Exhibit 10.1
DISTRIBUTION AGREEMENT MADE AND ENTERED INTO IN THE CITY OF MONTREAL, PROVINCE
OF QUEBEC WITH AN EFFECTIVE DATE OF MARCH 1st, 2006
BY AND BETWEEN: TELIPHONE INC., a body politic and corporate,
duly incorporated according to law, having a
place of business at 1080 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: 9164-4898 Quebec Inc., also known as "BR
Communications Inc.", a body politic and
corporate duly incorporated according to law,
having a place of business of at 811 Martin,
St-Amable, QC, Canada J0L 1N0, herein
represented by Benoit Ratthe, President, duly
authorized as he so declares,
hereinafter referred to as "DISTRIBUTOR"
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PREAMBLE
As per the effective date of this contract, this agreement replaces the previous
agreement for distribution between Teliphone and MSBR Communications Inc.
previously signed effective March 1, 2005. Upon execution, all previous rights,
responsibilities and obligations associated with the Teliphone and MSBR
Communications Inc. agreement become null and void. See reference "Agreement to
transfer rights of Distribution of Teliphone Products and Services" between MSBR
Communications Inc. and BR Communications Inc.
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 Distributor wishes to obtain an exclusive right to distribute to
Residential and Business Clients the Product throughout the provinces of Quebec
and Ontario (the "Territory") through Retail Outlets, telecommunications
interconnection companies, other Resellers of goods and services in the
telecommunications sector and Teliphone's web site 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 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. BUSINESS CLIENTS: A business client is an end user of the Product
and may be a moral person or partnership or association or company
with limited liability who may require multiple telephone lines and
other services which the normal private consumer would not be using.
2.2. DISTRIBUTOR BACK-OFFICE: means an internet portal supplied by
Teliphone where Teliphone 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
a Distributor to determine what amounts and or information to
determine whatever information that they're entitled to get within
the agreements made with Teliphone.
2.3. 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;
2.4. FAIR MARKET VALUE: The price that would be agreed upon in an open
and unrestricted market between fully-informed, knowledgeable and
willing parties dealing at arm's length without constraint.
2.4. INTERNET SALE: An internet sale occurs when a prospective customer
whose principal address is within the Territory becomes a Teliphone
Subscriber through the purchase of the Product via Teliphone's web
site.
2.5. PROMOTION MATERIAL: This is advertising information that may be made
available through various means to identify the availability of VoIP
products and services, and without limiting the generality of the
nature of this material, it may include doorway stickers, posters,
table tents, brochures, pamphlets, business cards, web portal,
prepaid telephone service card, etc. wherein the logo of Teliphone
may be displayed and promoted.
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2.6. RECURRING REVENUES: This is the revenue being received by Teliphone
from the Teliphone Subscriber payable to Teliphone based on the
services purchased from Teliphone
2.7. RE-SELLER: a Re-Seller is a company or individual who will sell The
Product in The Territory pursuant to authorization emanating from
the Distributor
2.8. RE-SELLER BACK-OFFICE: means an internet portal supplied by
Teliphone where Teliphone 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
a Re-Seller to determine what amounts and or information to
determine whatever information that they're entitled to get within
the agreements made with the Distributor.
2.9. 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 may be
promoted in the Territory.
2.10. SERVICES: Services include but are not limited to the voice and data
services that can be purchased by the Teliphone subscriber in order
to make and receive calls from various Teliphone Products.:
2.11. SUBSCRIBER BACK-OFFICE: Means an internet portal supplied by
Teliphone where Teliphone 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 allows the
subscriber to instantly obtain copy of detailed record of calls,
charges incurred to date, payments received by Teliphone from
subscriber, and any other information that may from time to time be
made available by Teliphone for the use by Subscriber
2.12. TELIPHONE SUBSCRIBER: This is any End User of the Teliphone services
in good payment standing who elects to complete or receive a
telephone call using a telephone device which is being made
available by Teliphone. Only Teliphone Subscribers whose principal
location entered in their account as residing within the Territory
will be considered in this agreement.
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2.13. TERRITORY: Shall mean the Provinces of Quebec and Ontario.
2.14. 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
2.15. WHOLESALER: A Re-seller which achieves a higher than usual amount of
sales volume of hardware or services to their customers. Wholesalers
typically offer direct support to their customers, as well as
invoice their customers directly for services.
