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[Jyra Research Inc. San Xxxx Letterhead]
March 26, 1998
Socrates, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000
Distributorship Agreement
Sir or Madam:
This Letter Agreement will confirm the agreement between Jyra Research Inc.
("Jyra") and Xxxxxxxx, Inc. ("you"), regarding the terms and conditions under
which you will operate as a distributor of computer software of Jyra's line
(the "Line"):
1. Jyra's Representations. Jyra represents to you that:
(a) Jyra is a corporation duly organized and existing under the laws
of the State of Delaware, with its principal place of business at 0000 Xxxxxx
Xxxx, Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx 00000; and
(b) Jyra is in the business of developing and licensing computer
software of the Line throughout the United States of America.
2. Your Representations. You represent to Jyra that:
(a) You are a corporation duly organized and existing under the laws
of the State of Maryland, with your principal place of business at 0000
Xxxxxxxxxx Xxxxx, Xxxxx, Xxxxxxxx 00000. At the same time as you are
delivering this Letter Agreement, you are delivering to Jyra a current, true,
and complete certificate of good standing certified by the Secretary of State
of the State of Maryland;
(b) You are competent to make all representations and to make and
fulfill all promises which you make in this Letter Agreement; and
(c) You are, and will remain for the term of this Letter Agreement,
a wholly-owned subsidiary of MVSI, Inc. of Vienna, Virginia.
3. Exclusive Distributorship. During the term of this Letter
Agreement:
(a) Jyra grants you the exclusive right to buy from Jyra, for resale
into the "Territory," as that term is defined below, products (including parts
and accessories for such products) of the Lines (the "Products");
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(b) You will concentrate your service, promotion, and sales efforts
within the following geographical area (the "Territory"), consisting of five
subterritories (each, a "Subterritory"), as follows:
(i) the "Baltimore Subterritory", which shall mean a circle
having its center at the most central point in Baltimore, Maryland, and a
radius of twenty-five (25) miles;
(ii) the "Newport News Subterritory", which shall mean a circle
having its center at the most central point in Newport News, Virginia, and a
radius of twenty-five (25) miles;
(iii) the "New York Subterritory", which shall mean a circle
having its center at the World Trade Center in Manhattan and a radius of
twenty-five (25) miles;
(iv) the "Philadelphia Subterritory", which shall mean a circle
having its center at Independence Hall and a radius of twenty-five (25) miles;
and
(v) the "Washington Subterritory", which shall mean a circle
having its center at the Capitol Building and a radius of twenty-five (25)
miles.
(c) Jyra will not appoint another distributor located in or
primarily responsible for the Territory or any Subterritory, but Jyra itself
shall be permitted at all times to sell Products in the Territory and any
Subterritory.
4. Prices, Discounts and Conditions of Sale. Jyra's current prices are
as set forth in the Schedule of Current Prices and Available Discounts. Jyra
reserves the right to change its prices at any time, but will not change such
Available Discounts during the term of this Letter Agreement. Jyra's Standard
Conditions of Sale to Distributors (the "Standard Conditions") in effect on the
date of each order will govern your purchases of Products. You represent that
you have read Xxxx's presently effective Standard Conditions. You acknowledge
and agree that Xxxx's Standard Conditions govern numerous important terms,
including, but not limited to, Xxxx's warranty and disclaimers and limitations
thereof.
5. Your Sales, Service, and Reporting Obligations. To Jyra's
reasonable satisfaction, you will:
(a) make purchases of the Products in amounts not less than the
Minimum Purchases specified in the Minimum Purchases Rider attached to this
Letter Agreement, and for Quarter 1 only, pay in full for all Products ninety
(90) days after delivery, provided, that any obligation on Jyra's part to
continue making deliveries will be subject to the Standard Conditions; All
purchases for subsequent quarters shall be paid in cleared funds not later than
the 14th day of the calendar month following receipt of the relevant license
fee or annual support charge from an End-User.
