EMS Asia Distribution Agreement
*
This EMS Asia Distribution Agreement ("Agreement") is entered into as of
the 29th day of May, 1998 by Effective Management Systems, Inc. ("EMS"), a
Wisconsin corporation with its principal place of business at 12000 West
Park Place, Milwaukee, Wisconsin 53224, and EMS Asia Pacific Limited
("MARKETING PARTNER" or "MP"), a Hong Kong company with its Hong Kong
business address located at 114 Tower II, The Gateway, 25-27 Canton Road,
Kowloon, Hong Kong.
1. Definitions
1.1 "Products" shall mean the EMS computer software system known
as TCM/TM/ and any MES technology based software developed by EMS which
would attach to Baan software ("Software"), and any Improvements to the
Software as defined below. It includes object code and, except with
respect to those portions which it is standard EMS U.S. practice to
withhold, source code. It shall also include the right to any updates
when generally made available from time to time as point releases and the
right to use the development language Synergy', in which the Software is
written, in connection with authorized uses of the Software.
1.2 "Technical Information" shall mean i) the knowledge, experience,
and information of EMS, not in written or printed form, relating to the
servicing, use, or sale of the Products ("Know-How") and ii) any written
materials containing information relating to the servicing, use, or sale
of Products ("Technical Data").
1.3 "Improvements" shall mean any change or modification, whether or
not patentable, copyrightable or susceptible to any other form of
protection, in or relating to the design, manufacture, composition,
assembly or servicing of the Software, including all derivative works
thereof, regardless by whom made or paid for, the ownership of which shall
solely belong to EMS.
1.4 "End Users" shall mean any entity which uses the Software in
their own business for their own internal operational purposes as
authorized under this Agreement.
2. Authority. MP is hereby authorized, on an exclusive basis in the
Territory' (as defined in the attached Exhibit A-1) and subject to the
terms of this Agreement, to i) sell licenses of Software under
circumstances which insure that basic support will be available to the
licensee, ii) solicit orders for services, including support, related to
the Products ( Services'), to be performed by EMS certified providers of
such Services in the Territory, iii) appoint resellers with EMS prior
approval, iv) use the Products in its own internal operations as an End
User without additional cost, but under the same restrictions as any other
user, v) utilize EMS' proprietary translation tool on a non-exclusive
basis and solely in furtherance of this relationship. MP shall use its
best efforts to obtain such sales and orders and otherwise perform its
obligations under this Agreement, and vi) to the extent EMS has such
authority, the right to sell any third party software EMS is selling,
without any EMS markup.
3. End User License. MP agrees to utilize, present to, and obtain the
signature of End Users on the form of EMS license agreement attached to
this Agreement as Exhibit B ("License") as amended from time to time by
EMS in its sole discretion. Except as permitted herein, the terms of the
License may not be changed by MP in any respect without EMS' prior written
consent.
4. License Payment Terms and Cost Payment to EMS.
4.1 MP shall make reasonable effort to require payment terms from
End Users under Licenses calling for full payment due 90 days after
Installation.
4.2 Pursuant to such Licenses, MP shall collect all payments called
for thereunder unless EMS instructs the End User and MP otherwise. MP
shall be obligated to pay EMS the amounts due EMS on each such License
within 30 days of MP's receipt of any such payments and shall make every
reasonable effort to enforce each License Agreement's payment terms.
4.3 The License fee amount due EMS shall, unless otherwise agreed in
writing, be the percentage set forth on Exhibit A-2 for the Products at
the prices set forth on the applicable License, regardless of the actual
License payments collected. However, MP may not manipulate the price of
Services, beyond market standard such that the price of a License has been
reduced below market standard, thereby reducing the fee to EMS.
5. MARKETING PARTNER Retention. MP shall retain as applicable i) on all
License payments received, an amount equal to the difference between the
actual License payment amount and the amount it owes EMS, and ii) on all
Services it sells the actual Services payments it receives.
6. Business Plan and Forecast. The parties shall annually develop a
mutually acceptable Business plan to be reviewed quarterly which shall
include a sales level performance target, the first of which is set forth
on Exhibit A-3. Such target is a forecast of payments to be received by
EMS during each year of this Agreement.
