International Distribution Agreement

INTERNATIONAL DISTRIBUTION AGREEMENT Page 1 of 31 Exhibit 10.1 INTERNATIONAL DISTRIBUTION AGREEMENT This Agreement, to take effect as of the date of its signature by both parties hereto, is by and between VeriChip Corporation, a Delaware, U.S.A. corporation having offices at 1690 South Congress Avenue, Suite 200, Delray Beach, Florida 33445, United States of America (hereinafter referred to as " VeriChip" or the " Company" ), and Surge IT Solutions a business entity duly organized and existing under the laws of London, England with principal offices at Tower Road, London NW 10 2HP, (hereinafter referred to as " Distributor" ). Distributor and the Company may hereinafter be referred to as the " Parties" and individually, as a " Party" . WITNESSETH: WHEREAS, VeriChip markets highly sophisticated identification devices and readers; and WHEREAS, due to the technical nature and use of the Company' s products, users may be properly served only if they have the benefit of professional pre- and post-sale demonstration, orientation, training and support; and WHEREAS, Distributor has represented to the Company that Distributor possesses experience in the distribution of products and that it has and will maintain the technical, financial and human resources required to explain, demonstrate and service the Company' s products in a proper manner; and WHEREAS, Distributor wishes to be appointed the Company' s exclusive distributor for the marketing, promotion, sale and services within the Territory (as hereinafter defined) of the Company' s products listed in EXHIBIT " B" attached hereto (the " Products" ); and the Company wishes to make such appointment, subject to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter contained, the Parties hereby agree as follows: SECTION 1. DEFINITIONS
In this Agreement, capitalized terms shall have the meanings set forth in this Section 1. Definitions, or elsewhere in the provisions of this Agreement: (a)" Agreement" means this " International Distribution Agreement" , and any and all Exhibits referenced herein, signed by both Parties. (b) " Company Confidential Information" means all of the Company' s information already in the possession of, or subsequently obtained by, Distributor, either (1) in writing and marked with a restrictive legend, such as " Confidential" , or (2) in writing, orally, visually or by delivery of items which are, at the time of disclosure or within (thirty) 30 days after its disclosure, identified as confidential information, all to the extent that such information or material has not been made publicly available by the Company. The use of " Company Confidential Information" is subject to the provisions of Section 13, hereof. INTERNATIONAL DISTRIBUTION AGREEMENT Page 2 of 31 (c) " Date of Delivery" is the date the Product ordered by Distributor is delivered F.O.B. Miami, FL, U.S.A. to Distributor' s agent. (d) " Date of Shipment" is the date a Product is shipped to Distributor from the Company' s distribution center in the U.S.A., as such date is shown in the corresponding bill of lading. (e) " Effective Date" means the date this Agreement is accepted by the Company, as evidenced by the signature of the Company' s representative. (f) " End User" or " User" is anyone who acquires Products within the Territory for its own use and not for resale. (g) " Price List" means the list of the Company' s wholesale list price for the Products, as quoted by the Company from time to time. The Company' s List Price in effect as of the date hereof is attached hereto as EXHIBIT " C" Price List. (h) " Product" or " Products" means each of the Company' s product or products listed in EXHIBIT " B" Products, attached hereto, and any copy or part thereof, documentation, updates, or other materials delivered to Distributor by the Company in conjunction with the Products. The Company may alter, improve, change or discontinue any of the Products at any time. (i) " Purchase Order" means the form attached hereto as EXHIBIT " A" Form of Purchase Order for Products, as the Company may amend it from time to time. (j) " Quota" means the minimum quantities of Products which Distributor shall purchase from the Company, as set forth in EXHIBIT " D" Quota Requirements, attached hereto. Distributor' s failure to meet such Quota requirements shall be a material breach of this Agreement. (k) " Reseller" means anyone who acquires Products from Distributor within the Territory for resale to End Users. (l) " Territory," means the country or countries listed in EXHIBIT " E" - Territory, attached hereto. (m) " Trademarks" means any trademarks, service marks and trade names which the Company may at any time have adopted, used or registered, which identify either the Company or the Products, or are used by the Company in relation to and in connection with the Products. (n) " US" or " U.S.A." means the United States of America. SECTION 2. APPOINTMENT OF EXCLUSIVE DISTRIBUTOR
