EXHIBIT 10.4
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Distribution Agreement between NetFabric and Xxxxxxxx, dated November 29, 2004
NETFABRIC
DOMESTIC DISTRIBUTION AGREEMENT
This Agreement between NETFABRIC CORPORATION, a Delaware corporation with
principal offices at 00 Xxxxxxx Xxxx, Xxxxxxxx X, Xxxxx 000, Xxxxxxxxxx, XX,
00000 ("NetFabric") and XXXXXXXX TELECOMMUNICATIONS CORP ("Distributor"), a
corporation, whose address is 0000 Xxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxx, X0X0X0,
shall be effective as of the date of execution by NetFabric ("Effective Date").
In consideration of the representations, warranties, covenants and agreements
set forth herein and intending to be mutually bound, the parties hereto agree as
follows:
1. DEFINITIONS
Capitalized terms shall have the meaning set forth in Exhibit A, attached hereto
and incorporated herein by this reference.
2. DISTRIBUTION RIGHTS
2.1 During the term of this Agreement, NetFabric grants to Distributor the
non-exclusive right and license to distribute the Products to Resellers and
Customers located in the Territory, as defined on Exhibit A hereto. Pursuant to
the terms hereof, NetFabric shall sell to Distributor, and Distributor shall
purchase from NetFabric, the Products set forth on Exhibit B hereto ordered by
Distributor at the Purchase Prices and upon the Payment Terms described below.
2.2 NetFabric reserves the right at any time to discontinue the production
or distribution of any of its Products, to modify the design of or upgrade its
Products or any part of its Products and to change its service, warranty, or
other policies, upon thirty (30) days written notice to Distributor.
2.3 NetFabric also reserves the right to add products to or delete products
from Exhibit B upon thirty (30) days written notice to Distributor.
3. PRICE
3.1 The current Products, Discounts, and Suggested List Prices are set
forth on Exhibit B hereto. NetFabric reserves the right to change Exhibit B upon
thirty (30) days written notice to Distributor.
3.2 Payments to NetFabric with respect to all products received by
Distributor shall be made by Distributor in US dollars, free of withholding,
within thirty (30) days of the date of NetFabric's invoice. Such payment must be
a certified check if any preceding check is returned to NetFabric for
insufficient funds.
3.3 NetFabric's prices do not include any foreign, federal, state or local
sales, use, value added or other taxes, customs duties, or similar tariffs and
fees which NetFabric may be required to pay or collect upon the delivery of the
Products or upon collection of the price. Should any tax or levy be made,
Distributor agrees to pay such tax or levy and indemnify NetFabric for any claim
for such tax or levy demanded. Distributor covenants to NetFabric that all
Products acquired hereunder will be for redistribution in the ordinary course of
Distributor's business, and Distributor agrees to provide NetFabric with
appropriate resale certificate numbers and other documentation satisfactory for
the applicable taxing authorities to substantiate any claim of exemption from
any such taxes or fees.
3.4 Notwithstanding any other provision in this Agreement to the contrary,
Distributor shall not be deemed In default if it withholds any specific amount
to NetFabric because of a legitimate dispute between the parties as to that
specific amount, pending the resolution of the disputed amount.
4. STOCK BALANCING
Distributor may return Products to NetFabric, including 100% of discontinued
Products, as follows: (a) Returns shall be made each quarter, at one time in the
month immediately following the end of the quarter; (b) except as may be agreed
by the parties, from time-to-time, returns shall not exceed 20% of the previous
quarter's purchases; and (c) returns shall be accepted on a dollar-for-dollar
reorder basis, as follows: Distributor shall request a Return Merchandise
Authorization ("RMA") number, offering offsetting purchase order(s) with a total
value equal to or greater than the aggregate purchase price of the Products to
be returned. The offsetting purchase order(s) may include one or more orders
already placed and not yet shipped, provided such orders were placed in the same
month as the RMA request. Upon receipt of the purchase order(s), NetFabric shall
issue the RMA number, which must accompany the return shipment. NetFabric agrees
not to ship against the offered purchase order(s) until it has approved the RMA.
To be eligible for return, Products must be new, unused and in their original,
sealed packaging. However, no return will be authorized by NetFabric if, at the
time of the requested return, Distributor Is in default or breach of any
provision of this Agreement, including failure to comply with any applicable
credit terms or delinquency in any payment to NetFabric, subject to
Distributor's right of withhold under section 3.4.
