<PAGE> 1
Items 6, 7 and 8, and certain exhibits, of this Form 10-KSB are omitted and
will be filed by amendment.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the fiscal year ended December 31, 1997
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from ______________ to ______________
Commission file number: 1-12937
ALL COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-3124655
(State of incorporation) (I.R.S. employer identification number)
225 Long Avenue, Hillside, New Jersey 07205
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 282-2000
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Common Stock, no par value per share Boston Stock Exchange
Class A Common Stock Purchase Warrants Boston Stock Exchange
Title of each class Name of each exchange on which registered
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes|X| No |_|
<PAGE> 2
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |_|
State issuer's revenues for its most recent fiscal year: $6,925,169
Aggregate market value of Common Stock held by nonaffiliates as of March 1,
1998: $2,107,031
Number of shares of Common Stock outstanding as of March 1, 1998: 4,910,000
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its 1998
Annual Meeting of Stockholders are incorporated by reference to Part III of this
report.
<PAGE> 3
PART I
The statements contained herein, other than historical information, are or may
be deemed to be forward-looking statements and involve factors, risks and
uncertainties that may cause the Company's actual results in future periods to
differ materially from such statements. These factors, risk and uncertainties
include the relatively short operating history of the Company; market acceptance
and availability of new products; the non-binding and nonexclusive nature of
reseller agreements with manufacturers; rapid technological change affecting
products sold by the Company; the impact of competitive products and pricing, as
well as competition from other resellers; possible delays in the shipment of new
products; and the availability of sufficient financial resources to enable the
Company to expand its operations.
ITEM 1. BUSINESS
GENERAL
All Communications Corporation (the "Company") is engaged in
the business of selling, installing and servicing voice, (including computer
telephony integration (CTI)), and videoconferencing communications systems, and
structured cabling systems, concentrating in the commercial and industrial
marketplace. The Company's products and services are intended principally for
use by all business and governmental entities. In connection with the sale and
service of its products, the Company also markets other peripheral data and
telecommunications products.
The Company was organized as a New Jersey corporation in 1991.
The Company's headquarters are located at 225 Long Avenue, Hillside, New Jersey
07205.
RECENT DEVELOPMENTS
In November 1997, the Company entered into a two year
nonexclusive distribution agreement, with renewal options, with Polycom, Inc.
("Polycom") for the Polycom ViewStation(R) group videoconferencing system and
the Polycom ShowStation(R) IP integrated conference projector. This agreement
enables the Company to market and sell a full range of Polycom manufactured
videoconferencing, audioconferencing and dataconferencing products.
In November 1997, the Company signed a one year nonexclusive
distribution agreement with Lucent Technologies,
<PAGE> 4
Inc. ("Lucent") to sell, install and maintain Lucent Partner, Legend and
Definity telephone systems, voice mail and CTI software as an authorized Lucent
dealer. The Company also has authority to resell, install and maintain Lucent
peripheral products. The distribution agreement currently covers only the State
of New Jersey, however, the Company anticipates that Lucent will agree to
expand the geographic coverage of the distribution agreement.
On March 26, 1998, the Company received a letter of commitment
from an asset-based lender for a $5,000,000 working capital credit facility.
Loan availability will be based on 75% of eligible accounts receivable, as
defined in the letter of commitment, and 50% of eligible finished goods
inventory, with a cap of $1,200,000 on inventory financing. Outstanding
borrowings will bear interest at the lender's base rate plus 1% per annum,
payable monthly, and will be collateralized by a lien on accounts receivable,
inventories, and intangible assets. The Company will be subject to certain as
yet unspecified financial covenants relating to minimum net worth, maximum
leverage and minimum profitability. The commitment also provides for the payment
of various fees, including a $30,000 closing fee as well as ongoing servicing
and renewal fees. The credit facility will have a initial term of two years,
with annual renewals thereafter subject to the lender's review. The loan closing
is currently scheduled for no later than April 25, 1998, and remains subject to
the lender's receipt of certain Company documents, corporate guarantees, and the
satisfaction of customary closing conditions.
INDUSTRY OVERVIEW
VOICE COMMUNICATIONS. Advances in telecommunications
technologies have facilitated the development of increasingly sophisticated
telephone systems and applications. Telecommunications systems have evolved from
simple analog telephones to sophisticated digital systems and applications.
Users increasingly rely upon a variety of applications, including conference
calling, speakerphones, voice processing and automated attendant, to improve
communications within their organizations and with customers and vendors.
Digital technology has facilitated the integration of computing and
telecommunications technologies, which has made possible a number of new
applications that further enhance productivity. Examples of CTI applications
include caller I.D., where a caller's telephone number is displayed on the
telephone, call accounting, which permits accounting for telephone usage and
toll calls, electronic data interchange between customers and vendors and the
use of automatic number identification coupled with "database look-up," where
customer information is retrieved automatically from a computerized database
when the customer calls.
<PAGE> 5
Historically, CTI technologies and applications were utilized
in conjunction with large telecommunications systems. However, small to medium
size businesses and other organizations, as well as small to medium size
facilities of larger organizations, are requiring and seeking out
telecommunication systems with advanced CTI features and applications at
increasingly lower price points, in order to improve efficiency and enhance
competitiveness.
As the telecommunications needs of businesses have become more
advanced, the integration of the different parts of a system has become
increasingly complex. The system integration, service and support capabilities
of telecommunications suppliers have become significant competitive factors. In
order to meet the needs of end users, suppliers such as the Company have been
increasingly required to develop close relationships with their customers.
VIDEOCONFERENCING. Videoconferencing communication entails the
transmission of video and audio signals and computerized data between two or
more locations through a digital telecommunication network. Videoconferencing
communications systems were first introduced in the late 1970s in the form of
specialized dedicated conference rooms outfitted with expensive electronic
equipment and requiring trained operators. Signals were transmitted over
dedicated transmission lines established between fixed locations. Market
acceptance of early systems was limited because of the low quality of the video
output, as well as the high hardware and transmission costs and limited
availability of transmission facilities.
Technological developments in the 1980's resulted in a
dramatic increase in the quality of video communications, as well as a
substantial reduction in its cost. The proliferation of switched digital
networks, which transmit digital, as opposed to analog signals, eliminated the
requirement of dedicated transmission lines. Advances in data compression and
decompression technology, and the introduction of devices for separating and
distributing digital signals over several channels simultaneously and
recombining them after transmission, resulted in products with substantially
improved video and audio quality and further reduced hardware costs. Competition
among telecommunications carriers during the past decade, together with the
expanded use of fiber optic technology and the development of integrated
switched digital networks ("ISDN") have further contributed to reduced
transmission costs.
Further technological developments in the 1990's in
videoconferencing systems resulted in accepted industry standards
<PAGE> 6
which now enables compatibility among systems made by different manufacturers.
These developments have increased the quality and features available in
videoconferencing systems while significantly decreasing the costs to the
customer.
STRUCTURED CABLING SYSTEMS A cabling or wiring system is a
long term infrastructure investment for voice and high speed data transmission.
Computer systems requiring high speed or maximum bandwidth for connectivity
options require structured wiring systems to be in place. These systems can now
be certified to meet connectivity requirements for management information
systems as well as have assurance of handling future modifications. The Company
believes that the demand for structured wiring systems is increasing due to a
growing demand for computer systems and local area networks to run at
continually higher speeds.
PRODUCTS AND SERVICES
The Company provides turnkey integrated voice and
videoconferencing solutions to its customers. The Company is a reseller of voice
communications products manufactured by Lucent, the Business Telephone System
Division of Panasonic Communications and Systems Company ("Panasonic") and
Active Voice Corporation ("Active Voice") and videoconferencing products
manufactured by Polycom and Sony Electronics Inc. ("Sony"). The Company sells,
installs and maintains the full line of voice and videoconferencing products
manufactured by these companies.
VOICE COMMUNICATIONS. The Company is a reseller of Lucent and
Panasonic digital key and hybrid telephone systems, PBX telephone systems, voice
processing systems and CTI solutions. Lucent and Panasonic manufacture digital
key and hybrid telephone systems which contain multi-featured fully electronic
digital telephones, common control units, central processing units, and
associated common equipment to provide service in the approximately 200 line and
under marketplace. The Company distributes Lucent manufactured PBX systems under
the name Definity BCS which has a capacity expandable up to 25,000 ports. The
Company also distributes a Panasonic manufactured PBX system under the name DBS
576 with a maximum capacity of 576 ports. A key telephone system provides each
telephone with direct access to multiple outside trunk lines and internal
communications through intercom lines. A PBX (private branch exchange) system,
through a central switching system, permits the connection of internal and
external lines. A hybrid switching systems provides, in a single system, both
key telephone and PBX features. Key telephone equipment may be used with PBX
equipment.
<PAGE> 7
The Company sells fully integrated voice processing systems
manufactured by Lucent, Panasonic and Active Voice. The systems range from 2 to
64 voice ports and up to 100 hours of message storage. The systems have
automated attendant features which allow for incoming calls to be answered
electronically and distributed to specific extensions without the use of a
switchboard operator. The systems can be interactive with display telephone
sets. System users have the ability to access stored messages from any
touch-tone telephone. The systems have the capability to automatically notify a
user outside the system of urgent messages. The systems have additional features
which can be customized to the needs of the end user.
Several of Lucent and Panasonic systems support open
architecture interfaces that allow external computers to interact and control
the systems through industry standard interfaces. The systems support an RS-232
system level interface, an RS-232 Hayes based desktop interface and a Windows
Dynamic Data Exchanges (DDE) interface. The systems have Developer Toolkits
available that include the detailed interface specifications, application notes
and development tools to assist third party software developers to develop
vertical market CTI applications for the products. Applications include database
look-up (which utilizes caller-ID information to retrieve customer information
automatically from a computerized database), automated attendant, interactive
voice response and call accounting (which permits the monitoring of telephone
usage and toll cost). Several of the systems support Microsoft Telephone
Application Programming Interface (TAPI) and Novell Telephony Services
Applications Programming Interface (TSAPI). There are Windows-based interfaces
available for personal computers to facilitate installation, system
configuration and programming.
The Company also sells, installs, and maintains peripheral
equipment and components manufactured by other vendors. Such equipment and
components are readily available through multiple manufacturers and suppliers.
The Company sells, installs and services Panasonic products
throughout the United States both through employees of the Company and
subcontractors. The Company currently sells Lucent products through its direct
sales force.
VIDEOCONFERENCING. The Company began selling videoconferencing
products in the third quarter of 1994. The Company provides Sony and Polycom
videoconferencing systems for United States customers on a global basis, with a
concentration in the Northeastern United States. The Company: (i) provides
<PAGE> 8
its customers with systems produced by both Sony and Polycom, worldwide
manufacturers of room based videoconferencing equipment, and ancillary equipment
manufactured by others, (ii) selects and integrates those systems and components
into complete systems designed to suit each customer's particular communications
requirements and (iii) provides training and other continuing services designed
to insure that its customers fully and efficiently utilize their systems.
The Company sells Sony's flagship videoconferencing product,
the Trinicom(R) 5100 videoconferencing system ("Trinicom 5100"). Trinicom 5100
is unique in that it is the only videoconferencing room system currently
available with the built-in capability to connect four locations without the use
of an external bridge. The Company has installed Trinicom 5100 systems
domestically and internationally for business, education, health care and
government agencies. The Company has provided systems throughout the United
States and North America, as well as Europe, South America, and Asia. In 1997,
the Company installed approximately 100 Trinicom 5100, and its predecessor, the
Trinicom 5000, systems and ancillary equipment at approximately $33,000 per
system.
The Company recently began selling and installing Polycom's
ViewStation(R) videoconferencing system. The ViewStation(R) is available in two
configurations, each equipped with a voice-tracking camera and Polycom's
trademark Acoustic Clarity Technology for exceptional quality audio, as well as
the industry's first implementation of an embedded Web server in a
videoconferencing system for remote system management and presentations.
STRUCTURED CABLING SYSTEMS The Company offers structured
cabling systems by NORDX/CDT and Lucent. Structured cabling systems offer state
of the art, high bandwidth, standards based wiring infrastructure with a long
life cycle which support current technologies, and also can support higher
speeds for future technologies. Structured cabling systems can be implemented
for a few end users or up to thousands of end users per installation depending
on the needs of the end user.
<PAGE> 9
LINE SHARING Under an agreement with Maxbase, Inc., the
Company through its wholly-owned subsidiary, Allcomm Products Corp.
("Allcomm"), is the exclusive distributor of "Maxshare 2", a patented on demand
line sharing device. The Maxshare 2 product allows multiple voice or data
communications simultaneously over multiple standard telephone lines. The
Maxshare 2 system is a non-networking line pooling device with unrestricted
bandwidth. Maxshare 2 allows up to eight telecom devices to share up to four
standard telephone lines. Maxshare 2 units can be combined so that multiples of
eight telecom devices can share the same four lines. Ordinarily, businesses
must install dedicated, standard telephone lines for each phone, modem, fax or
credit card authorization terminal. Customers save money with Maxshare 2
technology by reducing the number of required telephone lines. Based upon a
national average monthly line cost, the Company expects that most customers
will recover their investment in the Maxshare 2 product through cost savings
in approximately 3 months.
STRATEGY
The Company's strategy is to increase its revenue through the
expansion of sales and marketing efforts to sell the Company's core voice
communications and videoconferencing products. The Company hired additional
sales personnel during 1997 and expects to see increased sales in 1998 as a
result thereof.
The Company also seeks to expand its presence in the
structured cabling systems market through increased marketing efforts and plans
to offer structured cabling systems to its existing voice communications and
videoconferencing customers.
The Company is a turnkey provider of integrated voice and
videoconferencing solutions to its customers. As a turnkey provider, the Company
provides design, products, network implementation, installation, training and
post-installation support. The Company's ability to supplement customers'
existing telecommunications in-house support staff enables its customers to
reduce overhead costs and positions the Company to provide additional products
and services. The Company believes that customers will seek to increasingly
outsource their telecommunications support needs.
In the fourth quarter of 1997, Allcomm began to market the
Maxshare 2 product line to independent dealers as well as end users. The Company
expects that Allcomm will continue to grow its dealer network in 1998.
<PAGE> 10
RESELLER AGREEMENTS
The Company has an agreement with Panasonic authorizing the
Company to serve as its nonexclusive reseller in the United States. The
agreement with Panasonic expires on December 31, 1998 and is automatically
renewable for successive one-year terms unless terminated by either party upon
at least 30 days' prior notice, or immediately by Panasonic upon written notice
to the Company if the Company is in default in the performance of its
obligations under the agreement, or upon the bankruptcy or insolvency of the
Company.
On February 21, 1997, the Company signed a non-exclusive
reseller agreement with Sprint North Supply ("SNS") wherein SNS agreed to
provide the Company with Sony videoconferencing equipment through January 31,
1998, which agreement has been renewed. The agreement may be terminated by SNS
in the event the Company represents Sony's products in an unfavorable or
unprofessional manner. In addition, SNS may terminate the agreement upon 60
days' written notice if the Company does not promote the purchase of Sony's
products to the best of its abilities, or support or represent Sony products in
a way deemed acceptable to SNS. The agreement may be terminated by either party
upon 60 days' prior notice. In December 1997, the Company began to purchase
equipment directly from Sony.
The Company has recently entered into reseller agreements with
Lucent and Polycom. See Item 1. Business - Recent Developments.
MAJOR CUSTOMERS
During the fiscal years ended December 31, 1997 and 1996 one
customer, Coldwell Banker(R), a real estate brokerage franchiser, a brand of
Cendant Corp. (formerly HFS Incorporated) ("Cendant"), accounted for
approximately 15% and approximately 26%, respectively, of the Company's total
sales. In December 1996, the Company signed a non-exclusive Preferred Vendor
Agreement ("Cendant Agreement") with Cendant for a term of four years expiring
December 8, 2000, for the Company to provide telephone and voice processing
systems to the real estate brokerage franchise systems of Century 21(R), ERA(R)
and Coldwell Banker(R) (the "Franchisees"). Pursuant to the Agreement, Cendant
has agreed to promote the Company and its telephone and voice processing
products to the Franchisees and make available to the Company a list containing
the names, business addresses and contact telephone numbers of the Franchisees.
The Company will offer its products, including installation and maintenance
service contracts, to the Franchisees. The sum of $50,000 was
<PAGE> 11
paid to Cendant in return for Cendant providing access to the Franchisees.
Cendant is to receive commissions ranging from 2% to 13% of gross sales,
depending on the products and services sold. The Cendant Agreement may not be
terminated by either party except for a material breach in the terms of the
Cendant Agreement by either party. The breaching party shall be given notice of
the breach and the opportunity to cure such breach within 30 days of the date of
notice (10 days in the case of a default in payment). Cendant can also terminate
the Cendant Agreement in the event it receives a bona fide written offer from a
supplier for the services provided by the Company under the Cendant Agreement at
pricing that is at least 5% less than the pricing provided in the Cendant
Agreement. Within 15 days of notice of such offer, the Company may offer Cendant
the same prices and services offered by such suppliers. If the Company does not
make such offer within 15 days, Cendant may terminate the Cendant Agreement upon
30 days notice to the Company.
The Company expects to continue to sell its telephone and
voice processing systems to Cendant Franchisees pursuant to the Cendant
Agreement. It is expected that sales to Cendant under the Cendant Agreement
will continue to comprise a substantial portion of the Company's revenues in
1998; however, in view of the Cendant Agreement and the anticipated expansion
of the Company's business, it is expected that sales to Cendant as a percentage
of total sales will continue to decrease.
SALES AND MARKETING
The Company maintains a sales and marketing organization
supported by sales, technical and training personnel versed in the
specifications and features of the voice communications and videoconferencing
systems sold to customers. The Company markets both voice communications and
videoconferencing systems through its direct sales force. The Company provides
training to its sales force to maintain the expertise necessary to effectively
market and promote the systems.
The manufacturers the Company represents furnish the Company
with sales, advertising and promotional materials, which the Company in turn
furnishes to its existing customers and prospective customers in conjunction
with sales promotion programs of the manufacturers. The Company maintains up to
date systems for demonstration and promotion to customers and potential
customers. Technical and training personnel attend sales and service training
sessions offered by its manufacturers from time to time to enhance their
knowledge and expertise in the sale, installation and maintenance of the
systems.
<PAGE> 12
The Company hosts seminars for the purposes of demonstrating
videoconferencing systems to its prospective customers, and to provide
prospective customers the opportunity to learn more about the Company's products
and services.
During the fiscal years ended December 31, 1997 and 1996,
approximately 52% and 72%, respectively, of the Company's total sales were
attributable to the sale of voice communications equipment. Approximately 48%
and 28%, respectively, of the Company's total sales were attributable to the
sale of videoconferencing communications equipment.
CUSTOMER SERVICE AND SUPPORT
The Company believes that the service and support it provides
to customers is an important factor in the success of its business. The
technical expertise and experience of the Company's management and employees
enables it to provide its customers with a single source for a variety of
systems consulting and maintenance services.
