products for the Application and to provide
UltraCard Products to end-users and other customers, either directly or through
additional sub-distributors or value-added-re-sellers, provided, however that
the rights of such sub-distributors or value-added-re-sellers shall not exceed
those granted to Sub-distributor herein and that Distributor is notified of said
sub-distributors. All software, know-how and other technology developed or
acquired by Sub-distributor ("Sub-distributor Technology") shall be and remain
the sole property of Sub-distributor.
SECTION 3. OBLIGATIONS OF SUBDISTRIBUTOR
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3.1 Sub-distributor agrees to use its best efforts to promote
diligently the sale of UltraCard Products within the Territory, and to develop
the Application to further promote the sale of products, and will consult with
Distributor and UltraCard respecting its marketing plans, programs and
techniques to insure that the same do not materially prejudice Distributor or
UltraCard or their other marketing arrangements.
3.2 Sub-distributor understands and agrees that UltraCard Products sold
to Sub-distributor hereunder may bear markings, legends or trade names installed
or placed thereon by Distributor and/or UltraCard. Distributor and UltraCard
shall supply a list of trademarks, trade-names and loges to be included on
UltraCard Products within a reasonable time following execution of this
Agreement. Sub-distributor shall be entitled to use its own marking on
UltraCard Products it sells in the Territory, provided such marking, legends or
trade names by Distributor and/or UltraCard shall not be removed, concealed or
covered by Sub-distributor's markings, without the prior written consent of
Distributor and/or UltraCard, as the case may be.
<PAGE>
3.3 Sub-distributor acknowledges that during the Term (as defined in
Section 6), Distributor and/or UltraCard may furnish Sub-distributor with, or
Sub-distributor may have access to, information pertaining to Distributor,
UltraCard, UltraCard Products and Distributor Technology, as the case may be,
which is confidential and proprietary in nature ("Confidential Information").
Sub-distributor agrees to use all Confidential Information obtained directly or
indirectly from Distributor and/or UltraCard for the sole purpose of performing
under this Agreement. Sub-distributor shall not disclose any Confidential
information to any third party without the prior written consent of UltraCard
(except disclosures made to employees or agents of Sub-distributor on a "need to
know basis" subject to an obligation of confidentiality, or necessary
disclosures made to customers of UltraCard Products). Confidential Information
shall not include information which (a) was known to Sub-distributor prior to
receipt of any Confidential Information from Distributor and/or UltraCard; (b)
becomes known to Sub-distributor from sources other than Distributor and/or
UltraCard; or (c) becomes a matter of public knowledge other than by breach of
the Agreement by Sub-distributor.
3.4 Distributor will provide Sub-distributor with all sales inquiries
received, which are directed toward end user purchase or re-sellers of the
Application.
3.5 Sub-distributor will provide Distributor quarterly status reports
that indicate the end user applications being pursued in the marketplace. This
information will be held in confidence by distributor, subject only to its
obligations under the Master Agreement.
3.6 Sub-distributor will use its best efforts to undertake marketing
commitments commensurate with industry standards and to engage, as it deems
appropriate in its reasonable discretion, mutually agreed upon value added
reseller's ("VAR's") for the UltraCard Products.
3.7 Sub-distributor agrees to attend such industry trade shows,
lectures, symposiums and the like and to subscribe to such industry periodicals
as it deems necessary or appropriate in its reasonable discretion to perform its
obligations hereunder.
3.8 Sub-distributor will provide a "beta" test site for application(s)
of the UltraCard Products, on terms and conditions mutually acceptable to the
parties.
SECTION 4. PRICES AND TERMS
4.1 Attached hereto as Exhibit "C" and incorporated herein is the
current UltraCard Product Book ("the UltraCard Product Book"). For all UltraCard
Products, Distributor shall charge Sub-distributor the prices set forth in the
UltraCard Product Book. Distributor shall give Sub-distributor at least thirty
(30) days' written notice of any price changes affecting any of the UltraCard
Products, prior to the effective date of such price change. Sub-distributor
shall be entitled at all times during the Term to purchase
<PAGE>
UltraCard Products at the most favorable prices and terms as offered to any
other distributor or customer of UltraCard or Distributor. Distributor and
UltraCard shall offer Sub-distributor its standard credit arrangements, which
shall include a two percent (2%) discount for all payments made within the (10)
days of Sub-distributor's actual receipt of UltraCard Products and the related
invoice.
