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EXHIBIT (6)i
DISTRIBUTION AGREEMENT
THIS AGREEMENT made in triplicate the day of November, 1998.
BETWEEN:
AXYN CANADA CORPORATION, a corporation incorporated pursuant to
the laws of Canada
(hereinafter called "the Distributor")
OF THE FIRST PART
AND:
MPT MILLENNIUM PATENT TECHNOLOGIES CORPORATION LIMITED, a
corporation incorporated under the laws of Cyprus
(hereinafter called "the Owner")
OF THE SECOND PART
WHEREAS the Owner has agreed to sell copies of the Software (defined herein) to
the Distributor and the Distributor has agreed to market and distribute copies
of the Software in accordance with the terms of this Agreement;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants herein contained and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged) the parties hereto
hereby agree as follows:
ARTICLE I APPOINTMENT AS DISTRIBUTOR
1.1 The Owner hereby appoints the Distributor as the exclusive distributor of
the Software (as defined in Schedule "A") in Canada and the Distributor hereby
accepts such appointment. In accordance with such appointment, the Distributor
shall have the exclusive right to distribute and sell copies of the Software to
third parties in Canada only (the "Territory").
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1.2 In consideration for and in connection with such appointment, the
Distributor shall:
(a) diligently exploit and market the Software;
(b) maintain, enhance, support, assist and provide such other
services with respect to the Software as may be necessary or
desirable to properly exploit the Software; and
(c) take all other steps as may be reasonably required in order to
effectively market and sell copies of the Software including,
without limitation, preparing sales and promotional materials in
order to facilitate advertising and sales of the Software and to
write, update and maintain all user manuals.
1.3 In connection with the appointment by the Owner of the Distributor as
the exclusive distributor of the Software in the Territory, the
Distributor shall have the right to use any trademarks associated with
the Software for the purposes of carrying out its obligations under this
Agreement and for no other purposes whatsoever. The Owner shall record
the Distributor as a registered user of all trademarks associated with
the Software in the Territory required by the Distributor to market and
sell the Software.
1.4 Except as otherwise provided herein, the Distributor shall, in
consultation with the Owner, make all decisions and do and perform all
such acts and things as may be necessary or desirable in connection with
the sale, marketing and distribution of the Software;
1.5 The Owner shall produce or cause to be produced, copies of the Software
for sale to the Distributor for resale to third parties as principal.
The Distributor is acting as an independent contractor and distributor
and nothing herein shall be deemed to constitute the Distributor as
agent, joint venturer or partner of the Owner or to be related to the
Owner. For greater certainty, the Distributor shall have no authority to
negotiate or conclude contracts in the name of the Owner and the Owner
shall not be bound in any manner whatsoever by any agreement, warranty
or representation made by the Distributor to any other person or with
respect to any action of the Distributor.
1.6 The Distributor shall be responsible for all costs, expenses and
disbursements of any kind in connection with the exploitation,
marketing, distribution and sale of the Software and in connection with
the performance of all of its obligations hereunder, including without
limitation, its share of all costs of enhancing and maintaining the
Software, all costs incurred in promoting and advertising the Software
and all costs of packaging, invoicing, collecting and support services
related to the Software. FOR GREATER CERTAINTY, ALL COSTS OF DUPLICATING
THE SOFTWARE SHALL BE INCURRED BY THE DISTRIBUTOR.
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1.7 Copies of the Software may be sold by the Distributor singly or in bulk,
depending on the requirements of its customers. Copies of the Software
may also be produced in customized format to meet unique demands of
purchasers. The Distributor shall also be entitled to grant licenses for
the use of all or some of the Software to users (including users
affiliated with the Distributor) provided that such licensing activity
shall not exceed twenty percent (20%) of the Distributor's business,
based on revenues, in connection with the commercial exploitation of the
Software.
1.8 The Distributor shall develop and/or oversee, at its own expenses, the
production of all marketing and sales literature, technical and
professional literature, and direct mail publications and presentations
required in connection with the sale and marketing of the Software.
1.9 The Distributor shall determine the selling price for each copy of the
Software to third parties with a view to maximizing the revenues
attributable to the exploitation of the Software.
