EXHIBIT 10.8
COMMUNICATIONS SYSTEMS INTERNATIONAL, INC.
DISTRIBUTOR AGREEMENT
______________________________________________________________________________
THIS AGREEMENT is made and entered into by and between COMMUNICATIONS
SYSTEMS INTERNATIONAL, INC., a Colorado corporation ("CSI"), whose address is 8
South Nevada Avenue, Suite 101, Colorado Springs, Colorado 80903, and
______________________________________ ("Distributor"), whose address is
_________________________________________________________________.
I. AGENCY RELATIONSHIP
The following are the basic terms of the Distributor Agreement, which terms
are supplemented with the "Additional Provisions" which are attached hereto.
1.1 Engagement of Distributor. CSI hereby agrees to engage Distributor as
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CSI's agent for selling all of CSI's products and services, whether currently
available or developed and provided in the future. Distributor hereby accepts
engagement as CSI's agent for selling such services, which may include Callback
Services, Phone Debit Cards and other services designated by CSI, in accordance
with the terms and conditions contained in this Agreement.
1.2 Term and Renewal. The term of this Agreement shall commence as of the
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date that it has been signed by an authorized officer of CSI, and shall continue
in effect until ____________, 199_, unless sooner terminated in accordance with
the provisions of this Agreement. The term of this Agreement may be renewed for
______ additional terms of _____ years each upon strict compliance with the
Additional Provisions.
1.3 Fees and Costs. The rights granted to Distributor by this Agreement
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are granted free of charge, and no distributor fee shall be payable by
Distributor. Distributor shall be responsible for paying all expenses relating
to the establishment and conduct of the business contemplated by this
Agreement, except as specifically set forth otherwise in this Agreement.
1.4 Authority of Agent. Distributor shall have the authority to solicit
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offers from potential customers to subscribe to or purchase CSI's products and
services. Distributor has no right to enter into a contract on behalf of CSI or
to bind CSI in any manner not expressly authorized under this Agreement.
1.5 Territory. Distributor may exercise the rights granted by this
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Agreement and market CSI products and services throughout _____________.
Distributor shall not be entitled to market CSI products and services anywhere
else in the world without the execution by CSI of an Addendum to this Agreement
specifying such additional approved territory.
1.6 Status of Parties. CSI and Distributor agree that their relationship
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is that of principal
and agent for the limited purpose of selling CSI's products and services in
accordance with this Agreement. Distributor is an independent contractor and not
an employee, partner, or joint venturer of or with CSI.
II. PAYMENT AND COLLECTION TERMS
2.1 Customer Orders, Billing and Collection, and Customer Service. All
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customer orders shall be processed on CSI's standard form Service Agreement
which shall be executed by Distributor and the customer. CSI will maintain
responsibility to bill and collect from all customers. Distributor shall be
responsible for all direct customer service and contact with Distributor's
customers. These customer-oriented responsibilities are defined with more
specificity in the Additional Provisions attached hereto.
III. DISTRIBUTOR'S COMPENSATION
3.1 Commission Rate. CSI shall pay to Distributor within fifteen days of
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the second month following its receipt of Distributor's Collected Revenues (as
defined in the Additional Provisions) ____________ percent (___%) of
Distributor's Collected Revenues for such month of collections.
IV. MARKETING STANDARDS
4.1 Marketing and Advertising Standards. Distributor shall comply with
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the marketing standards, advertising requirements, and other requirements as set
forth in Section IV of the Additional Provisions.
4.2 Performance Standards. Within the earlier of: (i) _______ months
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after the effective date of this Agreement; or (ii) ______ months after
Distributor has obtained its license from _________, Distributor must achieve
and maintain thereafter a minimum of $_______ U.S. Dollars per month in Callback
Services billing and collections. The failure to meet the foregoing billing
requirements in a timely manner will be a material breach of this Agreement and
shall give CSI the right to terminate this Agreement upon ______ days' written
notice of termination to Distributor.
V. ADDITIONAL PROVISIONS
This Agreement shall include all of the terms and conditions contained in
the attached "Additional Provisions" which are hereby incorporated herein by
this reference.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year so indicated.