SECTION 5. EXCLUSIVITY
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5.1 During the Term (as defined below), Sub-distributor shall be the
exclusive distributor for all UltraCard Products and distributor for all
Distributor Technology for the Application. Distributor shall not, during the
Term, engage any other sub-distributor or other licensee of UltraCard Products
or the Distributor Technology for the Application.
SECTION 6. TERM OF AGREEMENT
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6.1 The term of this Agreement ("the Term") shall commence on the date
hereof and shall continue until the second anniversary of the first delivery of
UltraCard Products to Sub-distributor for distribution and sale Pursuant to
orders from Sub-distributor as contemplated by this Agreement, subject to
automatic renewal for successive two-year terms as set forth below. For all
purposes of this Agreement, "Term" shall mean and include the initial term and
all extended or renewal terms as herein provided. During the initial term of
this Agreement the Sub-distributor's annual sales of UltraCard Product shall be
two million dollars gross sales. The required Term shall be automatically
renewed and extended unless the Sub-distributor has failed to achieve over the
year prior to the scheduled termination of the Term, a rate of growth in annual
gross sales from UltraCard Products that is at least equal to twenty-five
percent (25%) of the growth from its previous year sales of UltraCard Products.
For example, if Sub-distributor achieves an average of 25 million dollars in
gross annual sales during the second Term, the Term shall be renewed.
Notwithstanding the foregoing, in the event of a shortfall in the required
annual sales during a Term, Sub-distributor shall have the right to pay
Distributor the amount equal to the net profit that Distributor would have
earned if there had been no such shortfall. Once Sub-distributor achieves annual
sales during a Term of 10 million dollars, no increases in such sales shall be
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required to automatically renew the Term. If Distributor elects not to renew the
Term because of Sub-distributor's failure to meet the annual sales requirements,
(a) it shall give Sub-distributor at least sixty (60) days prior written notice
of the termination of the Term, and (b) it shall suspend such termination if
Sub-distributor disputes that Distributor is entitled to terminate and commences
arbitration within such 60-day period. When the arbitration award is rendered
(if the arbitrators determine Distributor is entitled to do so), Distributor may
then end the Term notwithstanding any appeals of the arbitration award.
SECTION 7. INSURANCE, RISK OF LOSS
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<PAGE>
7.1 With respect to all UltraCard Products shipped to Sub-distributor,
Sub-distributor will cause the same to be insured by a reputable insurance
carrier under a policy providing all-risk coverage (excluding war risk), The
policy shall be in a form as to entitle Sub-distributor to receive any proceeds
of such insurance that may become due or payable thereunder and to have any and
all claims thereunder. The insurance shall be at least in an amount equal to
the Sub-distributor's purchase price of the UltraCard Products. Such insurance
shall remain in force until the Products are delivered to Sub-distributor.
SECTION 8. DELIVERY
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8.1 Delivery to Sub-distributor shall be FOB Sub-distributor. Shipping
instructions shall be provided on purchase orders submitted by Sub-distributor
to UltraCard. If UltraCard fails to comply with the shipping instruction of
Sub-distributor resulting in excess transfer and/or storage charges, such excess
charges shall be the responsibility of Distributor. In the event Sub-distributor
fails to specify shipment instructions, Distributor may select the shipper and
enter into reasonable shipping contracts at the expense of Sub-distributor.