1.10 The Distributor shall not be entitled to any compensation, fees or costs
in connection with the services provided hereunder.
ARTICLE 2 PURCHASE PRICE AND PAYMENT FOR SOFTWARE
2.1 The Distributor shall pay the following:
(a) an amount equal to 7% of the gross revenue of the Software
received by the Distributor in the Territory;
(b) an amount equal to a payment of 9% of the gross revenue from the
sale of the Software by the Distributor in the Territory by
assumption of the similar obligation of the Owner to The Guide
Associates Inc. pursuant to a Software Purchase Agreement dated
as of the date of this Agreement; and
(c) $10,000.00 per year payable on the date first written above and
thereafter on each anniversary date of this Agreement.
2.2 The Distributor shall pay to the Owner the amount owing to the Owner for
the sale by the Distributor of copies of the Software (net of sales and
value added taxes) (hereinafter referred to as "Sales Revenues") within
twenty (20) days following the end of each calendar quarter. Payment of
Sales Revenues shall be payable by the Distributor out of receipts from
sales of copies of the Software by the Distributor. Each payment of
Sales Revenues payable hereunder shall be accompanied by a statement,
setting forth particulars of all sales by the Distributor of copies of
the Software for the period then
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ended. Within sixty (60) days of each calendar year end, the Distributor
shall provide a statement, certified by its auditors, of all sales of
copies of the Software for such year.
2.3 Upon reasonable notice and no more than once per year, the Owner, at its
own expense, shall have the right to appoint a representative to review
the financial records of the Distributor for the purposes of verifying
the calculations of the sale prices and the total purchases and sales by
the Distributor of copies of the Software. The Distributor shall fully
cooperate with such representative. The Distributor covenants that it
shall cause accurate and complete financial books of accounts and
records to be kept at all times in respect of purchases and sales of
copies of the Software. The Distributor shall also provide to the Owner,
when same are prepared and received by the Distributor, copies of the
internal quarterly financial statements of the Distributor and copies of
the year-end audited financial statements of the Distributor.
2.4 All references to dollars contained in this Agreement and all Schedules
hereto are to United States dollars unless otherwise indicated.
ARTICLE 3 MARKETING PLAN
3.1 The Distributor shall periodically prepare a marketing plan.
ARTICLE 4 INSURANCE
4.1 The Distributor shall name the Owner as the insured, in respect of any
insurance obtained by the Distributor relating to the Software in
amounts which third party insurance agents from time to time advise is
customary in the industry for comparable products.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE DISTRIBUTOR
5.1 The Distributor hereby represents and warrants to the Owner as follows
and hereby acknowledges and confirms that the Owner is relying on such
representations and warranties in connection with the entering into by
the Owner of this Agreement:
(a) the Distributor is a corporation duly and validly incorporated
and organized under the laws of Canada and is validly existing
and in good standing under the laws of Canada;
(b) the execution and delivery of this Agreement by the Distributor
has been duly authorized by all necessary corporate action and
the Distributor has all requisite corporate power and authority
to enter into this Agreement and to carry out its terms;
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(c) the execution and delivery of this Agreement by the Distributor
and the observance of, performance of and compliance by it with
the terms hereof do not constitute: a violation of applicable
law; a violation or a breach of any contract or any other
instrument to which the Distributor is a party or by which it is
bound; a default under, or would constitute a default with the
passage of time or the giving of notice or both or otherwise
under, any contract or obligation to which the Distributor is a
party or by which it is bound; or a violation or a breach of any
writ, injunction, statute, by-law, judgment, decree, order, rule
or regulation, including of any court or administrative body, by
which the Distributor is bound;
(d) the Distributor has all requisite power and authority to own,
lease and operate the properties and assets now owned, leased
and operated by it and is duly qualified to do business and is
in good standing in every jurisdiction in which the character of
the business conducted or the nature of the properties owned,
leased or operated by the Distributor makes such qualification
necessary;
(e) there are no judgments outstanding and no claims, actions,
suits, proceedings or investigations pending or, to the best of
the Distributor's knowledge after reasonably diligent
investigation, threatened against or affecting the Distributor
or the Software at law or in equity or before any federal,
state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic
or foreign, enjoining, restricting or prohibiting the right of
the Distributor to sell, market and distribute the Software as