7. EMS Obligations.
7.1 Liaison. Except as specifically advised otherwise, all
requests, communications, and issues relating to EMS's responsibilities
under this Agreement, as well as with third party software vendors whose
products are sublicensed pursuant to this Agreement, will be administered
directly by EMS.
7.2 MARKETING PARTNER Support.
7.2.1 EMS will provide, at standard charge, technical phone, fax,
and E-mail support through EMS' international help desk offices in
Milwaukee, WI.
7.2.2 MP may purchase EMS consulting and training services from EMS
at the then current daily charge for such services plus travel expenses.
7.2.3 EMS will provide, at no cost to MP, one set of available
English training videos.
7.3 Demonstration Licenses. EMS will make available, at no charge
to MP, a reasonable number of run time demonstration licenses for the
Products for use on EMS supported hardware configurations.
7.4 Promotional Materials and International Customer Conference.
EMS will make available, at no charge to MP, one copy of standard released
EMS promotional literature art work, and three admissions to each EMS'
International Customer Conference and Technology Seminar which is held
annually in the United States. Participants are responsible for all their
travel and related expenses.
7.5 Product and Market Information Updates. EMS will make
available, at no charge to MP, by hard copy, monthly, information on the
Products and EMS' markets, and information on the Products and the
company.
7.6 Technical Certification. EMS will make available a technical
support personnel certification program, and agrees to assist MP in the
certification of its personnel.
7.7 Business and Marketing Consultation. EMS will share appropriate
reference information profiles and competitive information with MP.
7.8 Documentation. EMS will provide, at no charge to MP, two sets
of available user and technical documentation in English, and to the
extent available, in local language. The technical documentation includes
training seminar material. Additional copies of the documentation may be
purchased at EMS cost. English language user documentation, in electronic
or hard copy form, as released for Asia use, will be made available with
each license purchased.
7.9 Existing Market Penetration Resources. EMS shall provide to MP
such existing market materials and information, as set forth on Exhibit A-
4, as will assist MP in maintaining and penetrating the Territory.
8. MARKETING PARTNER Obligations.
8.1 Order Handling. MP shall place all orders for Products with
EMS from a location in the USA in US dollars or upcharge minimum License
Payments by any local country required tax or royalty withholding. Any
and all taxes or other fees, costs, or expenses relating to the purchase,
export, transfer, and import of the Products from EMS to final location
shall be the sole responsibility of MP.
8.2. Non-Competition. MP may not offer products which compete with
the Products or Services to any prospect or account registered to MP.
During the Term, MP agrees not to directly or indirectly develop or market
any product which competes with the Software, and for Five years
thereafter not to develop such a product. Not withstanding this
limitation, MP may enter into a distribution arrangement with Baan for its
application software product in the Territory at any time.
8.3 MARKETING PARTNER Personnel, Offices, and Capabilities. MP
represents that it has and will use experienced software professionals
familiar with the market and its needs with respect to sales and service
personnel, and agrees to have the necessary qualified full time dedicated
sales personnel and systems engineers available in order to effectively
perform its obligations under this Agreement in support of the Business
Plan. MP also agrees to maintain at least one office in a strategic area
of the Territory and agrees to provide sales and pre-sales services to
prospects with demonstrations utilizing appropriate hardware and software.
8.4 Expenses and Taxes. MP agrees to pay for all travel and related
expenses of any EMS pre-sales services requested by MP and any and all
local taxes and duties relating to MP's responsibilities and obligations.
8.5 Account Management. MP shall act as Account Manager during each
License implementation period. Such responsibility shall include first
line response and liaison to all inquiries from the End User relating to
EMS or the Products.
8.6 Representing EMS and the Products, and Software Security. MP
shall appropriately represent EMS and the Products by limiting all of its
statements, whether written or verbal, relating to EMS or the Products to
those set forth in the current Technical Data and other written technical
and marketing literature provided to MP by EMS pursuant to this Agreement.
MP shall install and activate Software security for each license.
8.7 Territory, Prospect, and Account Management Plan. As part of
its regular business plan activities, MP agrees to develop and adhere to
an appropriate Territory, Prospect, and Account Management Plan.
