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Software Distribution Agreement

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Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

Authorized Distributor Agreement, Version 1.0 1 3/12/98


THIS AGREEMENT is made Multimicro inc, 1998





(hereinafter "DRAGON")





H1J 1Y8

FAX: 514-354-2299

(hereinafter "DISTRIBUTOR") Authorized Distributor Agreement

Revision 3/12/98


Appendix A: Products Appendix B: Territories Appendix C: Quotas/Prices appendix D: Trademark Guidelines Appendix E: List of Distributors in Territories Appendix F: License Agreement

Authorized Distributor Agreement

Revision 3/12/98


Whereas DRAGON develops, manufactures and/or distributes certain products shown in Appendix A and which may be changed from time to time, ("PRODUCTS"); and

WHEREAS DISTRIBUTOR, distributes, markets, and sells items used in the computer and software field, and

WHEREAS RESELLER, markets and sells items used in the computer and software field to end users, and includes

WHEREAS the PARTIES intend to enter into an agreement pursuant to which DISTRIBUTOR will solicit orders from RESELLERS for the purchase of the PRODUCTS in the areas ("TERRITORIES") specified in Appendix B;

NOW, THEREFORE the PARTIES hereto agree as follows:



DRAGON hereby appoints and grants to DISTRIBUTOR the non-exclusive right to sell the PRODUCTS provided by DRAGON within TERRITORIES.

(a) If the DISTRIBUTOR does not meet an assigned quarterly quota as defined

in Appendix C this AGREEMENT is terminated immediately, unless DRAGON

extends AGREEMENT in writing.

(b) DRAGON retains the right to negotiate and transact directly with all

customers within the territory.


DISTRIBUTOR agrees that it shall use reasonable efforts to promote the sale and distribution of the PRODUCTS, including, but not limited to:

(a) Ensuring that its staff is appropriately trained by DRAGON or its

designee as needed;

(b) Following-up any and all leads of prospective buyers furnished to

DISTRIBUTOR by DRAGON in a timely and efficient manner

(c) Participating in promotions and selling programs sponsored by DRAGON;

(d) Complying with all reasonable standards of DRAGON for displaying,

advertising, demonstrating, and explaining the operation and use of the


Authorized Distributor Agreement

Revision 3/12/98

(e) Using its best efforts to resolve any customer satisfaction issues that

may arise from the use of DRAGON's PRODUCTS;

(f) Submitting to DRAGON financial data on a yearly basis. Public companies

should also include annual report with such financial data.

(g) Advising DRAGON immediately of any legal notices served on DISTRIBUTOR

or filed by DISTRIBUTOR which might affect DRAGON or the market

prospects of the PRODUCTS;

(h) Supplying DRAGON with monthly sell through data including reseller

name, address, street, zip, country and telephone number along with

number of units of Dragon Products sold by SKU and version. This is a

condition precedent to DRAGON giving any Marketing Development Funds to

(i) Ensuring that RESELLERS of the Dragon NaturallySpeaking Deluxe and

other high-end DRAGON Products receive a Certification Number from

Dragon before selling such Product.

(j) Making available to RESELLERS designated new products as they become

available from DRAGON

DISTRIBUTOR understands that failure to satisfactorily perform the above duties will provide grounds for termination of this Agreement.


DRAGON shall provide to DISTRIBUTOR:

(a) training of DISTRIBUTOR's salespeople and technical support people in

the important characteristics, benefits, markets, competition, and

operation of PRODUCTS; the frequency, duration, location, subject

matter, and cost of training shall be provided as appropriate in the

judgment of DRAGON. DRAGON will not pay a fee associated with training


(b) when available, reasonable quantities, at a reasonable cost, and in a

timely manner, of information, descriptive materials, demonstration

programs, and manuals on the sale, and support of PRODUCTS;

(c) (3) three copies of PRODUCT at no charge for internal use only by


(d) reasonable access to DRAGON's pre-sale and post-sale technical

assistance information sources as needed by DISTRIBUTOR with regard to

the application and uses of the PRODUCTS;

(e) according to DRAGON's then-current DISTRIBUTOR lead distribution

policy, timely sales leads of prospective buyers who have responded to

DRAGON's advertising or public relations efforts;

(f) inclusion of DISTRIBUTOR's name and contact information in DRAGON's

home page information on the World Wide Web.

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

Authorized Distributor Agreement

Revision 3/12/98

(g) whenever possible thirty (30) days advanced notice of expected changes

in DRAGON policy, products or DISTRIBUTOR promotions including new

versions, new pricing, special DISTRIBUTOR promotions, etc.

(h) notification of any new Distributors in the Territories in addition to

those listed on Appendix E

Notwithstanding anything to the contrary contained herein, DRAGON shall have no obligation to provide servicing, repairs, counseling or other assistance to any customers of DISTRIBUTOR unless DRAGON has made agreements with any such customer directly.