The Company provides customers of both voice communication and
videoconferencing systems with a full complement of services to ensure customer
satisfaction and optimal utilization of the systems. As a preliminary component
of a sale to a customer or prospective customer, the Company provides consulting
services in order to assess the customer's needs and specifications and to
determine the most effective method to achieve those needs. Upon delivery of the
system, Company employees install and test the equipment to make sure the
systems are fully functional. In situations where a customer is located at a
great distance from the Company's offices, the Company, on an as-needed basis,
will engage the services of an installation subcontractor located in close
geographic proximity to the customer, for the installation and testing of
equipment sold by the Company to the customer. The retention of an installation
subcontractor located in close proximity to a customer benefits the customer
through quick and cost-effective installation of the system. After the equipment
is functional, the Company provides training to all levels of the customer's
organization. Training includes instruction in systems operation and, with
respect to videoconferencing systems, planning and administration of meetings.
The Company maintains a 24 hour toll-free technical support
hotline that customers may call. The Company also provides onsite support and
maintenance which includes the repair and/or replacement of equipment.
<PAGE> 13
EMPLOYEES, CONSULTANTS AND SUBCONTRACTORS
As of March 1, 1998, the Company had forty-six (46) employees,
as well as a network of fifty (50) consultants and installation subcontractors
who are available on an as-needed basis for marketing support and to provide
contract installation. Nineteen (19) of the Company's employees are engaged in
marketing and sales, sixteen (16) in installation service and customer support
and eleven (11) in finance and administration. None of the Company's employees
are represented by a labor union. The Company believes that its employee
relations are good.
COMPETITION
The voice and videoconferencing communications industries have
been characterized by pricing pressures and business consolidations. The Company
competes with other manufacturers and distributors of voice communications and
videoconferencing systems, many of which are larger, have greater recognition in
the industry, a longer operating history and greater financial resources than
the Company. The Company's competitors in the voice communications sector
include Lucent, Northern Telecom, Toshiba America, Inc., Siemens Corporation and
NEC Corporation. The Company also competes with other dealers of voice
communication products. The Company's competitors in the videoconferencing
communications sector include Picturetel Corporation, Tandberg Inc., VTEL
Corporation and other dealers. Existing competitors may continue to broaden
their product lines and expand their retail operations, and potential
competitors may enter into or increase their focus on the voice and/or
videoconferencing communications market, resulting in greater competition for
the Company. In particular, management believes that as the demand for
videoconferencing communications systems continues to increase, additional
competitors, many of which also will have greater resources than the Company,
will enter the videoconferencing market. Consequently, there can be no assurance
that the Company can successfully compete with established and better
capitalized companies.
The Company conducts comprehensive sales and product training
for all its sales and marketing personnel. The Company believes that such
training results in its employees having a high level of product and industry
knowledge which makes the Company more attractive to end users. The Company also
strives to provide prompt and efficient installation, customer training and
after sales service which the Company believes results in repeat business as
well as new referrals.
<PAGE> 14
ITEM 2. DESCRIPTION OF PROPERTY
The Company's headquarters are located at 225 Long Avenue,
Hillside, New Jersey, 07205. These premises consist of 7,180 square feet of
office space, and 7,400 square feet of secured warehouse facilities. The term of
this lease is for a period of five years and expires on May 31, 2002. The base
rental for the premises during the term of the lease is $87,040 per annum. In
addition, the Company is also obligated to pay its share of the landlord's
operating expenses (i.e., those costs or expenses incurred by the Landlord in
connection with the ownership, operation, management, maintenance, repair and
replacement of the premises, including, among other things, the cost of common
area electricity, operational services and real estate taxes). The Company has
an option to renew the lease for an additional term of five years, provided the
Company is not in default under the terms of the lease at the time of renewal.
The Hillside premises serve as the Company's headquarters and is utilized for
executive, administrative and sales functions, the demonstration of the
Company's voice and videoconferencing systems and the warehousing of the
Company's inventory. At the present time, there is additional adjoining space in
both the office and warehouse areas if the Company needs room to expand this
facility.
The Company maintains an office at 35 Nutmeg Drive, Trumbull,
Connecticut, 06611 under a written lease for a five year term. This facility is
used primarily as a videoconferencing sales and demonstration office. It
consists of approximately 1,820 square feet at an annual rental of $20,020. In
addition the Company is required to pay its share of lessor's operating expenses
and electricity.
The Company maintains various demonstration facilities
throughout the northeast, Atlantic coast and Pacific coast area. It leases
premises in Washington, D.C. at 1130 Connecticut Avenue, N.W. Suite 425, 20036.
The occupancy is under an oral month to month lease for which the Company pays a
monthly rental of $2,500. There are several other locations not under lease
which the Company uses for demonstration purposes in exchange for permitting the
lessor to use the demonstration equipment and in some cases, the Company
reimburses the lessor for the use of ISDN lines. These sites are 2974 Scott
Blvd., Santa Clara, CA 95054, 1301 West Copans Road, Suite F-1, Pompano Beach,
Florida; The Chamber of Commerce Building, 200 South Broad Street, Suite 700,
Philadelphia, Pennsylvania, 19102; 370 Park Avenue, 7th Floor, New York, New
York 10152; 331 River Street, West Newton, Massachusetts, 02165; 532 Beverly
Drive, Allentown, Pennsylvania, 18104; 7605 Croydon Place, Manassas, Virginia,
20109 and 47 High Street, Manchester, New Hampshire, 03104.
<PAGE> 15
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant in an action by Mountain Plaza
Associates. Mountain Plaza Associates filed its Complaint on November 24, 1997
in New Jersey Superior Court, Law Division, Essex County seeking damages of
$233,720, together with interest, costs and attorneys fees for unpaid rent under
a lease between Mountain Plaza Associates, as landlord, and the Company, as
tenant. The lease covered the premises located at 1450 Route 22 West,
Mountainside, New Jersey 07092 which formerly served as the Company's
headquarters. The Company terminated the lease and vacated the premises in June
1997 due to various problems with the premises which rendered it unfit for
continued occupancy. The Company believes it has meritorious defenses to this
lawsuit, and has filed an Answer and Counterclaim.
There are no other pending material legal proceedings against
the Company or any of its properties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
<PAGE> 16
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Common Stock has been listed and traded on the Boston
Stock Exchange since April 28, 1997 under the symbol "CMN". The following table
sets forth the high and low closing prices for a share of Common Stock for each
quarter as set forth below.
<TABLE>
<CAPTION>
1997 High Low
---- ---- ---
<S> <C> <C>
2nd quarter (from April 28, 1997) 9 9
3rd quarter 5-1/16 4-5/8
4th quarter 4-5/8 1-27/32
</TABLE>
The Common Stock is also listed and traded on the OTC
Electronic Bulletin Board under the symbol "ACUC". The following table sets
forth the high and low bid prices for each quarter as set forth below.
Quotations may reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
<TABLE>
<CAPTION>
1997 High Low
---- ---- ---
<S> <C> <C>
2nd quarter (from April 28, 1997) 9-1/4 5-7/8
3rd quarter 10-1/4 3-1/2
4th quarter 4-3/8 1/2
</TABLE>
The Company has not paid any cash or stock dividends on the
Common Stock and does not anticipate paying dividends on the Common Stock at any
time in the foreseeable future.
As of March 1, 1998, there were 35 record holders of Common
Stock. Institutions, as holders of record, may hold Common Stock as nominees
(street name) on behalf of multiple beneficial owners.
The Company's initial public offering of its Common Stock and
Common Stock Purchase Warrants commenced on April 28, 1997. All securities
offered were sold. The net proceeds of the offering to the Company were
$4,539,740. From the effective date of the registration statement through
December 31, 1997, a
<PAGE> 17
reasonable estimate of the utilization of the net proceeds of the offering is as
follows:
<TABLE>
<S> <C>
Purchase of furniture, equipment and
leasehold improvements $ 398,834
Repayment of indebtedness 822,452
Marketing 184,847
Working capital 1,810,069
Telephone and videoconferencing
equipment inventory 600,530
Leasing new corporate headquarters 78,234
Hiring additional employees 644,774
----------
$4,539,740
==========
</TABLE>
<PAGE> 18
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Omitted. To be Filed By Amendment
<PAGE> 19
ITEM 7. FINANCIAL STATEMENTS.
Omitted. To be Filed By Amendment
<PAGE> 20
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Omitted. To be Filed By Amendment
<PAGE> 21
PART III
The Company intends to file with the Securities and Exchange
Commission, within 120 days after the end of the fiscal year covered by this
report, a definitive Proxy Statement (the "Proxy Statement") for use in
connection with the Company's 1998 Annual Meeting of Stockholders. In accordance
with General Instruction E(3) of Form 10-KSB, the information required by Items
9, 10, 11 and 12 below is incorporated herein by reference to the Proxy
Statement.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
The information required by this Item 9 is incorporated herein
by reference to the sections entitled "Election of Directors", "Executive
Officers" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the
Proxy Statement.
ITEM 10. EXECUTIVE COMPENSATION.
The information required by this Item 10 is incorporated
herein by reference to the sections entitled "Executive Compensation" and
"Compensation of Directors" in the Proxy Statement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required by this Item 11 is incorporated
herein by reference to the section entitled "Security Ownership of Certain
Beneficial Owners and Management."
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item 12 is incorporated
herein by reference to the section entitled "Certain Relationships and Related
Transactions" in the Proxy Statement.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following documents are filed as part of this
report:
(1) A list of the financial statements filed as
a part of this report is set forth in Item 7
and is incorporated herein by reference.
<PAGE> 22
(2) Exhibits:
The information required by this Item
13(a)(2) is set forth in the Index to
Exhibits and is incorporated herein by
reference. Included in the Index to Exhibits
are the following management contracts,
compensatory plans and arrangements:
(i) 10.3 Employment Agreement, effective
January 1, 1997, between the
Registrant and Richard Reiss.
(ii) 10.4 Amendment to the Employment
Agreement in Exhibit 10.3 above,
effective March 21, 1997.
(iii) 10.5 Employment Agreement, effective
January 1, 1997, between the
Registrant and Joseph Scotti.
(iv) 10.6 Employment Agreement, effective
January 1, 1997, between the
Registrant and Leo Flotron.
(v) 10.10 Registrant's Stock Option
Plan.
(b) No reports on Form 8-K were filed by the
Company during the fourth quarter of 1997.
<PAGE> 23
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
ALL COMMUNICATIONS CORPORATION
Dated: March 31, 1998 By: /S/ RICHARD REISS
------------------------
Richard Reiss, Chairman,
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ RICHARD REISS Chairman of the Board of Directors, March 31, 1998
- ---------------------------- Chief Executive Officer and
RICHARD REISS President (Principal Executive
Officer)
/S/ SCOTT TANSEY Vice President - Finance March 31, 1998
- ----------------------------- (Principal Financial and
SCOTT TANSEY Accounting Officer)
/S/ ROBERT B. KRONER Director March 31, 1998
- -----------------------------
ROBERT B. KRONER
/S/ ERIC FRIEDMAN Director March 31, 1998
- -----------------------------
ERIC FRIEDMAN
/S/ PETER MALUSO Director March 31, 1998
- -----------------------------
PETER MALUSO
/S/ ANDREA GRASSO Director March 31, 1998
- -----------------------------
ANDREA GRASSO
</TABLE>
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
3.1 Certificate of Incorporation of the Registrant dated August 16, 1991, as amended. (1)
3.2 By-Laws, as amended. (1)
4.1 Form of Amended Warrant Agreement among the Registrant and American Stock Transfer &
Trust Company, as Warrant Agent. (1)
4.2 Specimen Common Stock Certificate of Registrant. (1)
4.3 Specimen Class A Warrant Certificate of Registrant. (1)
10.1 Agreement, dated December 9, 1996, between the Registrant and HFS Incorporated. (1)
10.2 Dealer Agreement, dated May 20, 1992, between the Registrant and Panasonic
Communications & Systems Company. (1)
10.3 Employment Agreement, effective January 1, 1997, between the Registrant and Richard
Reiss. (1)
10.4 Amendment to the Employment Agreement in Exhibit 10.3 above, effective March 21, 1997.
(1)
10.5 Employment Agreement, effective January 1, 1997, between the Registrant and Joseph
Scotti. (1)
10.6 Employment Agreement, effective January 1, 1997, between the Registrant and Leo
Flotron. (1)
10.7 Lease Agreement for premises located at 1450 Route 22, Mountainside, New Jersey, dated April 13, 1995,
between the Registrant and Mountain Plaza Associates. (1)
10.8 First Amendment to Lease Agreement for premises located at 1450 Route 22, Mountainside, New Jersey,
dated June 27, 1996, between the Registrant and Mountain Plaza Associates. (1)
10.9 Sublease Agreement for premises located at 1130 Connecticut Avenue, N.W., Washington D.C., dated July
1, 1996, between the Registrant and Charles L. Fishman, P.C. (1)
10.10 Registrant's Stock Option Plan. (1)
10.11 Agreement, dated February 21, 1997, between the Registrant and Sprint North Supply. (1)
10.12 Dealer Sales Agreement, dated March 10, 1997, between the Registrant and Sprint North
Supply. (1)
10.13 Lease Agreement for premises located at 225 Long Avenue, Hillside, New Jersey, dated March 20, 1997,
between the Registrant and Vitamin Realty Associates, L.L.C. (1)
</TABLE>
<PAGE> 25
<TABLE>
<S> <C>
10.14 Agreement, dated September 10, 1997, between the Company and Maxbase, Inc.
(incorporated herein by reference to the Registrant's Current Report on Form 8-K filed
September 18, 1997, Commission File No. 1-12937).
*10.15 Reseller Agreement, dated November 21, 1997, between Polycom, Inc. and the Registrant.
*10.16 Dealer Agreement, dated November 26, 1997, between Lucent Technologies, Inc. and the
Registrant.
11.1 Computation of Income Per Share. (2)
16.1 Letter on Change in Certifying Accountant. (2)
*21.1 Subsidiaries of the Registrant.
23.1 Consent of the Company's Independent Auditors. (2)
27.1 Financial Data Schedule. (2)
</TABLE>
- ----------
*Filed herewith
(1) Previously filed with Registrant's Registration Statement on Form SB-2,
Registration No. 333-21069.
(2) To be Filed by Amendment.
<PAGE> 1
[Letterhead of POLYCOM]
VIDEOCONFERENCING AND DATA CONFERENCING PRODUCTS
NORTH AMERICAN
1997-1998 RESELLER AGREEMENT
By and Between
POLYCOM, INC.
and
ALL COMMUNICATIONS CORPORATION
<= VIDEOCONFERENCING PRODUCTS <= DATACONFERENCING PRODUCTS
This RESELLER Agreement ("Agreement") is entered as of November 21, 1997, 1997
by and between Polycom Inc., a Delaware corporation having its principal place
of business located at 2584 Junction Avenue, San Jose, California 95134-1902 and
All Communications Corporation ("RESELLER") having its principal place of
business located at 225 Long Avenue, Hillside, New Jersey 07205.
I. APPOINTMENT
A. Appointment and Territory. Polycom hereby appoints RESELLER as a
non-exclusive RESELLER for the sale and servicing of Polycom's
products as set forth in Exhibit A. Polycom reserves the right to
sell its products to end-user customers directly or through other
distributors, OEMs, Telcos, dealers or any other resellers. RESELLER
may distribute products only to customers located and taking
delivery in the geographic sales locations as specified in Exhibit B
("Authorized Locations").
B. Reproduction Rights, Trademarks and Markings. RESELLER shall
accurately describe the product in all advertisements and written
proposals to customers and has the right to reproduce Polycom's
trademarks, trade names and logos in its efforts to promote
Polycom's products, provided that such are true reproductions, with
all of the appropriate proprietary notices, and provided that
Polycom shall have written approval rights prior to any use or
publication. RESELLER recognizes Polycom's exclusive ownership of
such marks and names and agrees not to take any action inconsistent
with such ownership. RESELLER further agrees to discontinue use of
any such marks or names immediately upon expiration or termination
of this Agreement. RESELLER will not remove or make or permit any
alterations in any tags, labels, or other identifying markings on
Polycom's products.
C. Independent Contractor. The relationship established by this
Agreement between Polycom and RESELLER is that of independent
contractors. RESELLER shall not incur any obligation or commitment
on behalf of Polycom unless specifically approved in writing, in
advance, by an authorized Polycom representative. RESELLER is
responsible for all of its employees and agents and its labor costs
and expenses and will indemnify Polycom from any and all claims,
liabilities, losses, injuries, damages, or the like occasioned by
RESELLER's activities in connection with this Agreement, including,
without limitation, providing unauthorized representations to
customers or breaching any term of this Agreement.
II. TERM AND TERMINATION OF AGREEMENT
A. Term. Subject to the termination provisions contained herein, this
Agreement will continue in effect for two (2) years. Unless the
parties enter into a new Agreement prior to the termination date,
the Agreement will continue for additional one year periods until
termination is made pursuant to the terms provided hereunder.
Page 1 CONFIDENTIAL
<PAGE> 2
B. Termination.
1. Polycom shall have the right to immediately terminate this
Agreement by written notice:
a. Upon liquidation, dissolution, merger, consolidation, or
sale of substantially all of the assets of RESELLER or
upon any material change in the management or control,
direct or indirect, of RESELLER;
b. In the event that any proceedings are commenced against
RESELLER or if RESELLER seeks protection under
bankruptcy, insolvency, or debtor's relief law, and such
proceedings are not dismissed within sixty (60) days
after the date of commencement thereof;
c. If RESELLER fails to make timely payment as defined in
Section V., C.4;
d. Upon breach of any term of this Agreement by RESELLER;
e. If RESELLER fails to purchase for delivery the minimum
quantity purchases as defined in Section IV.A. In this
event, Polycom may, in its discretion, elect not to
terminate the Agreement and shall have the right to
reduce the discount level.
2. Polycom may terminate this Agreement for any reason or no
reason by giving RESELLER ninety (90) days prior written
notice of the termination.
3. In the event Reseller is unable to provide service to
customers, Polycom will arrange for service to be available to
end-users who have acquired Polycom products through Reseller.
In the event Reseller elects to no longer service Polycom
end-user customers, Reseller will cooperate with Polycom to
find a means for continued support for end-user customers.
C. Effect of Termination. Upon termination or expiration of this
Agreement, all licenses and rights of RESELLER hereunder shall
terminate except the end-user licenses granted to customers and the
provisions of Sections I.C., V.C., and VI. through X. shall survive
termination. All payments shall become immediately due and payable.
Upon termination or expiration of this Agreement, RESELLER must, at
Polycom's sole option, return all unsold, unopened Polycom's
products to Polycom for credit, provided such unsold, unopened
Polycom products are received within thirty (30) days of termination
or expiration of this Agreement and are in the same condition as
that in which they were delivered to RESELLER as determined in the
sole judgment of Polycom. Any Polycom products not returned to
Polycom in accordance herewith, may be sold by RESELLER in
accordance with the terms of this Agreement. RESELLER shall return
such products freight prepaid.
