EXHIBIT 10.10
DISTRIBUTOR AGREEMENT
Between Seller, Inc., a Delaware corporation with principal offices at 12800
Middlebrook Rd., Germantown, MD 20874-5204 ("Seller"), and Comtel Electronic
Systems GMBH ("Distributor"), a German corporation with a principal place of
business at Max-Planck-Strasse 9a* 61381 Friedrichsdorf/ Germany,
WHEREAS, Seller is the manufacturer of a product called Telecom 2000(TM), and
WHEREAS, Distributor wishes to make purchases of Telecom 2000(TM) for resale,
and
WHEREAS, the parties believe that it would be mutually beneficial for them to
cooperate in order for Distributor to resell Telecom 2000(TM),
NOW, THEREFORE, in order to establish the terms and conditions under which the
parties' respective goals may be accomplished, in exchange of the mutual
covenants and premises hereinbelow, the parties agree as follows:
1.0 DEFINITIONS
Seller Product shall mean those products listed in Attachment A hereto.
Telecom 2000(TM) shall mean the intellectual property underlying Seller Product
related to or derived from Telecom 2000(TM) and / or related to or derived from
US Patent No. 5, 526, 353 including specifically, for purposes of clarification
and not limitation, algorithms, electronic computer protocols, routines,
subroutines or programs developed by or on behalf of Seller or otherwise owned
by or in the custody of Seller.
2.0 LICENSE AND SCOPE OF AGREEMENT
2.1 License Rights and Scope. Subject to the terms and conditions set forth
herein, Seller hereby grants to Distributor, and Distributor accepts, a
non-transferable and non-exclusive license to distribute Seller Product, with a
geographical focus upon the continent of Europe, non-exclusive therefore.
2.2 Restrictions on Use. All purchase, use, and resale by Distributor of Seller
Product is restricted as follows :
(a) Distributor is strictly prohibited from reverse engineering, reverse
compilation, or reverse assembly of Seller Product;
(b) Distributor is strictly prohibited from making a copy or copies of Seller
Product;
(c) Distributor shall not misuse the trademarks or trade names of Seller, but
Distributor may use the trademarks or trade names of Seller in advertising
Seller Products;
(d) Distributor shall not make any foreign sales without full compliance with
United States import/export laws and restrictions, and shall be responsible to
Seller and indemnify Seller for any failure to abide with this clause; and
(e) Distributor shall not make any government contract sales that impair the
rights of Seller hereunder, and must take all necessary steps to insure
compliance with the intellectual property ownership
rights of Seller hereunder, and shall be responsible to Seller and indemnify
Seller for any failure to abide with this clause.
2.3 Term. This Agreement shall be for a term of one year, subject to termination
by either party at any time in accordance with the terms hereof.
2.4 Termination. Subject to Section 4.6 hereof, the Agreement may be terminated
by Seller if Distributor does not pay Seller any amount due hereunder or
otherwise materially breaches this Agreement, or if Distributor violates any
material term hereof, including specifically but not as a limitation its
restrictions under 2.0 and its duties under Section 3.0. Distributor shall have
the right to terminate this Agreement if Seller fails to provide support as
described in Attachment B, or if Seller otherwise materially breaches this
Agreement. Either party may terminate this Agreement if a force majeure event
continues for more than ninety (90) days or if the other party becomes insolvent
or bankrupt or makes an assignment for the benefit of creditors.
2.5 Duties Upon Termination. Upon the termination or expiration of this
Agreement for any cause, the parties agree to continue their cooperation in
order to effect an orderly termination of their relationship. Distributor shall
immediately cease representing itself as a Distributor of Seller Product, and
shall accept no new orders for Seller Product except pursuant to firm,
outstanding bids or quotations.
2.6 Survival. Upon the termination or expiration of this Agreement for any
cause, the paragraphs which by their plain meaning, including specifically but
not as a limitation provisions which protect the intellectual property rights of
Seller shall survive.
2.7 Breach or Default. Neither party may terminate this Agreement for breach or
default of the other party unless and until the party seeking to terminate has
specified the breach or default in writing and such breach or default has not
been cured by the receiving party within thirty (30) days after receipt of
written notice.
3.0 OBLIGATIONS OF DISTRIBUTOR
3.1 Reasonable Best Efforts Services and Minimum Commitment. In consideration of
the license granted above and discounting schedules extended in Attachment A,
Distributor agrees to exert its reasonable best efforts to resell Seller
Product, to meet agreed-upon sales goals, and to purchase the Minimum Commitment
of Seller Product outlined in Attachment A.
