Exhibit 10.4
SOLE DISTRIBUTOR AGREEMENT
THIS AGREEMENT (the "Agreement") is made this 1st day of January, 2005 by
and between Netconx D&C Wireless, LLC, located at 0000 Xxxxxx Xxxxxxx Xxxxx,
Xxxxxxxxxxxxx, XX 00000 ("NCX"), and O2 Secure Wireless, Inc., located at 0000
Xxxxxxx Xxxxxx Xxxx, Xxx. 000, Xxxxxxxx, XX 00000 (the "Distributor").
WHEREAS, NCX owns certain import relationships, software licensing and
branding agreements and intellectual property designs, and Distributor wishes to
purchase or manufacture, for use or resale, products imported by or products
designed by NCX which utilize said relationships and agreements, NCX hereby
authorizes the Distributor to:
1. Products, Compensation & Limitation.
(a) Wireless cards.
(i) During the term of this Agreement, Distributor may purchase from
NCX for the purposes of internal use or resale the wireless cards
described on Exhibit A attached hereto (hereinafter "card" or "cards")
at the prices indicated thereon. For purposes of this Agreement, the
term "resale" shall be defined as the sale of cards by the Distributor
to third parties as part of a transaction in which Distributor does
not expect to generate additional revenue from subscribers to the
Distributors wireless internet access service.
(ii) In the event Distributor resales the cards, Distributor shall pay
NCX the additional amounts set forth on Exhibit A.
(iii) In the event the NCX's cost to purchase a card from its
manufacturer increases or decreases at any time by more than 2.5%,
then the NCX Cost for the card as set forth on Exhibit A shall
automatically increase or decrease by the exact same percentage that
NCX's cost has increased or decreased.
(b) Single and Dual Card Access Point.
(i) NCX hereby authorizes Distributor to manufacture for use or resale
(or contract with others to manufacture on Distributor's behalf), the
hard and soft components of NCX's outdoor access point as described in
Exhibit B. With the exception of the cards defined in Paragraph
1(a)(i), Distributor shall be authorized to purchase the components
for the outdoor access points from the suppliers of its choosing.
(ii) As additional compensation to NCX, Distributor shall pay NCX a
royalty in the amount set forth on Exhibit A for each outdoor access
point produced for use or resale.
(iii) Distributor is hereby authorized, but not required, to market
the outdoor access points produced under this Paragraph 1(b) under the
trademark "LinkLight," which is owned by NCX. .
2. Exclusivity. During the term of this Agreement, NCX will not sell cards or
outdoor access points to any third party, either directly or through a
distributor, independent sales agent, wholesaler or retailer. During the
term of this Agreement, Distributor agrees to make the cards and outdoor
access points available for purchase by any person at a reasonable price.
3. Assignment of Manufacturer Warranty. NCX represents that it has a warranty
from its manufacturer of the cards, under which the manufacturer is
required to repair or replace at its expense any card that does not work
properly within _______ years after the date of installation due to a
defect in the manufacture of the cards or its components (but not a defect
in the design of the cards). NCX hereby assigns to Distributor any rights
it has against the manufacturer of the cards with respect to any defect in
the manufacture of the cards or its components.
4. Confidentiality of Proprietary Information. The parties agree, during or
after the term of this Agreement, not to reveal confidential information,
or trade secrets to any person, firm, corporation, or entity. Such
confidential and proprietary information shall include, but not necessarily
be limited to, any information regarding the price charged the Distributor
by NCX for the cards as set forth on Exhibit A, or any plans or
specifications for the cards or the outdoor access points as set forth in
Exhibit B attached hereto. Should either party reveal or threaten to reveal
this information, the other shall be entitled to an injunction restraining
said party from disclosing same, or from rendering any services to any
entity to whom said information has been or is threatened to be disclosed,
the right to secure an injunction is not exclusive, and the party may
pursue any other remedies it has against said party for a breach or
threatened breach of this condition, including the recovery of damages.
