EXCLUSIVE DISTRIBUTION AGREEMENT
THIS
EXCLUSIVE DISTRIBUTION AGREEMENT (this
“Agreement”) is made as of the 20th day of
April, 2005 by and between CALYPSO
WIRELESS, INC., a
corporation duly organized and existing under the laws of the State of Delaware
with its principal place of business at Miami, Florida (“CALYPSO”) and
FRANC
TELECOM, LTD., a
company registered under the laws of England and having its registered office at
London, England (the “Distributor”) including Evolution Answers, Ltd. (Sales and
distribution) and Franc Advertising, Ltd. (Advertising), both wholly owned
entities of FRANC
TELECOM, LTD., as
holding company.
WHEREAS, because
this is the initial Agreement between the parties, and because of certain
marketing and technological advances, both parties acknowledge that ongoing
review and amendments to this Agreement may be necessary.
WHEREAS, CALYPSO
has for supply a mobile dual mode cellular Wi-Fi broadband telephone, for
transmittal of voice and video;
WHEREAS,
CALYPSO, subject
to certain exceptions and conditions desires Distributor to act as its exclusive
distributor in the United Kingdom, to sell the Products designed and
manufactured by CALYPSO under the brand name Calypso and desires to appoint
Distributor as its exclusive Distributor in the Territory; and
WHEREAS,
Distributor is willing to sell and distribute CALYPSO’s Products and be
appointed Distributor pursuant to the terms and conditions hereinafter set
forth.
NOW,
THEREFORE, in
consideration of the premises and of the mutual covenants of the parties hereto,
it is hereby agreed as follows:
1. Definitions
and Interpretation.
1.1. In this
Agreement, the following words and expressions shall have the following
meanings:
“Affiliate” shall
mean, with respect to any party, any Person which, directly or indirectly, is
controlled by, controls or is under common control with such party. For purposes
of this definition, the term “control” (including with correlative meanings, the
terms “controlled by” and “under common control with”) shall mean, with respect
to any Person, the direct or indirect ownership of more than fifty percent (50%)
of the voting or income interest in such Person or the possession otherwise,
directly or indirectly, of the power to direct the management or policies of
such Person.
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“Agreement
Products” shall
mean the CALYPSO mobile broadband telephone, Model Numbers C1250i and C1500i or
its substantial equivalent the specifications of each of which are set forth on
Exhibit
A. In
addition, upon mutual written agreement, the parties may include additional
products as “Agreement Products” by attaching the specifications for such
product(s) to Exhibit
A, which
specifications shall including the initial Minimum Price for such additional
product(s). Upon attaching such specifications, each additional product shall be
deemed an “Agreement Product” hereunder.
“Agreement
Product Specifications” shall
mean the specifications for the Agreement Products set forth in Exhibit
A, as such
specifications may be modified or supplemented by CALYPSO from time to
time.
“Agreement
Year” shall
mean the twelve (12) month period commencing on April 2oth, 2005 and each
separate successive twelve (12) month period thereafter.
“Binding
Forecast” shall
mean that term as defined in Section 7.3(a).
“Dollars”
and
“$” shall
mean the lawful currency of the United States of America.
“Effective
Date” shall
mean the date of the commencement upon signatures by the Parties of this
Agreement.
“Fee
Payment Default” shall
mean that term as defined in Section 7.1(c).
“Initial
Term” shall
mean that term as defined in Section 3.2.
“Launch” shall
mean the commencement by the Distributor of sales of an Agreement Product in
commercial quantities in the Territory for use in the Territory.
“Minimum
Amounts” shall
initially mean the number of units Distributor shall purchase as set forth in
Section 7.2 (a).
“Patents” shall
mean Letters Patent or similar statutory rights relating to any Agreement
Products (including any continuation-in-part, continuation or division thereof
or substitute thereof), and patent applications which are pending as of the
Effective Date, in each case as set forth in Exhibit
B,
together with any supplementary or complementary protection certificates thereof
if and when such are granted.
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“Person” shall
mean an individual, a corporation, limited liability company, a partnership, a
trust, an unincorporated organization or a government or any agency or political
subdivision thereof.
“Product
License Approvals” shall
mean those regulatory approvals required for the importation, promotion,
marketing and sale of the Agreement Products in the Territory (including any
reimbursement or pricing approvals).
“Territory” shall
mean the United Kingdom.
1.2. In this
Agreement, unless the context otherwise requires:
(a)
clause headings are inserted for convenience of reference only and have no legal
effect;
(b)
references to sections, exhibits and schedules are to be construed as references
to the sections of, and exhibits and schedules to, this Agreement and references
to this Agreement include its exhibits and schedules;
(c)
references to (or to any specified provision of) this Agreement or any other
document shall be construed as references to this Agreement, that provision or
that document as in force for the time being and as amended, varied,
substituted, supplemented, restated or novated in accordance with the terms
thereof or, as the case may be, with the agreement of the relevant parties and
(where such consent is, by the terms of this Agreement or the relevant document,
required to be obtained as a condition to such amendment being permitted) the
prior written consent of CALYPSO;
(d) words
importing the plural shall include the singular and vice versa;
(e)
references to a person shall be construed as including references to an
individual, firm, consortium, company, corporation, unincorporated body of
persons or any State or any agency thereof; and
(f)
references to statutory provisions shall be construed as references to those
provisions as replaced, amended or re-enacted from time to time.
2. Appointment;
Best Efforts; Exclusivity.
2.1.
Appointment.
(a)
Subject to the terms and conditions hereinafter set forth, CALYPSO hereby
appoints the Distributor as its exclusive (except to the extent set forth in
Section 2.3) distributor for the promotion, marketing, sale and distribution
within the Territory of the Agreement Products supplied by CALYPSO or an
Affiliate of CALYPSO to the Distributor pursuant to this Agreement.
(b)
Distributor is also seeking to be named the exclusive distributor for other
countries comprising the European Union. Before making an appointment for a
distributor within the European Union, CALYPSO will first advise and reasonably
discuss the opportunity with Distributor. If Distributor should provide bankable
orders for 500,000 or more units within six (6) months of the execution of this
contract, CALYPSO will give full, fair and reasonable consideration to including
the remaining countries comprising the European Union within the defined
Territory.