UltraCard agrees to furnish Distributor's requirements of UltraCard Products,
and to effect delivery thereof within a commercially reasonable time and
delivery schedule, and shall not prefer other parties over Sub-distributor with
respect to shipment of UltraCard Products,
8.2 If the failure of Distributor, UltraCard or Sub-distributor to make
any delivery (or portions thereof) when due or perform any other obligation
under the Agreement is occasioned in whole or in part by an act of God or the
public enemy, fire, explosion, perils of the sea, flood, drought, war, riots,
sabotage, accident, embargo, governmental priority regulation or requirement or
shortage or failure of supply of materials or labor, or any occurrence or act
beyond the control of Distributor, UltraCard or Sub-distributor, as the case may
be, then, Distributor, UltraCard or Sub-distributor, as the case may be, shall
be excused from any such failure and Distributor, UltraCard or Sub-distributor,
as the case may be, shall have no obligation or liability whatsoever arising out
of or in connection with any such failure. However, each party shall use all
commercially reasonable means and measures to overcome or minimize the effects
of any such event, shall perform its obligations hereunder to the extent such
event does not prevent it from doing so, and shall resume full performance
hereunder as soon as such event no longer prevents such performance. Anything
herein to the contrary notwithstanding, if Distributor and/or UltraCard shall
fail to deliver UltraCard Products in a timely fashion and/or which are not in
accordance with Product Specifications or fit for their intended purpose,
Sub-distributor shall have the right to manufacture either directly or through
third parties, UltraCard Products, at its own cost and expense, provided,
however, that Sub-distributor shall be allowed a credit against any amounts
owing to Distributor hereunder for the amount Sub-distributor would have paid to
acquire such products from Distributor.
<PAGE>
8.3 Except as provided in Section 9 hereof, after delivery of UltraCard
Products to the FOB point, Distributor shall not be responsible for loss or
damage in transit. Claims for shortages or damages resulting from shipment
shall be made against the carrier or insurer by Sub-distributor, and UltraCard
and Distributor shall not be entitled to any proceeds of any such claims.
SECTION 9. ACCEPTANCE AND CLAIMS
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9.1 All UltraCard Products shall be received subject to acceptance by
Sub-distributor. Sub-distributor or its agents shall promptly inspect all
Products whose containers show evidence of damage. Sub-distributor shall notify
Distributor of any such damage or if it finds a shipment short in quantity of
UltraCard Products, and shall return damaged products to Distributor for credit
unless the carrier accepts responsibility for the damage, in which event
Sub-distributor shall adjust the loss with the carrier. In addition,
Sub-distributor may return any defective UltraCard Products to UltraCard for
credit in the event that the Sub-distributor or any customer discovers that such
products are defective or fail to perform to Product Specifications (as
described below), provided such claim must be made within thirty (30) days of
the date of delivery to the end-user customer. In event of damaged, defective or
undelivered UltraCard Products as aforesaid, Sub-distributor shall be entitled
to a credit equal to its purchase price for the relevant UltraCard Products plus
the reasonable charges of returning such Products to UltraCard, and all such
amounts shall apply toward Sub-distributor's annual sales requirements.
SECTION 10. INDEPENDENCE OF THE PARTIES
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10.1 Distributor and Sub-distributor shall at all times act as
independent parties without the right or authority to bind the other with
respect to any agreement, representation or warranty made with or to any third
party. Distributor and Sub-distributor shall be responsible for all costs,
expenses, taxes and liabilities arising from the conduct of its own business, as
well as from the activities of its officers, directors, agents or employees, and
each shall hold harmless and indemnify the other from any such obligations.
10.2 Each of UltraCard, Distributor, and Sub-distributor respectively,
agrees to indemnify and hold harmless each other party against any injury, loss,
damage or expense, including but not limited to attorneys' fees, arising out of
or resulting from the possession, use, demonstration or sale of any of the
UltraCard Products (and caused by the negligence of such respective indemnifying
party). UltraCard shall be responsible for claims arising from the design or
manufacture of UltraCard Products.
SECTION 11. TERMINATION
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11.1 Except as otherwise provided herein, this Agreement may be
terminated upon the happening of one or more of the following events:
<PAGE>
(a) By either party in the case of a material violation by the other
party of any one or more of the terms of this Agreement and the failure of the
violating party to correct such violation within a thirty (30) day cure period
following receipt of written notice specifying such violation and the intended
termination of this Agreement, provided that if the party receiving such notice
disputes the violation, the cure period shall be extended if the dispatching
party it commences arbitration proceedings to resolve the dispute within such
30-day period. Further, if a violation cannot be cured within such 30-day
period, the cure period shall be extended so long as the cure is promptly
commenced and diligently prosecuted to completion; or
(b) Immediately by either party if the other party files a petition in
bankruptcy or a petition in bankruptcy is filed against it (a no dismissal of an
involuntary petition is obtained within forty-five (45) days of the filing
thereof) or it becomes insolvent or makes an assignment for the benefit of
creditors or any arrangement pursuant to any bankruptcy law.