3. APPOINTMENT OF DISTRIBUTOR
3.1. Teliphone appoints the Distributor as its exclusive distributor in
the Territory for Sales through various distribution channels such
as but not limited to:
o Retail Outlets
o Teliphone's web site
o Telecommunications Interconnection companies
o Other re-sellers in the field of telecommunications products
and services
upon the terms and conditions herein set out and Distributor hereby
accepts such appointment. This exclusivity appointment carries the
following exceptions:
o Sales of Teliphone's products and services performed by:
o Mobality Inc. (Ontario)
o Dialek Telecom (Quebec)
o Business wholesaler known as "GH" or Tel-Synergy
4. DETAILS OF SALES ACTIVITIES WITHIN THE TERRITORY
4.1. Distributor acknowledges that as they sell the product, there is
initially a substantial negative financial burden which is assumed
by Teliphone, namely that Teliphone must apply inventory below its
cost. Consequently, Teliphone reserves the right to decline or to
accept any orders from Distributor if;
a) It is not in the interest of Teliphone from an economic point of
view, or;
b) If the timing for the commencement of the business is
inappropriate, Teliphone, its Distributor and, if necessary, an
independent mediator will determine the appropriate timing, or;
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c) If the Re-Seller is not deemed appropriate, Teliphone, its
Distributor and, if necessary, an independent mediator will
determine the appropriateness of the Re-Seller, or;
d) if the credit worthiness of the Re-Seller is not considered to be
appropriate, Teliphone reserving in its sole discretion to determine
the appropriate credit credentials or; Teliphone must demonstrate
inappropriate credit worthiness by means of credit verification
services to Distributor.
e) For any other commercial reason arising out of current market
circumstances. Teliphone will demonstrate to Distributor the
severity of the market circumstance which will necessitate such an
action.
4.2. COMMISSION STRUCTURE:
4.2.1. INTERNET SALES WITHIN THE TERRITORY. Distributor will be
entitled to the 25% commissions on Recurring Revenues for all
internet sales made within the Territory to Teliphone
Subscribers whose principal address is within the Territory.
Distributor will not receive any commissions on the hardware
devices sold.
4.2.1.1. PROVISION FOR SALES OF TELIPHONE'S MOBILNATION
Distributor will receive 10% commissions on Recurring Revenues
of MobilNation services sold on Teliphone's MobilNation
website. Distributor will only begin to receive such
commissions once Distributor has been successful in producing
adequate levels of sales activity in the other segments in
order to receive commissions. Both Teliphone and Distributor
will jointly decide on when this adequate level of sales
activity is achieved, whereby the pronunciation of the start
date of receipt of commissions will not be unreasonably
withheld by either party.
4.2.1.2. PROVISION FOR SALES OF LONG DISTANCE SERVICES
Distributor will receive 5% commissions on revenues relating
to long distance services purchased by End-Users. These
services are outside of monthly long distance rate plans and
are long distance services purchased by End-Users in pre-paid
increments and billed on a per minute of usage basis. The 5%
commission will be paid once Teliphone receives the pre-paid
increment.
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4.2.2. RETAIL AND TELECOMMUNICATIONS INTERCONNECTION SALES WITHIN
THE TERRITORY.
Distributor will receive 25% of recurring revenues which Distributor
will utilize to pay commissions to itself and to its re-sellers. In
the case when a desired total commission pay-out exceeds 25%,
Teliphone reserves the right to agree or disagree to increase
commissions paid on the proposed sale.
Teliphone and Distributor will jointly decide on the pricing
strategy of the hardware sold to re-sellers. Teliphone reserves the
right to agree or disagree on any proposed sale price of hardware as
per Schedule "A".
Additional commissions may be paid to Distributor or Re-sellers,
such as but not limited to Long Distance sales incentives,
activation fees, etc. Teliphone and Distributor will jointly decide
on pricing strategies for these commissions. Teliphone reserves the
right to agree or disagree on any proposed sale price of hardware.
4.2.3. WHOLESALER SALES WITHIN THE TERRITORY
In the case of wholesale sales within the territory, Distributor
will be entitled to a commission of 10% on monthly services sold.
5. RE-SELLERS / ASSIGNMENT
5.1. Teliphone hereby grants to the Distributor the right to appoint
persons or companies as its Re-Sellers of the Product, provided
however that the appointment by the Distributor of one or more
Re-Sellers shall not relieve the Distributor 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. Distributor shall, on a best effort basis, cause sales to occur to
Teliphone Subscribers by achieving End User activations.
6.2. It is understood by both parties that there are many external
factors that may influence sales objectives, such as competitive
activity, amounts of investment in branding and promotion, inventory
considerations for opening up new retailers, area code
availabilities within Teliphone's ability to cover the Territory,
etc. As a result, quantities related to objectives in 6.1. above
will be established based on a marketing plan produced by both
Parties during the month of January of each year.
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6.3. Distributor hereby warrants and represents that it hereby agrees to
the pricing as set by Teliphone.
7. RESPONSIBILITIES OF TELIPHONE
7.1. Teliphone will, on a best effort basis, ensure that it supplies to
Distributor and its Re-Seller network, within reasonable lead times
befitting the product or service offering, all products and services
as ordered and required by Distributor or its Re-Sellers in order
for it to deliver on its responsibilities as outlined in section 6
above.
8. SHIPPING AND PAYMENT ARRANGEMENTS
8.1. Products will be shipped direct to the Re-Seller upon receipt by
Teliphone of the Distributor's purchase order. The product shall be
sold F.O.B. Teliphone's warehouse. Distributor and Teliphone may
choose to develop different methods in order to increase the
efficiency of the hardware fulfillment process. Both parties will
work together to identify the most cost effective methods to fulfill
Re-Seller orders and as such, fulfillment procedures may change over
time.
8.1.1. Terms of payment will be COD.
8.2. Teliphone will pay Distributor all commissions within 15 days of
month end.