(c)
Except as specifically provided to the contrary herein, the foregoing
appointment shall not be construed, by implication or otherwise, (i) to effect
any sale of proprietary CALYPSO technology, (ii) to grant any license relating
to CALYPSO’s proprietary methods of formulating, fabricating and manufacturing
the Agreement Products, or (iii) to grant the Distributor any rights in or to
any proprietary technology or patents or trademarks of CALYPSO.
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2.2. Acceptance
of Obligations; Best Efforts. The
Distributor hereby accepts the appointment described in Section 2.1 and hereby
agrees to use its best efforts at all times during the term hereof to promote,
market, sell and distribute the Agreement Products in the Territory.
Distributor’s “best efforts” in this Section 2.2 shall mean that Distributor
shall use generally the same channels and methods, exercise the same degree of
effort and diligence, and adhere to the same standards as Distributor and its
Affiliates would apply in distributing their own actively-promoted products, and
shall be such as are commercially reasonable.
2.3.
Conversion
to Non-Exclusive Distributorship. In the
event that in any Agreement Year including and after the First Agreement Year
(and so long as (i) no force majeure condition of Distributor exists at such
time pursuant to Section 20, (ii) CALYPSO has met its supply obligations under
Section 7.4 and (iii) Distributor is able to lawfully sell any Agreement
Products in the Territory), the Distributor’s Net Sales of the Agreement
Products in the Territory in such Agreement Year comprise less than the Minimum
Amounts during each Agreement Year, either CALYPSO or the Distributor may elect
upon 60 days notice, but in any event not later than 30 days after the end of
the applicable Agreement Year, to convert the Distributor’s distribution rights
under this Agreement in the Territory from exclusive to non-exclusive; provided,
however, that Distributor may cure, within 60 days after receipt of any such
notice from CALYPSO, a shortfall of Net Sales with respect to the Territory for
an Agreement Year by paying to CALYPSO within 30 days after such Agreement Year
an amount equal to 20% of such shortfall in such Agreement Year for such
Territory; further provided that at CALYPSO’s election, CALYPSO may refuse to
allow such cure if Distributor has taken advantage of such cure provision in
each of the two preceding Agreement Years. Upon conversion of Distributor’s
rights to a non-exclusive distribution arrangement in the Territory, CALYPSO
shall have the right to distribute the Agreement Products and/or engage another
distributor for the Territory. Notwithstanding the foregoing, the Distributor
shall retain the right to use all trademarks under which the Distributor
launched the Agreement Products in the Territory.
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3. Term
and Termination.
3.1.
Effective
Date. This
Agreement shall take effect as of the Effective Date.
3.2.
Term.
(a)
Unless this Agreement is sooner terminated in accordance with the provisions of
this Agreement, the term of the appointment hereunder for shall commence on the
first day of the first Agreement Year and shall end on the last day of the Fifth
Agreement Year (the “Initial Term”).
(b)
Unless this Agreement is sooner terminated in accordance with the provisions of
this Agreement, the appointment of the Distributor hereunder as exclusive
distributor of the Agreement Products shall be renewable, upon 30 days written
notice prior to the end of the Initial Term, for an additional consecutive term
of 12 months following the date of expiration of the Initial Term.
3.3.
Inventory.
(a) Upon
termination of this Agreement for any reason, CALYPSO shall have the right (but
not the obligation) to repurchase all or part of the inventory of the Agreement
Products held by the Distributor or its Affiliates.
(b) The
price for inventory to be repurchased by CALYPSO pursuant to Section 3.3(a)
above shall be the cost thereof actually paid by the Distributor to CALYPSO.
With respect to any quantities not repurchased by CALYPSO, the Distributor shall
have the right to sell such inventory of the Agreement Products, in its usual
and customary manner, in the ordinary course of business.
3.4.
Insolvency. This
Agreement may be immediately terminated by either party, upon giving written
notice to the other party, in the event that the other party shall become
insolvent or be declared bankrupt by a court of competent jurisdiction or shall
be the subject of any reorganization (other than a corporate reorganization
effected in the ordinary course of business and not arising out of any
insolvency) or winding up, receivership or dissolution, bankruptcy or
liquidation proceeding, or any proceeding or action similar to one or more of
the above, in which case termination shall be effective upon such written
notice. The failure of either party to give notice of termination upon obtaining
knowledge of any such event shall not be interpreted as a waiver of such party’s
rights under this Section 3.4, and such party reserves the right to exercise any
such rights at any time after the occurrence of any such event.
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3.5.
Breach. This
Agreement may be terminated by either party if the other party shall breach any
of its payment obligations hereunder or if either party shall commit a material
breach of any of its warranties, covenants, conditions, obligations or
agreements contained herein, provided that such
breach shall continue for a period of 30 days after written notice thereof and
provided further that
such termination shall be immediately effective upon further written notice to
that effect to the breaching party after its failure to cure such breach within
such applicable notice period.
3.6.
Certain
Rights Upon Termination. Upon
termination of this Agreement for any reason whatsoever, CALYPSO shall have the
following rights:
(a)
CALYPSO shall have the unrestricted right to review, access, use and permit
others to review, access and use, either directly or by cross-reference or
incorporation or otherwise, all information, data, investigations, marketing
information disseminated by Distributor publicly to customers and all
information required to be provided to CALYPSO by law, information relating to
regulatory approvals pertaining to the Agreement Products (the “Information”)
which are possessed or controlled by the Distributor or any of its Affiliates,
or to which the Distributor or any of its Affiliates has a right to review,
access or use. The Distributor unconditionally agrees promptly to take any
action and to execute and deliver to CALYPSO any documents or instruments
reasonably requested by CALYPSO to permit CALYPSO to make full use of such
unrestricted right.