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(b) make sales of the Products in amounts not less than the Minimum
Resales specified in the Minimum Resales Rider attached to this Letter
Agreement, and maintain an adequate number of qualified sales personnel and
engage in adequate promotion for that purpose;
(c) refrain from making sales to resellers of the Products;
(d) display and demonstrate reasonable quantities of Products;
(e) operate a fully equipped first-rate demonstration facility
devoted exclusively to the Products and no competitive goods whatsoever at a
location within each Subterritory subject to the reasonable prior approval of
Jyra;
(f) provide (and pay the rent and charges for all reasonable tenant
services for) an office of reasonable size and quality located within your
offices in the Washington Subterritory to be occupied by a systems engineer to
be selected and hired by Jyra to support your trainers and sales staff;
(g) install and service Products in accordance with Jyra's
instructions from time to time;
(h) provide technical support to customers and prospective customers
of the Products by phone from Monday through Friday, 8 a.m. through 5 p.m.,
taking no longer than sixty (60) minutes to return calls;
(i) (for customers of the Products whose single purchase yields less
than $500,000 to Jyra) provide next-day response on-site maintenance from
Monday through Friday, 8 a.m. through 5 p.m.;
(j) (for customers of the Products whose single purchase yields
between $500,000 and $1 million to Jyra) provide four-hour response on-site
maintenance from Monday through Friday, 8 a.m. through 5 p.m.;
(k) (for customers of the Products whose single purchase yields more
than $1 million to Jyra) provide four-hour response on-site maintenance every
day, without exception, Monday through Sunday, twenty-four (24) hours per day;
(l) provide direct training to customers for the Products out of
your offices in Washington and New York and at the customer's site, reasonably
depending upon the size of the business opportunity and the customer's
convenience, and use your reasonable endeavors to persuade your customers to
complete training courses in accordance with Jyra's minimum recommendations
from time to time;
(m) make the Products available to licensees in object code form
only;
(n) refrain from delivering possession of any copies of Products or
Product documentation to any end-user unless accompanied by an end-user
license, and use reasonable efforts to cause each end-user to deliver to Jyra
an end-user license acknowledgement;
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(o) supply the Products only to prospective end-users whom you
reasonably believe are responsible and likely to comply with their obligations
under an end-user license;
(p) ensure that only the current versions of the Products supplied
to you from time to time are delivered to end-users, and make any new or
modified versions available to end-users promptly;
(q) if you fail to provide adequate support services to end-users
and Jyra chooses to provide such services on your behalf (after written notice
from Jyra providing you with not less than forty-eight (48) hours' opportunity
to cure), pay to Jyra on demand all reasonable costs and expenses incurred by
Xxxx as a result;
(r) at Jyra's request from time to time, demonstrate your compliance
with all Minimum Resale Requirements to Jyra's reasonable satisfaction. Not
more often than once per contract year, Jyra may require you to provide (at
your sole expense) a written certification to Jyra of the results of an audit
performed by an independent certified public accountant subject to Jyra's prior
written approval; and
(s) compensate your sales personnel in connection with sales of all
Products at a rate no less favorable than that applicable to equivalent sales
of products produced by your most favored vendor.
6. Jyra's Support Obligations. Jyra will:
(a) offer you its Intranet Services Monitor ("ISM") for six-month
intervals at a monthly rental rate of $500 per customer per license;
(b) provide you with funding to develop marketing and training
capabilities in connection with the Products, including, but not limited to,
trade show fees, case studies, and promotions, as follows: $5,000 upon
execution of this Letter Agreement, and an additional $5,000 at the end of the
first 90 days of this Letter Agreement (provided, however, that such amount
shall not become payable if either this Letter Agreement is terminated pursuant
to Paragraph or you fail to meet your Minimum Purchase or Minimum Resale
obligations for such period (or both)); for each remaining quarter of the term,
an amount equal to ten (10%) percent of goods which you have purchased and paid
for in full in the immediately prior quarter;
(c) provide you with the following in readily downloadable or
reproducible electronic format:
(i) product description brochures and white papers;
(ii) user guides and system manuals; and
(iii) training tools, including trouble shooting techniques;
(d) cooperate with you in developing seminars and workshops on
network management and the strategic benefits of the Products, provided, that
you will assume primary responsibility and bear most of the expense of each
such endeavor; and
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(e) cooperate with you in placing booths that market the Products at
regional conferences and trade shows, provided, that you will assume primary
responsibility and bear most of the expense of each such endeavor.
