INDEPENDENT MASTER DISTRIBUTOR AGREEMENT
THIS INDEPENDENT MASTER DISTRIBUTOR AGREEMENT (this "Agreement") is made
and entered into as of the 13th day of January 1997, (the "Effective Date") by
and between DIGITEC 2000, INC., a Nevada corporation, and Carlos Gomez, an
individual and CG COM, INC., a New York corporation ("Master Distributor").
WITNESSETH:
WHEREAS, DigiTEC manufactures and sells the TEC Direct prepaid telephone
cards issued jointly with Frontier Communications Corporation; and
WHEREAS, Master Distributor desires to act as a Master Distributor to
market and sell the prepaid telephone cards (the "Cards") to individuals and
business customers (hereinafter referred to collectively as "Customers" and
individually as a "Customer"), through which such Customers may access the
services listed on Exhibit A attached hereto (the "Services") for the prices set
forth on Exhibit A:
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and intending to be legally bound by this Agreement, DIGITEC
and Master Distributor agree as follows:
1. RELATIONSHIP
a DIGITEC appoints Master Distributor, and Master Distributor accepts
such appointment, for the sale to Customers of the Cards. Subject to
meeting the sales volume requirements in Paragraph 4 and the terms
and conditions of this Agreement, Master Distributor shall have
exclusive distribution in the State of New York. Master Distributor
shall have 120 days to stop marketing cards not produced by DIGITEC
and market DIGITEC's Cards exclusively. After 120 days, DIGITEC at
its sole option shall allow for additional 30 day extensions.
Additionally, DIGITEC shall place its employees at the office of the
Master Distributor to fulfill its own business. DIGITEC will refer
its TEC Direct sales in the exclusive area to Master Distributor.
Master Distributor will be the Master Distributor in all other
states. In the states where DIGITEC has no current Master
Distributor, DIGITEC shall also refer its TEC Direct sales to Master
Distributor.
b This Agreement does not create an employment agreement, joint
venture or partnership between the parties hereto, and neither party
has any right nor any authority to act on behalf of the other beyond
that expressly
granted herein. Master Distributor shall conduct its business at its
own initiative, responsibility and expense.
c During the term of this Agreement and thereafter, DIGITEC reserves
the right, without obligation or liability to Master Distributor for
payment of compensation or otherwise, to market the Services,
whether through its own representatives, through other independent
representative(s) or otherwise.
2. TERM
a This Agreement shall become effective as of the Effective Date and
shall continue in effect until the later of two (2) years after the
Effective Date with an option to extend the Agreement for an
additional year.
b Either party may terminate this Agreement (i) if the other party
becomes insolvent, makes an assignment for the benefit of creditors
or files a petition for reorganization under bankruptcy law; (ii) if
a petition in bankruptcy is filed by or against the other party and
not dismissed within sixty (60) days thereafter; or (iii) if the
other party is in breach of a material term or provision of this
Agreement and such material breach or default is not cured within
thirty (30) days after the other party receives notice of such
breach or default.
3. COMMISSIONS. Provided that Master Distributor purchases a minimum of
wholesale value per month of cards in accordance with Paragraph 4, DIGITEC shall
pay Master Distributor commissions ("Commissions") equal to thirty-six percent
(36) of (a) the face value of each Card sold by Master Distributor where Master
Distributor has delivered to DIGITEC exemption certificates ("Certificates")
with respect to applicable states and use taxes and federal excise and
communications taxes ("Taxes") on the sale of such Cards, or (b) the face value
of each Card sold by Master Distributor less applicable Taxes where Master
Distributor has not delivered Certificates to DIGITEC with respect to such
Cards. Commissions for the sale of a Card shall be paid to Master Distributor at
the time Distributors remit to DIGITEC, in readily available funds, an amount
equal to the face value of such Cards, less the commissions on such Cards.
DIGITEC may offset against Master Distributor's Commissions any amounts that
Master Distributors may owe to DIGITEC under this Agreement.
