Exhibit 10.16   AMENDED AND RESTATED INTERNATIONAL DISTRIBUTOR AGREEMENT

 
This Amended and Restated International Distribution Agreement (“Agreement”) is
made and entered this 8th day of July, 2002 (“Effective Date”) by and between
Castelle, Inc., a California corporation having its principal place of business
located at 855 Jarvis Drive, Suite 100,, Morgan Hill, California 95037, U.S.A.
(hereinafter referred to as “Castelle”), and AMS, Ltd., having its principal
place of business located at Bournemouth, England (hereinafter referred to as
“Distributor”). Castelle and Distributor are collectively referred to below as
the “parties” and individually as a “party”.
 
WHEREAS, the parties have previously executed an International Distribution
Agreement effective as of 24 April 2001 (the “Prior Agreement”); and
 
WHEREAS the parties now wish to modify and expand their relationship, and they
have thus set forth the terms of their expanded relationship within this
Agreement below, with the intent and desire that this Agreement shall replace
and supercede the Prior Agreement;
  NOW THEREFORE, the parties agree as follows:   1. APPOINTMENT OF DISTRIBUTOR
AND TERRITORY  

1.1
Purpose. The purpose of this Agreement is to appoint a Distributor to promote
the sale of Castelle’s Products set forth in Exhibit A in the Territory.
      1.2
Appointment. Subject to the terms and conditions set forth herein, Castelle
hereby appoints Distributor as Castelle’s non-exclusive, authorized distributor
for the Products to Customers in the Territory during the term of this
Agreement, and Distributor hereby accepts such appointment. “Customers” means
both Resellers and End Users in the Territory. “Resellers” means independent
companies or persons who have the competence, training and resources to
distribute the Products, and who Distributor contracts with for the distribution
of the Products to other Resellers or End Users. “End Users” means the ultimate
customer that acquires the Products for ordinary business or personal use and
not for further distribution or resale.
      1.3 Territory.  The Distributor’s Territory shall be as set forth within
Exhibit B.       1.4
Territorial Responsibility. Distributor will pursue sales policies and
procedures appropriate and sufficient to realize maximum sales potential for the
Products in the Territory. Distributor will maintain sufficient inventory of the
Products to provide competitive delivery schedules to Customers.

  2. TERM OF AGREEMENT  

2.1    
Initial Term. This Agreement shall become effective on the Effective Date set
forth above and shall continue for an initial term of one (1) year (“Initial
Term”) subject to the terms and conditions set forth herein.
  2.2
Effective Date. The Effective Date of this Agreement shall be the date it is
signed as accepted by a duly authorized officer of Castelle.
    2.3
Renewal of Agreement. This Agreement shall thereafter be renewed for successive
periods of one year  (each a “Renewal Term”), unless terminated by either party
pursuant to the provisions of Section 15(“Termination”) below, or by notice, in
writing, addressed to the other party, no less than 3 months prior to the
expiration of the term, and no more than six (6) months prior to the expiration
of the Initial term or Renewal Term as the case may be.

Page 1

--------------------------------------------------------------------------------

  Exhibit 10.16  

3. PRICING  

3.1  
Distributor’s Prices. Subject to adjustments described herein, Distributor’s
prices for Products shall be based upon a percentage of the U.S. Suggested List
Price attached hereto as Exhibit A. Castelle prices to Distributor shall not be
greater than Castelle’s prices to any other U.K. Distributor for the term of
this Agreement. All prices are stated in U.S. dollars, F.O.B. Castelle, Morgan
Hill, California, U.S.A.
 
 
3.2  
Minimum Purchase Commitment. The Minimum Purchase Commitment, set forth in
Exhibit C, shall be the total purchase price, net of taxes, duties,
transportation and other charges, which Distributor has committed to purchase in
each Time Period and under the parameters as set forth and defined in Exhibit C
of this Agreement. Castelle reserves the right, upon thirty (30) days prior
written notice, based upon its review and valuation of the market, the Territory
and the results achieved, to review and adjust the Minimum Purchase Commitment
for the Time Period following the current fiscal quarter. In the event
Distributor fails to meet the Minimum Purchase Commitment for any Time Period
and/or the total annual commitment, Castelle may, at its sole option and without
notice, either (i) upon thirty (30) days prior written notice, increase the base
price to Distributor or (ii) terminate this Agreement.
 
3.3  
Price Adjustments. Castelle may change its prices set forth on Exhibit A
attached hereto at any time, provided that no such price increase shall be
effective until thirty (30) days after notice by Castelle to Distributor of such
change. Price decreases may be effective immediately on the date of notification
by Castelle. Price increases will not be applied to Product that does not ship
within the thirty (30) day notice period as a result of any delays caused by
Castelle. In addition, Castelle reserves the right to adjust Distributor’s
prices in the event that Distributor fails to meet the Minimum Purchase
Commitments set forth in Exhibit C. All price adjustments shall apply to
Products ordered, but not shipped, after the effective date of such change.
  3.4  
Price Protection. In the event Castelle should lower its Product prices to
Distributor, Castelle will grant Distributor a price protection credit to be
applied against future orders equal to Distributor’s net unit price difference
between the higher and lower price on all new, unsold eligible Products in
Distributor’s inventory that Castelle has shipped to Distributor within ninety
(90) days before the effective date of the price reduction.
 
3.5           
Product List Price in Distributor’s Territory. Castelle and Distributor agree
that it is in both parties best interests that the End User prices for the
Products quoted by the Distributor, or offered to or by Distributor’s Resellers,
in the Territory be competitive to motivate and promote purchases by end users
of Castelle Products. Castelle has provided Distributor with Castelle’s U.S.
Suggested List Price for Castelle Products in Exhibit A. Distributor shall
exercise its best efforts to quote and promote Castelle’s Suggested List Price
in the currency of the Territory for sales to End Users. Distributor shall
develop and set the prices to be offered for the Products to its Resellers in
the Territory, and shall obtain Castelle’s review of such prices prior to
implementation and roll-out.
 
4. ORDERS
 
4.1           
Purchase Orders. Distributor shall purchase all Products hereunder by issuing
written Purchase Orders to Castelle not less than thirty (30) days prior to
Distributor’s requested ship date identifying the Products to be purchased, the
quantity, price, total Purchase Order price, shipping instructions, requested
ship dates and any other special information. Distributor may place additional
interim Purchase Orders at any time and with no notice requirement as the market
demand may from time to time require. Castelle will use its commercially
reasonable best efforts to comply with Distributor’s Product shipment
requirements for any orders submitted with short notice delivery requirements.
 
4.2           
Acceptance of Purchase Orders. Castelle, at its place of business in the U.S.A.,
or at any other place Castelle may select, may, at Castelle’s option, accept or
reject Distributor’s Purchase Order within ten (10) days of Castelle’s receipt
thereof. Castelle intends to accept all Purchase Orders that are issued in

Page 2

--------------------------------------------------------------------------------

  Exhibit 10.16        

 
conformance with the provisions of this Agreement. Acceptance of Purchase Orders
shall be confirmed to Distributor by first class mail, telex or confirmed
telefax.
     