contemplated herein and pursuant to the marketing plan;
(f) no registration or filing with the consent, approval or other
action by any federal, state, provincial or other governmental
agency or instrumentality is or will be necessary for the valid
execution and performance of this Agreement by the Distributor;
(g) except for events or conditions relating to businesses in
general, there is no event or condition of any character
pertaining to the business of the Distributor or to the assets
of the Distributor that may reasonably be expected to adversely
affect its assets or its business. The Distributor is not in
default under any laws, regulations, by-laws, orders or
requirements applicable to its business;
(h) the business carried on by the Distributor has been and is now
being conducted in compliance with all statutes, regulations,
by-laws, orders, covenants, restrictions or plans of all
federal, state, provincial or municipal authorities, agencies,
boards, or licensing bodies applicable to such business and the
Distributor holds all licenses and permits necessary for the
carrying on of such business. There is no threatened suspension,
cancellation or invalidation of any
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such approval, license, permit or certificate which could
reasonably be expected to have an adverse effect on the
Distributor;
(i) the Distributor is not in default under or in breach of any
material term of any contract to which it is a party or by which
it is bound. There exists no state of facts which, after notice
or lapse of time or both, or otherwise, would constitute a
default under or breach of a material term of any such
contracts. All such contracts are now in good standing and in
full force and effect and the Distributor is entitled to all of
the benefits thereunder.
ARTICLE 6 COVENANTS OF THE DISTRIBUTOR
6.1 The Distributor covenants and agrees to do the following:
(a) enhance, market and distribute the Software pursuant to the
terms hereof and in accordance with the provisions of the
marketing plan;
(b) exploit the Software and carry on its business in a prudent,
efficient and conscientious manner and at all times ensure that
the exploitation of the Software and the business carried on by
the Distributor is carried on in compliance with all applicable
laws;
(c) assist the Owner, in securing the Distributor as a registered
user of the trademarks used in association with the Software,
and thereafter, the Distributor shall maintain its registration
as a registered user of such trademarks;
(d) provide or arrange for, at its own expense, technical support
for the Software including maintenance, enhancement and
refinement, where applicable, of the Software for purposes of
use, demonstration, duplication and distribution of the
Software. The Distributor shall ensure that the Software is
maintained free of bugs and defects and shall reasonably enhance
or refine existing features, if applicable, in order to
reasonably maintain the marketability of the Software;
(e) comply with all license and registration requirements, file all
returns, keep all records, pay all taxes, fees, levies, rates
and assessments which may be levied or assessed against it as a
result of the operation of its business;
(f) do all things and cause all things to be done to ensure that all
of the representations and warranties of the Distributor
contained in this Agreement remain true and correct throughout
the term of this Agreement as if such representations and
warranties were continuously made throughout the term of this
Agreement;
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(g) pay all Sales Revenues to the Owner, as hereby agreed to;
(h) not, in any way, infringe or contribute to the infringement by
others of the rights of the Owner in any of the trademarks or
copyrights associated with the Software and furnish any
information in its possession in connection with the
infringement of such trademarks or copyrights by a third party
to the Owner, as soon as reasonably possible and to cooperate
fully with the Owner in any action commenced with respect to any
infringement relating to such trademarks or copyrights;
(i) neither the Distributor nor any person, firm or corporation with
which it is affiliated in any way shall develop, market,
enhance, or exploit, either directly or indirectly, any software
or similar product that may be competitive in any way with the
Software other than a software product developed with the use or
assistance of all or part of the Software in which the
Distributor has an ownership interest;
(j) ensure that all copies of the Software and all packaging
includes proprietary, patent, copyright, trademarks and trade
secret legends, in such form and in such location as specified
by the Owner, from time to time in writing, clearly indicating
that (i) copyright to the Software is owned by "MPT Millennium
Patent Technologies Corporation Limited" and that (ii) copies of
the Software cannot be reproduced and sold without the consent
of the Owner; and
(k) provide the Owner, upon request being made therefor, from time
to time, with information relating to the sales and marketing of
the Software by the Distributor, revenues generated from the
sales of the Software by the Distributor, and of any
modification, production, reproduction, or use of the Software.