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CSI:
COMMUNICATIONS SYSTEMS
INTERNATIONAL, INC., a Colorado corporation
By:___________________________________________
Title:_______________________________________________
Date:___________________________________________
By:___________________________________________
Title:_______________________________________________
Date:___________________________________________
DISTRIBUTOR:
By:___________________________________________
Title:_______________________________________________
Date:___________________________________________
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DISTRIBUTOR AGREEMENT
ADDITIONAL PROVISIONS
The following Additional Provisions are attached to and made a part of that
certain Distributor Agreement between Communications Systems International, Inc.
("CSI") and ____________________________ ("Distributor").
CSI is in the business of providing international long distance
telecommunications services. Such services include, but are not limited to,
callback services consisting of CSI's normal automated callback services that
route international long distance calls through Colorado Springs, Colorado, at
United States long distance rates, "Tina" boxes for routing international long
distance calls through Colorado Springs, Colorado, and an X.25 network for
routing telecommunications (collectively referred to as "Callback Services"),
and long distance telephone debit cards ("Phone Debit Cards"). CSI may develop
new and additional products and services during the term of this Agreement.
Distributor wishes to represent CSI and market CSI's products and services, and,
in doing so, is willing to utilize CSI's standards, methods and operating
procedures, as the same are more specifically described in this Agreement. From
time to time, CSI may make reasonable changes in the standards, methods and
operating procedures, and Distributor agrees to comply with such changes within
thirty days after it has received written notice of the changes so long as such
changes do not unreasonably burden Distributor and do not materially conflict
with the spirit and intent of this Agreement. CSI is willing to engage
Distributor as its agent pursuant to the terms and conditions set forth in this
Agreement.
ARTICLE I
AGENCY RELATIONSHIP
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1.1 Renewal.
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(a) Renewal. If Distributor has complied with all of the terms and
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conditions of this Agreement and has complied with the marketing standards
established by CSI for its agents throughout the term of this Agreement, then,
at the expiration of the original term, this Agreement may be renewed, but only
if:
(1) Distributor agrees to comply with CSI's standards for agents
then in effect, subject to the limitations set forth in the second paragraph of
Page 1 of this Agreement, and agrees to make other changes in products,
services, marketing and business practices to be consistent with the then
current requirements and practices of CSI; and
(2) Distributor provides CSI with written notice of
Distributor's intention to renew at least six months prior to expiration of the
original term of this Agreement. Within 30 days after receipt of such notice of
Distributor's intention to renew, CSI shall provide Distributor with a statement
as to whether it is entitled to renew. If Distributor is entitled to renew, this
Agreement will be extended for the additional period on the same terms and
conditions as are contained in this Agreement. There shall be no renewal fee. If
Distributor desires any changes in this Agreement, such changes will only be
effective upon agreement by both Distributor and CSI, and such agreement must be
reached at least thirty days prior to the end of the original term.
1.2 Fees and Costs. Expenses payable by Distributor include but are not
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limited to travel, entertainment, supplies, postage, shipping and any and all
compensation to agents and employees of Distributor. Any charges incurred by
Distributor for using any of CSI's vendor accounts, such as overnight delivery
services, shall be charged back to Distributor by CSI and Distributor shall
promptly pay CSI for any and all such charges.
1.3 Authority of Agent. Offers from customers solicited by Distributor
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shall be subject to acceptance by CSI and no contract for the provision of
products or services shall exist until CSI and the customer have entered into an
agreement for services pursuant to Section 2.1 of this Agreement. CSI has the
right, in its sole discretion, to reject any customer who is not creditworthy or
who is not legally eligible to receive certain CSI products or services.
1.4 Limitation on Liability. Distributor has no power or authority to
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bind or obligate CSI to third parties. CSI shall have no liability whatsoever
for the acts and omissions of Distributor, and Distributor shall have no
liability whatsoever for the acts and omissions of CSI.
