EXHIBIT 10.3
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY TERAFORCE TECHNOLOGY CORPORATION
FOR CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT WITH "***".
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "Distribution Agreement") is made and
entered into as of November 13, 2003 (the "Effective Date") by and between VISTA
CONTROLS, INC., a California corporation, with offices at 28965 Avenue Penn,
Santa Clarita, CA 91355 ("VISTA"), and DNA COMPUTING SOLUTIONS, INC., a Delaware
corporation with offices at 1240 East Campbell Road, Richardson, Texas 75081
("DNA").
RECITALS
WHEREAS, VISTA and DNA are parties to that certain Technology License
and Marketing Agreement, dated of even date herewith and to which this
Distribution Agreement forms an exhibit (the "License Agreement"), pursuant to
which, among other things, DNA grants VISTA a license to use the Licensed
Technology (as defined in the License Agreement) for the purposes set forth in
the License Agreement;
WHEREAS, VISTA and DNA are parties to that certain Technology Transfer
and Support Agreement, dated of even date herewith and which is also attached as
an exhibit to the License Agreement (the "Transfer Agreement"), pursuant to
which, among other things, DNA is transferring to VISTA all information and
materials related to the Licensed Technology;
WHEREAS, VISTA desires to appoint DNA as an authorized distributor of
the certain Products (as defined in the License Agreement) set forth on Exhibit
A attached hereto (the "Authorized Products").
WHEREAS, DNA desires to be appointed and serve as a non-exclusive
authorized distributor of the Authorized Products on the terms and conditions
set forth herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the foregoing and of the
mutual promises, covenants, conditions, and undertakings hereinafter set forth,
the sufficiency of which is hereby acknowledged, and for other good and valuable
consideration, it is agreed by and between the parties as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used and not defined herein have the meanings given
them in the License Agreement. The following terms have the following meanings:
"Authorized Products" has the meaning set forth in the recitals to this
Distribution Agreement, and any additional Products VISTA may authorize in
writing from time to time.
"Charges" has the meaning set forth in Section 6.1 of this Distribution
Agreement.
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"Customer" any Person to which DNA sells, distributes or transfers the
Authorized Products for end use by such Person in the Territory and solely for
the end use for which such Authorized Products are intended as set forth in the
Documentation or otherwise prescribed by VISTA.
"Customer Agreement" has the meaning set forth in Section 3.5 of this
Distribution Agreement.
"Distribution Agreement" has the meaning set forth in the first
paragraph hereof.
"DNA" has the meaning set forth in the first paragraph hereof.
"Documentation" means all instructions, documentation and all other
informational materials related to the Authorized Products that have been
provided by VISTA or its designee to DNA or otherwise authorized in writing by
VISTA for sale, distribution or transfer to Customers together with the sale,
distribution or transfer of Authorized Products.
"Effective Date" has the meaning set forth in the first paragraph
hereof.
"Initial Term" has the meaning set forth in Section 7.1 of this
Distribution Agreement.
"License Agreement" has the meaning set forth in the recitals to this
Distribution Agreement.
"Order" has the meaning set forth in Section 5.2 of this Distribution
Agreement.
"Order Acknowledgement" has the meaning set forth in Section 5.2 of
this Distribution Agreement.
"Order Confirmation" has the meaning set forth in Section 5.2 of this
Distribution Agreement.
"Order Date" has the meaning set forth in Section 5.2 of this
Distribution Agreement.
"Renewal Term" has the meaning set forth in Section 7.1 of this
Distribution Agreement.
"Rolling Forecast" has the meaning set forth in Section 5.5 of this
Distribution Agreement.
"Standard Resale Terms" has the meaning set forth in Section 3.4 of
this Distribution Agreement.
"Term" has the meaning set forth in Section 7.1 of this Distribution
Agreement.
"Transfer Agreement" has the meaning set forth in the recitals to this
Distribution Agreement.
"VISTA" has the meaning set forth in the first paragraph hereof.
ARTICLE 2
APPOINTMENT OF DISTRIBUTOR
2.1 Appointment and Grant of Rights. Subject to the terms and
conditions of the Agreements, VISTA hereby appoints DNA as a non-exclusive
authorized distributor of the Authorized Products and grants DNA a
non-transferable, non-exclusive, non-sublicensable world-wide right to:
(a) promote, advertise, market, demonstrate, offer for
sale, sell, distribute and transfer the Authorized Products to Customers and
potential Customers in the Territory;
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(b) use, copy, reproduce and display the Promotional
Materials (as defined in the License Agreement) for the purpose of promoting,
advertising, marketing, demonstrating, and offering for sale the Authorized
Products to Customers and potential Customers in the Territory; and
(c) copy, reproduce and distribute copies of the
Documentation only as necessary for distributing such copies to Customers in the
Territory only in connection with the sale, distribution or transfer of
Authorized Products to Customers as permitted hereunder.
2.2 Restrictions. Except as expressly authorized in this
Distribution Agreement, DNA shall not, and shall not cause or permit others to,
in whole or part (a) reproduce, prepare derivative works based upon, distribute
copies of, perform, display, make, use, offer for sale, sell or import any
Products or the Promotional Materials or Documentation (b) reverse engineer,
disassemble or decompile any Products or the Promotional Materials or
Documentation or (c) distribute, license, sublicense, lease, rent, assign, grant
a security interest in, or transfer any Products or the Promotional Materials or
Documentation.
2.3 No Limitation. This Distribution Agreement shall not be
construed as a limitation or restriction on the right of VISTA to, or to cause
or permit others to, promote, advertise, market, demonstrate, license, grant the
right to sublicense, offer for sell, sell, distribute transfer or import any
Products, including, without limitation, the Authorized Products, directly or
indirectly itself or through another Person distributor to any Person,
including, without limitation, any Customer, inside or outside the Territory,
whether or not such efforts are in competition with the performance of DNA's
rights, obligations or duties hereunder.