3.2 Sales Capability. Distributor shall maintain offices as sales locations,
which offices shall be staffed by a sufficient trained capable sales and
technical staff, adequate to provide Distributor's customers with assistance and
instructions on setup, installlation, and use of Seller Product.
3.3 Sales Reports, Sales Estimates, and Product Performance Data. Periodically,
as agreed, Distributor shall provide Seller with a report of sales and licenses
made in that month, to include numbers of units, types of units, dollar value of
units, and, where practicable, customer for and location of units. In addition,
Distributor will, periodically, as agreed, forecast expected sales to be made in
the upcoming three month period on a "rolling" basis. The Distributor is
required to forward to Seller any reports from users of the Seller Product
regarding either (i.) any outages or failures experienced by users of the Seller
Product which become known to Distributor, or (ii) any complaints of users of
the Seller Product regarding the quality, functionality or performance of Seller
Product which become known to Distributor.
3.4 Insurance Coverages. Distributor shall have and maintain ordinary business
insurance including comprehensive general liability insurance in an amount not
less than one million dollars ($1,000,000 US).
4.0 ORDERING, DELIVERY, ACCEPTANCE, FEES, PAYMENT, AND SUPPORT
4.1 Ordering and Delivery. Individual firm funded purchase orders of Distributor
issued to Seller shall be effective upon acceptance and order receipt
verification in writing by Seller at its headquarters at Germantown, Maryland,
USA. All Seller Products are listed in the initial form of Attachment A with
prices and the purchase orders of Distributor must reflect the description,
prices, and model numbers contained therein. The terms and conditions of this
Agreement override those of the purchase orders, with the exception of
Distributor's rights to return ordered product (if any) after acceptance has
occurred under the provisions of 4.2 below. All Seller Products shall be
delivered on or about the delivery date set forth in the order receipt
verification in writing by Seller. Shipment will be at the risk of Distributor.
Distributor shall have 15 business days to verify that all deliveries have been
received. Delivery of the Seller Products shall be conclusively deemed to be
completed at the end of the 15 business days verification period or at such time
as missing deliverables identified by Distributor in writing during the 15
business days verification period have been replaced by Seller.
4.2 Acceptance. The Seller Product shall be accepted by Distributor if the
Seller Products perform substantially as described in their current
documentation. Failure of Distributor to inform Seller of acceptance or
non-acceptance within thirty (30) days following completed delivery or
commercial use of the deliverables by Distributor shall constitute acceptance.
Purchase prices and license fees shown in the initial form of Attachment A are
due and payable upon acceptance.
4.3 After-Sale Support of Products. Following delivery of the Deliverables,
Distributor shall be exclusively responsible for the installation, testing,
modification, management, and control of its resales of Seller Product, except
for Seller's Warranty responsibility in clause 5.3 below and After-Sale Support
of Products responsibility defined in Attachment B hereto.
4.4 Prices and Price Changes. Distributor agrees to pay Seller the amounts shown
on Attachment A for Seller Product. Distributor shall keep records regarding its
distribution hereunder in detail to permit Seller to make verification of
compliance herewith. Seller may change the price of any Seller Product
subsequent to the date of this agreement effective upon thirty (30) days prior
written notice. Firm funded purchase orders accepted by Seller before the
written notice of price increase is issued and proposals to Distributor's
customers which have been issued prior to the written notice of price increase
shall be honored at the old (lower) price for sixty (60) days after the
effective date of the increase. If prices are decreased, Seller will give
Distributor a written notice thereof effective immediately, and the decrease
shall apply to all unused unopened inventory purchased by Distributor during the
previous thirty (30) days, as well as to orders-in-process.
4.5 Training, Updates, Maintenance & Support Fees. Except as expressly provided
in this Agreement, including the Attachments and Exhibits, all training and
support services provided by Seller shall be at an additional fee in accordance
with Seller's then current standard rates. Unless otherwise stated in
Attachment B, Distributor shall reimburse Seller for all reasonable travel and
other out-of-pocket expenses incurred by Seller in connection with the
assistance furnished hereunder, provided same have been approved and
preauthorized by Distributor. The foregoing provisions do not apply to
warranty-covered Seller Products under clause 5.3 below.
