TECH FLEX FUNDING DEALER MARKETING AGREEMENT
AGREEMENT dated as of May ll, 2001 between Tech Flex Funding, Inc. (TFF), a
California corporation located at 00000 Xxx Xxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000, and Videolocity, Inc. (TFF Dealer), a NV state corporation
located at 358 S. 000 X. Xxxxx 0000, Xxxx Xxxx Xxxx XX, 00000.
WHEREAS, TFF is in the business of, among other things, the sale and marketing
of a telecommunications equipment leasing program to end user customers, as
offered by independent financial entities.
WHEREAS, TFF Dealer is in the business of, among other things, the sale,
installation of, training on and maintenance of telecommunications equipment;
and
WHEREAS, TFF Dealer wants to promote the telecommunications equipment leasing
program being offered by TFF, and TFF wants TFF Dealer to promote the aforesaid
leasing program.
NOW THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. Obligation/Term.
1.1 TFF Dealer hereby agrees to perform the services specified in
Section 2 below in consideration of the payment of the fees specified
in Section 3 below.
1.2 This Agreement shall remain in effect until TFF or Dealer
terminates it by giving 90 days advance written notice to the other
party or until terminated pursuant to Section 4 below.
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2. Services/Obligations of TFF Dealer.
2.2 TFF Dealer shall provide at least one qualified, trained
salesperson to market TFF's leasing program. TFF Dealer shall designate
one employee to be the point of contact for TFF in connection with the
activities to be carried out under this Agreement.
2.2 When any TFF Dealer salesperson obtains an order to lease
telecommunications equipment through TFF's leasing program, the lease
agreement used shall be the standard lease agreement, as supplied by
TFF to TFF Dealer, without modification (unless agreed to otherwise by
TFF in writing). TFF Dealer shall make sure that any lease agreement is
completed in its entirety, is executed by an individual authorized to
sign on behalf of and user customer, and contains a fully itemized list
of each and every component that comprises the telecommunications
equipment being leased. TFF Dealer shall collect requisite credit
information in accordance with the policies and procedures in effect at
that time. TFF Dealer shall also collect any requisite upfront lease
payments in accordance with the policies and procedures in effect at
that time. TFF Dealer shall fax a copy of such lease agreement and
credit information to TFF for overall approval including credit, along
with an itemized breakdown by each component of the installed price per
component which installed price shall include any relevant training and
warranty charges. TFF Dealer shall mail to TFF any upfront lease
payments collected by TFF Dealer from the lease customer.
2.3 TFF Dealer shall install and maintain all telecommunications
equipment in a good, workmanlike manner, in accordance with
manufacturers specifications and to the reasonable satisfaction of each
end user. Such maintenance and service shall be provided in accordance
with TFF Dealer's standard policies and procedures, as set forth in the
attached Exhibit A, as provided and prepared by TFF Dealer. TFF Dealer
shall make reasonable efforts to label each component of the
telecommunications equipment to indicate ownership of leasing company
and the month and year of first installation.
2.4 TFF Dealer shall train all of end user's employees in the use of
the telecommunications equipment being leased by such end user.
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2.5 TFF Dealer shall have at least one (1) fully certified technician
per product line leased by TFF. TFF Dealer shall be a fully authorized
dealer for any product line leased by TFF.
2.6 TFF Dealer shall perform all maintenance against normal wear and
tear (as defined in the attached Exhibit A) for any end user under this
Agreement without any charge to such end user. See Section 3.5 as to
recurrent maintenance fee to be earned by TFF Dealer under this
Agreement.
2.7 At the end of each lease term (if the end user does not elect to
purchase the equipment), or earlier (in the case of a switch out, early
lease cancellation, or delinquent account situation), TFF Dealer shall,
upon TFF's written request, remove the leased equipment from the end
user's business location and dispose of such equipment as so instructed
by TFF, or in accordance with the terms of this Agreement, as the case
may be. In connection with the foregoing, TFF shall pay TFF Dealer on a
time and materials basis including shipping costs.
