--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Geospatial Holdings, Inc. 8-K [ghi-8k_041111.htm]
 
 
Exhibit 10.1

LICENSE AND DISTRIBUTION AGREEMENT
 
This License and Distribution Agreement (the “Agreement”) is entered into this
5th day of April, 2011 and shall become effective upon (i) the closing by
Licensee of a new round of common stock financing in an amount that equals or
exceeds five million (USD 5,000,000) in cash and provided that such closing
occurs on or before 31 May 2011; and (ii) the issuance to Delta Networks of
eighteen percent (18%) of Geospatial common stock and (iii) the signing by
Geospatial and Delta Networks of the Subscription And Rights Agreement of same
date as the date of this Agreement (the “Effective Date”), by and among Reduct
NV, a company organized and existing under the laws of Belgium with a registered
office at Molenberglei 42, B-2627 Schelle, Belgium (“Reduct”), Geospatial
Holdings, Inc. (“Geospatial”), a Nevada corporation having an office and its
principal place of business at 229 Howes Run Road, Sarver, Pennsylvania 16055,
on behalf of itself and its wholly owned subsidiary Geospatial Mapping Systems,
Inc. (“Licensee”), and only with respect to the cancellation of warrants hereof
and the receipt of Geospatial common stock pursuant to Article XV hereof , Delta
Networks, SA, a company incorporated under the laws of Luxembourg (“Delta
Networks”).
 
RECITALS
 
WHEREAS, Reduct and Licensee entered into that Amended & Restated Exclusive
License and Distribution Agreement on December 15, 2009, as subsequently amended
(together, with the amendments, the “Previous Agreement”), pursuant to which
Reduct granted to Licensee an exclusive right and license to promote, market,
use, and distribute certain Reduct products and technology;
 
WHEREAS, the Previous Agreement has been terminated on the terms set forth
therein;
 
WHEREAS, Reduct and Geospatial have concluded on January 18, 2011 a summary of
terms that constitute a Letter of Intent, subject to approval of the parties’
Board of Directors, with the intent to amend and replace the Previous Agreement,
including a mutual agreement that any suit or claims that either Reduct or
Geospatial may assert under the Previous Agreement will be vacated;
 
WHEREAS, Reduct and Licensee desire to enter into this new Agreement so that the
surviving provisions of the Previous Agreement are of no further force and
effect so that this Agreement constitutes the entire new understanding between
the parties;
 
WHEREAS, pursuant to the Previous Agreement, Reduct and Delta Networks hold
outstanding warrants in Licensee, which such warrants Delta Networks hereby
desires to agree to cancel under certain conditions set forth in Article XV
hereof;
 
WHEREAS, Licensee hereby vacates any suit or claims that Geospatial may assert
under the Previous Agreement;
 
WHEREAS, Reduct hereby vacates any suit or claims that Reduct may assert under
the Previous Agreement under certain conditions set forth in Article XV hereof;
 
 
1

--------------------------------------------------------------------------------

 
 
WHEREAS, Licensee hereby agrees that Delta Networks shall receive at the
Effective Date and thereafter for a term of eight (8) years Geospatial common
stock required to bring Delta Networks’ ownership into Geospatial common stock
to the equivalent of 18%, as set forth in general in Article XV hereof, and in
specific in the Subscription Rights Agreement of same date as the date of this
Agreement.
 
WHEREAS, pursuant to this new Agreement, Reduct shall provide Licensee with the
exclusive, or non-exclusive, as applicable, right to serve as licensee and
distributor for the Products to any individual or entity for use in the
jurisdictions of the Territory and an exclusive, or non-exclusive, as
applicable, right to market, advertise, promote, distribute, use, offer for
sale, sell, direct import from Reduct, and lease the Products, for use in the
Territory (the “License”);
 
WHEREAS, Reduct’s intent is to provide Licensee with reasonable protection for
Licensee to achieve the level of License exclusivity consistent with that
provided in the Previous Agreement.
 
NOW, THEREFORE, in consideration of the mutual premises and covenants set forth
below, the parties agree as follows:
 
ARTICLE I: CONDITIONS OF (i) APPOINTMENT, and (ii) EXCLUSIVENESS
 
1.1 Territory License Grant. As a condition of the appointment and the License
grant, Licensee shall, as from the Effective Date of this Agreement, purchase
from and make payment in cash to Reduct (the “Purchase” or “Purchases”) a number
of 27 Reduct Probe Products by December 31, 2011 and a total cumulative number
of 110 Probe Products by December 31, 2012 (the “Initial Period”).
 
During the Initial Period, the License shall be non-exclusive and for the
territories of North America, Australia, and South America (the “Territory”).
Notwithstanding the above, if at any time up to and including December 31, 2012,
Licensee Purchases a total cumulative number of 110 Reduct probes, the License
shall immediately convert to an exclusive license for the duration of the Term
(“Exclusive License Period”), provided that Licensee meets at any time from
December 31, 2012 onwards, the cumulative minimum Probe Product purchase
requirements on a semi-annual basis pursuant to Exhibit B hereof (“Exclusive
License Purchase Requirements”). Notwithstanding the foregoing, Licensee’s
orders on a quarterly basis shall not deviate from the Exclusive License
Purchase Requirements to less than fifty percent  (50%). Licensee shall correct
such deviations, if any, in the subsequent quarter(s).
 
If at any time following the Initial Period, Licensee does not meet the
cumulative minimum Probe Product purchase requirements on a semi-annual basis
pursuant to Exhibit B hereof, the License shall remain, or again become a
non-exclusive license for the duration of the Term (the “Non-Exclusive License
Period”).
 
Both Parties acknowledge and agree that it shall not be the intent of Licensee
to build up inventory of Probe Products in order to circumvent the spirit of
this Agreement.
 
 
2

--------------------------------------------------------------------------------

 
 
Therefore and except as agreed in writing otherwise, Licensee’s permitted stock
shall not exceed the quarterly stock levels as set forth in Exhibit B.
 
1.2  Additional Territory License Grant.  For the duration of the Term, the
License shall be non-exclusive for the markets of Russia, Oman, Jordan, Abu
Dhabi and Qatar  (each separate market an “Additional Territory” and together
with the Territory, the “Territories”); provided, however, Licensee’s rights may
become exclusive for that Additional Territory for the duration of the Term upon
conditions which shall be negotiated between Licensee and Reduct, such
negotiations to be conducted in good faith. Section 5.1.2 shall not apply in
relation to Purchase Prices in an Additional Territory. The parties agree that
for a period of twelve (12) months from the date of this Agreement, Reduct shall
not appoint any other entity as an exclusive licensee in the Additional
Territory.
 
1.3  Scope of License.
 
A.           Non-Exclusive License Period. During any Non-Exclusive License
Period, Reduct hereby appoints Licensee, and Licensee hereby accepts such
appointment, as an independent and non-exclusive licensee and distributor for
the Probe Products to any individual or entity for use in the jurisdictions of
the Territory. Reduct hereby grants Licensee a non-exclusive right and License
to market, advertise, promote, distribute, use, offer for sale, sell, direct
import from Reduct, and lease the Probe Products, for use in the Territory in
strict accordance with the terms and conditions of this Agreement (the
“Non-Exclusive License”). Licensee shall not assign such Non-Exclusive License.
 
B.           Exclusive License Period. During the Exclusive License Period,
Licensee shall be an independent and exclusive licensee and distributor for the
Probe Products to any individual or entity for use in the Territory.  During the
Exclusive License Period, Reduct hereby grants Licensee an exclusive right and
License to market, advertise, promote, distribute, use, offer for sale, sell,
direct import from Reduct, and lease the Probe Products, for use in the
Territory in strict accordance with the terms and conditions of this Agreement
(the “Exclusive License”).  Reduct shall refer any and all persons or entities
from the Territory who contact Reduct to Licensee and Reduct agrees not to
knowingly discuss sales or pricing terms of the Probe Products with anyone in
the Territory. Licensee shall not assign such Exclusive License.
 