(b)
Further, CALYPSO shall have exclusive ownership rights to the Trademarks and to
all other product specific logos, slogans and other intangibles used by the
Distributor solely in association with the independent sale of the Agreement
Products (including any and all good will associated with the Agreement Products
and all registrations relating thereto) possessed or controlled by the
Distributor or any of its Affiliates, and the Distributor unconditionally
agrees, subject to the provisions of Section 3.3(b), (i) immediately upon
termination to cease using the Trademarks and any such logos, slogans, and
marketing rights of CALYPSO or any imitations thereof and (ii) immediately to
execute and deliver to CALYPSO any documents or instruments reasonably requested
by CALYPSO to give full effect to the provisions of this Section
3.6.
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(c) In
addition, the Distributor unconditionally agrees, subject to the provisions of
Section 3.3(b), that it shall, upon the request of CALYPSO, immediately inform
all relevant regulatory authorities that the Distributor is no longer a
distributor of the Agreement Products and shall take all action and execute and
deliver all documents and instruments necessary in order to transfer to the
fullest extent permitted under applicable law all registrations and Product
License Approvals, or applications therefor, for the Agreement Products to
CALYPSO or any Person nominated by CALYPSO.
3.7. Effects
of Termination.
(a) Upon
termination of this Agreement for any reason, the Distributor shall immediately
discontinue making any representations regarding its status as a distributor for
CALYPSO and shall immediately cease conducting any activities with respect to
the marketing, promotion, sale or distribution of the Agreement Products,
provided, however, that the Distributor shall be permitted to sell inventory not
repurchased by CALYPSO in accordance with Section 3.3.
(b)
Termination of this Agreement shall not affect obligations of either party that
may have accrued prior to the effective date of termination. Subject to Clause
3.8 below, termination of this Agreement shall be in addition to, and shall not
be exclusive of or prejudicial to, any other grounds for termination or rights
or remedies at law or in equity which either party may have on account of any
default of the other party.
3.8. Waiver. The
Distributor hereby waives, to the extent it is able to do so under the laws of
the United States and other applicable law, any statutory rights it may have or
acquire in respect of the termination of the relationship established hereby
pursuant to the terms hereof, and agrees that the rights available to it
hereunder in the event of such termination are adequate and reflect the
agreement of the parties. The Distributor shall not have any right to claim any
indemnity for goodwill or lost profits or any damages arising from the rightful
termination of this Agreement in accordance with the terms hereof.
4. Payments. All
payments hereunder shall be made in U.S. Dollars. Payments to CALYPSO shall be
wired to an account designated by CALYPSO and the costs of any such remittance
shall be borne by the Distributor.
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5.
Withholding. All
payments to be made by the Distributor under this Agreement shall be made in
full, free and clear of and without any deduction of or withholding for or on
account of any taxes levied in any country of the Territory or elsewhere;
provided that if the Distributor shall be required by law to make any deduction
or withholding from any payment to CALYPSO then:
(a) the
Distributor shall ensure that such deduction or withholding does not exceed the
minimum legal liability therefore; and
(b) not
later than 30 days before each deduction or withholding of any taxes, the
Distributor shall forward to CALYPSO such documentary evidence as may be
required by CALYPSO in respect of the proposed deduction, withholding or
payment; and
(c) prior
to any deduction or withholding the parties shall attempt in good faith to agree
upon revised mutually acceptable pricing and/or payment terms.
6.
Trademarks;
Agreement Product Marking; Promotional Information.
6.1.
Trademarks. Subject
to the provisions of Section 3.6, CALYPSO hereby licenses to the Distributor the
right to use, and hereby requires solely in association with the independent
sale by the Distributor of the Agreement Products the use of, the Trademarks in
the Territory during the term of this Agreement. The Distributor agrees that any
and all goodwill developed in the Trademarks used by Distributor hereunder shall
inure to and be owned by CALYPSO. The Distributor warrants that it shall not use
any of the Trademarks at any time outside the Territory or use any of the
Trademarks for any products other than the Agreement Products within the
Territory. The Distributor shall not use a trademark or other xxxx (other than a
Trademark) in connection with its distribution of the Agreement Products unless
and until it has been agreed upon in writing by each of the parties and become a
Trademark as defined herein. CALYPSO shall prosecute, maintain and defend the
Trademarks throughout the Term of this Agreement in the Territory.
Notwithstanding any of the above, the license to use the Trademarks in the
Territory shall not include license to use the Patented Technology for
manufacturing, reproduction or for any other use. Any licensing for the usage of
the patented technology for manufacturing, reproduction or any other use by the
Distributor other than marketing and selling the products provided by Supplier
would be expressly prohibited absent a separate licensing agreement.
6.2.
Termination
of Right to Use Trademarks. Subject
to the sell-out right of Section 3.3(b) and except as otherwise provided in
Section 3.6, upon termination of this Agreement, the license to use the
Trademarks in the Territory shall terminate, and the Distributor unconditionally
agrees promptly to take all necessary action and execute and deliver to CALYPSO
all necessary documents and instruments to remove the Distributor as a
registered user and/or a recorded licensee of the Trademarks and to confirm that
the goodwill in the Trademarks shall inure to the benefit of CALYPSO. In the
event that the Distributor fails promptly upon written request by CALYPSO to
comply with any of its agreements in the preceding sentence of this Section 6.2,
the Distributor hereby irrevocably consents to CALYPSO’s taking any action
necessary to give effect to such agreements.
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6.3.
Notice. Each
party hereto agrees promptly to notify the other in writing of any infringements
or imitations of the Trademarks by third parties, which may come to its
attention.
6.4.
Labelling;
Promotional Materials; Approved Use of Agreement Products.
(a) All
labeling, packaging, instructions and specifications relating to the agreed
products are subject to the express written approval of the Supplier prior to
their use.
(b) The
Distributor shall provide CALYPSO with copies of all marketing and promotional
material relating to the Agreement Products prior to their use. All marketing
and promotional material shall be consistent with the Product Guidelines and the
relevant Product License Approvals, and deemed acceptable in such case. Any
marketing and promotional material outside the scope of the Product Guidelines
shall require the written approval of CALYPSO prior to their use.
(c) The
Distributor agrees that its promotion, marketing, sale and distribution of the
Agreement Products in the Territory, and the promotional materials and labelling
used in connection therewith, shall be strictly in accordance with the approved
use of the Agreement Products and as further provided in this
Agreement.
6.5.
