Exhibit 10.5

HCX5OO0/HCX5OOOi®

AUTHORIZED DISTRIBUTOR

AGREEMENT for 2004

by and between

HITACHI TELECOM (USA), INC.

and

XETA TECHNOLOGIES

AUTHORIZED DISTRIBUTOR AGREEMENT
TABLE OF CONTENTS

 

Page

 

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Master Agreement/Communication

2

Appointment

2

Product Definition

2

Term

3

Sales Promotion and Services

3

Forecast and Reports

3

Orders, Delivery

4

Prices

5

Payment and Additional Delivery Terms

5

Maintenance and Service

6

Training

8

Claims

8

Toll Fraud/Disclaimer

9

Limited Warranty

9

Repair Out of Warranty

10

Repair and Return Procedure

10

Inspection and Testing

10

Product Marking

11

Force Majeure

11

Advertising and Media Relations

11

Trademarks

11

Patents

12

Confidentiality

13

Indemnification by DISTRIBUTOR

14

Limitations

14

Termination

14

Export Control Provisions

15

Relationship of Parties

16

Notices

16

Nonassignment

17

Arbitration Clause

17

Waiver

17

Miscellaneous

18

Applicable Law

18

Execution

18

Exhibit A - Product Definition

 

Exhibit B - Distributor Requirements

 

Exhibit C - System Quantities and Discounts

 

Exhibit D - Sales and Shipping Forecast Form

 

Exhibit E - Return Material Authorization

 

AUTHORIZED DISTRIBUTOR AGREEMENT

          AGREEMENT made this 1st day of January 2004, by and between HITACHI
TELECOM (USA), INC., a Delaware corporation having an office at 3617 Parkway
Lane, Norcross, GA, 30092 (hereinafter referred to as “HITEL’) and XETA
TECHNOLOGIES, a corporation having an office at 1814 West Tacoma, Broken Arrow,
OK 74012 (hereinafter referred to as “DISTRIBUTOR”).

WITNESSETH

          WHEREAS, HITEL is engaged in the business, among other things, of
selling communication systems, materials and parts and licensing related
application and other software, all as described in Exhibit A attached hereto
(hereinafter referred to as “PRODUCTS”); and

          WHEREAS, DISTRIBUTOR desires to engage in the sale, installation and
maintenance of PRODUCTS, subject to the terms and conditions hereinafter set
forth;

          NOW, THEREFORE, in consideration of the mutual obligations set forth
herein, the parties hereto agree as follows:

1.       MASTER AGREEMENT/COMMUNICATION

          This Agreement shall constitute an overriding master agreement fully
setting forth the rights and responsibilities of the parties with respect to the
subject matter hereof, and all sales and shipments of PRODUCTS shall be made on
the terms and conditions set forth herein. The terms and conditions of this
Agreement shall supersede the terms and conditions of any purchase order or
other document submitted by DISTRIBUTOR, and HITEL shall not in any event be
bound by the terms and conditions of DISTRIBUTOR’s purchase order forms or any
other documents submitted by DISTRIBUTOR. Any conflicting or additional
provisions on purchase orders issued by DISTRIBUTOR to HITEL (specifically
including, without limitation, all terms and conditions printed on back of such
documents), or on any acceptance, confirmation, acknowledgment or similar forms
issued by HITEL shall be inapplicable to such agreements to purchase and sell,
unless specifically and expressly agreed to in a single writing signed by both
parties. DISTRIBUTOR will issue an individual Purchase Order for each system
ordered.

2.       APPOINTMENT

          Subject to the terms and conditions hereinafter provided, HITEL hereby
appoints DISTRIBUTOR and DISTRIBUTOR hereby accepts appointment by HITEL as a
non-exclusive distributor of PRODUCTS for resale to end users as specified in
this Agreement including its Exhibits.

3.       PRODUCT DEFINITION

          The term PRODUCTS, as used herein, shall refer only to PRODUCTS as
identified in Exhibit A.

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4.       TERM

          The term of the Agreement shall commence on January 1, 2004 and shall
continue until December 31, 2004. At the written request of either party given
at least ninety (90) days prior to the expiration of the Agreement, both parties
may negotiate in good faith and for a reasonable period for an extension of the
term of this Agreement. Expiration shall not affect any liabilities occurring
prior thereto, including, but not limited to, obligations with respect to
payment and delivery in connection with orders accepted prior to expiration.

