Services And Distribution Agreement

Exhibit 10.17


SERVICES AND DISTRIBUTION AGREEMENT


THIS AGREEMENT is entered into by and between American Telecom Services, Inc., a Delaware corporation, with offices located at 1191 Huntington Drive, Suite 311, Duarte, CA 91010-2400 (" Supplier" ), and Databyte Technology, Inc., a corporation, with offices located at 11836 Clark Street, Arcadia, CA 91006 (" Vendor" ).


WHEREAS, Supplier is engaged in the business of producing certain products (" Product(s)" ) and offers such Product to third parties; and


WHEREAS, Vendor is engaged in the business of receiving, warehousing and distributing merchandise and also renders customer services and billing services in connection with such merchandise and desires to render each of the foregoing services to Supplier in connection with the Products;


NOW, THEREFORE, the parties hereby enter into this Agreement and agree to all of the terms and conditions as follows:


1. Services .

A. Vendor shall provide facilities in Arcadia, California, or such other location approved by Supplier, to receive, warehouse and distribute the Products and, Vendor also will render customer and billing services in connection with all sales distributed by Vendor, including but not limited to maintaining complete records with respect to importation and related costs, to sales, accounts receivable, receipts, shipping and returns. The manner and method of the customer and billing services to be rendered by Vendor will be subject to Supplier' s direction and approval.


i. Vendor shall provide written monthly reports to Supplier' s designee, presently Mr. Corey Fischer, with a copy to Mr. Bruce Hahn, which reports shall include detailed information with respect to importation and related costs, to sales, accounts receivable, receipts, shipping, returns, and inventory. Vendor agrees to implement a reporting system such that Supplier will have twenty-four hour access via the Internet to examine the up to the minute current status of the information to be included in the reports to be provided by Supplier.


B. Vendor is prohibited from making any copies, archival or otherwise, of the Products or any component thereof. Vendor is further prohibited from using the Products in any manner other than as specifically authorized herein. Any unauthorized use shall be deemed a material breach of this Agreement by Vendor and shall entitle Supplier to immediately terminate this Agreement for cause pursuant to Section 8.B. below.

2. TERM . Subject to earlier termination pursuant to the terms hereof, the term of this Agreement shall be as follows (with the Initial Term and all Extended Terms, if any, referred to hereinafter collectively as the " Term" ):

A. Initial Term . This Agreement shall be effective as of the date of execution by both parties (" Effective Date" ) and shall extend for the period of one year thereafter (" Initial Term" ).


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B. Extended Term . This Agreement shall be automatically renewed and shall continue for additional successive periods of two years each (each an " Extended Term" ), on an ongoing basis, unless and until either party gives the other party written notice of its intention not to renew the Agreement, said notice to be provided at least 90 days prior to the expiration of the then current Term.


3. FEES .


A. Services Fee. In consideration for the services rendered by Vendor hereunder and during the Initial Term of the Agreement and each Extended Term, and provided Vendor is not in breach of this Agreement, Vendor agrees to pay to Supplier a Services Fee equal to three percent (3%) of " Net Sales" actually collected. For the purposes of this Agreement, Net Sales is defined as gross sales shipped less returns and allowances, cooperative advertising, promotional allowances, sales commissions and cash discounts.

i. The Services Fee shall be payable on the 15 th of each month for the prior month' s collections on shipments. An allowance of 10% of each month' s collectibles may be held back for returns, and after the deduction of any such month' s returns, the balance remaining, if any, from the 10% will be paid to Vendor not later than ninety days after the original monthly payment from which the funds were held back.


4. COSTS AND EXPENSES . Vendor shall be reimbursed for pre-approved actual and direct costs and expenses expressly related to return packaging and case packaging, customs, freight, outbound shipping costs, and toll free telephone line. Supplier shall invoice Vendor for such costs and expenses and Vendor agrees to pay said invoices within thirty days of receipt of such invoices.