Legend. Subject
to applicable laws and regulations in the Territory, all relevant packaging and
promotional material for the Agreement Products used or sold by the Distributor
shall contain (i) all applicable markings needed to keep the Trademarks
enforceable throughout the Territory as reasonably specified by CALYPSO to the
Distributor and (ii) a legend which shall be displayed in a reasonably
conspicuous manner on all packaging of such Agreement Products containing the
corporate identification logo of CALYPSO and indicating that such product has
been developed and manufactured by Calypso Wireless, Inc., and its
affiliates.
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7.
Supply
of Agreement Products.
7.1.
General;
Fee.
(a)
CALYPSO agrees to sell the Agreement Products to the Distributor, on the terms
and subject to the conditions set forth herein, for resale by the Distributor
within the Territory, and the Distributor shall obtain the Agreement Products
for resale in the Territory only from CALYPSO or its Affiliates. CALYPSO shall
not sell the Agreement Products itself or supply of the Agreement Products to
any third party for resale within the Territory, provided that CALYPSO’s
obligations under this sentence shall be subject to (i) applicable law and (ii)
the provisions of this Agreement, including Section 2.3.
(b)
CALYPSO aggress to make available a sufficient number of CALYPSO units to comply
with the provisions of this Agreement, at a unit price to be determined under
separate agreement.
(c) The
failure by CALYPSO to receive all or any portion of the payments set forth in
Section 7.1(b) above shall not invalidate, rescind, diminish or otherwise effect
the grant of the distribution rights by CALYPSO to Distributor, unless such
payment is earned by CALYPSO and Distributor subsequently fails to make such
payment in a full or timely manner (a “Fee Payment Default”).
7.2.
Minimum
Amounts.
(a) The
Distributor hereby undertakes to purchase the following Minimum Amounts during
each Agreement Year.
| Agreement Years | Minimum Purchases |
|
1 |
100,000
units upon execution of the agreement; 150,000 additional units purchased
and delivered prior to the end of the contract year (400,000 additional
units if exclusive Territory is expanded to include the European
Union). |
| 2-5 | 250,000 units per contract year. |
| (500,000 units if exclusive Territory is expanded to include the European Union). |
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(b) If
CALYPSO has appointed a new distributor in the Territory pursuant to Section 2.3
and the Distributor has the right to distribute the Agreement Products in the
Territory, the supply pricing for the Distributor’s purchase of the Agreement
Products for sale in the Territory shall not exceed the supply pricing paid for
the Agreement Products by such new distributor appointed by CALYPSO within the
Territory. For the avoidance of doubt, in such event CALYPSO or any Affiliate of
CALYPSO shall have the right to sell the Agreement Products in any such country
at any price, including a price that is lower than the then applicable Minimum
Price.
(c) The
price initially payable by the Distributor to CALYPSO for each unit of the
Agreement Products during each Agreement Year shall be the applicable Minimum
Price (subject to adjustment at the close of each applicable Agreement Year in
accordance with Section 7.2(d) below).
(d)
CALYPSO shall retain the right to adjust the price of the units during each
Agreement Year due to price inflation of phone parts, changes in the exchange
rates and for any other reason that would otherwise increase the price of the
parts used in the manufacturing process. Such price increases shall be notified
within 30 days after the end of each Agreement Year.
(e) All
purchases of the Agreement Products hereunder shall be billed and paid in U.S.
Dollars upon delivery of the Agreement Products. Distributor shall make payments
to CALYPSO by interbank transfer prior to the release of the
Products.
7.3.
Sales
and Supply Forecasts; Accounts.
(a) At
least 30 days prior the end of each Agreement Year, the Distributor shall
provide to CALYPSO an updated supply forecast of units in excess of the minimum
amounts as described in Section 7.2(a) above to be obtained by the Distributor
for sale (“Supply Forecast”). The first of each Supply Forecast shall constitute
a binding commitment by the Distributor to purchase such quantity of Agreement
Products (“Binding Forecast”).
7.4.
Shipment
and Delivery; Packaging; Shelf Life.
(a) The
Agreement Products are sold FOB, Manufacturer.
(b) The
Distributor shall submit a binding purchase order setting forth the quantities,
delivery date and shipping instructions with respect to each shipment of the
Agreement Products, such purchase orders to be received by CALYPSO at least 180
days prior to the requested delivery date. CALYPSO shall have no obligation to
supply Distributor with quantities of the Agreement Products in excess of the
amounts in the then current Supply Forecast for the relevant period. For the
avoidance of doubt, all purchase orders submitted with respect to any Agreement
Products prior to the Launch of such Agreement Product shall be
binding.
7.5.
Risk
of Loss. CALYPSO
shall bear all risk of loss of, or damage to, all units of the Agreement
Products to the extent the same is in its possession or the possession of its
Affiliates, nominees or agents. The Distributor shall bear all risk of loss of,
or damage to, all units of the Agreement Products after delivery to a common
carrier for shipment to the Distributor in accordance with Section
7.4.
7.6.
Acceptance. All
units of the Agreement Products delivered to Distributor pursuant to this
Agreement shall be deemed accepted upon delivery to a common carrier for
shipment. Any non-conformity which arises after acceptance by Distributor
directly associated with Product quality and specification shall be the
responsibility of CALYPSO unless such non-conformity is due to improper storage
conditions subsequent to delivery of the Agreement Products. All other
non-conformities of the Agreement Products shall be the responsibility of the
Distributor. CALYPSO and the Distributor agree to consult with each other in
order to resolve the discrepancy between each other’s determinations. If such
consultation does not resolve the discrepancy, the parties agree to nominate a
reputable independent quality control company, acceptable to both parties, that
shall carry out tests on representative samples taken from such shipment, and
the results of such tests shall be binding on the parties. CALYPSO shall at its
expense replace any such shipment to the extent that it does not conform to the
Agreement Product Specifications. All defective units of the Agreement Products
shall be returned to CALYPSO at the address set forth in Section 24 of this
Agreement, accompanied or preceded by a reasonably detailed statement of the
claimed defect or non-conformity and proof of date of purchase, and packed and
shipped according to instructions provided by CALYPSO. The shipping costs of any
such returned units shall be borne by CALYPSO, unless such units are determined
not to be defective under the terms of this Agreement, in which case such
shipping costs shall be borne by the Distributor.