1.4  Products Covered. “Probe Products” shall mean the products as set forth in
the first table of Exhibit A hereof, owned and or developed by Reduct as of the
date hereof and/or as mutually agreed to by the Parties, during the Term of this
Agreement. Reduct may amend or supplement its range of Products from time to
time. Except as specifically approved by Reduct, during the Term of this
Agreement, Licensee shall not purchase, market, advertise, promote, distribute,
use, offer for sale, sell, direct import and lease any products in conflict with
Reduct’s Intellectual Property Rights and Reduct Trademarks or substantially
similar to the Probe Products from any other supplier or manufacturer of such
products.  Notwithstanding the foregoing, Licensee shall have the right to
purchase
 
 
3

--------------------------------------------------------------------------------

 
 
from third parties commercially available product items similar in purpose as
the product items set forth in the second table (“Accessories products”) of
Exhibit A hereof. “Intellectual Property Rights” means all (a) patents
(including without limitation, all patent applications and divisions,
continuations, continuations-in-part, renewals, reissues, reexaminations and
extensions of the foregoing, as applicable); (b) rights associated with works of
authorship and industrial design rights, including copyrights; and (c) rights
relating to the protection of trade secrets and know how. Reduct’s “Intellectual
Property” does not include Reduct’s Trademarks.
 
1.5 Sublicensees. Licensee may market, distribute, sell or lease the Probe
Products directly to end-users or through Licensee’s sublicensees, resellers or
agents and will assure at all times that such sublicensees, resellers or agents
operate in accordance with this Agreement. Licensee shall be liable for the
actions, omissions, and performance of such sublicensees, resellers or agents in
violation of this Agreement except for fraud, willful misconduct or gross
negligence on the part of such sublicensees, resellers or agents.
 
1.6 No Licensee Sales Outside the Territories. Licensee shall not knowingly,
directly or indirectly, market, distribute, export, sell, service or lease the
Probe Products for use outside the Territories without Reduct’s written
approval.
 
1.7 Sales by Sublicensees, Resellers or Agents Outside the Territory. Licensee
shall not permit any sublicensees, resellers or agents to market, distribute,
export, sell, deliver, service or lease the Probe Products outside the
Territory, directly or indirectly, to purchasers within the Territory whom
Geospatial has reasonable reason to believe intend to use the Probe Products
outside the Territory or re-sell the Probe Products to an entity located outside
the Territory, without prior written approval from Reduct. In addition, Licensee
shall require its sublicensees, resellers or agents to agree in writing that
they will not, directly or indirectly, market, distribute, export, sell,
deliver, service or lease the Probe Products outside the Territory. Licensee,
its sub-licensees, resellers and agents shall not be liable to Reduct if the
end-users export, sell, use or lease such Probe Products for use outside the
Territory provided that Licensee complies with the foregoing sentence. Both
Parties will agree on a course of action to restrict or limit such distribution
outside the Territory.
 
1.8 Reduct’s Sales.  Both Parties acknowledge and agree that it is Reduct’s
intent to appoint an exclusive licensee for the Territories on terms set forth
herein within a timeframe for Reduct to be commercially reasonable. To this
effect, Reduct has entered into this Agreement with Licensee. From the Effective
Date of this Agreement through the Initial Period and until December 31, 2012,
Reduct shall not be restricted from entering into any license agreements with
third parties; provided however, any such agreement shall be on a non-exclusive
basis and shall state that any such agreement will immediately, at Licensee’s
election at the onset of the Exclusive License Period until December 31, 2012,
(i) convert to a sublicense agreement under Licensee, or (ii) terminate.  In
case such agreement shall terminate, and always provided that Licensee does not
unreasonably withhold approval or require commercially unreasonable conditions
for conversion to such sublicense agreement under Licensee, following a ninety
(90) day grace period beginning at the onset of the Exclusive License Period,
the
 
 
4

--------------------------------------------------------------------------------

 
 
third party shall be prohibited from selling or renting any of the Probe
Products for use in the Territory. Reduct shall require the third party to agree
so in writing. Reduct shall not be liable to Licensee provided that Reduct
complies with the foregoing sentence. Reduct shall also not enter into any
license, distribution, or sales agreement for the Probe Products at terms more
favorable to those granted to Licensee. As of January 1, 2013 and for the
duration of any Non-Exclusive Period, Reduct shall not be restricted from
entering into any non-exclusive or exclusive license agreements with third
parties. If, by December 31, 2013 and for the duration of any Non-Exclusive
Period, Licensee has not purchased at least eighty percent (80%) of the
cumulative minimum Probe Product purchase requirements on a yearly basis
pursuant to Exhibit B hereof (the “Minimum Purchase Requirements”), Reduct has
the option, at its sole discretion, to terminate pursuant to the terms of this
Agreement.
 
1.9 Improvements. Any inventions or improvements in the Probe Products or
Accessories products by Licensee, which arise as a result of access to the Probe
Products, shall be the sole and exclusive property of Reduct and shall be
licensed to Licensee under the terms and conditions of this Agreement. However,
if Licensee makes a significant contribution to the improvement, modification,
enhancement or adaptation of the Probe Products or Accessories products, Reduct
shall not charge any addition to the Licensee’s Purchase Price to use that
improvement, modification, enhancement or adaptation for the Term.
 
1.10 Intellectual Property Protection. Reduct will use commercially reasonable
efforts to prepare, file, prosecute, maintain and extend patents, patent
applications, copyright registrations and copyright applications for
Intellectual Property covering the Probe Products,  Probe Products components,
and related services in the Territory (collectively, “IP Registrations”).
 
1.11 Enforcement Against Third Parties.
 
A. In the event that Reduct or Licensee becomes aware of actual or threatened
infringement of any Reduct Intellectual Property or Trademark that has the
potential to cause a material adverse effect on either Reduct’s or Licensee’s
sales, it will promptly notify the other party in writing.  Reduct must bring,
at its own expense, an enforcement action against any third party.  If Reduct
does not bring such infringement action during the Term, and such lack of
bringing an infringement action materially affects Licensee, Licensee’s Revenue
Royalty obligation set forth in Section 5.6 hereof shall be terminated.  During
the Term, no settlement of an action will be made by Reduct or Licensee without
the prior written consent of the other party if such settlement would adversely
affect the rights of the other party, such consent not to be unreasonably
withheld, conditioned or delayed. In any event, Reduct and Licensee will assist
one another and cooperate in any such litigation at the other’s reasonable
request at the expense of the requesting party, and, if a party is necessary in
order to institute or maintain an infringement suit by the other party as
defined by law, that party will join such suit and may, in its discretion, be
represented by its own counsel at its own expense.
 
B. Reduct and Licensee have the right to recover their respective actual
out-of-pocket expenses, or proportionate share thereof, in connection with any
litigation
 
 
5

--------------------------------------------------------------------------------

 
 
or settlement thereof from any recovery made by the other party. Any excess
amount will be shared between Reduct and Licensee in an amount proportional to
their respective expenses.
 
C. The parties will keep one another reasonably informed of the status of their
respective activities regarding any such litigation or settlement thereof.
 
1.12 Bankruptcy. If Reduct is under any proceeding under applicable bankruptcy
law and the trustee in bankruptcy of Reduct, or Reduct, as a debtor in
possession, rightfully elects to reject this Agreement, Licensee may retain any
and all of Licensee’s rights hereunder, to the maximum extent permitted by law,
provided that Reduct, as debtor in possession, is not otherwise legally
permitted to terminate this Agreement as provided in Article IX hereof.
 
ARTICLE II: OBLIGATIONS OF LICENSEE AND EXPENSES
 
2.1.1  Licensee shall use its best efforts to meet the Purchase quantity
requirements as described in Section 1.1 hereof and shall make payment to Reduct
in cash.
 
2.1.2  In order for the License to convert to and / or remain an Exclusive
License for the duration of the Term (Exclusive License Period), Licensee shall
meet the Exclusive License Purchase Requirements as described in Section 1.1
hereof on a cumulative semi-annual basis as described in Exhibit B hereof and
make payment to Reduct in cash.
 
2.1.3  Licensee shall Purchase and order the Probe Products in accordance with
Exhibit B and Article IV hereof, and pay the Probe Products and Accessories
products in accordance with Article V hereof.
 
