EXCLUSIVITY AGREEMENT
This contract (hereinafter called the "Formal Contract) is
executed this 17th day of January, 2000 between Eagle Wireless
International, Inc, a Texas corporation having an office at 000
Xxxxxxxxxx Xxxxx, Xxxxxx Xxxx, XX, 00000, XXX, (hereinafter
called "Manufacturer") and Xxxxxx.xx Enterprises Corp., a British
Columbia Corporation having an office at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx XX, X0X0X0 (hereinafter called "Customer"). This Formal
Contract replaces and supersedes any and all prior agreements,
written and oral, between Manufacturer and Customer except that
certain purchase order STB001 dated December 13, 1999 whose terms
and order quantities are Incorporated within this agreement.
WHEREAS, Manufacturer is a manufacturer, distributor and marketer
of Set-Top-Box and other communication products and services;
WHEREAS, Customer has initiated a business that requires the use
of certain .Set-Top-Box products and other products and services
that Manufacturer provides and is prepared to begin the use,
distribution and marketing of these products;
WHEREAS, Manufacturer and Customer (hereinafter called the
"Parties') executed a Purchase Order for certain Set-Top-Box
products on December 13, 1999 (hereinafter called the "Initial
Purchase Order") to enter into an exclusive relationship whereby
Customer will exclusively use, distribute, and market the
Set-Top-Box products of Manufacturer throughout marketing
territory of Customer in return for being awarded the exclusive
distribution rights to Manufacturers Set-Top-Box product for
Canada.
WHEREAS, The parties agreed in the Initial Purchase Order to
fully formalize their relationship through the execution of a
Formal Contract that is approved by the respective management of
each company.
NOW THEREFORE, in consideration of the mutual covenants and
undertakings set out herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree to as follows:
Section I - Definitions
1.1 PRODUCT means any and all existing and future Set-Top-Box
like devices owned, designed or licensed by Manufacturer that can
be used as a computer, Internet gateway, digital video or audio
disc player or other- similar multimedia personal device.
1.2 AFFILIATE of a party means any legal entity whose majority
or controlling ownership interest representing the right to vote
for or manage the affairs of the entity is, during the term of
this Contract, owned or controlled (but only so long as such
ownership or control exists), directly or indirectly, by that
party, or any legal entity that possesses, directly or
indirectly, such a majority or controlling ownership interest in
a party hereto.
1.3 SEMI-EXCLUSIVE means that conveyed rights are equally shared
by the grantee and the grantor with neither party having
authority to transfer, assign or otherwise sublicense the rights
to a third party without the express written consent of the other
party.
1.4 FINANCING PERIOD means the date that a release of product is
requested by Customer in writing until date Manufacturer receives
liquidity of funds to pay for the products delivered to Customer.
1.5 MANUFACTURED COST means the- cost of direct and indirect
materials attributed in accordance with US GAAP to the
manufacture of the Product, manufacturing labor and overhead,
software, royalty license, all other fees, collateral materials,
shipping materials, warranty reserve, insurance, and
manufacturing financing charges.
1.6 CUSTOMER BASE COST means the Manufactured Cost multiplied by
a factor of 110%.
1.7 SALES PRICE means the final collected sales price to the
distribution source system integrator, or retail customer,
1.8 PROFIT means the difference between the Sales Price and the
Customer Cost Floor.
1.9 FINANCE CHARGE means an interest rate of 16% per annum
compounded monthly that will accrue on amounts not paid by an
established due date.
Section 2 - Grants
2.1 For the term of this Contract, Manufacturer grants to
Customer and Affiliates of Customer a Canadian exclusive and a U.
S. non-exclusive, indivisible license to sell, distribute, and
have third parties distribute the Product provided the minimum
quantities are being maintained on a continuing semi-annual
basis, and a worldwide exclusive virtual content driven local
based portal communities based on the Urbana/Guelph Project.. The
basis for the exclusivity is a average quantity of 500,000
Set-Top-Box units bought and paid for or $US-125M of paid for
business to Manufacturer over a period of twenty one months from
the start of this agreement.
For greater clarity to maintain its Canadian Exclusive and U.S.
Non-Exclusive rights, Customer must order, take delivery, and pay
for an average of 166,666 Set-Top-Box Units at a Customer Bass
Cost determined by section 4.1 in each of the first 3 seven month
periods following the execution of this contract.
2.2 Customer grants to Manufacturer the exclusive right to
provide all of its Set-Top-Box requirements for a period of three
years after December 13, 1999 without regard to the location of
the product usage or type of application. This grant is being
provided In return for certain custom design commitments by
Manufacturer to Customer; and the cost control and profit sharing
agreements between Customer and Manufacturer detailed in Section
4. 1.
Section 3 - Purchase Orders
Customer and Manufacturer will jointly establish a sales
committee to establish the configuration, delivery schedule, and
associated pricing impacts for the various versions of the
Product before final commitments by Customer to any of Customer's
clients to receive final conformations of orders for any orders
that are non-standard to Manufacturers product line. Manufacturer
will be responsible for the determination of ail final pricing
for standard and non-standard orders.