ARTICLE II
PAYMENT AND COLLECTION TERMS
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2.1 Customer Orders. If a customer obtained by Distributor wishes to
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purchase any of CSI's products and services, the Distributor and the customer
shall both sign CSI's standard form service agreement ( a "Service Agreement"),
which CSI will provide to Distributor. Distributor shall submit the signed
Service Agreement to CSI. Every order must be approved by CSI before the account
becomes effective, and the account will become effective only when CSI signs the
Service Agreement. Prior to the time CSI signs the Service Agreement, no
commission shall be paid to Distributor.
2.2 Billing and Collection. CSI, and not Distributor, will be responsible
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for all billing of and collection from customers relating to this
Initial _____
Agreement. CSI will directly bill all customers obtained by Distributor for all
products and services used by those customers. Distributor shall have no right
or obligation to bill or collect any payments from customers or potential
customers for products or services provided or to be provided under this
Agreement. Distributor will not represent to potential or existing customers
that it has the right to bill or collect from customers, and will not so bill or
collect. In the event that Distributor collects or attempts to collect fees from
customers, CSI may promptly terminate this Agreement without notice to
Distributor. CSI will provide Distributor with a list of delinquent accounts
during the middle of the billing cycle each month in order to allow Distributor
to inquire as to problems customers may be experiencing or to monitor delinquent
accounts.
2.3 Customer Service. Distributor shall be responsible for soliciting and
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servicing customers, and for all contact with customers. Distributor's duties
prior to obtaining orders include educating and informing potential customers of
the products and services of CSI. CSI shall be responsible for all billing and
collection responsibilities after CSI has signed a Service Agreement with that
customer. After acceptance of a Service Agreement by CSI, Distributor shall be
obligated only to provide ongoing customer service.
ARTICLE III
DISTRIBUTOR'S COMPENSATION
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3.1 Distributor's Commissions. Commissions will be paid to Distributor by
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CSI based on the amount of revenue actually collected and received by CSI from
customers who have been solicited by Distributor and have entered into a Service
Agreement with Distributor. (Such revenues from customers obtained by
Distributor that are received and collected by CSI are referred to in this
Agreement as "Distributor's Collected Revenues.") CSI shall pay commissions
owed to Distributor no later than the 15th day of the second month after CSI
receives the Distributor's Collected Revenues on which the commissions are
based. For example, CSI shall pay the commissions owed for Distributor's
Collected Revenues received by CSI in the month of May no later than July 15.
CSI's obligation to pay commissions earned pursuant to this Section 3.1 shall
survive such termination.
3.2 Residual Commissions. After the end of the term of this Agreement,
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CSI shall continue to pay to Distributor commissions equal to ___ percent of
Distributor's Collected Revenues received by CSI, with respect to telephone
services provided during the term of this Agreement. Once CSI has paid
commission equal to ___ percent of Distributor's Collected Revenues received by
CSI, Distributor shall have no right to receive, and C. S. International shall
have no obligation to pay, any additional commissions. CSI's obligation to pay
commissions in accordance with this Section 3.2 shall survive termination of
this Agreement, unless CSI terminates this Agreement because of a default by
Distributor, as provided in Section 7.2.
ARTICLE IV
MARKETING STANDARDS
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4.1 Sales Literature; Assistance. CSI will provide Distributor with an
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understanding of CSI's products and services and assistance in selling these
products and services. Assistance will not include expenses for brochures,
stationery, sales scripts, rate sheets and marketing letters, all of which shall
be produced at the expense of Distributor. Distributor will also pay all other
marketing and advertising expenses in connection with all of CSI's products and
services.
4.2 Demo Lines. To assist Distributor in marketing Callback Services, CSI
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will make a long distance calling demonstration line (a "Demo Line") available
to Distributor on the following basis:
(a) Distributor must supply CSI with an active credit card account to
assure payment of all charges on the Demo Line;
(b) Distributor will receive a $50.00 per month credit against
charges on the Demo Line for each $50,000.00 per month billed to customers
obtained by Distributor, not to exceed a total credit of $500.00 per month; and
(c) Each $50.00 credit earned may be applied to only one Demo Line.