7. Training of Your Personnel.
(a) During the first three (3) months of the term of this Letter
Agreement, Jyra will provide three (3) training sessions for your personnel in
the installation, implementation, and use of the Products, and will charge you
nothing for such sessions;
(b) Any additional training that your personnel may require will be
provided by Jyra at its site in San Xxxx in accordance with its standard scale
of charges in force from time to time. If, alternatively, you choose to have
your personnel trained on-site, then you will bear all reasonable travel and
lodging expenses to be incurred by Jyra personnel in connection with such
sessions;
(c) Except as expressly set forth in this Paragraph , each party
will bear all travel and lodging expenses of its respective personnel in
connection with training sessions.
8. Term and Termination.
(a) Subject to Paragraph 8.(b) and Paragraph 8.(d), this Letter
Agreement will commence on March 1, 1998, and will expire one (1) years from
that date;
(b) Subject to Paragraph 8.(d), either you or Jyra may terminate
this Letter Agreement for any reason or for no reason whatever on written
notice to be provided to the other at any time between 90 and 120 days from
March 1, 1998, such termination to be effective upon the giving of such notice.
In the event of such termination, you will, at your own expense, return all
Products to Jyra in exchange for a full refund of the purchase price actually
paid therefor, exclusive of shipping and taxes;
(c) Subject to Paragraph 8.(b) and Paragraph 8.(d), on condition
that you make (and are paid for) Minimum Resales in excess of $1,300,000 during
the first year of this Letter Agreement, then you will have the option to renew
this Letter Agreement for one additional year, during which additional year
your Minimum Resale Requirement shall be $7,500,000. Such option shall be
exercisable upon written notice to Jyra not later than fifteen (15) days
following the end of the first contract year;
(d) Regardless of anything else in this Letter Agreement:
(i) Jyra may terminate this Agreement at any time upon Xxxx's
giving you thirty (30) days' written notice in the event of your breach of any
of the terms or conditions of this Agreement.
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(ii) In the event that any of the following enumerated
occurrences (each, an "Occurrence") shall occur:
(A) You become (or Jyra reasonably expects you to become)
insolvent;
(B) There are instituted by or against you proceedings in
bankruptcy or under any insolvency law or law
providing for reorganization, receivership or
dissolution; or
(C) You make (or Jyra reasonably expects you to make) an
assignment for the benefit of creditors;
then the term of this Agreement will expire on the earliest of the following
three (3) dates:
(X) the date on which this Agreement would expire under
Paragraph 8.(a), above;
(Y) the effective date of any termination by Jyra under
Paragraph 8. (d)(i) , above; or
(Z) the date occurring six months after the earliest
Occurrence.
(e) Regardless of anything else in this Letter Agreement, after the
expiration or earlier termination of this Letter Agreement, Jyra is hereby
released from any obligation or liability to you. Jyra reserves the right not
to renew this Letter Agreement and not to enter into any other agreement with
you regarding your distributorship. Jyra will not be responsible for any loss
which you may suffer because of the expiration, termination, or non-renewal of
this Letter Agreement or your distributorship.
9. Effect of Expiration or Termination. Upon expiration or termination
of this Letter Agreement:
(a) all rights and obligations of the parties under this Letter
Agreement shall automatically terminate except for such rights of action as
shall have accrued prior to such termination and any obligations which
expressly or by implication are intended to come into or continue in force on
or after such termination;
(b) you will immediately eliminate from all your literature,
business stationery, publications, notices and advertisements all references to
the title "Authorized Jyra Research Dealer" and all other representations of
your appointment under this Letter Agreement;
(c) you will, at your own expense immediately return to Jyra (or
otherwise dispose of as Jyra may instruct) all promotional materials and other
documents and papers whatsoever sent to you and relating to Xxxx's business
(other than correspondence between you and Jyra), all property of Jyra, and
all copies of the Products in your possession or control;
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(d) each end-user agreement then subsisting shall continue in effect
and shall survive the termination of this Agreement.