2.8 Notwithstanding, anything to the contrary contained herein, in the
event an end user customer elects to upgrade its then leased equipment
due to growth or obsolescence, prior to the expiration of the then
existing term of the lease, TFF Dealer shall grant TFF a trade-in
allowance on any equipment coming into inventory according to the
following schedule:
-50% of initial equivalent sales price during year 1,
-40% of initial equivalent sales price during year 2,
-30% of initial equivalent sales price during year 3,
-20% of initial equivalent sales price during year 4, and
-10% of initial equivalent sales price during year 5.
All trade-in allowances shall be deducted from the funding on the
upgrade transaction. See Section 3.3(b) for a definition of equivalent
sales price.
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2.9 Upon the completion of installation of and training on any
equipment deal for TFF, TFF Dealer shall obtain an executed delivery
and acceptance from the end user the delivery of which to TFF shall be
one of the conditions precedent to TFF paying TFF Dealer the fees
discussed in Section 3 below.
2.10 Should TFF Dealer also be an authorized sub agent of PSI Network,
Inc. (PSI) for Network Services through Lightyear, and should TFF
Dealer sign up a lease customer for Lightyear network services, then
TFF Dealer my elect to direct some or all of the long distance
commissions, paid by PSI to TFF Dealer on such account, directly back
to the end user in the form of a rebate paid out by PSI. To do so, TFF
Dealer must instruct PSI in writing as to the amount to re-directed to
the end user by PSI in the form of a rebate. TFF Dealer acknowledges
that PSI shall send such rebate to the end user provided the end user
is current on its Lightyear network services xxxx.
2.11 TFF Dealer shall at all times maintain or cause to maintained, at
its own cost and expense: (a) worker's compensation insurance covering
all statutory liability plus common law liability; (b) errors and
omission insurance with coverage amounts satisfactory to TFF; (c)
comprehensive general liability coverage against liability for injuries
to persons or property and product liability insurance with a single
limit amount of not less than $1,000,000 per occurrence; and (e) hazard
and liability insurance covering all equipment leased by TFF to end
users. All of said insurance shall name TFF (and any lease financing
company disignated by TFF) as an additional insured and contain such
other terms and shall be placed with such insurance companies, as shall
be satisfactory to TFF. Each policy shall provide that TFF shall be
notified in writing at least (30) days prior to any cancellation
thereof. Upon TFF's written request, TFF Dealer shall provide TFF with
copies of any such insurance policies.
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2.12 Upon TFF's written request, TFF Dealer shall provide TFF with
copies of any and all financial statements of TFF Dealer on an
unaudited basis (or audited, if available), as well as any other
reasonable information requested by TFF, including but not limited to
TFF Dealer's compliance with its commitment to employing certified
technicians and maintaining its authorized dealerships with the product
manufacturers, as described in Section 2.5 above.
3.3 An example of a Rental Fee computation, as hereinafter provided, is
attached as Schedule 11. The following words and terms, when used in
this Agreement, shall have the following meanings:
(a) The term Rental Fee shall mean an amount equal to the
Equivalent Sales Price.
(b) The term Equivalent Sales Price shall mean the monthly lease
before sales tax stated in the lease agreement with the customer
divided by the monthly rental factor as listed on Schedule 1-A,
1-B, 1-C attached hereto, which factor varies depending upon the
term of the lease agreement.
3.4 Within three business days after receipt by TFF of (a) the signed
lease agreement, (b) any applicable upfront monthly lease payments, (c)
signed delivery and acceptance, (d) itemized invoice referred to in
Section 2.2 above, (e) verbal confirmation by customer as to the
validity of the delivery and acceptance, and (f)lease funding from
TFF's funding source, TFF shall pay TFF Dealer the Rental Fee on any
given transaction.
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3.5 TFF shall pay TFF Dealer a recurrent maintenance fee equal to: 10%
(Schedule 1-B) of the monthly lease payment (before applicable sales
taxes) collected under each lease agreement. No recurrent maintenance
fee shall be due until 10 business days after the end of the first
calendar quarter in which the delivery and acceptance was signed by the
lease customer. The recurrent maintenance fee shall be paid each
quarter thereafter within 10 business days of each such quarter.
4. Non Disclosure and Non Circumvention
4.1 TFF Dealer agrees that during the term of this Agreement and
thereafter, TFF Dealer will not, directly or indirectly, disclose to
any third party, or use or authorize any third party to us, any
information relating to the organization, structure, contract, method
of marketing, method of financing, financing terms, rebate terms or
related matters concerning TFF's lease program all of which TFF Dealer
hereby acknowledges as confidential and valuable to TFF.