5.       SALES PROMOTION AND SERVICES

          (a)        DISTRIBUTOR shall use its best efforts to maintain a sales
and service staff adequate to support effectively the sale, service and
reputation of PRODUCTS in the geographic area(s) specified in Exhibit B. It is
the expectation of HITEL and DISTRIBUTOR that DISTRIBUTOR will purchase and take
delivery of new systems, upgrade orders, parts and subcomponents to meet the
minimum purchase volume(s) for the contract year, as specified in Exhibit C. 
DISTRIBUTOR’s failure to meet the specified minimum purchase volume(s) shall
entitle HITEL to adjustments as described in Exhibit C in addition to all other
remedies available to HITEL at law.

          (b)        DISTRIBUTOR may, from time to time, request HITEL to
provide on-site sales support assistance to DISTRIBUTOR for pre-sale activities.
Subject to available manpower and at HITEL’s sole discretion, HITEL may provide
such services. This sales support assistance may be provided by HITEL or its
assignee, designee, subcontractor or the like from a HITEL location, DISTRIBUTOR
location or on-site at the customer location and shall be referred to as sales
support. Whenever possible, DISTRIBUTOR shall request sales support from HITEL
no less than fifteen (15) days prior to the date upon which DISTRIBUTOR would
like such service to be performed. Shorter notice may result in increased travel
costs, which HITEL, in its sole discretion, may require DISTRIBUTOR to pay in
exchange for the support. Such charge must be negotiated and agreed between both
parties before the date of the Sales Support.

          (c)        DISTRIBUTOR shall be responsible for the application,
installation, repair and maintenance of PRODUCTS in such a manner as to further
effectively promote the sale and use of PRODUCTS. DISTRIBUTOR shall comply with
all applicable laws, ordinances and regulations of all applicable federal, state
and local jurisdictions.

          (d)        DISTRIBUTOR agrees that sales of PRODUCTS will be to end
users of PRODUCTS and DISTRIBUTOR will not sell PRODUCTS to distributors,
dealers, sub-dealers or the like for the purpose of resale by such party(-ies)
to end users unless agreed to in writing by HITEL, prior to any such sale to
such distributor, dealer, sub-dealer or the like.

6.       FORECAST AND REPORTS

          Within thirty (30) days from the signing of this Agreement,
DISTRIBUTOR shall inform HITEL of DISTRIBUTOR’S public business plan for
PRODUCTS. DISTRIBUTOR shall also, (i) provide quarterly updates to said annual
business plan no later than two (2) weeks before the beginning of each calendar
quarter, (ii) keep HITEL informed of its activities relating to

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PRODUCTS, (iii) furnish HITEL with information relative to the number of
proposals offered, the progress of potential sales orders and the reason for
lost sale(s) and (iv) on a quarterly basis, furnish HITEL with information
summarizing significant marketing activities, trends and conditions in
DISTRIBUTOR’s Territory.

          From time to time, HITEL may advise DISTRIBUTOR of its public business
plan for PRODUCTS.

          (b)        DISTRIBUTOR shall provide to HITEL a rolling forecast of
PRODUCTS to be delivered. The forecast shall be provided by the 25th day of each
month and cover the DISTRIBUTOR’S expected PRODUCTS order activity for the three
(3) months immediately following the date of the forecast. The monthly forecast
shall be in the format as provided in Exhibit D. DISTRIBUTOR understands that
the completion and accuracy of such forecasts may affect its ability and
priority to obtain PRODUCTS within the otherwise agreed delivery intervals.

7.       ORDERS, DELIVERY

          (a)        DISTRIBUTOR shall obtain PRODUCTS by placing firm orders on
HITEL, which orders shall include a description and specification of PRODUCTS,
quantities, prices, a “requested” delivery schedule, and the name and location
of the end user (in the case of system orders).

          (b)        No order shall be binding upon HITEL unless and until it
has been accepted by HITEL in writing. HITEL shall have the right to accept or
reject any purchase order, and if HITEL rejects any purchase order, DISTRIBUTOR
hereby agrees to indemnify HITEL and hold HITEL harmless from any claim
resulting from HITEL’s refusal to accept purchase orders from DISTRIBUTOR.
HITEL’s acceptance of purchase orders shall not be unreasonably withheld.

          (c)        HITEL may delay or stop any shipment to DISTRIBUTOR if
DISTRIBUTOR fails to pay when due amounts owed to HITEL after demand for payment
has been made by HITEL (in which case DISTRIBUTOR shall be charged for storage
and cancellation at normal rates and at HITEL’s discretion) or if HITEL, in its
reasonable discretion, shall have reservations concerning DISTRIBUTOR’S
financial condition and DISTRIBUTOR fails to provide HITEL with adequate
assurances of performance after demand by HITEL.