8.8 End User Support. MP acknowledges it has full responsibility to
support its End Users, agrees to work to ensure the highest level of
customer satisfaction possible, and only market and sell the Products to
prospects where there is a good fit with the prospect's needs.
8.9 Localization. MP shall be responsible to perform, at its own
expense, and at all times during the Term of this Agreement, the
appropriate and necessary work to adapt or improve and enhance the
Products, as updated and revised by EMS from time to time, for local
language, currency, and any other localization needs, such that the
Products become and remain competitive in the Territory for fully
integrated manufacturing operations computer software systems. Upon
release by MP, MP shall furnish to EMS a copy of all such localized
Products and corresponding Technical Data.
8.10 Existing Market Obligations Assumption. MP shall assume the
existing service and assistance obligations and relationship
responsibilities to customers and prospects in the Territory in order to
provide a smooth transition to MP from preexisting conditions while
maintaining a positive attitude toward and perception of EMS and the
Products.
9. Accounting, Record-keeping, and Confidentiality.
9.1 Maintenance of Records and Review. The MP shall maintain all
appropriate books, records, and correspondence with respect to the
performance of its obligations hereunder, and EMS shall have the right,
upon reasonable request, to review or have reviewed, at its own expense,
such materials.
9.2 Confidentiality. MP acknowledges that all the Products and
Technical Information, and information relating to EMS' business,
marketing, and future plans, are and constitute valuable assets and Trade
Secrets of EMS which are proprietary to EMS and may also be subject to an
assertion of confidentiality by one or more licensors of EMS
("Confidential Information"). Accordingly, MP agrees that any disclosure
of any nature it may make of Confidential Information would constitute a
serious and material loss to EMS and is good cause for immediate
termination. Likewise, EMS acknowledges that it may receive similar
proprietary information from MP and, therefore, each agrees; i) not to
disclose any Confidential Information to any employee, agent, or other
party, including a prospect, except as permitted by and in furtherance of
this Agreement, and then only to such people or entities who have a need
to know and are subject to a Confidentiality Agreement' in the form
approved by the other party from time to time and attached in current
approved form as Exhibit C, and ii) to take all reasonable precautions to
prevent unauthorized parties from discovering, acquiring, or using
Confidential Information.
9.3 Survival of Confidentiality. Notwithstanding any other
provisions of this Agreement, the obligations of confidentiality of this
paragraph shall survive the termination or expiration of this Agreement.
10. Term.
10.1 Initial Term. The initial Term of this Agreement is three years
unless earlier terminated. This Agreement may be earlier terminated by
either party if the other materially breaches it and does not cure the
breach within 30 days after written notice. It shall be considered a
material breach and there shall be no cure period if Confidentiality has
been breached by either party, either party becomes insolvent, MP violates
or permits the violation of EMS's Software security system, or MP fails to
achieve its annual Business Plan's performance target as set forth in
Exhibit A-3 and the next two quarters, leveled, of the following year's
annual performance target.
10.2 Subsequent Terms. After the initial Term, this Agreement may be
renewed for one year Terms if both parties mutually agree to do so in
writing prior the expiration of the current Term.
11. Disputes. All disputes, controversies, or differences which may arise
between the parties which cannot be settled amicably by conciliation
between them shall be heard, settled, and decided by arbitration in
Milwaukee, WI in accordance with the Commercial Rules of American
Arbitration Association, and under the laws of the State of Wisconsin,
USA Such arbitration shall be conducted in English. Each party must
supply all documents in English and will have interpreters available if
necessary. The decision of the arbitrator will be accepted as final and
binding upon the parties, and enforceable in any court of competent
jurisdiction. Each party will bear its own costs of arbitration pending
the award of the arbitrator, which award may include costs.
12. Export Control. The Parties acknowledge that the export and re-export
of the Technical Information and the Software may become subject to United
States (USA) export controls. MP shall comply at all times with any
applicable USA export controls and furnish and supply such information to
EMS as EMS may reasonably request in order to satisfy its obligations
under any such USA law.
13. Limitation on Remedies. Under no circumstances shall either party be
liable to the other party by reason of breach, termination, or non-renewal
of this Agreement for any consequential, general, or special damages even
though the Parties may be aware of the possibility of such damages.