9. RESPONSIBILITIES OF THE DISTRIBUTOR
The distributor agrees that during the term of this Agreement, it shall:
9.1. 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.
9.2. Request approval from Teliphone on all marketing and promotional
material prior to distribution.
9.3. Devote its best efforts to the performance of its obligations under
this Agreement
9.4. Make every reasonable effort and use proper means to develop the
market potential for trade in Product and actively solicit the
activation by End Users.
9.5. Share in marketing, promotion and advertising costs as agreed upon
with Teliphone on a case by case basis.
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9.5.1. In the case of demonstration phones, Distributor will cover
100% of Teliphone's cost of the hardware required for the
demonstration unit. Teliphone will pay for a free unlimited
local calling only on the demonstration unit. The number of
demonstration units in circulation will be determined on a
case by case basis by Teliphone and Distributor.
9.5.2. Distributor will provide Teliphone with banner advertising
throughout DISTRIBUTOR's and its Re-Seller's network of web
sites.
9.6. Develop, promote and maintain with End Users, the goodwill and
reputation of Teliphone and its products and services.
10. TERM AND TERMINATION
10.1 TERM. This Agreement shall commence on the date hereinabove and
remain in effect for a period of five (5) years 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 (90) days prior to the end of the Initial
Term, or end of successive renewal terms. In the case of dissolution
of this contract, Distributor will be entitled to commissions on
recurring revenues for as long as the Teliphone Subscriber that
existed prior to the dissolution of this contract remains a client
in good standing of Teliphone.
10.2 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.
(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.
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(d) Either party commits, participates or acquiesces in any fraudulent
or improper actions in regards to this agreement;
11. CONFIDENTIALITY.
11.1. "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.
11.2. 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.
11.3. 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.
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12. GENERAL AND CONCLUDING PROVISIONS
12.1. 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.
12.2. This Agreement contains the entire agreement among the parties with
respect to the transactions contemplated herein, and supersedes all
prior negotiations, agreements and undertakings.
12.3. 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.
12.4. 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 Beaver Hall, Suite 1555
Montreal, Quebec H2Z 1S8
Attention: George Metrakos
Telephone (514) 313-6010
Fax (514) 313-6001
E-mail: gmetrakos@teliphone.ca
Distributor
BR Communications Inc.;
811 Martin, St-Amable,
QC, Canada J0L 1N0
Attention : Benoit Ratthe
Telephone (514) 313-3271
Fax (450) 649-2846
E-mail: bratthe1@sympatico.ca
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12.5. This Agreement shall be construed in accordance with the laws of the
Province of Quebec and Canada.
12.6. This Agreement may be amended only by written agreement duly
executed by all parties hereto.
12.7. 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.
12.8. 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.
12.9. 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 Distributor 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.
12.9.1. In the event the majority control of the shares in Teliphone
is sold to a third party or in the event that the sale of
assets of Teliphone occurs, Teliphone reserves the right to
acquire the projected residuals of Distributor at fair market
value.
12.10. 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.
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WHEREFORE THE PARTIES HERETO HAVE SIGNED WITH DATE EFFECTIVE ON THE DATE AND
PLACE FIRST MENTIONED HEREINABOVE.
TELIPHONE INC Distributor: BR Communications Inc.
per: per:
/s/ George Metrakos /s/ Benoit Ratthe
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George Metrakos, President Benoit Ratthe, President
11/28/2006 11/28/2006
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Date Date
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SCHEDULE "A"
The purchase and commission structure is as follows:
Hardware:
o Teliphone V1 wi-fi VoIP phone at a cost of $60 each
o TeliphoneLine single port unit at a cost of $20 each
o TeliphoneLine dual port unit at a cost of $40 each
Note- Hardware prices subject to change under conditions stipulated under
section 4.2.2
In the case where DISTRIBUTOR should sell a hardware unit at the full,
non-contract price, the above margins (sell price - cost) will still apply to
calculate the cost.
As commission for activating new accounts with monthly unlimited rate plans, a
10$ commission will be credited to DISTRIBUTOR's account upon the activation of
a $9.95/mth North America Unlimited plan. A 5$ commission will be credited to
DISTRIBUTOR's account upon the activation of the line with a $4.95 Province
Unlimited plan.
No commissions will be paid out on the iPCS SIM card, iPCS hardware or the iPCS
security deposits.
Services:
DISTRIBUTOR will receive 25% commission on the total expenditures (monthly basic
plan and unlimited long distance plans) made by the DISTRIBUTOR's activated
clients. This 25% includes the re-seller portion of the commission, as decided
upon by DISTRIBUTOR.
Distributor will receive 5% commission on long distance to be paid upon receipt
of pre-paid $10 increments as received by active Teliphone subscribers.
DISTRIBUTOR will also acknowledge that if Teliphone services are sold to a Call
Center customer, then DISTRIBUTOR's Call Center customers cannot subscribe to
unlimited long distance packages and must negotiate a per minute Long Distance
rate with Teliphone.
The Teliphone iPCS monthly plans, additional cellular air time minutes and
cellular long distance minutes will provide a 5% commission.
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