2.2  Additional Revenue Percentage. Licensee shall pay to Reduct during the Term
an amount equal to five percent (5%) on all revenues, including any and all
revenues pertaining to data management activity out of the use of Probe Products
and License Grant (the “Additional Revenue Percentage”) of Licensee and all
companies that are or become a subsidiary or other affiliate of Licensee, in
case of assignment of the activity pertaining to said data management. Licensee
shall not assign any of the activity pertaining to said data management to any
other entity or person without the prior written consent of Reduct. Licensee
undertakes that it shall not allow any activity pertaining to said data
management to be carried out outside of Licensee’s activity and undertakes to
require in writing from its investor(s), officer(s), director(s), employees,
agents or representatives a non-compete undertaking to this effect. Licensee
shall pay as follows: from the five percent, two percent (2%) shall be paid on a
quarterly basis and three percent (3%) shall accrue until the Aggregate Licensee
Volume Rebate Amount as defined in Section 5.1.2 hereof is USD 0,00, at which
time such accrued amounts shall be paid quarterly over a period of one (1) year.
Future amounts of Additional Revenue Percentage shall be paid in full and
quarterly.
 
2.3 Licensee Software Development. Licensee hereby undertakes to make all
reasonable efforts, at Licensee’s sole cost, to finalize the first stage
development of the Geospatial software  (the “Geospatial software lite product”
as specifically referred to in the January 18, 2011 summary of terms that
constitute a Letter of Intent, subject to
 
 
6

--------------------------------------------------------------------------------

 
 
approval of the parties’ Board of Directors ), sufficient in all respects that
it is deployable as market ready and tested companion system to the Reduct
probe.
 
2.4 Marketing And Product Support. Licensee shall use commercially reasonable
efforts to promote the marketing and sale of the Probe Products within the
Territory. Reduct agrees to provide a reasonable and sufficient amount of
technical and technological support (including, but not limited to, sales
personnel training, product demonstrations and promotional “roadshows”) as and
when reasonably requested by Licensee to facilitate sales by Licensee, including
following the launch of new or improved products. The parties acknowledge and
agree that any technical and technological support contemplated by this
Agreement shall be provided by Reduct to Licensee at a facility in the Territory
designated by Licensee, provided that Licensee reimburses Reduct for reasonable
travel and lodging expenses incurred in connection therewith.
 
2.5 Licensee Prices. Prices for the sale or rental by Licensee of the Probe
Products and Accessories products in the Territory shall be established and
revised from time to time by Licensee in its sole discretion.
 
2.6 Costs and Expenses. Licensee shall be responsible for all costs and expenses
relating to its obligations under this Agreement including but not limited to
this Article II, except as expressly indicated otherwise.
 
ARTICLE III: OBLIGATIONS OF REDUCT
 
3.1 Supply. Always provided that there is no cause for termination by Reduct
pursuant to Section 9.1 hereof, Reduct shall undertake the following:
 
A. Make commercially reasonable efforts to manufacture and, assemble the Probe
Products and Accessories products and any required replacement products, ordered
under Article IV and paid for under Article V below, to Licensee in accordance
with Exhibit B hereof and in accordance with the delivery schedule as provided
in the accepted P.O. (defined in Section 4.1 below). Notwithstanding the above,
in the event that Licensee has, with the prior written agreement of Reduct,
committed to an agreed delivery timetable to its customers, Reduct shall use its
best efforts to adhere to that agreed delivery timetable.
 
B. Keep Licensee informed of the Probe  Products and Accessories products
manufacturing availability. In the event of a shortfall in manufacturing
capacity, Reduct will use commercially reasonable efforts to provide Licensee
with timely manufacturing capacity and, if timely delivery of such products is
unavailable, Section 4.1 of this Agreement sets forth the Parties’ options.
 
C. In the event that any such new product (“New Product”) is developed, Reduct
agrees to notify Licensee at least thirty (30) days prior to the introduction of
the New Product to the market elsewhere and agrees to make the New Product
available to Licensee under this Agreement in accordance with Section 5.3
below.  If Licensee elects
 
 
7

--------------------------------------------------------------------------------

 
 
to market and promote the New Product pursuant to this Agreement, Reduct shall
provide equivalent level of technical and technological support with respect to
such New Product to Licensee as it is providing for the Probe Products and
Accessories products hereunder. The parties’ rights and obligations under this
Agreement shall apply to the New Products, mutatis mutandis.
 
 3.2 Marketing Assistance and Training. Reduct shall undertake the following:
 
A. Make available to Licensee a reasonable quantity of Probe Products and
Accessories products literature and promotional materials in a form as used by
Reduct. Licensee may also purchase, at its expense, additional quantities of
materials from Reduct. All such materials supplied to Licensee shall be in
English.
 
B. Answer promptly any queries concerning the Probe Products and Accessories
products or applications thereof that Licensee may submit to Reduct in
connection with proposed marketing campaigns or contemplated sales.
 
C. Upon the request of Licensee and subject to Licensee agreeing to  reimburse
Reduct’s reasonable costs and expenses, provide suitably qualified personnel to
participate in marketing activities of Licensee within the Territory. The
timetable for such marketing activities shall be agreed between Licensee and
Reduct. Reduct shall not be required to participate in more than two such
marketing activities per year.
 
D. Upon written request of Licensee, Reduct, or any authorized party appointed
by Reduct, shall provide training on the operation, repair and maintenance of
New Products to Licensee’s technicians. Upon request of Licensee, Reduct shall
provide this training at a facility designated by Licensee, provided that
Licensee reimburses Reduct for reasonable travel and lodging expenses incurred
in connection therewith.
 
3.3 Parallel Imports. During the Exclusive License Period, Reduct shall not
permit the sale of the Probe Products to purchasers for use within the Territory
or to purchasers outside the Territory whom Reduct has reasonable reason to
believe intend to use the Probe Products in the Territory or re-sell the Probe
Products to an entity located in the Territory.  In addition, Reduct shall
require its licensees to agree in writing that they will not market, distribute,
export, sell, deliver, service or lease the Probe Products for use in the
Territory. Reduct shall not be liable to Licensee if the end-users export, sell,
use or lease such Probe Products into the Territory provided that Reduct
complies with the foregoing sentence. Both Parties will agree on a course of
action to restrict or limit such distribution into the Territory.
 
3.4 Third Party Inquiries. During the Exclusive License Period, Reduct shall
refer to Licensee all inquiries regarding acquisition of Probe Products for use
in the Territory.
 
ARTICLE IV: ORDERING AND DELIVERY OF THE PRODUCTS
 
4.1 Purchase Order. Licensee shall submit all orders for Probe Products and
Accessories products to Reduct via a purchase order (each a “P.O.”) at the email
address and facsimile number set forth in Section 16.4 below. The P.O. shall set
forth the type of Probe Products and Accessories product from Reduct’s then
current Probe Product and
 
 
8

--------------------------------------------------------------------------------

 
 
Accessories product portfolio in Exhibit A hereof and in accordance with then
current Probe Product and Accessories product specifications, Licensee’s
expected date of delivery, which date shall be commercially reasonable. Within
ten (10) business days after receipt of a P.O., Reduct will notify Licensee in
writing whether Licensee’s order for such products is accepted or rejected. A
P.O. can be rejected if the order refers to Probe Product and Accessories
product which do not conform to (i) the then current Probe Products and
Accessories product portfolio, or (ii) the then current Probe Products and
Accessories product specifications, or (iii) order volumes on a quarterly basis
in excess of the permitted stock levels as set forth in Exhibit B hereof, except
as agreed in writing otherwise, or (iv) the Volume Rebates, if applicable
pursuant to Section 5.1.2 hereof, and the Purchase Price rebates applicable
pursuant to Section 5.1.3 hereof for the Probe Products and Accessories
products, or (v) the information specified by Reduct and communicated to
Licensee. If accepted, Licensee will be notified within ten (10) days from
receipt of the P.O. of the date or dates on which delivery is expected to be
made (the “Acceptance Notice”).  Reduct will use its best efforts to fill all
orders placed by Licensee on the delivery dates specified by Licensee.
 
Upon issuance by Reduct of the Acceptance Notice, the P.O and Acceptance Notice
shall constitute a contract in accordance with the terms and conditions of this
Agreement. In the event that Licensee is required by an end-user to commit to a
delivery timetable, Licensee shall not make such commitment without first
consulting Reduct and obtaining Reduct’s written commitment to the delivery
timetable.
 