4.6 Payment. All checks will be in U.S. currency unless otherwise agreed and
shall be drawn on U.S. banks. Except as otherwise stated herein, based upon
credit approval in the sole discretion of Seller, all payments including license
fees shall be due and payable within thirty (30) calendar day after the receipt
by Distributor from Seller of an invoice. If Distributor fails to pay any amount
due by the due date, Distributor shall pay late charges of 1.5% per month, but
not more than the highest rate permitted by law, together with all Seller's
expenses and collection charges
4.7 Taxes. In addition to Seller's fees hereunder, Distributor is obligated to
pay any federal, state, provincial, county, local or governmental taxes,
(including but not limited to sales tax and value added
taxes), duties fees and amounts in lieu thereof, now or hereafter applied on the
licenses granted or products sold herein or Distributor's production, storage,
transportation, import, export, licensing or use of Seller Product. Any such
taxes, duties, fees and amounts payable in lieu thereof, including interest and
penalties thereon ,paid or payable at any time by Seller, exclusive of taxes
based solely on Seller 's net income, shall be reimbursed by Distributor.
5.0 OWNERSHIP AND PROPRIETARY RIGHTS
5.1 Ownership. All rights, title and interest to Telecom 2000(TM) shall at all
times remain the exclusive property of Seller. All applicable copyrights, trade
secrets, patents and other intellectual property rights in Seller Product and
Telecom 2000(TM) shall remain the exclusive property of Seller. No title to
Telecom 2000(TM) is transferred to Distributor. Distributor shall not remove the
copyright, trademark and proprietary rights notices of Seller, and shall
prohibit any such removal by its officers, agents, employees, and contractors.
5.2 Proprietary Rights. Distributor acknowledges that Telecom 2000(TM) is
proprietary and confidential and constitutes valuable trade secrets of Seller.
Distributor agrees to safeguard Telecom 2000(TM) with not less than the same
degree of care as is exercised in connection with Distributor's own most
proprietary and confidential materials.
All aspects of Telecom 2000(TM), including without limitation, programs, methods
of processing, specific design and structure of individual programs and their
interaction and unique programming techniques employed therein, if any, shall
remain the sole and exclusive property of Seller, and shall not be used, sold,
revealed, disclosed or otherwise communicated, directly or indirectly, by
Distributor to any person, company, or institution other than as set forth
herein, excepting such technical and business development communications,
products demonstrations, and detailed technical discussions as Distributor
reasonably may deem necessary to perform the reselling duties described herein.
5.3 Warranty and Disclaimer of Warranty. Seller Product Hardware is warranted as
free from defects in materials and workmanship for a period of one year after
shipment. In the event of warranty claims hereunder, Distributor shall return
ship to seller, prepaid, with a written description of the basis for warranty
claim for a final determination by Seller. Warranty-covered items shall be
repaired or replaced by Seller and shipped to Distributor, at Seller's expense.
All Seller Product Software is delivered "AS IS". SELLER MAKES NO EXPRESSED OR
IMPLIED WARRANTIES WHATSOEVER WITH RESPECT TO SELLER PRODUCT. IN PARTICULAR, AND
WITHOUT LIMITING THE FOREGOING, THE PARTIES AGREE THAT THERE IS NO EXPRESSED OR
IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR OF MERCHANTABILITY.
SELLER SHALL NOT BE FOUND LIABLE FOR ANY MONETARY DAMAGES OF ANY KIND
WHATESOEVER RELATED TO THE USE OF SELLER PRODUCTS, AND ANY AND ALL RISK OF SUCH
USE IS HEREBY SPECIFICALLY ASSUMED BY DISTRIBUTOR.
6.0 INDEMNIFICATION
6.1 Limitation of Liability. IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE
OTHER OR TO ANY OTHER THIRD PARTY BASED ON CONTRACT, TORT OR OTHERWISE FOR LOSS
OF REVENUES, LOST PROFITS, LOST SAVINGS, OR INDIRECT, CONSEQUENTIAL, INCIDENTAL,
SPECIAL OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING IN ANY WAY TO THIS
AGREEMENT, EXCEPT THAT DISTRIBUTOR MAY BE FOUND SO LIABLE TO SELLER FOR ANY
DAMAGES ARISING OUT OF OR RELATING TO DISTRIBUTOR'S INTENTIONAL OR GROSSLY
NEGLIGENT VIOLATION OF CLAUSES 2.2.