As additional commission DIGITEC will allow Master Distributor 0.25% of
its monthly sales for advertising and promotional purposes provided that Master
Distributor complies with the terms and conditions under Paragraphs 6 and 7.
4. SALES VOLUME REQUIREMENTS. Master Distributor agrees to the following minimum
monthly sales volume levels:
First Month: $1.0 Million
Second Month: $2.0 Million
Third Month: $3.0 Million
Fourth Month: $4.0 Million
Fifth Month and Thereafter: $5.0 million
5. MASTER DISTRIBUTOR'S RESPONSIBILITIES. Master Distributor agrees to
a Market the "TEC Direct Phone Card," to the Master Distributor
existing customer base, negotiate sales in accordance with the
prices set forth on Exhibit A attached hereto, and deliver the
Cards.
b Cooperate in the collection, compilation and maintenance of data
required to be reported by DIGITEC or its shareholders pursuant to
any federal regulation or order.
c Maintain documents and records ("Records") relating to the sales of
Cards to Customers for a period of not less than twelve (12) months
or such other longer period as may be required by applicable law,
rule or regulation, and produce such documents, with the exception
of customer lists, within a reasonable period of time upon request
of DIGITEC.
5. DIGITEC'S RESPONSIBILITIES. DIGITEC agrees to:
a Master Distributor understands that the availability of service
depends solely upon third party providers, and DIGITEC neither
warrants nor is responsible for the performance or acts of those
third party service providers.
b Provide customer service to Customers.
c Taxes will be the responsibility of Frontier Communications under
Paragraph 5.4 of its agreement with DIGITEC attached as Exhibit B.
Master Distributor will be responsible to collect state sales tax
exemption certificates.
d Provided that Master Distributor maintains its monthly minimum
revenues, DIGITEC shall issue it or its designees 50,000 stock
options.
6. USE OF NAMES. Master Distributor shall provide to DIGITEC and Frontier
Communications, Inc. for their prior review and written approval, all
promotions, advertising or other materials using or displaying the name of
DIGITEC, TEC Direct or Frontier.
7. CONFIDENTIAL INFORMATION
a The parties understand and agree that the terms and conditions of
this Agreement, all documents referenced herein, communications
between the parties regarding this Agreement or the Services
described herein (including price quotes for any Services provided
to Customers), and Customer and account information (collectively
"Confidential Information"), are confidential as between Master
Distributor and DIGITEC.
b A party shall not disclose Confidential Information unless subject
to discovery or disclosure pursuant to a law, rule, regulation or
legal process, or to any other party or Master Distributors of a
party including their respective investment bankers, lenders,
lawyers, accountants, insurance carriers or prospective purchaser
who have agreed not to disclose such Confidential Information.
Violation by a party or its Master Distributors of the foregoing
provisions shall entitle the non-disclosing party, at its option, to
obtain injunctive relief without a showing of irreparable harm or
injury and without bond.
c The parties further agree that any press release, advertisement or
publication generated by a party regarding this Agreement, Cards or
the Services or in which a party desires to mention the name of the
other party or the other party's parent or affiliated company(ies),
will be submitted to the non-publishing party for its written
approval prior to publication.
d The provisions of this Section 7 shall be effective as of the
Effective Date and shall remain in full force and effect during the
period of this Agreement and for a period of one (1) year after
termination of this Agreement.
e After the expiration of this Agreement or the termination of this
Agreement by either party for any reason, upon request of a party,
the other party shall return to the requesting party any physical or
written records containing Confidential Information of the
requesting party then in its possession.
8. INDEMNIFICATION
a Master Distributor agrees to indemnify and hold DIGITEC harmless
from any and all claims, actions, damages, expenses and other
liabilities, including reasonable attorneys' fees and costs of
litigation, resulting from Master Distributor's acts, omissions or
misrepresentations in violation of this Agreement.
b DIGITEC agrees to indemnify and hold Master Distributor harmless
from any and all claims, actions, damages, expenses and other
liabilities, including reasonable attorneys' fees and the costs of
litigation, resulting from DIGITEC's acts, omissions or
misrepresentations in violation of this Agreement.