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF THE OWNER
7.1 The Owner hereby represents and warrants as follows and hereby
acknowledges and agrees that the Distributor is relying on such
representations and warranties in connection with the entering into by
the Distributor of this Agreement:
(a) the Owner has the right to make the appointment and grant the
rights provided for herein;
(b) the Owner is a corporation duly and validly incorporated and
organized under the laws of Cyprus and is validly existing and
in good standing under the laws of Cyprus;
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(c) the execution and delivery of this Agreement by the Owner has
been duly authorized by all necessary action, and the Owner has
all requisite power and authority to enter into this Agreement
and to carry out the terms herein;
(d) this Agreement has been duly and validly executed and delivered
by the Owner and constitutes a valid and legally binding
agreement, enforceable against the Owner in accordance with its
terms; and
(e) the execution and delivery of this Agreement by the Owner, and
the observance of, performance of and compliance by it with the
terms hereof do not constitute: a violation of applicable law; a
violation or breach of any contract or any other instrument to
which the Owner is a party or by which it is bound; a default
under, or would constitute a default with the passage of time or
the giving of notice or both or otherwise under, any contract or
obligation to which the Owner is a party or by which it is
bound; or a violation or a breach of any writ, injunction,
statute, bylaw, judgment, decree, order, rule or regulation,
including of any court or administrative body, by which the
Owner is bound.
ARTICLE 8 CONFIDENTIALITY
8.1 The Distributor shall use its best efforts to maintain the
confidentiality of any proprietary information or trade secrets
pertaining to the Software and will seek to restrict the ability of any
employee having knowledge of such proprietary information or trade
secrets from disclosing same to any other person. The Distributor shall
promptly notify the Owner of any violation or challenge to the copyright
relating to the Software. For purposes of this Agreement, all knowledge
or information relating to this Agreement or developed or acquired or
conceived by the Distributor in performing its obligations hereunder, or
in exploiting the Software, including, without limitation, technology,
source code, documentation and test procedures pertaining to the
Software shall be deemed to be trade secrets, know how and proprietary
information of the Owner and the Distributor shall maintain in
confidence at all times during the term of this Agreement and following
its termination all such trade secrets, know how or proprietary or other
information and shall not disclose any such trade secrets, know how or
proprietary information to anyone.
ARTICLE 9 OBLIGATION TO PROTECT COPYRIGHT AND TRADEMARKS
9.1 The Distributor hereby acknowledges that the Owner owns, at all times,
all right, title and interest in and to the Software, including all
intellectual property rights and copyrights associated therewith. The
Distributor shall, at all times, protect the interest of the Owner in
and to the Software and in connection therewith, the Distributor hereby
agrees to defend and protect, at its own expense, all intellectual
property rights and copyrights associated with the Software against
third party claims.
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ARTICLE 10 INDEMNITY
10.1 The Distributor hereby agrees to indemnify and hold harmless the Owner
from and against any and all losses, costs, claims and amounts arising
out of or in connection with any acts or omissions of the Distributor
pursuant to this Agreement, including, without limitation, any claims by
third parties, including, without limitation, claims for product
liability or loss of profits, arising out of the sale of copies of the
Software or any other services provided by the Distributor to such third
party and from any claims by any person for or relating to infringement
of any copyright or intellectual property rights associated with the
Software. The Distributor further covenants and agrees to indemnify and
hold harmless the Owner from and against any and all losses, damages,
costs, expenses and amounts incurred by the Owner in connection with or
relating to any untruth of any representation or warranty made by the
Distributor hereunder or relating to any breach by the Distributor of
any of its covenants or agreements contained herein. The Distributor
shall diligently defend any such claim, suit or proceeding brought
against the Owner by any third party with respect to any matter to which
this indemnity relates. The Owner shall be entitled to participate in
any such litigation conducted by the Distributor with its own counsel at
its own expense and the Distributor shall at all times consult the Owner
and, if applicable, its counsel, and generally keep the Owner apprised
of all matters with respect to the litigation. If the Distributor fails
to take any actions to restrain an infringement or alleged infringement
of any intellectual property rights and/or copyrights associated with
the Software, the Owner shall have the right, at the Distributors cost
and expense, to take any such action they deem necessary to protect
their intellectual property rights in the Software, including filing
lawsuits in the event of infringement, and filing for copyright and
trademark registrations.
