International Distribution Agreement

Exhibit 10.12


INTERNATIONAL DISTRIBUTION AGREEMENT


THIS INTERNATIONAL DISTRIBUTION AGREEMENT (this "Agreement") is made and entered into as of this 25th day of February, 2000, by and between:


MECAR S.A., a corporation organized and existing under the laws of Belgium, with its registered office at Rue Grinfaux, 50, 7181 Petit Roeulx-lez-Nivelles, Belgium ("Supplier"); and


MECAR, LTD. (E.C.), a corporation organized and existing under the laws of the Kingdom of Bahrain, with its registered office at P.O. Box 140 14th Floor, The Tower Sheraton Commercial Complex, Manama, Bahrain ("Distributor").


WHEREAS, Supplier is engaged in the design, development, manufacture, marketing, and sale of medium and large caliber ammunition for land-based weapon systems and of other defense products;


WHEREAS, Distributor is engaged in the marketing and sale of ammunition, systems, and other defense products to the governments of certain countries; and


WHEREAS, Supplier and Distributor desire that Distributor be authorized to act as an independent distributor of the Products (as hereinafter defined) subject to the terms and conditions set forth below;


NOW, THEREFORE, in consideration of the foregoing and the balance of the provisions of this Agreement, Supplier and Distributor agree as follows:


ARTICLE I - DEFINITIONS


1.1. Definitions. Except as otherwise specified or as the context may otherwise require, the following terms have the meaning indicated below for all purposes of this Agreement and the definitions of such terms are equally applicable in the singular and plural forms.


(a) Affiliate. The term "Affiliate" means any company or other entity that is, directly or indirectly, owned or controlled by either party to this Agreement or any company, other company, other entity, or person that, directly or indirectly, owns or controls either party to this Agreement.


(b) Products. The term "Products" means the products and services of Supplier that are specified on the Product List set forth in APPENDIX A to this Agreement.


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(c) Territory. The term "Territory" means those countries specified in APPENDIX B to this Agreement.


(d) Customer. The term "Customer" means any government of a country, or any political subdivision thereof, within the Territory, including any ministry, department, agency or instrumentality thereof, or any person or entity purchasing the Products for use by a Customer within the Territory.


(e) Trademarks. The term "Trademarks" means Supplier's trademarks, trade names, service marks or any similar name or any combination thereof, or any other trademarks, trade names, or service marks owned or claimed by Supplier or its Affiliates.


ARTICLE II - APPOINTMENT


2.1 Appointment. Supplier hereby appoints Distributor as its exclusive authorized distributor in the Territory for the sale of Products to Customers, and Distributor hereby accepts this appointment. Supplier will not appoint another authorized distributor in the Territory for the sale of Products to Customers during the term of this Agreement, and Distributor will not sell in the Territory any products competitive with the Products during the term of this Agreement without Supplier's prior written consent.


2.2 Limitations. Distributor agrees that it shall not, directly or indirectly, market, promote or sell the Products or offer to sell Products outside of the Territory without Supplier's prior written consent. Distributor agrees that it will, without compensation, refer to Supplier all inquiries concerning the Products and received by Distributor from persons or entities located outside the Territory.


2.3 Independent Contractor. Distributor shall conduct its business in the purchase and resale of Products as a principal for its own account and at its own expense and risk. This Agreement does not in any way create the relationship of principal and agent, employer and employee, partners, joint ventures or any similar relationship between the parties. Distributor neither has nor shall have the power, right or authority to bind Supplier or to assume or create any obligation or responsibility, express or implied, on behalf of Supplier or in Supplier's name, and Distributor shall not hold itself out to others as having such power, right or authority. Distributor has no authority to appoint an associate distributor or sub-distributor of Products. Nothing in this Agreement is intended, nor shall it be construed, as reserving to Supplier control over the business operations of Distributor except as set forth herein. Nothing herein contained, however, shall restrict Supplier in providing instruction and guidance to Distributor on order to Maintain Supplier's standards of representation and service for the Products offered to Customers under this Agreement and protect the reputation of supplier's business and goodwill represented by the Trademarks.