SECTION 12. WARRANTIES
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12.1 UltraCard and Distributor will make available to Sub-distributor
and its customers a 12-month (commencing upon delivery to the end-users
customers) return-to-factory parts-and-labor warranty programs on all UltraCard
Products, pursuant to which UltraCard shall repair or replace (at UltraCard's
option) all UltraCard Products that prove during such 12-month period to be
defective or not to perform in accordance with Product Specifications.
12.2 Distributor warrants that UltraCard Products will be saleable in
the ordinary course of business and shall perform and conform in all respects to
the Product Specifications as set forth in Exhibit "C". Distributor shall not
adversely modify the Product Specifications during the Term, and the parties
shall amend Exhibit "C" from time to time to reflect changes or additions to
UltraCard Products.
12.3 Distributor represents and warrants that it owns or has licensed
all patents, copyrights and trademarks and similar rights (the "Intellectual
Property Rights") necessary to license, manufacture, ship and sell the UltraCard
Products, all without violating, infringing or conflicting with any Intellectual
Property Rights of third parties. Distributor will preserve and protect its
Intellectual Property Rights against claims and infringements by any party, and
without limiting the generality of foregoing (a) Distributor shall promptly
commence and diligently prosecute appropriate proceedings to enforce its
Intellectual Property Rights and prevent any other party from selling or
distributing any product in the Territory using any technology or information
protected by UltraCard's or Distributor's Intellectual Property Rights; and (b)
Distributor will defend and indemnify Sub-distributor and its customers against
any claims that UltraCard Products or UltraCard's or Distributor's Intellectual
Property Rights violate or infringe upon any
<PAGE>
patent, trademark or similar rights held or claimed by any other party. If
Distributor fails to promptly act to protect or maintain UltraCard's or
Distributor's Intellectual Property Rights, Sub-distributor shall have the right
to take such action as Sub-distributor shall deem necessary or appropriate to
protect or maintain UltraCard's or Distributor's rights, at its own costs and
expense, provided, however, that sub-distributor shall be allowed a credit
against any amounts owing to Distributor hereunder for the amount
Sub-distributor would have paid to acquire such products from Distributor.
12.4 THE WARRANTIES UNDER THIS AGREEMENT ARE THE SOLE AND EXCLUSIVE
WARRANTIES EXPRESS OR IMPLIED GIVEN BY DISTRIBUTOR IN CONNECTION WITH THIS
AGREEMENT. THERE SHALL BE NO LIABILITY ON THE PART OF DISTRIBUTOR FOR ANY
GENERAL, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE SALE, MANUFACTURE
OR USE OF ANY ULTRACARD PRODUCTS SOLD HEREUNDER EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS SECTION, DISTRIBUTOR MAKES NO WARRANTIES, EXPRESS OR IMPLIED
(INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR USE AND/OR PURPOSE) WITH RESPECT TO THE ULTRACARD
PRODUCTS.
SECTION 13. SERVICE OBLIGATIONS
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13.1 Unless Sub-distributor elects to receive the maintenance services
provided for in the UltraCard Product Book, Sub-distributor shall be responsible
for supplying, or making arrangements for supplying, all necessary service to
the UltraCard Products for the Application.
13.2 UltraCard and/or Distributor shall make available to
Sub-distributor adequate training, equipment and spare parts for all such repair
and service obligations. Distributor agrees that all UltraCard Products which
Sub-distributor cannot repair shall be returned for repair to Distributor,
either without cost pursuant to the 12-month warranty or at a reasonable cost to
Sub-distributor's customers.
SECTION 14. COMPLIANCE WITH LAW
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14.1 Each of Sub-distributor and Distributor shall comply with all
applicable laws, regulations and orders and the like to the extent applicable to
each in the conduct of its business under this Agreement, and shall indemnify
and hold the other party harmless form any claim, liability, cost or expense
(including attorneys' fees) arising out of a violation thereof by the respective
indemnifying party.