2.1 Subject to the terms and conditions of this Agreement, the Company hereby appoints Distributor as the Company' s exclusive distributor of Products in the Territory. During the Term of this Agreement, as such term is defined in Section 12 below, Distributor shall have the exclusive right to market, promote, sell and provide services for the Products in the Territory, under the Company' s name and Trademarks. Distributor hereby accepts such appointment and expressly acknowledges and agrees that, pursuant to

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this Agreement, Distributor shall only have the rights of Distributor expressly granted by the Company hereunder. Distributor further agrees that it shall promote and maintain the excellence of quality and enhance the goodwill which is now associated with the name and reputation of the Company and its Products. Distributor acknowledges that, by accepting this appointment, it will be subject to all of the terms and conditions of this Agreement and to the Company' s marketing, sales and merchandising policies as they now exist or as they may be altered, at the Company' s sole discretion, from time to time, provided, however, that the Company shall provide Distributor with a 30 (thirty) day prior written notice, and provided also that the Company will not make any changes that impose a material burden on Distributor unless such changes are reasonably necessary to comply with any applicable law, regulation or governmental or der or to improve the prospects of the business. Distributor' s failure to operate in accordance with such policies shall entitle the Company to terminate this Agreement in accordance with Section 16 hereof. 2.2 Distributor agrees that (i) it will market, promote and sell the Products solely to Resellers, if any, and/or Users within the Territory; (ii) whenever Distributor places orders for Products it will do so solely under the Company' s authorized form of Purchase Order, which expressly references and incorporates the terms and conditions of this Agreement; and (iii) all such Purchase Orders must be issued and signed by Distributor and must be accepted in writing signed by the Company. Distributor further agrees that it will market, promote, and offer for sale solely those Products the Company specifically approves under this Agreement, as such are listed in EXHIBIT " B" hereto, or in any amendment that, from time to time, the Company makes to it in a writing signed by the Company, and that any Purchase Order Distributor submits to the Company will list only such approved Products. Dis tributor shall not, without the prior written consent of the Company, sell, market or distribute any version of the Products other than the version the Company shall designate from time to time as the most current version. Distributor shall not sell, advertise or solicit orders for the Products outside the Territory and shall promptly relay any such inquiries to the Company. 2.3 Nothing in this Agreement shall be construed as prohibiting or placing any restrictions whatsoever on the Company' s right (i) to market, promote, distribute, license or sell any Products outside the Territory to or for the benefit or use of any person, firm or company the Company may select in its sole discretion, notwithstanding that any such person, firm or company may intend to use or resell the same within the Territory; or (ii) to appoint other distributors of the Products outside the Territory that may sell Products outside the Territory, provided that any such agreement between the Company and any such distributors, shall include a clause where such distributors agree not resell or distribute the Products within the Territory. Notwithstanding the foregoing, the Company will instruct its other distributors not to export Products to the Territory. If the Company is contacted by someone or some entity in or out of the Territory requesting to buy Products in the Territory (i.e. shipped to within the Territory), then the Company shall refer such person or entity to Distributor. 2.4 In partial consideration of the distribution rights granted by the Company to the Distributor hereunder, Distributor shall pay to the Company a non-recurring and non-refundable fee in the amount of $___0___ (the " Distribution Fee" ). The Distribution Fee shall be due and payable in U.S. Dollars on the date of execution of this Agreement, and shall be fully earned by the Company when paid.