ARTICLE 3
DISTRIBUTOR OBLIGATIONS
3.1 Requirements; Exclusivity. During the Term, DNA shall purchase
all of its requirements for the Authorized Products exclusively from VISTA, and
VISTA shall supply Authorized Products to DNA or directly to Customers pursuant
to the terms and conditions of Orders and this Distribution Agreement. Subject
to and except as otherwise expressly set forth in Section 6.2 of the License
Agreement, DNA shall refrain from promoting, advertising, marketing,
demonstrating, offering for sale, selling, distributing or transferring products
that are competitive with and/or perform or possess the same or similar
functions for or on behalf of any person or entity other than VISTA. DNA
acknowledges and agrees that any violation of this provision shall be a material
breach of this Distribution Agreement and the License Agreement and that this
undertaking will not adversely affect its ability to maintain its business and
operations.
3.2 Marketing Obligations. DNA agrees to promote, advertise,
market, resell, distribute and otherwise favorably publicize the availability of
the Authorized Products to Customers and potential Customers pursuant to the
terms and conditions set forth herein and in accordance with the License
Agreement.
3.3 Notice Requirement. All Authorized Products, Promotional
Materials and Documentation shall prominently display the trademark, copyright
or the proprietary notices, or such other notices as the parties may mutually
agree with respect to each Order. DNA shall not, and shall not permit any of its
personnel or any third party to delete or alter in any manner this notice or any
other proprietary legend or restrictive notice contained or included on the
Authorized Products or in any Promotional Materials or Documentation.
3.4 Standard of Conduct. DNA agrees to conduct its business and
perform its obligations hereunder in a timely and professional manner using
qualified personnel, and at all times in a manner that reflects favorably upon
VISTA, its suppliers and the Authorized Products and VISTA Marks, and their
respective goodwill and reputation, and to promote, advertise, market,
represent, display and demonstrate the Authorized Products prominently,
truthfully and fairly. DNA agrees to avoid deceptive, misleading or unethical
practices and to not make any false or misleading statements, claims or
representations with
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respect to VISTA or the Authorized Products, or propose terms to Customers or
potential Customers that are inconsistent with the terms and conditions of this
Distribution Agreement. DNA's employees assigned to perform any services or
obligations hereunder shall have the proper skill, training and background so as
to enable them to perform in a competent and professional manner. DNA shall
offer the Authorized Products for sale only pursuant to VISTA's standard terms
and conditions for use of the Authorized Products and standard warranties for
the Authorized Products attached hereto as Exhibit B (collectively, the
"Standard Resale Terms") or such other terms as the parties may mutually agree
upon in writing with respect to each Order. VISTA shall be entitled to alter and
amend the Standard Resale Terms from time to time upon notice to DNA; provided
that all such amendments shall apply prospectively. DNA shall not offer any
terms, conditions or warranties to Customers or potential Customers in addition
to, conflict with or are different from the Standard Resale Terms without
VISTA's prior written consent, and any such deviations from or additions to such
Standard Resale Terms without VISTA's prior written consent shall be the sole
responsibility of DNA and will not be binding upon VISTA.
3.5 Customer Agreements. Prior to the sale, distribution or
transfer of Authorized Products to a Customer, DNA shall require such Customer
to enter into a written agreement providing for the terms of sale of the
Authorized Products by DNA to such Customer, which agreement shall include, at a
minimum, the Standard Resale Terms (or such modified version thereof as agreed
to in writing by VISTA in writing in advance) (each, a "Customer Agreement").
DNA shall promptly provide such Customer Agreement to VISTA for its review and
approval. No Customer Agreement shall be effective unless and until it has been
countersigned by an authorized representative of VISTA, and DNA shall ensure
that each Customer Agreement includes an express condition to that effect.
3.6 Customer Responsibility. Except as otherwise set forth herein
(including Section 4.1 below) or in the License Agreement, DNA shall be solely
responsible for all matters relating to the Customers, including, without
limitation, establishing and enforcing the terms of sale of the Authorized
Products with Customers, contracting with Customers for and consummating the
sale and delivery of the Authorized Products, timely fulfilling all Customer
orders for the Authorized Products, collecting all proceeds from the sale of
Authorized Products to Customers, responding to Customer inquiries and
complaints, providing support and assistance regarding the features, use and
functionality of the Authorized Products and otherwise maintaining the Customer
relationship. DNA acknowledges and agrees that, except as otherwise set forth
herein or in the License Agreement or as otherwise agreed to in writing by VISTA
on a Customer by Customer basis prior to the execution of the applicable
Customer Agreement, VISTA and its suppliers shall have no responsibility,
obligation or liability to the Customers in any manner, including, without
limitation, any obligation to respond to Customer inquiries or complaints or
provide any Authorized Product replacements or refunds directly to any Customer
for any nonconforming Authorized Products.
3.7 Governmental Approvals. DNA will be responsible for obtaining
any foreign or domestic export or import licenses and government or government
agency approvals required for sale, distribution or transfer of the Authorized
Products by DNA to a Customer or potential Customer prior to sale or delivery of
the Authorized Products to the Customer.
ARTICLE 4
VISTA OBLIGATIONS
4.1 Product Warranty. Subject to Section 3.6, VISTA will provide
DNA and Customers with the product support included in the warranty provisions
set forth in the Standard Resale Terms for the Authorized Products. The term of
the warranty for the Authorized Products will commence on the date of delivery
of the Authorized Products to the Customer. DNA acknowledges and agrees that the
product warranty shall not extend to any defects resulting from defects in the
Authorized Products if such defect relates to the Licensed Technology.
4.2 Additional Support. DNA may purchase from VISTA at VISTA's
then-current rates additional support for the Authorized Products, including,
without limitation, engineering and technical support.
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4.3 Collaboration. VISTA and DNA agree to conduct regular meetings
at least once per year during the Term of this Distribution Agreement for the
purposes of sharing technical and marketing information and strategies relating
to the Authorized Products and fostering a close working relationship. The
parties' rights in and toany ideas, concepts, processes, methods, techniques,
inventions, materials, strategies, data and other information resulting from all
such collaboration shall be subject to and governed by Article 5 of the License
Agreement.