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7.7.
Purchase
Orders. The
provisions of this Agreement shall prevail over any inconsistent statement or
provisions contained in any document related to this Agreement passing between
the parties hereto including, but not limited to, any purchase order,
acknowledgment, confirmation or notice. All purchase orders shall be backed with
an irrevocable letter of credit with appropriate draw down scheduling and may be
provided under separate cover. Letter of credit shall be issued from respectable
European Bank acceptable by CALYPSO.
7.8.
Limited
Warranty; Limitation on Liability.
CALYPSO
represents and warrants that the Agreement Products supplied to the Distributor
hereunder shall:
(a)
conform to the Agreement Product Specifications, as applicable; and
(b) be
manufactured substantially equivalent in quality and performance as the
commercial samples provided by CALYPSO.
THE
FOREGOING WARRANTY IS THE SOLE AND EXCLUSIVE WARRANTY GIVEN BY CALYPSO WITH
RESPECT TO THE AGREEMENT PRODUCTS, AND CALYPSO GIVES AND MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, OTHER THAN THE
FOREGOING. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, NO IMPLIED WARRANTY
OF MERCHANTABILITY, NO IMPLIED WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE,
AND NO IMPLIED WARRANTY ARISING BY USAGE OF TRADE, COURSE OF DEALING OR COURSE
OF PERFORMANCE IS GIVEN OR MADE BY CALYPSO OR SHALL ARISE BY OR IN CONNECTION
WITH ANY SALE OR PROVISION OF THE AGREEMENT PRODUCTS BY CALYPSO, OR THE
DISTRIBUTOR’S (OR ITS AFFILIATES’) USE OR SALE OF THE AGREEMENT PRODUCTS, OR
CALYPSO’S AND/OR THE DISTRIBUTOR’S (OR ITS AFFILIATES’) CONDUCT IN RELATION
THERETO OR TO EACH OTHER. NO REPRESENTATIVE OF CALYPSO IS AUTHORIZED TO GIVE OR
MAKE ANY OTHER REPRESENTATION OR WARRANTY OR TO MODIFY THE FOREGOING WARRANTY IN
ANY WAY.
The
limited warranty set forth in this Section 7.8 does not apply to
any non-conformity of the Agreement Products resulting from (a) repair or
alteration by any party other than CALYPSO or its Affiliates, (b) misuse,
negligence, abuse, accident, mishandling or storage in an improper environment
by any party other than CALYPSO or its Affiliates, or (c) use, handling, storage
or maintenance other than in accordance with instructions and recommendations
provided by CALYPSO or its Affiliates.
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CALYPSO’s
obligation with respect to units of the Agreement Products which do not meet the
warranty contained herein is limited to replacement of such units of the
Agreement Products as applicable, provided that such units are returned to
CALYPSO accompanied by a reasonably detailed statement of the claimed defect or
non-conformity and proof of purchase, and packed and shipped according to
instructions provided by CALYPSO, and only if, upon examination by CALYPSO, such
units of the Agreement Products are determined to have been defective under the
terms of this Agreement.
CALYPSO’S
LIABILITY, AND THE EXCLUSIVE REMEDY, IN CONNECTION WITH THE SALE OR USE OF THE
AGREEMENT PRODUCTS (WHETHER BASED ON CONTRACT, NEGLIGENCE, BREACH OF WARRANTY,
STRICT LIABILITY OR ANY OTHER LEGAL THEORY), SHALL BE STRICTLY LIMITED TO
CALYPSO’S OBLIGATIONS AS SPECIFICALLY AND EXPRESSLY PROVIDED IN THIS SECTION 7.8
AND IN SECTION 9 BELOW. EXCEPT AS SPECIFICALLY PROVIDED IN THIS SECTION 7.8 AND
IN SECTION 9 BELOW, CALYPSO SHALL HAVE NO LIABILITY, OBLIGATION OR
RESPONSIBILITY OF ANY KIND, IN ANY WAY OR TO ANY EXTENT, FOR ANY DAMAGES,
LOSSES, COSTS, EXPENSES OR LIABILITIES FOR ANY REPRESENTATION OR WARRANTY OF ANY
KIND WITH RESPECT TO THE AGREEMENT PRODUCTS OR THE PERFORMANCE THEREOF, OR
ARISING IN ANY WAY IN CONNECTION WITH THE PURCHASE OR USE OR INABILITY TO USE
THE AGREEMENT PRODUCTS, EVEN IF CALYPSO HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES. IN NO EVENT WHATSOEVER SHALL CALYPSO HAVE ANY LIABILITY,
OBLIGATION OR RESPONSIBILITY FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES ARISING IN ANY WAY IN CONNECTION WITH THE AGREEMENT
PRODUCTS OR THEIR SALE OR USE.
8.
Advertising
Revenue.
8.1. The
promotion and obtaining of advertising revenue will be separately conducted by
Franc Advertising, Ltd., on behalf of the Distributor.
8.2.
Incremental
Royalties. The
Parties will negotiate at the earliest opportunity an agreement governing the
solicitation of advertising and allocation and distribution of advertising
revenue, which will provide CALYPSO to receive 7% of the gross revenue or a
reasonable percentage to be negotiated at a later time.
9.
Indemnification;
Confidentiality; Public Announcement.
9.1.
Indemnification
from the Distributor. Subject
to the provisions of Section 9.3, the Distributor shall defend, indemnify and
hold CALYPSO and its Affiliates and their respective directors, officers, agents
and employees harmless from and against any and all liabilities, claims, damages
and expenses (including without limitation actual court costs and reasonable
attorneys’ fees regardless of outcome) resulting from claims of third parties or
arising out of Distributors methods of operations, methods of sales, methods of
representation, methods of advertising and any other actions not contemplated in
this Agreement; provided,
however, that upon CALYPSO being advised of any assertions of any such third
party claims or suits or upon the bringing or filing of such claims or suits by
any third party against CALYPSO, CALYPSO will promptly notify the Distributor
thereof and CALYPSO may, at its option, permit the Distributor’s attorneys to
handle and control the defense of such claims or suits at the Distributor’s cost
and CALYPSO will co-operate with the Distributor in the defense thereof. The
parties agree that there shall be no settlements, whether agreed to in court or
out of court, without the prior written consent of the indemnifying
party.