4.3    
Terms of Purchase Orders. Distributor’s Purchase Orders submitted to Castelle
from time to time with respect to Products to be purchased hereunder shall be
governed by the terms and conditions of this Agreement, and notwithstanding the
content of Distributor’s Purchase Order, this Agreement shall take precedence
over such Purchase Orders, and any conflicting, inconsistent, or additional
terms of Distributor’s Purchase Order shall be null and void, and are hereby
waived by Distributor.
         4.4    
Order Deferral, Cancellation and Modification. Distributor may, by prior written
notice to Castelle, defer and/or cancel delivery of a Purchase Order once
without penalty, provided such notice is received by Castelle not less than ten
(10) business days prior to the scheduled ship date for order cancellation and
five (5) business days prior to the scheduled ship date for order deferrals.
Distributor may not cancel or defer orders placed for immediate shipment.
  5. DISTRIBUTOR REPORTS, FORECASTS AND MINIMUM INVENTORY   5.1
Reports and Forecasts. Distributor shall submit to Castelle a three (3) month
rolling forecast five (5) days before the end of each calendar month. In
addition, Distributor shall within five (5) days after the end of each calendar
month submit a written and electronic report to Castelle setting forth the
previous month’s sales unit volume (“POS” data) and current inventory by Product
model. POS data to be reported to Castelle on a monthly basis should include, at
a minimum, “Product Number”, “Product Description”, “Serial Number”, “Quantity”,
“Order Date”, “Name of Company Sold To”, “Country of Name of Company”,
“Reseller/End User”. Service, software upgrades and support contracts should
also be included in the POS report to include the above information as
appropriate. Inventory data to be reported to Castelle on a monthly basis should
include, at a minimum, “Product Number”, “Product Description”, “Serial Number”,
“Quantity”, “Date Received”, “Evaluation or Not”. Failure to provide monthly
sales unit volume and current inventory by Product model reports may forfeit the
Distributor’s right to claim price protection credit (reference section 3.4).
       5.2
Inventory. Distributor shall, at all times, maintain minimum inventory levels of
each Castelle Product sold by Distributor, sufficient to satisfy Distributor’s
and Customers’ order demands, and shall use its best efforts to always have
Castelle inventory on hand. Distributor shall maintain sufficient minimum
inventory levels of each Castelle Product to satisfy the demands of the
Territory.
  6. PACKAGING, SHIPMENT, RISK OF LOSS AND ACCEPTANCE OF ORDERS   6.1  
Packaging. All Products delivered pursuant to the terms of this Agreement shall
be suitably packaged for shipment in Castelle’s standard shipping cartons,
marked for shipment to Distributor’s address, and delivered to Distributor or
its carrier agent. In the absence of shipping instructions from Distributor,
Castelle shall ship via air freight and shall select the carrier.
       6.2
Ship Dates. Shipping dates committed by Castelle require prompt receipt of all
necessary documents from Distributor. Where existing priorities and schedules
prevent strict compliance with requested ship dates, Purchase Orders will be
scheduled as close as is practical to the requested ship date.
       6.3
Shipment Terms. Shipments from Castelle shall be made Ex Works, Castelle’s
manufacturing plant, freight, duties and taxes collect, to distributor’s address
set forth on Distributor’s Purchase Orders. In no event shall Castelle have any
liability in connection with shipment, nor shall the carrier be deemed to be an
agent of Castelle. Castelle shall not be liable for damages or penalty for delay
in delivery or for failure to give notice of any delay.
       6.4
Title and Risk of Loss. Risk of loss with respect to Products and Software shall
pass from Castelle to Distributor upon delivery. Delivery shall be deemed made
upon transfer of possession to the initial

Page 3

--------------------------------------------------------------------------------

  Exhibit 10.16  

 
common carrier or Distributor’s representative at Castelle’s manufacturing
plant. Transfer of ownership and title to the Products and Software shall pass
from Castelle to Distributor only after payment in full by Distributor for the
Products and Software ordered by Distributor and shipped by Castelle.
 

6.5  
Acceptance. Distributor shall inspect all Products promptly upon receipt thereof
at the ship-to location and may reject any Product that is defective. Any
Product not properly rejected by Distributor shall be deemed accepted. To reject
a Product, Distributor shall notify Castelle of its rejection, by telefax,
within ten (10) days of receipt of the shipment, and request a Return Material
Authorization (“RMA”) number. Distributor shall return the rejected Product(s),
freight collect, in its original shipping carton with the RMA number displayed
on the outside of the carton. Castelle may refuse to accept any Product that
does not bear a valid RMA number on the carton. Rejected Product(s) must be
shipped to arrive at Castelle no later than 60 days after the issuance of the
RMA number; the RMA number will no longer be valid after that time.
  7. PAYMENT   7.1    
Products. Payment by Distributor for all Products hereunder shall be by
Telephone Transfer (“TT”) for payment in the United States to Castelle at a bank
approved by Castelle.
       7.2    
Distributor Credit and Payment Terms. Distributor shall complete Castelle’s
Credit Application and apply for credit. Payment terms shall be net thirty (30)
days. In the event that Distributor’s account is past due, Castelle may and
without notice, charge and distributor shall pay a finance charge equal to one
and one-half percent (1½%) per month, or the maximum amount allowed by law,
whichever is less, upon the unpaid balance, until the date of payment, provided,
however, that no such finance charge shall be assessed on any invoice disputed
in good faith by Distributor and for which Distributor has notified Castelle by
confirmed telefax within ten (10) days of receipt of invoice with a detailed
explanation of the reason for the dispute. Distributor shall pay all of
Castelle’s costs and expenses (including reasonable attorney’s fees) incurred in
enforcing Castelle’s right under this Section 7.
 
7.3  
Taxes and Duties. The prices stated are exclusive of Taxes and Duties. Any Taxes
and Duties related to this Agreement shall be paid by distributor (other than a
tax measured by Castelle’s net income) or in lieu thereof, Distributor shall
provide an exemption certificate acceptable to the local taxing authorities. All
Taxes and Duties shall be billed as a separate item on the invoice.
 
7.4  
Withholding. In the event that any Government in the Territory shall require the
withholding of any sums, however designated, which may be payable hereunder,
there shall be added to amounts due the amount of such withholding, so that
Castelle shall receive from Distributor the same and equal amount as it would
have received without such withholding. No such withholding as described above
shall become due as a result of actions taken by Castelle except as may be
otherwise defined herein.
 
7.5  
Currency. All prices and charges under this Agreement are stated and shall be
paid in United States dollars. Distributor agrees to take all necessary actions
required, including registration of this Agreement and application for
permission to make payments to Castelle hereunder, with the appropriate
government authorities of Distributor’s jurisdiction, or such other institution
or official, and to take such other measures as may be necessary to comply with
any government currency controls in effect in Distributor’s jurisdiction, as
soon as reasonably practicable after execution of this Agreement.
 
 
8. LIMITED WARRANTY  
 
8.1
Castelle Warranty. The Distributor shall provide and abide by Castelle’s
warranty. Castelle warrants that it has the right and interest in the Products
to make the sales and licenses contemplated herein. Castelle warrants the
Products against defects in materials and/or workmanship for one (1) year from
purchase by the end-user customer or fifteen (15) months from Castelle’s initial
shipment to Distributor, whichever is less. This warranty is contingent upon
proper use of a Product in the application for which

Page 4

--------------------------------------------------------------------------------

  Exhibit 10.16  

 
it is intended and is voided if Products are modified without Castelle’s
approval or are subjected to unusual physical or electrical stress.
 
 
When a defective Product is returned, freight prepaid, validly to Castelle’s
factory in Morgan Hill, California, U.S.A., during the warranty period,
Castelle, at its sole option, shall repair or replace the defective Product at
no charge. Castelle will furnish repair parts and replacement Products on an
exchange basis. Such parts and replacement Products may be either reconditioned
or new. After repair or replacement Castelle will return the Products, freight
paid, promptly at its expense by a carrier or method of delivery of its
choosing.
 