4.2 During the term of the Agreement and thereafter, TFF Dealer shall
not deal directly or indirectly with any TFF's lease funding sources as
to the subject matter of this Agreement or any matter relating to the
subject matter of the Agreement. TFF acknowledges that TFF Dealer may,
at the time of execution of this Agreement, have its own traditional
third party lease program with one or more of TFF's lease funding
sources which existing relationships, to the extent they exist, shall
be exempt from the covenants of the foregoing sentence only as to
traditional third party lease arrangements but not as to the structure
of TFF's leasing program.
4.3 During the term of this Agreement, TFF Dealer shall not, directly
or indirectly, whether as an individual office, director, shareholder,
partner, employee, agent, representative, consultant or otherwise,
become or be interested in, or associated with, any other person,
corporation, firm, partnership or other entity whatsoever engaged in
the business promoted by TFF or in connection herewith.
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4.4 TFF Dealer hereby acknowledges that any violation of Sections 4.1,
4.2, or 4.3 will cause damage to TFF in an amount or amounts difficult
to ascertain. Accordingly, notwithstanding Section 8 below, TFF shall
be entitled to temporary and / or permanent injunctive relief for any
breach or threatened breach by TFF Dealer of the terms of Sections 4.1,
4.2, 4.3 above without proof of actual damages that have been or may be
caused to TFF by such breach.
5. Performance Bonus. In the event TFF (or an assignee of all the
rights and obligations hereunder) voluntarily sells its leasing related
business or, makes an initial public offering regarding its leasing
related business, whichever first occurs (the Event), TFF will
distribute a Performance Bonus to Dealer provided the total Equivalent
Sales Prices (as defined in Section 3.3 (b) hereof and as sometimes
referred to as ESP) for TFF Dealer's leasing customers under TFF's
program are at least $100,000 at the time of such distribution. The
Performance Bonus shall be equivalent fifteen percent (15%) of the
consideration attributable to the Event and further allocable to TFF
Dealer's leasing customers under the TFF program. For example, assuming
at the time of such distribution TFF Dealer is determined to have done
10% of TFF's total leasing related business and assuming the
consideration attributable to the Event is $5,000,000 then the amount
of the Performance Bonus for TFF Dealer would be equivalent to $75,000
($5,000,000 X 15% X 10).
Any distribution of a Performance Bonus by TFF Dealer shall be subject
to any and all reasonable restrictions and methods of calculation
placed upon such distribution by TFF and / or its outside financial or
legal advisors at the time, and shall also be subject to all state and
federal securities laws in effect at the time of distribution to the
extent any portion of the Performance Bonus is comprised of TFF stock.
TFF Dealer hereby recognizes and acknowledges that it is very difficult
to predict if and when an Event may occur; that this is an area of
speculation; that TFF Dealer has the expertise or can obtain the
expertise to make its own evaluation of the likelihood and timing of an
Event; that the TFF Dealer is not relying on TFF, or any of its
employees, officers, directors, shareholders or agents to make any such
evaluation; and that the likely occurrence of an Event within the
reasonably foreseeable future is not a material inducement for TFF
Dealer to enter into a contractual relationship with TFF. TFF Dealer
shall be responsible for any and all taxes, charges or the like that
may be levied with respect to the distribution of any Performance
Bonus.
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6. Default. If any party is in default under any provision (including
any promise or covenant contained herein) of this Agreement for more
than 10 calendar days for any reason, the non defaulting party of such
default and the defaulting party shall have 10 calendar days from
receipt of such notice to cure such default. If the default is not
cured within the 10 day period, or for a default which cannot be cured
within the 10 day period, a good faith effort is not begun within the
10 day period and diligently and consistently pursued to cure such
default, the non defaulting party shall have the right to terminate
this Agreement without further notice. TFF's right to termination shall
include but not be limited to the replacement of TFF Dealer with
another service and maintenance company.
