Exhibit 10.11
WHOLESALE AGREEMENT MADE AND ENTERED INTO IN THE CITY OF MONTREAL, PROVINCE OF
QUEBEC WITH AN EFFECTIVE DATE OF
BY AND BETWEEN: TELIPHONE INC., a body politic and corporate,
duly incorporated according to law, having a
place of business at 1080 Cote du Beaver Hall,
suite 1555, Montreal, Quebec, H2Z 1S8, herein
represented by George Metrakos, President, duly
authorized as he so declares,
hereinafter referred to as "TELIPHONE"
AND: 9151-4877 Quebec Inc., also known as "Dialek
Telecom"., a body politic and corporate duly
incorporated according to law, having a place
of business at 6 Wellington Sud, suite 302,
Sherbrooke, QC, Canada J1H 5C7, herein
represented by Lukas Dufault, President, duly
authorized as he so declares,
hereinafter referred to as "Wholesaler"
PREAMBLE
WHEREAS Teliphone is in the business of providing Voice Over Internet Protocol
(VoIP) service such that telephone communications may be effected through the
use of wireless or wired high speed Internet and is an importer of the hardware
devices required for delivery of the service (the "Product")
WHEREAS Wholesaler wishes to obtain the right to distribute a White Label VoIP
version of the Product known as "Dialek" ("White Label Product") throughout
Canada and the United States (the "Territory") on the terms and subject to the
conditions herein contained.
Whereas the parties wish to set forth their rights and obligations pertaining to
the right of distribution of the White Label Product in the Territory and have
agreed to cause the product to be marketed in conformity with the terms and
conditions as provided herein;
WHEREFORE THE PARTIES HERETO HAVE AGREED AS FOLLOWS:
1. The Preamble hereinabove stated shall form an integral part of the present
Agreement as if recited herein at length;
2. Definitions
2.1. END USER: These are members of the public who elect to gain access to
a device for telephone communication through the use of VoIP who are
charged for the use of the product;
2.2. RECURRING REVENUES: This is the revenue being received by the
Wholesaler from their White Label Subscriber payable to the Wholesaler
based on the services purchased from Wholesaler.
2.3. RECURRING COSTS: This is the cost being paid to Teliphone by
wholesaler based on the services purchased from Wholesaler by their White
Label Subscribers.
2.4. RE-SELLER: a Re-Seller is a company or individual who will sell the
White Label Product in The Territory pursuant to authorization emanating
from the Wholesaler.
2.5. RETAIL OUTLETS: Means a commercial place of business selling
electronic, computer, telecommunications and related accessories and
services with permanent retail store frontage serving commercial
enterprises and the consumer public whose purposes is to invite the
general public to enter their premises in order to demonstrate and offer
for sale products and services such that the Product and the White Label
Product may be promoted in the Territory.
2.6. SERVICES: Services include but is not limited to the following items
that can be purchased by the White Label Subscriber in order to make and
receive calls from the various White Label Products:
o Monthly Single Point of Contact (SPC) services
o Monthly Basic VoIP calling services
o Monthly Unlimited VoIP long distance calling packages
o Monthly Limited VoIP long distance calling packages
o Long distance calling on a per minute charge basis
o Monthly Cellular phone (iPCS) local air time calling services
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o Additional local air time calling services on a per minute
basis
o Cellular phone (iPCS) long distance air time calling services
2.7. SUB-TERRITORY: Shall mean a region as defined by its telephone area
code located within the Territory.
2.8. TERRITORY: Shall mean the countries of Canada and The United States
of America.
2.9. VoIP: Voice Over Internet Protocol consists of a form of voice
communication through the use of high speed internet, wireless internet
(wi-fi), router, gateway, portable and desktop communication devices
2.10. WHITE LABEL BACK-OFFICE: means an internet portal supplied by
Teliphone where White Label Product Subscribers may gain access to all of
their private records through the use of internet, such records emanating
from Teliphone's central serving system which would allow Wholesaler to
determine what amounts and or information to determine whatever
information that they're entitled to get within the agreements made with
Teliphone.