5. Term of Agreement. This Agreement shall have a term of three (3) years. In
the either party commits a material breach of this Agreement, the
nonbreaching party may terminate this Agreement in the event the breaching
party has not cured the breach within thirty (30) days after notice of
breach by the nonbreaching party.
6. Non-Solicitation. During the term of this Agreement, neither party may
solicit for employment any of the party's employees. Furthermore,
Distributor may not contact or solicit any relationship with the
manufacturer of the card , Nanjing Z-Com, without first obtaining written
authorization from NCX, except that Distributor may contact the
manufacturer for the purpose of making a warranty claim with respect to a
card.
7. Software License. NCX hereby grants the Distributor a non-exclusive,
royalty-free, irrevocable, worldwide, fully paid-up license (with rights to
sublicense through multiple tiers of sub-licensees) to practice all patent,
copyright, moral right, mask work, trade secret and other intellectual
property rights, incuding the right to modify or create derivative works
therefrom, relating to any software code owned, created or used by NCX in
connection with the cards or the outdoor access points (other than software
used by NCX under a license from an arms-length third party), which license
shall survive the term of this Agreement or any termination of this
Agreement prior to the expiration of its term.
8. Issuance of Shares to NCX. In consideration for mutual benefits and
promises herein, the Distributor hereby issues NCX 2,000,000 shares (the
"Shares") of its common stock, subject to the following terms and
conditions:
(a) Cancellation. The Shares are subject to cancellation on the following
terms:
(i) In the event either party terminates this Agreement prior to the
end of the term of this Agreement, then the number of Shares that
shall be cancelled shall be equal to the product of (a) 2,000,000
times (b) the percentage obtained by dividing (a) 1,095 minus the
number of days that this Agreement was in force and effect (b) by
1,095.
(ii) In the event Xxxxx Xxxxxxx employment with the Distributor is
terminated prior to the end of the term of this Agreement for any
reason, then the number of Shares that shall be cancelled shall be
equal to the product of (a) 1,000,000 times (b) the percentage
obtained by dividing (a) 1,095 minus the number of days that this
Agreement was in force and effect (b) by 1,095.
(iii) In the event Xxxxx Xxxxxxx'x employment with the Distributor is
terminated prior to the end of the term of this Agreement for any
reason, then the number of Shares that shall be cancelled shall be
equal to the product of (a) 1,000,000 times (b) the percentage
obtained by dividing (a) 1,095 minus the number of days that this
Agreement was in force and effect (b) by 1,095.
(b) Restrictive Legend. The Shares shall carry a restrictive legend
required by state and federal securities laws stating that the Shares
may not be sold or transferred unless the sale or transfer is
registered or is exempt from registration under the Securities Act of
1933 and under any applicable state law. In addition, the restrictive
legend shall also contain a notice that the Shares are subject to
cancellation under certain circumstances defined by this Agreement,
and that their sale or transfer are subject to certain limitations
defined by this Agreement. NCX understands that it may be barred or
delayed from selling or transferring the Shares unless and until the
Distributor has registered the Shares or its legal counsel has
determined that the sale or transfer of the Shares will be exempt from
registration under applicable state and federal securities laws.
(c) Limitation on Sales of Shares. To the extent the Shares are not
subject to cancellation hereunder, NCX agrees that, within any
calendar quarter during the term of this Agreement, it may, to the
extent permitted by applicable law (including SEC Rule 144), sell no
more than 1% of the average weekly trading volume of the common stock
of the Distributor for the four weeks prior to the start of the
calendar quarter. Any shares that NCX may sell in any calendar quarter
that are not sold may not be sold in any future quarter. The
Distributor agrees that it will pay all costs necessary to obtain any
legal approvals to enable NCX to sell shares to the extent provided in
this subparagraph under SEC Rule 144, including any legal opinions or
certificates required in order to verify or obtain compliance with
Rule 144.