13
9.2.
Indemnification
from CALYPSO. Subject
to the provisions of Section 9.3, CALYPSO shall defend, indemnify and hold the
Distributor and its Affiliates and their respective directors, officers, agents
and employees harmless from and against any and all liabilities, claims, damages
and expenses (including without limitation actual court costs and reasonable
attorneys’ fees regardless of outcome) resulting from claims of third parties
arising out of infringement of the Trademarks or Patents resulting from the sale
of the Agreement Products or use of the Trademarks or Patents in the
Territory;
provided,
however, that upon the Distributor being advised of any assertions of any such
third party claims or suits or upon the bringing or filing of such claims or
suits by any third party against the Distributor, the Distributor will promptly
notify CALYPSO thereof and, at CALYPSO’s cost, permit CALYPSO’s attorneys to
handle and control the defense of such claims or suits and will co-operate with
CALYPSO in the defense thereof. The parties agree that there shall be no
settlements, whether agreed to in court or out of court, without the prior
written consent of the indemnifying party.
9.3.
Limitation
on Liability.
NOTWITHSTANDING
ANY PROVISION TO THE CONTRARY IN SECTIONS 9.1 AND 9.2 ABOVE, OR ANY OTHER
PROVISION OF THIS AGREEMENT, IN NO EVENT (INCLUDING THE FAULT, NEGLIGENCE OR
STRICT LIABILITY OF EITHER PARTY) SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
OTHER THAN TO THE EXTENT NECESSARY TO REIMBURSE SUCH OTHER PARTY FOR DAMAGES
ACTUALLY PAID TO A NON-AFFILIATED THIRD PARTY, PROVIDED THAT SUCH DAMAGES ARE
OTHERWISE COVERED BY THE PROVISIONS OF SECTION 9.1 OR SECTION 9.2, AS THE CASE
MAY BE.
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9.4.
Confidential
Information. All
information acquired by either party (the “Recipient”) from the other party or
any of its Affiliates (the “Discloser”) during the term of this Agreement or
prior to the Effective Date, relating directly or indirectly to the present or
potential business, operations, corporate, technical or financial situation of
the Discloser, or to manufacturing know-how, patents, data, test results,
techniques, processes, procedures, raw materials, dealer, supplier and customer
lists, or any improvements thereof of the Discloser (“Confidential Information”)
is confidential, and shall be held in trust by the Recipient for the exclusive
benefit of the Discloser. Unless otherwise agreed to in writing by the
Discloser, the Recipient shall not at any time, either during or subsequent to
the term of this Agreement, use for itself (other than in accordance with the
terms of this Agreement) or any other Person, or disclose or divulge to any
Person, other than to those of its employees and advisors and Affiliates who
require the same for the purposes hereof and who are bound by the same
obligations of confidentiality, non-disclosure and non-use as set forth herein,
any Confidential Information or any other confidential or proprietary
information of the Discloser of which the Recipient may acquire knowledge;
provided, however, that the confidentiality, non-disclosure and non-use
provisions contained in this Section 9.4 shall not apply to any information or
data to the extent that the Recipient:
(a) shall
demonstrate by clear and convincing evidence that such information or data is
known generally to persons in the trade through no act or omission of the
Recipient or any of its Affiliates;
(b) is
required by any government authority to disclose such information or data,
including without limitation for the purposes of obtaining and maintaining any
Product License Approvals under this Agreement; or
(c) shall
demonstrate by its written records was disclosed to or created by it or its
Affiliates on a non-confidential basis from a source other than the Discloser or
its Affiliates and that such disclosure or creation did not constitute a breach
of any applicable confidentiality obligations.
15
Confidential
Information shall be immediately returned to the Discloser upon termination of
this Agreement, along with any copies, reproductions, digests, abstracts or the
like of all or any part thereof in the Recipient’s possession or under the
Recipient’s control, and upon such return any computer entries or the like
relating thereto shall, to the extent legally permissible, be destroyed. Such
return (and destruction) will not affect the Recipient’s obligations hereunder
which shall survive indefinitely. Notwithstanding anything herein to the
contrary, the provisions of this Section 9.4 shall be subject to CALYPSO’s
rights under Section 3.6.
9.5.
Public
Announcement. Except
as shall be necessary for governmental notification purposes or to comply with
applicable laws and regulations, and except as otherwise agreed to by the
parties hereto in writing, the parties agree to keep the existence of this
Agreement, and the transactions contemplated hereby, strictly confidential. In
the event that a party must file this document or otherwise disclose any of its
subject matter pursuant to public filing requirements, such party shall seek
confidential treatment of those portions of the Agreement as the parties shall
mutually agree upon. The parties shall agree upon the text of an initial public
announcement relating to the transactions contemplated by this Agreement as soon
as possible. Any subsequent public announcements regarding this Agreement or the
transactions contemplated herein shall also be agreed upon in writing between
the parties prior to any release thereof.
10.
New
Products.
10.1
Distributor
will, from time to time, suggest and discusses possible hardware and software
modifications of the Agreement Products with CALYPSO and the expanded use of
CALYPSO’s ASNAP technology and will discuss all possible joint venture
opportunities.
10.2.
Nothing
in this Section 10 shall be construed, by implication or otherwise, (i) to
effect any sale or license of proprietary CALYPSO technology (including any New
Products), (ii) to grant any license relating to CALYPSO’s proprietary methods
of formulating, fabricating and manufacturing the Agreement Products or New
Products, or (iii) to grant Distributor any rights in or to any proprietary
technology or patents or trademarks of CALYPSO.
11. Licensing
the Agreement Products for Manufacture. The
Parties shall discuss the possibility to enter into a licensing agreement for
the manufacturing of the Agreement Products utilizing Calypso’s Patents.
Notwithstanding the above, CALYPSO shall have the right to assign, license or
negotiate with any other company the manufacturing of the Agreement Products
utilizing the Calypso Patents outside the Distributor’s Territory.
12.