4.3 Trade Names and Trademarks. During the term of this Agreement,
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Distributor shall use the trade names, trademarks and service marks of CSI in
connection with the marketing and sale of products and services pursuant to this
Agreement, subject to the approval of C.S.. International as provided below in
Section 4.4. All trade names, trademarks and service marks owned or employed by
CSI or any subsidiary or affiliate of CSI used or employed in CSI's business
operations shall remain the sole and exclusive property of CSI, or such
subsidiary or affiliate. No title or rights whatsoever to any of CSI's trade
names, trademarks, service marks and other intellectual property shall pass to
Distributor by this Agreement or any actions undertaken pursuant to this
Agreement. Distributor shall immediately discontinue any use of CSI's marks and
names upon termination of this Agreement.
4.4 Advertising. From time to time, CSI shall establish standards for all
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advertising, promotional and customer training materials used or distributed by
Distributor that relate to CSI's products and services, and Distributor, at its
expense, shall comply with such standards. The current standards for
advertising, promotional and customer training materials are described with more
particularity in Exhibit A attached hereto. Distributor
Initial _____
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agrees to comply with any changes to such standards as CSI may propose from time
to time within thirty days after written notice of such changes is given by CSI
to Distributor, provided that the changes do not unreasonably burden Distributor
and do not involve a substantial increase in the cost of providing such
materials. Distributor shall provide to CSI, for its prior review and written
approval, all promotional, advertising or other materials or activity using or
displaying CSI's trade name, trademarks, service marks, products or services or
referring to Distributor as an authorized agent, branch office or distributor of
CSI.
4.5 Presentation of Products, Services and Rates. Distributor will
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present CSI and CSI's products and services to potential customers in a
responsible way, never making claims of greater savings or service than actually
exist. Distributor will adhere to the appropriate CSI rate and price structure
applicable at the time of soliciting customers unless a different structure is
agreed to in writing by CSI. Distributor shall quote prices for CSI's products
and services only at the levels authorized by CSI. These rates may be revised
from time to time by CSI in accordance with CSI's generally applicable criteria
and as required by the prevailing rate schedules. CSI will inform Distributor
of any changes in its rates in a timely manner such that Distributor may
continue to accurately represent the services to the public. CSI shall have the
absolute right to establish the long distance rates, payment terms and
advertising and promotional policies for its services. Distributor shall comply
with all of CSI's customer service procedures regarding CSI's products and
services.
4.6 Distributor's Agents and Employees. Distributor has the right to hire
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and train agents and employees working for Distributor under the following terms
and conditions: (a) Distributor shall disclose to each agent and employee the
relationship between Distributor and CSI; (b) Distributor shall require all
agents and employees of Distributor to abide by all of the terms and conditions
of this Agreement; (c) CSI will not actively solicit any of Distributor's agents
or employees to become agents of CSI; (d) all customers obtained by
Distributor's agents or employees will be customers of Distributor and will not
be allowed to become customers of the agent or employee without Distributor's
consent; (e) Distributor's agents and employees shall not be considered agents
or employees of CSI for any purpose whatsoever; (f) CSI will provide Distributor
with a monthly accounting of sales made by Distributor's agents; and (g)
Distributor shall be solely responsible for paying any and all compensation owed
to its agents or employees, together with any and all taxes associated with such
compensation. CSI shall have no obligation whatsoever to Distributor's agents
and employees. All agents engaged by Distributor will be assigned their own
account numbers by CSI solely for the purpose of accounting for sales made by
such agents so that Distributor may calculate any commissions payable by
Distributor.
ARTICLE V
ASSIGNMENT
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5.1 Assignment by CSI. This Agreement may be assigned by CSI to an
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affiliate or successor of CSI or any other firm or entity capable of performing
CSI's obligations under this Agreement with the approval of Distributor, unless
CSI determines, in its reasonable discretion, that the assignment is likely to
materially and adversely affect Distributor's ability to perform its obligations
under this Agreement, or if the assignee is not able to provide reasonably
competitive rates, in which case Distributor shall have the right to deliver
written notice to CSI of its refusal to permit the assignment within twenty days
after Distributor has received notice of the proposed assignment. The failure
to deliver such notice within ten days shall be deemed a waiver of Distributor's
right to reject the proposed assignment. Such assignment will not release CSI
from its obligations under this Agreement.