10.2 The Owner hereby covenants and agrees to indemnify and hold harmless the
Distributor from and against any and all losses, damages, costs,
expenses and amounts arising out of or in connection with any acts or
omissions of the Owner pursuant to this Agreement or in connection with
or relating to any untruth of any representation or warranty made by the
Owner hereunder or relating to any breach by the Owner of any of its
covenants or agreements contained herein. The Owner shall diligently
defend any such claim, suit or proceeding brought against the
Distributor by any third party with respect to any matter to which this
indemnity relates. The Distributor shall be entitled to participate in
any such litigation conducted by the Owner with its own counsel at its
own expense and the Owner shall at all times consult the Distributor
and, if applicable, its counsel, and generally keep the Distributor
apprised of all matters with respect to the litigation.
10.3 For greater certainty, except for the express warranties set forth in
Section 7 hereof, the Owner makes no further warranties or covenants
whatsoever with respect to the Software or the sale of copies thereof to
the Distributor, either expressed or implied, including, without
limitation, any warranty as to merchantable quality or fitness for any
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particular purpose or arising by statute or otherwise in law or from any
course of dealing or usage of trade.
ARTICLE 11 TERMS
11.1 The term of this Agreement shall be five years and thereafter shall
automatically be renewed for successive periods of one year unless
either party gives no less than ninety days notice of termination prior
to the expiry of the original term or any renewal term.
ARTICLE 12 TERMINATION
12.1 With the exception of Paragraph 10.1, which shall survive the
termination of this Agreement, this Agreement shall terminate upon the
happening of the following events:
(a) if the Distributor fails to make any payment hereunder when due
and such breach is not cured within ninety (90) days after
notice of such breach is given by the Owner to the Distributor;
(b) if the Distributor shall fail to perform or comply with any
other material term, condition, covenant or obligation hereunder
on its part to be performed or complied with and such failure to
perform or comply is not remedied within ninety (90) days after
written notice of such is given by the Owner to the Distributor;
(c) if the Distributor becomes insolvent, makes any assignment in
bankruptcy or makes any other assignment for the benefit of
creditors, makes any proposal under the Bankruptcy and
Insolvency Act (Canada) or any comparable law, is adjudged
bankrupt, files a petition or proposal to take advantage of any
act of insolvency, consents to or acquiesces in the appointment
of a trustee, receiver, receiver and manager, interim receiver,
custodian, sequestrator or other person with similar powers of
itself or of all or any substantial portion of its property or
assets, files a petition or otherwise commences any proceeding
seeking any reorganization, arrangement, composition or
readjustment under any applicable bankruptcy, insolvency,
moratorium, reorganization or other similar law affecting
creditors' rights or consents to, or acquiesces in, the filing
of such a petition;
(d) if any creditor of the Distributor appoints a trustee, receiver,
receiver and manager, interim receiver, custodian, sequestrator
or other person with similar powers, of the Distributor or of
all or any substantial portion of its property or assets, files
a petition or otherwise commences any proceeding seeking any
reorganization, arrangement, composition or readjustment under
any applicable bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting creditors' rights
and such action, appointment or proceeding is not terminated or
withdrawn within 90 days of the Owner providing written notice
to the Distributor;
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(e) if the Distributor ceases or threatens to cease to carry on its
business or institutes or agrees to institute proceedings for
the winding-up of its operations; and
(f) if any representation or warranty made by the Distributor in
this Agreement shall prove to have been incorrect in any
material respect on and as of the date thereof.
