EXCLUSIVE DISTRIBUTION
AGREEMENT
THIS
EXCLUSIVE DISTRIBUTION AGREEMENT (this “Agreement”) is made as of the
20 th 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 mark (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