ARTICLE 5
ORDERING AND DELIVERY
5.1 VISTA Price List. VISTA will provide DNA with a current copy
of VISTA's standard price list including standard delivery schedules, for
Authorized Products, to be used by DNA solely for its internal purposes and to
provide quotations of prices and estimated delivery schedules for Authorized
Products to potential Customers. The standard price shall be based upon the
Fully Burdened Cost of the Authorized Products as defined in the License
Agreement and as agreed to between VISTA and DNA on at least a yearly basis;
provided, however that VISTA reserves the right to modify the standard price for
Authorized Products based upon unforeseen additional product costs outside of
VISTA's direct control, including, but not limited to, material cost increases
imposed by outside vendors. DNA acknowledges and agrees that the standard price
list provided by VISTA contains only estimated delivery schedules, and is not
binding on VISTA.
5.2 Ordering Procedures. DNA shall submit a written purchase order
to VISTA in a form acceptable to VISTA in its sole discretion, via facsimile or
otherwise, for the Authorized Products that DNA desires to purchase pursuant to
the terms of this Distribution Agreement. Each purchase order shall be signed by
an authorized representative of DNA and shall include the following minimum
information:
(a) Name and description of potential Customer, including
intended end-use of the Authorized Products, country
of ultimate destination for the Authorized Products,
credit information if requested, and a copy of the
executed or proposed Customer Agreement;
(b) Proposed date of purchase and any time commitments or
delivery schedules;
(c) Quality, quantity and type of Authorized Products
ordered and all other services, deliverables or
materials ordered in connection therewith;
(d) Foreign or domestic government licenses and/or
approvals required for sale, distribution or transfer
of the Authorized Products to the potential Customer;
and
(e) Any special terms or other information relevant to
the purchase of the Authorized Products.
All such orders must be acknowledged in writing by an authorized VISTA
representative (the "Order Acknowledgement"). VISTA reserves the right to reject
any orders of Authorized Products by DNA, in VISTA's reasonable discretion. As
part of an Order Acknowledgement, VISTA will provide DNA with a firm price
quotation and delivery schedule for the order and all other applicable terms and
conditions relating thereto. DNA may elect to purchase the Authorized Products
and other deliverables pursuant to the terms and conditions of such Order
Acknowledgement by sending VISTA a written order confirmation within ten (10)
days following the date of such Order Acknowledgement (the "Order
Confirmation"). The terms and conditions set forth in the Order Acknowledgement
as accepted by DNA pursuant to the Order Confirmation are referred to herein as
the "Order" and the date on which such Order Confirmation is
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received by VISTA is referred to herein as the "Order Date". The parties
acknowledge and agree that any transactions conducted by electronic means shall
be subject to all terms and conditions of this Distribution Agreement and shall
be binding upon and enforceable against the parties.
5.3 Conflicts. In the event of a conflict between the terms of any
order submitted by DNA and an Order Acknowledgement, the terms and conditions of
the Order Acknowledgement shall prevail. Any terms and conditions proposed by
DNA which deviate from, are inconsistent with or in addition to the terms and
conditions set forth in the Order Acknowledgement shall not be binding on VISTA
unless specifically agreed to in writing by VISTA. DNA shall be fully
responsible for any obligations to Customers or potential Customers that deviate
from, are inconsistent with or in addition to the terms and conditions of the
Order unless VISTA agrees to the changes in advance in writing.
5.4 Government Approvals. If a U.S. export license and/or other
foreign or domestic government agency approval is required prior to sale,
distribution or transfer of the Authorized Products, VISTA will not begin
preparing the Authorized Products for shipment until the U.S. export license and
such other required approvals have been obtained, and the delivery schedule will
date from the date on which VISTA receives written notice that the required
licenses and approvals have been obtained and received copies of such licenses
and approvals. The Order will terminate if such licenses and approvals are not
obtained within ninety (90) days after the Order Date.
5.5 Forecasting. Beginning on the Effective Date and on the first
day of each calendar quarter thereafter during the Term of this Distribution
Agreement, DNA shall provide VISTA with its good faith written estimate, by
quantity, grade, size and delivery date, of its anticipated need for the
Authorized Products for each month in the next ensuing twelve (12) month period
(each such estimate being referred to as the "Rolling Forecast"). The Rolling
Forecasts are to be used by VISTA for raw material procurement and production
planning purposes. DNA's Rolling Forecasts shall not be binding on VISTA unless
and until VISTA explicitly accepts such Rolling Forecast in writing.
5.6 Production. VISTA shall not discriminate against DNA in any
commercially unreasonable manner in the allocation of its inventory or current
production among purchasers of Authorized Products; provided, however, that
nothing in this Distribution Agreement prohibit VISTA from allocating
production, inventory or delivery times in favor of any Customer as may be
commercially prudent in VISTA's best interest. VISTA may commit its inventory or
current production to or for the benefit of the United States Government, or
discontinue any product model included as part of the Authorized Products,
without incurring liability to DNA (except as provided in the Agreements),
Customers or potential Customers or any other party for any damages or losses
suffered by any party for any delay or failure to deliver the Authorized
Products. VISTA shall provide DNA with reasonable advance written notice, but in
any event at least ninety (90) days, before discontinuing one or more Authorized
Product models included as part of the Authorized Products and will fill Orders
that have been accepted by VISTA for such discontinued products if possible.
5.7 Delivery. VISTA, or its supplier, manufacturer or other
designee, shall use its commercially reasonable efforts to deliver all
Authorized Products in accordance with the applicable Order. Unless otherwise
agreed between the parties in an Order or otherwise in writing, delivery of
Authorized Products shall be F.O.B. Los Angeles, California, U.S.A.
5.8 Inspection. In the event VISTA's third party supplier,
manufacturer or other designee delivers Authorized Products directly to DNA
pursuant to an Order, DNA shall, upon VISTA's written request, inspect all
Authorized Products, including all components, units, packaging and containers
thereof, to reasonably confirm that they are in compliance with the Order and
all applicable laws and standards. DNA shall promptly notify VISTA of any
suspected nonconforming Authorized Products, and VISTA shall refund or replace
any such nonconforming Authorized Products in accordance with Section 5.8 below.
