International Distributor Agreement

This Agreement is made as of the 1st day of January , 200 2 ,
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BETWEEN:


ZIM TECHNOLOGIES INTERNATIONAL INC., a corporation incorporated
under the laws of Canada and having its principal place of
business at 20 Colonnade Road, Suite 200, Nepean, Ontario,
Canada, K2E 7M6


(hereinafter "ZIM")


AND: DOSIT GMBH & CO. KG , a corporation incorporated under the
laws of Germany and having its principal place of business at
Lindemannstrasse 79, Dortmund 44137


(hereinafter "Distributor")


WHEREAS ZIM has developed a range of proprietary computer software products;


AND WHEREAS Distributor markets and distributes various computer software products;


AND WHEREAS Distributor desires to be appointed a distributor of certain of ZIM's proprietary computer software products and to be granted a right to market and distribute such products to Distributor's customers and authorized sub-distributors within a defined territory, and ZIM is willing to make such an appointment and to grant such a right on the terms and subject to the conditions set forth in this Agreement;


NOW THEREFORE, in consideration of the terms of this Agreement, ZIM and Distributor agree as follows:


1. DEFINITIONS


The following terms shall have the meanings set forth below:


"AGREEMENT" means this ZIM International Distribution Agreement, including all exhibits hereto;


"CUSTOMER" means any end user to whom Distributor or one of its Sub-distributors has distributed one or more of the Products pursuant to a ZIM Software License Agreement;


"DOCUMENTATION" means the user manuals and other documentation which ZIM generally provides to its customers together with the Software;


"PRODUCTS" means the Software together with the Documentation;
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"PRODUCT MAINTENANCE" means Product maintenance and support under ZIM's "Mission Assistance Program" or "MAP", as more particularly described in Exhibit G hereto;


"SOFTWARE" means the computer software products listed in Exhibit A hereto, in the form delivered by ZIM to Distributor under this Agreement;


"SUB-DISTRIBUTOR" means a sub-distributor appointed and licensed by Distributor to market and distribute the Products;


"TERRITORY" means the geographical areas described in Exhibit B hereto;


"UPDATE" means any new release that maintains the same version number (ex. 5.x to 5.x) that ZIM may release from time to time with respect to any of the Products; and


"UPGRADE" means any new release that reflects a change in the version number (ex. 5.x to 6.0) that ZIM may release from time to time with respect to any of the Products; and


"ZIM SOFTWARE LICENSE AGREEMENT" means the end user software license agreement in Exhibit E hereto, as amended from time to time by ZIM in its sole discretion.


2. APPOINTMENT OF DISTRIBUTOR AND GRANT OF LICENSE


(a) Appointment and Grant:
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In accordance with the terms and subject to the conditions of this Agreement, and with effect from the date first set forth above, ZIM hereby appoints Distributor as a distributor of the Products and, as such, grants to Distributor a limited, non-exclusive, non-transferable right:


(i) to market the Products to potential Customers within the
Territory;


(ii) to distribute the Products to Customers within the Territory
in accordance with the ZIM Software License Agreement;


(iii) to provide maintenance and support to Customers in respect of
the Products;


(iv) to sub-license the rights described in clauses (i) to (iii)
above to its Sub-Distributors.


(b) No Transfer of Rights:
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Distributor acknowledges and agrees that all right, title and interest in and to the Products, including all intellectual property rights therein, are vested in and shall remain vested in ZIM or its licensers. Nothing in this Agreement shall be construed as transferring ownership of any rights of ZIM or its licensers in the Products to Distributor or its Sub-Distributors.


(c) General Restrictions on Rights:
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Except as specifically permitted herein, no right to modify, adapt, integrate, manufacture, copy, distribute, sell, rent, license, maintain or support the Products, in whole or in part, or to sub-license any of the rights set forth in clause (a), is hereby granted. Distributor shall not permit its Sub-Distributors to further sub-license any rights in the


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Products, except to Customers pursuant to the terms and conditions of the ZIM Software License Agreement.


3. ORDERS


(a) Placement:
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Distributor shall place orders in writing for Products and/or Product Maintenance directly with ZIM at the address set out in Section 30 of this Agreement. Each order shall specify the following information:


(i) the name. The address, contact name, phone number, and fax
number for each of the Customer, Sub-Distributor (if
applicable) and Distributor shall be provided at ZIM's
request.


(ii) the type and quantities of Products and/or Product Maintenance
ordered;


(iii) the fee payable by Distributor to ZIM for each unit of
Products and/ or Product Maintenance ordered;


(iv) the configuration of the proposed systems on which the
Software will be installed;


(v) the number of users authorized to have access to the Software;


(vi) a purchase order number; and


(vii) the products licensed to Customer and the serial numbers of
such Products for Product Maintenance orders.


(b) Acceptance:
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ZIM shall use its best efforts to respond to any order within fifteen (15) days of the date of receipt; however, ZIM reserves the right to reject any order at any time. An order shall be deemed to be accepted upon the earlier of (i) the date Distributor receives written acceptance of the order from an authorized representative of ZIM or (ii) the date ZIM ships the Product to Distributor. No order shall be binding upon ZIM prior to acceptance. Following acceptance by ZIM, an order shall be binding on Distributor and ZIM and subject to the terms and conditions of this Agreement.