3.1 Manufacturer will provide Customer with a written
conformation of all purchase orders and formal purchase order
releases within three days of the receipt of such orders.
Manufacturer reserves the sole right to accept or reject any
purchase order. Purchase orders must be in writing to
Manufacturer at least sixty-days in advance of the scheduled
shipment date. Once issued, purchase orders may not be canceled
without penalty. Purchase orders on custom configurations may not
be canceled without paying for all work in process plus a 10%
penalty. No penalty shall be assessed if future orders within 90
days utilize the work In process and Customer pays Manufacturer
for any and all additional manufacturing and manufacturing
financing costs associated with the delay.
3.2 Completed purchase orders will be invoiced by Manufacturer
to Customer at the Customer Base Cost plus freight and handling
FOB Singapore. Invoices will be payable Net 30 for domestic or
Canadian shipments, after credit approval by Manufacturer and
Manufacturer's production finance sources, and prepaid for
International shipments. Invoiced amounts that remain unpaid
more than thirty days will be subject to a finance charge of 16%
per annum compounded monthly. Manufacturer will be the final
authority regarding all credit matters.
Section 4 - Profit Sharing
4.1 Both Manufacturer and Customer recognize the importance of
obtaining market share during the initial introduction of the
Set-Top-Box product line into the sales and marketing territories
of Customer. In recognition of this fact Manufacturer agrees to
develop new Set-Top-Box configurations and models required by
Customer volume applications and to sell these models to Customer
at actual Manufactured Cost plus 10%. This Cost will become the
Customer Base Cost, Customer may sell to the end user or
integrator at his independent SALES
4.2 PRICE and may establish his own PROFIT. Both parties agree
that the final product must be priced to the end user
competitively with other makes and models available and on a
feature by feature basis. At some time after market share is
achieved Manufacturer reserves the right to increase the Customer
Cost Floor in order to recover product development costs and to
increase profit margins.
Section 5 -Warranty Provisions
5.1 Manufacturer will provide all warranty service for the
United States and Canada from its contract facility in Houston
Texas, Other warranty provisions will be made for sales outside
of these locations. Manufacturer will provide technical support
for training, installation, or system integration to large
accounts of Customer if requested at standard industry rates.
Manufacturer will indemnify Customer against any and all warranty
costs damages and liabilities attributed to the failure of its
Set-Top-Box unless such costs, damages and liabilities result
from installation, misuse or other items specifically excluded
from the warranty.
Section 6 - Miscellaneous Provisions
6.1 The term of this contract shall be three years from the date
of this contract.
6.2 Customers and related relationships and agreements remain
the property of the respective parties to this Contract. Both
parties acknowledge that there may arise instances of common
customers and agree that these situations will be handled in a
businesslike fashion on a case by case basis.
6.3 Should Customer have an opportunity to sell or merge the
majority interest in its business to a third-party investor then
any such new investor must abide with the terms and conditions of
this contract or negotiate changes to the Contract that will
provide protection to Manufacturer.
6.4 Customer and Manufacturer agree that any disputes arising
under this Contract will be settled by arbitration in accordance
with the rules of the American Arbitration Association in the
location of the party not requesting arbitration.
6.5 This Contract shall be construed under and in accordance
with the laws of the State of Texas and obligations of the
parties created hereunder are enforceable in Xxxxxx County,
Texas.
6.6 Should any part or portion of this Contract be invalid, the
balance of the provision shall remain unaffected and shall be
enforceable.
6.7 This Contract shall (save and except for the Purchase Order
dated December 13, 1999) constitute the entire agreement between
Manufacturer and Customer. Any amendments hereto shall be done
only in writing signed by both parties. No oral agreements will
be recognized, All purchase orders issued under this contract
must be in conformance with this Contract.
6.8 Notices given under this Contract by either party must be
given in writing and may be effected by certified mail, postage
prepaid with return receipt requested. Mailed notices shall be
addressed to the address of the party as it appears below. Mailed
notices shall be deemed communicated seven days after the
postmark date of the mailing. FAX copies will be sent at the same
time as the mailed copies.
The contact address for Customer is:
President, Xxxxxx.xx Enterprises Corp.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, X0X0X0
The contact address for Manufacturer is:
President, Eagle Wireless International, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxx 00000
6.9 This agreement may not be assigned or transferred by
Customer without the express written consent of Manufacturer. In
the event written authority to assign or transfer the obligations
and benefits of this agreement are granted then all terms and
provisions of this agreement shall inure to the benefit of, and
be binding on, said assignee and successor interest of Customer.
6.10 This agreement shall be executed in two counterparts, each
party to retain an original.
Both parties agree to provide at their own expense the other with
audited financial on an annual basis.
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed by their duly authorized representative:
EAGLE WIRELESS INTERNATIONAL, INC.
By: /s/ Xx. Xxxx Xxxxxx
Xx. Xxxx Xxxxxx, President
XXXXXX.XX ENTERPRISES CORP.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, President