4.2 Shipment and Delivery; Title and Risk of Loss and Damage. Reduct shall
deliver the Products EXW (Incoterms) Reduct with risk of loss and damage passing
to Licensee upon shipment EXW (Incoterms) Reduct. Licensee shall arrange
shipment.
 
4.3 Acceptance by Licensee. Licensee shall inspect the products promptly upon
receipt thereof and may reject any products which are not according to then
current Reduct product specifications. Products not rejected by written
notification to Reduct within fourteen (14) days of receipt shall be deemed to
have been accepted. Rejected products shall be returned freight prepaid to
Reduct within ten (10) calendar days of rejection. As soon as possible Reduct
shall, at its option and expense, either repair or replace such rejected
products. Reduct shall prepay transportation costs back to Licensee and shall
reimburse Licensee for any costs of transportation incurred by Licensee in
connection with the return to Reduct of such properly rejected products.
 
4.4  Timely Products.  If during the Term of this Agreement, Reduct determines
that it is unable to deliver the products within a ninety (90) day period from
the date specified on the P.O., the number of Probe Products that Reduct is
unable to deliver in timeframe set forth above shall be included in the
calculations regarding exclusive or non-exclusive license periods.
 
 
9

--------------------------------------------------------------------------------

 
 
ARTICLE V: VOLUMES, VOLUME REBATES, PAYMENT TERMS,
PURCHASE PRICES, PRICE LIST, FEES & LICENSEE SOFTWARE
ROYALTIES
 
     5.1    Eligibility for Volume Rebates, Purchase Price rebates and/or Fee,
as applicable. Items from the first table called Probe Products and second table
called Accessories product as set forth in Exhibit A hereof are eligible for
Volume Rebates pursuant to Section 5.1.2 hereof, Purchase Price rebates pursuant
to Section 5.1.3 hereof, and/or a Fee pursuant to Section 5.5 hereof.
 
5.1.1 Volumes. Licensee undertakes to Purchase, which Reduct hereby accepts to
supply, the quarterly sales volumes as set forth in Exhibit B hereof (the
“Quarterly Sales Volumes”).
 
5.1.2 Volume Rebates. For the Term of the Agreement and always provided that
there is no cause for termination by Reduct pursuant to Section 9.1 hereof,
Reduct grants Licensee a volume rebate, which amounts in total to USD five
million (USD 5,000,000)  (the “Aggregate Licensee Volume Rebate Amount”).
 
 During the Term, within thirty (30) days following receipt of Reduct invoice,
Licensee shall remit to Reduct payment in accordance with the following terms:
 
(a) Initially, seventy-five (75%) of the total purchase price per accepted and
Eligible Probe Products. The remaining twenty-five percent (25%) of the total
purchase price shall be deducted from the Aggregate Licensee Volume Rebate
Amount (the “Lower Licensee Volume Rebate Payment Percentage”).
 
(b) Following any quarter period at the end of which the cumulative Purchased
Probe Products exceed the Quarterly Sales Volumes,  Licensee shall remit payment
for fifty percent (50%) of the total purchase price for the accepted and
Eligible Probe Products.  The remaining 50% of the total purchase price shall be
deducted from the Aggregate Licensee Volume Rebate Amount (“Higher Licensee
Volume Rebate Percentage”).
 
(c) At any time Licensee fails to meet the cumulative Sales Volumes on a
quarterly basis, the payment terms revert to the Lower Licensee Volume Rebate
Payment Percentage.
 
Immediately following Licensee’s purchase of the 110th Probe Product at any time
up to December 31, 2012, 100% of any and all Eligible Probe Product Purchases
not exceeding the permitted stock levels as set forth in Exhibit B hereof shall
be deducted from the Aggregate Licensee Volume Rebate Amount until the Aggregate
Licensee Volume Rebate Amount is USD 0.00. As from December 31, 2012 onwards,
the terms pursuant to Section 5.1.2 (a) and Section 5.1.2 (b) will apply.
 
(d)  When the Aggregate Licensee Volume Rebate Amount is USD 0.00, Licensee
shall remit payment for one hundred percent (100%) of the Purchase Price to
Reduct in accordance with the terms set forth in this Article 5.
 
 
10

--------------------------------------------------------------------------------

 
 
5.1.3 Licensee’s Purchase Price. Until Licensee has Purchased 110 Probe
Products, the prices for the Probe Products shall be those specified in Reduct’s
Probe Products and Accessories product price list attached hereto as Exhibit A
(the “Purchase Price”). The Purchase Prices currently set forth in Exhibit A
shall be established and shall  remain at the lower of (a) the Purchase Price or
(b) those prices offered for similar products and similar volumes of products to
other licensees, distributors or agents of Reduct, or any other third party
(“MFN Prices”), always provided that Licensee (i) meets the purchase quantity
requirements as set forth in Exhibit B hereof , and (ii) is not otherwise in
default of any term or condition of this Agreement. The Purchase Price for Probe
Products in excess of the Purchase of 110 Probe Products and until December 31,
2014, shall remain at the lower of (a) those prices offered for similar products
and similar volumes of products to other licensees, distributors or agents of
Reduct, or any other third party (“MFN Prices”) or (b) Reduct’s documented
cost-plus a 100% mark-up, and always provided that Licensee (i) meets the
purchase quantity requirements as set forth in Exhibit B hereof, and (ii) is not
otherwise in default of any term or condition of this Agreement. As of January
1, 2015, Purchase Prices shall be established at the lower of (a) MFN Prices or
(b) Reduct’s documented cost-plus mark-up of 90% in the first following year,
80% in the second following year, 70% in the third following year, 60% in the
fourth following year and 50% in the years thereafter, and always provided that
Licensee (i) meets the purchase quantity requirements as set forth in Exhibit B,
and (ii) is not otherwise in default of any term or condition of this
Agreement.  Except as expressly stated otherwise, the Purchase Prices do not
include any existing or future taxes, tariffs, fees, duties, or levies
whatsoever applicable to the products sold under this Agreement. Purchase Prices
shall be reviewed quarterly and, if applicable, adjusted for inflation and
changes in supplier prices.
 
5.1.4  Incentive.  Reduct shall be provided an economic incentive to reduce its
costs from current levels. In the event Reduct is able to reduce its documented
costs from current levels, 50% of such cost reductions shall be credited to
Reduct notwithstanding the provisions set forth in Section 5.1.3.
 
5.2 New Price Lists. Reduct shall, based on Reduct’s costs and MFN prices in the
previous quarter, provide a list of new Purchase Prices to Licensee on a
quarterly basis, as applicable.  Reduct must provide written notice to Licensee
not less than thirty (30) days prior to the effective date of the new Purchase
Price list, and such written notice must include the cost breakdown detailing
any such additional manufacturing or raw material cost. In the event of a price
increase, such increase will apply to all accepted P.O.s issued by Licensee
after the effective date of the increase. In the event of a price decrease, such
decrease will apply to accepted P.O.s issued by Licensee after the effective
date of such decrease.
 
5.3 New Products. The prices for all New Products shall also be determined by
Reduct from time to time, subject to the same principles as set forth in
Section 5.1, and Section 5.2.
 
5.4 Invoice and Payment Terms.
 
A. Reduct shall invoice Licensee simultaneously with the issuance by Reduct of
an Acceptance Notice. The invoice shall be sent by facsimile transmission or
 
 
11

--------------------------------------------------------------------------------

 
 
electronic mail and shall set forth the Purchase Price of all Products included
in the order, as well as all charges owed by Licensee under this Article V. The
invoice shall also provide Licensee’s P.O. number allocable to the order, a
description of the Products or component parts being manufactured and assembled,
the price of all Products reflected in the P.O. and any discount in effect for
the Products. At that time Reduct shall also provide Licensee with a current
statement of account listing any and all outstanding invoices and any payments
made or credits given since the previous statement.
 