6.2 Indemnification by Seller. Seller shall indemnify, defend and hold
Distributor harmless from any claims, damages or judgments, including all
reasonable attorney's fees, directly or indirectly resulting
from any claimed infringement or violation of any US copyright, US patent or
other US intellectual property right with respect to Seller Product. Seller
shall have no liability for any such claims or liabilities based on use of: (i)
any version, modification or adaptation of Seller Product, if such infringement
would have been avoided by the use of a then current unaltered release of Seller
Product ; or (ii) a combination of Seller Product with any product or data not
included in Seller Product when delivered to Distributor by Seller.
Following notice of a claim or a threat of actual suit, Seller, at its sole
option, shall as Distributor's sole remedy (except as otherwise provided for in
this section):
(a) procure for Distributor the right to continue, as provided herein, to
use, distribute and sublicense Seller Product at no additional expense
to Distributor; or
(b) provide Distributor with a non-infringing version of Seller Product.
7.0 PUBLICITY
7.1 Issuance of Publicity. Any and all publicity of any kind whatsoever with
regard to this Agreement shall be determined by Seller in its sole discretion,
except that with respect to the use of the trademarks and trade names, any
publicity is subject to the approval of the party whose trademarks and trade
names are to be used, only to the extent of the use of such trademarks and trade
names and with respect to the portions of the publicity bearing any such
trademarks and trade names.
8.0 GENERAL
8.1 Compliance With Local Laws. Distributor shall be exclusively responsible at
its own expense for compliance with all local laws relating to Seller Product
and the use thereof hereunder by Distributor. Distributor shall indemnify and
save harmless Seller from any claim by a third party arising out of or related
to non-compliance with local laws by Distributor.
8.2 Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, Montgomery County, Maryland
being the venue for all disputes, except for Federal jurisdiction disputes, the
venue for which shall be the Eastern District of Virginia.
8.3 Dispute Resolution. If either party wishes to commence litigation, then
either before or promptly after doing so, that party shall notify the other
party in writing by Federal Express or facsimile transmission of a request for
meeting. The request shall contain a description of the problem. Within fourteen
(14) days of receipt of the letter requesting the meeting, the parties shall
meet at a mutually convenient location in Montgomery County, Maryland. The
meeting shall be attended by an executive of each party having the authority to
resolve the problem. Each party may bring technical staff or other
representatives having information bearing on the problem; however, neither
party may bring an attorney or be represented in the meeting by an executive who
is an attorney unless agreed in advance in writing by the other party. In the
event such meeting fails to resolve issues in dispute, all actions relating to
dispute hereunder shall have as venue, Montgomery County, Maryland, except for
Federal jurisdiction disputes, the venue for which shall be the Eastern District
of Virginia.
8.4 Independent Contractors. It is expressly agreed that Seller and Distributor
are acting hereunder as independent contractors, and under no circumstances
shall any of the employees of one party be deemed the employees of the other for
any purpose.
8.5 Notice. Any notice required to be given by either party to the other shall
be deemed given ten (10) days after being deposited in the postal system in
registered or certified form with return receipt requested, postage paid,
addressed to the notified party at the address set forth above.
8.6 Assignment. A party may not assign this agreement or any portion thereof
without the approval of the other party, which shall not be unreasonably
withheld.
8.7 Amendment; Waiver. Any provision of this Agreement may only be amended or
waived if such amendment or waiver is in writing; and, if an amendment, executed
by all parties hereto and, if a waiver, executed by the party which is waiving
the term, condition or right.
8.8 Severability. Any provision of this Agreement that is prohibited or
unenforcable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforcability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdictio
8.9 Headings. The headings of the various sections of this Agreement have been
inserted for ease of reference only and shall be deemed not to be a part of this
Agreement.
8.10 Entire Agreement. This Agreement constitutes the entire understanding of
the parties with relation to the subject matter hereof, and may be amended only
by a writing in accordance with clause 8.7 above.