Representations
of CALYPSO. CALYPSO
represents, warrants and covenants as follows:
16
12.1. It is a
corporation duly organized and validly existing under the laws of the State of
Delaware with the full power to conduct its affairs as currently conducted and
contemplated hereunder. All necessary action has been taken to enable it to
execute and deliver this Agreement and perform its obligations
hereunder.
12.2. This
Agreement is a valid and binding obligation of CALYPSO enforceable in accordance
with its terms. CALYPSO has the unencumbered right to enter into this Agreement
and to fulfill its duties hereunder. It is not and will not become a party to
any agreement in conflict herewith. Accordingly, CALYPSO has the right to
appoint the Distributor as the exclusive distributor of the Agreement Products
in the Territory in accordance with the terms of this Agreement and such
appointment will not constitute a breach of any existing contractual or other
arrangements between CALYPSO and any Affiliated or non-Affiliated third party,
nor shall it infringe the rights of any Affiliated or non-Affiliated third
party.
12.3
No
approval, consent, order, authorization or license by, giving notice to or
taking any other action with respect to, any governmental or regulatory
authority is required in connection with the execution and delivery of this
Agreement by CALYPSO and the performance by CALYPSO of its obligations
hereunder.
13.
Representations
of the Distributor. The
Distributor represents, warrants and covenants as follows:
13.1 It is a
corporation duly organized and validly existing under the laws of England with
full power to conduct its affairs as currently conducted and contemplated
hereunder. All necessary action has been taken to enable it to execute and
deliver this Agreement and perform its obligations hereunder.
13.2. This
Agreement is the Distributor’s valid and binding obligation enforceable in
accordance with its terms. The Distributor has the unencumbered right to enter
into this Agreement and to fulfill its obligations hereunder. It is not and will
not become a party to any agreement in conflict herewith. Accordingly, the
Distributor has the right to act as the exclusive distributor of the Agreement
Products in the Territory in accordance with the terms of this Agreement and the
performance of its obligations hereunder will not constitute a breach of any
existing contractual or other arrangements between the Distributor and any
Affiliated or non-Affiliated third party, nor shall it infringe the rights of
any Affiliated or non-Affiliated third party.
13.3. No
approval, consent, order, authorization or license by, giving notice to or
taking any other action with respect to any governmental or regulatory authority
is required in connection with the execution and delivery of this Agreement by
the Distributor and the performance by the Distributor of its obligations
hereunder.
17
14.
Insurance. Each
party hereto shall (a) obtain and maintain such insurance policies as are
adequate to cover its respective obligations hereunder and which are consistent
with normal business practices of prudent companies similarly situated and (b)
provide the other party, upon request, with certificates of insurance confirming
the existence of such insurance policies.
15. Infringement. Each of
the Distributor and CALYPSO will promptly notify the other party in writing of
any infringement of a Patent or Trademark or unauthorized disclosure or use of
any Confidential Information, of which it becomes aware in the Territory.
CALYPSO shall have the exclusive right at its own cost to take all legal action
in the Territory it deems necessary or advisable to eliminate or minimize the
consequences of such infringement of a Patent or Trademark in the Territory. For
the purpose of taking any such legal action, CALYPSO shall have the right,
subject to the Distributor’s consent which consent shall not be unreasonably
withheld or delayed, to use the name of the Distributor as plaintiff, either
solely or jointly in accordance with the applicable rules of procedure; provided
that CALYPSO shall give the Distributor prior notice of such use of the
Distributor’s name. The Distributor shall promptly furnish CALYPSO with whatever
written authority may be required in order to enable CALYPSO to use the
Distributor’s name in connection with any such legal action, and shall otherwise
cooperate fully and promptly with CALYPSO in connection with any such action.
All proceeds realized upon any judgment or settlement regarding such action
shall belong to CALYPSO.
16.
Further
Assurances. The
parties hereto agree to execute such further or other documents and assurances
as are necessary from time to time in order to give effect to the provisions of
this Agreement.
17.
Assignment. The
rights and obligations of the parties hereto shall inure to the benefit of and
shall be binding upon the authorized successors and permitted assigns of each
party. Neither party may assign its rights or obligations under this Agreement
or may designate another person to perform all or part of its obligations under
this Agreement, or to have all or part of its rights and benefits under this
Agreement without the prior written consent of the other party, except to an
Affiliate or to a successor of the business, by merger or otherwise, to which
this Agreement relates, provided that in the case of an assignment to an
Affiliate the assigning party shall promptly notify the other party in writing
of such assignment and shall remain liable (both directly and as guarantor) with
respect to all obligations so assigned. In the event of any assignment or in the
event that an Affiliate of either party shall exercise rights and/or perform
obligations hereunder pursuant to the terms of this Agreement, the assignee or
Affiliate, as the case may be, shall specifically assume and be bound by the
provisions of the Agreement by executing and agreeing to an assumption agreement
satisfactory to the other party hereto.
18
18.
Governing
Law; Arbitration; Injunctive Relief.
(a) Governing
Law. This
Agreement shall be governed by and construed in accordance with the internal and
substantive laws of the State of Florida, United States of America, and shall
not be governed by the United Nations Convention for International Sale of
Goods.
(b)
Dispute
Resolution. In the
event of any dispute touching or concerning this Agreement, the parties hereby
agree to submit such dispute:
(i)
first, to the most senior executive officer of the business unit of each party
responsible for the business of the Agreement Products, or their designees, and
if the dispute is not successfully resolved by these senior executive officers
within a period of twenty (20) days through good faith discussions, or such
other period as is agreed upon in writing by the parties; then
(ii)
second, for arbitration in Miami, Florida under the Rules of the American
Arbitration Association in effect on the date of this Agreement (the “Rules”) by
arbitrators appointed in accordance with said Rules. Any decision of such
arbitrators shall be written and shall be final and binding upon the parties. In
any arbitration pursuant to this Section the award shall be rendered by a
majority of three (3) arbitrators, one (1) of whom shall be appointed by each
party and the third of whom shall be appointed by mutual agreement of the two
(2) party-appointed arbitrators. In the event of failure of a party to appoint
an arbitrator within thirty (30) days after commencement of the arbitration
proceeding or in the event of failure of the two (2) party-appointed arbitrators
to agree upon the appointment of the third arbitrator within thirty (30) days
after commencement of the arbitration proceeding, such arbitrator shall be
appointed by the American Arbitration Association in accordance with the Rules.