5. ORDERS AND SHIPPING
5.1 Upon receipt of an order by Distributor, NetFabric shall use reasonable
efforts to deliver such order to Distributor within ten (10) days of the date of
such order. Orders shall be shipped F.O.B. NetFabric In accordance with the
Distributor's reasonable instructions. Distributor shall use its best efforts in
placing orders at least four (4) weeks in advance of the requested ship date.
NetFabric requests that orders be placed at least four (4) weeks in advance of
the requested date for shipment but in no event shall any order be placed more
than ninety (90) days in advance of the requested ship date. All risk of loss or
damage to the Products will pass to Distributor upon delivery by NetFabric to
the carrier, freight forwarder, or Distributor, whichever occurs first.
NetFabric shall ship orders to Distributor at least as promptly as NetFabric
ships any other orders received at or about the same time. Should orders for
Products exceed NetFabric's available inventory, NetFabric may allocate its
available inventory and make deliveries on a basis NetFabric deems equitable, in
its sole discretion, and without liability to Distributor on account of the
method of allocation chosen or its implementation. In any event, NetFabric will
not be liable for any damages, direct, consequential, special or otherwise, to
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Distributor or to any other person for failure to deliver or for any delay or
error In delivery of Products.
5.2 NetFabric reserves the right to cancel any orders placed by Distributor
and accepted by NetFabric or to refuse or delay shipment thereof, if Distributor
(i) fails to make any payment as provided in this Agreement or under the terms
of payment set forth in any invoice or otherwise agreed to by NetFabric and
Distributor, (ii) fails to meet reasonable credit or financial requirements
established by NetFabric, including any limitations on allowable credit, or
(iii) otherwise fails to comply with the terms and conditions of this Agreement.
No such cancellation, refusal or delay will be deemed a termination (unless
NetFabric so advises Distributor) or breach of this Agreement by NetFabric.
6. MARKETING COLLATERAL, TRAINING AND POS DATA
6.1 NetFabric agrees to provide reasonable training and sales collateral
materials as needed, and to provide sales training for Distributor's staff, at
times mutually agreed upon by NetFabric. In addition, NetFabric agrees to
provide units of each NetFabric Product at cost for in-house training, resources
library and technical support use; such units, as well as any "NFR units (i.e.,
Products that may not be resold to end users), may not be redistributed for any
reason, except for special promotional "NFR" units that are offered to
Distributor in exchange for Distributor's purchase of specified Products.
Distribution of such Product units in violation of the foregoing will constitute
a material breach of this Agreement. When a new Product or new version is
released, units of the new Product or new version will also be provided by
NetFabric to Distributor.
6.2 Distributor will provide NetFabric within seven business (7) days alter
the end of each calendar month, a written or electronic report and computer
media data files, including POS data, (in a format, style and manner approved by
NetFabric) showing, for such month, I) Distributor's current inventory levels
for each of the Products. From time-to-time, Distributor will provide NetFabric
with any other information it may reasonably require regarding the sale of
Products.
7. ADVANCE NOTICE
In the event that NetFabric shall sell any additional Product not set forth on
Exhibit B which is offered by NetFabric through comparable wholesale
distributors. NetFabric shall make reasonable efforts to notify Distributor not
less than thirty (30) days in advance of such event and, in any event, at least
as quickly as NetFabric notifies any other Distributor.
8. NOTICE
Any notices hereunder to be given by either party to the other shall be in
writing and sent by certified mail to each party's address as set forth above,
with a courtesy copy to the General Counsel, and sent to the attention of the
Senior Buyer or Product Manager as applicable if sent to Distributor, and to the
attention of the VP of Sales, if sent to NetFabric.
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9. DEFECTIVE PRODUCTS
9.1 Distributor will accept and will require its Resellers to accept the
return any Product by an end user due to the end user's failure to agree to the
terms the End user License accompanying such Products, provided that the disk
package of such Product is returned unopened. Distributor may also return any
opened units of defective Product which have been returned by end users in
accordance with the warranty set forth in the End user License accompanying the
Product. Transportation charges for the return of such Products shall be borne
by NetFabric. Such returns must be accompanied by a purchase order for
replacement Products equal in value to the purchase price paid by Distributor
for the returned Products. The offsetting purchase order(s) may include one or
more orders already placed and not yet shipped, provided such orders were placed
in the same month as the RMA request.