III. RESPONSIBILITIES OF POLYCOM
Polycom represents, warrants and agrees:
A. Sales Materials. To make available to RESELLER reasonable sales
support materials such as product brochures, data sheets, user
guides, applications, briefs, sales notebooks, formal sales
presentations in overhead, slide or flip chart form, and other such
materials.
B. Marketing Support. To provide RESELLER with reports detailing
marketing or technical information on Polycom products, competitive
comparisons, and announcements, and to promptly respond to all
inquiries and requests for help from RESELLER. To provide RESELLER
with one thousand (1,000) sets of data sheets at no charge for each
Polycom product following the execution of this Agreement. To
further provide a cooperative marketing program pursuant to the
description and terms and conditions provided in Exhibit C.
Page 2 CONFIDENTIAL
<PAGE> 3
C. Sales, Customer Service, and Maintenance Training. To provide
training for RESELLER as specified in Exhibit D and to provide
RESELLER with telephone technical support of Polycom's product at
Polycom's expense pursuant to Exhibit E.
IV. RESPONSIBILITIES OF RESELLER
RESELLER represents, warrants and agrees:
A. Minimum Quarterly Purchase. To purchase the minimum dollar value
quantity of Polycom's products at the discount set forth in Exhibit
F within the calendar quarter of the accepted purchase order. Upon
execution of this Agreement, RESELLER shall submit firm calendar
quarterly purchase orders as set forth in Exhibit F. Each subsequent
calendar quarterly purchase order must be submitted to Polycom no
later than thirty (30) days prior to the beginning of the next
calendar quarter. Reseller must purchase at least fifty thousand
dollars ($50,000) of Polycom Videoconferencing and Dataconferencing
Products in any given quarter to remain in good standing.
B. Demo/Spare Purchase. Upon execution of this Agreement, RESELLER
shall submit a firm purchase order for at least one (1) demo unit of
each product type RESELLER will sell (second demo unit is optional)
and one (1) service unit for every RESELLER location. RESELLER will
receive a fifty percent (50%) discount for each of these units.
RESELLER agrees not to sell the units for a minimum of six (6)
months from date of purchase order. If sold, RESELLER agrees to
maintain a minimum of one (1) spare unit per authorized sales
location.
C. Software License.
1. To distribute Polycom products only as packaged by Polycom
with Polycom's software license agreement intact and with no
portion of the package obscured. Copies of software in
Polycom's product are licensed for distribution only and not
sold. RESELLER is not entitled to receive any source code or
documentation relating to the software contained in Polycom
products.
2. Not to decompile, disassemble, modify, or otherwise reverse
engineer the software contained in Polycom products or attempt
to learn the source code, structure, algorithms, or ideas of
such software underlying Polycom products.
D. Resale of Polycom Product Components. Not to sell or offer to sell
separately any subassemblies, parts or components of Polycom
products.
E. Sales and Service Coverage. To provide sales and service in all
Authorized Territories as defined in Exhibit B.
F. Sales and Service Training. To require its sales people, customer
service, technical service and maintenance personnel to periodically
attend the Polycom product training sessions as specified in Exhibit
D.
G. Technical Services and Support. To meet all training and service
level criteria established in Exhibits D and E and to properly
register the warranty for each and every product sold, and to
maintain a log of all service activity and to report such data
quarterly to Polycom, such that Polycom can properly track,
investigate, and resolve product service issues. RESELLER agrees to
provide Polycom, upon Polycom's written request, with information
about the customers of Polycom products, and the date of product
distribution. RESELLER also agrees to stock loaner units,
replacement units, and spare parts kits for each type of product
sold to each Authorized Territory in the quantities necessary to
meet the service response times described below.
H. Service Response Time/Loaner Units. To directly respond to customer
service requests within one (1) business day of receiving a service
call and to escalate unresolvable problems to Polycom's reseller
technical assistance center, within one day. RESELLER agrees to
provide an equivalent loaner unit, either at no charge
Page 3 CONFIDENTIAL
<PAGE> 4
or at a reasonable cost, to the customer by the end of the second
business day if a unit under warranty cannot be repaired in the
field. The customer may keep the equivalent loaner unit permanently,
or until their unit is repaired and returned. Units which fail
within 30 days from shipment to the customer (DOA) shall be
advance-replaced by the Reseller. Notwithstanding any other
provisions hereof, Reseller will receive an RMA number for the DOA
unit. Reseller will sent the unit to Polycom for replacement and
Polycom will exert its efforts to ship the replacement unit within
48 hours of receipt.
I. Forecast, Sales and Inventory Reports. To provide Polycom with a
report within ten (10) days of the end of each quarter reflecting
the inventory of units on-hand and each month's sales level for
Polycom product. To provide Polycom quarterly with a rolling
one-hundred and eighty (180) day forecast of product delivery
schedules, of which the first ninety (90) days is binding per the
RESELLER's released purchase orders and the second ninety (90) days
is non-binding.
J. Sales Qualifications. To provide its customers with access to a
dedicated demonstration system and a minimum of one Polycom trained
sales person at each sales location.
K. Lead Follow Up. To follow up on each and every qualified sales lead
from Polycom and report on the results of such field sales efforts,
so that Polycom can properly manage sales inquiry generation and
qualification programs thereby insuring a continued flow of
profitable sales leads for RESELLER.
L. Optional Upgrade Program. At RESELLER's sole option, to participate
in Polycom's Optional Monochrome ShowStation Upgrade Program as
described in Exhibit G.
M. General Conduct. To, at all times, conduct its business in a
professional manner and not engage in any deceptive, misleading,
illegal or unethical business practice or any practice that will
reflect unfavorably on Polycom or its products. RESELLER shall use
its best efforts to successfully market, distribute and support
Polycom's products on a continuing basis.
V. TERMS AND CONDITIONS
A. Orders and Delivery. All Polycom product orders shall be subject to
the terms and conditions of this Agreement. Purchase orders are
subject to acceptance in writing by Polycom. All orders are
non-cancelable and non-reschedulable by RESELLER unless agreed to in
writing by Polycom.
B. Delivery. The standard delivery schedule for all Polycom products
shall be ninety (90) days after acceptance by Polycom of order from
RESELLER. Orders placed for new products are subject to longer lead
times, at Polycom's sole discretion. An order will not be accepted
until RESELLER has met all payment and order terms of this
Agreement. All Polycom products shipped will have appropriate
regulatory product certification. Polycom will consider shorter
shipping lead-times on a case-by-case basis.
C. Price and Payment
1. Purchase Prices. The pricing for all orders will be subject to
the discount schedule in Exhibit F and based on the North
American Price List in Exhibit A.
2. Price Changes. Polycom shall have the right to change the
discount schedule and its pricing for Polycom products
provided that Polycom shall give RESELLER thirty (30) days
written notice before such charges shall become effective.
Polycom will accept orders at the old price until the new
price becomes effective provided that RESELLER accepts
delivery of such orders within three (3) months of order date.
3 Credit. Polycom may extend a credit line to RESELLER based on
the satisfactory credit standing of RESELLER, the amount of
such credit line to be at the sole discretion of Polycom.
Polycom reserves the right at any time to revoke any credit
extended to RESELLER for any reason.
Page 4 CONFIDENTIAL
<PAGE> 5
4. Payment. All Polycom products will be invoiced upon shipment.
Payment terms are net thirty (30) days from date of shipment,
assuming RESELLER is in good credit standing. All other orders
are COD or cash in advance, at Polycom's sole discretion.
5. Late Charges and Collections Fees. Any invoice not paid within
the net thirty (30) day payment terms will be subject to a one
and one-half percent (1 1/2%) monthly late payment charge.
This includes, but is not limited to, any unearned discounts
taken by RESELLER. In addition, RESELLER agrees to reimburse
Polycom for any costs, including reasonable attorney's fees,
necessary to collect any unpaid amounts due subject to the
terms of this Agreement.
6. Taxes. RESELLER shall be responsible for the payment of local
excise, sales, use, property and other duties, customs fees,
or taxes levied with respect to units of Polycom products sold
to RESELLER hereunder.
7. Title & Security Interest. Title to the hardware shall pass to
the RESELLER and delivery is deemed to occur upon Polycom's
delivery of Polycom product to the commercial carrier Ex-Works
Polycom. In all cases, risk of loss or damage in transit shall
fall upon RESELLER, whose responsibility it shall be to file
claims with the carrier.
Polycom shall retain a security interest in all Polycom
products shipped to RESELLER until the full purchase price,
including taxes and additional charges, has been paid. Polycom
is authorized to file this Agreement together with any forms,
financing statements, or other documents necessary to evidence
and perfect Polycom's security interest. RESELLER agrees to
execute any such documents and otherwise assist Polycom to
effectuate the foregoing upon Polycom's request.
D. Product Changes. Polycom reserves the right to make modifications to
Polycom products at any time but shall not be obligated to implement
such modifications in Polycom products that have previously been
delivered to RESELLER.
E. Freight. All product is shipped Ex-Works. Polycom will ship freight
collect, best way surface unless prior shipping instructions have
been provided by RESELLER. RESELLER shall pay all transportation
charges and insurance premiums.
F. Warranty and Repair. Polycom's Warranty and Liability Limitation is
attached hereto as Exhibit H. Polycom warrants only to RESELLER that
Polycom product will be free from manufacturing and materials
defects for fifteen (15) months after shipment to RESELLER, or for
twelve (12) months after delivery to RESELLER's customer, whichever
is earlier. RESELLER may only return Polycom product to Polycom
pursuant to the terms contained in Exhibits E and I. Polycom's
warranty excludes components that fail due to ordinary wear and
tear, including: lamps, pens, and batteries.
G. Force Majeure. Polycom shall not be liable for failure to deliver or
delays in delivery occasioned by causes beyond Polycom's control,
including but not limited to, strikes, lockouts, fires, embargoes,
war or other outbreaks of hostilities, inability to obtain materials
or shipping space, machinery breakdowns, delays of carrier or
suppliers, governmental acts and regulations.
VI. CONFIDENTIAL INFORMATION
RESELLER acknowledges that by reason of its relationship with Polycom
hereunder, it will have access to certain information and materials
concerning Polycom's business, plans, customers and products, including
but not limited to, information and materials contained in technical data
provided by Polycom which is confidential and of substantial value.
RESELLER agrees that it shall not use in any way for its own account or
the account of any third party, any such confidential information.
RESELLER will take every reasonable precaution to protect the
confidentiality of such information consistent with the efforts exercised
by it with respect to its own confidential
Page 5 CONFIDENTIAL
<PAGE> 6
business information. In the event of termination of this Agreement,
RESELLER shall immediately return to Polycom all of Polycom's confidential
information in its possession, custody or control including all copies
thereof.
VII. QUARTERLY BUSINESS REVIEWS
Polycom and RESELLER agree to hold quarterly business reviews at a
mutually agreeable location to discuss RESELLER's business, which will
include the following: marketing plans, advertising, organization and
staff, sales levels, service, and credit.
VIII. ARBITRATION
[Deleted]
IX. INDEMNIFICATION
Polycom shall defend any suit or proceeding brought against RESELLER based
on a claim that the Polycom products or any part thereof, furnished by
Polycom under this Agreement, constitute an infringement of any existing
patent, copyright, or other proprietary right of any third party; provided
that Polycom is notified promptly in writing and given, information, and
assistance by RESELLER to defend such suit or proceeding. Polycom shall
have sole control over the defense and/or settlement of any such event and
shall indemnify RESELLER for all costs, and any damages that may be
finally awarded therein against RESELLER. In case the Polycom products or
any parts thereof, are in Polycom opinion likely to become, or do become
the subject of such a claim; or are held in any such suit or proceeding to
constitute an infringement of any patent, copyright, or other proprietary
right of any third party, or become the subject of an injunction
prohibiting the use thereof; or any settlement made requires the use of
Polycom's products to be discontinued: Polycom shall at its own option and
expense, either (1) procure for RESELLER and RESELLER's customers the
right to continue using said Polycom products; or (2) replace the same
with non-infringing Polycom products which equal or exceed the capacity
and performance of the Polycom products being replaced; or (3) modify said
Polycom products so they become non-infringing. If Polycom is not
reasonably able to replace or modify the infringing Polycom products or
procure for RESELLER and RESELLER's customers the right to continue using
them, RESELLER will return the infringing Polycom products and Polycom
will refund the purchase price less any discounts and unpaid amounts due
Polycom. Polycom's obligation set forth above will not apply as to Polycom
products that have been modified by RESELLER or RESELLER's customer
(except as approved in writing by Polycom).
Polycom shall also have no obligation as a result of any suit or
proceeding brought against RESELLER arising from the use of the Polycom
products, or any part thereof, furnished hereunder in combination with
products not supplied or specified by Polycom where the alleged
infringement relates to such combination.
X. LIMITED LIABILITY
Polycom shall not be liable under any section of this Agreement or under
any contract, negligence, strict liability or other theory for (a) any
amounts in excess of amounts paid to it by RESELLER, (b) any incidental or
consequential damages, including lost profits, or (c) cost of procurement
of substitute goods, services or technology.
XI. GENERAL
A. RESELLER acknowledges that it has not been induced to enter into this
Agreement by any representation or warranty not set forth in this
Agreement or in the written materials given by Polycom to RESELLER. This
Page 6 CONFIDENTIAL
<PAGE> 7
Agreement contains the entire Agreement of the parties, and supersedes all
existing Agreements and all previous oral, written, or other communications with
the exception of the Polycom National Account Agreement between them concerning
its subject matter.
B. No addition or modification of any part of this Agreement shall be binding
upon Polycom or RESELLER unless made in writing and signed by a duly authorized
representative of each party.
C. The paragraph headings contained herein are intended for convenience of
reference only, and shall not affect the interpretation of any provisions.
D. If any provisions of this Agreement shall be held to be invalid, illegal, or
unenforceable, the validity, legality or enforceability of the remaining
provisions shall in no way be affected or impaired.
E. This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
F. The waiver by either party of a breach of any provision of this Agreement
shall not be construed as a waiver of any subsequent breach.
G. All notices shall be in writing and delivered by hand or sent by registered
or certified mail, return receipt requested, to addresses indicated on the face
of this Agreement or to such other addresses as the parties shall specify by
written notice.
H. No action, regardless of form, arising out of or related to this Agreement,
may be brought by either party more than one year after the cause of action has
occurred, except that an action for non-payment may be brought within one year
after the date of last payment. And in no event shall such action be brought
more than one year after termination of this Agreement between parties.
I. This Agreement may not be assigned, transferred or sub-licensed by RESELLER
in whole or in part, including by purchase, merger or operation of law, without
Polycom's written consent which shall not be unreasonably withheld.
J. In the event that Polycom has not acquired ViaVideo Communications, Inc.
("ViaVideo") on or before March 31, 1998 pursuant to the merger agreement dated
June 11, 1997, the fulfillment of the videoconferencing products only will be
assigned to ViaVideo under the terms and conditions provided herein. The
videoconferencing products are those specifically listed in Exhibit A under the
sub-titles "Videoconferencing Products" and "Videoconferencing Accessories." In
this event, all other product will remain the exclusive fulfillment of Polycom.
Once Polycom has completed the acquisition, this Section will become null and
void and no assignment of any products will occur.
Page 7 CONFIDENTIAL
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth.
POLYCOM, INC.: RESELLER:
By: /s/ Michael R. Kourey By: /s/ Richard Reiss
------------------------------ ---------------------------
Michael R. Kourey Name: Richard Reiss
Chief Financial Officer Title: President and CEO
Page 8 CONFIDENTIAL
<PAGE> 9
Exhibit A
[Logo] P0LYCOM(R)
Advanced Teleconferencing Solutions
NORTH AMERICAN VIDEOCONFERENCING PRICE LIST
Effective: November 1, 1997
<TABLE>
<CAPTION>
Model Number Description List Price (US$)
- --------------------------------------------------------------------------------
Systems
- --------------------------------------------------------------------------------
<S> <C> <C>
TBA ViewStation(TM) $5,999.00
TBA ViewStation w/384kpbs $8,999.00
</TABLE>
NORTH AMERICAN DATA CONFERENCING PRICE LIST
Effective: November 1, 1997
<TABLE>
<CAPTION>
Model Number Description List Price (US$)
- --------------------------------------------------------------------------------
Systems
- --------------------------------------------------------------------------------
<S> <C> <C>
2200-05000-001 ShowStation(R) IP $12,999.00
2200-00250-001 ShowStation $9,999.00
- --------------------------------------------------------------------------------
Factory Options for Use with ShowStation IP
- --------------------------------------------------------------------------------
2200-03873-025 LAN Interface Option 499.00
2200-03874-025 LAN Multipoint Option 999.00
2200-03875-025 VCS Interface Option 499.00
2200-03876-025 External Device Support Option 499.00
2200-03877-025 Audio/Video Support Option 1.999.00
- --------------------------------------------------------------------------------
Factory Options for Use with ShowStation
- --------------------------------------------------------------------------------
2200-02243-001 Enhanced Feature Package 5999.00
(Printer Support, Image Storage,
External PC Support)
2200-02238-001 VCS Interface Option $499.00
</TABLE>
Prices subject to change without notice.
Prices are valid for all North American versions; please refer to Polycom
International availability listing for currently approved country offerings.
Prices are ex-works Polycom factory.
Page 9 CONFIDENTIAL
<PAGE> 10
Exhibit B
AUTHORIZED SALES TERRITORIES
RESELLER agrees to restrict its sales activity to the specific Polycom
Authorized Territories in which it maintains the minimum service requirements as
specified in Sections IV.F-H. RESELLER agrees that only after Polycom has
certified each territory in writing will RESELLER be allowed to initiate
selling. Each Authorized Territory is defined below and may only be modified as
provided herein.
Authorized Territory
United States, Europe and South America
Page 10 CONFIDENTIAL
<PAGE> 11
Exhibit C
[Logo] P0LYCOM(R)
Advanced Teleconferencing Solutions
POLYCOM VIDEO AND DATACONFERNCING
COOPERATIVE MARKETING PROGRAM
Overview
The Polycom Cooperative Marketing Program is a program by which Polycom provides
Cooperative Marketing Credits to eligible distributors to encourage promotion of
Polycom products and services. Polycom is available to assist you in developing
effective, custom Marketing Programs that allow you to increase your coverage in
the teleconferencing market and to boost your sales of Polycom video and
dataconferencing products.
Credit Accrual Process
Polycom Cooperative Marketing Program (PCMP) Credit accrues for all video and
dataconferencing products on a monthly basis (fiscal months) at a rate of two
percent (2%) of your purchases of Polycom product, net of all discounts and
credits. Co-op for video and dataconferencing products will be SEPARATE
ACCOUNTS. The accrued funds for each product line may be used only on programs
to support that Polycom product line. To encourage prompt usage of this credit,
after the sixth month of availability, unused credit will expire. Polycom will
provide a monthly cooperative marketing credit statement that enables you track
usage of co-op funds. This report provides a monthly co-op credit balance and
can be used in planning the usage of co-op funds for future marketing campaigns.
You may also contact the Polycom Marketing Communications Department directly
for your current credit balance.