5.9 Refund or Replacement. VISTA shall, at its election, replace
or return the price paid by DNA for any Authorized Product, which is shown to
VISTA's reasonable satisfaction not to conform to its
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applicable Order as of the date of delivery thereof. In order for a replacement
to be given, DNA must promptly, but no later than thirty (30) days following the
delivery date thereof, notify VISTA of such non-conformity, and must return such
nonconforming Authorized Products to VISTA or its designee at DNA's expense, or
at VISTA's election, destroy such Authorized Products and provide an executed
certification of destruction for the nonconforming Authorized Products.
5.10 Quality Issues. DNA shall promptly bring to VISTA's attention,
and work with VISTA in good faith to address, any significant flaws, design
problems, quality issues or Customer dissatisfaction with the Authorized
Products, including quality issues related to the Licensed Technology. The
parties' rights in and to any ideas, concepts, processes, methods, techniques,
inventions, materials, strategies, data and other information related to any
resolving such flaws, problems, issues or dissatisfaction shall be subject to
and governed by Article 5 of the License Agreement.
ARTICLE 6
CHARGES AND PAYMENTS
6.1 Charges. DNA shall pay VISTA the applicable fees and charges
for the Authorized Products (the "Charges") set forth in the Order and in this
Distribution Agreement in accordance with this Distribution Agreement. All
prices for Authorized Products shall be F.O.B. Los Angeles, California, U.S.A.,
and shall be exclusive of all taxes, fees, excises and/or charges which are now
or may hereafter be imposed (whether by federal, state, municipal or other
public authority) with respect to the sale and shipment of Authorized Products,
including, without limitation, all packaging, shipping, delivery and insurance
costs, all of which shall be the responsibility of DNA.
6.2 Expenses. Except as otherwise explicitly set forth in this
Distribution Agreement or as otherwise agreed to by the parties in writing, each
party shall bear all of its own expenses incurred in performing its obligations
under this Distribution Agreement. A party will reimburse the other party for
reasonable out-of-pocket costs and expenses required and actually incurred by
such party in performing its obligations hereunder only if the performing party
has (a) obtained the other party's prior written consent to reimburse the
performing party for such expenses, which consent may be given or withheld in
the non-performing party's sole discretion, (b) detailed such expenses on a form
acceptable to the other party, and (c) submitted supporting documentation
reasonably satisfactory to the other party.
6.3 Payment Terms. Unless otherwise agreed to as part of an Order
Acknowledgment, thirty percent (30%) of the Charges set forth in an Order shall
be paid by DNA together with submission of the Order Confirmation therefor. All
other payments hereunder shall be due and payable within thirty (30) days
following the date of such invoice, which invoice shall be dated by VISTA no
earlier than the date submitted to DNA hereunder. DNA agrees to pay a late
charge of one and one-half percent (1.5%) per month or the maximum lawful rate,
whichever is less, for all past due amounts. DNA shall not be entitled to
withhold or otherwise offset any amounts due to VISTA hereunder as a result of
nonpayment by a Customer. Unless otherwise directed by VISTA, all payments to
VISTA hereunder are to be paid in U.S. currency, either by check delivered
VISTA's address for notices set forth herein, or via wire transfer to the
following VISTA account:
VISTA Bank Name: _______________________
ABA Routing No.: _______________________
VISTA Account No.: _____________________
6.4 Taxes. The Charges do not include, and DNA shall be separately
responsible for the payment of all, taxes assessed in connection with any Order,
including, but not limited to, sales, use, withholding, excise, ad valorem,
value added, import, export or other taxes that may be assessed by any
jurisdiction, and all processing fees and administrative costs associated with
any required U.S. export license or other domestic or foreign government
approval. VISTA may, but is not obligated to, include such taxes, fees and
charges in any invoice or as part of any Order, and in the event VISTA elects to
do so, DNA agrees to pay such amounts directly to VISTA. DNA acknowledges that
VISTA is providing DNA
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the Authorized Products for resale only. For each Authorized Product sold by
DNA, DNA shall provide VISTA with an executed resale certificate evidencing that
all applicable taxes have been properly paid thereon by DNA or an exemption
certificate evidencing that no taxes were attributable thereto. VISTA shall not
be responsible for any personal property, sale, use, withholding, excise or
other taxes assessable on the sale or delivery of the Authorized Products by DNA
to a Customer, which taxes shall be borne by DNA or the Customer as appropriate.
6.5 Reports. Within thirty (30) days after the end of each month,
DNA will provide VISTA with a report of the number of Authorized Products sold,
distributed or transferred by DNA to Customers during the preceding month. Upon
request by VISTA, DNA shall provide VISTA an accounting of all Customers (i.e.,
full name, address, telephone number, e-mail address, date of the delivery of
the Authorized Product(s), and the number and type of Authorized Products
delivered to each Customer). All information regarding Customers shall be the
Confidential Information of VISTA and owned by VISTA and shall not be used by
DNA for any other purpose than fulfilling its obligations hereunder.
6.6 Records and Audit. During the Term and for three (3) years
following the termination or expiration of this Distribution Agreement, (a) DNA
shall maintain complete and accurate records at its principal place of business
relating to the performance of its obligations hereunder and all of DNA's sales,
distribution and sales activity relating to the Authorized Products, and (b)
VISTA or its designated representative shall have the right, upon five (5) days
written notice and during normal business hours, to inspect such records to
insure compliance with DNA's obligations under this Distribution Agreement. In
the event such audit reveals a discrepancy between the Fees paid to, or to be
paid to, VISTA and the Fees actually received by VISTA, then the amount of such
discrepancy shall be paid within thirty (30) days of such audit. In the event
that any audit performed under this Section reveals underpayments in excess of
five percent (5%), DNA shall bear the full cost of such audit and pay all
interest due under Section 6.3.
ARTICLE 7
TERM AND TERMINATION
7.1 Term. The initial term of this Distribution Agreement shall
commence on the Effective Date and shall continue for the period of ***
thereafter, unless sooner terminated as provided herein (the "Initial Term"),
and shall continue for *** (***) additional successive renewal periods each for
a term of *** (***) (each a "Renewal Term" and together with the Initial Term,
the "Term") until terminated in accordance with the terms hereof. Either party
may terminate this Distribution Agreement by providing the other party with
written notice of termination at least sixty (60) days prior to the expiration
of such Initial Term or any Renewal Term.