CASTELLE DOES NOT WARRANT THAT THE PRODUCTS OR SPARE PARTS SHALL OPERATE
UNINTERRUPTED OR WITHOUT ERROR. THE WARRANTY SHALL BE VOID ON PRODUCTS WHICH
HAVE BEEN SUBJECTED TO ABUSE, MISUSE, ACCIDENT, ALTERATION, NEGLECT,
UNAUTHORIZED REPAIR OR INSTALLATION. Castelle shall make the final determination
as to the existence and cause of any alleged defect. Expendable items (such as
lamps and fuses) are not warranted.
 

8.2
No Other Warranty. EXCEPT FOR THE LIMITED WARRANTY REFERENCED ABOVE, CASTELLE
GRANTS NO OTHER WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE OR OTHERWISE,
REGARDING THE PRODUCTS, AND SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF
FITNESS FOR ANY PURPOSE, QUALITY, MERCHANTABILITY, OR OTHERWISE.
       9. CHANGES, IMPROVEMENTS AND DISCONTINUANCE        9.1
Changes and Improvements. During the term of this Agreement, Castelle agrees to
inform Distributor on a timely basis of changes and improvements in the
Products’ performance, serviceability, uses and applications. Castelle reserves
the right to make any changes to the Products which it deems appropriate.
       9.2
Discontinued Product. If during the term of this Agreement, Castelle
discontinues a Product(s), Castelle agrees to provide Distributor with sixty
(60) days prior written notice of Product’s discontinuance. Distributor may
place an order for such discontinued Product(s) during the notification period
for delivery within six (6) months after the end of such notice period, but
Castelle’s acceptance of such orders shall be on an “as available” basis.
       10. STOCK ROTATION        10.1
At the beginning of each calendar quarter during the term of this Agreement,
Distributor may return one (1) consolidated shipment of Products to Castelle,
freight prepaid, for credit against future orders provided Distributor meets the
following criteria: (i) the value of the returned Product(s) shall be no greater
than the purchase value of the returned Product(s) based on Castelle’s then
current Distributor Price List; (ii) all returned Products must be in their
unopened, original packaging, be in new condition, be on Castelle’s currently
available Product Price List and not have been abused or damaged; (iii)
Distributor shall not return any Products for the same identical Product model;
(iv) at the time of the return, Distributor must place an irrevocable Purchase
Order with Castelle having a net value of not less than the value of the
returned Product; (v) the total value of the returned Product shall not exceed
20% of the value of the previous quarter’s net shipments to the Distributor.
Distributor shall request a Return Material Authorization (“RMA”) number for the
return of the Product(s). Distributor shall return the Product(s), in its
original shipping carton with the RMA number displayed on the outside of the
carton. Castelle may refuse to accept any Product that does not bear a valid RMA
number on the carton. Product(s) must be shipped to arrive at Castelle no later
than 60 days after the issuance of the RMA number; the RMA number will no longer
be valid after that time.

Page 5

--------------------------------------------------------------------------------

  Exhibit 10.16  

11. INTERNET WEB SITE AND PRODUCT DOCUMENTATION  

11.1
Castelle Web Site. Castelle agrees to provide Distributor with a current copy
and future updates of relevant portions of its Castelle U.S. web site to be
replicated by Distributor in a format appropriate for the U.K. market.
 
11.2
Distributor Web Site. Distributor shall review and get approval from Castelle
prior to making modifications to the Castelle U.S. web site for implementation
in the U.K. market. Distributor web site may be listed as castelle.uk.co and
have links to appropriate Castelle U.S. web pages such the technical support
data base, product evaluation downloads, email newsletters, lead generation
email blast tools, etc. Castelle also agrees that Distributor shall have access
to the URL www.castelle.com/eu.
 
11.3
Distributor Web Site Statistics and Information. Distributor shall make
available to Castelle information from its castelle.uk.co web site including
page hits, leads generated and other information that may be deemed relevant.
 
11.4
Product Documentation. Castelle agrees to provide Distributor with a reasonable
initial quantity of Castelle’s advertising and promotional materials and
technical data related to the Products (“Product Documentation”) at no charge.
Distributor may purchase from Castelle any Product Documentation related to
Castelle’s Products which it requires to promote such Products.
 
11.5
Localization and Distribution of Product Materials. Distributor shall use its
best efforts to localize the Product Documentation for effective use within the
various countries of the Territory.
 
12. TRAINING, SUPPORT AND SERVICES   12.1
Services by Distributor. Distributor shall train its Customers with respect to
the Products sold. The services to be performed under this Agreement
(“Services”) shall be performed only by specially and properly trained personnel
of Distributor. Distributor will maintain sufficient inventory of the Products
to provide competitive delivery schedules and satisfactory replacement services
for DOA (“Dead-On-Arrival”) products to its Customers. DOA products are those
that are on the current price list, and have failed within 30 days of shipment
from the Distributor to the Distributor’s customer.
 
12.2
Services by Castelle. Castelle shall provide technical training for a reasonable
number of Distributor’s  personnel at no charge. Such personnel shall have the
appropriate technical knowledge and English language skills to benefit from such
training. In addition, Castelle shall provide periodic sales, service and
installation training classes to Distributor at no charge. Sales and service
training shall be held at such places and times as Distributor and Castelle
shall mutually agree.
 
12.3
Spare Parts. Castelle agrees to provide spare parts for Products sold hereunder
for a period of not less han one (1) year from the last date of shipment of such
Product to Distributor. Spare parts shall be made available to Distributor at
Castelle’s then current price in effect at the time Distributor orders such
spare parts.
 
12.4
Support by Castelle. Castelle agrees to provide during the principal period from
06:00 to 17:00 Pacific Standard Time, Monday through Friday, excluding Castelle
holidays, secondary technical support assistance to Distributor by telephone,
telefax and Internet for problem identification and resolution.
 
12.5
Support in Territory. Distributor shall be responsible for supporting all
Products which it distributes to its Customers. Distributor shall maintain
support personnel sufficiently knowledgeable with respect to the Products to
answer customer inquiries regarding the use and operation of the Products.
Distributor shall ensure that all customer questions are initially addressed to
and answered by Distributor.

Page 6

--------------------------------------------------------------------------------

  Exhibit 10.16  

12.6
Support Transition and Fees. Distributor shall assume support responsibility for
the current Castelle support contract customers in the Territory and provide
support through the customer’s contract period without additional charge. Prior
to the expiration of the support contract date Distributor shall renew the
support agreement and bill, collect and receive all renewal fees.
 
12.7
Support Policy. Distributor shall follow U.S. support policy guidelines and
provide similar support to its Customers, including its End User, VAR and
Alliance Partner Customers.
 
12.8
Reseller Management. Upon the Effective Date of this Agreement, Distributor
shall take over the management, Support and Services of resellers who are
currently purchasing Products directly from Castelle within the Territory,
whether those resellers are under contract to Castelle or not (“Castelle
Resellers”). Instead of and in the place of Castelle, Distributor will provide
all necessary Services, support, management, sales guidance and assistance for
Castelle Resellers. Distributor will also be responsible for such services and
support to current Resellers of Distributor, and Resellers appointed by
Distributor in the future. Distributor and Castelle will coordinate their
efforts to optimize Distributor’s ability to accomplish a smooth and orderly
transition for Castelle Resellers. Distributor shall report to Castelle and
otherwise keep Castelle informed with information regarding all Resellers it
manages, and its progress in effecting the transition of Castelle Resellers.
 
13. TRADEMARKS AND TRADENAMES
 
13.1
License. During the term of this Agreement, Distributor shall have the right to
indicate that it is an Authorized Castelle Distributor. Distributor shall also
have the right to use Castelle’s Trademarks for the purpose of (i) localizing
Product Documentation within the various countries of the Territory, and (ii)
advertising and distributing Product Documentation in the sale or marketing of
Products in the Territory consistent with Distributor’s requirements hereunder,
provided, however, that any Product Documentation created by or for Distributor
or its Resellers shall be reviewed and approved by Castelle prior to adoption
and use. Nothing herein shall grant to Distributor any right, title or interest
in the Trademarks, except as specifically set forth herein.
 