Co-op Credit Approval Criteria
100% reimbursement co-op credit is available for many forms of advertising or
promotion to end-users including, but not limited to, print ads, direct mail
pieces, seminars, radio and TV ads, and trade show signage. Polycom literature
may also be obtained at 100% reimbursement.
To apply and qualify for 100% co-op credit you must submit a sample of your ad
or marketing piece alone with a Polycom Co-operative Marketing Credit form
(sample attached) to the Polycom Marketing Communications Department PRIOR to
distribution or implementation of the program. Any programs or advertising
expenditures that are submitted for PCMP reimbursement that were not approved
prior to execution, may still be eligible for a matching disbursement from the
co-op fund, but whether and at what percentage a credit will be given will be at
Polycom's sole discretion.
The following criteria will be used to determine whether, or at what pro-rata
percentage, the submission is eligible for PCMPC.
o Promotional materials must prominently feature Polycom and Polycom
products or services. They must also include the Polycom Authorized
Distributor Logo. (See Polycom Marketing Program binder for logo
Page 11 CONFIDENTIAL
<PAGE> 12
stat sheet). The fact that Polycom manufactures its products must be
clearly presented in all promotional materials.
o Information presented in submitted promotional materials must be accurate,
verifiable, and in the sole opinion of Polycom, not cause harm to
Polycom's image.
o The first usage only of the name of Polycom products and services must be
directly preceded by the word "Polycom" (e.g., Polycom's ShowStation(R) is
the...).
o Polycom trademarks in copy text must be followed by the appropriate
trademark symbol (e.g., (R) or TM)., Trademark credit should be presented
at the bottom of the page or the end of the document (please see the
Polycom Corporate Trademark Notification Guidelines in the Marketing Guide
for more details).
o Polycom logo usage guidelines must be followed. For a copy of these
guidelines, consult your Polycom Marketing Binder or contact Polycom
Marketing Communications.
Claims Process
Once you receive the invoice(s) for your pre-approved marketing activity, submit
your paid invoices, any necessary backup documentation (i.e. sample of ads), and
a copy of your related pre-approved Polycom Cooperative Marketing Credit Form to
Polycom's Marketing Communications Department. By observing the following
guidelines, Polycom will be able to process your request more
efficiently:
o Paid invoices must be submitted within 30 days of completion of ad
placement, collateral production, or promotional event to qualify for PCMP
credit.
o Include sample of advertising material: tear sheet, media selection, issue
date, size, color and any other pertinent specification.
o Promotional materials not completely devoted to Polycom will be considered
for pro-rated credit.
o Claims that exceed your PCMP credit balance will receive partial credit.
All claims are issued only in the form of credit memos against your Polycom
account.
For more information or to request assistance in developing a custom marketing
campaign please contact your Polycom Distribution Manager, or the Polycom
Marketing Communications Department at 408-526-9000 or 800-765-9266.
Page 12 CONFIDENTIAL
<PAGE> 13
Request for Polycom Cooperative Marketing Credit
Please complete and fax this form to Polycom Market Development (408-474-2542)
along with a sample marketing piece or a marketing program outline for prior
approval before implementing your marketing program. You will receive a response
within two working days. Once you receive the invoice(s) for your marketing
materials or event, mail with tear sheets or other appropriate documentation and
a copy of this form to Polycom Market Development for credit.
================================================================================
Request Information
Organization _______________________________________________
Address _______________________________________________
_______________________________________________
_______________________________________________
City/State/Zip _______________________________________________
Telephone _______________________________________
Fax _______________________________________
Project Name: _______________________________________________
Project Description: _______________________________________________
(include issue date, _______________________________________________
size, etc.) _______________________________________________
_______________________________________________
Estimated Project Cost: ____________________________________
Name _____________________________________
Title _____________________________________
Signature _____________________________________ Date _________
================================================================================
For Polycom Use
Prior Approval by _____________________________________ Date _________
Claim Approved by _____________________________________ Date _________
Amount Approved _____________________________________ Date _________
Polycom Incurred Expense/Acct: ____________ Customer Incurred Expense______
Submitted to Acctg: ________________________________________ Date _________
================================================================================
Page 13 CONFIDENTIAL
<PAGE> 14
Exhibit D
RESELLER TRAINING PROGRAM
Polycom will hold Reseller training classes at its corporate headquarters at
regularly scheduled intervals, generally at least once per quarter. RESELLER
agrees to send sales and service personnel, at Reseller's expense, to the
appropriate training sessions listed below.
Sales Training
RESELLER agrees to send at least two salespersons to Polycom for product
pre-sales training within 60 days of contract execution and at least one
salesperson every six months thereafter for product update training.
Technical Support Training
RESELLER shall appoint at least one Polycom product technical expert within
reseller's organization who will be responsible for post-sales technical support
knowledge and internal Polycom product technical support training. RESELLER
shall send the appointed technical expert along with one lead telephone support
person to Polycom for post-sales technical support training within 60 days of
contract execution. Should Reseller appoint a new Polycom product technical
expert, Reseller shall inform Polycom in writing and send the newly appointed
person for technical support training within 60 days from the time of the new
appointment.
Polycom will provide Reseller with training course materials free of charge,
which the Reseller may then use for internal training of its sales and service
personnel.
ShowStation Field Repair Training
Resellers who elect to provide depot or onsite repair of ShowStation shall send
their appointed product technical expert and one lead repair technician to
Polycom for ShowStation field repair training before performing ShowStation
repairs.
Page 14 CONFIDENTIAL
<PAGE> 15
Exhibit E
TECHNICAL SUPPORT REQUIREMENTS
RESELLER shall provide all level I telephone technical support and customer
service to its end-user customers. The level I support required shall be as
follows:
o Answer questions about Polycom product applications
o Assist with product installation and configuration
o Answer questions about the operation of the product
o Perform local and remote diagnostic tests
o Guide customer through software upgrade procedures
o Diagnose failure of Polycom-specified field replaceable units (FRU's)
Level II Technical Support
Polycom will provide level II telephone technical assistance to Reseller's
authorized personnel. Polycom will not routinely provide direct telephone
support to reseller's end-user customers.
Polycom's Technical Assistance Center (TAC) is available Monday Through Friday,
6:00 AM to 6:00 PM Pacific Time, excluding U.S. holidays at 800.451.0995.
RESELLER agrees to respond to customer service requests within one business day,
and to provide all technical support and customer service to its end-user
customers. RESELLER further agrees to repair or replace any defective customer
unit within two (2) business days during the warranty period.
RESELLER agrees to repair failed Polycom products by swapping FRUs either at
customer site or RESELLER's repair depot at no charge to Polycom. Polycom will
replace RESELLERs failed FRUs that are under warranty at no charge. If Polycom
determines, in its sole discretion, that a failure mode is epidemic, Polycom may
request that RESELLER return entire Polycom products to Polycom rather than the
swapping of FRUs as described herein.
Except in the case of a Polycom-determined epidemic failure condition, if
RESELLER fails to swap failed FRUs and instead returns an entire unit, Polycom
may charge RESELLER the fee outlined in Exhibit A for this service and may
return the repaired Polycom product to RESELLER freight collect.
Page 15 CONFIDENTIAL
<PAGE> 16
Exhibit F
POLYCOM PRODUCTS VOLUME DISCOUNT SCHEDULE
<TABLE>
<CAPTION>
Quarterly Dollar Volume Non-Stocking Stocking
--------------------------------------------------------
<S> <C> <C>
Over $1,500,000 40% 42%
$1,000,000 - $1,499,999 38% 40%
$600,000 - $999,999 36% 38%
$400,000 - $599,999 34% 36%
$200,000 - $399,999 32% 34%
$50,000 - $199,999 30% 32%
</TABLE>
The discount schedule applies to quarterly purchase orders of each product
type (video and dataconferencing). DISCOUNTS ARE EARNED SEPARATELY FOR EACH
PRODUCT TYPE.
The initial quarterly discount is based on opening order. To qualify for a given
discount level for the subsequent quarter, the current quarter's shipments must
exceed the appropriate quarterly dollar volume commitment. Thus, to receive a
32% discount, RESELLER must order a minimum of $250,000 a quarter to receive
that discount for the next quarter. Any time a RESELLER orders total for the
quarter-to-date are enough to qualify for a higher discount level, RESELLER will
receive that higher discount on all additional orders for the remainder of the
current quarter and the subsequent quarter.
RESELLER must submit a purchase order for the required dollar volume to qualify
for their initial discount level, in any combination of demonstration and
inventory units, with this signed contract.
RESELLER must order a minimum of $50,000 in each quarter to remain in good
standing.
STOCKING DEALER DISCOUNT
RESELLER will receive an additional 2% discount for issuing quarterly,
non-cancelable purchase orders to Polycom for its quarterly purchase volume, and
receiving at RESELLER's designated warehouse location all ordered product during
the course of that quarter. If Polycom receives, prior to the beginning of each
quarter, a P.O. for product of a given dollar volume, including shipping
instructions for the full volume of the P.O. during the quarter, that reseller
will receive the higher "stocking" discount level on these units, as outlined
above. Units can be specified for shipment at any time during the quarter. Thus,
if RESELLER sends Polycom a non-cancelable P.O. for $250,000 worth of product
prior to the beginning of that quarter, that reseller would receive the standard
32% discount, plus an additional 2% discount, for a total discount of 34% off
that entire order and all subsequent orders for that quarter.
Page 16 CONFIDENTIAL
<PAGE> 17
Exhibit G
OPTIONAL MONOCHROME SHOWSTATION UPGRADE PROGRAM
RESELLER may, at it's sole option, participate in the exchange of existing
monochrome ShowStations for new Color ShowStation. By participating in this
voluntary program, RESELLER agrees to provide a 25% discount of the price paid
by the end-user customer for a monochrome ShowStation unit, exclusive of any
options, when that end-user purchases from RESELLER a new color ShowStation at
full list price.
Polycom will then pay for shipment of the monochrome ShowStation to its
facility, and reimburse RESELLER $500. An example transaction follows:
$9,995.00 Price of monochrome ShowStation
* 25%
= $2,498.75 Refund to end-user
$12,995 List price of color ShowStation
- 2,498.75 Refund for trade-in
$10,496.25 Sale price to end-user
- 9,356.40 Cost of color ShowStation at MINIMUM Reseller discount
= $ 1,139.85
+ 500.00 Refund from Polycom
= $ 1,669.85 12.8% Margin to Reseller on Transaction.
Thus, Resellers participating in this program will make a MINIMUM of a 13%
margin on units sold under this program. Additionally, units purchased for this
program count toward RESELLER quarterly dollar volume, and help to earn higher
discounts. Polycom may also refer upgrade candidates to Resellers participating
in the program, giving RESELLER access to new customers.
RESELLER:__________________________________
NAME:______________________________________
SIGNATURE:_________________________________
TITLE:_____________________________________
DATE:______________________________________
Page 17 CONFIDENTIAL
<PAGE> 18
Exhibit H
WARRANTY AND LIABILITY LIMITATION
1. Limited Warranty and Disclaimer
Polycom, Inc. warrants its products to be free of defects in materials and
workmanship for a period of twelve (12) months from date of purchase. If any
such product should become defective within the warranty period, Polycom, Inc.
will repair or replace the product, at its sole option, provided it is returned
directly to Polycom or an authorized Polycom Service Center during the warranty
period in accordance with the provisions included in the Return Material
Authorization (RMA) Policy and Procedure. Defective product being returned must
have proof of purchase. Please call our toll free number 1.800.451.0995 for the
authorized service site nearest you. Polycom, Inc. is not responsible for costs
incurred in delivering or shipping product to or from its service site. All
replaced products become the property of Polycom, Inc.
The above warranty does not apply to damage to products resulting from accident,
misuse, service, or modification by anyone other than Polycom, Inc. or its
authorized service facilities. This warranty is limited to the original
purchaser and is not transferable.
ANY LIABILITY OF POLYCOM WITH RESPECT TO THE PRODUCT OR THE PERFORMANCE THEREOF
UNDER ANY WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER THEORY WILL BE LIMITED
EXCLUSIVELY TO PRODUCT REPAIR OR REPLACEMENT AS PROVIDED ABOVE. EXCEPT FOR THE
FOREGOING, THE PRODUCT IS PROVIDED "AS IS" WITHOUT WARRANTY OF ANY KIND
INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
2. Limitation of Remedies and Damages.
POLYCOM, ITS AGENTS, EMPLOYEES, DEALERS AND OTHER AUTHORIZED REPRESENTATIVES
SHALL NOT BE RESPONSIBLE OR LIABLE WITH RESPECT TO THE PRODUCT OR ANY OTHER
SUBJECT MATTER RELATED THERETO UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY
OR OTHER THEORY FOR ANY INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING,
BUT NOT LIMITED TO LOSS OF INFORMATION, BUSINESS OR PROFITS.
The law of certain states does not permit limitation or exclusions of implied
warranties and consequential damages so the above limitations, disclaimers, or
exclusions may not apply to you. This warranty gives you special legal rights.
You may also have other rights which vary from state to state.
Page 18 CONFIDENTIAL
<PAGE> 19
Exhibit I
RETURN MATERIAL AUTHORIZATION (RMA) POLICY AND PROCEDURE
The following procedures must be followed to return a product for repair or
replacement. NO PRODUCTS WILL BE ACCEPTED WITHOUT AN RMA NUMBER, WHICH SHOULD BE
CLEARLY MARKED ON THE OUTSIDE OF THE PACKAGE ALONG WITH SENDERS NAME. PRODUCT
MUST BE RETURNED IN THE ORIGINAL CONTAINER. RMA numbers may be obtained by
calling the Polycom Technical Service Department during Polycom's normal
business hours. Polycom will provide an RMA within two (2) business days of
receiving such a bona fide request.
The following RMA information must also be included inside the box with the
product being returned:
a. RMA Number f. Customer Address
b. Reseller's Name g. Model Name
c. Reseller's Telephone # h. Serial Number & Revision of original product
d. Ship to Address (in the case of ShowStation components)
e. Carrier Instructions
Any product received without this information may be returned to RESELLER at
RESELLER's expense. A repaired unit (or replacement, at Polycom's option) will
be returned to RESELLER at Polycom's expense within twenty-one (21) days from
receipt of the defective products. In the event that RESELLER requests an
advance replacement unit before the defective unit has been received, RESELLER
will be invoiced for an additional unit. This amount will be credited upon
receipt of the defective products provided the unit is received within
twenty-one (21) days from shipment of the advanced replacement unit.
Polycom must receive the defective products within twenty-one (21) days from
shipment of the advanced replacement shipment. On the twenty-second (22nd) day
the RMA will be closed, the customer will be billed for the full value of the
unit, and the unit will be deemed the property of the RESELLER.
Requests for advanced replacements will ship within forty-eight (48) hours from
the date of the RMA and are subject to a one-hundred dollar ($100) expedite
charge.
The warranty policies for repaired products are as follows:
In Warranty Systems (All Polycom Products)
Repaired products are warranted for the remainder of the original twelve
(12) month warranty or for a period of ninety (90) days from the date of
shipment, whichever is greater. There will be no factory labor charge for
repairing or replacing defective products during the Warranty period. This
Warranty does not cover damage due to negligence, abuse, or physical
damage.
Out of Warranty Systems
Repaired products are warranted for a period of ninety (90) days from the
due of shipment. A charge will be assessed to repair (or replace at
Polycom's option) defective products which are out of warranty as set
forth in Exhibit A. This Warranty does not cover damage due to negligence,
abuse or physical damage.
Page 19 CONFIDENTIAL
<PAGE> 1
DEALER AGREEMENT BETWEEN LUCENT TECHNOLOGIES AND
ALL COMMUNICATIONS, CORP.
FOR BUSINESS COMMUNICATIONS SYSTEMS
TABLE OF CONTENTS
1.0 DEFINITIONS ........................................................... 2
2.0 DEALER APPOINTMENT .................................................... 3
3.0 DEALER RESPONSIBILITIES ............................................... 4
4.0 INSTALLATION, WARRANTY AND POST-WARRANTY SERVICES ..................... 7
5.0 DEALER ORDERS ......................................................... 8
6.0 DEALER CANCELLATION OF ORDERS ......................................... 9
7.0 PRODUCT, PRODUCT COMPONENTS, AND SOFTWARE LICENSE CHANGES ............. 9
8.0 DEALER PRICES AND DISCOUNTS ........................................... 9
9.0 DEALER PRICE LIST AND DISCOUNT CHANGES ................................ 10
10.0 LUCENT BILLING AND DEALER PAYMENT ..................................... 11
11.0 DEALER FORECAST AND REPORTS ........................................... 11
12.0 TITLE AND RISK OF LOSS ................................................ 11
13.0 INSURANCE ............................................................. 12
14.0 USE OF INFORMATION .................................................... 12
15.0 LICENSE ............................................................... 13
16.0 TRADEMARKS ............................................................ 14
17.0 PRODUCT WARRANTY ...................................................... 14
18.0 LIMITATION OF LIABILITY ............................................... 15
19.0 INDEMNITY ............................................................. 16
20.0 INFRINGEMENT .......................................................... 17
21.0 TERMINATION OF AGREEMENT .............................................. 18
22.0 EFFECTS OF TERMINATION ................................................ 19
23.0 SURVIVAL OF OBLIGATIONS ............................................... 20
24.0 FORCE MAJEURE ......................................................... 20
25.0 SECURITY INTEREST ..................................................... 20
26.0 SEVERABILITY .......................................................... 20
27.0 ASSIGNMENT ............................................................ 21
28.0 NON-WAIVER ............................................................ 21
29.0 CHOICE OF LAW AND DISPUTES ............................................ 21
30.0 NOTICES ............................................................... 22
31.0 ENTIRE AGREEMENT ...................................................... 23
32.0 TERM .................................................................. 23
APPENDIX: ADDRESSES ........................................................ 24
APPENDIX: AREA ............................................................. 25
PRODUCT APPENDIX: KEY SYSTEMS .............................................. 26
PRODUCT APPENDIX: GUESTWORKS(TM) SERVER & ASSOCIATED ADJUNCTS
PRODUCT APPENDIX: DEFINITY BCS & ASSOCIATED ADJUNCTS
<PAGE> 2
AGREEMENT NO.: NEDA4D 9711C2
DEALER AGREEMENT BETWEEN LUCENT TECHNOLOGIES AND
ALL COMMUNICATIONS, CORP.
FOR BUSINESS COMMUNICATIONS SYSTEMS
This Dealer Agreement ("Agreement") is effective as of NOV 26 1997 and is
between Lucent Technologies Inc. ("Lucent"), a Delaware corporation, through its
Business Communications Systems unit ("BCS"), with offices at 211 Mount Airy
Road, Basking Ridge, New Jersey 07020, and All Communications, Corp.,
("Dealer"), a corporation, with offices at 225 Long Avenue, Hillside, NJ 07205.
WHEREAS, Lucent desires in certain geographic areas of the United States
to have others with the necessary marketing capabilities, integrity and
dedication to End User satisfaction to assist Lucent in marketing complete
business telecommunications systems to End Users;
WHEREAS, Dealer represents that it has the necessary marketing
capabilities, integrity and dedication to sell forecast quantities of complete
Lucent business telecommunications systems to End Users located in Dealer's
Area.