7.2 Termination.
(a) Mutual. Either party may terminate this Distribution
Agreement upon prior written notice to the other party if:
(i) the other party is in material breach of
this Distribution Agreement and, if such breach is curable, does not cure such
breach within thirty (30) days (or ten (10) days in the case of nonpayment of
any Charges hereunder) after the non-breaching party provides the breaching
party with written notice and a reasonable description of such breach; or
(ii) the other party files a petition in
bankruptcy, is adjudicated a bankrupt or files a petition or otherwise seeks
relief under or pursuant to any bankruptcy, insolvency or
- ------------------
*** CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY TERAFORCE TECHNOLOGY
CORPORATION FOR CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
8
reorganization statute or proceeding, or if a petition in bankruptcy is filed
against it or it becomes insolvent or makes an assignment for the benefit of its
creditors or a custodian, receiver or trustee is appointed for all or a
substantial portion of its business or assets, provided such circumstance are
not cured within thirty (30) days of the commencement of the above-stated event.
Nothing contained herein will be deemed to preclude or impair any rights that
VISTA may have as a creditor in any bankruptcy proceeding.
(b) By VISTA. VISTA may immediately terminate this
Distribution Agreement, in whole or part, by written notice to DNA, and may
regard DNA as in default of this Distribution Agreement, if DNA is in default of
its obligations under the Transfer Agreement.
(c) Consultation. Each party hereto agrees to consult in
advance with the other party hereto and to bring to the attention of the other
party any problems, differences of opinion, disagreement or any other matters
which may lead such party to terminate or seek to terminate this Distribution
Agreement. The purpose and intent of the parties in including this provision is
to ensure that both parties to this Distribution Agreement are made aware of any
problems arising out of or relating to this Distribution Agreement or the
relationship of the parties hereunder, so that the parties hereto may, in good
faith, consult with one another concerning such problems and, where possible,
resolve such problems to the parties' mutual satisfaction, thereby preserving
their contractual relationship and the goodwill and mutual respect presently
existing between the parties to this Distribution Agreement.
7.3 Rights Upon Expiration or Termination. In addition to those
obligations upon expiration or termination of this Distribution Agreement
contained elsewhere herein or provided by law, the following shall apply in the
event of termination for any reason:
(a) Each party shall promptly, but no later than thirty
(30) days following the effective date of termination, pay to the other party
all amounts due and owing hereunder.
(b) DNA shall provide VISTA with a written report
certified by an officer of DNA listing the nature and quantity of all Authorized
Products and all other items, including all associated packaging, labels,
advertising, Promotional Materials, and displays, Documentation and any other
items bearing the VISTA Marks or related to the Authorized Products in DNA's or
its Affiliates' possession, custody or control on the date of termination.
(c) Except as otherwise expressly provided herein, all
rights granted to the parties hereunder shall immediately cease, and each party
shall, as directed by the other party, either deliver to other party or
permanently and irretrievably destroy (and certify such destruction in writing)
all physical and electronic evidence of the other party's Confidential
Information.
(d) VISTA shall deliver all Orders previously accepted by
DNA but yet undelivered as of the date of termination provided that such Orders
are in accordance with the terms and conditions accepted by VISTA and further
provided that the payment provisions of Section 6 above are met prior to
delivery by VISTA. Except where this Distribution Agreement is terminated by
VISTA pursuant to Section 7.2(a)(i), 7.2(a)(ii) or 7.2(b), DNA shall be entitled
to continue marketing and distributing its inventory of the Authorized Products
that is on hand at the time of such expiration or termination for a period of
one hundred eighty (180) days, after which DNA shall immediately ship and
deliver to VISTA, without charge to VISTA, all existing inventory of Authorized
Products, all packaging, labels, advertising, Promotional Materials, displays,
Documentation and any other items bearing the VISTA Marks or related to the
Authorized Products.
(e) Termination of the License Agreement shall
automatically terminate this Distribution Agreement.
7.4 Survival; Non-Exclusive Remedies. Notwithstanding anything in
this Distribution Agreement to the contrary, the following provisions of this
Distribution Agreement will survive its expiration or termination: Sections 2.2,
3.3 (only during the 180-day period set forth in Section 7.3(d)
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above), 3.6, 3.7 (only during the 180-day period set forth in Section 7.3(d)
above), 4.1, 5.3, 6.1 (to the extent set forth in Section 7.3(a) above), 6.2,
6.3 (to the extent set forth in Section 7.3(a) above), 6.4, 6.5 and 6.6, and
Articles 1, 7, 8, 9 and 10. Any such termination shall be in addition to any
other rights or remedies available at law or in equity to the terminating party
and shall not affect any rights or obligations that have accrued prior to the
date of termination. VISTA is under no obligation to terminate this Distribution
Agreement on the occurrence of any or all of the events set forth in Section
7.2.
ARTICLE 8
REPRESENTATION, WARRANTIES AND COVENANTS
8.1 Mutual. Each party represents, warrants and covenants to the
other as follows:
(a) It has the right, power and authority to enter into
and perform its obligations under this Distribution Agreement, and this
Distribution Agreement constitutes a legal, valid and binding obligation on its
part, enforceable against it in accordance with its terms.
(b) The execution, delivery and performance of this
Distribution Agreement by such party will not result in the breach of any terms
of, or constitute a default under, or conflict with, or cause any acceleration
of any obligation of such party, or violate any applicable law, rule or
regulation, and each party will at all times comply with all applicable federal,
state and local laws, rules and regulations in the performance of its
obligations hereunder and obtain and possess all licenses, consents, permits and
other required or prudent authorizations to perform its obligations hereunder.
8.2 By VISTA. VISTA's sole warranty for the Authorized Products is
set forth in VISTA's Standard Resale Terms, and such product warranties set
forth the exclusive remedy of DNA (except as set forth in Section 5.8 above or
in the License Agreement) and the exclusive remedy of the Customers against
VISTA arising from the Authorized Products.