          (d)        Except for PRODUCTS covered by accepted purchase orders,
HITEL may, at any time and from time to time, upon ninety (90) days notice to
DISTRIBUTOR, or sooner if accepted by DISTRIBUTOR, suspend or discontinue the
sale of any PRODUCTS of any type or model and substitute a new type or model,
change the design or make improvements to PRODUCTS, eliminate any type or model,
or completely discontinue the importation or sale of PRODUCTS, without any
liability on its part to DISTRIBUTOR. HITEL shall not have any obligation to
furnish or install any change, substitution or improvement on any PRODUCTS
previously sold to DISTRIBUTOR whether previously delivered or undelivered and
covered by an accepted purchase order. HITEL will provide to DISTRIBUTOR, on a
timely basis, all engineering change notices issued. Upgrades, Spare Parts,
sub-components and RMA orders will be provided at the current list prices minus
applicable hardware discounts as set forth in Exhibit C.

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          (e)        A delivery schedule shall be established by HITEL for each
order submitted by DISTRIBUTOR and accepted by HITEL within ten (10) business
days of acceptance by HITEL. Delivery may be made in installments.  Default or
delay by HITEL in delivering or shipping the whole or any part or installment of
any order shall not affect any other portion thereof, nor shall it affect any
other order between the parties. DISTRIBUTOR may cancel the order without
penalty if HITEL is unable to ship the complete order (or a sufficient part or
installment of the order so that PRODUCTS may be resold) within sixty (60) days
of the delivery schedule established by HITEL at the time of acceptance of such
order.

          (f)        Invoices for partial or installment deliveries shall be
issued at the time of shipment of such partial order or installment, except
where the systems delivered are incomplete to the point of being unsuitable for
resale.

          (g)        Except as provided in Subsection (e) hereof, DISTRIBUTOR
shall not have the right to cancel, reschedule, change or modify all or any
portion or installment of any order for PRODUCT covered by this Agreement
without HITEL’s prior written consent.

          (h)        DISTRIBUTOR may, pursuant to the terms and conditions of
this Agreement, order and HITEL shall provide spare parts, software and third
level technical support as required for the maintenance of PRODUCT for a period
of nine (9) years from the ship date of PRODUCT, provided that DISTRIBUTOR is,
at all times, in full compliance with this Agreement and HITEL has not
terminated this Agreement due to DISTRIBUTOR’s material breach.

          (i)        The acceptance by HITEL of any purchase order from
DISTRIBUTOR or the sale of any PRODUCTS by HITEL to DISTRIBUTOR after the
termination of this Agreement shall not be construed as a renewal or an
extension, or as a waiver of termination of this Agreement, but in the absence
of a new written Agreement, all such transactions shall be governed by the
provisions of this Agreement.

8.       PRICES

          The prices charged to DISTRIBUTOR shall be according to a written or
“Configurator” quote provided to DISTRIBUTOR for each system, discounted
according to the discount shown in Exhibit C. Each quote shall be valid for
ninety (90) days from the date of such quotation. No verbal quotation or verbal
confirmation given to DISTRIBUTOR shall be binding upon HITEL unless it is
confirmed in writing by HITEL.

9.       PAYMENT AND ADDITIONAL DELIVERY TERMS

          Payment terms are net thirty (30) days after invoice from HITEL for
the total outstanding invoiced amount, including new systems, parts, patches,
upgrades, expansions, etc., within the preset credit line. For the portion, if
any, exceeding the preset credit line, HITEL requires a cash payment or issuance
of an irrevocable letter of credit before shipment. HITEL may revoke the net
thirty (30) days payment terms at any time upon written notice to DISTRIBUTOR
stating the reason(s) for such revocation and insist upon an irrevocable letter
of credit, payment in advance or such other method as HITEL may determine for
all goods to be delivered after such notice.

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Any invoices which remain due and payable after thirty (30) days are subject to
a 1.67 percent (1.67%) per month service charge for each month or the fraction
thereof that the payment is not received by HITEL, or, if this interest rate
exceeds the maximum allowed by applicable law, then at the maximum lawful rate. 
HITEL is not responsible for delays caused by the United States Post Office.

Security Interest. So long as HITEL has not received full and complete payment
for any delivered PRODUCTS, a purchase money security interest in the PRODUCTS
shall be created and remain in HITEL until HITEL receives full payment of the
full invoice amount thereof. It is further understood and agreed that until said
security interests are extinguished as set forth herein, HITEL shall have the
absolute right to repossess and resell the PRODUCTS.