WHEREAS, the parties represent that each will conduct its business in a
manner that reflects favorably on the quality image of itself, the other party
and Lucent's Products;
WHEREAS, Dealer represents that it has or will acquire the service
capabilities necessary to meet Lucent's quality standards for design,
installation, and provision of warranty and maintenance on-site services for
Lucent Products, if Dealer opts to provide such services;
WHEREAS, Lucent has relied upon these Dealer representations and forecasts
as the basis for granting Dealer the right to market its Lucent Products in the
Area;
NOW, THEREFORE, Lucent and Dealer hereby agree as follows:
<PAGE> 3
1.0 DEFINITIONS
For the purposes of this Agreement, the following terms and their
definitions shall apply:
1.1 "Area" means the specific geographic area in which Dealer or one of
its Dealers has agreed to market Lucent Products in accordance with this
Agreement. The specific geographic areas that comprise the Area are identified
by city, state, county and zip code or other appropriate description in
Appendix: Area.
1.2 "Dealer Service" means one or more of those services Dealer may choose
to perform itself for Lucent Products in the Area. Dealer Services include
system configuration to the End User, installation, warranty, and provision of
post-warranty on-site maintenance.
1.3 "End User" means a third party to whom Dealer markets or sells Lucent
Products within the Area for use by such third party in the ordinary course of
its business and not for resale; End User does not include any Lucent BCS Global
Account or any office, department, agency, or defense installation of the United
States Government..
1.4 "Lucent Product" means a Lucent equipment model identified in a
Product Appendix to this Agreement that Dealer has purchased directly from
Lucent through its BCS Distribution Development and Management group or an order
source within Lucent designated by the BCS Distribution Development and
Management group (collectively, "DDM") and that carries the standard Lucent
warranty when resold to an End User, Lucent Products may be new or Classic. A
Classic Lucent Product has been remanufactured only by or for Lucent. Each
Lucent Product consists of one or more Product Components. The set of Product
Components that may be used to equip a Lucent Product is determined solely by
Lucent, which has the right to reject any order placed by Dealer that does not
reflect rational complete Lucent Products or reasonable inventory requirements.
1.5 "Lucent Service" means one or more of those services provided by
Lucent that Dealer may choose to resell as a Lucent Service Sales Agent,
including system configuration, installation, provision of post-warranty and
on-site and remote maintenance service, and Professional Services. Lucent
Service also includes post-warranty remote maintenance service separate from
post-warranty on-site maintenance service, which Dealer may offer in conjunction
with Dealer Service. Lucent Services, including the prices at which they may be
offered to end users and the commissions payable on their sale, and the price at
which Lucent will provide remote maintenance service as a subcontractor for
Dealer Service are described and identified in the Dealer Handbook.
1.6 "Product Component" means an item of equipment identified by a Lucent
equipment price element code. To the extent that a Product Component contains or
consists of any firmware or software, an End User shall have the right to use
such firmware or software in accordance with Section 15.0.
2
<PAGE> 4
1.7 "Software" means any computer program that is composed of routines,
subroutines, instructions, processes, algorithms, and like ideas or know-how,
owned by or licensed to Lucent and or one or more of its suppliers, regardless
of the medium of delivery, including revisions, patches and updates of the same.
1.8 "Territory" means the United States of America, including the District
of Columbia but excluding 1) the Commonwealth of Puerto Rico and all other
territories, protectorates and possessions of the United States of America, and
2) the geographical areas defined as the "Primary Area of Responsibility" for
Cincinnati Bell Telecommunication Services Inc. (the operating area of
Cincinnati Bell Telephone Company in the states of Ohio, Indiana and Kentucky),
MTA Communications, Inc., doing business as NorthCom (the state of Alaska),
Progressive Communications of Hawaii, Inc. (the state of Hawaii), and Atlantic
of Tampa, L.P. (the Tampa, Florida metropolitan area).
2.0 DEALER APPOINTMENT
2.1 Lucent hereby appoints Dealer, and Dealer hereby accepts an
appointment, to be an authorized Lucent Dealer for the limited purpose of
marketing and selling the Lucent Products listed in a Product Appendix to End
Users within the Area and the Territory in accordance with the terms and
conditions of this Agreement. Dealer's authorized marketing location(s) and
shipping location(s) are set forth in the Appendix: Addresses. If Dealer has
marketed or sold new or Classic Lucent Products to an End User as defined in
Section 1.5 hereof, which Lucent Products are installed and used at premises
within Dealer's Area, Dealer may market and sell limited quantities of Lucent
Products to other locations of that End User outside the Area but in the
Territory. Lucent's appointment of Dealer is predicated on Dealer's agreement to
market the Lucent Products in the Area and to achieve the Area forecast
submitted pursuant to Section 11.0 of this Agreement. Lucent Products installed
outside the Area will not be considered by Lucent when determining whether
Dealer has achieved its Area forecast submitted pursuant to Section 11 of this
Agreement. Dealer's sales of Lucent Products outside the Area (unless
specifically permitted by this Section 2.1), Dealer's failure to limit its
marketing efforts and sales of Lucent Products to authorized locations or
authorized End-Users, or Dealer's failure to achieve levels of sales acceptable
to Lucent in the Area shall, among others, be grounds for termination or
nonrenewal of this Agreement.
2.2 Dealer shall have no right to authorize others to resell or market
Lucent Products and any such authorization or attempted authorization shall be
void and without effect. Dealer's sales of Lucent Products to other resellers
shall be grounds for termination or nonrenewal of this Agreement. Dealer is not
authorized to employ sales agents (other than an employee of Dealer located at
an authorized Dealer marketing location) or other independent contractors to
market Lucent Products. Dealer agrees that it has no exclusive right to market
the Lucent Products set forth in a Product Appendix hereto in the Area or
Territory, and that no franchise is granted to Dealer herein. No payment of any
fee or equivalent charge is required of Dealer by Lucent as a condition of this
Agreement.
3
<PAGE> 5
2.3 Lucent expressly reserves both the right to contract with others to
market Lucent Products in the Territory and the Area and to itself directly
engage in such marketing.
2.4 The relationship of the parties under this Agreement shall be, and
shall at all times remain, one of independent contractors and not that of
franchisor and franchisee, joint venturers, or principal and agent. Neither
party shall have any authority to assume or create obligations on the other's
behalf with respect to Lucent Products, and neither party shall take any action
that has the effect of creating the appearance of its having such authority.
2.5 All persons furnished by Dealer shall be considered solely Dealer's
employees, and Dealer shall be solely responsible for payment of all their
unemployment, Social Security and other payroll taxes including contributions
from Dealer when required by law.
2.6 Dealer may market Lucent Products only from the authorized marketing
locations set forth in a Product Appendix. During the term of this Agreement, no
new or additional Dealer marketing location(s) may be established in or outside
of the Area to market Lucent Products without prior written authorization from
Lucent.
2.7 Dealer may not market or sell Lucent Products to any Lucent BCS Global
Account, or any office, department, agency, or defense installation of the
United States Government, and will use its best efforts to ensure that Dealer
does not market to present direct customers of Lucent who are under warranty or
with existing maintenance contracts for Lucent products or to any entity that is
considering a proposal from Lucent for products or maintenance services, except
that Dealer may respond to a request directed to Dealer for a competitive bid,
proposal, or quotation even if Lucent is also responding. Dealer is not
appointed or authorized to market or sell Lucent Products to any Lucent BCS
Global Account or to the United States Government by reason of the fact that
Dealer has, in the past, sold used or unused products manufactured by Lucent to
such Global Accounts or to the United States Government.
3.0 DEALER RESPONSIBILITIES
3.1 Dealer has previously submitted to Lucent an "Authorized Dealer
Application". Dealer certifies and warrants that, to the best of its knowledge,
such information is current, accurate, complete and not misleading. Dealer also
agrees during the term of this Agreement to notify Lucent immediately in writing
and describe in detail any significant or material change in such information.
3.2 Dealer agrees to devote its best efforts to promote and market Lucent
Products to End Users within the Area. Dealer also warrants that it will conduct
its business in a manner that reflects favorably on the quality image of Lucent
Products and on the good name, goodwill or reputation of Lucent and will not
employ deceptive, misleading or unethical practices that are or might be
detrimental to Lucent or its Products.
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3.3 Dealer shall not purchase or otherwise obtain Lucent Products for
resale from any source other than DDM unless a Lucent Product is not available
from BCS on a timely basis, in which case Dealer may purchase that Lucent
Product from the Lucent Catalogs or the NPSC, provided that such purchases are
only to meet a specific customer need. Dealer's purchase or resale of an unused
product originally manufactured by Lucent that, if purchased from DDM, would be
a Lucent Product under this Agreement, shall be grounds for immediate
termination of this Agreement.
3.4 Dealer shall provide and consistently maintain a staff of adequately
trained and competent sales personnel, knowledgeable of the specifications,
features and advantages of the Lucent Products. Such personnel shall be made
aware of the restrictions on use of Lucent's Information as set forth in Section
14.0. All training that Lucent requires Dealer personnel to undergo that enables
Dealer to market and demonstrate Lucent Products effectively shall be provided
at no charge to Dealer. All other marketing or Lucent Product training requested
by the Dealer and offered by Lucent, will be furnished to Dealer at Lucent's
standard rates, terms and conditions.
3.5 If Dealer chooses to provide Dealer Service, Dealer shall provide and
consistently maintain a staff of services personnel, trained on the Lucent
Products to Lucent's specifications. Such personnel shall be made aware of the
restrictions on use of Lucent's Information as set forth in Section 14.0. All
services training that Lucent requires Dealer personnel to undergo, or other
services training requested by the Dealer and offered by Lucent, will be
furnished to Dealer at Lucent's standard rates, terms and conditions. If Dealer
has subcontracted with Lucent to perform all or part of Dealer Service to an End
User and Dealer installs unused product(s) manufactured by Lucent but not
purchased from DDM as part of that End User's system, in addition to any other
remedies available to Lucent, Lucent may terminate any Dealer licenses to use
Lucent maintenance software and may also terminate its subcontracts with Dealer
to perform Dealer Service. If Dealer has sold a Lucent Product system and a
Lucent Post-Warranty Maintenance service contract to an End User, Dealer will
advise such End User that addition of unused product(s) to the Lucent Product
system may void Lucent's warranty and cause Lucent to terminate the service
contract.
3.6 Dealer agrees to purchase and maintain a working Lucent system either
as a demonstration model or as Dealer's primary telecommunications system at
each of Dealer's principal marketing locations.
3.7 Dealer shall offer to train those End Users who elect to install their
own systems in the effective use of the Lucent Products, including providing any
instructional material furnished to Dealer by Lucent. Dealer shall specifically
describe to those End Users who elect to install their own systems the sections
of such material, including brochures and manuals packaged with the Lucent
Products, that describe toll fraud and the precautions an End User can take to
prevent toll fraud.
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3.8 Dealer shall inform End Users of the Services available from Dealer.
3.9 Dealer shall report promptly to Lucent all known or suspected Lucent
Product defects or safety problems and keep Lucent informed of End User
complaints with respect to Lucent Products or Services.
3.10 Dealer shall provide Lucent reasonable access to Dealer's premises
during normal business hours to inspect and verify Dealer performance of its
obligations under this Agreement, including the right to inspect and audit
Dealer's records relating to Lucent Product transactions in and out of Dealer's
Area, Dealer's purchases and sales of unused products, Distribution Functions
and Dealer Services.
3.11 Dealer shall comply with all applicable requirements of federal,
state and local laws, ordinances, administrative rules and regulations,
including, by way of illustration and not limitation, all requirements of Part
68 of the Federal Communication Commission's (FCC) Rules and Regulations and the
Federal Export Administration Act of 1969, 50 U.S.C. app. Sections 2401-2414.
3.12 To ensure timely delivery to End Users, Dealer shall maintain,
subject to availability from Lucent, an adequate inventory of Lucent Products.
Upon request, Dealer shall make available to Lucent the status of Dealer's
current inventory of Lucent Product Components.
3.13 Dealer shall have the capability of providing End Users reasonable
financing alternatives to facilitate the procurement of Lucent Products and
Dealer Services. Dealer shall furnish evidence of such capability to Lucent upon
request.
3.14
a. To ensure fulfillment of Lucent's Product and Software warranties
to End Users, to ensure End User safety, to ensure End Users receive the
latest information concerning the use of Lucent Products and enhancements
thereto, to maintain End User satisfaction, and to assist Lucent in
tracking equipment maintenance obligations and materiel accountability,
Dealer agrees to maintain and make available to Lucent on reasonable
request an accurate and complete list of Dealer's Lucent Product and
Software End Users by name, installation address, the Lucent Product
Components furnished to each End User, the transaction date, and (for End
Users who elect to install their own systems only), all serial numbers
associated with the new Lucent Products, Software or new Lucent Product
Components. The obligation to maintain and make such information available
to Lucent shall survive expiration or termination of this Agreement.
Lucent will use this information solely for the purposes set forth in this
Section 3.14.
b. If Lucent is to install the Products, Dealer shall give the
information described in 3.14 a., above, to the Lucent Branch where the
End User is located, in the agreed format, as soon as Dealer's order
process is completed. This will enable the customer to receive the Lucent
Warranty on the new Lucent Products and Software, and
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if the customer has a Post Warranty Maintenance contract and has like
products, the new Lucent Products will automatically be added to that
contract when the Warranty expires.
3.15 Dealer shall keep accurate accounts, books and records relating to
the business of Dealer with respect to Lucent Products and Dealer Services in
accordance with generally accepted commercial and business accounting principles
and practices that are sufficient for Lucent to ascertain Dealer's compliance
with its obligations under this Agreement.
3.16 Dealer agrees to participate in Lucent's Customer Satisfaction
Surveys. Lucent may conduct performance reviews of all Dealer responsibilities.
3.17 By the fifth (5th) business day of each month, in a format to be
provided by Lucent to Dealer, Dealer will submit a point-of-sale report of sales
made the previous month, by ZIP code, line and station size for new or upgraded
systems, type of system, and the total price Dealer paid to Lucent for the
equipment sold in each ZIP code.
4.0 INSTALLATION, WARRANTY AND POST-WARRANTY SERVICES
4.1 Lucent agrees to furnish any Lucent Services required by End Users
purchasing Lucent Products from Dealer, as Dealer requests, until Dealer's
installation and maintenance personnel have completed training to the
satisfaction of Lucent. During such interim period, Dealer agrees to propose
Lucent, and only Lucent, Services in connection with each End User purchase of
Lucent Products under this Agreement, and Dealer will apply for appointment as a
Lucent Service Sales Agent. Connection of unused product(s) manufactured by
Lucent to the Lucent Product system may void Lucent's warranty to such End User
and cause Lucent to terminate the Lucent Services contract with such End User.
4.2 After such training has been completed, Services may be furnished by
the Dealer for Lucent Products under this Agreement, as required by End Users
purchasing such Lucent Products. To ensure Dealer provision of high quality
Services to End Users, Dealer shall: (i) perform Services directly and not
through a non-Lucent independent contractor or agent except with Lucent's
specific permission; and (ii) perform such Services competently and in
accordance with any applicable Lucent standards. The indemnity obligations of
Dealer under Section 19.1 shall apply to any Services furnished by Dealer to End
Users. If Dealer desires to have Lucent perform certain Services for Dealer's
End Users, Dealer may continue to function as a Lucent Service Sales Agent.
4.3 Lucent's appointment of Dealer to market Lucent Products hereunder is
predicated on Dealer's agreement that it will hold itself out as authorized by
Lucent to provide Services only as to Lucent Products hereunder and will, to the
sole satisfaction of Lucent, clearly distinguish its authorization to provide
Services for such Lucent Products and its lack of authorization to provide
Services for other Lucent-manufactured equipment, unless such authorization is
provided by written agreement with Lucent. Dealer also agrees to inform End
Users of such distinction in Dealer's marketing (including brochures or other
printed or written materials) of
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Lucent Products and of any other Lucent equipment. In addition to any other
events of termination set forth in this Agreement, Dealer's failure to
distinguish between its authorization to offer Services as to Lucent Products
and its lack of authorization to offer Services as to other Lucent equipment or
to inform End Users of such distinction shall entitle Lucent to terminate this
Agreement upon written notice to Dealer.
4.4 Dealer may incorporate Lucent's remote maintenance support features in
its Services Offers to End Users. Lucent will serve as Dealer's subcontractor
for such remote maintenance. NO LICENSE IS GRANTED, AND NO TITLE OR OTHER
OWNERSHIP RIGHTS IN LUCENT'S INTELLECTUAL PROPERTY RELATED TO LUCENT'S PROVISION
OF REMOTE MAINTENANCE SUPPORT SHALL PASS TO DEALER UNDER THIS AGREEMENT OR AS A
RESULT OF ANY PERFORMANCE HEREUNDER. Dealer agrees to provide Lucent with
accurate information on End User port capacity, software attachments, and other
information required in order for Lucent to invoice Dealer accurately for such
remote support. Failure to provide such accurate information or to update it on
a timely basis shall entitle Lucent to terminate this Agreement upon written
notice to Dealer. Connection of unused product(s) manufactured by Lucent but
not purchased from DDM as part of an End User's system may, in addition to any
other remedies available to Lucent, permit Lucent to terminate any Dealer
licenses to use Lucent maintenance software and also terminate its
subcontract(s) with Dealer to perform Dealer Service.
5.0 DEALER ORDERS
5.1 Orders for Lucent Products submitted by Dealer shall refer to this
Agreement's identification number and shall contain the information necessary
for proper delivery and invoicing of Product Components including, without
limitation, the date of the order, a description of and the price element code
for Product Components to be furnished and any shipping instructions. All orders
submitted by Dealer shall be deemed to incorporate and be subject to the terms
and conditions of this Agreement as well as any supplemental terms and
conditions agreed to in a writing signed by the authorized representatives of
both parties. All other terms and conditions contained on any order form or
correspondence originated by Dealer are rejected and shall have no effect.
Lucent may require that Product Components be ordered only in factory-packed
quantities or in minimum order amounts. Lucent reserves the right to reject any
order or portion thereof, which right will not be exercised unreasonably..
5.2 Lucent will ship Lucent Products ordered by Dealer only to the
authorized shipping location(s) within the Area specified in a Product Appendix,
or only if Lucent is installing the Products, to the premises of an End User
within the Area.
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6.0 DEALER CANCELLATION OF ORDERS
Dealer may, upon prior written notice to Lucent, cancel any order or
portion thereof except with respect to Lucent Product Components that have
already been delivered by Lucent to a carrier for shipment to Dealer. Dealer
agrees to pay to Lucent, upon any such cancellation, a liquidated amount equal
to fifteen percent (15%), if the canceled order is not for a configured system
or systems, or twenty percent (20%), if the canceled order is for a configured
system or systems, of the purchase price of the canceled portion of the order to
compensate Lucent for its costs and expenses associated with such cancellation.