MADE AND ENTERED INTO this _________ day of _________, 199__, by the undersigned
authorized representatives of the parties.
e-Net, Inc. Distributor
-----------------------
Company Name
- ------------------------ ------------------------
(Signature) (Signature)
- ------------------------ ------------------------
(Name) (Name)
- ------------------------ ------------------------
(Title) (Title)
- ------------------------ ------------------------
(Date) (Date)
ATTACHMENT A
Seller Product and Distributor Prices
Product Designation List Price Each
- ------------------- ---------------
T2000-TS $549
T2000-CO $795
T2000-IN (4 port BRI) $8495
T2000-DTI (PCM single span T1/E1) $10,995
Gateways FXS 7300 (7.3kbps single span T1/E1) $29,995
Network Management System (NMS) $10,000
INITIAL DISCOUNT FOR DISTRIBUTOR AGREED AS 35%. A LIMITED NUMBER OF
DEMONSTRATION AND TEST UNIT ORDERS SHALL BE DISCOUNTED AT 40%.
- --------------------------------------------------------------
Discounts based on total units purchased per calendar quarter no minimum
committment.
Units Purchased Discount off List
- --------------- -----------------
0 - 19 0%
20 - 99 10%
100 - 499 15%
500 - 999 20%
1000 - 4999 25%
5000 + 30%
Discounts based on total units purchased per calendar quarter with a minimum
committment of 100 units per quarter. To qualify, participants must submit a
funded purchase order for a 100 unit order by the beginning of each quarter.
Units Purchased Discount off List
- --------------- -----------------
100 - 499 25%
500 - 999 30%
1000 - 4999 35%
5000 + 40%
All prices herein are available for certified Distributors only, and are subject
to change by Seller in accordance with the Seller's contractual agreements and
standard practices and policies.
Service Fees ( See Attachment B):
A one-year maintenance contract is available upon initial order for a
fee of fifteen per cent (15%) of the order dollar value. Maintenance service
includes Standard Support as defined in Attachment B. Nonstandard Support in the
areas of enhanced installation service, training, customization, and relocation
is available on a per order basis, when accepted by e-Net, Inc. Fees for
Nonstandard Support are based upon $1500.00 per day, minimum of two days, plus
travel and living.
ATTACHMENT B
Seller's After-Sale Support of Seller Products
Product Malfunction Correction Procedures
Problem Classifications - If Distributor or its Customer encounters a problem
(classified below) with the product, then Seller is required to respond to the
Distributor or its Sublicensee in the time specified below:
P1: Critical Systems Problem - Customer is unable to use the product as
documented, and a major operational problem or reliability problem exists.
Seller shall provide acknowledgment of the problem within four (4) hours. At
this time, Distributor or its Customer may be required to provide additional
information to enable Seller to recreate the problem. Seller shall use its best
efforts to provide a work-around (if a work-around is possible) for the problem
and shall provide a plan for resolution within one (1) day from the time at
which the problem can be reproduced by Seller. Distributor or its Customer may
be required to aid in this task if the error can not be reproduced by Seller. A
patch release containing the fix shall be produced according to the plan
mentioned above. Status reports will be provided to Distributor or its Customer
as required, but no less than twice a week.
P2: Minor Operational Problem(s) - An intermittent `bug' in the product exists,
but it is not a critical systems reliability issue; however, the product does
not function as documented, and the `bug' creates a minor operational impact.
Seller shall provide acknowledgment of the problem within one (1) business day.
At this time, Distributor or its Customer may be required to provide additional
information to enable Seller to recreate the problem. Distributor or its
Customer may be required to aid in this task if the error can not be reproduced
by Seller. Seller shall use its best efforts to provide a work-around (if a
work-around is possible) for the problem and shall provide a plan for resolution
within one (1) week from the time at which the problem can be reproduced by
Seller. Any fixes to address this problem shall be incorporated into the next
Maintenance Release.
P3: Annoyance Type Problem - The use of the product produces a user annoyance
while the product is in application. Seller shall provide acknowledgment of the
problem within two (2) business days. At this time, Distributor or its Customer
may be required to provide additional information to enable Seller to recreate
the problem. Seller shall use its best efforts to provide a work-around (if a
work-around is possible) for the problem and shall provide a plan for resolution
within two (2) weeks from the time at which the problem can be reproduced.
Distributor or its Customer may be required to aid in this task if the error can
not be reproduced by Seller. Seller and Distributor or its Customer will jointly
determine if the annoyance is to be fixed. If it is agreed upon that the
annoyance is to be fixed, then Seller shall provide a schedule for the next
Scheduled Release and incorporate the fix into that release.
Definitions:
1.) Scheduled release - includes new functionality
2.) Maintenance release - takes care of `bug' fixes
3.) Work-around - customer able to make alteration to application or product as
a temporary solution.