It is understood by the parties hereto that the ability of DISTRIBUTOR to make
the payments contemplated hereunder is of the essence of this Agreement and in
the event that DISTRIBUTOR does not make the payments in accordance with the
terms and conditions of this Agreement, for any reason or cause, including
without limitation, by virtue of any regulation or order of any government
authority, HITEL, in addition to whatever other remedies may be available to it,
may elect to terminate this Agreement immediately.

Delivery terms for all PRODUCTS shall be FOB HITEL’s designated shipping point. 
Any orders, which at DISTRIBUTOR’S request, are not shipped within sixty (60)
days of acceptance by HITEL shall be subject to a storage charge as described in
HITEL price guides.

DISTRIBUTOR shall not have the right to cancel, reschedule, change or modify all
or any portion or installment of any PRODUCTS covered by this Agreement without
HITEL’s prior written consent.  Each cancellation so agreed to by HITEL shall be
subject to a cancellation fee as described in HITEL price guides.

10.     MAINTENANCE AND SERVICE

          (a)        DISTRIBUTOR shall be responsible for the installation,
timely maintenance and service to users of PRODUCTS; and shall perform such
responsibilities in a satisfactory manner to maintain and enhance HITEL’s and
the PRODUCTS’ respective good name and reputations. Maintenance, services and
consultation as provided by DISTRIBUTOR technicians at customer locations are
referred to as first level support. Maintenance, services and consultation as
provided by DISTRIBUTOR technical experts at a centralized location providing
support to the first level support technicians are referred to as second level
support. Both first and second level support is the responsibility of
DISTRIBUTOR. For this purpose, DISTRIBUTOR shall maintain or have contracted
with a number of competent Hitachi Certified technicians, as defined in Exhibit
B, who are readily accessible to end users. DISTRIBUTOR shall, at its own
expense, maintain the technical level of its staff to provide PRODUCT technical
support in performing all of its activities under the Agreement. DISTRIBUTOR
shall also maintain an adequate inventory of parts and equipment, in accordance
with Exhibit E hereof, to maintain satisfactory operation of PRODUCTS being used
by its customers, without relying upon urgent supplies from HITEL.

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          (b)        DISTRIBUTOR acknowledges that failure to fulfill its
obligations under subparagraph (a) could irreparably damage the business
reputation of PRODUCTS, and that HITEL, upon fifteen (15) days notice (one (1)
day notice if system is not processing calls), may take corrective measures as
may in HITEL’s discretion be required, holding DISTRIBUTOR fully responsible for
cost and expenses thereof, if DISTRIBUTOR has not initiated appropriate
corrective measures within the fifteen (15) days (one (1) day if system is not
processing calls), following notice by HITEL.

          (c)        HITEL shall have access to customers at any time to review
DISTRIBUTOR’S installation and maintenance performance and degree of customer
satisfaction, and DISTRIBUTOR shall take such remedial action and/or make such
improvements in service as may be reasonably requested by HITEL in writing.
HITEL may request references from customers in connection with the promotion of
HITEL sales. HITEL, in its sole discretion: may provide customers with PRODUCT
or system passwords; or, upon the written request of customer(s), may change
PRODUCT or system password(s) without notice to DISTRIBUTOR of the new
password(s).

          (d)        Within one hundred twenty (120) days of cutover, HITEL or
its assignee may perform a technical audit to determine if the PRODUCT
installation meets HITEL’s published standards as defined in current system
documentation. If installation of the PRODUCT does not meet such standards,
HITEL may require the DISTRIBUTOR to take corrective action to meet HITEL’s
standards. If DISTRIBUTOR fails to take such action within thirty (30) days,
HITEL may take such action and invoice DISTRIBUTOR at published technical
support rates. Failure of DISTRIBUTOR to take such actions is cause for HITEL to
terminate this Agreement.