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ARTICLE III - SALES AND WARRANTY SERVICE


3.1 Promotion of Sales. Distributor shall use its best efforts to sell and promote the sale of Products within the Territory, and to provide prompt and competent service to Customers in connection with such sales, both at the time of and subsequent to delivery of Products to Customers. Distributor shall contract directly with Customers and Supplier shall not be a party to any such Customer/Distributor contract. Distributor shall be free to establish its own resale prices to the Customers without any limitations imposed by Supplier.


3.2 Facilities. Distributor will provide, staff, equip, and maintain facilities for the sale of Products in the Territory, and will maintain a sales staff with an adequate number of trained employees reasonably sufficient to meet the needs of the Territory.


3.3 Warranty Service. Distributor will, according to the recommendations of Supplier, arrange for Supplier's performance of warranty service where appropriate, both within the Territory and/or at Supplier's facility in Belgium. In no event will Distributor take any actions to attempt to obligate Supplier to provide any level of warranty service beyond any warranty set forth in the applicable purchase order.


ARTICLE IV - TERMS AND CONDITIONS OF SALE


4.1 Shipment. Except as the parties may otherwise hereafter agree in writing, Distributor shall purchase Products directly from Supplier and Supplier shall deliver such Products directly to Customers from Supplier's facility in Belgium.


4.2 Terms of Sale. Payment, shipping, financing, and warranty terms shall be agreed upon by the parties prior to Distributor's placing of any purchase order with Supplier and shall be incorporated into such purchase order. All payments shall be made in the currency stated in the purchase order. Warranties shall not apply to any Products that have been altered after delivery to Distributor or Customers, as the case may be, without the express written consent of Supplier.


4.3 Order of Precedence. Any provision of any purchase order placed by Distributor that is inconsistent with any tern of this Agreement shall be null and void unless such inconsistent provision is expressly accepted by Supplier in writing.


4.4 Acceptance. No purchase order shall be binding on Supplier until accepted in writing by a duly authorized employee of Supplier. Supplier may refuse to accept any purchase order for any reason.


4.5 Compliance with Laws. Distributor shall comply with all applicable laws and regulations in the conduct of its business and pertaining to the subject matter of this


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Agreement, including, without limitation, the export laws and regulations of Belgium. Should Distributor be or become aware of any applicable laws or regulations that are inconsistent with the provisions of this Agreement, Distributor shall promptly notify Supplier of such inconsistency. Supplier may, at its option, either waive the performance of such inconsistent provisions or terminate this Agreement. Distributor, at its sole expense, shall be responsible for obtaining and maintaining all licenses, permits, and approvals that are required by all appropriate governmental authorities with respect to Distributor's conduct of its business and its performance under this Agreement. Furthermore, Distributor, at its sole expense, shall comply with any requirement of such governmental authorities for the registration or recording of this Agreement and/or for any required product registrations. Distributor shall furnish to Supplier, upon the latter's request, written evidence from such governmental authorities of all such licenses, permits, clearances, authorizations, approvals, registrations, and recordings.


4.6 Export Licenses. Supplier shall be responsible for obtaining any necessary export licenses or other export approvals.


4.7 Force Majeure. Unless otherwise provided in a purchase order, supplier shall not be liable for any failure to deliver hereunder, where such failure has been occasioned by fire, embargo, strike, failure to secure materials from the usual source of supply, or any other circumstance beyond Supplier's control that prevents Supplier from making deliveries in the normal course of its business. Supplier shall, however, promptly make the delivery, at the agreed price, when any such cause or causes interfering with delivery shall have been removed.


ARTICLE V - INDEMNIFICATION


5.1 Indemnification of Distributor. Supplier shall indemnify Distributor and its affiliates, officers, directors, agents and employees against, and hold them harmless from, any and all losses, liabilities, claims, damages, costs and expenses (including reasonable attorneys' fees) in connection with (i) any breach of this Agreement by Supplier; (ii) any injury to persons or property arising solely out of a deficit in the design, manufacture or materials of a Product; and (iii) any claims of trademark or patent infringement or other violations of intellectual property rights made my third parties in connection with the Products as sold by Supplier to Distributor.


5.2 Indemnification of Distributor. Distributor shall indemnify Supplier and its affiliates, officers, dire ...