(d) Certain Representations and Warranties of NCX. In connection with the
issuance of the Shares, NCX represents and warrants to the Distributor
as follows:
(i) NCX (i) understands and acknowledges that the issuance of the
Shares has not been registered, and will not be registered, under the
1933 Act, nor under the securities laws of any state, nor under the
laws of any other country; (ii) recognizes that no public agency has
passed upon the accuracy or adequacy of any information provided to
NCX or the fairness of the terms of this transaction; and (iii) agrees
not to sell such securities without registering such sale under any
applicable state or federal securities laws unless exemptions from
such registration requirements are available with respect to any such
sales.
(ii) NCX will be acquiring the Shares for its own account for
long-term investment and not with a view towards resale, division or
distribution thereof.
(iii) NCX was recently formed to engage in the business of providing
broadband, wireless internet service, and other related services,
primarily to residents of multi-family properties, and has never
produced a profit from operations. Accordingly, NCX recognizes that
its investment in the Shares is a speculative venture, involves a high
degree of risk, and that the consideration for the issuance of the
Shares is placed at the risk of the business and may be completely
lost. NCX acknowledges that the Distributor makes no representation or
warranties about the potential future value of the Shares.
(iv) NCX confirms and represents that it is able (i) to bear the
economic risk of its investment in the Shares, (ii) to hold the Shares
for an indefinite period of time, and (iii) to afford a complete loss
of its investment.
(v) NCX has become aware of the offering of the Shares otherwise than
by means of general advertising or general solicitation.
(vi) NCX has carefully considered and has, to the extent it believes
such discussion necessary, discussed with its professional, legal, tax
and financial advisors, the suitability of an investment in the Shares
for its particular tax and financial situation and has determined that
the Shares are a suitable investment for NCX.
(vii) NCX has been presented with and has acted upon the opportunity
to ask questions of and receive answers from Distributor relating to
the merits of an investment in Distributor, and to obtain any
additional information necessary to verify the accuracy of the
information made available to them.
9. Arbitration. Any claim or controversy arising out of or related to this
Agreement, including any claim to enforce any rights created by this
Agreement or regarding the enforceability or interpretation of this
Agreement, shall be settled by arbitration in accordance with the rules of
the American Arbitration Association. Judgment upon the award rendered may
be entered in any court with jurisdiction.
10. Severability. Each provision of this Agreement is severable. If any
provision herein is found to be unenforceable, or in violation of any law,
rule, regulation, order or decree of any governmental authority, court or
agency, then such provision will be modified to the minimum extent
necessary so as to render it enforceable and/or cure such violation, and
all other provisions hereof or thereof will remain in full force and effect
notwithstanding such violation. If this Agreement is held invalid or cannot
be enforced, then to the full extent permitted by law any prior agreement
between NCX (or any predecessor thereof) and the Distributor shall be
deemed reinstated as if this Agreement had not been executed.
11. Amendment; Waiver. No party hereto amend this Agreement, unless in a
writing signed by all the respective parties hereto or thereto. Each waiver
of any provision or breach hereof must be in a writing executed by the
waiving party. The waiver by any party of any provision or breach hereof
will not waive any other breach or provision or be deemed another waiver of
the same breach or provision.
12. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties relating to the subject matter of this
Agreement, and supersedes any and all prior written agreements,
commitments, understandings or communications in each case with respect to
the subject matter of this Agreement. No purported modification or
amendment to this Agreement shall be enforceable unless it is in writing
and signed by the party against whom enforcement of the modification or
amendment is sought.
13. Execution. This Agreement may be executed in counterpart, in which event
each executed copy shall constitute an original and each executed copy
shall be deemed one and the same instrument.
EXECUTION
By signing below the parties hereto cause this Agreement to be effective
pursuant to the terms and conditions defined herein on the date first indicated
above.
NETCONX D&C WIRELESS, LLC O2 SECURE WIRELESS, INC.
BY: /s/ Xxxxx X. Xxxxxxx BY: /s/ T. Xxxxx Xxxxxx
---------------------------- --------------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxxx Xxxxxx
Title: President and CEO Title: President
Date: 01-01-05 Date: 01/01/05
Address: 0000 Xxxxxxx Xxxxxx Xxxx,
Xxx. 000
Xxxxxxxx, XX 00000
678.942.0684
Fax: 942.0688