          (e)        DISTRIBUTOR may request on-site Technical Support from
HITEL by submitting written purchase orders therefore to HITEL. Subject to its
available manpower and in HITEL’s reasonable discretion, HITEL may agree to
provide such on-site Technical Support assistance to DISTRIBUTOR for
installation and/or troubleshooting of systems. Any and all such on-site
Technical Support shall be provided by HITEL at the rates set forth in HITEL
Price Guides at the time HITEL accepts the purchase order(s) for such Technical
Support, and shall include separate charges for the use of test equipment and
all travel and living expenses related to HITEL’s provision of such Technical
Support. This activity, as provided by HITEL or its assignee either from a HITEL
location or at a DISTRIBUTOR or customer location (on-site), is referred to as
third level support. The rate shall be subject to change upon ninety (90) days
prior written notice. This charge will be waived if: (i) the system is
in-warranty and on-site third level support is initiated by HITEL; or (ii) the
system is out of warranty, the on-site third level support is initiated by
DISTRIBUTOR and the problem was found to be caused by in-warranty PRODUCT. Case
(i) does not require a purchase order. DISTRIBUTOR shall make every reasonable
effort to inform HITEL two (2) weeks in advance when on-site third level support
is requested, and such support may be limited by HITEL as it may deem necessary
in view of its available manpower.

          (f)        Subject to its available manpower, HITEL Technical Support
engineers shall give telephone assistance for PRODUCTS. Telephone assistance for
out of warranty PRODUCTS will be billed at the rates set forth in HITEL Price
Guides with time charged to the nearest one-half (1/2) hour. If HITEL determines
that DISTRIBUTOR’s request for third level support should not be included in
third level support, including, but not limited to, problems that are related to
installation, configuration, integration, third party repair or unintended
usage, DISTRIBUTOR will be billed as described above regardless of warranty
status. Rates are subject to change upon ninety (90) days prior written notice.

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          (g)        HITEL will only accept calls for assistance from HITEL
Certified Technicians currently registered with HITEL by an Authorized
DISTRIBUTOR and only if the system in question is equipped for remote access and
the technician has ready access to spare parts.

          (h)        Nothing contained in this Section 10, or otherwise in this
Agreement, shall be construed as obligating HITEL, in any way, to take any
action with respect to any customer of DISTRIBUTOR.

11.     TRAINING

          Technical courses will be conducted for DISTRIBUTOR’s technicians at
HITEL facilities in Norcross, Georgia. Training shall be approximately two weeks
for Technicians. All pertinent, required documentation will be furnished by
HITEL to attendees.

          The training will be conducted by HITEL employee(s) who will be
dedicated to this function whenever a class is in progress. The training will be
conducted in a suitable area reserved for this purpose.

          DISTRIBUTOR shall bear all salary, transportation and other expenses
for its personnel in addition to tuition and material charges set forth in HITEL
Price Guides. HITEL will not release a system for shipment until DISTRIBUTOR has
had a minimum number (as defined in Exhibit B) of Technicians complete the
initial training required to receive Hitachi certification and DISTRIBUTOR
provides written authorization for Hitachi Certified technician’s call privilege
level to HITEL. A purchase order for a training class shall be issued by
DISTRIBUTOR listing the technician’s name, the geographical area to be served by
the technician after certification and charges for the class.

12.     CLAIMS

          Risk of loss and/or damage shall pass to DISTRIBUTOR upon delivery by
HITEL, at HITEL’s designated shipping point.  The issuance of a clean bill of
lading by the railroad or trucker or the issuance of a clean receipt by the
freight agent designated by DISTRIBUTOR, upon such delivery, shall constitute
conclusive proof that the package(s) containing PRODUCTS were not damaged at the
time of delivery to DISTRIBUTOR and that the number of packages delivered were
those set forth on such bill of lading or receipt. Any claim for shortages or
damage to PRODUCTS shall be made by DISTRIBUTOR to HITEL (2002 says and, except
for those claims covered by the warranty hereinafter set forth, shall be made by
DISTRIBUTOR to HITEL) within thirty (30) days after delivery by the railroad,
trucker or freight agent, as the case may be. Such claims shall be in writing,
shall specify the items under claim and the nature of the damages, and all other
details as may be reasonably required by HITEL to consider such claim. HITEL or
its representatives shall have the right to inspect and/or test the PRODUCTS
covered by such claim. If, in the reasonable opinion of HITEL, such claim is
justified, HITEL shall have the right, at its option, to promptly repair or
replace the PRODUCTS or part, or issue a credit for the invoice value thereof.

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          HITEL shall not under any circumstances or for any cause, be liable
for any actual, consequential, special or other damages or loss of use of
PRODUCTS. If DISTRIBUTOR does not make its claim within the time above provided,
it shall be deemed to have unconditionally accepted the PRODUCTS.