B. Except as otherwise specifically provided in this Article V, specifically
Section 5.2, within thirty (30) days of receipt of Reduct’s invoice, Licensee
shall pay Reduct one hundred percent (100%) of the total Purchase Price for such
Products. All payments to Reduct for the accepted Products in accordance with
this Section 5.4 B shall be made to:
 

     
Beneficiary:
  
Reduct NV
Bank:
  
KBC Bank
Address:
  
Trade Mart, Atomiumsquare 120
 
  
1080 Brussels, Belgium
   
Account No:
  
735-0030244-65
IBAN:
  
BE18 7350 0302 4465
BIC:
  
KREDBEBB
   
US Corresponding Bank:
  
KBC Bank, New York
Account No:
  
026008248
BIC:
  
KREDUS33

 
5.5 10% Fee on Reduct sale until December 31, 2012 (the “Fee”). From the
Effective Date of this Agreement through the Initial Period and until December
31, 2012, and always provided that Licensee (i) meets the purchase quantity
requirements as set forth in Exhibit B hereof and (ii) is not otherwise in
default of any term or condition of this Agreement, for any Probe Product that
Reduct sells directly or indirectly through a Vendor for use in the Territory,
Licensee shall have a right to receive from Reduct the amount equal to 10% of
the Eligible Probe sale or rental price, as applicable (the “Fee”). For the
avoidance of doubt, Licensee shall not be entitled to receive the Fee, if the
License has not converted to an Exclusive License by December 31, 2012 pursuant
to Section 1.1 herein.  If the License has converted to an Exclusive License by
December 31, 2012, Licensee continues to be entitled to this Fee with respect to
such Eligible Probe Products sold directly or indirectly through a vendor for
use in the Territory under Reduct contracts concluded from the Effective Date of
this Agreement through the Initial Period and until December 31, 2012, which
contracts may continue in time during the Exclusive License Period.
 
5.6 Software.  To the extent that Reduct elects, for which it intents to make
all reasonable efforts, to utilize the Geospatial Software (defined in Section
2.3) as a
 
 
12

--------------------------------------------------------------------------------

 
 
 companion product to the sale or rental of its probes, upon the probe’s initial
commercial use (sale or rental), such use shall be made pursuant to software
license with reasonable restrictive terms and Reduct shall pay Licensee a fee of
five percent (5%) of the sales price or rental fee.
 
5.7 Maintenance. The parties shall use their best efforts to enter into a
separate maintenance agreement.
 
ARTICLE VI: TRADEMARKS, TRADE NAMES
 
6.1 Trademarks and Trade Names. Licensee acknowledges that Reduct owns or has
rights to (i) the name Reduct NV and any abbreviations thereof and (ii) any and
all of Reduct’s trademarks, words and design marks, trade names, service marks,
trade logos and trade dress, and foreign language equivalents thereof, including
those described in Schedule 6.1 hereto (collectively, the “Trademarks”), and as
each may be unilaterally amended from time to time (whether registered or not).
Licensee acknowledges the exclusive ownership by Reduct, subject only to the
grant of any exclusive license of Reduct in and to the Trademarks used in
connection with any of the Products. Licensee agrees that it will not procure
either directly or indirectly the registration of any Trademark without the
written consent of Reduct. Licensee recognizes the validity of Reduct’s right to
use the Trademarks and agrees not to take any action that would adversely affect
the Trademarks or their ownership.
 
ARTICLE VII: PATENTS & COPYRIGHTS
 
7.1 Reduct Patents. Licensee acknowledges that Reduct owns or has rights to
patents, pending or otherwise, that relate to the working or form part of the
Products. Schedule 7.1 sets forth a list of all such patents (relevant for the
Territory) as of the date first set forth on this Agreement.
 
7.2 Patent & Copyright Indemnity. Reduct will defend, indemnify and hold
Licensee and its sublicensees and its and their customers harmless from any
claims asserted against, imposed upon or incurred by Licensee or any of its
sublicensees or any of its or their customers arising out of or relating to a
claim that the Products infringe or otherwise violate any patent right, design
patent right, copyright, trade secret or other intellectual property or
proprietary right of any third party. Licensee will promptly notify Reduct of
the claim, furnish Reduct a copy of each writing relating to the claim and give
Reduct authority, information and assistance (at Reduct’s expense) necessary to
defend or settle the claim. Reduct will not settle the claim without Licensee’s
prior written consent if such settlement would adversely affect the rights of
the other Party, such consent not to be unreasonably withheld, conditioned or
delayed. This obligation excludes infringement arising out of (1) unauthorized
use of the Products by Licensee or its customers, (2) post-delivery unauthorized
modifications to the Products by Licensee or its customers; or (3) the
combination, operation or use of the Products with non-Reduct supplied hardware,
software, programs, data or specifications by Licensee or its customers if a
different combination would avoid the infringement; provided such combination is
not
 
 
13

--------------------------------------------------------------------------------

 
 
recommended by Reduct or contemplated by Reduct’s Product documentation. Without
prejudice to the indemnity for any actions brought against Licensee referred to
above, in the event that Reduct becomes aware of any actual or potential
infringement claims, Reduct may at its sole option and discretion (1) procure
for Licensee and its customers the right to use such Product free of any
infringement liability; (2) replace such Products with a non-infringing
substitute; or (3) accept Licensee’s return of the infringing Products in
exchange for a refund of the purchase price paid to Reduct by Licensee
therefore. THIS INDEMNITY IS REDUCT’S SOLE LIABILITY AND LICENSEE’S SOLE REMEDY
FOR INFRINGEMENT OF PATENTS OR COPYRIGHTS.
 
ARTICLE VIII: TERM
 
8.  Subject to earlier termination pursuant to Section 9.1 hereof, the term of
this Agreement (the “Term”) shall start as of the date first listed above and
continue to be in force until 31st December 2020.
 
ARTICLE IX: TERMINATION
 
9.1 Termination For Cause. This Agreement may be terminated for cause as
follows:
 
A. By either party upon ninety (90) days written notice if the other party
commits a material breach of the Agreement and fails to cure the breach within
such ninety (90) day period.
 
B. By Reduct upon thirty (30) days written notice if Licensee: (i) does not make
payment pursuant to Section 5.4 B hereof, or (ii) does not pay the amounts of
Additional Revenue Percentage pursuant to Section 2.2 hereof, or does not order
pursuant to Article IV hereof, or (iii) in accordance with Section 1.8 hereof.
 
C. By either party if the other party ceases to operate its business in the
ordinary course, files for bankruptcy or has an order for relief entered against
it in an involuntary bankruptcy case, files any proceeding for insolvency,
reorganization, liquidation, receivership, or dissolution or there is an
assignment for the benefit of creditors.
 
D. By (i) Licensee upon ninety (90) days written notice if (a) Reduct becomes
generally ineligible to obtain or receive approval for any applicable license or
export / import documents as are necessary to sell and deliver Products and
Component Products; or (b) Licensee’s sales activities are materially affected
by Reduct’s inability to supply the Products and such inability is not due to
events described in Section 14 hereof and Reduct does not remedy the situation
within a reasonable period; (ii) Licensee if Reduct does not make technological
improvements to the Products and as a result of the lack of improvements, the
Products are no longer competitive in the marketplace; or (iii) either party
upon ninety (90) days written notice if the other party assigns this Agreement
in violation of Section 16.5 hereof.
 
 
14

--------------------------------------------------------------------------------

 
 
9.2 Effect of Termination.
 
A. Upon a termination, Licensee shall, within thirty (30) days, pay Reduct (i)
all fees due and unpaid with respect to Products delivered to Licensee, and (ii)
amounts of Additional Revenue Percentage due pursuant to Section 2.2 hereof, and
(iii) amounts of Additional Revenue Percentage accrued pursuant to Section 2.2
hereof, which shall become automatically payable and due in total upon a
termination herein.  Licensee shall following any termination of this Agreement
be allowed to purchase Products at end-user terms and conditions set by Reduct
or a Reduct sub-distributor in the Territory, it being understood that such
terms and conditions shall not include the mechanism of Volume Rebates as
described in Section 5.1.2 hereof. Nothing in this Article shall prevent
Licensee from selling, distributing, marketing and promoting any remaining
inventory to third parties in the Territory.
 