13.2
No Registration. At no time during or after the term of this Agreement shall
Distributor attempt or assist others to register any trademarks, slogans,
designs or trade names confusingly similar to those of Castelle, or challenge or
assist others to challenge Castelle’s Trademarks or registrations thereof.
 
13.3
No Removal. Distributor shall not remove, alter, deface or otherwise obscure any
Castelle trademark or trade name appearing on any Product or documentation
without the express written permission of Castelle.
 
13.4
Approval of Representations. All representations of Castelle Trademarks which
Distributor intends to use shall be first submitted to Castelle for approval
(which shall not be unreasonably withheld) of design, color and other details or
shall be exact copies of those used by Castelle. Distributor shall use all
Castelle Trademarks only in accordance with the sales of Castelle Products and
consistent with Castelle’s standards for the use of Castelle Trademarks by the
Distributor.
 
14. PROMOTION
 
14.1
Distributor Promotion. Distributor agrees to undertake during the term of the
Agreement such promotion and advertising campaigns and marketing strategies,
including advertising in local trade media, direct mail campaigns, Internet
marketing and trade show participation, as are necessary to stimulate and
promote the sale of the Products in the Territory. Distributor will make
available to Castelle copies of all sales literature, brochures and advertising
media relating to the Products.
 
14.2
Distributor Focus. Distributor has been a successful VAR in the territory and
understands it needs to focus on expanding the business through strong promotion
and support to other resellers, some of whom

Page 7

--------------------------------------------------------------------------------

  Exhibit 10.16  

 
may be viewed at times as competitors. A cooperative balance needs to be
established between “Castelle U.K.”, AMS and other Resellers.
 

14.3
Cooperative Promotion Allowance. Subject to Distributor stocking Products at
satisfactory levels, fulfilling Minimum Purchase Commitments under Section 3.2
hereinabove on a run-rate basis, and otherwise complying with the terms and
conditions of this Agreement, Castelle agrees to allocate 2% of the previous
quarters net sales as a product promotion allowance. Distributor shall submit
proposed promotion materials and projects to Castelle for review prior to any
initial release. Upon receipt of reasonable evidence of such promotion
expenditures, Castelle will credit the amount against Distributor purchases.
 
14.4
Other Market Development Funds. Castelle may, from time to time at its own
discretion, provide additional funding, on a split-the-cost basis, for other
market development projects. Approval and credit procedures would be the same as
for the Cooperative Promotion Allowance.
 
15. TERMINATION
 
15.1
Termination for Insolvency. To the extent permitted by law, Castelle may
terminate this Agreement  effective immediately and without liability upon
written notice to Distributor if any one of the following events occurs: (i)
Distributor files a voluntary petition in bankruptcy or otherwise seeks
protection under any law for the protection of debtors; (ii) a proceeding is
instituted against Distributor under any provision of any bankruptcy, insolvency
or debtor’s relief law which is not dismissed within sixty (60) days; (iii) a
court assumes jurisdiction of the assets of Distributor; (iv) a trustee or
receiver is appointed by a court for all or a substantial portion of the assets
of Distributor; (v) Distributor becomes insolvent is unable to or ceases to pay
its debts in the normal course, or suspends business, or (vi) Distributor makes
an assignment of its assets for the benefit of its creditors.
 
15.2
Termination for Cause. If either party fails to perform any material obligation
under this Agreement, including, in the case of Distributor, the failure to meet
the Minimum Purchase Commitments set forth in Exhibit C, then upon thirty (30)
days written notice to the breaching party specifying such default, the
non-breaching party may terminate this Agreement, without liability, unless: (i)
the breach specified in the notice has been cured within the thirty (30) day
period; or (ii) the default is not of an urgent nature in the sole discretion of
the nonbreaching party and reasonably requires more than thirty (30) days to
correct (and specifically excluding any failure to Minimum Purchase Commitments
or pay money), and the defaulting party has, in the reasonable judgment of the
nonbreaching party begun substantial corrective action to correct the default
within such thirty (30) day period and diligently pursues such action, in which
event, termination shall not be effective unless ninety (90) days has expired
from the date of the notice without corrective action being completed and the
default remedied.
 
15.3
Termination for Convenience. Either party may terminate this Agreement for their
convenience following the Initial Term by providing the other party with sixty
(60) days prior written notice.
 
15.4
Effect of Termination.
 
(a) Distributor’s Rights and Responsibilities. Upon termination or cancellation
of this Agreement Distributor shall have no further right to purchase Products
for resale or to represent itself as anAuthorized Castelle Distributor except as
specifically permitted in Paragraph 15.4 (b) below. All unshipped orders shall
be cancelled by Castelle without liability. Distributor shall, within ten (10)
business days after termination, pay all outstanding and unpaid invoices issued
by Castelle, less the costs of Products to be returned to Castelle to the extent
authorized under Section 15.4 (b) herein below.
 
(b) Inventory. Distributor may, unless notified otherwise in writing on or
before the effective date of termination, sell its remaining inventory of the
Products after termination of this Agreement. In the event that Distributor
should elect not to sell its remaining inventory, Castelle may, at its sole

Page 8

--------------------------------------------------------------------------------

  Exhibit 10.16  

 
discretion, repurchase Distributor’s inventory which is fit, merchantable and in
Castelle’s original shipping carton at Castelle’s then current U.K. Distributor
prices, less the aggregate amount of all credits previously issued with respect
to such Products. Castelle shall promptly inspect all Products returned by
Distributor and shall advise Distributor of any Product that is damaged and not
acceptable to Castelle for repurchase.
 

16. LIMITED LIABILITY  

 
IN NO EVENT SHALL CASTELLE’S TOTAL LIABILITY HEREUNDER EXCEED THE AMOUNT PAID BY
DISTRIBUTOR FOR PRODUCTS HEREUNDER, AND IN NO EVENT SHALL CASTELLE BE LIABLE FOR
COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES BY ANYONE, OR FOR ANY
SPECIAL CONSEQUENTIAL, INCIDENTAL OR OTHER DAMAGES, HOWEVER CAUSED, WHETHER FOR
BREACH OF CONTRACT, NEGLIGENCE OR OTHERWISE, AND WHETHER OR NOT CASTELLE HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THIS LIMITATIOIN SHALL APPLY
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED
HEREIN.
 

17. INDEMNITY  

17.1
Indemnity by Castelle. Subject to the restrictions set forth in this Paragraph,
Castelle agrees to defend and indemnify Distributor from and against all actions
or proceedings brought against Distributor arising out of any actual or alleged
infringement by the Products of any patent, copyright, trade secret or other
intellectual property right.
 
17.2
Distributor Obligations. Distributor shall promptly notify Castelle of any claim
hereunder upon becoming aware of the same and shall cooperate with and provide
all reasonable assistance to Castelle upon Castelle’s request and, at Castelle’s
expense, in the defense or settlement of such claim. Castelle shall have sole
authority to defend and/or settle any claim under this Paragraph, provided,
however, that Distributor may at its own cost, retain separate representation.
 
17.3
Remedy for Infringement. If any Product, or any portion thereof, is finally
adjudged to infringe a patent, copyright, trade secret or other intellectual
property right, or if in Castelle’s opinion is likely to become the subject of
such a claim, Castelle shall, at its option, either: (i) procure for Distributor
the right to continue using the Product(s); or (ii) replace or modify the
Products(s) so that it becomes non-infringing; or (iii) upon return of all
infringing Product(s), refund to Distributor the price actually paid by
Distributor for the infringing Products; or (iv) substitute for the infringing
Products(s) other suitable, non-infringing equipment.
 