2.11. WHITE LABEL SUBSCRIBER: This is any End User of the White Label
version of the Teliphone VoIP or Cellular service in good payment standing
who elects to complete or receive a telephone call using a telephone
device which is being made available by Wholesaler.
3. APPOINTMENT OF WHOLESALER
3.1. Teliphone appoints the Wholesaler as a White Label Product Wholesaler
in the Territory upon the terms and conditions herein set out and
Wholesaler hereby accepts such appointment.
3.2. Wholesaler may promote and sell its White Label Product in The
Territory to their existing client base. Wholesaler may also look to sell
outside its existing client base. This is permissible provided that
Wholesaler does not promote and sell its White Label Product through
Retail Outlets without prior written consent of Teliphone whose consent
will not be unreasonably withheld. Teliphone reserves the right to
disallow Wholesaler to sell or promote its White Label Products to Retail
Outlets should Teliphone feel that its presence may in any way negatively
impact Teliphone's own sales and promotional activities.
4. DETAILS OF SALES ACTIVITIES WITHIN THE TERRITORY
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4.1. Wholesaler acknowledges that on a prior date, Teliphone has entered
into agreement with Distribution Car-Tel Inc. ("Car-Tel") in order to
provide VoIP services in the Territory to Business and Residential Clients
and as a consequence thereof renounces to any claim or beneficial interest
and or right with respect to any revenues derived from the activities of
Teliphone and Car-Tel.
4.2. Wholesaler cannot sell their White Label Product in the Sub-Territory
of the city of St-Hyacinthe, Province of Quebec through Retail Outlets
until October 1, 2005.
4.3. Wholesaler cannot sell their White Label Product in the Sub-Territory
of the city of Laval, Province of Quebec to Business customers until
November 1, 2005.
4.4. Wholesaler shall be granted the exclusive right to sell their White
Label Product in the Sub-Territory of Sherbrooke, Quebec for a period of 6
months upon the signing of this agreement. This means that Teliphone will
not promote its Teliphone brand of products and services in the
Sub-Territory of Sherbrooke during this time.
4.5. Wholesaler is entitled to sell their White Label Product to any
Retail Outlets only within the Sub-Territory of Sherbrooke, Province of
Quebec, Canada. This includes the geographic territory encompassing cities
that are considered local to Sherbrooke, including the cities found in
Schedule "A".
4.6. Wholesaler may purchase all inventories of hardware devices for the
White Label Product from Teliphone at Teliphone's landed cost. Payment
will be made as per the terms and conditions outlined in section 7. The
current pricing of White Label Product hardware devices can be found in
Schedule "A". Consequently, Teliphone reserves the right to decline to
accept any orders from Wholesaler if;
a) if the credit worthiness of the Wholesaler is not considered to
be appropriate, Teliphone reserving in its sole discretion to
determine the appropriate credit credentials or;
b) For any other commercial reason arising out of current market
circumstances.
4.7. Wholesaler reserves the right to purchase other hardware devices for
its White Label product, upon written approval from Teliphone, once
Teliphone has been provided a reasonable amount of time to fully evaluate
said hardware. Teliphone's consent for use of different hardware for
Wholesaler's White Label product will not be unreasonably withheld.
5. RE-SELLERS / ASSIGNMENT
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5.1. Teliphone hereby grants to the Wholesaler the right to appoint
persons or companies as its Re-Sellers of the White Label Product,
provided however that the appointment by the Wholesaler of one or more
Re-Sellers shall not relieve the Wholesaler of its obligations hereunder.
Teliphone shall be requested in writing for its consent for such
appointment, which consent will not be unreasonably withheld.