B.  Except in cases of bad faith by either Reduct or Licensee, neither Reduct
nor Licensee shall be liable to the other solely because of the termination of
this Agreement, for compensation, reimbursement, or damages due to the loss of
prospective profits or anticipated sales, or due to loss of goodwill of Reduct
or Licensee. Notwithstanding the foregoing, Licensee and Reduct, as applicable,
shall remain liable for any obligations for (i) unpaid amounts for the Products,
and (ii) unpaid amounts of Additional Revenue Percentage due or payable upon the
termination of this Agreement pursuant to Section 9.2 A hereof, and (iii) unpaid
amounts of Licensee software royalties pursuant to Section 5.6 hereof, and (iv)
for damages, indemnities or other compensations due to breach of this Agreement
prior to the termination.
 
C. The provisions of Sections 1.9, 6.1, 7.1, 9.2, 10.1, 16.1, 16.2, 16.3, 16.4,
16.5, 16.6, 16.7 and Articles XI, XII, XV and XIII shall survive any termination
or expiration of this Agreement.
 
E. In the event either party terminates this Agreement for any reason in
accordance with the terms hereof, Reduct and Licensee shall cooperate to
reassure customers concerning a continuing level of service and support in
accordance with each party’s legal obligations.
 
ARTICLE X: FEES AND TAXES
 
10.1 Payment. Licensee shall be obligated to pay all applicable U.S. import
license fees, customs fees, taxes, tariffs, fees, duties, levies or other
charges that are levied or asserted by any public authority in the Territory,
and Reduct shall be obligated to pay all applicable export license fees, customs
fees, taxes, tariffs, fees, duties, levies or other charges that are levied or
asserted by Belgian authorities with respect to the Products purchased by
Licensee.
 
10.2 Addition to Price. Any tax, tariff, fee, duty, levy or other charge (other
than income taxes imposed upon Reduct) which Reduct may be required by any
applicable law to withhold, collect or pay with respect to the import, sale,
delivery, or use of any Products ordered or delivered to Licensee shall be added
to the price of such products.
 
 
15

--------------------------------------------------------------------------------

 
 
ARTICLE XI: CONFIDENTIALITY
 
11.1 Confidential Information. In negotiating and implementing this Agreement,
either party may transmit to the other party (for the purpose of this clause the
“Recipient”) or Recipient’s representative (for the purpose of this clause the
“Representative”) certain proprietary and confidential information regarding the
Products, maintenance services, marketing strategy and industry analysis (the
“Confidential Information”). Such Confidential Information is defined as all
non-public information which is furnished by the other Party or its
representatives, regardless of whether specifically identified as proprietary or
confidential together with all proprietary data on (without limitation) prices,
volumes, quality, trade secrets, know-how, ideas, principles, analyses,
techniques, methodologies or other documents that may be reasonably regarded as
confidential under the circumstances. A Recipient’s Representative shall be
deemed to include each person that is or becomes (i) a subsidiary or other
affiliate of Recipient, or (ii) an officer, director, employee, partner,
attorney, advisor, accountant, agent or representative of Recipient or any of
Recipient’s subsidiaries or other affiliates. The term person will be broadly
interpreted to include any individual and any corporation, partnership, entity
or group. Each party agrees that, for the Term and a period of three (3) years
after expiration or termination of this Agreement, it shall not disclose any
information it receives from the other party to any other third party, person,
corporation or entity. No party shall use Confidential Information for its own
benefit, except as provided herein. Nothing contained in this Article XI shall
grant or imply any rights by license, estoppel or otherwise. Confidential
Information as used herein does not include information which: (i) is in the
public domain at the time of its disclosure or which enters the public domain at
any time after such disclosure through no fault of the Recipient, (ii) is
generally disclosed to third parties by the disclosing party without
restriction, (iii) is communicated to the Recipient by a third party having a
right to do so without restriction on nondisclosure, or (iv) is approved for
release by written authorization of the other party.
 
11.2 Each party shall safeguard any Confidential Information that it receives
from the other party in connection with this Agreement. No party shall disclose
or cause to be disclosed, any of the Confidential Information, except to those
employees of the parties and any Affiliates who require access to the
Confidential Information to perform under this Agreement.
 
11.3 The parties acknowledge that the disclosing party would not have an
adequate remedy at law for money damages if the covenants contained in this
Article XI were breached. Accordingly, the disclosing party shall be entitled to
an injunction restraining such disclosure and other equitable relief (including
specific performance), without the requirement of posting a bond or other
security.
 
ARTICLE XII: LIMITATION OF LIABILITY AND REMEDIES; INDEMNITY
 
12.1 Liability for Termination. Except as specifically provided in Article IX or
this Section 12.1, neither party shall be liable to the other, by reason of the
termination of this Agreement, for incidental, consequential, punitive, or
special damages, reimbursement or damages due to the loss of prospective profits
or anticipated sales or loss of goodwill.
 
 
16

--------------------------------------------------------------------------------

 
 
12.2 Limitation of Liability for Products and Component Products; Sole Remedy.
Liability under this Agreement is expressly limited to the Purchase Price paid
by Licensee for the Products that are the subject of a dispute or controversy.
IN NO EVENT SHALL THERE BE LIABILITY FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL,
INCIDENTAL OR INDIRECT DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOSS OF
ANTICIPATED PROFITS OR ECONOMIC LOSS, EVEN IF THE OTHER PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE.
 
ARTICLE XIII: WARRANTIES, REPRESENTATIONS AND
RESTRICTIVE COVENANTS
 
13.1 DISCLAIMER. THE FOLLOWING WARRANTIES FOR THE PRODUCTS ARE IN LIEU OF ALL
CONDITIONS OR WARRANTIES EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT
LIMITED TO, ANY IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE AND OF ANY OTHER CONDITION OR WARRANTY OBLIGATION ON
THE PART OF REDUCT OR ITS LICENSORS, WHICH ARE HEREBY EXPRESSLY DISCLAIMED.
 
13.2 Warranty. For twelve (12) months from delivery of Probe Products and
Accessories products to Licensee. Licensee shall be permitted to keep a stock in
amounts as set forth in Exhibit B hereof (the “Permitted Stock”).  The limits on
stock set forth in Exhibit B hereof, exclude Licensee’s Probe Products that (i)
have been rented at least once; and/or (ii) have been designated for delivery to
a specific customer. For such rented and/or specifically customer designated
Probe Products, the parties shall use their best efforts to enter into a
separate warranty agreement. Upon sale out of Licensee’s Permitted Stock to an
end user, Reduct shall activate the Probe Products and enter (i) the end user
details and (ii) Reduct probe related software, whereupon Warranty herein will
commence for twelve months.  Reduct warrants the products to be free from
defects in material and workmanship and the products shall further be free from
material defects, program errors, and non comformities and shall otherwise
perform in all material respects in the manner specified in the documentation
and other written materials provided to Licensee. This warranty will not apply
if repair or parts replacement is required because of accident, neglect, misuse,
transportation, or use which does not conform to the specific or general
instructions of Reduct. This warranty does not apply to any products which have
been opened, disassembled, unsealed or changed except by Reduct, except that the
warranty shall not be affected by any repair or alteration of a product by a
technician skilled by Reduct in the art, employed or retained by Licensee.
 
13.3 Remedy. Licensee’s sole remedy for and Reduct’s liability for warranty
breaches are limited as set forth in Article XII and this Article XIII.
 
13.4 End-User Warranty. Licensee shall be obligated to provide to customers the
original manufacturers’ warranties on defects in materials and workmanship, the
scope and period of which shall be generally consistent with (and for the
avoidance of doubt, not beyond, in excess of or in addition to) Reduct’s
Warranty to Licensee in Section 13.3
 
 
17

--------------------------------------------------------------------------------

 
 
above, including at minimum the following requirements: (a) Licensee shall pass
on the original manufacturers’ warranties that the products are free from
defects in materials and workmanship; and (b) Licensee shall work with Reduct
and the original manufacturer to correct any such defects without any charge.
During the warranty period, the cost of the replacement component parts shall be
borne by Reduct.
 