17.4
Entire Liability. THE FOREGOING PROVISIONS OF THIS SECTION 17 STATE THE ENTIRE
LIABILITY AND OBLIGATIONS OF CASTELLE AND THE EXCLUSIVE REMEDY OF DISTRIBUTOR
WITH RESPECT TO ANY ALLEGED INTELLECTUAL PROPERTY RIGHT INFRINGEMENT BY THE
PRODUCTS.
  17.5
Indemnity by Distributor. Distributor agrees to indemnify, defend and hold
harmless Castelle from claims, losses, costs and liabilities arising out of the
acts, omissions, Services, and sales of Distributor and its Customers. Castelle
will promptly notify the Distributor of any such claims, losses, costs and
liabilities, render reasonable assistance as required, and subject to
Distributor selecting competent counsel and skillfully protecting Castelle
hereunder in Castelle’s sole discretion, Castelle will permit the Distributor to
direct the defense or settlement negotiations, and subject to Castelle’s
approval of settlement details, to actually settle such claims.
 

18. GENERAL TERMS AND CONDITIONS

Page 9

--------------------------------------------------------------------------------

  Exhibit 10.16  

18.1
Notices. All notices and requests required or authorized hereunder shall be
given in writing either by personal delivery, by registered or certified mail,
return receipt requested, or by telefax. Such notice shall be deemed to have
been given upon such date that it is so personally delivered; the date seven (7)
days after it is deposited in the mail; or the date the same is sent by telefax,
irrespective of the date appearing therein.
 
18.2
Title. Castelle warrants that is owns all right, title and interest in the
Products, including any Products hereafter made subject to this Agreement, and
in all of Castelle’s patents, trademarks, trade names, inventions, copyrights,
know-how and trade secrets relating to the design, manufacture, operation or
service of the products. Distributor understands and agrees that the use of any
of these proprietary rights is authorized solely for the purposes set forth
herein, and shall cease upon termination or expiration of this Agreement.
 
18.3
Confidentiality and Proprietary Information.
 
(a) Confidential relationship. The parties agree and understand that by
execution of this Agreement a confidential relationship is created by which
either party may have access to confidential information owned or controlled by
the other (including, but not limited to, all drawings, blueprints,
descriptions, specifications, software, and data) disclosed in any form whether
written, oral or on computer readable medium, and such information may contain
proprietary details and disclosures (“Confidential Information”).
 
(b) Duty. Each party shall keep and have its agents and employees keep all
Confidential Information confidential and shall not copy or disclose the same
except as specifically authorized by this Agreement, without the prior written
consent of the other. Nothing herein shall limit either party’s use or
dissemination of information not derived from the disclosing party or which has
been or is subsequently made public by the disclosing party or a third party
with the authority to do so. Upon expiration or termination of this Agreement,
each party shall return to the other all copies of all Confidential Information,
whether printed or otherwise.
 
(c) Reverse engineering. Distributor agrees and covenants that it will not
disassemble or reverse engineer any Product or portion thereof. No right or
license is granted by this Agreement to Distributor to use Confidential
Information or information derived from Confidential Information, for any
purpose other than as expressly permitted under this Agreement.
 
18.4
Export. The parties agree and understand that all obligations of Castelle to
deliver, and of Distributor to accept, Products hereunder shall be specifically
subject to Castelle obtaining the necessary approvals and licenses from the
United States Government for export of the same. Castelle agrees to use its best
commercially reasonable efforts, and Distributor agrees to cooperate in
providing information and assistance requested by Castelle to obtain any such
necessary approvals.
 
18.5
Foreign Law Warranties and Obligations.
 
(a) Government consent. Distributor represents and warrants that, as of the date
of this Agreement, no consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority in the Territory,
including the E. C. Commission, which has not been made or obtained by
Distributor prior to the date hereof, is required in connection with the valid
execution, performance and delivery of this Agreement. Alternatively, if any
such actions are required, Distributor agrees to use its best efforts to obtain
such consent, approval or authorization and agrees to comply with all applicable
laws in its performance under this Agreement.
 
(b) Import and export control. Distributor understands and acknowledges that
Castelle is subject to regulation by agencies of the U.S. government, including
the U.S. Department of Commerce, which prohibit export or diversion of certain
products and technologies to certain countries. Any and all obligations of
Castelle to provide technical information, technical assistance, any media in
which any of the foregoing is contained, training and related technical data
(collectively “Data”) shall be

Page 10

--------------------------------------------------------------------------------

  Exhibit 10.16  

   
subject in all respects to such United States laws and regulations as shall from
time to time govern the license and delivery of technology and products abroad
subject to the jurisdiction of the United States, including the Export
Administration Act of 1979, as amended, any successor legislation, and the
Export Administration Regulations issued by the U.S. Department of Commerce,
Bureau of Export Administration. Distributor warrants that it will comply in all
respects with the export and reexport restrictions set forth in the export
license (if necessary) for every item shipped from Castelle and will otherwise
comply with the Export Administration Regulations or other United States laws
and regulations in effect from time to time.
 
(c) Representations of Distributor. Without in any way limiting the provisions
of this Agreement, Distributor agrees that, unless prior written authorization
is obtained from the U.S. Department of Commerce, Bureau of Export
Administration, it will not resell, export or reexport, either directly or
indirectly, any Product, or any portion thereof, to country groups Q,S,W,Y, or Z
(as defined in the Export Administration Regulations and which currently
consists of Albania, Bulgaria, Cambodia, Cuba, Czechoslovakia, Estonia, Hungary,
Laos, Latvia, Libya, Lithuania, Mongolia People’s Republic, North Korea, Poland,
Romania, the (former) Union of Soviet Socialist Republics and Vietnam), or
Afghanistan or the People’s Republic of China any of the Data (if the direct
products are commodities, software, or technical data described on the Control
List with a letter “A” following its Export Control Number).
 
18.6
Independent Contractors. The relationship of Castelle and Distributor
established by this Agreement is that of independent contractors, and nothing
contained herein shall be construed to (i) give either party the power to direct
and control the day-to-day activities of the other; (ii) constitute the parties
as partners, joint venturers, co-owners or otherwise as participants in a joint
or common undertaking; or (iii) allow Distributor to create or assume any
obligation on behalf of Castelle for any purpose whatsoever. All financial
obligations associated with Distributor’s business are the sole responsibility
of Distributor. All sales and other agreements between Distributor and its
customers are Distributor’s exclusive responsibility and shall have no effect on
Distributor’s obligations under this Agreement. Distributor shall be solely
responsible for, and shall indemnify and hold Castelle harmless from all claims,
damages or lawsuits (including Castelle’s attorney’s fees) arising out of the
acts of Distributor, its employees or its agents.
 
18.7
Force Majeure. Except for the obligation to pay money properly due and owing,
either party shall be excused from any delay or failure in performance hereunder
caused by reason of any occurrence or contingency beyond its control, including,
but not limited to, an act of God, earthquake, labor disputes, riots war, civil
insurrection, expropriation, novelty of product manufacture or other
unanticipated manufacturing problems, governmental requirements, inability to
secure materials on a timely basis, and transportation difficulties. The
obligations and rights of the party so excused shall be extended on a day-to-day
basis for the time period equal to the period of such excusable delay. In order
to obtain a suspension under this Paragraph, the party delayed shall send
written notice of the delay and the reason therefore to the other party within
seven (7) days from the time the party delayed knew of the cause of such delay.
 