6. REQUIRED TELIPHONE SUBSCRIBER SALES
6.1. Wholesaler shall purchase directly from Teliphone the minimum
quantities of the Product intended for Sherbrooke, Quebec and hereby
warrants and represents that it shall cause sales to occur to Sherbrooke
White Label Product Subscribers by achieving activations of Business
Clients and or End Users of a White Label Product activation with the
following minimum quantities provided for:
a) 100 by upon the signing of this agreement
b) 500 within 3 months of the signing of this agreement
c) 1000 within 5 months of the signing of this agreement
6.2. Should Wholesaler not achieve activations of the required number of
White Label Product Subscribers within the minimum quantities provided for
in 6.1 above, the Wholesaler shall forfeit its right to the exclusivity of
Sherbrooke, Quebec as outlined in 4.3. above.
6.3. Teliphone agrees to provide the Wholesaler the product as ordered
subject to the terms of this agreement and will use its best efforts to
cause the Product to meet all End User and Business client requirements.
6.4. Wholesaler hereby warrants and represents that it hereby agrees to
the pricing as set by Teliphone under schedule "C" which pricing may be
modified from time to time at the sole discretion of Teliphone.
7. SHIPPING AND PAYMENT ARRANGEMENTS
7.1. White Label Products will be shipped to one destination supplied by
the Wholesaler upon receipt by Teliphone of the Wholesaler's purchase
order. The product shall be sold F.O.B. Teliphone's warehouse.
7.1.1. Terms of payment will pre-paid upon receipt of order.
7.2. Teliphone will invoice Wholesaler for the number of activated
accounts and their respective services at the end of each month payable
upon receipt of invoice. Wholesaler will maintain a pre-paid bank for all
long distance minutes used by their End Users, which Wholesaler shall
monitor in order to ensure that there always remains a credit balance.
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8. RESPONSIBILITIES OF THE WHOLESALER
The Wholesaler agrees that during the term of this Agreement, it shall:
8.1. Comply and cause all its Re-Sellers or parties appointed by it to
comply with all applicable laws in the Territory relating to the
advertising, distribution and sale of Products and with the terms and
conditions of this Agreement.
8.2. Devote its best efforts to the performance of its obligations under
this Agreement.
8.3. Make every reasonable effort and use proper means to develop the
market potential for trade in the White Label Product and actively solicit
the activation by End Users.
8.4. Teliphone shall provide Wholesaler with their White Label Product End
User account access, through the transfer of all required user names and
passwords such that Wholesaler can properly support its White Label
Product End Users.
9. TERM AND TERMINATION
9.1 TERM. This Agreement shall commence on the date hereinabove and remain
in effect for an initial period of one (1) year from the effective date.
This agreement shall automatically renew successive one-year terms, unless
either party provides written notice to the other party not less than
ninety (30) days prior to the end of the Initial Term, or end of
successive renewal terms. In the case of dissolution of this contract,
Wholesaler will be entitled to commissions on recurring revenues for as
long as the White Label Subscriber that existed prior to the dissolution
of this contract remains a client in good standing on a continuous basis
of Teliphone.
9.2 TERMINATION BY EITHER PARTY. Either party (the "Non-Defaulting Party")
may terminate this Agreement by providing at least thirty (30) days prior
written notice to the other party (the "Defaulting Party") upon the
occurrence of any of the following events:
(a) the Defaulting Party is in default in the performance of any of its
obligations under this Agreement or breaches any provision hereof
and such default or breach continues after at least ten (10)
following receipt of written notice of such default or breach from
the Non-Defaulting Party to the Defaulting Party.
(b) the conviction in any court of competent jurisdiction of either
party or any employee, shareholder, director or officer of either
party for any crime or violation of law if, such conviction is
likely to adversely affect the operation or business of the other
party or tend to be harmful to the goodwill or reputation of the
other party.
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(c) Any conduct or practice by either party, its directors, officers,
employees or shareholders, which is injurious to the goodwill or
reputation of the other party.