9.2 NetFabric provides a limited warranty to end users of the Products.
Distributor will make no other warranty on NetFabric's behalf. EXCEPT FOR SUCH
WARRANTY, THE PRODUCTS ARE PROVIDED WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS
OR IMPLIED. NETFABRIC DOES NOT WARRANT THAT THE FUNCTIONS CONTAINED IN THE
PRODUCTS WILL BE UNINTERRUPTED OR ERROR FREE. NETFABRIC DISCLAIMS ALL OTHER
WARRANTIES AND CONDITIONS, EITHER EXPRESS OR IMPLIED INCLUDING THE WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10. INDEMNIFICATION
10.1 Indemnification of Distributor.
NetFabric agrees that, if notified promptly in writing and given sole control of
the defense and all related settlement negotiations, and if Distributor
cooperates and provides reasonable assistance, NetFabric will defend Distributor
against any claim based on an allegation that (i) a Product supplied hereunder
infringes a copyright, trademark, or state trade secret right within the
Territory, (ii) a Product supplied hereunder caused property damage or the death
of or a personal injury to, any person, arising out of or resulting in any way
from any defect in a Product, (iii) NetFabric violated any United States law,
statute or ordinance or any United States governmental or administrative order,
rule or regulation with regard to the Product or its manufacture, possession,
use or sale or (iv) arises from NetFabric's acts, omissions or
misrepresentations with respect to the Products to the extent that NetFabric
would have been found liable by a court if the claim had been made directly
against NetFabric. NetFabric will pay any resulting costs, damages and
attorneys' fees finally awarded by a court with respect to any such claims.
Distributor agrees that, if the Products in the inventory of Distributor, or the
operation thereof, become, or in NetFabric's opinion are likely to become, the
subject of such a claim, Distributor will permit NetFabric, at NetFabric's
option and expense, to, among other things, procure the right for Distributor to
continue marketing and using such Products, or to replace or modify them so that
they become non-infringing. If neither of the foregoing alternatives is
available on terms that NetFabric in its sole discretion deems reasonable,
Distributor will return such Products on written request from NetFabric.
NetFabric will grant Distributor a credit equal to the price paid by Distributor
for such returned Products, as adjusted for discounts, returns and credits
actually given, provided that such returned Products are in an undamaged
condition. NetFabric will have no obligation to Distributor with respect to
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infringement of patents, copyrights, trademarks or trade secrets or other
proprietary rights beyond that stated in this Section 10.1
10.2 Indemnification of NetFabric
Distributor agrees to indemnify and hold harmless NetFabric, its affiliates,
employees and agents, against any and all claims and liabilities (including
reasonable, attorney's fees and costs of litigation) arising from Distributor's
acts, omissions or misrepresentations, regardless of the form of action.
11. TERM AND TERMINATION
11.1 Unless this Agreement is terminated as provided below, the rights and
obligations of Distributor and NetFabric hereunder shall be effective for a term
of one year from the effective date and will automatically renew, for additional
one-year terms, upon each anniversary of the effective date.
11.2 Either party hereto may terminate this Agreement upon (a) thirty (30)
days written notice to the other following any material breach or omission by
the other with respect to any term, representation, warranty, condition, or
covenant hereof and (b) the failure of such other party to cure such breach or
omission prior to the expiration of such thirty (30) day period, provided that
in the event Distributor defaults in any payment due NetFabric such notice
period prior to termination will be reduced to ten (10) days.
11.3 Distributor or NetFabric may terminate this Agreement at will, at any
time during the term of this Agreement, with or without cause, by written notice
given to the other party not less than ninety (90) days prior to the effective
date of such termination.
11.4 Upon termination or expiration of this Agreement, Distributor shall
submit to NetFabric within ten (10) days after the effective date of termination
or expiration, a list of all Products in Distributor's inventory. If NetFabric
terminates this Agreement in accordance with Section 11.3 or if Distributor
terminates this Agreement in accordance with Section 11.2, NetFabric shall
repurchase all such Products, if they are in new and original condition. If
Distributor terminates this Agreement in accordance with Section 11.3 or if
NetFabric terminates this Agreement in accordance with Section 11.2, NetFabric
may, at its option, repurchase any such Products, if they are in new and
original condition. In such case, NetFabric will pay Distributor the actual
price Distributor paid for such Products, subtracting any amounts then owing to
NetFabric.
11.5 In the event NetFabric issues a notice of termination due to
Distributor's breach of this Agreement, NetFabric will be entitled to reject all
or part of any orders received from Distributor after notice but prior to the
effective date of termination. In the event a notice of termination is issued by
either party, NetFabric may limit monthly shipments to Distributor during the
notice period to Distributor's average monthly shipments from NetFabric during
the twelve (12) months prior to the date of notice of termination.