The arbitrators shall apply the governing law set forth in this Section.
Judgment upon an award rendered by the arbitrators may be entered in any court
having jurisdiction thereof.
19
(c) Each
of the parties hereto acknowledges and agrees that damages will not be an
adequate remedy for any material breach or violation of this Agreement if such
material breach or violation would cause immediate and irreparable harm (an
“Irreparable Breach”). Accordingly, notwithstanding the provisions of Section
19(a) to the contrary, in the event of a threatened or ongoing Irreparable
Breach, each party hereto shall be entitled to seek, in any state or federal
court in the state of the principal offices of the other party, equitable relief
of a kind appropriate in light of the nature of the ongoing threatened
Irreparable Breach, which relief may include, without limitation, specific
performance or injunctive relief; provided, however, that if the party bringing
such action is unsuccessful in obtaining the relief sought, the moving party
shall pay the non-moving party’s reasonable costs, including attorney’s fees,
incurred in connection with defending such action. Such remedies shall not be
the parties’ exclusive remedies, but shall be in addition to all other remedies
provided in this Agreement.
19.
Severability. In the
event that any provision of this Agreement shall be held by a court of competent
jurisdiction or by any governmental body to be invalid or unenforceable, such
provision shall be deemed severable and the remaining parts and provisions of
this Agreement shall remain in full force and effect.
20.
Force
Majeure. Each of
the parties shall be excused from the performance of its obligations hereunder
in the event such performance is prevented by force majeure, and such excuse
shall continue as long as the condition constituting such force majeure
continues. For the purpose of this Agreement, force majeure is defined as
contingencies beyond the reasonable control of either party, including, without
limitation, acts of God, judicial or regulatory action, war, civil commotion,
destruction of production facilities or materials by fire, earthquake or storm
and labor disturbances (whether or not any such labor disturbance is within the
power of the affected party to settle).
21.
Interest. Any
overdue amounts payable by either party hereunder shall bear interest compounded
monthly at 1.5%, or, if lower, the highest rate permissible by applicable law,
from the due date until the date of payment.
22.
No
Partnership or Agency.
This
Agreement and the relations hereby established by and between CALYPSO and the
Distributor do not constitute a partnership, joint venture, agency or contract
of employment between them. The relationship between the parties established by
this Agreement shall be solely that of vendor and vendee and all rights and
powers not expressly granted to the Distributor are expressly reserved to
CALYPSO. The Distributor shall have no right, power or authority in any way to
bind CALYPSO to the fulfillment of any condition not herein contained, or to any
contract or obligation, expressed or implied. The Distributor specifically
agrees that it shall have no power or authority to represent the CALYPSO in any
manner; that it will solicit orders for products as an independent contractor in
accordance with the terms of this Agreement; and that it will not at any time
represent orally or in writing to any person or corporation or other business
entity that it has any right, power or authority not expressly granted by this
Agreement.
20
23.
Notices. All
communications in connection with this Agreement shall be in writing and
delivered personally or sent by postage prepaid first class mail, nationally
recognized overnight courier service, or facsimile, and if relating to default,
late payment or termination, delivered personally or by certified mail, return
receipt requested, facsimile or courier, addressed to each party as set
forth
below:
To
CALYPSO:
CALYPSO
WIRELESS, INC.
0000 XX
000 Xxxxxx
Xxxxx
Xxxxx, Xxxxxxx 00000
Attention:
President, Xxxxxx Xxxxxxxxx
Telephones: 000
000-0000
000 000-0000 Fax
To
Distributor:
FRANC
TELECOM, LTD.
X X Xxxx
Pandit
00 Xxxxxx
Xxxxxx
Xxxxxx,
Xxxxxxx XX0X0XX
And
Xxxxxxx
XxxXxxxxxxx
X.X. Xxx
0000
Xxxxxxxxxxx,
XX. 00000
0000
Xxxxxxxx Xx.
Xxxxxxxxxxx,
XX. 00000
21
or to
such other address as the addressee shall last have designated by notice to the
communicating party. The date of giving any notice shall be the date of its
actual receipt.
24.
Survival.
The
provisions of Sections 3.3, 3.6, 3.7, 3.8, 6.2, 9.1, 9.2, 9.3, 9.4, 9.5, 11, 18
and 24 of this Agreement shall survive the termination or expiration of this
Agreement (as the case may be) and shall remain in full force and effect. The
provisions of this Agreement that do not survive termination or expiration
hereof (as the case may be) shall, nonetheless, be controlling on, and shall be
used in construing and interpreting the rights and obligations of the parties
hereto with regard to, any dispute, controversy or claim which may arise under,
out of, or in connection with this Agreement.
25.
Miscellaneous. This
Agreement sets forth the entire agreement between the parties with respect to
the transactions and arrangements contemplated hereby and supersedes all prior
oral or written arrangements. This Agreement may be modified or amended only by
a written instrument executed and delivered by both parties. None of the
provisions of this Agreement shall be deemed to have been waived by any act or
acquiescence on the part of either party except by an instrument in writing
signed and delivered by the party executing the waiver. This Agreement may be
executed in several identical counterparts, each of which shall be an original,
but all of which constitute one instrument, and in making proof of this
Agreement it shall not be necessary to produce or account for more than one such
counterpart.
IN
WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date and year first above
written.
CALYPSO:
CALYPSO WIRELESS, INC.
By:
/s/ Xxxxxx Xxxxxxxxx -
President-CEO
(Authorized
Officer)
DISTRIBUTOR:
FRANC TELECOM, LTD
By:
/s/s
JM - Franc
Telecom.
(Authorized
Officer)
22
EXHIBITS
Exhibit A —
Agreement Products Specification and Approval Documents
Exhibit B —
Patents and Trademarks
23
EXHIBIT
A
Agreement
Products Specification and Approval Documents
24
EXHIBIT
B
Patents and Trademarks
Patents
Trademarks
25