SECTION 15. INTELLECTUAL PROPERTY RIGHTS
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<PAGE>
15.1 Sub-distributor is hereby granted the nonexclusive, royalty free
sub-license and privilege to use during the Term all of UltraCard's trademarks
relating to all the UltraCard Products, including but not limited to the
trademarks (or applications therefor) set forth in Exhibit "D", all in
accordance with good business practice. Sub-distributor shall have the right
and privilege to sublicense or otherwise permit the use of the trademarks by
others with Distributors prior written consent.
15.2 In the event UltraCard and/or Distributor as the case may be,
decides to apply for registration of any of the trademarks in any part or all of
the Territory, UltraCard and/or Distributor, as the case may be, shall duly
notify Sub-distributor in writing, may request and obtain Sub-distributor's
advice and assistance, if needed, and shall keep Sub-distributor informed of
pertinent developments and/or the issuance of registration. Upon the filing of
an application or issuance of registration of any trademark, such application or
trademark shall be added to Exhibit "D".
15.3 Sub-distributor shall at all times recognize and respect and
protect UltraCard's right of total ownership of any and all trademarks and shall
not in any way derogate UltraCard's sole property rights in the same.
15.4 Sub-distributor shall notify Distributor of any and all
infringements of UltraCard's trademark that may come to Sub-distributor's
attention.
SECTION 16. ARBITRATION
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16.1 Except as otherwise state herein, all disputes, difference or
questions arising out of relating to this Agreement shall be finally and solely
determined and settled by arbitration in Newport Beach, California (or such
other place as the parties agree) in accordance with the rules of the American
Arbitration Association then in effect. Said arbitration shall be conducted by a
panel of three arbitrators. In any such arbitration proceedings, the arbitrators
shall adopt and apply the provisions of the Federal Rules of Civil Procedure
relating to discovery so that each party shall allow and may obtain discovery of
any matter not privileged which is relevant to the subject matter involved in
the arbitration to the same extent as if such arbitration were a civil action
pending in a United States District Court. Any award or determination of the
arbitration panel shall be final, non-appealable and conclusive. Judgment upon
any arbitration award may be entered and enforced in any court of competent
jurisdiction.
16.2 If any arbitration or other legal action is initiated by either of
the parties hereto, the prevailing party shall be entitled to recover from the
other party reasonable attorneys' fees in addition to other relief that may be
awarded, All references to "attorneys' fees" (and similar phrases) in this
Agreement shall include, without limitation, attorneys' and paralegals' fees,
disbursements and expenses whether suit (or arbitration) be commenced or not and
in any administrative, regulatory, insolvency, bankruptcy, investigative and
appellate proceedings.
SECTION 17. NOTICES
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<PAGE>
17.1 Any notice, request, instruction or other communication required or
permitted to be given under this Agreement shall be in writing unless otherwise
specified herein and shall be given by sending such notice properly addressed to
the other party's address shown below [or any other address as either party may
indicate by notice in writing to the other from time to time (such notice of
changed address to be effective only upon actual receipt by the addressee)] by
prepaid registered airmail or by cable or telex or by Federal Express or other
recognized overnight courier delivery service. All such notices shall be deemed
given three (3) days after the date of mailing or at the time of delivery to the
courier or to a cable communications company for transmittal, or upon
transmittal of a telex, as the case may be:
If to Distributor: Global Cybersystems, Inc.
Suite 1010
435 Martin St.
Blaine, WA 98230
If to Sub-Distributor: Financial Electronic Systems, Inc.
2425 Porter Street #2
435 Martin St.
Soquel, CA 95073
SECTION 18. MISCELLANEOUS
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18.1 Neither party may assign this Agreement without prior written
consent of the other party hereto. Notwithstanding any conflicting or
inconsistent provisions of this Agreement, Distributor agrees that
Sub-distributor may freely enter into and perform joint venture, profit-sharing,
franchise, sub-distributorship, or similar agreements with any other parties,
all as Sub-distributor deems appropriate in its sole discretion, but Distributor
shall not assign all of its right hereunder as an entirety without Distributor's
prior consent not to be unreasonably withheld or delayed.