If an order is delayed or suspended for more than two months at the request of,
or for reasons attributable to, Dealer, such order shall be considered as having
been canceled and will be subject to the cancellation charges set forth in this
Section.
7.0 PRODUCT, PRODUCT COMPONENTS, AND SOFTWARE LICENSE CHANGES
7.1 Lucent may without the consent of Dealer, but with ninety (90) days
advance written notice to Dealer, delete any Lucent Product from Appendix A and,
upon thirty (30) days advance written notice to Dealer, delete any Lucent
Product Component listed in Appendix A.
7.2 Lucent may, at any time without advising Dealer, make changes in the
Lucent Products or Lucent Product Components or modify the drawings and
specifications relating thereto, or substitute Lucent Products or Lucent Product
Components of later design to fill an order, provided the changes, modifications
or substitutions under normal and proper use do not adversely impact upon form,
fit or function or are recommended by Lucent to enhance safety. Lucent may, at
any time with ten days advance written notice to Dealer, change the terms of its
End User Software License.
8.0 DEALER PRICES AND DISCOUNTS
8.1 The prices applicable to Dealer orders requesting shipment within
Lucent's then current Lucent Product shipment intervals shall be determined in
accordance with: (i) Lucent's Dealer List prices in effect on the date an order
is accepted by Lucent (i.e., the date it is entered in Lucent's order processing
system); (ii) the Dealer discount schedule in effect on the date the order is
accepted by Lucent; and (iii) the provisions of this Section 8.0. Lucent's
current Dealer Prices and Dealer discount and rebate schedules are contained in
the Dealer Handbook. Dealer orders requesting delayed shipment (i.e., shipment
on dates beyond Lucent's then current Lucent Product shipment intervals) shall
be subject to price increases and discount decreases that become effective
before shipment.
8.2 The discount applicable to Dealer orders placed, and not subsequently
canceled, during the term of this Agreement and any subsequent term of a
substantially similar Agreement, will be determined based on the then effective
discount schedule and the actual dollar value, based on Dealer List Prices, of
all orders placed and not subsequently canceled during the
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immediately preceding quarter. The otherwise applicable discount percentage will
be reduced by an amount set forth in the then effective discount schedule for
the quarter following any quarter in which Lucent learns of Lucent Product sales
by Dealer not in conformance with the terms of Section 2.1 of this Agreement.
8.3 Lucent may verify or audit Dealer's Lucent Product sales records or
rebate calculations and request copies of invoices, shipping documents, payment
records and the like in connection with such audits, which requests will not be
unreasonably refused.
9.0 DEALER PRICE LIST AND DISCOUNT CHANGES
9.1 Lucent may decrease Dealer list prices or increase discounts or
rebates in the Dealer discount or rebate schedules without advance notice to or
the consent of Dealer. Lucent agrees to provide written notice of any such price
or discount changes and the effective date thereof. Lucent agrees to provide to
Dealer on previously ordered Lucent Products either a) a recomputation of the
amounts payable for all orders accepted by Lucent within sixty (60) days prior
to the effective date of the applicable price decrease or discount increase, or
b) a recomputation of Dealer charges based on actual inventory held by Dealer at
Dealer's authorized shipping location on the date Dealer receives notification
of the applicable price decrease or discount increase, whichever is greater.
Lucent reserves the right to audit associated inventory levels. The difference
between the recomputed amounts and previously invoiced amounts will be reflected
as a credit to Dealer's account. Lucent also may institute promotional price
decreases or discount increases at any time under such terms and conditions as
Lucent in its sole discretion shall determine are appropriate. Promotional
prices and discounts shall apply only during the period specified by Lucent and
there shall be no recomputation of amounts payable by Dealer for orders placed
prior to such period.
9.2 Lucent may, without the prior consent of Dealer, increase Dealer list
prices or decrease discounts or rebates in the Dealer discount or rebate
schedules provided Lucent furnishes Dealer written notice of any such changes
sixty (60) days in advance of the effective date.
9.3 Unless expressly stated to the contrary, Dealer list prices do not
include taxes or Lucent's charges for related domestic transportation or storage
services. Lucent's Dealer list prices do include its standard packing for
domestic shipment. All Lucent Product prices are F.O.B. Lucent's shipping point.
Unless Dealer furnishes Lucent a valid tax exemption certificate, Dealer shall
pay all applicable taxes, however designated, resulting from this Agreement or
any activities hereunder (exclusive of any tax based on or measured by net
income).
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10.0 LUCENT BILLING AND DEALER PAYMENT
Invoices for Lucent Products will be sent by Lucent upon shipment, or as
soon thereafter as practicable. Unless Dealer is otherwise notified by Lucent in
writing, Dealer shall pay the invoiced amount in full on receipt of Lucent's
invoice. Payments not received within thirty (30) days of the invoice date may,
at Lucent's option, incur a late payment charge that shall be computed at the
rate of one and one-half percent (1-1/2%) of the overdue amount per month or the
maximum lawful rate, whichever is lower. The amount of Dealer credit or terms of
payment may be changed or credit withdrawn by Lucent at any time upon notice to
Dealer in writing, unless Dealer provides Lucent with adequate assurance of
performance, as that phrase is used in Section 2-609 of the Uniform Commercial
Code as adopted in Delaware within ten days of any such written notice.
11.0 DEALER FORECAST AND REPORTS
11.1 Upon execution of this Agreement, Dealer shall submit to Lucent a
forecast of total Lucent Product orders to be placed by Dealer during the
contract term. The forecast must specify, for each quarter, the total dollar
order volume (based on Dealer Price List prices) and the dollar value and total
unit quantities of each Lucent Product construct (i.e., average configuration of
Lucent Product Components in an initial End User installation of a Lucent
Product model) to be ordered. In the event of price increases or discount
decreases, as described in Section 9.2 hereof, Dealer may amend its current
forecast within 30 days of the receipt of written notice of such price changes.
11.2 Lucent may reject any forecast submitted by Dealer if, in Lucent's
sole judgment, such forecast does not project either: (1) the level of Lucent
Product orders Lucent reasonably requires of Dealer to achieve its marketing
objectives in the Area; or (2) a realistic assessment of Dealer's potential
successful marketing opportunities in the Area during the forecast period.
Lucent shall notify Dealer in writing within thirty (30) days of receipt of
Dealer's forecast if Lucent has rejected such forecast or it will be deemed to
have been accepted by Lucent.
11.3 Dealer shall submit the forecast of Lucent Product orders and actual
Lucent Product installation data specified in Section 11.1 in a format specified
by Lucent.
12.0 TITLE AND RISK OF LOSS
12.1 Title (except for firmware and software) and risk of loss or damage
to Lucent Products shall pass to Dealer: (i) at the time Lucent or its supplier
delivers possession of the Lucent Products to a carrier or (ii) if there is no
carrier, at the time Dealer takes possession of the Lucent Products at Lucent's
or its supplier's plant or warehouse or other facility. Claims for shortages or
for merchandise damaged during shipment must be filed with the freight carrier
by Dealer. Lucent will cooperate with Dealer but will not assume responsibility
for the processing
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or collection of claims. Dealer may make no deductions from invoices for
claims against a carrier.
12.2 TO BE EFFECTIVE, DEALER REJECTION OR REVOCATION OF ACCEPTANCE OF
NONCONFORMING GOODS MUST BE MADE BY WRITTEN NOTICE TO LUCENT WITHIN TEN (10)
DAYS AFTER DELIVERY. LUCENT PRODUCTS REJECTED OR NOT ACCEPTED BY DEALER MUST BE
RETURNED WITHIN THIRTY (30) DAYS IN THEIR ORIGINAL PACKAGING IN ACCORDANCE WITH
LUCENT'S INSTRUCTIONS. A restocking charge in the amount of twenty percent (20%)
of the purchase price will apply to returns, accepted by Lucent, of products
ordered in error by Dealer.
13.0 INSURANCE
Dealer shall maintain, during the term of this Agreement, all insurance
and bonds required by any applicable law, including but not limited to: (1)
workers' compensation insurance as prescribed by the laws of all states in which
work pursuant to this Agreement is performed; (2) employer's liability insurance
with limits of at least $1 million per occurrence; and (3) comprehensive
personal liability insurance coverage (including products liability coverage and
comprehensive automobile liability coverage) with limits of at least $1 million
for bodily injury, including injury to any one person and $1 million on account
of any single occurrence, and $1 million for each occurrence of property damage,
or in lieu of such limits, bodily injury and property damage liability insurance
(including products liability and comprehensive automobile coverage) with a
combined single limit of at least $2 million per occurrence. Dealer shall name
Lucent as an Additional Insured on all such policies. Upon request of Lucent,
Dealer shall furnish adequate proof of such insurance.
14.0 USE OF INFORMATION
All technical and business information, Dealer List prices, discounts or
rebates, and trade secrets in any form, furnished to Dealer under or in
contemplation of this Agreement and identified as or known by Dealer to be
proprietary to Lucent (all hereinafter designated "Information") shall remain
the property of Lucent. Unless Lucent otherwise expressly agrees in writing,
such Information: (i) shall be treated in confidence by Dealer and used by
Dealer only for the purposes of performing Dealer's obligations under this
Agreement; (ii) shall not be disclosed to anyone, except to employees of Dealer
and End Users to whom such disclosure is necessary to the use for which rights
are granted hereunder, (iii) shall not be reproduced or copied in whole or in
part, except as necessary for use as authorized in this Agreement; and (iv)
shall, together with any copies thereof, be returned, be destroyed or, if
recorded on an erasable storage medium, be erased when no longer needed or when
this Agreement terminates, whichever occurs first. Any copies made as authorized
herein shall contain the same copyright notice or proprietary notice or both
that appear on the Information copied. The above conditions do not apply to any
part of the Information (i) which is or becomes known to the receiving party or
its affiliates free of any obligation to keep same in confidence; (ii) which is
or becomes generally available to the public without breach of this Agreement;
or (iii) which is developed by the receiving party or its affiliates. The
obligation of confidentiality and restrictions on use of
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Information shall exist for a period of (i) five (5) years after the termination
of this Agreement, or (ii) ten (10) years after the receipt of such Information,
whichever is longer.
All technical and business information and trade secrets in any form,
furnished to Lucent under or in contemplation of this Agreement and identified
as or known by Lucent to be proprietary to Dealer (all hereinafter designated
"Information") shall remain the property of Dealer. Unless Dealer otherwise
expressly agrees in writing, such Information: (i) shall be treated in
confidence by Lucent and used by Lucent only for the purposes of performing
Lucent's obligations under this Agreement; (ii) shall not be disclosed to
anyone, except to employees of Lucent and End Users to whom such disclosure is
necessary to the use for which rights are granted hereunder; (iii) shall not be
reproduced or copied in whole or in part, except as necessary for use as
authorized in this Agreement; and (iv) shall, together with any copies thereof,
be returned, be destroyed or, if recorded on an erasable storage medium, be
erased when no longer needed or when this Agreement terminates, whichever occurs
first. Any copies made as authorized herein shall contain the same copyright
notice or proprietary notice or both that appear on the Information copied. The
above conditions do not apply to any part of the Information (i) which is or
becomes known to the receiving party or its affiliates free of any obligation to
keep same in confidence; (ii) which is or becomes generally available to the
public without breach of this Agreement; or (iii) which is developed by the
receiving party or its affiliates. The obligation of confidentiality and
restrictions on use of Information shall exist for a period of (i) five (5)
years after the termination of this Agreement, or (ii) ten (10) years after the
receipt of such Information, whichever is longer.
15.0 LICENSE
15.1 Upon delivery of Lucent Product firmware and software to Dealer,
Lucent grants to Dealer a personal and non-exclusive right to use such licensed
materials ("Licensed Materials") in the Area and Territory solely to fulfill its
duties and obligations under this Agreement. NO TITLE OR OTHER OWNERSHIP RIGHTS
IN INTELLECTUAL PROPERTY OR OTHERWISE IN THE LICENSED MATERIAL OR ANY COPY
THEREOF SHALL PASS TO DEALER UNDER THIS AGREEMENT OR AS A RESULT OF ANY
PERFORMANCE HEREUNDER
15.2 Dealer agrees: (i) to make only those copies of Software necessary
for its use under this Agreement and assure that such copies contain any
proprietary or copyright notice appearing on the Software being copied; (ii) not
to reverse engineer, decompile or disassemble the Licensed Materials or
otherwise attempt to learn the source code, structure, algorithms or ideas
underlying the Licensed Materials; (iii) not to export the Licensed Materials
out of the Territory, and (iv) not to use the Software directly for any third
person or permit any third person to use the Software except as necessary under
this Agreement.
15.3 Lucent further grants to Dealer the right to furnish Licensed
Materials to End Users coincident with the sale of Lucent Products utilizing
such Licensed Materials, provided, however, that unless the Licensed Materials
come with a limited use license, which may be in the
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form of a shrink-wrap (break-the-seal) agreement, provided by Lucent, Dealer
obtains agreement in writing from the End User, before or at the time of
furnishing each copy of Licensed Materials, in the form set forth in an Appendix
to this Agreement.
16.0 TRADEMARKS
16.1 Lucent grants Dealer permission to utilize certain Lucent designated
trademarks, insignia, and symbols ("Marks") in Dealer's advertising and
promotion of Lucent Products furnished hereunder, provided such use conforms to
Lucent's standards and guidelines. Dealer shall not do business under any Mark
or any derivative or variation thereof, and Dealer shall not directly or
indirectly hold itself out as having any relationship to Lucent or its
affiliates other than as an "Authorized Lucent Dealer" or other Lucent approved
term. Except as provided in Section 22.2.2, Marks may only be used by Dealer to
advertise and promote the Lucent Products during the term of this Agreement.
Marks are not to be used by Dealer in any way to imply Lucent's endorsement of
products, licensed materials or services not furnished hereunder, such as used
or unused products originally manufactured by Lucent. Marks are not to be used
by Dealer in advertising or marketing materials, including print, radio,
television, broadcast facsimile, telemarketing or Internet websites, that reach
End User prospective customers outside Dealer's Area. Such uses of Marks will be
cause for immediate termination of this Agreement. Dealer will not alter or
remove any Mark applied to Lucent Products without the prior written approval of
Lucent. Nothing in this Agreement creates in Dealer and Dealer agrees not to
assert, any rights in the Marks.
16.2 All Dealer-initiated advertisements or promotions using Marks or any
reference thereto, whether under a promotional allowance program or otherwise,
shall receive to prepublication review and approval by Lucent with respect to,
but not limited to context, style, appearance, composition, timing and media.
16.3 This Agreement does not give Dealer any rights to use the logo or
trademark of AT&T Corp. Such rights cannot be obtained under this Agreement or
any other Agreement with Lucent Technologies Inc.
17.0 PRODUCT WARRANTY
17.1 Dealer may, but is not required to, provide warranties and remedies
in addition to but not less than the warranties and remedies set forth in
Section 17.2. Dealer shall inform the End User of Lucent's Limitation of
Liability as set forth in Section 18 of this Agreement, in a reasonable manner.
Lucent hereby warrants to Dealer the title of the Lucent Products purchased
under this Agreement. This warranty of title is the only warranty provided to
Dealer.
17.2 Dealer shall, before or at the time of delivery of Lucent Products,
advise an End User of the following:
(i) that the Lucent Products may contain remanufactured parts that
are equivalent to new in performance and appearance;
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(ii) that there is a toll fraud exclusion in Lucent's warranty, with
a specific reference to the words of that exclusion and an explanation of the
meaning of those words;
(iii) that the Lucent Products are warranted on the Delivery or
In-Service Date, whichever is applicable, and for a period of one (1) year
thereafter to operate in accordance with Lucent's standard published
specifications and if any Lucent Products are not operational during the
warranty period, that the End User shall notify the Dealer who at its option
will replace or repair those Lucent Products without charge. Replaced Lucent
Products become the property of Dealer; and
(iv) THAT LUCENT AND ITS AFFILIATES AND SUPPLIERS MAKE NO OTHER
WARRANTIES EXPRESS OR IMPLIED AND SPECIFICALLY DISCLAIM ANY WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.
17.3 EXCEPT FOR THE WARRANTY OF TITLE TO DEALER AND THE LIMITED PRODUCT
WARRANTY TO DEALER'S END USERS REFERENCED IN THIS SECTION, LUCENT, ITS
AFFILIATES AND SUPPLIERS MAKE NO WARRANTIES EXPRESS OR IMPLIED AND SPECIFICALLY
DISCLAIM ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.
17.4 The indemnity obligations of Dealer under Section 19.1 shall apply to
Dealer's provision of End User warranty assistance services and to any failure
to refer to and explain the toll fraud exclusion to an End User.
18.0 LIMITATION OF LIABILITY
EXCEPT FOR PERSONAL INJURY AND EXCEPT FOR THE LIABILITY EXPRESSLY ASSUMED
BY LUCENT UNDER SECTIONS 19 AND 20 OF THIS AGREEMENT, THE LIABILITY OF LUCENT
AND ITS PARENT OR AFFILIATES FOR ANY CLAIMS, LOSSES, DAMAGES OR EXPENSES FROM
ANY CAUSE WHATSOEVER (INCLUDING CLAIMS OF INFRINGEMENT AND ACTS OR OMISSIONS OF
THIRD PARTIES) REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT OR
OTHERWISE, SHALL NOT EXCEED THE LESSER OF THE DIRECT DAMAGES PROVEN OR THE
REPAIR, REPLACEMENT COSTS (INCLUDING THE COSTS OF COVER) OR PURCHASE PRICE OF
THE PRODUCTS OR SERVICE THAT DIRECTLY GIVES RISE TO THE CLAIM. IN NO EVENT SHALL
LUCENT OR ITS PARENT OR AFFILIATES BE LIABLE TO DEALER OR TO ANY OTHER COMPANY
OR ENTITY FOR ANY INCIDENTAL, RELIANCE, CONSEQUENTIAL OR ANY OTHER INDIRECT LOSS
OR DAMAGE (INCLUDING LOST PROFITS OR REVENUES OR CHARGES FOR COMMON CARRIER
TELECOMMUNICATION SERVICES OR FACILITIES ACCESSED THROUGH OR CONNECTED TO
PRODUCTS ["TOLL FRAUD"]) ARISING OUT OF THIS AGREEMENT. NO ACTION OR PROCEEDING
AGAINST LUCENT MAY BE
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COMMENCED MORE THAN TWELVE (12) MONTHS AFTER THE CAUSE OF ACTION ACCRUES. THIS
SECTION SHALL SURVIVE FAILURE OF AN EXCLUSIVE REMEDY.