14. Miscellaneous.
14.1 Independence and Authority. The parties hereto are independent
contractors solely responsible for their own business operation and
compliance obligations. Each represents to the other full authority to
enter into this Agreement and all proper and required authority to perform
its obligations hereunder.
14.2 Severability. If any provision of this Agreement shall be
deemed illegal or unenforceable, such illegality or unenforceability shall
not affect the validity and enforceability of any legal and enforceable
provisions hereof, this Agreement shall be construed as if such illegal
and unenforceable provisions had not been inserted herein, unless such
illegality or unenforceability shall destroy the Agreement's underlying
business purpose.
14.3 Assignment. This Agreement may not be assigned in whole or in
part by any party hereto without the prior written consent of all parties.
14.4 Entire Agreement. This Agreement, including the referenced
and attached Exhibits, constitutes the entire agreement between the
Parties with respect to the matters herein and supersedes all prior
understandings and agreements relating to such matters. No modification
of this Agreement will be effective unless in writing signed by both
Parties and referencing this Agreement. Except as otherwise set forth,
all communications and information called for to be provided one party to
the other, shall be in English.
14.5 Non-Recruitment. Both parties agree, during the Term and for a
one year period thereafter, not to recruit or hire, without the written
approval of the other, any employee or agent acting on behalf of the other
during the Term.
Agreed to as of the above date by:
EMS Asia Pacific Limited
By __________________________________________
Donald W. Vahlsing, Director
Agreed to and Accepted at Milwaukee, WI by:
Effective Management Systems, Inc.
By __________________________________________
Michael D. Dunham, President
Exhibit A
to EMS Asia Distribution Agreement
dated 5/29/98
1. (P 2.0) TERRITORY shall mean:
Korea, Japan, China, Taiwan, the South East Asia countries (including
Singapore, Malaysia, Thailand, and Vietnam), Indonesia, Philippines,
Australia, and New Zealand
2. (P 4.3) MARKETING PARTNER'S required License fee payments to EMS is
composed of a) $2,000 per month for 30 months following MP achieving
Gross Margin Base, except that, if terminated early by EMS for breach by
MP, any remaining payments shall be immediately due and, if terminated by
MP for breach by EMS, no further payments shall thereafter be due, and b)
the following % of License payments called for, as collected, starting the
month following MP achieving Gross Margin Base:
first 12 months: . . . . . . . . . 20 %
Next 12 months: . . . . . . . . . 25 %
thereafter: . . . . . . . . . . . 30 %
where 'Gross Margin' is calculated according to U.S. gaap, consistently
applied with EMS past practices, and Gross Margin Base' equals the
earlier to occur of $100,000 for three consecutive quarters or $200,000 in
any one quarter.
3. (P 6.0) MARKETING PARTNER'S forecast of Payments to be actually
received by MARKETING PARTNER during the Term is:
year 1 . . . . . . . . . . . . . . . . $_________________.
year 2 . . . . . . . . . . . . . . . . $_________________.
year 3 . . . . . . . . . . . . . . . . $_________________.
4. (P 7.9) Existing Market Resources to be provided by EMS to MP:
Existing receivables, fixed assets, contracts rights and obligations,
leases, cash amounts which EMS deems reasonable for these purposes, all as
listed in the Attachment to this Exhibit, and other non material
assistance in establishing and maintaining government permissions and
registrations, personal relationships with existing vendors, suppliers,
and qualified personnel previously performing and providing the selling
and servicing obligations required under this Agreement, all to maintain
and enhance the Products' market position and growth objectives envisioned
by this Agreement.
________ ________
(Exhibit A initials)
Exhibit B
to EMS Asia Distribution Agreement
dated 5/29/98
(P 3.0) The approved EMS End User License Agreement to be used by
MARKETING PARTNER hereunder in current form is attached hereto or will be
provided.
________ ________
(Exhibit B initials)
Exhibit C
to EMS Asia Distribution Agreement
dated 5/29/98
(P 9.2) Confidentiality Agreements (as currently approved by the
respective parties) are attached hereto or will be provided)
_________ _________
(Exhibit C initials)