13.     TOLL FRAUD/DISCLAIMER

          DISTRIBUTOR understands that the PRODUCTS are not immune from
unauthorized use or fraudulent intrusions and that third parties may commit
various forms of toll fraud using the PRODUCTS as conduits. HITEL hereby
expressly disclaims that the PRODUCTS have been designed to completely prevent
or are otherwise immune from such unauthorized uses and toll fraud. DISTRIBUTOR
shall notify and warn each of its customers, verbally and in writing, of the
possibility that the PRODUCTS may be fraudulently used including, but not
limited to, unauthorized or fraudulent use of the PRODUCT’s interconnection to
long distance services, equal access (101XXXX or other types of calling),
external call forwarding, trunk to trunk calling, voice mail and DISA. In no
event shall HITEL be liable to DISTRIBUTOR, DISTRIBUTOR’s customers or
subsequent purchasers or users of PRODUCTS for any claim relating in any way to
unauthorized use of the PRODUCT or toll fraud.

14.     LIMITED WARRANTY

          HITEL warrants to DISTRIBUTOR alone, that PRODUCTS sold to DISTRIBUTOR
pursuant to this Agreement will be delivered free from defects in material and
workmanship under normal and proper use and will materially conform to HlTEl’s
specifications at the time of delivery to DISTRIBUTOR, with the term of said
warranty being fifteen (15) months for all PRODUCTS, from the date of delivery
to DISTRIBUTOR provided that:

          (a)        HITEL is promptly notified in writing of any warranty
claim: and

          (b)        DISTRIBUTOR provides HITEL with the means and access to
examine and test the PRODUCTS within a reasonable period of time, and at
DISTRIBUTOR’s cost; and

          (c)        HITEL’s examination of such items shall disclose to its
reasonable satisfaction that the claimed defect in the PRODUCTS constitutes a
breach of the above warranty and was not caused by such occurrences as misuse,
abuse, neglect, improper handling, installation, operation, maintenance,
unauthorized repair, alteration or accident. Modification of PRODUCTS by
DISTRIBUTOR or at DISTRIBUTOR’s direction, unless specifically authorized in
writing by HITEL, shall invalidate the above warranty; and

          (d)        DISTRIBUTOR complies in all respects with the procedures
for implementing HITEL’s warranty protections set forth in HITEL’s Return
Material Authorization (RMA) program description.  A copy of the current RMA
program description is attached as Exhibit E.

          This Limited Warranty does not cover any items normally consumed in
operation of Products (such as lamps, fuses, etc.) or cosmetic damage.

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          HITEL’s liability under this warranty is limited to repairing,
replacing or issuing a credit in the amount of the unit Agreement price, at its
election, for any such claim. Any repair or replacement shall not extend the
warranty period, except as provided in Exhibit E hereof. If HITEL elects to
replace a defective PRODUCT, HITEL’s obligation is limited to making a
replacement PRODUCT available to DISTRIBUTOR FO  HITEL’s designated shipping
point, and does not include such items as the provision of any labor involved or
connected therewith, such as that which is required to diagnose trouble, service
faults, etc., or removing or installing any PRODUCT, responsibility for any
transportation expense other than delivery to the FOB point, and any taxes,
duties or the like in connection therewith. HITEL may replace PRODUCTS hereunder
with new or refurbished parts or PRODUCTS, in HITEL’s discretion.

          DISCLAIMER OF WARRANTY. THIS WARRANTY IS EXTENDED TO DISTRIBUTOR ONLY
AND IS NOT TRANSFERABLE TO SUBSEQUENT PURCHASERS OR USERS OF PRODUCTS. THIS
WARRANTY IS GIVEN IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN
NO EVENT SHALL HITEL BE LIABLE FOR DAMAGES IN EXCESS OF THE VALUE OF THE
DEFECTIVE PRODUCT(S) OR PART, NOR SHALL HITEL BE LIABLE FOR ANY INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES, LOSS OF PROFITS OF ANY KIND OR FOR LOSS OF USE
OF THE PRODUCTS.

15.     REPAIR OUT OF WARRANTY

          HITEL agrees to perform repair service on HITEL PRODUCTS returned by
DISTRIBUTOR to HITEL’s designated repair facility during the term of this
Agreement and for a period of three (3) years after the last delivery of PRODUCT
under this Agreement. All PRODUCT returned by DISTRIBUTOR to HITEL for repair
will be repaired only if deemed repairable in HITEL’s sole discretion.
DISTRIBUTOR will follow the procedure in HITEL’s RMA program, (which may be
changed at HITEL’s sole discretion) for the return of  PRODUCT for repair.
Repaired PRODUCT will be shipped to DISTRIBUTOR within the period specified in
the RMA program after receipt of PRODUCT at HITEL’s designated repair facility.
DISTRIBUTOR will be billed for such repair at HITEL’s current prices in effect
at the time DISTRIBUTOR presents PRODUCT for repair. A copy of HITEL’s current
repair price list is attached as Exhibit E. In no event will HITEL be liable for
data stored on PRODUCTS presented for repair.