18.8
Arbitration. With the exception of injunctive relief sought by Castelle, and
actions for violations of Section 18.3 (“Confidentiality and Proprietary
Information”), Section 18.5 (“Foreign Law Warranties and Obligations”) or
disputes otherwise involving Distributor’s use of Castelle’s Intellectual
Property Rights, any dispute or claim arising out of, in relation to, or in
connection with this Agreement, or the interpretation, making, performance,
breach or termination thereof, shall be finally settled by binding arbitration
in Santa Clara, California under the Commercial Arbitration Rules of the
American Arbitration Association (“AAA”) by three arbitrators appointed in
accordance with said AAA Rules. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
 
18.9
Governing Law. This contract shall be governed by the law of the state of
California and not by any terms of the Convention in Contracts for International
Sales of Goods. Arbitrators shall apply California

Page 11

--------------------------------------------------------------------------------

  Exhibit 10.16  

law to the merits of any dispute or claim, without reference to rules of
conflict of law. Arbitration proceedings shall be governed by the AAA Rules,
without reference to state arbitration law.
  18.10
Survival of Certain Terms. The provisions of Paragraphs 8 [Limited Warranty],
13.2 [No Registration], 17 [Intellectual Property Right Indemnity], and 18
[General Terms and Conditions], shall survive the expiration or termination for
any reason of this Agreement.
 
18.11
Waiver. Any waiver of any right or remedy under this Agreement must be in
writing and signed by the party to be bound to be effective. No delay or
omission in exercising any right or remedy shall operate as a waiver of such
right or remedy or any other right or remedy. A waiver on any one occasion shall
not be construed as a waiver of any right or remedy on any future occasion.
 
18.12
Assignment. Any assignment of this Agreement, or any of the rights hereunder,
either voluntarily or by operation of law, by Distributor shall be void without
the joint, prior written consent of Castelle and Distributor.
  18.13
Severability. If any provisions or portion thereof of this Agreement is held to
be unenforceable or invalid, the remaining provisions and portions thereof shall
nevertheless be given full force and effect, and the parties agree to negotiate
in good faith, a substitute valid provision which most nearly effects the
parties’ intent in entering into this Agreement.
  18.14
Language. This Agreement shall be construed and interpreted in English, and any
translation hereof to a language other than English shall be for convenience
only.
 

19. ENTIRE AGREEMENT  
This Agreement together with the Exhibits attached hereto, constitutes the
entire agreement between the parties with respect to the subject matter hereof,
taking precedence over and superseding the Prior Agreement entered by the
parties as of April 24, 2001, and any other prior or contemporaneous oral or
written agreements or understandings. No subsequent alterations, amendments, or
additions hereto shall be binding and valid unless reduced to writing and signed
by both parties hereto.

 
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated below:

        CASTELLE INCORPORATED AMS Ltd.       By:  /s/ Scott C. McDonald By:  /s/
Dennis Buller       Name: Scott C. McDonald Name: Dennis Buller     Title:
President & CEO Title: Director     Date: Date:

Page 12

--------------------------------------------------------------------------------

  Exhibit 10.16  

EXHIBIT A  

PRODUCTS & PRICES  

Distributor Price equal to 65% of U.S. Price List MSRP  

The Products and U.S. Price List and the U.K. Price List are Included in
Attachments 1 and 2 to this Exhibit A

Page 13

--------------------------------------------------------------------------------

  Exhibit 10.16  

ATTACHMENT 1 TO EXHIBIT A
Products and U.S. Price List  

FaxPress Network Fax Servers  
FaxPress Small Business Edition (SBE), 2500, 5000, 7000 & 7500 Fax Server
 Integrated network fax servers for Windows NT/2000/Terminal Server, NetWare,
Linux
 

Part Number Description MSRP      

--------------------------------------------------------------------------------

  6629860-1109 Small Business Edition (SBE) Ethernet 8MB memory 1 line 14.4 Kbps
$ 1495              6629860-1100 FaxPress 2500† Ethernet 8 MB memory • 2
lines 14.4 Kbps
New!!Reform for FaxPress Software Included with FP5000/7000/7500 $ 2995     
6629860-1055 FaxPress 5000† Ethernet • 16MB memory • 4 lines • 14.4 Kbps $ 5995
     6629860-1056 FaxPress 5000† Ethernet • 32MB memory • 8 lines • 14.4 Kbps $
7995      6629860-1136 FaxPress 7000† Ethernet • 10/100Base-T • 32MB memory • 8
lines • Rackmount $ 8495      6629860-1146 FaxPress 7500† Ethernet •
10/100Base-T • 32MB memory • 8L Fax/4L E&M • RM $ 9995            

† FaxPress 2500, 5000, 7000 and 7500 models come with software version 6.x PRO,
and include a choice of Exchange Direct, Exchange Connector, or SMTP gateway.
The 5000, 7000 and 7500 models now also include Reform for FaxPress software.
 

FaxPress PRO†† Software for Small Business Edition (SBE)  

 
New Features Include: Single Sign On, Archive, ODBC Phone Books, Fax Approval,
Multiprotocol, SNMP Plus choice of Exchange Direct, Exchange Connector or SMTP
Gateway
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1084 FaxPress v6.x Basic to v6.x PRO with E-Mail Gateway†††  $ 495    
       

FaxPress Add-Ons & Upgrades   FaxPress Software Upgrades to v6.x PRO††
                                                            
     New Features Include: Single Sign On, Archive, ODBC Phone Books, Fax
Approval, Goldmine, Multiprotocol, SNMP
 

 
NOTE: FaxPress 6.x software upgrades can only be sold to customers having
FaxPress models 1500N, 3500, OfficeConnect, SBE, 2500, 5000, 7000 or 7500. The
purchase of a software upgrade does not entitle the buyer/customer to any
support on the FaxPress hardware. In cases where the hardware needs to be
upgraded in order to run the new software (including upgrades necessitated by
failures that can occur in the flashing of Boot PROM’s or modifying of
EEPROM’s), the cost of the hardware upgrade is the responsibility of the
customer - it is not included in the cost of the software. Customers that desire
both software and hardware support should investigate Castelle s Extended
Support Agreement. Please contact your Castelle Sales Representative for
details.
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1095 FaxPress v3.7.3 Upgrade to v6.x PRO with E-Mail Gateway††† $ 1990
  6629860-1096 FaxPress v4.x Upgrade to v6.x PRO with E-Mail Gateway††† $ 1690  
6629860-1097 FaxPress v5.x Upgrade to v6.x PRO with E-Mail Gateway†† $ 1490     
6629860-1081 FaxPress v3.7.3 Upgrade to v6.x PRO without E-Mail Gateway $ 995  
6629860-1082 FaxPress v4.x Upgrade to v6.x PRO without E-Mail Gateway $ 695  
6629860-1083 FaxPress v5.x Upgrade to v6.x PRO without E-Mail Gateway $ 495  

--------------------------------------------------------------------------------

  Exhibit 10.16  

†† Certain features contained in v6.x PRO are activated with a “key code” that
is based on the serial number of the FaxPress unit that it will be loaded onto.
The serial number will be required when ordering.
 
††† Purchase of this software upgrade includes choice of Exchange Direct,
Exchange Connector or SMTP gateway. Please indicate your choice when ordering.
 