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Distributor hereby expressly agrees that the Distributor Fee shall not in any way or under any circumstances be credited against or applied to amounts due for any Products ordered by Distributor under this Agreement, including without limitation, Products ordered pursuant to Section 7.2 below. SECTION 3. PARTIES' RELATIONSHIP The Parties hereby agree that: 3.1 Distributor is an independent contractor and not an agent of the Company. This Agreement does not constitute a joint venture, agency or partnership between the Parties, nor does it create an employer-employee relationship. Neither Party is a legal representative, partner, franchisee, employee or associate of the other, legally or otherwise. 3.2 Neither Party has the power to assume nor will assume or create any obligations on behalf of the other, nor make any representations or warranties about the other. Distributor has no power, express or implied, to accept any order on behalf of the Company or to bind the Company, either directly or indirectly, with respect to any order or with respect to any other contract or matter whatsoever. 3.3 As an independent contractor, Distributor is free to select its sales personnel and establish their compensation, and manage its business as it deems appropriate, provided such management is not in contravention of any policies prescribed by the Company or in contravention of the terms of this Agreement. Distributor may appoint sub-distributors within the Territory, provided that Distributor informs any such sub-distributor of the applicable rules and regulations (both contained herein and any other applicable rules and regulations) and Distributor is responsible for any breach thereof by any such sub-distributor.
SECTION 4. GENERAL OBLIGATIONS OF DISTRIBUTOR
4.1 Marketing . In the marketing, promotion and sales of Products, Distributor shall act on its own behalf, and for its own account, except as otherwise specifically stipulated in this Agreement, or as separately agreed to in writing by the Parties, and shall sell the Products at its own prices and under its own terms and conditions. With respect to the marketing and distribution of the Products, Distributor shall have the following obligations: (a) To use its best efforts to further the promotion, marketing and distribution of the Products in the Territory; (b) To maintain, at its own expense, appropriate offices and a full range of available Products. Company may provide Distributor with free samples for demonstration purposes; (c) To establish and maintain an adequate organization, infrastructure, personnel and marketing strategy for its marketing, promotion and sale of the Products in the Territory; (d) To maintain an adequate balanced inventory of the Products, sufficient to fill reasonably anticipated orders from customers and to actively promote orders for the Products. During any subsequent contractual period, Distributor shall purchase such minimum quantity of Products as established by mutual agreement between the Parties from time to time;

INTERNATIONAL DISTRIBUTION AGREEMENT Page 5 of 31 (e) To promptly respond to all inquiries from customers, including complaints, process all orders, and effect all shipments of Products; (f) To pass on or flow-through to its Resellers, if any, and Users any warnings and cautions and other descriptive literature regarding the proper use of all Products, as provided by the Company; (g) Upon reasonable notice to Distributor, permit the Company to visit Distributor' s place of business and inspect its inventories, service records, and other relevant documents; (h) To maintain throughout the Territory, at Distributor' s sole expense, an adequate sales force dedicated to the marketing, promotion and sale of the Products; (i) To participate actively in sales or merchandising programs prepared by the Company; to participate in all fairs and exhibitions in the Territory where such participation would, in the judgment of the Company, promote the Products, and to develop and implement sales programs for the promotion of the Products. The costs associated with such participation shall be previously agreed by both parties; (j) To assist the Company in all local tax and government reports or any other local requirements. The Company will compensate Distributor for any costs which might be incurred by Distributor in providing such assistance, provided such costs have been approved by the Company in advance; (k) From time to time during the Term of this Agreement and upon expiration or termination hereof, Distributor will provide the Company immediately upon request with a list of the names and addresses of all persons to whom Distributor has sold the Products and all information concerning the sale of the Products which the Company may require. The Company agrees and understands that this information will be considered as Distributor proprietary and confidential information, and therefore it shall be treated as confidential by the Company, in terms of this Agreement.