4. SPECIAL ORDERS FOR PRODUCTS


(a) Distributor's Demonstration Copies of Products:
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Distributor may order a single copy of any Product for the purposes of:


(i) demonstrating the Product to potential Customers;


(ii) providing technical support to Customers in respect of the
Product; and


(iii) training its staff in the operation and technical support of
the Product.


The order, delivery and use of such demonstration copy by Distributor shall be subject to the terms and conditions of this Agreement and the ZIM Software License


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Agreement, except that ZIM's list price for such demonstration copy shall be deemed to be a nil amount. Distributor shall not provide such demonstration copy or any copies thereof to any third party nor use the demonstration copy to create any new applications for its own commercial purposes not connected directly with the purposes of this Agreement.


(b) Distributor's Copies of the Products for Other than Demonstration
Purposes:
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Distributor may also order any of the Products for its own commercial purposes not connected directly with the purposes of this Agreement. The order and delivery of such Products by Distributor shall be subject to the terms and conditions of this Agreement, and the product fees payable to ZIM in respect of such Products shall be calculated in accordance with Section 8(b) of this Agreement. The use of such Products by Distributor as end user shall be subject to the terms and conditions of the ZIM Software License Agreement.


5. DELIVERY OF PRODUCTS


(a) Shipment:
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Within seven (7) days of acceptance of an order for Products, ZIM shall ship the Products to Distributor at the address set out in Section 30 of this Agreement. Distributor shall be responsible for all shipping, handling and in-transit insurance costs for delivery of Products by ZIM to Distributor. All shipments of Products by ZIM to Distributor shall be F.O.B. Ottawa, Ontario, Canada, with shipping, handling and insurance charges prepaid and added to the invoice or charged directly to the Distributor's shipping account.


(b) Risk of Loss:
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ZIM shall have no liability to Distributor for any loss, damage or expense due to late delivery of any Products due to causes beyond ZIM's control. All risk of loss or damage to Products shall pass to Distributor upon delivery of Products to a common carrier at ZIM's distribution point in Ottawa, Ontario, Canada. The common carrier shall not be deemed to be an agent of ZIM.


(c) Clearing Customs and Export/Import Permits:
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Distributor shall be responsible for (i) obtaining all permits required to import the Products into the Territory and to distribute the Products within the Territory, and (ii) clearing the Products through local customs upon arrival of the Products in the Territory. ZIM shall be responsible for obtaining all permits required to export the Products from Canada.


(d) Inspection:
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Distributor shall inspect the Products upon arrival in the Territory and shall immediately notify ZIM in writing of any damage to the Products or any discrepancy between the Products received and the shipping documents. Distributor shall retain any damaged Products in the original packaging for inspection by ZIM or its agent or insurer. Any insurable claim not reported to ZIM in writing within fifteen (15) days after arrival may be denied.


6. OBLIGATIONS OF DISTRIBUTOR


(a) Best Efforts to Market Products:
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Distributor shall use its best efforts to promote the distribution of the Products throughout the Territory. If Distributor has appointed Sub-Distributors pursuant to the term and conditions of this Agreement, Distributor shall use its best efforts to ensure that each such Sub-Distributor promotes the distribution of the Products throughout that part of the Territory assigned to it.


(b) Marketing Materials:
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Distributor shall use ZIM's marketing materials referred to in Section 7(a) herein. Subject to ZIM's prior written approval, Distributor shall be permitted to make copies of such marketing materials, provided Distributor's copies maintain the same or better quality as those provided by ZIM. Depending on availability, Distributor may purchase from ZIM copies of ZIM's marketing materials, in such quantities as required, at prices to be determined by ZIM in its sole discretion.


Subject to ZIM's prior written approval, Distributor may, at its own expense, translate ZIM's marketing materials into the languages spoken in the Territory and make copies of such translations for distribution in the Territory. ZIM shall own all rights in any such translations. Distributor represents and warrants that any such translations shall be a complete and accurate translation of the English language version of the marketing materials provided to Distributor by ZIM. Distributor shall ensure that ZIM's copyright notice is affixed to all such translations and any copies thereof. In the event of any dispute among ZIM, Distributor or a Customer arising from the use of ZIM's marketing materials or any translations thereof, the English language version of such materials shall be referred to exclusively in the settlement of such dispute and shall prevail over any translations of such materials.


Distributor and its Sub-Distributors shall have the right to incorporate into their own marketing materials excerpts from ZIM's marketing materials referred to in Section 7(a) herein, provided Distributor first submits English language specimens of the proposed materials to ZIM for written approval. Any marketing materials prepared by Distributor or its Sub-Distributors in respect of the Products shall acknowledge ZIM as being the owner and developer of the Products referred to therein. Notwithstanding the foregoing, any marketing materials prepared by Distributor or its Sub-Distributors for mass distribution, which make reference to the Products or to ZIM, shall be submitted to ZIM, in an English language version, for written approval prior to distribution.