7. Force Majeure. Neither party shall be liable for its failure to
perform due to contingencies beyond its reasonable control or beyond
reasonable foreseeability including, but not limited to, strikes or
other labor disturbances, riots, wars, fires, acts of God, the
inability to obtain equipment or materials through no fault of the
party unable to so obtain equipment or materials, or acts in compliance
with any law, regulation or order, whether valid or invalid, of the
United States of America or any other governmental body or sovereign
thereof.
8. Governing Law / Venue / Arbitration. This Agreement shall be
governed by the laws of the state of California. VENUE FOR ANY DISPUTE
ARISING OUT OF OR RELATING TO THE AGREEMENT (CONTRACT, TORT OR
OTHERWISE) SHALL BE IN ORANGE COUNTY, CALIFORNIA. IN THE EVENT OF ANY
DISPUTE ARISING OUT OF OR RELATING TO THE AGREEMENT CONTRACT, TORT OR
OTHERWISE) BETWEEN TFF (INCLUDING ANY OF ITS SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES OR THE LIKE) AND TFF DEALER (INCLUDING ANY OF ITS
SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES OR THE LIKE), TFF AND TFF
DEALER AGREE TO SUBMIT SUCH DISPUTE TO THE EXCLUSIVE AND BINDING
JURISDICTION OF THE AMERICAN ARBITRATION ASSOCIATION IN ORANGE COUNTY,
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CALIFORNIA. TFF AND TFF DEALER AGREE TO BE BOUND BY ANY DECISION ISSUED
BY SUCH ASSOCIATION AND EACH PARTY HEREBY WAIVES ANY AND ALL RIGHTS TO
A JURY TRIAL OR TO PURSUE ANY LEGAL REMEDY THROUGH ANY FORUM OTHER THAN
THE AMERICAN ARBITRATION ASSOCIATION. TFF and TFF Dealer shall each be
responsible for its own initial attorney's fees and costs in connection
with any proceeding before such association; however, the prevailing
party in such action shall be awarded, in addition to any damages,
injunctions, or other relief, its cost and expenses, including
reasonable attorney's fees.
9. Notices. Any notice, request, demand or other communication give
pursuant to the terms of this Agreement shall be deemed given upon
delivery, if hand delivered, or 3 days after deposit in the United
States mail, postage prepaid, and sent certified or registered mail,
return receipt requested, addressed to the addresses of the party being
notified or at such other address as such party shall in writing have
advised the other party. Notices shall be sent to:
Tech Flex Funding, Inc.
00000 Xxx Xxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Tel:000-000-0000
Fax:000-000-0000
Attention Xxxxxx Xxxx, COO
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Tel: (000) 000-0000 / (000) 000-0000
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Fax: (000) 000-0000
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10. Assignability. This Agreement shall be binding upon and shall inure
to the benefit of the successors and permitted assignees. Neither party
may assign this Agreement, or any part of it, without the prior written
consent of the other party which consent shall not be unreasonably
withheld; however, TFF may withhold its consent unreasonably to any
request to assign this Agreement to another service company.
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11. Entire Agreement / Amendment. This Agreement contains the entire
understanding of the parties concerning the subject matter hereof and
supersedes all prior or existing agreements, verbal or written,
concerning the subject matter hereof. This Agreement may only be
amended by the mutual written consent of both parties.
12. Negotiation / Counsel. This Agreement was freely negotiated by both
parties. Each party had access to legal counsel in the negotiation and
preparation of this Agreement to the extent so desired by each party.
13. Miscellaneous. This Agreement may be executed in any number of
counterparts (including facsimile copies), each of which shall be an
original, and all of which together shall constitute one and the same
instrument. The waiver of any party of any breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent breach by any party. Each party warrant and represent that
the execution, delivery and performance of this Agreement have been
duly authorized and that no further action is necessary to make this
Agreement valid and binding upon them and legally enforceable against
them.
In WITNESS WHEREOF, the parties have executed this Agreement in the
place and on the date written next to each party's name.
Executed at: Tech Flex Funding, Inc.
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Xxxxxx Xxxxxx
On: ____________ , 200_ Its: EVP & General Counsel
Executed at: TFF Dealer
Salt Lake City, UT. /s/ Xxxxx X. XxXxxxx
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Xxxxx X. XxXxxxx
On: May 11, 2001 Its: CFO
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