4.2 Advertising . Distributor shall diligently undertake to advertise the Products in the Territory. The Company will furnish Distributor, from time to time and without additional charge, with such marketing and technical materials in the English language as the Company may, in its sole discretion, deem necessary or desirable (the " Promotional Materials" ). Distributor may, solely during the Term of this Agreement, utilize such Promotional Materials in promoting sales of the Products and in preparing its own advertising materials. Distributor may, in its own discretion, translate such Promotional Materials from English into the language of the Territory for distribution in the Territory, but shall provide a sample of them to the Company prior to any distribution. Distributor shall bear all costs of this translation and shall be solely responsible for inaccurate, inc onsistent or misleading translations. The Company shall have ownership rights to all advertising and promotional materials so translated. All expenses incurred by Distributor with respect to the creation and distribution of advertising materials, advertising and promoting the Products in an adequate fashion shall be borne by Distributor. Distributor may use the Promotional Materials and the full range of direct marketing media, including home shopping, spot, long form television, direct mail, telemarketing, live shows, radio and print advertisements, catalog, Internet and retail, in the marketing and promotion of the Products in the Territory, to the extent the Company, in its sole discretion, deems Distributor to have such ability. Upon expiration or termination of this Agreement, Distributor shall promptly return to the Company, at no cost to the Company, all advertising and Promotional Materials translated or prepared by Distributor.

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4.3 Internet . Distributor shall follow the Company' s written instructions with respect to each of the following: (i) use of any information about the Company or the Products available on the Internet; (ii) linking of any site on the Internet to any other site on the Internet established, operated or sponsored by the Company; and (iii) use of any of the Trademarks or Promotional Materials on any site on the Internet. Distributor acknowledges that it shall cease the activities described in (i), (ii) and/or (iii) above, if so instructed by the Company. In no event shall Distributor establish, operate, sponsor or contribute content to any site on the Internet that incorporates the word " verichip" as its URL address or any part of such address. 4.4 Customer Support . Distributor shall handle and promptly settle any User' s customer complaints concerning the Products, following the Company' s guidance included in the Company' s operations guide provided by the Company to Distributor (the " Operations Guide" ), as amended from time to time in the sole discretion of the Company. Distributor agrees to assist the Company in arranging for any customer warranty service. 4.5 Expenses . Distributor assumes full responsibility for all costs and expenses which it incurs in carrying out its obligations hereunder, including but not limited to all rentals, salaries, commissions, advertising, demonstrations, travel and accommodation expenses without the right to reimbursement for any portion thereof from the Company. 4.6 Other General Obligations Of Distributor . Subject to all applicable laws and regulations in the Territory, Distributor undertakes the following obligations within the Territory on a continuing basis:
(a) Adherence to Business Ethics and Laws Distributor shall adhere to the highest principles of business ethics and in this regard shall: (1)comply with all laws and regulations in the Territory; (2)adopt a set of business conduct guidelines (the " Guidelines" ), to be furnished to all its employees and others who represent Distributor to the public. Distributor shall ensure that all such persons clearly understand that they must comply with the Guidelines. The Guidelines shall incorporate provisions that: (i)prohibit the making of payments or gifts for the purpose of influencing a decision to award or to continue business with Distributor; (ii)require compliance with all laws and regulations in the Territory, including without limitation, Government procurement laws; (iii)require fair and equitable treatment for organizations, agencies, companies and enterprises; (iv)require that representations be accurate; (v)require handling of intellectual property in accordance with the rights granted to Distributor; (vi)require sales and business practices in keeping with the principles of free competition and business ethics and conduct; (vii)require full and accurate reporting to appropriate authorities and to Distributor; (3)monitor compliance with the above provisions; and (4)notify the Company promptly upon discovery of any instance where Distributor fails to comply with any one or all of the provisions of this Section.