16.     REPAIR AND RETURN PROCEDURE

          The repair and return procedure for handling repairs of PRODUCTS both
in and out of warranty (Sections—14 and 15) is set forth in HITEL’s Return
Material Authorization (RMA) program description. The RMA program description is
available to DISTRIBUTOR upon request and may be changed by HITEL upon thirty
(30) days written notice by HITEL.  A copy of the current RMA program
description is attached as Exhibit E.

17.     INSPECTION AND TESTING

          (a)        Unless otherwise agreed in writing, HITEL’s or its
suppliers’ inspection shall be final.

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          (b)        Should any specific inspection or test be requested by
DISTRIBUTOR, all expenses therefor shall be at DISTRIBUTOR’S expense and the
delivery period and validity period (if any) shall be adjusted accordingly.

18.     PRODUCT MARKING

          All PRODUCTS sold to DISTRIBUTOR under this Agreement which bear the
HITEL or Hitachi name and/or logo, shall not have such name or logo removed nor
defaced by DISTRIBUTOR. The placing of the DISTRIBUTOR logo on PRODUCTS sold
under this Agreement is permitted only upon the prior written consent of HITEL.

19.     FORCE MAJEURE

          Any cause beyond the reasonable control of HITEL or HITEL’s suppliers,
including but not limited to sabotage, fires, floods, strikes, riots, labor
difficulties, insurrection, war, embargo priorities created at the request or
for the benefit of, directly or indirectly, any government authority, agency or
agencies thereof, act of God, breakdown of machinery or equipment, or inability
to obtain material, labor, equipment or transportation, or any failure by any of
HITEL’s suppliers to deliver or supply PRODUCT, parts or components which
results in HITEL’s failure to perform in accordance with the terms hereof, shall
not give rise to any liability or damages on account of such delay or
nonperformance, but shall be deemed an excuse for HITEL’s performance. In any
such event, HITEL shall have the right, at its election and without any
liability on it to DISTRIBUTOR to (a) cancel all or any portion of this
Agreement, or (b) perform the Agreement as so restricted or modified to the
extent determined by HITEL in its sole and absolute discretion or (c) perform
the Agreement within a reasonable time after the causes for nonperformance or
delay have terminated.

20.     ADVERTISING AND MEDIA RELATIONS

          HITEL may, as it deems necessary and desirable, advertise PRODUCTS on
a national or local basis. HITEL may list DISTRIBUTOR’s name, address and
telephone numbers in its advertising and promotional materials, at its
discretion, for as long as this Agreement is in force.

21.     TRADEMARKS

          DISTRIBUTOR does not have and is not granted any right or interest in
or to the name “HITACHI”, “HITACHI TELECOM (USA), INC.”, “HITEL’ or any
trademark or trade names owned, used or to be owned or used by HITEL or HITACHI,
LTD.  Any use of such names, trade names or trademarks by DISTRIBUTOR shall be
only upon the prior written consent of HITEL and for HITEL’s exclusive benefit.
Under no circumstances shall DISTRIBUTOR register any such name, trademarks or
trade name. DISTRIBUTOR further agrees not to contest or dispute, directly or
indirectly, HITEL’s or HITACHI, LTD.’s proprietary interest in or ownership of
the name “HITACHI”, or any trade names owned or used by HITACHI, LTD. or HITEL.
DISTRIBUTOR shall not remove, obliterate, alter or cover the trademark or name
“HITACHI” on any PRODUCT. However, DISTRIBUTOR may place on PRODUCTS its own
name or trademark.

11

22.     PATENTS

          (a)        HITEL agrees to defend, at its expense, any suit or
proceeding brought against DISTRIBUTOR based upon a third party claim of direct
infringement of a U.S. patent by PRODUCTS furnished hereunder. HITEL also agrees
to hold DISTRIBUTOR harmless against actual damages for such direct
infringement.