8.3 Disclaimer and Limitation. EXCEPT AS SPECIFICALLY AND
EXPRESSLY REPRESENTED AND WARRANTED HEREIN, VISTA DISCLAIMS AND EXCLUDES ALL
WARRANTIES, EXPRESS, IMPLIED OR OTHERWISE, INCLUDING WITHOUT LIMITATION ALL
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, FREEDOM
FROM INFRINGEMENT OF ANY INTELLECTUAL PROPERTY OR OTHER PROPRIETARY RIGHTS, AND
WARRANTIES BASED ON A COURSE OF DEALING BETWEEN THE PARTIES OR USAGE OF TRADE.
NEITHER PARTY, NOR ITS EMPLOYEES, REPRESENTATIVES OR AGENTS WILL BE LIABLE FOR
ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT
LIMITATION, ECONOMIC LOSSES AND LOST PROFITS, EVEN IF SUCH PARTY HAS BEEN
NEGLIGENT OR HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT
SHALL VISTA BE LIABLE FOR DAMAGES IN EXCESS OF THE AMOUNT ACTUALLY PAID BY DNA
OR CUSTOMERS TO VISTA FOR THE AUTHORIZED PRODUCTS WHICH RELATE TO THE CLAIM
BEING MADE.
8.4 By DNA. DNA represents, warrants and covenants to VISTA as
follows:
(a) All services and efforts to be performed and taken by
DNA hereunder will be performed in a professional, workmanlike manner, in
accordance with industry standards and by reasonably skilled persons who are
sufficiently trained to accomplish their assigned tasks.
(b) All obligations owed to third parties with respect to
the activities contemplated to be undertaken by DNA pursuant to this
Distribution Agreement are or will be fully satisfied by DNA so that VISTA will
not have any obligations with respect thereto (other than with respect to the
fulfillment of VISTA's standard product warranties pursuant to Section 8.2
above).
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ARTICLE 9
INDEMNITY AND INSURANCE
9.1 Indemnification by DNA. DNA will defend, indemnify and hold
harmless the VISTA Indemnitees from and against any and all liabilities,
damages, losses, claims, demands, assessments, actions, causes of action, costs
(including attorneys' fees and associated expenses) and any of them, arising out
of or resulting from third party claims with respect to any (a) acts or
omissions of any of the DNA Indemnitees, whether or not constituting, but
including, any breach by DNA of any representation, warranty or covenant of DNA
contained in this Distribution Agreements, (b) claims by a Customer or potential
Customers or suppliers of DNA (except as are the result of VISTA's performance
of or failure to perform its obligations hereunder or under the License
Agreement with respect to such Customers), and (c) the Licensed Technology,
including, without limitation, the portions of the Authorized Products comprised
of or embodying the Licensed Technology and DNA's promotion, advertising,
marketing, demonstration, offer for sale, sale, distribution, transfer, use or
misuse of the Authorized Products (except as otherwise set forth in Section
9.2(b) below with respect to the VISTA Technology), including, without
limitation, any claim for injury, death or property damage or for violation of
any patent, copyright, trademark or other intellectual property or proprietary
right of any third party and any product liability claims relating thereto.
9.2 Indemnification by VISTA. VISTA will defend, indemnify and
hold harmless the DNA Indemnitees from and against any and all liabilities,
damages, losses, claims, demands, assessments, actions, causes of action, costs
(including attorneys' fees and expenses) and any of them, arising out of or
resulting from third party claims with respect any (a) acts or omissions of any
of the VISTA Indemnitees, whether or not constituting, but including, any breach
by VISTA of any representation, warranty or covenant of VISTA contained in this
Distribution Agreement, and (b) violation of any valid United States patent,
copyright, trademark or other intellectual property or proprietary right of any
third party based solely upon the Authorized Products but only to the extent
based on the VISTA Technology including, without limitation, the portions of the
Authorized Products comprising or embodying the VISTA Technology.
9.3 Indemnification Procedures.
(a) Notice. If any third party makes a claim covered by
Section 9.1 or 9.2 against an indemnitee with respect to which such indemnitee
intends to seek indemnification under this Section, such indemnitee will give
prompt notice of such claim to the indemnifying party, including a brief
description of the amount and basis therefor, if known; provided, however, that
the failure to give such notice promptly will not relieve the indemnifying party
of its obligations hereunder except to the extent prejudiced thereby.
(b) Control of Defense. Upon the giving of such notice,
the indemnifying party will be obligated to defend such indemnitee against such
claim, and will be entitled to assume control of the defense of the claim with
counsel chosen by the indemnifying party; provided, however, that if DNA is the
indemnifying party, VISTA shall be entitled, upon notice to DNA at any time, to
undertake and assume sole control of the defense thereof with counsel of its own
selection if VISTA reasonable determines that DNA is unable, due to financial
reasons or otherwise, to continue actively and diligently defending against such
claim. The non-defending party will, to a commercially reasonable extent,
cooperate fully with, and assist, the defending party in its defense against
such claim in all reasonable respects, at the defending party's request and
expense. The defending party will take commercially reasonable steps to keep the
non-defending party fully apprised at all times as to the status of the defense.
Notwithstanding the foregoing, the non-defending party will have the right, at
its expense, to employ separate counsel in any such action, but the role of such
counsel will only be supportive of the defending party's counsel. Neither party
will be liable for any settlement of action or claim effected without its
consent, which will not be unreasonably withheld. Notwithstanding the foregoing,
the indemnitee will retain, assume, or reassume sole control over all expenses
relating to every aspect of the defense that it believes is not the subject of
the indemnification provided for in this Section. Following indemnification as
provided in this Article 9, the indemnifying party will be subrogated to all
rights of the indemnitee with respect to the matters for which indemnification
has been made.
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(c) Satisfaction of Defense Costs. During the pendency of
a suit, proceeding, claim or demand against which DNA is required to indemnify
any of the VISTA Indemnitees pursuant to Section 9.1 above, VISTA may withhold
payments due to DNA under the Agreements or under any other business arrangement
between the parties to the extent reasonably necessary to conduct the defense
thereof and to satisfy any liability therein provided.
9.4 Infringement Remedy.
(a) By DNA. If any portion of the Authorized Products, or
any part thereof, becomes, or in either party's opinion is likely to become, the
subject of any claim or action covered by Section 9.1(c), then DNA shall comply
with its obligations set forth in Section 9.4 of the License Agreement on the
terms and conditions set forth therein.