9. LIMITED LIABILITY. In no event will a party's performance or failure to
perform its obligations hereunder result in such party's liability to the
other party or any third party for any indirect, special, incidental,
punitive, or consequential losses or damages, including without
limitation, loss of revenue, loss of customers or clients, loss of
goodwill or loss of profits arising in any manner from this agreement
whether based on any theory or tort, breach of contract or statute of
whether at law or in equity.
10. OPTION TO PURCHASE CG COMM INC.
DIGITEC shall have the option to purchase CG COMM at a purchase price of
$5.0 million or its average monthly sales volume computed after the initial ramp
up period, whichever is greater. For purposes of calculating monthly sales
volume, any accounts originating from DIGITEC'S customer base shall be excluded
from CG COMM's monthly sales volume. IF DIGITEC exercises its option, Master
Distributor will be excluded from the business for a period of two years.
11. GENERAL PROVISIONS
a Assignment. Master Distributor may not assign this Agreement in
whole or in part without the prior written consent of , which may be
given or withheld in the sole discretion of DIGITEC; provided, that
Master Distributor may enter into agreements to market and sell the
Cards.
b Amendment. This Agreement can be modified only by a written
amendment signed Master Distributor and DIGITEC and shall not be
modified or supplemented by any course of dealing or trade usage.
c Force Majeure. Neither party shall be held liable for any delay or
failure in performance of any part of this Agreement because of
circumstances beyond its control such as acts of God, acts of civil
or military authorities, cable cuts, embargoes, epidemics, war,
terrorist acts, riots, insurrections, fire, explosions, earthquakes,
nuclear accidents, floods, or other major environmental
disturbances, power blackouts, strikes, or from any other cause or
whatsoever kind arising without its actual fault.
d Choice of Law; Forum Selection. This Agreement is governed by the
laws of the State of New York without regard to choice of law
principles. Any legal action or proceeding with respect to this
Agreement may only be brought in the Courts of the State of New York
in and for the County of New York.
e Agency Orders. All obligations under this Agreement shall be subject
to legislation and to valid and applicable government agency orders,
regulations, tariff provisions, and decisions and orders of courts
of competent jurisdiction.
f Severability. Both parties agree that it is of the intention of
either party to violate public policy, state or federal statutory or
common laws, and that if any sentence, paragraph, clause or
combination thereof in this Agreement is in violation of the same,
such paragraph, clause or sentence, or combination of the same shall
be inoperative, and the remainder of this Agreement shall remain
binding upon the parties hereto.
g Authority. Each party represents and warrants that it has the
requisite corporate power and authority to enter into this agreement
and undertake its obligations hereunder, and that this Agreement has
been executed and delivered by its duly authorized, and is the
binding obligation of such party enforceable in accordance with its
terms.
h Notice. All notices, requests, or other communications under this
Agreement shall be in writing and shall be deemed to have been duly
given when delivered in person or deposited in the United States
Mail, certified or registered, return receipt requested, or
nationally recognized overnight mail service, addressed as follows:
To Master Distributor: CG Com, Inc.
3262 Westchester Avenue
Bronx, New York 10467
Attention: Carlos Gomez
Carlos Gomez
3262 Westchester Avenue
Bronx, New York 10467
Fax: 718 829 5876
To DIGITEC: DIGITEC 2000, INC.
500 Fifth Avenue
Suite 424
New York, NY 10110
Attention: Frank C. Magliato
Fax: 212 944 2829
i Entire Agreement. This Agreement, including Exhibits A and B
attached hereto, constitutes the complete statement of the
understandings between the parties regarding the subject matter
hereof and supersedes all proposals and prior agreements (oral or
written) between the parties relating thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
DIGITEC 2000, INC. CG COM, INC.
By /s/ Frank Magliato By /s/ Carlos Gomez
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Title: Frank Magliato, President Title: Pres
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/s/ Carlos Gomez
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Carlos Gomez