FaxPress Hardware
Upgrades                                                                                  
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  66298600-878 FaxPress 1500/1500-N 1-line Upgrade Kit $ 6257      66298600-850
FaxPress 3000/3500 2-line Upgrade Kit $ 995      6629860-1049 FaxPress 5000
4-line Upgrade Kit $ 2495  

  FaxPress Software Add-Ons for 5.x and 6.x                                
                                  

PART NUMBER DESCRIPTION    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

      6629860-1006 FaxPress OCR Software (for v5.x or higher) $ 595     
6629860.1002 FaxPress cc:Mail 6.x Gateway, Windows Version (for v5.x or higher)
$ 995      6629860-1092 FaxPress 6.x Lotus Notes Gateway, Windows NT only† $ 995
     6629860-1099 FaxPress 6.x SMTP Gateway (Windows NT only) † $ 995     
6629860-1033 FaxPress Exchange Direct Software (for v5.x or higher)† $ 995     
6629860-1134 FaxPress Exchange Connector Software (for 6.2 SP1 or higher)† $ 995
     6629660-1152 Reform for FaxPress (for 6.2 SP2 or higher) †† (New!) $ 250  

  †  
This software is activated with a “key code” that is based on the serial number
of the FaxPress unit that it will be loaded onto. The serial number will be
required when ordering. For Exchange Direct, please specify your current
FaxPress software revision also.
 

††     
This software is activated with a “key code” that is based on the “seed number”
of the Reform Software. After installing Reform, you can find the seed number by
clicking “Help” and then the “Register” button in the Form Designer.
 

LANpress Network Print Servers   LANpress MP  - High-performance, multi-protocol
external print servers 
                                    Supports Windows NT, Windows 95, Windows for
Workgroups, NetWare 2.x/3.x/4x (NDS), AppleTalk & UNIX 
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1108 LANpress Jr. 10/100 Ethernet •10/100Base-T $ 199     
6629660-1072 2000 2+1 Ethernet •10/100Base-T •2 parallel + 1 serial $ 339     
66298600-955 LANpress 3P/1 00 Ethernet •10/100Base-T •3 parallel $ 345     
6629860-1042 LANpress Jr. MP Ethernet • 10Base-T $ 149      6629860-1154
LANpress 2P Wireless (New!) $ 395  

  Page 15

--------------------------------------------------------------------------------

  Exhibit 10.16  

OfficeDirect Server Appliances   OfficeDirect Storage and Message Servers
                                                                  
Plug-and-forget server appliances that bring internet and inter-office e-mail
and fax communications to small and medium-sized companies
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1130 OfficeDirect Storage Server $ 995   6629860-1124 OfficeDirect
Message Server $ 995  

  InfoPress Information Delivery Solutions   -Universal document access and
delivery via phone, fax, e-mail and the Web   InfoPress Fax-On-Demand for Fax
Press  

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  117-IP/FaxPress 2 voice and 1 Fax Port Licenses plus ProLine2V, 2 Port Voice
Card $ 3289            

InfoPress Fax-On-Demand Starting Bundles  (includes FaxPress Integration
Software)   

PART NUMBER DESCRIPTION  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    117-HSEBundle InfoPress Fax-On-Demand, 2x1 Hardware/Software Kit
w/Email-On-Demand $ 5489   117-HSBundle InfoPress Fax-On-Demand, 2x1
Hardware/Software Kit $ 4389   117-Sbundle InfoPress Fax-On-Demand, 2X1 Software
$ 3289  

  InfoPress Additional Software
Licenses                                                                       
 

PART NUMBER DESCRIPTION  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    117-V InfoPress Software License, Voice (price per line) $ 1425   117-F
InfoPress Software License, Fax (price per line) $ 1425  

  InfoPress Email-On-Demand Enterprise
Edition                                                           

PART NUMBER DESCRIPTION    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    117-EMOD1 InfoPress Email-On-Demand, Enterprise Edition, single address $
1095   117-EMOD25 InfoPress Email-On-Demand, Enterprise Edition, 25 addresses $
5495   117-EMOD100 InfoPress Email-On-Demand, Enterprise Edition, 100 addresses
$ 8245   117-EMOD100+ InfoPress Email-On-Demand, Enterprise Edition, 100+
addresses $ 10995  

  Page 16

--------------------------------------------------------------------------------

  Exhibit 10.16  

ATTACHMENT 2 TO EXHIBIT A

U.K. Price List  

FaxPress Network Fax Servers   FaxPress Small Business Edition (SBE), 2500,
5000, 7000 & 7500 Fax Server Integrated network fax servers for Windows
NT/2000/Terminal Server, NetWare, Linux  

Part number Description MSRP      

--------------------------------------------------------------------------------

  6629860-1109 Small Business Edition (SBE) Ethernet 8MB memory 1 line 14.4 Kbps
  £997             6629860-1100 FaxPress 2500† Ethernet 8MB memory • 2 lines
14.4 Kbps
                New!! Reform for FaxPress Software Included with
FP5000/7000/7500   £1997             6629860-1055 FaxPress 5000† Ethernet • 16MB
memory • 4 lines • 14.4 Kbps   £3997             6629860-1056 FaxPress 5000†
Ethernet • 32MB memory • 8 lines • 14.4 Kbps   £5330             6629860-1136
FaxPress 7000† Ethernet • 10/100Base-T • 32MB memory • 8 lines • Rackmount  
£5663             6629860-1146 FaxPress 7500† Ethernet • 10/100Base-T • 32MB
memory • 8L Fax/4L E&M • RM   £6663            

  t   FaxPress 2500, 5000, 7000 and 7500 models come with software version 6.x
PRO, and include a choice of Exchange Direct, Exchange Connector, or SMTP
gateway.  

FaxPress PRO†† Software for Small Business Edition (SBE)          New Features
Include: Single Sign On, Archive, ODBC Phone Books, Fax Approval, Multiprotocol,
SNMP  

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1084 FaxPress v6.x Basic to v6.x PRO with E-Mail Gateway†††   £330  

FaxPress Add-Ons & Upgrades   FaxPress Software Upgrades to v6.x PRO††
                                                                                                                        
     New Features Include: Single Sign On, Archive, ODBC Phone Books, Fax
Approval, Goldmine, Multiprotocol, SNMP
 

 
NOTE: FaxPress 6.x software upgrades can only be sold to customers having
FaxPress models 1500N, 3500, OfficeConnect, SBE, 2500, 5000, 7000 or 7500. The
purchase of a software upgrade does not entitle the buyer/customer to any
support on the FaxPress hardware. In cases where the hardware needs to be
upgraded in order to run the new software (including upgrades necessitated by
failures that can occur in the flashing of Boot PROM’s or modifying of
EEPROM’s), the cost of the hardware upgrade is the responsibility of the
customer - it is not included in the cost of the software. Customers that desire
both software and hardware support should investigate Castelle’s Extended
Support Agreement. Please contact your Castelle Sales
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1095 FaxPress v3.7.3 Upgrade to v6.x PRO with E-Mail Gateway†††  
£1327             6629860-1096 FaxPress v4.x Upgrade to v6.x PRO with E-Mail
Gateway†††   £1127             6629860-1097 FaxPress v5.x Upgrade to v6.x PRO
with E-Mail Gateway†††   £993             6629860-1081 FaxPress v3.7.3 Upgrade
to v6.x PRO without E-Mail Gateway   £663             6629860-1082 FaxPress v4.x
Upgrade to v6.x PRO without E-Mail Gateway   £463             6629860-1083
FaxPress v5.x Upgrade to v6.x PRO without E-Mail Gateway   £330  

Page 17

--------------------------------------------------------------------------------

  Exhibit 10.16  

†† Certain features contained in v6.x PRO are activated with a “key code” that
is based on the serial number of the FaxPress unit that it will be loaded onto.
The serial number will be required when ordering.
 
††† Purchase of this software upgrade includes choice of Exchange Direct,
Exchange Connector or SMTP gateway.
 