18.2 The parties hereto agree that this Agreement shall be legally
binding upon them and their respective personal representatives, successors and
permitted assigns.
18.3 This Agreement contains the entire understanding of the parties
relating to the subject matter hereof and supersedes all prior discussions and
agreements between them with respect to the specific subject matter herein
contained, and neither party shall be bound by any definition, condition,
warranty, or representation other than as expressly stated in this Agreement or
as subsequently set forth in any instrument in writing signed by an authorized
officer or officers of the party or parties to be changed.
18.4 This Agreement shall be governed by and interpreted in accordance
with the laws of the United States and the State of California as applied by the
courts therein.
<PAGE>
18.5 If any of the provisions, or portions hereof, of this Agreement
are declared invalid under any applicable statute or rule or law, they are to
that extent to be reformed or deemed committed and the balance of this Agreement
shall remain in full force and effect. The failure of either party to strictly
enforce any of its rights or remedies hereunder shall not constitute a waiver by
the party in any respect. In any action to enforce its right hereunder, either
party shall be entitled to whatever remedy a court of competent jurisdiction
deems it right hereunder, including, but not limited to reasonable attorneys'
fees.
18.6 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original but all of which together shall constitute
on and the same agreement.
18.7 All references to gender or number under this Agreement shall be
deemed interchangeably to refer to the masculine, feminine, neuter, singular
and/or plural, as the sense of the context requires. Section titles are included
for convenience of reference only, and shall not affect the interpretation of
this Agreement. This Agreement includes and incorporates by reference the
Recitals and all Exhibits hereto. This Agreement has been prepared by both
parties and their respective counsel, and shall not be construed more strictly
against either party on the basis of such party's drafting or preparing the
same. If any party is obligated to indemnify another in respect of a claim, then
(a) the indemnifying party may control defense thereof (through counsel
reasonably satisfactory to the indemnifying party), (b) the party seeking
indemnity shall give notice of the claim to the indemnifying party (but any
failure or delay in giving such notice shall not affect the right to indemnity
except to the extent the indemnifying party is actually prejudiced thereby, and
(c) the indemnified party shall not settle the claim without the indemnifying
party's consent not to be unreasonably withheld or delayed. Any party desiring
to inspect or audit another party's books and records shall bear the expense
thereof unless the audit or inspection proves that the other party underpaid the
inspecting party by 15% or more, in which event the underpaying party shall pay
(or reimburse) all expenses of the inspection or audit. Each party agrees to
fully cooperate in any such inspection or audit provided for in this Agreement,
by allowing full access to books, records, personnel, attorneys and accountants.
IN WITNESS WHEREOF, the parties hereto have read and executed this
Agreement and have set their hands and seals hereto as of the day and year first
above written.
Global Cybersystems, Inc.
By:_____________________________________
Title:__________________________________
Financial Electronic Systems, Inc.
<PAGE>
By: /s/ XXX
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Title: President
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UltraCard Corporation ("UltraCard") hereby acknowledges the foregoing
Sub-distribution Agreement (the "Agreement") between Global Cybersystems, Inc.
as Distributor and Financial Electronic Systems, Inc. as Sub-distributor. In
consideration of Sub-distributor entering into and performing under the
Agreement, UltraCard hereby covenants and agrees that (i) UltraCard will fully
perform all of its obligations under the Master Agreement in order to permit
Distributor to fully perform all of Distributor's obligations under the
Agreement; (ii) Sub-distributor shall automatically succeed to Distributor's
place under the Master Agreement if the Master Agreement shall be terminated or
Distributor shall no longer be performing its obligations thereunder unless
Sub-distributor is in breach of this agreement; (iii) to the extent necessary,
the Master Agreement shall be deemed amended to conform with the provision of
this Agreement.
Dated this day of ,1998.
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UltraCard Corporation
By:_________________
Its:________________
<PAGE>
EXHIBIT "A"
ULTRACARD PRODUCTS
HIGH DENSITY MAGNETIC CARDS AND READ WRITE UNITS
<PAGE>
EXHIBIT "B"
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT "C"
ULTRACARD PRODUCT BOOK
<PAGE>
EXHIBIT "D"
INTELLECTUAL PROPERTY
<PAGE>