(c) Business Plan:
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Distributor shall, on the effective date of this Agreement and at least ninety (90) days prior to the expiration of each twelve (12) month period of this Agreement, submit to ZIM a detailed business plan for the next calendar year in respect of distribution of the Products, which plan shall include, without limitation: projected licensing revenues and expenses; marketing and other efforts planned; and personnel to be assigned throughout that year to support Product marketing and distribution. The business plan also shall include the information described in Exhibit E to this Agreement. ZIM may make a reasonable request, from time to time, for an update to the business plan, and Distributor shall provide such update within ten (10) days of the date of such request.


(d) Monthly Billing Report:
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Distributor shall provide ZIM with a monthly billing report, which report shall include:


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(i) the revenue payable or paid to ZIM by Distributor in the
subject month, on a per Product, per Sub-Distributor and per
Customer basis;


(ii) the revenue forecasted for the three (3) months immediately
following the subject month, on a per Product basis; and


(iii) any other information which may be required pursuant to
Exhibit F hereto.


Such reports shall be submitted to ZIM on the dates set out in Exhibit F and shall be substantially in the form set forth in the attachment to Exhibit F.


In addition, Distributor shall, no later than the first (1st) day of June during each year of this Agreement, provide ZIM with a forecast of the Product maintenance and support fees payable by Distributor to ZIM for the period commencing on such date and ending the thirtieth first (30th) day of May in the following year.


(e) Distributor to Use ZIM Software License Agreement:
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Distributor and its Sub-Distributors approved by ZIM shall provide Products directly to Customers using the ZIM Software License Agreement set forth in Exhibit D to this Agreement. Distributor shall ensure that each Customer clearly acknowledges and agrees that it understands and accepts the terms and conditions of the ZIM Software License Agreement prior to delivery of the Products to such Customer. Distributor shall use its best efforts to ensure that each Customer complies with the terms and conditions of the ZIM Software License Agreement. Distributor shall notify ZIM immediately upon learning that any Customer has breached or potentially breached any of the terms and conditions of the ZIM Software License Agreement and shall provide reasonable assistance to ZIM in dealing with such breach, including any legal proceedings commenced by ZIM for seizure or injunctive relief.


Distributor may, at its own expense, translate the ZIM Software License Agreement into the languages spoken in the Territory and make copies of such translations for distribution of the Products in the Territory. ZIM shall own all rights in any such translations. Distributor represents and warrants that any such translations shall be a complete and accurate translation of the ZIM Software License Agreement set forth in Exhibit D hereto. In the event of any dispute among ZIM, Distributor or a Customer concerning the permitted use of any Product, the English language version of the ZIM Software License Agreement shall be referred to exclusively in the settlement of such dispute and shall prevail over any translations of such agreement.


(f) Contents of Sub-Distribution Agreements:
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Distributor agrees and shall ensure that the provisions of any sub-distribution agreement entered into between Distributor and a Sub-Distributor shall be no less onerous than the provisions contained in this Agreement in respect of:


(i) ZIM's proprietary and other rights in the Products;


(ii) confidentiality and non-disclosure of the Products;


(iii) marketing and distribution of the Products;


(iv) provision of first line maintenance and support to Customers
in respect of the Products;


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(v) participation in ZIM training sessions in respect of the
operation, demonstration and technical support of the
Products;


(vi) compliance with laws, rules and regulations;


(vii) use of ZIM's trade-marks, trade name, corporate name and
logos;


(viii) restrictions on representations and warranties;


(ix) limitation of ZIM's liability; and


(x) the effects of termination of this Agreement.


In addition, such agreement shall provide that the Sub-Distributor shall keep records as will show in detail the number and type of Products distributed to and additional maintenance and support purchased by its Customers and will permit verification of fees due Distributor. Such agreement shall also provide that ZIM shall have the right to audit such Sub-Distributor records, which right shall be similar in form and content to that set out in Section 8(f) of this Agreement.


(g) Provision of Updates to Customers:
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From time to time ZIM will advise Distributor of the availability of Updates to the Products that are installed in the Territory. If requested by Distributor, ZIM shall provide Distributor with copies of such Updates. Distributor shall then distribute the Updates, at no charge, to those Customers who are entitled to maintenance and support of such Products. This paragraph shall not be interpreted to require ZIM to develop and release Updates or to customize Updates to satisfy the particular requirements of any Customer.


The Updates shall not include any Software that ZIM decides, in its sole discretion, to make available generally as a separately priced release, Upgrade or option. ZIM may add any such release, Upgrade or option to the list of Products in Schedule A to this Agreement. The suggested retail price for each copy of such release, Upgrade or option shall be determined by ZIM in its sole discretion.


(h) Provision of Maintenance and Support to Customers:
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Distributor shall provide first line maintenance and support of Products delivered to its Customers, in accordance with Distributor's maintenance and support obligations set forth in Exhibit C. During the Warranty Period (as defined in Section 12(a) of this Agreement) in respect of any such Product, maintenance and support for that Product shall be provided by Distributor at no charge to Customer.


(i) Additional Product Maintenance Available to Customers:
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