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Further, Distributor hereby recognizes and agrees to comply with the U.S. Import/Export regulations, the Foreign Corrupt Practices Act and laws concerning International Economic Boycotts, together with other U.S. laws, to the extent that they are applicable to U.S. companies in their international operations. Without limiting the generality of the foregoing, Distributor agrees not to re-import the Product back into the United States and agrees that the Products and all packaging materials will be marked " made in the U.S.A. for export only" . (b) Contacts with the Press and Other Media Distributor shall not make any statement or distribute any material concerning the Company to the press or other communications media, except for (i) materials provided to Distributor by the Company for publication and (ii) statements and materials otherwise approved in writing by the Company. Distributor shall promptly bring to the Company' s attention and deliver to it copies of any articles in the press of the Territory concerning the Company and/or the Products of which Distributor may be aware. (c) Audits The Company will have audit rights of Distributor' s operations on: (i) adherence to Distributor' s Guidelines by Distributor' s employees and others who represent Distributor to the public, (ii) compliance with U.S. Government Import/Export Regulations and the U.S. Foreign Corrupt Practices Act, (iii) use and storage practices for the Company Confidential Information, (iv) use of the Trademarks; and (v) where there is suspicion of breach of other provisions of Distributor' s agreements and other contractual documents. The Company agrees to give Distributor' s management no less than five (5) business days prior written notice before exercising any of its Audit rights. (d) No Exports Outside the Territory Distributor shall not sell any Products outside of the Territory and shall use its best efforts to ensure that Products it sells are not resold outside of the Territory.

4.7 Distributor' s Representations and Warranties . Distributor hereby represents and warrants to the Company that: (i) Distributor is a business organization duly organized and in good standing in accordance with the laws of England; (ii) Distributor has duly authorized the execution and performance of this Agreement; (iii) this Agreement is lawful and may be performed in accordance with its terms under all the laws in force in London and throughout the Territory as of the date hereof; (iv) Distributor will advise the Company of any changes in the laws which might or will impair the validity of all or any part of this Agreement; and (v) Distributor is a business organization with the required personnel duly trained to market and sell products similar to the Products, transportation to distribute such Products, warehouses to store them and a computer system which allows a detailed control of stocks and sales.
SECTION 5. GENERAL OBLIGATIONS OF THE COMPANY; WARRANTIES
5.1 The Company agrees to use its commercially reasonable efforts to sell Products to Distributor during the Term of this Agreement, on such terms and prices as set forth herein and in EXHIBIT " C" , attached hereto, but in no event shall the Company be liable to Distributor for any loss of profits, loss of business, expenses or costs arising from or alleged to arise from any failure to deliver. Distributor hereby agrees that the Company shall have the right to allocate Products, in its sole discretion and in whatever manner it deems to be in its best interest, among its distributors without incurring any liability to Distributor.

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5.2 The Company warrants that the Products will be free from defects in material and workmanship and will substantially conform to its publicly available specifications. The Company shall replace or repair, at its option, any Products that within fifteen (15) days from the Date of Delivery are found defective in its materials, workmanship or specifications, upon written notification by Distributor identifying each and every defect. The Company' s obligation with respect to such Products or software, shall be limited to its repair or replacement, without any further expense to the Company. Any alteration, abuse, modification or misuse, including, but not limited to, neglect or accidental damage or defacement of the Products shall void this limited warranty. THE FOREGOING LIMITED WARRANTY IS EXPRESSLY MADE IN LIEU OF ANY AND ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. The foregoing limited warranty shall not be enlarged or affected by, and no liability or obligation shall arise from, the Company' s rendering of technical or other advice, or of service, in connection with any of the Products. Employees, agents, distributors