10. Warranty to Your Customers.
(a)You will provide to each customer a copy of Jyra's warranty and
limitation of liability provisions in the form furnished by Jyra together with
each Product. You cannot and will not pretend to expand or change any such
warranty or limitation of liability.
(b)You will keep Jyra informed of any claims and complaints from
customers concerning any Product.
11. Trademarks.
(b) Except as provided below, you will not use nor authorize anyone
else to use Jyra's name or trademarks. Any use which you make of Jyra's name
or trademarks will inure to Xxxx's sole benefit, and you will accrue no rights
in such name or trademarks. Under no circumstances shall you use any of Jyra's
names or trademarks in your corporate or business name.
(b) Jyra hereby grants you the non-exclusive, nontransferable,
royalty-free right to use Jyra's trademarks JYRA and JYRA RESEARCH and all
related logos, designs and presentations (altogether constituting the
"Trademark") in the Territory in connection with your sale of Products under
this Letter Agreement. In accordance with Xxxx's instructions, you will
display the symbols (tm),K, or (r) adjacent to the Trademark at all times.
12. Independent Contractor. You are in no way the legal representative,
agent, or employee of Jyra, and you cannot bind Jyra to any obligation. You
will conduct your business as an independent contractor.
13. Indemnity. You will indemnify and hold Jyra harmless against, and
reimburse Jyra for, any loss, liability, damage (whether actual or
consequential), or taxes, and all reasonable costs and expenses of defending
any claim brought, or tax levied, against Jyra in any judicial, administrative,
or arbitration proceeding in which Jyra is named as a party (including, but not
limited to, reasonable accountants', attorneys', and expert witness fees, costs
of investigation and proof of facts, court costs, other litigation expenses and
reasonable travel and lodging expenses), which Jyra may suffer, sustain, or
incur by reason of, arising from, or in connection with the operation of your
business, except to the extent that any such claim arises out of an unlawful
and intentional act or omission by Xxxx, relates to the alleged infringement of
another's trademark by your use of the Trademark pursuant to Jyra's authority,
or is governed by the Standard Conditions in a manner directly contrary to the
terms of this Paragraph .
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14. Jyra's Security Interest in Your Rights.
(a) Jyra hereby reserves, and you hereby irrevocably convey to Jyra,
a valid, enforceable, and perfected security interest in any and all of your
rights under this Agreement, including, but not limited to, any right which you
may have to use the Trademark. This security interest constitutes additional
collateral for your full and timely performance of all of your obligations
under this Letter Agreement and under the Standard Conditions, as they may be
in effect from time to time. The security interest reserved by and conveyed to
Jyra pursuant to this Paragraph is in addition to and not exclusive of any
other rights which Jyra may have under this Letter Agreement, under the
Standard Conditions, or otherwise pursuant to law; and
(b) You will execute and deliver to Jyra such recordable UCC-1
financing statements as may be requested by Xxxx from time to time in form,
substance, and number sufficient to perfect first-priority security interests
reserved by Jyra in such jurisdictions as Jyra may from time to time deem
appropriate
15. Allotment of Production. In the event of a shortage of Products
resulting from any cause whatsoever, Jyra will endeavor to make Products
available as ordered to meet your reasonable requirements, but reserves the
right to allot its production as it deems best. You agree that any failure to
supply Products from time to time in the event of any such shortage, or making
only part shipment, or no shipment at all against any order, will not make Jyra
liable or responsible to you to any extent.
16. Choice of Law and Submission to Jurisdiction.
1.
(a) The validity and interpretation of this Letter Agreement will be
governed by and construed and enforced in accordance with the laws of the State
of New York applicable to contracts negotiated and entered into therein.
(b) Jyra and you hereby irrevocably appoint each other their
respective agents for submitting to the jurisdiction of any court located in
the County of New York, New York in any action arising out of any alleged
breach of this Letter Agreement or in any way connected with the subject matter
of, or performance of either party under, this Letter Agreement. Xxxx and you
hereby irrevocably agree that any such action will be brought only in such a
court and no other.