EXCEPT FOR PERSONAL INJURY, THE LIABILITY OF DEALER AND ITS PARENT OR
AFFILIATES FOR ANY CLAIMS, LOSSES, DAMAGES OR EXPENSES FROM ANY CAUSE WHATSOEVER
(INCLUDING CLAIMS OF INFRINGEMENT AND ACTS OR OMISSIONS OF THIRD PARTIES)
REGARDLESS OF THE FORM OF ACTION. WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL
NOT EXCEED THE LESSER OF THE DIRECT DAMAGES PROVEN OR THE REPAIR, REPLACEMENT
COSTS (INCLUDING THE COSTS OF COVER) OR PURCHASE PRICE OF THE PRODUCTS OR
SERVICE THAT DIRECTLY GIVES RISE TO THE CLAIM. IN NO EVENT SHALL DEALER OR ITS
PARENT OR AFFILIATES BE LIABLE TO LUCENT OR TO ANY OTHER COMPANY OR ENTITY FOR
ANY INCIDENTAL, RELIANCE, CONSEQUENTIAL OR ANY OTHER INDIRECT LOSS OR DAMAGE
(INCLUDING LOST PROFITS OR REVENUES OR CHARGES FOR COMMON CARRIER
TELECOMMUNICATION SERVICES OR FACILITIES ACCESSED THROUGH OR CONNECTED TO
PRODUCTS ["TOLL FRAUD"]) ARISING OUT OF THIS AGREEMENT. NO ACTION OR PROCEEDING
AGAINST DEALER MAY BE COMMENCED MORE THAN TWELVE (12) MONTHS AFTER THE CAUSE OF
ACTION ACCRUES. THIS SECTION SHALL SURVIVE FAILURE OF AN EXCLUSIVE REMEDY.
19.0 INDEMNITY
19.1 Dealer will indemnify Lucent for the full amount of any settlement or
final judgment that arises out of a claim or suit by a third party to the extent
that such claim or suit is based on strict tort liability, breach of a warranty
provided by Dealer, or the intentional or negligent acts or omissions of Dealer.
Dealer's obligation to indemnify Lucent will be reduced in proportion to which
the settlement or final judgment is attributable to the strict tort liability of
Lucent, breach of a Lucent warranty, or the intentional or negligent acts or
omissions of Lucent, unless liability for such acts or omissions of Lucent is
otherwise excluded in other sections of this Agreement, or the negligent acts or
omissions of any other third party not under Dealer's direct control. Dealer's
obligation to indemnify Lucent shall be contingent upon: (1) Lucent promptly
notifying Dealer in writing of the existence of any claim or suit that may
result in a settlement or judgment for which Dealer may be obligated to
indemnify Lucent; (2) Lucent giving Dealer full opportunity and authority to
assume sole responsibility to settle and defend any such claim or suit; and (3)
Lucent furnishing to Dealer upon reasonable request all information and
assistance that Dealer deems to be reasonably required to settle or defend such
claim or suit. Dealer will also indemnify Lucent for the full amount of any
settlement or final judgment that arises out of a claim or suit by a third party
based on Dealer's establishment of its relationship with Lucent, whatever the
nature of the claim or suit. These indemnities are in lieu of all other
obligations of Dealer, express or implied, in law or in equity, to indemnify
Lucent for claims or suits covered by this section. Dealer's liability to
indemnify Lucent shall in no event exceed $500,000.
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19.2 Unless Lucent's liability is otherwise limited or excluded in other
sections of this Agreement, Lucent will indemnify Dealer for the full amount of
any settlement or final judgment that arises out of a claim or suit by a third
party to the extent that such claim or suit is based on the strict tort
liability of Lucent, breach of a Lucent warranty, or the intentional or
negligent acts or omissions of Lucent. Lucent's obligation to indemnify Dealer
shall be reduced in proportion to which the settlement or final judgment is
attributable to the strict tort liability of Dealer, breach of a Dealer
warranty, or the intentional or negligent acts or omissions of Dealer or any
other third party not under Lucent's direct control. Lucent's obligation to
indemnify Dealer will be contingent upon: (1) Dealer promptly notifying Lucent
in writing of the existence of any claim or suit that may result in a settlement
or final judgment for which Lucent may be obligated to indemnify Dealer; (2)
Dealer giving Lucent full opportunity and authority to assume sole
responsibility to settle or defend any such claim or suit; and (3) Dealer
furnishing to Lucent upon reasonable request all information and assistance
available to Dealer that Lucent deems to be reasonably required to settle or
defend such claim or suit. THIS INDEMNITY IS IN LIEU OF ALL OTHER OBLIGATIONS OF
LUCENT, EXPRESS OR IMPLIED, IN LAW OR IN EQUITY, TO INDEMNIFY DEALER FOR CLAIMS
OR SUITS COVERED BY THIS SECTION. LUCENT'S LIABILITY TO INDEMNIFY DEALER SHALL
IN NO EVENT EXCEED $500,000.
19.3 The party electing to take responsibility for settling or defending
any claim or suit covered by this Section 19.0 will be responsible for the
attorney's fees and costs incurred by said party to settle or defend such claim
or suit.
20.0 INFRINGEMENT
20.1 Lucent will defend or settle, at its own expense, any action brought
against Dealer or an End User, to the extent that it is based on a claim that
the normal use or sale of any Lucent Products provided under this Agreement
infringe any United States patent, trademark or copyright, that any licensed
materials provided under this Amendment infringe any United States copyright or
violate the trade secret of a third party. Lucent will pay those costs, damages
and attorneys' fees finally awarded against Dealer or an End User in any such
action attributable to any such claim, but such defense, settlements and
payments are conditioned on the following: (i) that Lucent shall be notified
promptly in writing by Dealer or an End User of any such claim; (ii) that Lucent
shall have sole control of the defense of any action on such claim and of all
negotiations for its settlement or compromise; (iii) that Dealer or End User
shall cooperate in a reasonable way to facilitate the settlement or defense of
such claim, and that Dealer or End User has made no statement or taken any
action that might hamper or undermine Lucent's defense or settlement; (iv) that
such claim does not arise from modifications to Lucent Products or licensed
materials not authorized by Lucent or from use or combination of the Lucent
Products with software and/or apparatus or equipment not supplied or specified
by Lucent; (v) that such claim does not arise from adherence to Dealer's or End
User's instructions or the use of items, materials or information of Dealer's or
End User's origin, design or selection; and (vi) that should Lucent Products or
licensed materials become, or in Lucent's opinion, be likely to become, the
subject of such claim of infringement, then Dealer or End User shall permit
Lucent, at Lucent's option and expense, either to: (1) procure for Dealer or End
User the right to continue using the Lucent
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Products or licensed materials, or (2) replace or modify the same so that it is
not subject to such claim and is functionally equivalent or (3) upon failure
of (1) and (2) above despite the reasonable efforts of Lucent, remove the
infringing Lucent Product or terminate Dealer's or End User's rights under the
license and refund the purchase price or fee paid less a reasonable allowance
for use, damage and obsolescence. In the event that a claim of infringement
arises for which the liability of Lucent is excepted under (iv) or (v) above,
Dealer or End User will defend and save Lucent harmless to the same extent and
subject to the same limitations as apply to Lucent when Lucent is liable
hereunder. This Section 20.0 states the entire liability of Lucent with respect
to infringement by Lucent Products or licensed materials provided hereunder.
21.0 TERMINATION OF AGREEMENT
21.1 Neither party is under any obligation to renew this Agreement for an
additional term and either party may terminate this Agreement without cause upon
ninety (90) days notice.
21.2 Lucent may terminate this Agreement upon thirty (30) days prior
written notice to Dealer if: (i) Dealer markets or sells Lucent Products outside
the Area except as specifically permitted in Section 2.1; (ii) Dealer fails to
limit its marketing efforts to authorized locations or End-Users as defined in
Section 1.5; (iii) Dealer fails to make reasonable commercial efforts to achieve
levels of sales that comply with the Lucent Product forecasts for the Area
submitted pursuant to Section 11.0; (iv) Dealer fails to provide an acceptable
quality of service to End Users in accordance with Lucent's Quality Policy; or
(v) there occurs any material change in the management or control of Dealer.
21.3 Except as otherwise provided in this Agreement, either party may
terminate this Agreement upon thirty (30) days prior written notice if the other
party has defaulted in the performance or has breached its obligations under
this Agreement, and such breach or default remains uncured for a period of
twenty (20) business days following receipt of notice of such breach or default.
21.4 Lucent may terminate this Agreement upon twenty-four (24) hours
written notice if Dealer has: (i) become insolvent, invoked as a debtor any laws
relating to the relief of debtors' or creditors' rights, or has had such laws
invoked against it; (ii) become involved in any liquidation or termination of
its business; (iii) been involved in an assignment for the benefit of its
creditors; (iv) sold or attempted to resell Lucent Products to any third party
other than an End User or an authorized Dealer (v) appointed or attempted to
appoint any unauthorized agent or unauthorized manufacturer's representatives
for Lucent Products; (vi) purchased unused products manufactured by Lucent from
a source other than DDM or sold or attempted to resell any unused products
manufactured by Lucent that, if purchased through DDM, would be a Lucent Product
under this Agreement; (vii) remotely accessed PBX locations maintained by Lucent
directly; (viii) activated software features without compensation to Lucent;
(ix) misrepresented, by statement or by omission, Dealer's authority to resell
under this or any other written agreement with Lucent that is limited to
specific Lucent products or services, by stating or implying, by use of a Lucent
Mark or otherwise, that the authority granted in this or such other agreement
applies
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to any Lucent product or service not covered by this or such other agreement, or
(x) failed to comply with Lucent's guidelines for the proper use of Lucent's
Marks.
21.5 Dealer may terminate this Agreement on twenty-four (24) hours written
notice if Lucent has: (i) become insolvent, invoked as a debtor any laws
relating to the relief of debtors' or creditors' rights, or has had such laws
invoked against it; or (ii) become involved in any liquidation or termination of
its business; (iii) been involved in an assignment for the benefit of its
creditors.
21.6 Notwithstanding such termination rights, each party reserves all of
its legal rights and equitable remedies, including without limitation those
under the Uniform Commercial Code.
21.7 Neither party shall be liable to the other on account of termination
of this Agreement, either for compensation or for damages of any kind or
character whatsoever, on account of the loss by Lucent or Dealer of present or
prospective profits on sales or anticipated sales, good will, or expenditures,
investments or commitments made in connection therewith or in connection with
the establishment, development or maintenance of Dealer's business.
22.0 EFFECTS OF TERMINATION
22.1 Notwithstanding any other provisions of this Agreement, termination
or expiration of this Agreement shall automatically accelerate the due date of
all invoices for Lucent Products, such that they shall become immediately due
and payable not later than the effective date of termination.
22.2 Upon termination or expiration of this Agreement, Dealer shall
immediately:
22.2.1 provide Lucent with the first right to repurchase any Lucent
Products in Dealer's possession or control and not already identified to an
executed End User contract or outstanding proposal. The price Lucent shall pay
to Dealer to repurchase Lucent Products shall be the price paid by Dealer.
Dealer shall make such Lucent Products available to Lucent within ten (10)
business days of Lucent's notice to Dealer of its intent to exercise such right;
22.2.2 discontinue any and all use of Marks, including but not
limited to such use in advertising or business material of Dealer, except to
identify the Lucent Products; provided that if Lucent does not repurchase
Dealer's remaining inventory, Dealer may continue using Marks as authorized in
this Agreement for an additional ninety (90) days for the limited purpose of
marketing such inventory to End Users after termination is effective;
22.2.3 remove and return to Lucent or destroy at Lucent's request,
any and all promotional materials supplied without charge by Lucent except those
necessary for the limited purpose of marketing existing Dealer inventory
pursuant to Section 22.2.2;
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22.2.4 return all Lucent proprietary Information. Licensed Materials
and Software, except that which Lucent determines is necessary to operate and
maintain previously furnished Lucent Products;
22.2.5 cease holding itself out, in any manner, as a Lucent
authorized Dealer of the Lucent Products; and
22.2.6 notify and arrange for all publishers and others (including,
but not limited to, publisher of telephone and business directories) who may
identify, list or publish Dealer's name as a Lucent authorized Dealer of Lucent
Products, to discontinue such listings.
23.0 SURVIVAL OF OBLIGATIONS
The respective obligations of Dealer and Lucent under this Agreement that
by their nature would continue beyond the termination, cancellation or
expiration of this Agreement, shall survive termination, cancellation or
expiration hereof, such as, by way of example only, the obligations pursuant to
the following Sections: USE OF INFORMATION, LICENSE, TERMINATION OF AGREEMENT,
LIMITATION OF LIABILITY, INDEMNITY and TRADEMARKS.
24.0 FORCE MAJEURE
Except for Dealer's obligation to make timely payments, neither party
shall be held responsible for any delay or failure in performance to the extent
that such delay or failure is caused by fires, embargoes, explosions, labor
disputes, government requirements, civil or military authorities, acts of God,
inability to secure raw materials or transportation facilities, acts or
omissions of carriers or suppliers or any other causes beyond the parties'
control whether or not similar to the foregoing.
25.0 SECURITY INTEREST
Dealer hereby grants Lucent and its assignees a purchase money security
interest in all Lucent Products and Lucent Product Components the title to which
passes to Dealer under this Agreement and any proceeds therefrom including
accounts receivable, installment contracts, chattel paper and other instruments
arising therefrom, until all charges including shipping and late payment
charges, if any, are paid in full. When requested to do so by Lucent, Dealer
agrees to execute promptly, to deliver to Lucent and have filed all documents,
including financing statements, deemed necessary by Lucent to perfect, maintain
or protect its security interest. A copy of this Agreement may be filed to
perfect Lucent's security interests.
26.0 SEVERABILITY
If any section, or clause thereof, in this Agreement is held to be
unenforceable, then the meaning of such section or clause will be construed so
as to render it enforceable, to the extent feasible; and if no reasonable
interpretation would save such section or clause, it will be severed
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from this Agreement and the remainder will remain in full force and effect.
However, in the event such section or clause is considered an essential element
of this Agreement by either Lucent or Dealer, the parties shall promptly
negotiate a replacement therefor.
27.0 ASSIGNMENT
Dealer shall not assign any right or interest under this Agreement or
delegate any work or other obligation to be performed or owed by Dealer under
this Agreement without the prior written consent of Lucent, which consent shall
not be unreasonably withheld. Any assignment or delegation by Dealer without
such consent shall be void and ineffective. By the provision of notice thereof
in accordance with this Agreement, Lucent shall have the right to assign this
Agreement and to assign its rights and delegate its obligations and liabilities
under this Agreement, either in whole or in part (an "Assignment"), to any
entity that is, or that was immediately preceding such Assignment, a current
subsidiary, business unit, division or other affiliate of Lucent. The notice of
Assignment shall state the effective date thereof. Upon the effective date and
to the extent of the Assignment, Lucent shall be released and discharged from
all obligations and liabilities under this Agreement. Such Assignment, release
and discharge shall be complete and shall not be altered by the termination of
the affiliation between Lucent and the entity assigned rights or delegated
obligations and liabilities under this Agreement.
28.0 NON-WAIVER
No course of dealing, course of performance or failure of either party
strictly to enforce any term, right or condition of this Agreement shall be
construed as a waiver of any term, right or condition.
29.0 CHOICE OF LAW AND DISPUTES
29.1 The construction, interpretation and performance of this Agreement
shall be governed by the local laws of the State of Delaware.
29.2 Any controversy or claim, whether based on contract, tort, strict
liability, fraud, misrepresentation, or any other legal theory, related directly
or indirectly to this Agreement (the "Dispute") shall be resolved solely in
accordance with the terms of this Section, except as set forth in paragraph 29.6
below.
29.3 If the Dispute cannot be settled by good faith negotiation between
the parties, Lucent and Dealer will submit the Dispute to non-binding mediation.
If complete agreement cannot be reached within thirty (30) days of submission to
mediation, any remaining issues will be resolved by binding arbitration in
accordance with paragraphs 28.4 and 28.5 below. The Federal Arbitration Act, 9
U.S.C. Sections 1 to 15, not state law, will govern the arbitrability of all
Disputes.
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29.4 A single arbitrator who is knowledgeable in the telecommunications
products field or in commercial matters will conduct the arbitration. The
arbitrator's decision and award will be final and binding and may be entered in
any court with jurisdiction. The arbitrator will not have authority to limit,
expand or otherwise modify the terms of this Agreement.
29.5 The mediation and, if necessary, the arbitration will be conducted
under the then current rules of the alternate dispute resolution (ADR) firm
selected by the parties, or if the parties are unable to agree on an ADR firm,
the parties will conduct the mediation and, if necessary, the arbitration under
the then current rules and supervision of the American Arbitration Association
(AAA). Lucent and Dealer will each bear its own attorneys' fees associated with
the mediation and, if necessary, the arbitration. Lucent and Dealer will pay all
other costs and expenses of the mediation/arbitration as the rules of the
selected ADR firm provide. The parties and their representatives shall hold the
existence, content and result of the mediation and arbitration in confidence.
29.6 Unless both parties agree otherwise, Disputes relating to Dealer's
compliance with Section 16 of this Agreement (Trademarks) shall be exempt from
the dispute resolution processes described in this Section.
30.0 NOTICES
All notices under this Agreement shall be in writing and shall be given in
person, by facsimile, by receipted courier or by certified U.S. mail, addressed
to the addresses set forth at the beginning of this Agreement or to such other
address as either party may designate by written notice to the other. All
written notices sent by mail shall be sent first class or better, postage
prepaid. All notices shall be deemed to have been given on the earlier of the
date actually received or the fifth day after mailing.
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31.0 ENTIRE AGREEMENT
The terms and conditions contained in this Agreement supersede all prior
oral or written understandings between the parties and constitute the entire
Agreement between them concerning the subject matter of this Agreement and shall
not be contradicted, explained or supplemented by any course of dealing between
Lucent or any of its affiliates and Dealer or any of its affiliates. This
Agreement shall not be modified or amended except by a writing signed by an
authorized representative of the party to be charged.
32.0 TERM
This Agreement shall be effective as of NOV 26, 1997 and shall have a term
of one year beginning on said date.
IN WITNESS WHEREOF the parties have caused this Agreement to be signed by
their duly authorized representatives.
Lucent Technologies Inc. All Communications, Corp.
By /s/ Robert C. Moss By: /s/ Joseph Scotti V.P. SALES
------------------------------- -------------------------------
Name Robert C. Moss Name: Joseph Scotti
Title: General Manager Title: V.P. SALES
Date: 11/26/97 Date: 11/10/97
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Appendix: Addresses
A. Marketing Location(s):
All Communications, Corp.
225 Long Avenue
Hillside, NJ 07205
B. Authorized Area:
All Communications, Corp.
225 Long Avenue
Hillside, NJ 07205
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Appendix: Area
A. Authorized Area for All Communications. Corp. for:
Product Appendix: Key Systems
Product Appendix: GuestWorks(TM) Server & Associated Adjuncts
Product Appendix: DEFINITY BCS & Associated Adjuncts
State County
----- ------
New Jersey All counties except Mercer
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Product Appendix: Key Systems
A. Products:
Merlin Legend Communications Systems
Partner(R) Communications Systems
Partner(R) Plus Communications Systems
Partner(R) II Communications Systems
Partner(R) Advanced Communications Systems
B. For the products covered by this Product Appendix, :Section 1.3 of the
Agreement is replaced by the following and Section 2.7 is deleted.