FaxPress Hardware Upgrades
                                                                              

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  66298600-878 FaxPress 1500/1500-N 1-line Upgrade Kit   £417   66298600-650
FaxPress 3000/3500 2-line Upgrade Kit   £663   6629860-1049 FaxPress 5000 4-line
Upgrade Kit   £1663            

FaxPress Software Add-Ons for 5.x and 6.x    

PART NUMBER DESCRIPTION    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    6629860-1006 FaxPress OCR Software (for v5.x or higher)   £397  
6629860-1002 FaxPress cc:Mail 6.x Gateway, Windows Version (for v5.x or higher)
  £663   6629860-1092 FaxPress 6.x Lotus Notes Gateway, Windows NT only †   £663
  6629860-1099 FaxPress 6.x SMTP Gateway (Windows NT only) †   £663  
6629860-1033 FaxPress Exchange Direct Software (for v5.x or higher) †   £663  
6629860-1134 FaxPress Exchange Connector Software (for 6.2 SP1 or higher)†
(New!)   £663   6629860-1152 Reform for FaxPress (for 6.2 SP2 or higher)††
(New!)   £167            

†  
This software is activated with a “key code” that is based on the serial number
of the FaxPress unit that it will be loaded onto. The serial number will be
required when ordering. For Exchange Direct, please specify your current
FaxPress software revision also.
 

 ††  
This software is activated with a "key code" that is based on the "seed number"
of the Reform Software. After installing Reform, you can find the seed number by
clicking “Help” and then the “Register” button in the Form Designer.
 

LANpress Network Print Servers   LANpress MP  - High-performance, multi-protocol
external print servers 
                                     Supports Windows NT, Windows 95, Windows
for Workgroups, NetWare 2.x/3.x/4x (NDS), AppleTalk & UNIX
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1108 LANpress Jr. 10/100 Ethernet •10/100Base-T (New!)   £133  
6629860-1072 LANpress 2000 2+1 Ethernet •10/100Base-T •2 parallel + 1 serial
(New!)   £226   66298600-955 LANpress 3P/100 Ethernet •10/100Base-T •3 parallel
  £230   6629860-1042 LANpress Jr. MP Ethernet •l0Base-T   £99   6629860-1154
LANpress 2P Wireless   £263  

Page 18

--------------------------------------------------------------------------------

  Exhibit 10.16  

OfficeDirect Server Appliances  

OfficeDirect Storage and Message Servers  

 
Plug-and-forget server appliances that bring internet and inter-office e-mail
and fax communications to small and medium-sized companies
 

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  6629860-1130 OfficeDirect Storage Server (New!)   £663   6629860-1124
OfficeDirect Message Server (New!)   £663  

          InfoPress Information Delivery Solutions   -Universal document access
and delivery via phone, fax, e-mail and the Web    InfoPress Fax-On-Demand for
Fax Press   

PART NUMBER DESCRIPTION MSRP  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  117-IP/FaxPress 2 voice and 1 Fax Port Licenses plus ProLine2V, 2 Port Voice
Card   £2193  

  InfoPress Fax-On-Demand Starting Bundles  (includes FaxPress Integration
Software)   

PART NUMBER DESCRIPTION    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    117-HSEBundle InfoPress Fax-On-Demand, 2x1 Hardware/Software Kit
w/Email-On-Demand   £3659   117-HSBundle InfoPress Fax-On-Demand, 2x1
Hardware/Software Kit   £2926   117-Sbundle InfoPress Fax-On-Demand, 2X1
Software   £2193  

   InfoPress Additional Software Licenses   

PART NUMBER DESCRIPTION    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    117-V InfoPress Software License, Voice (price per line)   £950   117-F
InfoPress Software License, Fax (price per line)   £950  

   InfoPress Email-On-Demand Enterprise Edition    

PART NUMBER DESCRIPTION    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

    117-EMOD1 InfoPress Email-On-Demand, Enterprise Edition, single address  
£730   117-EMOD25 InfoPress Email-On-Demand, Enterprise Edition, 25 addresses  
£3663   117-EMOD100 InfoPress Email-On-Demand, Enterprise Edition, 100 addresses
  £5497   117-EMOD100+ InfoPress Email-On-Demand, Enterprise Edition, 100+
addresses   £7330  

Page 19

--------------------------------------------------------------------------------

  Exhibit 10.16  

EXHIBIT B  

Territory  

Distributor’s Territory shall be the “European Community”, defined for the
purpose of this Agreement as the countries set forth below. Castelle shall have
the right to revise the Territory upon thirty (30) days written notice in the
event that Distributor fails to meet its Minimum Purchase Commitment, or
Castelle determines in its solereasonable discretion that Distributor has failed
to adequately and effectively manage, support and provide Services to Resellers
within the Territory.
 

Group 1 Group 2 Group 2 (Cont’d)  

--------------------------------------------------------------------------------

  United Kingdom Spain Cyprus   Belgium Denmark Greece   Denmark Finland Monaco
  France Norway     Germany Portugal     Ireland Hungary     Italy Austria  
Netherlands Portugal   Sweden Liechtenstein     Switzerland Luxembourg  

Page 20

--------------------------------------------------------------------------------

  Exhibit 10.16  

EXHIBIT C  

Minimum Purchase Commitment  

Distributor agrees to purchase Products equal to Distributor’s prices at no less
than US$200,000 per calendar quarter (the “Time Period”), to be delivered in the
same calendar quarter, excluding stock rotation purchases authorized within
Section 10 hereinabove.

Page 21

--------------------------------------------------------------------------------

  Exhibit 10.16

 

ADDENDUM TO AMENDED AND RESTATED
INTERNATIONAL DISTRIBUTOR AGREEMENT

 

This Addendum to the Amended and Restated International Distributor Agreement
(“Agreement”) is attached to and made a part of that certain Agreement, dated as
of July 8, 2002 , between Castelle, a California corporation having its
principal place of business located at 855 Jarvis Drive, Suite 100, Morgan Hill,
California 95037, U.S.A. (“Castelle”) and AMS, Ltd., having its principal place
of business located at Bournemouth, England (“Distributor”). References to the
“Agreement” shall mean the Agreement as modified, amended and supplemented by
the terms of this Addendum.
 

Castelle and AMS agree to the following changes and additions to the Agreement:
 
Section 18.5  (c) Representations of Distributor  is modified and replaced by
the following provisions:
 
Without in any way limiting the provisions of this Agreement, Distributor agrees
that it will not resell, export or re-export, either directly or indirectly, any
Product, or any portion thereof, to the embargoed destinations unless prior
written authorization is obtained from a) the U.S. Department of Commerce Bureau
of Industry and Security, U.S.A., to destinations as published in their then
current Export Administration Regulations Part 746, which currently include
Cuba, Libya, Iran, Iraq, Rwanda and the Federal Republic of Yugoslavia (Serbia
and Montenegro, Bosnia-Herzegovina, Croatia, and Slovenia); b) the Department of
the Treasury, Office of Foreign Assets Control, U.S.A, to destinations as
published in their then current sanctions program, which currently include
Balkans, Burma, Cuba, Iran, Iraq, Liberia, Libya, North Korea, Sierra Leone,
Sudan, Taliban, Unita, and Yugoslavia; and c) the U.S. Department of Commerce
Bureau of Industry and Security, U.S.A, to persons as published in their then
current Denied Persons List, EAR Part 764, Supplement 2, Specially Designated
Nationals List, EAR Part 764, Supplement 3 and Entity List, EAR Part 744,
Supplement 4.
 
Exhibit B Territory. Distributor’s Territory is modified to include Russia.
 
In all other respects, the terms of the original Agreement remain in full
effect. However, if there is a conflict between this Addendum and the original
Agreement, the terms of this Addendum will prevail.
 

Castelle AMS, Ltd.     /s/ Scott C. McDonald /s/ Dennis Buller By: Scott C.
McDonald By: Dennis Buller President & CEO Director     Date:  September 6, 2002
Date: March 9, 2002

--------------------------------------------------------------------------------