5. CONFIDENTIALITY; NON-CIRCUMVENTION


A. Vendor acknowledges and agrees that this Agreement and all elements in connection with the Products including but not limited to and any and all other materials, software, hardware, manuals, documentation, marketing and promotional materials relating to this Agreement and the Products and each of the components and elements thereof (hereinafter referred to collectively as the " Materials" ), whether or not actually created by Supplier, are all the proprietary and confidential property of Supplier. Furthermore, the parties recognize that during the course of their relationship, Vendor may have occasion to receive additional Materials or information that is considered to be confidential or proprietary to Supplier, including information relating to inventions, patents, trademarks, copyrights, ideas, know-how, specifications, drawings, software, programming, business practices or policies, cost or pricing Product, customer or vendor lists and/or any other material referring to same (collectively, " Confidential Information" ). Confidential Information shall include, without limitation, any information or material that Supplier designates as such or which under the circumstances of disclosure to Vendor reasonably ought to be treated as such. For instance, the terms of this Agreement shall be considered confidential.

B. Accordingly, both during the Term of this Agreement and thereafter, Vendor agrees to maintain in strictest confidence, and will not use, disclose, reveal or make available to any third party or utilize for its own benefit (other than as authorized pursuant to this Agreement) any of the Product, Materials or any Confidential Information, without the prior express written

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consent of Supplier unless Vendor is obligated by court order or other valid legal means to divulge the Confidential Information. Vendor further agrees to take all reasonable precautions to preserve the confidentiality of Supplier' s Products and the Materials and Confidential Information provided in connection therewith and shall assume sole responsibility that its directors, officers, employees and agents, the persons and entities to which Vendor makes the Product available and Vendor' s permitted Vendors and assigns will similarly preserve the confidential nature of the information against unauthorized uses and/or unauthorized third parties. Vendor shall include a confidentiality provision in all of its employment agreements and agreements relating to the use of the Product. The provisions of this section shall survive expiration or termination of this Agreement.


C. Non-Circumvention .Vendor agrees not to circumvent Supplier and that it shall not enter into any discussions, negotiations, communications, agreements, contracts, or any other agreements regarding any type of project utilizing the ideas, plans and concepts or any elements similar to that which are encompassed in the Products, Materials and Confidential Information provided by Supplier. Specifically, Vendor agrees that: (a) Supplier has a substantial and material interest in the Products, Materials and Confidential Information; (b) Supplier may be entitled to equitable and legal remedies in the event Vendor consummates a transaction or enters into a business arrangement, utilizing, arising out of or related to any of the Products, Materials or Confidential Information; and (c) Supplier may suffer irreparable harm and significant damages if Vendor communicates, negotiates or enters into any business arrangement for any project with elements similar to that which are encompassed in the Products, Materials and Confidential Information.


6. RIGHTS .


A. Ownership . Nothing in this Agreement shall act to grant or transfer from Supplier to Vendor any ownership right, title or interest whatsoever in or to any of the Products or Materials (specifically including, without limitation, all of the copyrights, service marks trademarks and all elements and components thereof). Furthermore, all Products and Materials shall be and remain the sole property of Supplier, except with respect to each particular physical Product upon consummation of a sales transaction.

B. Post-Term . Upon the expiration or termination of this Agreement, all rights granted or licensed to Vendor under this Agreement shall forthwith terminate and immediately and automatically revert solely to Supplier and Vendor shall immediately discontinue all exploitation of any rights which are owned by Supplier and all use of the Materials. Furthermore, upon expiration or termination of this Agreement, Supplier may require Vendor to send to Supplier, at no cost to Supplier, any or all of the Products and Materials and/or require Vendor to destroy any or all of the Products and Materials then in Vendor' s custody, and provide Supplier with a certificate or affidavit testifying to said destruction.