1.3 "End User" means a third party to whom Dealer markets or sells
Products for use by such third party in the ordinary course of its business
within the Area or Territory and not for resale.
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Product Appendix: GuestWorks(TM) Server & Associated Adjuncts
A. Products
Guestworks Server (All Models)
Intuity Audix Lodging
Limited compatible Definity circuit packs and telephones, when ordered in
conjunction with a Guestworks Server
B. For the Products covered by this Product Appendix, the following replaces
Section 1.3 of the Agreement:
1.3 "End User" means a third party with a hotel or motel business to whom
Dealer markets or sells Products within the Area for hotel or motel use by such
third party in the ordinary course of its business and not for resale; End User
does not include any Lucent Technologies' Global Account or any office,
department, agency, or defense installation of the United States Government,
except that Dealer may market and sell Products to any Lucent Technologies'
Global Account referred to Dealer specifically for the sale of Products by the
Lucent Technologies Branch responsible for sales to that customer. No such
reference to Dealer for the sale of Lucent Technologies products not covered by
this Agreement, such as desktop video products, shall be deemed to be a
reference for Products. Marketing opportunities for sales of GuestWorks systems
to third parties for use in health care or senior citizens' residence facilities
must be individually reviewed with and approved by Lucent Technologies to be
certain that the system will meet the customer's needs and that the sale will
not expose Lucent Technologies to claims based on the system's unsuitability for
such uses or similar theories.
C. For the products covered by this Product Appendix, the following is added to
the Agreement as Section 5.3:
5.3 Circuit packs and 8400 Series DCP telephones offered under this
Product Appendix are intended for use with GuestWorks systems only. Orders for
DCP telephones beyond those provided in the GuestWorks packaged offers will be
rejected if the number of telephones ordered exceeds 10% of the total telephone
capacity of the system ordered. Orders for circuit packs will be considered on
an exception basis only. Failure to meet the requirements of this subsection
will be grounds for immediate termination of this Product Appendix, and
depending on the circumstances, may lead to termination of the Agreement to
which this is appended.
E. For the products covered by this Product Appendix, the following is the End
User Software License referred to in Section 15 of the Agreement:
GuestWorks Appendix Page 1
<PAGE> 29
END USER SOFTWARE LICENSE
LIMITED WARRANTY AND LIMITED LIABILITY
Compatibility. THE SOFTWARE IS NOT WARRANTED FOR NONCOMPATIBLE SYSTEMS.
Software. Lucent Technologies warrants that if the Software does not
substantially conform to its specifications, the end-user customer ("You")
may return it to the place of purchase within 90 days after the date of
purchase, provided that You have deployed and used the Software solely in
accordance with this License Agreement and the applicable Lucent
Technologies installation instructions. Upon determining that the returned
Software is eligible for warranty coverage, Lucent Technologies will
either replace the Software or, at Lucent Technologies's option, will
offer to refund the License Fee to You upon receipt from You of all copies
of the Software and Documentation. In the event of a refund, the License
shall terminate.
DISCLAIMER OF WARRANTIES. LUCENT TECHNOLOGIES MAKES NO WARRANTY,
REPRESENTATION, OR PROMISE TO YOU NOT EXPRESSLY SET FORTH IN THIS
AGREEMENT. LUCENT TECHNOLOGIES DISCLAIMS AND EXCLUDES ANY AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. LUCENT
TECHNOLOGIES DOES NOT WARRANT THAT THE SOFTWARE OR DOCUMENTATION WILL
SATISFY YOUR REQUIREMENTS, THAT THE SOFTWARE OR DOCUMENTATION ARE WITHOUT
DEFECT OR ERROR, OR THAT THE OPERATION OF THE SOFTWARE WILL BE
UNINTERRUPTED. ALSO, LUCENT TECHNOLOGIES DOES NOT WARRANT THAT THE
SOFTWARE WILL PREVENT, AND LUCENT TECHNOLOGIES WILL NOT BE RESPONSIBLE
FOR, UNAUTHORIZED USE (OR CHARGES FOR SUCH USE) OF COMMON CARRIER
TELECOMMUNICATION SERVICES OR FACILITIES ACCESSED THROUGH OR CONNECTED TO
THE SOFTWARE (TOLL FRAUD). Some states do not allow the exclusion of
implied warranties or limitations on how long an implied warranty lasts,
so the above limitation may not apply to You. This warranty gives You
specific legal rights which vary from state to state.
EXCLUSIVE REMEDY AND LIMITATION OF LIABILITY. EXCEPT FOR BODILY INJURY
PROXIMATELY CAUSED BY LUCENT TECHNOLOGIES'S NEGLIGENCE, YOUR EXCLUSIVE
REMEDY AND LUCENT TECHNOLOGIES'S ENTIRE LIABILITY ARISING FROM OR RELATING
TO THIS LICENSE AGREEMENT OR TO THE SOFTWARE OR DOCUMENTATION SHALL BE
LIMITED TO DIRECT DAMAGES IN AN AMOUNT NOT TO EXCEED $10,000. LUCENT
TECHNOLOGIES SHALL NOT IN ANY CASE BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL, INDIRECT, OR PUNITIVE DAMAGES, EVEN IF LUCENT TECHNOLOGIES
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. LUCENT TECHNOLOGIES
IS NOT
GuestWorks Appendix Page 2
<PAGE> 30
RESPONSIBLE FOR LOST PROFITS OR REVENUE OR SAVINGS, LOSS OF USE OF THE
SOFTWARE. LOSS OF DATA, COSTS OF RECREATING LOST DATA, THE COST OF ANY
SUBSTITUTE EQUIPMENT OR PROGRAM, CHARGES FOR COMMON CARRIER
TELECOMMUNICATION SERVICES OR FACILITIES ACCESSED THROUGH OR CONNECTED TO
THE SOFTWARE (TOLL FRAUD), OR CLAIMS BY ANY PERSON OTHER THAN YOU. THESE
LIMITATIONS OF LIABILITY SHALL APPLY NOTWITHSTANDING THE FAILURE OF AN
EXCLUSIVE REMEDY. Some states do not allow the exclusion or limitation of
incidental or consequential damages, so the above limitation or exclusion
may not apply to You.
Lucent Technologies grants You a personal, non-transferable and
non-exclusive right to use, in object code form, all software and related
documentation furnished under the Agreement between Lucent Technologies
and [Dealer]. This grant shall be limited to use with the equipment for
which the software was obtained or, on a temporary basis, on back-up
equipment when the original equipment is inoperable. Use of software on
multiple processors is prohibited unless otherwise agreed to in writing by
Lucent Technologies. You agree to use your best efforts to see that your
employees and users of all software licensed under this Agreement comply
with these terms and conditions and You will refrain from taking any
steps, such as reverse assembly or reverse compilation, to derive a source
code equivalent of the software.
You are permitted to make a single archive copy of software. Any copy must
contain the same copyright notice and proprietary marking as the original
software. Use of software on any equipment other than that for which it
was obtained, removal of the software from the United States, or any other
material breach shall automatically terminate this license.
If the terms of this license differ from the terms of any license packaged
with the software, the terms of the license packaged with the software
shall govern.
F. [For Dealers licensing the Orange Label Flash Card only.] The following new
Section 33 is added to the Agreement with respect to this Product Appendix:
33. SOFTWARE LICENSE, ORANGE LABEL FLASH CARD MEDIUM
A. Lucent grants Dealer a personal, non-transferable and non-exclusive
right to use, in object code form, Guestworks software ("the Software")
solely for the purpose of providing maintenance service on Guestworks PBX
systems. Title to and ownership of all Software shall remain with Lucent.
Dealer will refrain from taking any steps, such as reverse assembly or
reverse compilation, to derive a source code equivalent of the Software or
to develop other software. Dealer will use its best efforts to ensure that
its employees and users of the Software comply with these terms and
conditions.
B. Dealer may make a single archive copy of software. Any such copy must
contain the same copyright notice and proprietary markings that the
original Software contains.
GuestWorks Appendix Page 3
<PAGE> 31
Use of the Software on any equipment other than that for which it was
obtained, removal of the Software from the United States, use of the
Software for any purpose other than maintenance of Guestworks PBX systems
or any other material breach of the software license shall immediately and
automatically terminate this license and will be cause for immediate
termination of all Authorized Dealer Agreements between Dealer and Lucent.
G. [For Dealers licensing the Orange Label Flash Card only]. Section 21.4 of the
Agreement is amended by adding the language that is underscored and printed in
bold, as follows:
21.4 Lucent may terminate this Agreement upon twenty-four (24) hours
written notice if Dealer has: (i) become insolvent, invoked as a debtor any laws
relating to the relief of debtors' or creditors' rights, or has had such laws
invoked against it; (ii) become involved in any liquidation or termination of
its business; (iii) been involved in an assignment for the benefit of its
creditors; (iv) sold or attempted to resell Lucent Products to any third party
other than an End User without Lucent's written consent; (v) appointed or
attempted to appoint any unauthorized agent or unauthorized manufacturer's
representatives for Lucent Products; (vi) sold or attempted to resell any Lucent
Products not previously authorized by Lucent under this Agreement or that are
obtained from a source other than Lucent; (vii) remotely accessed PBX locations
maintained by Lucent directly; (viii) activated software features without
compensation to Lucent or violated the terms of the Software License granted by
adding Section 33 to the Agreement in connection with a Product Appendix for
GuestWorks systems (ix) misrepresented, by statement or by omission, Dealer's
authority to resell under this or any other written agreement with Lucent that
is limited to specific Lucent products or services, by stating or implying, by
use of a Lucent Mark or otherwise, that the authority granted in this or such
other agreement applies to any Lucent product or service not covered by this or
such other agreement, or (x) failed to comply with Lucent's guidelines for the
proper use of Lucent's Marks. Notwithstanding such termination rights, Lucent
reserves all of its legal rights and equitable remedies, including without
limitation those under the Uniform Commercial Code.
GuestWorks Appendix Page 4
<PAGE> 32
Product Appendix: DEFINITY BCS & Associated Adjuncts
A. Products
DEFINITY BCS Server (All Models)
DEFINITY AUDIX
INTUITY AUDIX
BCMS (20 Agents)
Limited compatible DEFINITY circuit packs and telephones, when ordered in
conjunction with a DEFINITY BCS Server.
B. For the Products covered by this Product Appendix, the following replaces
Section 1.3 of the Agreement and Section 2.7 is deleted.:
1.3 "End User" means a third party to whom Dealer markets or sells
Products for use by such third party in the ordinary course of its business
within the Area or Territory and not for resale.
C. For the products covered by this Product Appendix, the following is added to
the Agreement as Section 5.3:
5.3 Circuit packs and 8400 Series DCP telephones offered under this
Product Appendix are intended for use with DEFINITY BCS systems only. Orders for
DCP telephones beyond those provided in the DEFINITY BCS packaged offers will be
rejected if the number of telephones ordered exceeds 10% of the total telephone
capacity of the system ordered. Orders for circuit packs will be considered on
an exception basis only. Failure to meet the requirements of this subsection
will be grounds for immediate termination of this Product Appendix, and
depending on the circumstances, may lead to termination of the Agreement to
which this is appended.
D. For the products covered by this Product Appendix, the following is the End
User Software License referred to in Section 15 of the Agreement:
END USER SOFTWARE LICENSE
LIMITED WARRANTY AND LIMITED LIABILITY
Compatibility. THE SOFTWARE IS NOT WARRANTED FOR NONCOMPATIBLE SYSTEMS.
Definity BCS Appendix Page 1
<PAGE> 33
Software. Lucent Technologies warrants that if the Software does not
substantially conform to its specifications, the end-user customer ("You")
may return it to the place of purchase within 90 days after the date of
purchase, provided that You have deployed and used the Software solely in
accordance with this License Agreement and the applicable Lucent
Technologies installation instructions. Upon determining that the returned
Software is eligible for warranty coverage, Lucent Technologies will
either replace the Software or, at Lucent Technologies's option, will
offer to refund the License Fee to You upon receipt from You of all copies
of the Software and Documentation. In the event of a refund, the License
shall terminate.
DISCLAIMER OF WARRANTIES. LUCENT TECHNOLOGIES MAKES NO WARRANTY,
REPRESENTATION, OR PROMISE TO YOU NOT EXPRESSLY SET FORTH IN THIS
AGREEMENT. LUCENT TECHNOLOGIES DISCLAIMS AND EXCLUDES ANY AND ALL IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. LUCENT
TECHNOLOGIES DOES NOT WARRANT THAT THE SOFTWARE OR DOCUMENTATION WILL
SATISFY YOUR REQUIREMENTS, THAT THE SOFTWARE OR DOCUMENTATION ARE WITHOUT
DEFECT OR ERROR, OR THAT THE OPERATION OF THE SOFTWARE WILL BE
UNINTERRUPTED. ALSO, LUCENT TECHNOLOGIES DOES NOT WARRANT THAT THE
SOFTWARE WILL PREVENT, AND LUCENT TECHNOLOGIES WILL NOT BE RESPONSIBLE
FOR, UNAUTHORIZED USE (OR CHARGES FOR SUCH USE) OF COMMON CARRIER
TELECOMMUNICATION SERVICES OR FACILITIES ACCESSED THROUGH `OR CONNECTED TO
THE SOFTWARE (TOLL FRAUD). Some states do not allow the exclusion of
implied warranties or limitations on how long an implied warranty lasts,
so the above limitation may not apply to You. This warranty gives You
specific legal rights which vary from state to state.
EXCLUSIVE REMEDY AND LIMITATION OF LIABILITY. EXCEPT FOR BODILY INJURY
PROXIMATELY CAUSED BY LUCENT TECHNOLOGIES'S NEGLIGENCE, YOUR EXCLUSIVE
REMEDY AND LUCENT TECHNOLOGIES'S ENTIRE LIABILITY ARISING FROM OR RELATING
TO THIS LICENSE AGREEMENT OR TO THE SOFTWARE OR DOCUMENTATION SHALL BE
LIMITED TO DIRECT DAMAGES IN AN AMOUNT NOT TO EXCEED $10,000. LUCENT
TECHNOLOGIES SHALL NOT IN ANY CASE BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL, INDIRECT, OR PUNITIVE DAMAGES, EVEN IF LUCENT TECHNOLOGIES
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. LUCENT TECHNOLOGIES
IS NOT RESPONSIBLE FOR LOST PROFITS OR REVENUE OR SAVINGS, LOSS OF USE OF
THE SOFTWARE, LOSS OF DATA, COSTS OF RECREATING LOST DATA, THE COST OF ANY
SUBSTITUTE EQUIPMENT OR PROGRAM, CHARGES FOR COMMON CARRIER
TELECOMMUNICATION SERVICES OR FACILITIES ACCESSED THROUGH OR CONNECTED TO
THE SOFTWARE (TOLL FRAUD), OR CLAIMS BY ANY PERSON OTHER THAN YOU. THESE
LIMITATIONS OF
Definity BCS Appendix Page 2
<PAGE> 34
LIABILITY SHALL APPLY NOTWITHSTANDING THE FAILURE OF AN EXCLUSIVE REMEDY.
Some states do not allow the exclusion or limitation of incidental or
consequential damages, so the above limitation or exclusion may not apply
to You.
Lucent Technologies grants You a personal, non-transferable and
non-exclusive right to use, in object code form, all software and related
documentation furnished under the Agreement between Lucent Technologies
and [Dealer]. This grant shall be limited to use with the equipment for
which the software was obtained or, on a temporary basis, on back-up
equipment when the original equipment is inoperable. Use of software on
multiple processors is prohibited unless otherwise agreed to in writing by
Lucent Technologies. You agree to use your best efforts to see that your
employees and users of all software licensed under this Agreement comply
with these terms and conditions and You will refrain from taking any
steps, such as reverse assembly or reverse compilation, to derive a source
code equivalent of the software.
You are permitted to make a single archive copy of software. Any copy must
contain the same copyright notice and proprietary marking as the original
software. Use of software on any equipment other than that for which it
was obtained, removal of the software from the United States, or any other
material breach shall automatically terminate this license.
If the terms of this license differ from the terms of any license packaged
with the software, the terms of the license packaged with the software
shall govern.
E. [For Dealers or Distributors licensing the Orange Label Flash Card only.] The
following new Section 33 is added to the Agreement with respect to this Product
Appendix:
33. SOFTWARE LICENSE, ORANGE LABEL FLASH CARD MEDIUM
A. Lucent grants Distributor a personal, non-transferable and
non-exclusive right to use, in object code form, DEFINITY BCS software
("the Software") solely for the purpose of providing maintenance service
on DEFINITY BCS PBX systems. Title to and ownership of all Software shall
remain with Lucent. Distributor will refrain from taking any steps, such
as reverse assembly or reverse compilation, to derive a source code
equivalent of the Software or to develop other software. Distributor will
use its best efforts to ensure that its employees and users of the
Software comply with these terms and conditions.
B. Distributor may make a single archive copy of software. Any such copy
must contain the same copyright notice and proprietary markings that the
original Software contains. Use of the Software on any equipment other
than that for which it was obtained, removal of the Software from the
United States, use of the Software for any purpose other than maintenance
of DEFINITY BCS PBX systems or any other material breach of the software
license shall immediately and automatically terminate this license
Definity BCS Appendix Page 3
<PAGE> 35
and will be cause for immediate termination of all Authorized Distributor
Agreements between Distributor and Lucent.
F. [For Dealers licensing the Orange Label Flash Card only]. Section 21.4 of the
Agreement is amended by adding the language that is underscored and printed in
bold, as follows:
21.4 Lucent may terminate this Agreement upon twenty-four (24) hours
written notice if Dealer has: (i) become insolvent, invoked as a debtor any laws
relating to the relief of debtors' or creditors' rights, or has had such laws
invoked against it; (ii) become involved in any liquidation or termination of
its business; (iii) been involved in an assignment for the benefit of its
creditors; (iv) sold or attempted to resell Lucent Products to any third party
other than an End User without Lucent's written consent; (v) appointed or
attempted to appoint any unauthorized agent or unauthorized manufacturer's
representatives for Lucent Products; (vi) sold or attempted to resell any Lucent
Products not previously authorized by Lucent under this Agreement or that are
obtained from a source other than Lucent; (vii) remotely accessed PBX locations
maintained by Lucent directly; (viii) activated software features without
compensation to Lucent or violated the terms of the Software License granted by
adding Section 33 to the Agreement in connection with a Product Appendix for
DEFINITY BCS systems (ix) misrepresented, by statement or by omission, Dealer's
authority to resell under this or any other written agreement with Lucent that
is limited to specific Lucent products or services, by stating or implying, by
use of a Lucent Mark or otherwise, that the authority granted in this or such
other agreement applies to any Lucent product or service not covered by this or
such other agreement, or (x) failed to comply with Lucent's guidelines for the
proper use of Lucent's Marks. Notwithstanding such termination rights, Lucent
reserves all of its legal rights and equitable remedies, including without
limitation those under the Uniform Commercial Code.
Definity BCS Appendix Page 4
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name State of Incorporation
---- ----------------------
<S> <C>
(1) Allcomm Products Corp. Delaware
</TABLE>