(b) By VISTA. If any portion of the Authorized Products,
or any part thereof, becomes, or in either party's opinion is likely to become,
the subject of any claim or action covered by Section 9.2(b), then, VISTA shall,
at its expense, in its sole discretion and within thirty (30) days following
such notice or determination, either: (a) procure the right to continue using
same as contemplated hereunder; (b) modify same to render same non-infringing;
or (c) replace same with an equally suitable, functionally equivalent,
compatible, non-infringing Authorized Products. If none of the foregoing is
commercially practicable, the infringing Authorized Products in DNA's possession
shall be returned to VISTA and VISTA's sole liability (other than satisfaction
of its indemnification obligations hereunder) shall be to refund amounts paid
therefor by DNA for the period following the effective date of termination and
for the period during which the Licensed Technology was affected thereby.
9.5 Limitations. VISTA shall have no obligations under Section 9.2
unless: (a) DNA takes no action that, in VISTA's reasonable judgment, impairs
VISTA's defense of the claim; (b) DNA immediately stops all distribution,
transfer and use of the Authorized Products upon the request of VISTA; and (c)
DNA has paid VISTA all amounts due at the time DNA becomes aware of the claim.
The indemnity in Section 9.2 and the infringement remedy under Section 9.4 shall
not apply thief the infringement claim results from, in whole or part: (i) a
modification or other change to the Authorized Products not provided by VISTA;
(ii) the combination of the Authorized Products with hardware, software or other
goods, items or materials not provided by VISTA; (iii) the operation or use of
the Authorized Products in a manner not described in the Documentation; (iv) any
failure of DNA, or others acting under DNA's authority or control, to comply
with this Agreement; or (v) any use, sale, distribution or transfer or other
exploitation of the Authorized Products outside the scope of this Agreement.
9.6 Insurance. During the Term of this Agreement, each party
agrees that it shall, at its sole cost and expense, obtain and maintain the
insurance coverages pursuant to Section 9.6 of the License Agreement on the
terms and conditions set forth therein.
ARTICLE 10
MISCELLANEOUS
10.1 Incorporation by Reference. The parties agree that the terms
and conditions set forth in Article 5 (Ownership; Patent Rights and Litigation)
and Article 6 (Confidentiality and Non-Competition) of the License Agreement are
incorporated by reference herein and shall apply to, and each party agrees to
comply with and be bound by such terms and conditions as applicable to, this
Distribution Agreement, the Authorized Products and the parties' respective
obligations hereunder.
10.2 Independent Contractor Status. The parties to this
Distribution Agreement are independent contractors and this Distribution
Agreement shall not be construed to create any partnership, franchise or
employment relationship. In addition, nothing in this Distribution Agreement
shall be deemed to appoint or authorize one party to act as an agent or other
representative of the other party or to assume or incur any liability or
obligation in the name of or on behalf of the other party, but this Section
shall not be construed to diminish any licenses or rights granted to VISTA under
this Distribution Agreement. All sales
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to Customers by DNA shall be DNA's sales and any account receivable from such
Customers shall be the entire responsibility of DNA. Notwithstanding anything to
the contrary in this Distribution Agreement, DNA shall refrain from holding
itself out or representing itself as an employee, authorized agent or legal
representative of VISTA, and DNA shall make no representation on behalf of VISTA
nor take any action, except as expressly authorized in this Distribution
Agreement, that binds VISTA to any arrangement, contract, obligation or
commitment with any third party.
10.3 Force Majeure. Any failure or delay in the performance by
VISTA or DNA of their respective obligations hereunder, other than a failure to
pay undisputed amounts hereunder, shall not be a breach of this Distribution
Agreement if such failure or delay arises out of or results primarily from an
Event of Force Majeure. In the event that an Event of Force Majeure materially
affects a party's obligations hereunder, then upon notice to the other party,
the party affected thereby shall be relieved of its obligations hereunder for so
long as such Event of Force Majeure continues to have such affect. Both VISTA
and DNA shall use their commercially reasonable efforts to avoid the occurrence
and remove the causes of an Event of Force Majeure and to continue performance
of their respective obligations hereunder promptly following the removal of such
causes.
10.4 Assignments. This Distribution Agreement is binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Affiliates of VISTA are intended third party beneficiaries of this
Distribution Agreement to the extent expressly provided herein. DNA shall not
assign or transfer any of its rights under this Distribution Agreement (whether
by merger, operation of law or otherwise) or delegate any of its obligations or
duties hereunder without the prior written consent of VISTA, which may be
withheld in VISTA's sole discretion. VISTA shall be entitled to assign, transfer
or delegate this Distribution Agreement or any rights or duties under this
Distribution Agreement upon prior written notice to DNA. Any assignment of this
Distribution Agreement by either party shall not relieve or release such party
from any of its duties or obligations under this Distribution Agreement.
10.5 Subcontracting. DNA shall not subcontract the performance of
any of its obligations under this Agreement without the prior written consent of
VISTA. Any such subcontracting approved by VISTA as set forth herein shall not
relieve or discharge DNA from any of its obligations under this Distribution
Agreement and DNA shall remain liable for all acts and omissions of any such
subcontractor.
10.6 Notices. Any notice contemplated by or required or permitted
to be given under this Distribution Agreement shall be given in the manner set
forth in the License Agreement; provided, however that all notices to VISTA
shall be directed to the attention of the person named and the address or
facsimile number below (or, in each case, to such other person or address or
facsimile number as may be specified in writing to DNA):
VISTA:
VISTA Controls, Inc.
28965 Avenue Penn
Santa Clarita, CA 91355
Attn: Sales Manager
Fax:
With a copy to:
Curtiss-Wright Controls, Inc.
3120 Northwest Boulevard
Gastonia, NC 28052
Attn: Robert H. Shaw, General Counsel
Fax:
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10.7 Expenses. Each party hereto shall pay all of its own
administrative expenses (including without limitation the fees and expenses of
its agents, representatives and counsel) incident to the preparation and
implementation of this Distribution Agreement.