Notwithstanding any credit terms made available to Distributor prior to the date
of a termination notice, any Products shipped thereafter will be paid for by
certified or cashier's check prior to shipment. The due dates of all outstanding
invoices to Distributor for the Products will be accelerated automatically so
they become due and payable on the effective date of termination, even if longer
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terms had been provided previously. All orders or portions thereof remaining
unshipped as of the effective date of termination will automatically be canceled
and any unused MDF will be forfeited.
11.6 DISTRIBUTOR AND NETFABRIC EACH WAIVE ANY RIGHT IT MAY HAVE TO RECEIVE
ANY COMPENSATION OR REPARATIONS ON TERMINATION OR EXPIRATION OF THIS AGREEMENT
IN ACCORDANCE WITH ITS TERMS.
11.7 The termination or expiration of this Agreement shall not affect any
rights of either party with respect to any breach of this Agreement, any rights
under Section 10 (Indemnification) hereof or Distributor's rights to market and
promote Distributor's inventory of Products as provided in Section 11.4 above.
In addition the following Sections shall survive any termination of this
Agreement: 3.3, 4, 9.1, 9.2, 11.6, 12, 13, 14.5 and 14.7.
12. LIMITATION OF LIABILITY
12.1 NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT OR OTHERWISE,
NEITHER PARTY SHALL BE LIABLE TO THE OTHER OR TO AN END-USER UNDER ANY THEORY
FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING
DAMAGES FOR LOSS OF BUSINESS OR LOSS OF PROFITS) OR THE COST OF PROCUREMENT OF
SUBSTITUTE GOODS OR SERVICES, EVEN IF THAT PARTY OR ITS REPRESENTATIVES HAVE
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
12.2 No action arising out of or related to this Agreement, regardless of
form, may be brought by Distributor more than one (1) year after the cause of
action has accrued.
13. TRADEMARKS, TRADE NAMES AND COPYRIGHTS
13.1 During the term of this Agreement, Distributor is authorized by
NetFabric to use the trademarks NetFabric uses for the Products solely in
connection with Distributor's advertisement, promotion and distribution of the
Products. Distributor's use of such trademarks and logos will be in accordance
with NetFabric's policies in effect from time to time, including but not limited
to trademark usage policies.
13.2 As both a covenant by Distributor and a condition of NetFabric's
authorization of Distributor's distribution, Distributor will include on each
copy of any materials that it creates regarding or referring to the Products all
trademark, copyright and other notices of proprietary rights Included by
NetFabric on the Products or requested to be so included by NetFabric from time
to time. Distributor agrees not to alter, erase, deface or obscure any such
notice on anything provided by NetFabric.
13.3 Distributor has paid no consideration for the use of NetFabric's
trademarks, logos, copyrights, trade secrets, trade names or designations, and
nothing contained in this Agreement will give Distributor any interest in any of
them. Distributor acknowledges that NetFabric owns and retains all copyrights
and other proprietary rights in all the Products, and agrees that it will not at
any time during or after this Agreement assert or claim any interest In or do
anything that may adversely affect the validity or enforceability of any
trademark, trade name, trade secret, copyright or logo belonging to or licensed
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to NetFabric (including, without limitation, any act, or assistance to any act,
which may infringe or lead to the Infringement of any copyright in the Products)
or attempt to grant any right therein. Distributor agrees not to attach any
additional trademarks, logos, trade designations or other legends to any Product
without the prior written consent of NetFabric. Distributor further agrees not
to affix any NetFabric trademark, logo or trade name to any non-NetFabric
product.
13.4 Except to the extent permitted pursuant to Section 11.4 hereof, upon
expiration or termination of this Agreement, Distributor will forthwith cease
all display, advertising and use of all NetFabric names, marks, logos and
designations and will not thereafter use, advertise or display any name, make or
logo which is, or any part of which is, similar to or confusing with any such
designation associated with any Product.
13.5 Distributor agrees to cooperate without charge in NetFabric's efforts
to protect Its proprietary rights. Distributor agrees to notify NetFabric of any
breach of NetFabric's proprietary rights that comes to Distributor's attention.
14. OTHER TERMS AND PROVISIONS
14.1 Product Discontinuation. NetFabric shall provide Distributor with
thirty (30) days written notice prior to discontinuation of any Product.
Distributor may return such discontinued Products in accordance with Section 4
hereof.