PRICE FROM DRAGON TO DISTRIBUTOR. For each item or type of PRODUCTS ordered by DISTRIBUTOR from DRAGON during the term of this Agreement, DISTRIBUTOR shall pay to DRAGON the Distribution price listed on Appendix C.

DISCOUNT. DRAGON will give DISTRIBUTOR a discount on the Product price in the event the quarterly sales goals on Appendix C are met.

PRICE CHANGES. DRAGON retains the right to change the product and pricing schedules, set forth in Appendices A and C. Whenever possible DRAGON will give DISTRIBUTOR 30 days prior notice.

TERMS AND CONDITIONS OF SALES. Costs of duties, customs, and taxes shall be the exclusive responsibility of the DISTRIBUTOR. Cost of ground freight will be the responsibility of DRAGON.

PAYMENT TERMS DRAGON grants DISTRIBUTOR the option of the following payment te rms: Net 60 days, with a [**] at the time of shipping or [**] of receipt of Product and invoice. For purposes of determining discount, payment is deemed made on the day received by DRAGON.


SALES WITHIN TERRITORIES. This Agreement o nly provides authorization for DISTRIBUTOR to resell DRAGON's products through its own sales and marketing efforts within the TERRITORIES, and/or through its facilities located within the TERRITORIES as specified in Appendix B. Sales of DRAGON's product t hrough other facilities or through selling/marketing programs outside of the TERRITORIES, without express written permission from DRAGON, is grounds for termination of this Agreement by DRAGON.

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

Authorized Distributor Agreement

Revision 3/12/98


DISTRIBUTOR is authorized to appoint third parties ("RESELLERS") to assist in the sales of DRAGON's products, and fulfillment of DISTRIBUTOR's duties as defined above, provided that:

(a) DISTRIBUTOR uses its good faith efforts to appoint RESELLERS whose

ethics, business practices, and professionalism are consistent with


(b) Such DEALERS are located solely within the TERRITORIES specified in

Appendix B and will be bound by the same restrictions as above.

(c) DISTRIBUTOR is only authorized to sell to RESELLERS. DISTRIBUTOR is NOT

authorized to sell any of DRAGON's products directly to end-users.

d) All orders for PRODUCTS supplied to RESELLERS must be placed to DRAGON

through DISTRIBUTOR and DISTRIBUTOR shall retain any and all financial

responsibilities for such purchases.

(e) DISTRIBUTOR will remain responsible for meeting its duties as defined

above with respect to any users of RESELLERS


DRAGON grants DISTRIBUTOR a cooperative advertising allowance of [**] of Product invoice amount for such advertising featuring Product and/or DRAGON. DISTRIBUTOR shall submit adv ertising to DRAGON for review and approval prior to any initial release. Upon receipt of evidence of Authorized Distributor Agreement such advertising expenditures, DRAGON agrees to credit the amount thereof against future DISTRIBUTOR purchases.

DRAGON wi ll provide an [**] for Marketing Development Funds which will be used for marketing activities specific to DRAGON products. DISTRIBUTOR and DRAGON will reach prior agreement on how these funds are to be used. These funds are subject to completion of repor ts required of DISTRIBUTOR pursuant to section 2.2(h) herein.

Whether or not DISTRIBUTOR uses or qualifies for DRAGON's Market Development Funds, DISTRIBUTOR agrees to use a DRAGON-approved logo or mark on any of DISTRIBUTOR's advertising or marketing comm unications that feature DRAGON's products, but only according to the provisions in paragraph 7 below, and according to DRAGON's guidelines, which are attached hereto as Appendix D.

It is understood that the co-op allowance, the marketing development funds and the discount for meeting the quarterly sales targets are net of all price protections, rebates, and returns.

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

Authorized Distributor Agreement

Revision 3/12/98


Under this Agreement, DISTRIBUTOR may represent that it is an authorized DISTRIBUTOR of DRAGON's products in the TERRITORIES.

DISTRIBUTOR agrees not to in any way misrepresent, or in any way cause to be ambiguous (especially with respect to prospective customers, journalists, or market analysts, etc .) about DISTRIBUTOR's relationship with DRAGON, DISTRIBUTOR's duties as specified in this Agreement, the features of DRAGON's products including any technical specifications, expected benefits of use, and the origin of DRAGON's products. In particular, D ISTRIBUTOR shall not represent itself as an exclusive agent or exclusive distributor of DRAGON's products. The DISTRIBUTOR shall not represent itself as the developer or manufacturer of DRAGON's products, or as DRAGON itself.


DISTRIBUTOR shall be allowed to return Product for [**] after purchase of Product. The Product being returned as overstock will have return ground shipping paid for by DISTRIBUTOR. Defective Products will be destroyed on a monthly basis except for u nused headsets upon DRAGON's approval, which will be shipped to Dragon freight collect. DISTRIBUTOR will provide proof of on-site destruction prior to issuance of credit by DRAGON.

DRAGON shall give DISTRIBUTOR [**] of product discontinuation. DISTRIBUTOR may return all such products to DRAGON [**] incurred by DIS
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