12.2 Upon termination or expiration of the appointment made hereunder, for
any reason whatsoever, the right of the Distributor to use any of the
trademarks and any other intellectual property associated with the
Software shall immediately cease and all activities of the Distributor
with respect to the sale and marketing of the Software shall immediately
cease.
12.3 Upon termination of this Agreement in accordance with Paragraph 12.1
hereof, the Distributor shall promptly account to the Owner, with
respect to any and all amounts which may be owing by the Distributor to
the Owner hereunder and the Distributor shall return all unsold copies
of the Software to the Owner at no cost to the Owner.
ARTICLE 13 GENERAL CONTRACT PROVISIONS
13.1 Any notice or other communication which may be or is required to be
given or made pursuant to this Agreement may be given in writing by
personal delivery, by registered mail, postage prepaid or by telecopier
address as follows:
(a) to the Distributor at: Axyn Canada Corporation
000-000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxxxx X0 L 6B3
Attention: Xxxxxx Xxxx
Telecopier: (000) 000-0000
(b) to the Owner at: c/o Soloway, Xxxxxx
000-000 Xxxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx KI R 7Y2
Attention: Xxxxxxx Xxxxxxx
Telecopier: (000) 000-0000
or at such other address as may be given by either of them to the other
in writing from time to time. Any notice or other communication given by
mail as aforesaid shall be deemed to have been received on the tenth
(1Oth) day following the date of mailing such notice or other
communication. Any notice or other communication delivered or sent by
telecopier
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as aforesaid shall be deemed to have been received on the date on which
such notice or document was delivered or sent by telecopier. If a notice
or other communication shall have been mailed and if regular mail
service shall be interrupted by strike or other irregularity before the
deemed receipt of such notice as aforesaid, such notice shall, unless
earlier actually received, be deemed to have been received on the tenth
(1Oth) day following the resumption of normal mail service.
13.2 There are no other representations, undertakings or agreements of any
kind between or among the parties hereto with respect to the subject
matter hereof except those contained herein.
13.3 All agreements, representations, warranties and covenants of any of the
parties made herein or in any certificate or other document delivered by
or on behalf of any of the parties hereto pursuant to the provisions
hereof are material and shall be deemed to have been relied on by the
other party notwithstanding any investigation heretofore or hereafter
made by such other party, and shall survive the execution and delivery
of this Agreement and shall continue in full force and effect.
13.4 If any provision of this Agreement or the application thereof to any
person in any circumstance shall, to the extent be invalid or
unenforceable, such invalid or unenforceable provision shall be
severable from the remainder of this Agreement and shall not affect or
impair the validity or enforceability of any other provision of this
Agreement.
13.5 This Agreement shall be construed and enforced in accordance with the
laws of Cyprus applicable therein.
13.6 This Agreement is not assignable by the Distributor without the prior
written consent of the Owner, which consent may be unreasonably or
arbitrarily withheld, provided that the Distributor shall be entitled to
assign this Agreement, without the consent of the Owner to:
(a) a wholly-owned subsidiary of the Distributor provided such
wholly-owned subsidiary agrees to be bound by the terms of this
Agreement and provided further that such assignment shall not
release the Distributor of its obligations hereunder; and
(b) a third party in connection with the sale to such third party of
all or substantially all of the business and assets of the
Distributor to such third party, provided such assignee agrees,
in writing, with the Owner, to assume and be bound by all of the
Distributor's obligations under this Agreement in place and
instead of the Distributor.
Subject to the foregoing, the provisions of this Agreement shall inure
to the benefit and be binding upon the parties hereto and their
respective successors and assigns.
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13.7 Time shall be of the essence in this Agreement.
13.8 Each party shall from time to time hereafter and upon reasonable request
by any other party, execute, perform an make or cause to be executed,
performed or made all such other further acts, assurances and things as
may be required in order to give full effect to this Agreement.
IN WITNESS WHEREOF the parties have hereto have executed this Agreement
as of the date first above mentioned.
AXYN CANADA CORPORATION
MPT MILLENNIUM PATENT TECHNOLOGIES
CORPORATION LIMITED
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SCHEDULE "A"
(Description of Software)