and sales representatives are not authorized to make warranties. Oral or written statements made by them do not constitute warranties and shall not be relied on by Distributor. REPLACEMENT, OR REPAIR OF A DEFECTIVE PRODUCT IS DISTRIBUTOR' S SOLE AND EXCLUSIVE REMEDY FOR CONTRACT, WARRANTY, NEGLIGENCE, TORT OR STRICT LIABILITY CLAIMS FOR ANY LOSS, DAMAGE OR EXPENSE ARISING OR ALLEGED TO ARISE FROM THE MANUFACTURE, SALE, DELIVERY OR USE OF THE PRODUCTS. IN NO EVENT SHALL THE COMPANY BE LIABLE FOR LOSS OF USE OR PROFITS, LOSS OF BUSINESS, EXPENSES OR COSTS ARISING FROM OR ALLEGED TO ARISE FROM BUSINESS INTERRUPTION, ATTORNEYS' EXPENSES OR CONSEQUENTIAL, CONTINGENT, I NCIDENTAL OR SPECIAL DAMAGES CAUSED OR ALLEGED TO BE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE, TORT, STRICT LIABILITY, BREACH OF CONTRACT, BREACH OF WARRANTY OR OTHER BREACH OF DUTY OF OR BY THE COMPANY. Distributor shall obtain shipping instructions and a return material authorization from the Company for the return of any item under this warranty provision. Compliance with such instructions shall be a condition precedent to the Company' s repair or replacement options hereunder. 5.3 The Company shall make commercially reasonable efforts to provide Distributor with the latest Product information and, upon Distributor' s request, any information concerning the technical aspects of the Products, their use and application. 5.4 The Company does not guarantee the results of, and Distributor will not be entitled to rely on, any marketing plan of the Company. 5.5 The Company represents that: (i) it is a corporation duly incorporated and in good standing under the laws of the State of Delaware, United States of America; and (ii) it has duly authorized the execution and performance of this Agreement. The Company will notify Distributor about the approval, disapproval or any other significant event or information regarding the medical device approval for the Products in the USA.


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SECTION 6. ORDERS FOR PRODUCTS

6.1 Purchase Orders . Distributor shall submit its Purchase Orders for Products to the Company in writing, by facsimile, overnight reputable overnight courier or, if agreed to by the Company, e-mail. All Purchase Orders shall refer to this Agreement, and shall list the Products ordered, quantities, applicable prices, scheduled delivery dates, delivery point, shipping instructions and any other information deemed necessary by the Company. In case of conflicts or inconsistency between the terms and conditions of this Agreement and those set forth in any Purchase Orders, acceptances, correspondence, and other documents forming part of any order during the Term of this Agreement, this Agreement shall govern and prevail, and the conflicting or inconsistent terms and conditions of any such other documents shall be deemed deleted and shall not be binding upon either Party. Distributor shall ensure t hat its Purchase Orders are received by the Company at least forty-five (45) days prior to the delivery dates requested in the order. 6.2 Acceptance of Orders . All Purchase Orders from Distributor are subject to acceptancein writing by the Company. The Company may expressly accept or reject each Purchase Order, or the Company may show its acceptance by providing to Distributor the appropriate transaction documents, including, but not limited to, invoices (showing item, quantity, price, amount due, and other typical invoice information), and order acknowledgments (confirming Products and quantities ordered), or by sending the Products to Distributor. Each Purchase Order shall be deemed to be an offer by Distributor to purchase the Products pursuant to the terms of this Agreement, and, if accepted by the Company shall give rise to a contract on the terms set forth herein to the exclusion of any additional or contrary terms set forth in the Purchase Order. Distributor shall either accept or reject the Products within a fifteen (15) day period after the Date of Delivery. Distributor' s failure to give the Company written notice of rejection within such fifteen (15) day period shall be deemed acceptance of the Products by Distributor. Distributor shall also be deemed to have accepted the Products by signing a transaction document requiring its signature, or providing the Products to Resellers, if any, or Users, or making any payment, including partial payments, to the Company for such Products. Distributor may cancel its Purchase Order in writing prior to its acceptance by the Company. 6.3 Delivery, Insurance, Title And Risk Of Loss . The Company will make reasonable efforts to meet Distributor' s delivery requirements for Products ordered by Distributor in any Purchase Order accepted by the Company. The Company will inform Distributor of the estimated delivery dat ...