7. LIMITATION OF LIABILITY; REMEDIES .

A. VENDOR ACKNOWLEDGES AND AGREES THAT VENDOR' S SOLE REMEDY AGAINST SUPPLIER ARISING FROM OR IN CONNECTION WITH ANY BREACH OR FAILURE BY SUPPLIER TO MEET THE TERMS OF THIS AGREEMENT, SHALL BE THOSE EXPRESSLY SET FORTH IN THE DISPUTE RESOLUTION AND TERMINATION


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PROVISIONS OF THIS AGREEMENT. SUPPLIER DISCLAIMS ANY AND ALL OTHER LIABILITIES OR REMEDIES WHATSOEVER AND VENDOR HEREBY WAIVES ITS RIGHTS TO ALL OTHER REMEDIES WHATSOEVER.


B. NOTWITHSTANDING ANYTHING TO THE CONTRARY, ALL LIABILITY ARISING UNDER THIS AGREEMENT, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL BE LIMITED TO DIRECT, OBJECTIVELY MEASURABLE MONETARY DAMAGES. NEITHER PARTY NOR THEIR SERVICE PROVIDERS OR SUPPLIERS, SHALL HAVE ANY LIABILITY TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY INCIDENTAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION LOST PROFITS, LOSS OF PRODUCT, LOSS OF BUSINESS, LOSS OF GOOD WILL OR REPUTATION, INTERRUPTION OF BUSINESS, OR COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER UNDER THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.


C. THE PARTIES ACKNOWLEDGE THAT THE LIMITATIONS REFERENCED IN THIS SECTION ARE MATERIAL TERMS AND OF THE ESSENCE TO THIS AGREEMENT.


D. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 7: (i) THE AGGREGATE LIABILITY OF SUPPLIER UNDER THIS AGREEMENT SHALL NOT EXCEED THE LESSER OF (A) THE TOTAL AMOUNTS PAID BY VENDOR TO SUPPLIER HEREUNDER DURING THE SIX-MONTH PERIOD IMMEDIATELY PRECEDING THE EVENT THAT GAVE RISE TO THE CLAIMS OR (B) ONE HUNDRED THOUSAND DOLLARS ($100,000.00); AND (ii) THE REMEDIES LIMITATIONS IN THIS SECTION 7 SHALL NOT APPLY IN THE EVENT OF A BREACH BY VENDOR OF THE NON-CIRCUMVENTION PROVISIONS SET FORTH IN SECTION 5.C ABOVE.


8. TERMINATION . The following termination rights are in addition to the termination rights that may be provided elsewhere in the Agreement:

A. Without Cause . After the Initial Term, either party may terminate this Agreement without cause by giving the other party at least 90 days prior written notice of such termination (" Termination Notice" ) before the end of any Extended Term.

B. For Cause . Either party may terminate this Agreement at any time due to a material breach by the other party by giving the breaching party a Termination Notice stating the basis for such termination; provided, however, Vendor may not so terminate if Supplier cures such breach within 90 days following receipt of Vendor' s Termination Notice. Subject to said cure provision, the effective date of any such termination-for-cause shall be the last day of the regular billing cycle following receipt of the Termination Notice by the breaching party.


9. INDEMNITIES .

A. Each party hereby agrees to indemnify and hold harmless the other party and its parent, subsidiary and affiliated entities, and its and their owners, directors, officers, employees and representatives (collectively, " Indemnitees" ) from and against any and all claims, actions,


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proceedings, liabilities, damages, judgments, costs and expenses (including, without limitation, reasonable outside attorneys fees and legal costs, whether or not in connection with litigation) (collectively, " Claims" ) arising out of or in connection with a material breach of this Agreement by such party.

B. Vendor shall separately indemnify Supplier and its Indemnitees in connection with any Claims relating to: (i) any aspect of Vendor' s business or financial dealings which do not directly involve Supplier; (ii) any use by Vendor or any third party in connection with the services and/or Products supplied by Supplier; (iii) any decisions made by Vendor with respect to Vendor' s own compute ...