13.5 Other Representations and Warranties from Reduct. Reduct represents,
warrants and undertakes to Licensee that:
 

 
(i)
save for compliance with the relevant U.S. laws and regulations for export
control in respect of the Products as provided in Section 15.8, no other
licenses, approvals, consents or authorizations are required from any
governmental or regulatory authorities in the U.S. or Belgium, for the execution
and performance by Reduct of its obligations under this Agreement and the sale
and distribution of the products in the Territory;

 

 
(ii)
there is no known breach of third party intellectual property rights in respect
of the products;

 

 
(iii)
the warranties from the original manufacturers of the products (including the
component parts) are valid and subsisting and no waiver or exception has been
granted by Reduct to the original manufacturers. Reduct is not aware of any
events or circumstances which would or are likely to render the warranties void,
invalid or unenforceable, and Reduct will take all actions to assign to or
confer all rights on Licensee in respect of the warranties from the original
manufacturers of the products and the component parts thereof so as to allow the
Licensee to confer the benefits of the warranties to the sub-licensees or
end-users or to directly enforce the warranties against the original
manufacturers; and

 

 
(iv)
Reduct is not aware of any litigation, arbitration proceeding, investigation, or
actual or potential claims from any person (including governmental or regulatory
authorities) concerning the safety, quality or any other aspects of the
products, the component parts, the Trademarks, or the patent rights relating to
the Products and the component parts; and Reduct will notify Licensee in writing
promptly upon it becoming aware of any of such claims.

 
The representations, warranties and undertakings set out in this Section 13.5
shall be deemed repeated on the date of execution of this Agreement, the date of
issuance of the Acceptance Notice and the date of delivery of the relevant
products and/or component parts.
 
13.6 Representations and Warranties from Reduct, Delta Networks and Licensee.
Each of Reduct, Delta Networks and Licensee represent and warrant to the other,
on the date of the execution of this Agreement and for as long as Licensee
remains as Licensee of the products under this Agreement, that:
 

 
(i)
it is a company duly incorporated and organized and is validly existing under
the

 
 
18

--------------------------------------------------------------------------------

 
 

 
 
laws of its jurisdiction of incorporation and has not been dissolved;

 

 
(ii)
it has full power, authority and capacity to enter into this Agreement and to
perform its obligations hereunder. Except as expressly provided herein, all
corporate actions, conditions, approvals and requirements to be taken,
fulfilled, obtained, given and done by it in order to enable it to lawfully and
validly enter into, exercise its rights and perform and comply with its
obligations under this Agreement have been duly and validly taken, fulfilled,
obtained, given and done; and

 

 
(iii)
this Agreement constitutes a legal, valid and binding obligation of the relevant
party, enforceable in accordance with its terms, subject to any rules of law or
equity. The execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby and the fulfillment by such party of the terms,
conditions and provisions hereof will not contravene or violate or result in the
breach (with or without the giving of notice or lapse of time, or both) or
acceleration of any obligations of the relevant party under:

 

 
(1)
any laws applicable to the relevant party;

 

 
(2)
any judgment, order, writ, injunction or decree of any court or of any authority
which is presently applicable to the relevant party;

 

 
(3)
the charter documents of the relevant party or any amendments thereto or
restatements thereof; or

 

 
(4)
the provisions of any agreement, arrangement or understanding to which the
relevant party is a party or by which it is bound.

 
13.7 Restrictive Covenants. Each party covenants with the other that it shall
not, and shall cause its Affiliates not to: (i) during the term of this
Agreement and for a period of two (2) years following termination or expiration
of the term of this Agreement, induce or attempt to induce any director,
officers or key employee of the other party or any of its Affiliates to leave
employment of the other party or its Affiliate, as the case may be; (ii) use or
(insofar as it can reasonably do so) allow to be used, in the case of Licensee
the trade name of “Geospatial”, “Geospatial Mapping Systems”, and in case of
Reduct the trade name of “Reduct” or “DuctRunner” or any other trade name used
by the other party or its Affiliates or any other name intended or likely to be
confused with such trade names. In the event that any of the above restrictions
is void but would be valid if some part of the restrictions were deleted the
restrictions in question shall apply with such modification as may be necessary
to make it valid.
 
ARTICLE XIV: FORCE MAJEURE
 
14.1 Excuse. Should either party be delayed or rendered unable to perform its
obligations, wholly or in part, by an event of Force Majeure (defined below), it
shall give the other party notice of such event and performance shall be
suspended while the effects of the Force Majeure event are continuing. Such
suspension shall in no event exceed a
 
 
19

--------------------------------------------------------------------------------

 
 
maximum of six (6) months. Reduct or Licensee, as the case may be, shall
diligently seek to overcome such event of Force Majeure.
 
14.2 Events of Force Majeure. Neither Reduct nor Licensee shall be responsible
for any delay or failure to perform its obligations due to an event of Force
Majeure. Force Majeure means all events which are beyond the control of the
parties, and which are unforeseen, or if foreseen, unavoidable. Such events of
Force Majeure shall include, by way of example, but not limitation, the
following:
 
(a) Fire, explosion, frost, earthquake, storm, lightning, tide, tidal wave,
floods or perils of the sea, or acts of God;
 
(b) War, revolution, acts of public enemies or of belligerence, sabotage,
blockade or transportation embargoes, insurrection or riot;
 
(c) Labor disputes, strikes, labor shortages or other labor problems at Reduct
or Reduct’s major suppliers of parts and components and sub-assemblies;
 
(d) Shortage of, or an inability of, Reduct or Reduct’s suppliers to obtain raw
materials, production equipment and machinery, sub-assemblies, parts and
components;
 
(e) Expropriation, requisition, confiscation, interference by or restrictions or
onerous regulation imposed by civil or military authorities;
 
(f) Other acts of government or agencies of government, including denials,
onerous restrictions, or undue delays on export licenses or re-export
authorizations; and
 
(g) Other causes or events, similar to those above, beyond the party’s control.
 
ARTICLE XV: RELEASE AND STOCK
 
15.1  Outstanding Agreement Release.  Subject to Geospatial’s implementation of
Geospatial’s undertaking pursuant to Section 15.2 hereof, Reduct, and Delta
Networks shall release Licensee from any and all agreements that are currently
outstanding between the parties, including, but not limited to (i) forgiveness
of any past due license fees and minimum purchase obligations  and (ii) the
cancellation of the warrants to purchase 3,500,000 shares of Licensee common
stock now held by Delta Networks.
 
15.2  In consideration of the foregoing, at the Effective Date and for a term of
eight (8) years thereafter, Geospatial undertakes that Delta Networks shall
receive shares of Geospatial’s common stock in accordance with the terms set
forth in specific in the Subscription And Rights Agreement of same date as the
date of this Agreement.
 
Delta Networks understands that market opportunities may exist where its 18%
stock ownership could compromise the best interests of Licensee.  Under that
circumstance,
 
 
20

--------------------------------------------------------------------------------

 
 
Delta Networks shall enter into reasonable negotiations to restructure its
ownership interest.
 
ARTICLE XVI: GENERAL PROVISIONS
 
16.1 Arm’s Length Relationship of Parties. The relationship between Reduct and
Licensee under this Agreement is that of seller and buyer with the right to
resell. The parties are and will remain independent contractors and are in no
way the other party’s legal representative or agent.
 
16.2 Governing Language. This Agreement is in the English language only, which
shall be controlling in all respects. In the event this Agreement is translated
into the language of the court having jurisdiction over this Agreement, the
English version of this Agreement shall prevail over such translation with
respect to any and all interpretations of this Agreement and with respect to any
interpretation by such court of the intent of the parties hereto.
 
16.3 Severability. If any provision of this Agreement shall be declared void,
invalid, or illegal, the validity or legality of any other provisions and of the
entire Agreement shall not be affected thereby. However, the parties agree that
if any such provision shall be declared void, invalid, or illegal, the parties
will, in good faith, negotiate mutually acceptable substitute provisions.
 