(d) Either party commits, participates or acquiesces in any fraudulent
or improper actions in regards to this agreement;
10. CONFIDENTIALITY.
10.1. "Confidential Information" means any business and technical
information disclosed by either party to the other party, either directly
or indirectly, in writing, orally or by inspection of tangible objects
(including without limitation concepts, designs, documents, prototypes or
samples), which is designated as "Confidential," "Proprietary" or some
similar designation or is disclosed under circumstances which indicate its
confidential nature. Confidential Information may also include third party
confidential information. Confidential Information will not include any
information which
(i) was publicly known and made generally available in the public
domain prior to the time of disclosure by the disclosing party;
(ii) becomes publicly known and made generally available after
disclosure by the disclosing party to the receiving party through no
action or inaction of the receiving party;
(iii) is already in the possession of the receiving party at the
time of disclosure by the disclosing party as shown by the receiving
party's files and records immediately prior to the time of
disclosure;
(iv) is obtained by the receiving party from a third party without a
breach of such third party's obligations of confidentiality; or
(v) is independently developed by the receiving party without use of
or reference to the disclosing party's Confidential Information, as
shown by documents and other competent evidence in the receiving
party's possession.
10.2. Non-use and Nondisclosure. Each party agrees not to use any
Confidential Information of the other party for any purpose except to
perform its obligations or exercise its rights under this Agreement. Each
party agrees not to disclose any Confidential Information of the other
party to third parties or to such party's employees, except to those
employees or consultants of the receiving party who are required to have
the information. Nothing in this Section precludes either party from
disclosing the other party's Confidential Information as required by law
or a legal process.
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10.3. Maintenance of Confidentiality. Each party agrees that it will take
reasonable measures to protect the secrecy of and avoid disclosure and
unauthorized use of the Confidential Information of the other party.
Without limiting the foregoing, each party will take at least those
measures that it takes to protect its own most highly confidential
information and will ensure that its employees and independent contractors
who have access to Confidential Information of the other party have signed
a non-use and non-disclosure agreement in content similar to the
provisions hereof. Each party will reproduce the other party's proprietary
rights notices on any such approved copies, in the same manner in which
such notices were set forth in or on the original.
11. GENERAL AND CONCLUDING PROVISIONS
11.1. This agreement shall ensure to the benefit of and be binding upon
the parties hereto, and their respective heirs, legatees, executors, legal
representatives, successors and assigns.
11.2. This Agreement contains the entire agreement among the parties with
respect to the transactions contemplated herein, and supersedes all prior
negotiations, agreements and undertakings.
11.3. This Agreement may be executed in two or more counterparts each of
which shall be deemed an original and all of which together shall
constitute one and the same Agreement. Faxed signatures of the parties
shall be valid and binding, however, the parties hereto agree to provide
the original of their signature to this Agreement to each of the other
parties thereafter.
11.4. All notices in connection with this Agreement shall be in writing
and either hand-delivered or mailed by registered or certified mail and
shall be sent to all of the parties hereto. Any such notice shall be
deemed to have been received on the earlier of the date of the
hand-delivery or on the fifth (5th) business day following the date
indicated on the proof of mailing. The respective addresses for such
notices are:
Teliphone Inc
1080 Cote du Beaver Hall, suite 1555
Montreal, Quebec H2Z 1S8
Attention: George Metrakos
Telephone (514) 313-6010
Fax (514) 313-6001
E-mail: gmetrakos@teliphone.ca
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Wholesaler
9151-4877 Quebec Inc., Dialek Telecom
6, Wellington Sud, suite 302
Sherbrooke, Quebec J1G 5C7
Attention : Lukas Dufault
Telephone (819) 340-1199
Fax (819) 340-1198
E-mail : ldufault@dialektelecom.ca
11.5. This Agreement shall be construed in accordance with the laws of the
Province of Quebec and Canada.
11.6. This Agreement may be amended only by written agreement duly
executed by all parties hereto.
11.7. The parties shall furnish and deliver from time to time such
documents, and writings as may reasonably be required as necessary or
desirable to complete this Agreement and to give effect to its provisions.