5.2 Assignment by Distributor. This Agreement may not be assigned by
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Distributor to any other person or entity without the prior written approval of
CSI, which approval may be withheld or granted in CSI's sole and absolute
discretion.
ARTICLE VI
NON-COMPETITION
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6.1 Non-Competition. Distributor understands, acknowledges and agrees
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that, during the term of this Agreement, and for a period of three years
thereafter, Distributor shall not undertake any conduct or activity or engage in
any business, either directly or indirectly, that competes in any way with the
business of CSI, and Distributor shall not contract with, or provide money,
goods or services to, any other person or entity who is engaged in the business
of providing international long distance telecommunications or otherwise
competes with CSI. Distributor, for its own account, may engage in other
businesses and activities that are not in competition with CSI, provided that
such activities do not interfere with Distributor's performance of its
obligations under this Agreement.
Notwithstanding the foregoing, in the event CSI is unable to supply reasonably
competitive services to customers of Distributor, Distributor shall give written
notice of such fact to CSI. If CSI has not improved its services such that its
services are reasonably competitive in the market within thirty days after the
receipt of such written notice, Distributor shall have the right to terminate
this Agreement by delivering written notice of termination to CSI within another
thirty days after the end of CSI's thirty day "cure" period. Upon the
termination pursuant to this paragraph, the provisions of this Article VI
concerning non-competition occurring after the term of this Agreement will not
be applicable.
6.2 Proprietary Information. During the term of this Agreement and for a
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period of ten years thereafter, Distributor shall retain in confidence, and
shall require its directors, officers, employees, consultants, representatives
and agents to retain in confidence, any and all Proprietary Information (as
defined below). The parties agree that Proprietary Information constitutes
trade secrets of CSI and that the disclosure of Proprietary
Initial _____
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Information in contravention of this Agreement would constitute an unfair trade
practice. "Proprietary Information" means information relating to the business
and operations of CSI or its subsidiaries, affiliates, clients, customers,
consultants and agents, including, but not limited to, all customer lists and
all technical, marketing and financial information relating thereto, any
information relating to the pricing, methods, processes, financial data, lists,
apparatus, statistics, programs, research, development or related information of
CSI, its subsidiaries or affiliates, or CSI's clients and customers, concerning
past, present or future business activities or operations of said entities or
the results of the provision of services performed by Distributor under this
Agreement. Distributor shall take reasonable steps to prevent unauthorized
disclosure or misuse of Proprietary Information by any of its agents or
employees or by any other person having access to such information.
6.3 No Disclosure of Terms of Agreement. Neither CSI nor Distributor
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shall disclose the terms and conditions of this Agreement to any person or
entity without the prior written consent of the other party.
ARTICLE VII
DEFAULT, REMEDIES AND TERMINATION
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7.1 Events of Default. Each of the following shall constitute an "Event
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of Default": (a) the failure of Distributor to comply with or to satisfy any of
the terms of this Agreement; and (b) the violation or failure by either party to
comply with any term or provision of this Agreement and the failure of such
defaulting party to cure such violation or failure within thirty days after
receiving written notice of the violation or failure.
7.2 Remedies. Upon the occurrence of an Event of Default, the
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nondefaulting party shall have all rights and remedies expressly set forth in
this Agreement and all other rights and remedies available at law or in equity,
including but not limited to specific performance, damages, injunctive relief
and termination of this Agreement. If the nondefaulting party elects to
terminate this Agreement because of Event of Default caused by the other party,
the nondefaulting party may terminate this Agreement by delivering written
notice of termination to the defaulting party at least thirty days prior to the
effective date of termination. CSI's obligation to pay commissions under
Section 3.1 that have been earned prior to termination shall survive
termination, but CSI's termination pursuant to this Section 7.2 shall release
the parties from all other obligations to each other, including CSI's obligation
to pay residual commissions under Section 3.2.