16.4 Notices. Any notice regarding non-performance, breach, termination, or
renewal required or permitted under this Agreement shall be in writing and shall
be deemed to have been duly given (a) when received if personally delivered,
(b) within five (5) days after being sent by registered or certified mail,
return receipt requested, postage prepaid, to the parties  (and to the persons
to whom copies shall be sent), at the respective addresses of the parties set
forth below or at such other address as shall be given by either party to the
other in writing. All other notices may be sent by regular mail or by electronic
means, as may be agreed between the parties:
 

     
If to Reduct:
  
If to Licensee:
   
Otto Ballintijn
  
President
Reduct NV
  
Geospatial Holdings, Inc.
Molenberglei 42
  
229 Howes Run Road
B-2627 Schelle
  
Sarver, PA 16055
Belgium
  
F: +1 724-353-3049
F: +32 (0) 3 541 77 31
  
 
Email: otto.ballintijn@reduct.net
  
     
If to Delta Networks:
  
     
Delta Networks Limited SA
  
 
Rue de Merl 74
  
 
L-2146 Luxembourg
  
 

 
 
21

--------------------------------------------------------------------------------

 
 

     
Attention: Peter Magnus
  
     
With a copy to:
  
     
Jan De Wispelaere
  
 
Fazantenlaan, 13
  
 
B-3050 Oud-Heverlee
  
 
Belgium
  
 

 
16.5 Assignability. This Agreement shall not be assigned or transferred by
either party without the prior written consent of the other party provided that
either party shall have the right to assign its rights, duties and obligations
under this Agreement to any of its subsidiaries or Affiliates provided that if
such entity ceases to be a subsidiary or Affiliate of the assigning party, the
assigning party shall forthwith cause the entity to re-assign this Agreement
back to the assigning party. Notwithstanding the assignment to a subsidiary or
Affiliate, the original party shall remain bound by the terms of this Agreement
and shall procure its subsidiary or Affiliate (as the case may be) to fulfill
its obligations under this Agreement. Any attempted assignment or transfer by
either party without written consent shall be void and of no effect. If consent
is given, this Agreement shall be binding upon and inure to the benefit of the
assigns.
 
16.6 Governing Law and Forum for Disputes. This Agreement shall be governed by
and construed in accordance with the laws of Belgium without regard to any
conflicts of laws or provisions therein. Any and all disputes hereunder shall be
litigated, if at all, in either the Courts of Antwerp or elsewhere in Belgium,
it being the intention of both parties that Belgium serve as the exclusive forum
for dispute resolution. Both parties submit to the jurisdiction of the courts of
Antwerp, and agree that, in the event an action is brought in the courts of
Belgium, they will waive any argument of lack of personal jurisdiction or
improper venue, which they might otherwise have. Both parties waive any rights
to remove any action brought in a court in Belgium, to a court outside that
jurisdiction.
 
16.7 No Waiver. Any failure of either party to enforce at any time, or for any
period of time, any provision of this Agreement, shall not constitute a waiver
of such provision or in any way affect the validity of this Agreement.
 
16.8 Export Control. Both Reduct and Licensee acknowledge that they are
obligated to comply with and will strictly comply with export laws and
regulations of the United States, including but not limited to the Export
Administration regulations that may apply to the Products. Reduct shall provide
all reasonable assistance, including the signing of any official documents, for
the purpose of complying with any such laws and regulations.
 
16.9 Ethical Standards. Neither Reduct nor Licensee, nor any of their members,
employees, representatives, officers, directors, agents, or attorneys shall take
any action which would cause either itself or the other party to this Agreement
to be in violation of the United States Foreign Corrupt Practices Act of 1977
(as amended), 15 U.S.C. §§78 et
 
 
22

--------------------------------------------------------------------------------

 
 
seq., or the anti-corruption legislation of any other country that might be
applicable to the activities of either party under this Agreement.
 
16.10 Governmental Approvals. Reduct and Licensee shall work together in good
faith to ensure that all necessary approvals by governmental authorities for the
execution and performance of this Agreement, including, without limitation,
applicable approvals from exchange control and fair trade authorities and import
and export clearance by the authorities of the origin of the Products and the
Territory, are obtained. Both Reduct and Licensee shall promptly take such
action as may be reasonably necessary to obtain such approvals.
 
16.11 Compliance with Laws. Each party shall be responsible for compliance with
any national, regional and local laws and will obtain and maintain, at its
expense, all permits, licenses and government registrations and requirements
necessary or appropriate to perform hereunder and will, at its own expense, make
all filings with governmental authorities required by applicable law. In the
event that modification to the products or component parts is necessary to
secure the importation of such product or component part into the Territory,
Reduct shall endeavor to make such modification provided that it is technically
and commercially feasible to make such modifications and that the modifications
do not compromise the safety or usability of the products or component parts. If
such modifications would alter the production/sourcing cost of the products or
component parts, the parties will work together in good faith to agree on a
revised price list that would compensate Reduct for the additional costs arising
from such modifications.
 
16.12 Board of Directors.  Messrs. Timothy F. Sutherland, and Governor Tom Ridge
shall join or maintain their standing on the Licensee’s Board of Directors for
the same terms of compensation as Board of Directors currently receive and for a
period of not less than four years if Licensee meets is Exclusive License
Purchase Requirements or for a period of not less than two years if Licensee
does not meet these requirements.
 
16.13  Records and Audit Rights. Both parties shall have the right to conduct
periodic audits of the books and records of the other party as required to
verify compliance with various provisions of the Agreement, including reporting
of revenue subject to royalty payment and costing of Products and services. Both
parties will share annual audited financial statements prepared in accordance
with International Accounting Standards (“IAS”).
 
16.14 Complete Agreement. This Agreement, together with all Schedules and
Exhibits hereto, sets forth the entire Agreement between the parties with
respect to the subject matter hereof and supersedes, with the exception of the
Subscription And Rights Agreement of same date as the date of this Agreement,
all previous communications, representations or agreements, whether oral or
written, with respect to the subject matter hereof, including, but not limited
to the Original Agreement and each of the Amendments. No addition to or
modification of this Agreement shall be binding upon either party unless reduced
to writing and duly executed by the parties hereto in the same manner as the
execution of this Agreement.
 
 
23

--------------------------------------------------------------------------------

 
 
This Agreement shall be binding upon either party unless reduced to writing and
duly executed by the parties hereto in the same manner as the execution of this
Agreement.
 
[Signatures on Following Page]
 
 
24

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the parties hereto have signed this License and Distribution
Agreement as of the date first set forth above.
 
REDUCT, NV
   
By:
/s/ Otto Ballintijn
 
   
Name: 
Otto Ballintijn
   
Title:
Managing Director
   
DELTA NETWORKS, SA
   
By:
/s/ Peter Magnus
   
Name:
Peter Magnus
   
Title:
CEO
   
GEOSPATIAL HOLDINGS, INC
   
By:
/s/ Mark A. Smith
   
Name:
Mark A. Smith
   
Title:
President
   
GEOSPATIAL MAPPING SYSTEMS, INC.
   
By:
/s/ Mark A. Smith
   
Name:
Mark A. Smith
   
Title:
President

 
 
25

--------------------------------------------------------------------------------

 

Exhibit A: Product Pricing and Description
 
This Exhibit contains a description of products, inclusive of the first table
with Probe Products as defined in this Agreement.
 
This Exhibit further contains a column specifying whether a certain type of
product is  eligible for rebates pursuant to Section 5.1.2, Section 5.1.3, and
Section 5.5 of the Agreement, as the case may be.
 
Detailed product description on following pages.

 
26

--------------------------------------------------------------------------------

 

(IMAGE) [img001.jpg]

 
27

--------------------------------------------------------------------------------

 

(IMAGE) [img002.jpg]
 
 
28

--------------------------------------------------------------------------------

 
 
(IMAGE) [img003.jpg]
 
 
29

--------------------------------------------------------------------------------

 
 
(IMAGE) [img004.jpg]
 
(IMAGE) [img005.jpg]
 
 
30

--------------------------------------------------------------------------------

 
 
(IMAGE) [img006.jpg]
 
 
31

--------------------------------------------------------------------------------

 
 
(IMAGE) [img007.jpg]
 
 
32

--------------------------------------------------------------------------------

 
 
(IMAGE) [img008.jpg]
 
 
33

--------------------------------------------------------------------------------

 
 
Exhibit B – Yearly Cumulative and Quarterly Purchase Volumes
 
Subject to the terms of the Agreement hereof, Licensee undertakes to Purchase,
and Reduct hereby accepts to supply, quarterly sales volumes per respective year
as specified hereunder (the “Quarterly Sales Volumes”).
 
Maximum Probes Products in Licensee’s Stock as specified hereunder, and except
as agreed in writing otherwise.
 
For purposes of counting Sales Volumes,  the defined term Probe Products shall
mean any item(s) called “Probe products” from the first table countable as Sales
Volumes as set forth in the third column of  Exhibit A hereof.
 
 
34