10.8 Waiver. No waiver by either party hereto of any breach or
default of any of the covenants or agreements herein set forth shall be deemed a
waiver as to any subsequent and/or similar breach or default. The failure of any
party hereto to enforce at any time any of the provisions of this Distribution
Agreement shall in no way be construed to constitute a waiver of any such
provision nor in any way to affect the validity of this Distribution Agreement
or any part hereof, including the right of any party thereafter to enforce each
and every provision. The waiver by any party to this Distribution Agreement of
any breach or violation of any provision of this Distribution Agreement by the
other party hereto shall not operate or be construed to be a waiver of any
subsequent breach or violation thereof.
10.9 Governing Laws, Venue, Jurisdiction, Disputes. This
Distribution Agreement shall be interpreted and construed in accordance with the
laws of the State of North Carolina and the United States of America. Any
disputes, controversies or differences arising out of or in connection with this
Distribution Agreement or the making thereof, Including claims of fraud in the
inducement, which cannot be settled by mutual agreement shall be resolved by the
state or federal courts located in Mecklenburg County, North Carolina. All
parties hereby submit to the jurisdiction of said courts. The provisions of
Article 10 (Dispute Resolution) of the License Agreement shall apply to this
Transfer Agreement.
10.10 Export Restrictions. The Authorized Products and related
information covered by this Distribution Agreement are subject to export
regulations of the U.S. Government, including the U.S. Department of State
(International Traffic in Arms Regulations, 22 CFR 120 et seq.) and the U.S.
Department of Commerce (U.S. Export Administration Regulations 15 CFR 730 et
seq.) DNA will not export, re-export, resell, transfer or disclose, directly or
indirectly, any Authorized Product, technical data or software obtained
hereunder without (a) complying with applicable U.S. export control laws, (b)
notifying and obtaining written permission of VISTA, and (c) providing such
written assurances as VISTA may request. VISTA shall not be liable to DNA for
any failure to provide Authorized Products, services or technical data as a
result of U.S. Government's: (i) refusal to grant export or re-export license;
(ii) cancellation of export or re-export license; or (iii) interpretation of
U.S. export laws and regulations, after the date of an Order, adversely to the
interests of VISTA or DNA, or having a material affect on the cost of VISTA's
performance.
10.11 Drafting. All parties hereto have been represented by counsel,
and each voluntarily enters into and agrees to be bound by this Distribution
Agreement as written on the day it is signed. Authorship of this Distribution
Agreement shall be deemed to be joint, and shall not be attributed to one party
or another for the purpose of construing its terms or provisions. The recitals
to this Distribution Agreement are for reference purposes only and shall not be
binding upon any party or otherwise used by a party to contradict or challenge
the terms of this Distribution Agreement.
10.12 Severability. If any provision of this Distribution Agreement
is declared or found to be illegal, unenforceable or void, then both parties
shall be relieved of all obligations arising under such provision, but only to
the extent that such provision is illegal, unenforceable or void. Further, this
Distribution Agreement shall be deemed amended by modifying such provision to
the extent necessary to make it legal and enforceable while preserving its
intent or, if that is not possible, by substituting therefore another provision
that is legal and enforceable and achieves the same intended objective. If the
remainder of this Distribution Agreement shall not be affected by such illegal,
unenforceable or void provision and is capable of substantial performance, then
each provision not so affected shall be enforced to the extent permitted by law.
10.13 Counterparts. This Distribution Agreement and any amendments,
waivers, consents or supplements hereto may be executed in any number of
counterparts, and by different parties in separate counterparts, each of which
when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same agreement. Each such
agreement, document or
14
instrument shall become effective upon the execution of a counterpart hereof or
thereof by each of the parties hereto.
10.14 Media Releases. All media releases, public announcements and
public disclosures by DNA or VISTA, or their respective Affiliates,
representatives, employees or agents, relating to this Distribution Agreement or
its subject matter, but not including any announcement intended solely for
internal distribution by a party or any disclosure required by legal, accounting
or regulatory requirements beyond the reasonable control of a party, shall be
coordinated with and approved in writing by the other party prior to the release
thereof.
10.15 Third Party Beneficiaries. This Distribution Agreement is
entered into solely between, and may be enforced only by, DNA and VISTA, and
this Distribution Agreement will not be deemed to create any rights in third
parties, including, without limitation, suppliers, distributors, Customers or
subcontractors of a party, or to create any obligations of a party to any such
third parties.
10.16 Further Acts. Each party shall do, or cause to be done, all
such further acts, and shall execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any and all such further documentation as
the other party reasonably requires to carry out the purposes of this
Distribution Agreement.
10.17 Entire Agreement; Amendments. This Distribution Agreement and
its Exhibits (and to the extent applicable, the License Agreement and the
Transfer Agreement) constitute the entire agreement between the parties with
respect to the subject matter hereof, and all prior agreements respecting the
subject matter hereof, either written or oral, expressed or implied, shall be
abrogated, canceled, and are null and void and of no effect. All amendments to
this Distribution Agreement must be in writing and signed by the parties. Each
party represents and warrants to the other party that in entering into this
Distribution Agreement it has not relied on any representations, promises or
assurances from the other party or any employee, officer, director,
representative, attorney or Affiliate of the other party not expressly contained
in this Distribution Agreement. Any other terms or conditions shall not be
incorporated herein or be binding upon either party unless expressly agreed to
in writing by both parties.
Signatures Appear on Following Page
15
IN WITNESS WHEREOF, the parties have executed and delivered this
Distribution Agreement, in duplicate originals, by their respective persons or
officers hereunto duly authorized, to be effective as of the day and year first
above written.
VISTA CONTROLS, INC.
By: /s/ DAVID DIETZ
-------------------------------
Name: David Dietz
Title: Vice President and GM
DNA COMPUTING SOLUTIONS, INC.
By: /s/ R. EUGENE HELMS
-------------------------------
Name: R. Eugene Helms
Title: Chief Executive Officer
16
EXHIBIT A
AUTHORIZED PRODUCTS
The following Products (as defined in the License Agreement) are "Authorized
Products" for purposes of this Distribution Agreement:
***
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY TERAFORCE TECHNOLOGY CORPORATION
FOR CERTAIN PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
17
EXHIBIT B
STANDARD RESALE TERMS
18