14.2 This Agreement and the Exhibits A and B attached hereto contain all
the Agreements, understanding, representations, conditions, warranties and
covenants, and constitutes the sole and entire agreement between the parties
hereto pertaining to the subject matter hereof and supersedes all prior
communications or agreements, written or oral. This Agreement may not be
released or modified except by the mutual written consent of both Distributor
and NetFabric as attested to by an instrument signed by an officer of each of
them.
14.3 NetFabric and Distributor are each independent entities and neither
party shall be, nor represent itself to be, a franchisor, franchisee, joint
venturer, partner, master, servant, principal, agent or legal representative of
the other party for any purpose whatsoever.
14.4 If any provision of this Agreement is declared invalid or
unenforceable, the remaining provisions of this Agreement shall remain in full
force and effect.
14.5 All terms, conditions, or provisions which may appear as preprinted
language or otherwise be inserted within any purchase order, confirmation or
Invoice for any Product shall be of no force (unless mutually agreed upon by
both parties) and effect notwithstanding the execution of such purchase order or
other document subsequent to the date of this Agreement.
14.6 The rights and liabilities of the parties hereto will bind and inure
to the benefit of their respective assignees, successors, executors and
administrators, as the case may be; provided, that, as the license from
NetFabric hereunder is personal to Distributor, Distributor may not sublicense,
assign or transfer any of its rights, privileges or obligations hereunder either
in whole or In part, without the prior written consent of NetFabric. Nor shall
an assignment or transfer of the Agreement and the licenses granted herein be
affected by operation of law, such as for example, by merger, consolidation,
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sale of the business or assets, or by acquisition of a majority of the voting
stock of Distributor by a third party, without the prior written consent of
NetFabric. NetFabric, in a like manner, shall not assign nor transfer the
Agreement without the prior written consent of Distributor. However, NetFabric
may assign this Agreement, without prior consent of Distributor, to a third
party through merger, acquisition or purchase of all or substantially all of the
securities or assets of NetFabric. Any attempted assignment in violation of the
provisions of this Section 14.6 will be void.
14.7 In the event any litigation is brought by either party in connection
with this Agreement, the prevailing party in such litigation will be entitled to
recover from the other party all the costs, attorney's fees and other expenses
incurred by such prevailing party in the litigation.
14.8 Waiver by either Distributor or NetFabric of one or more terms,
conditions, or defaults of this Agreement shall not constitute a waiver of the
remaining terms and conditions or of any future defaults of this Agreements.
14.9 The validity, interpretation and performance of this Agreement shall
be controlled by and construed under the laws of the State of New York excluding
that body of laws controlling conflict of laws.
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NETFABRIC, INC. DISTRIBUTOR
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxx Xxxxxxxx
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Name: Xxxx Xxxxxxxx Name: Xxx Xxxxxxxx
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Title: President Title: President
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Date: Nov. 29, 2004 Date: Nov. 26, 2004
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EXHIBIT A
For the purpose of this Agreement, the following terms shall have the meanings
set forth below:
1. "Discounts" shall mean the discounts set forth in Exhibit B from the
Suggested List Price of such Product.
2. "Distributor" shall mean Distributor and any parent, subsidiary or
affiliated corporations it may have during the term hereof, and any person or
entity purchasing Products from NetFabric for sale to Retailers.
3. "Intellectual Rights" shall mean any rights relating to any trademark,
trade name, service xxxx, copyright, trade secret, invention, industrial model,
patent, process, technology, know-how or design.
4. "Inventory" shall mean at anytime all units of Product (a) in
Distributor's inventory, (b) ordered by Distributor but not yet received by
Distributor at such time, or (c) returned by Resellers to Distributor within 180
days of such time.
5. "Payment Terms" relating to any Product shall mean "net 30", defined as
requiring payment to arrive in NetFabric's account by the 30th calendar day
after NetFabric ships the Product.
6. "Purchase Price" of any Product shall mean the difference between (a)
the applicable Suggested List Price, and (b) the product of the applicable
Discount and Suggested List Price of such Product.
7. "Resellers" shall mean persons or entities who purchase Products from
Distributor and resell Product to end-users. "Customers" shall mean persons or
entities who purchase Products from Distributor for their own use.
8. "Return Price" for any unit of Product shall mean the amount originally
billed Distributor for such unit less any rebates or amounts under Section 2.2
with respect to such unit actually paid or credited by NetFabric to Distributor.
9. "Suggested List Price" of any Product shall mean the retail sales price
of such Product as suggested by NetFabric to retailers and set forth in Exhibit
B.
10. "Territory" means the United States, Canada and Mexico.
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