7.3 Regulatory Approval. This Agreement shall terminate automatically and
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without liability or further obligation on the part of either party to the other
party if, by order, act or omission of any court or government agency with
regulatory authority over CSI or long distance telephone services, or as the
result of the revocation or expiration of any required licenses or other
authority, CSI is denied or loses the right, power or authority to provide
Callback Services as contemplated by this Agreement. If such authority is lost,
suspended or not renewed with regard to only part of Callback Services or only
within a certain geographic area or areas where Callback Services have been
provided, then this Agreement shall terminate automatically and without
liability or further obligation on the part of either party to the other party
with regard only to the Callback Service or area affected. The provisions of
this Section 7.3 shall only apply to Callback Services; other services shall not
be affected by the terms of this Section 7.3. In the event of a termination
pursuant to this Section 7.3, CSI shall continue to have the obligation to pay
to Distributor the commissions required to be paid pursuant to Section 3.1 and
3.2 of this Agreement.
7.4 Fees and Expenses. In any action to enforce this Agreement, or to
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collect damages on account of any Event of Default, the prevailing party shall,
in addition to any damages and other relief awarded, be entitled to collect all
of its costs in such action, including court costs, costs of investigation and
settlement, reasonable attorneys' fees and all additional costs incurred in
collecting any judgment rendered in such action.
ARTICLE VIII
MISCELLANEOUS
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8.1 Applicable Law. This Agreement shall be governed by the laws of the
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State of Colorado, United States of America. With regard to international
service, this Agreement shall be governed by applicable federal statutes and
regulations of the United States of America. The parties stipulate to
jurisdiction and venue in the State of Colorado, United States of America.
8.2 Notices. Any notice or other documents or materials required or
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permitted to be delivered under this Agreement may be personally delivered or
sent by mail, with postage prepaid, by commercial delivery service or by
electronic facsimile. Notices shall be deemed effective upon receipt by the
party to whom the same are to be delivered, and shall be addressed as follows:
If to CSI, to Communications Systems International, Inc., 8 South
Nevada Avenue, Suite 101, Colorado Springs, Colorado 80920, Attention:
___________________________, Facsimile Number 719-471-2893.
If to Distributor, to
___________________________________________________________________________
___________________________________________________________________________
__________________________________________________________________________.
Either party may, by notice properly delivered, change the person or address to
which future notices and deliveries to that party shall be made.
Initial _____
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8.3 Headings. The article and section headings in this Agreement are for
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convenience only, and shall not be used in its interpretation or considered part
of this Agreement.
8.4 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 Effect of Agreement. All negotiations relative to the matters
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contemplated by this Agreement are merged herein and there are no other
understandings or agreements relating to the matters and things herein set forth
other than those incorporated in this Agreement. This instrument sets forth the
entire agreement between the parties and rescinds and replaces any and all prior
understandings and agreements, whether written or verbal, between Distributor
and CSI or any of its officers, directors or employees, and any such
understandings and agreements are hereby rendered null and void and shall have
no effect on or consequence to either party. No provision of this Agreement
shall be altered, amended, revoked or waived except by an instrument in writing
signed by the party to be charged with such amendment, revocation or waiver.
Subject to the provisions of Article V, this Agreement shall be binding upon the
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
8.6 No Implied Waiver. The failure of either party at any time to require
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the performance by the other party of any obligation under this Agreement shall
not affect in any way the right to require such performance at any later time,
nor shall the waiver by either party of one breach of any provision of this
Agreement be taken or held to be a waiver of any other breach of that provision
or any other provision of this Agreement.
8.7 Severability. If any clause or provision of this Agreement is
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illegal, invalid or unenforceable under applicable present or future laws, then
it is the intention of the parties that the remainder of this Agreement shall
not be affected, and that in lieu of any such clause or provision there be added
as a part hereof a substitute clause or provision as similar in terms and effect
to such illegal, invalid or unenforceable clause or provision as may be
possible.
8.8 Time. Time is of the essence of this Agreement.
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8.9 Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or the breach thereof, shall be settled by arbitration in
Colorado Springs, Colorado, before a single arbitrator in accordance with
applicable Colorado law concerning arbitration, and pursuant to the Commercial
Rules of the American Arbitration Association. Judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction.
Initial _____
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