11.8. The parties agree to do and cause to be done such acts, deeds,
documents and/or corporate proceedings as maybe necessary or desirable to
complete this Agreement, and to give effect to its provisions.
11.9. In the event the majority control of the shares in Teliphone is sold
to a third party and or in the event that the sale of the assets of
Teliphone occurs, it is understood and agreed that the rights and
obligations provided for the benefit of the Wholesaler under this
agreement shall form the subject of a specific clause under such future
agreements whereby the new controlling shareholders and or the purchaser
of the assets assumes all financial obligations of Teliphone as provided
for herein.
11.10. The parties hereto have requested that the present Agreement be
drafted in the English language. Les parties declarent qu'ils ont requis
que la presente entente soit redigee dans la langue anglaise.
WHEREFORE THE PARTIES HERETO HAVE SIGNED WITH DATE EFFECTIVE ON THE DATE AND
PLACE FIRST MENTIONED HEREINABOVE.
TELIPHONE INC Wholesaler: Dialek Telecom
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per: per:
/s/ George Metrakos /s Lukas Dufault
- ------------------------------------- ---------------------------------------
George Metrakos, President Lukas Dufault, President
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SCHEDULE "A" - Local cities to Sherbrooke, Quebec
Asbestos, QC
Ayer's Cliff, QC
Bishopton, QC
Bromptonville, QC
Bury, QC
Chartierville, QC
Coaticook, QC
Compton, QC
Cookshire, QC
Danville, QC Deauville, QC
East Angus, QC
East Hereford, QC
Eastman, QC
La Patrie, QC
Lawrenceville, QC
Magog, QC Mansonville, QC
North Hatley, QC
Richmond, QC
Rock Island, QC
Sawyerville, QC
Scotstown, QC
St-Adolphe-de-Dudswell, QC
St-Malo, QC
Stoke, QC
Stratford, QC
Valcourt, QC
Waterville, QC
Weedon, QC
Windsor, QC
Wotton, QC
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SCHEDULE "B"
Teliphone's landed costs for White Label Product hardware devices effective
March 20, 2005:
Teliphone wi-fi: US$135.00
TeliphoneLine single port: US$68.00
TeliphoneLine dual port: US$85.00
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SCHEDULE "C"
Effective February 6, 2005
Item Residential / SOHO Commercial / Enterprise
- ---------------------------------------------------------- ------------------ -----------------------
Rate Plan
o Single Point of Contact** $5.00/mth $5.00/mth
o Basic VoIP Service
o Unlimited within Teliphone local area*** $14.95/mth $14.95/mth
o Unlimited Quebec $4.95/mth $9.95/mth
o Unlimited North America **** $9.95/mth $19.95/mth
Additional Services
o Extra handset attributed to same number
o Additional monthly charge $4.95/mth $4.95/mth
o Extra phone number on same handset $4.95/mth $4.95/mth
o Activation charge per line Currently Free $19.95
* Includes a $30 long distance credit upon activation.
** PC, Single Point of Contact, includes a phone number, FollowMe Call
forwarding and Voice Mail.
*** Local area includes Montreal, Sherbrooke, St-Hyacinth, Toronto and New
York. Future Canadian cities will be added to the local coverage area.
**** Includes Continental US and Canada.
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SCHEDULE "D"
Teliphone will provide VoIP services to Wholesaler for the following prices:
Basic VoIP line, within Teliphone's local calling area (Montreal, New York and
Toronto), including Single Point of Contact for Cdn$12.97.
Basic VoIP line as above, including unlimited calling within the Province of
Quebec or Province of Ontario for Cdn$16.19.
Basic VoIP line as above, including unlimited calling within the Continental US
& Canada for Cdn$19.44.
Teliphone will provide to Wholesaler its long distance services at a discount of
10% off of Teliphone's posted retail rates.
WHOLESALER will also acknowledge that if Teliphone services are sold to a Call
Center customer, then WHOLESALER's Call Center customers cannot subscribe to
unlimited long distance packages and must negotiate a per minute Long Distance
rate with Teliphone.
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