17. General.
(a)This Letter Agreement supersedes all prior communications and
agreements, and will be deemed to be complete and will not in any way be
modified or waived except by agreement in writing by a duly authorized
representative of Jyra. A waiver by either party of any of the terms and
conditions of this Letter Agreement at any time or from time to time will apply
only to the particular instance or instances in which such waiver occurs, and
will not affect or impair in any way the further continuance in force of such
terms, conditions, or the right of either party to avail itself of such terms
or conditions in the event of any subsequent breaches.
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(b) Paragraph headings are for purposes of convenience only and are
not intended to form a part of nor to be used for purposes of interpretation of
the text of this Letter Agreement.
(c) Notices under this Letter Agreement must be mailed prepaid by
"certified mail, return receipt requested" or sent by receipted fax
transmission to the addresses shown above for the respective parties. However,
bulletins or other such information published by Jyra from time to time need
not be sent in such manner.
(d) If any provision of this Letter Agreement is for any reason held
invalid or unenforceable, such invalidity or unenforceability will not affect
any other provision or portion of this Letter Agreement. This Letter Agreement
will be construed as if it had never contained the invalid or unenforceable
provision or portion.
(e)The remedies expressly provided for in this Letter Agreement are
in addition to any other remedies which Jyra may have under the Uniform
Commercial Code or other applicable law.
(f) This Letter Agreement will not be effective until duly executed
by an officer of Jyra at its principal office.
(g) Any assignment of any rights under this Letter Agreement without
prior written consent of Jyra by its duly authorized representative will be
void.
If you are in agreement with the above, please sign and return the
enclosed photocopy of this Letter Agreement on or before March 25, 1998, and
this Letter Agreement will become our entire understanding.
Very truly yours,
JYRA RESEARCH INC.
by: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Office:
READ AND AGREED:
SOCRATES, INC.
by: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Office:
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Minimum Purchases Rider
This Minimum Purchases Rider forms a part of, and is
Subject to, the terms and conditions set forth in the
Letter Agreement between Jyra Research Inc. and Socrates, Inc.
Dated April 15, 1998.
Commencement of Period Close of Period Minimum Purchases
March 1, 1998 May 31, 1998 $100,000
June 1, 1998 August 31, 1998 $50,000
September 1, 1998 November 30, 1998 $100,000
December 1, 1998 February 28, 1999 $100,000
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Minimum Resales Rider
This Minimum Resales Rider forms a part of, and is
Subject to, the terms and conditions set forth in the
Letter Agreement between Jyra Research Inc. and Socrates, Inc.
Dated April 15, 1998.
Commencement of Period Close of Period Minimum Resales
March 1, 1998 May 31, 1998 $100,000
June 1, 1998 August 31, 1998 $150,000
September 1, 1998 November 30, 1998 $350,000
December 1, 1998 February 28, 1999 $700,000
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Schedule of Current Prices and Available Discounts
This Schedule of Current Prices and Available Discounts forms a part of, and is
Subject to, the terms and conditions set forth in the
Letter Agreement between Jyra Research Inc. and Socrates, Inc.
Dated April 15, 1998.
Current Software Prices (List):
Product Price
SLM10 $300 per application service
SLM50 $300 per application service
SLM100 $300 per application service
MLM1000 $8,000
MLM2000 $12,000
ISM $5,000
Cumulative Purchase Discounts (From List):
For each year's purchases from Jyra within each Percentage Discount
of the following brackets:
$0 -$249,999 30%
$250,000 - $749,999 33%
$750,000 - $999,999 35%
$1,000,000 - $1,349,999 41%
$1,350,000 and above 45%
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Large Opportunity Discounts (From List):
Size of Single-Purchase Opportunity Percentage Discount
$0 -$249,999 0%
$250,000 - $499,999 2%
$500,000 - $749,999 4%
$750,000 - $999,999 6%
$1,000,000 - $1,499,999 8%
$1,500,000 and above 10%