          (b)        HITEL’s agreement to defend and its obligation to indemnify
DISTRIBUTOR herein, which extends only to actual damages for direct infringement
of a U. S. patent which are awarded against DISTRIBUTOR in such suit or
proceeding, are subject to the following terms and conditions:

                       (1)        The agreement and obligation shall arise only
if DISTRIBUTOR gives HITEL prompt notice of the infringement claim; grants
HITEL, in writing, exclusive control over its defense and settlement; and
provides reasonable information and assistance to HITEL at HITEL’s expense, in
the defense of such claim;

                       (2)        The agreement and obligation will cover only
the PRODUCT as delivered by HITEL to DISTRIBUTOR and not to any modification or
addition made by DISTRIBUTOR or third parties;

                       (3)        The agreement and obligation shall not cover:
(i) any claim based on the furnishing of any information, service or technical
support to DISTRIBUTOR; or (ii) any claim of infringement of any third party’s
rights arising from use of any HITEL PRODUCT furnished hereunder in combination
with any other products or articles if such infringement would be avoided by the
use of the PRODUCT alone, nor does it extend to any PRODUCT furnished hereunder
of DISTRIBUTOR’S design or formula; or (iii) any claim that the use of the
PRODUCTS furnished hereunder infringes any third party’s process patent rights;
or (iv) any claim of infringement of any third party’s rights in respect to
patents, where it is the policy of such third party to offer patent license
agreements separately to end users;

                       (4)        If an infringement claim is asserted, or if
HITEL believes one likely, HITEL will have the right, but not the obligation:
(i) to procure for DISTRIBUTOR the right to use the PRODUCTS furnished hereunder
for the use contemplated by HITEL and DISTRIBUTOR in making this Agreement; (ii)
to modify the PRODUCTS furnished hereunder as appropriate to avoid such rightful
claim of infringement, as long as modification for this purpose does not
materially impair the operation thereof; or (iii) to accept the PRODUCT returned
and reimburse DISTRIBUTOR for the purchase price thereof less a reasonable
charge for wear and tear; and

                       (5)        The sale of any PRODUCT hereunder does not
convey any license by implication, estoppel, or otherwise covering combinations
of any PRODUCT furnished hereunder with other devices, articles or elements.

          (c)        DISTRIBUTOR shall indemnify and hold HITEL and its
supplier(s) harmless against any expense or liability from claims of patent
infringement of any patents related to PRODUCTS sold hereunder arising from: (i)
HITEL’s compliance with specifications or instructions furnished by DISTRIBUTOR;
(ii) use of any PRODUCT hereunder in connection with a manufacturing or other
process; or (iii) use of any PRODUCT in combination with products not supplied
by HITEL.

12

THE FOREGOING STATES HITEL’S EXCLUSIVE OBLIGATION WITH RESPECT TO CLAIMS OF
INFRINGEMENT OF PROPRIETARY RIGHTS OF ANY KIND, AND IS IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED. IN NO EVENT SHALL HITEL’S TOTAL LIABILITY TO
DISTRIBUTOR EXCEED THE PURCHASE PRICE RECEIVED BY HITEL FROM DISTRIBUTOR OF THE
ALLEGED INFRINGING HITEL PRODUCT(S).

23.     CONFIDENTIALITY

          HITEL may, from time to time during the term of this Agreement,
furnish DISTRIBUTOR Confidential Information relating to PRODUCTS. “Confidential
Information” includes without limitation:

 

(i)        any source code and internal (programmers’) documentation for any
software disclosed to DISTRIBUTOR;

 

(ii)       non-public financial information concerning HITEL;

 

(iii)      HITEL’s or Hitachi, Ltd. research and development;

 

(iv)      HITEL’s pricing or marketing plans;

 

(v)        technical support information, materials and documentation concerning
the operation, design and functionality of PRODUCTS;

 

(vi)       HITEL’s customer lists; and

 

(vii)      any information designated as confidential in writing.

          Confidential Information may be furnished orally, in written form,
including descriptive material, diagrams, specifications and other documents, or
by way of consignment. Written Confidential Information shall be marked
“Confidential”. DISTRIBUTOR agrees that all Confidential Information made
available to it by HITEL shall be kept strictly confidential by it, and
DISTRIBUTOR shall not divulge any such Confidential Information to any other
person, firm, corporation, association or entity without the express prior
written consent of HITEL. Confidential Information may be disclosed only to such
of DISTRIBUTOR’s employees who reasonably require access to such Confidential
Information for the purpose for which it was disclosed. DISTRIBUTOR shall not
make use of such Confidential Information without HITEL’s prior written consent
and agrees that in no event shall it use any such Confidential Information in
connection with the manufacture by it or by others of any product or equipment
similar to the PRODUCTS. The obligations of DISTRIBUTOR under this paragraph
shall survive any termination of this Agreement for a period of seven (7) years.

          Information shall not be deemed confidential information or know-how
if it is:

          (a) publicly available prior to this Agreement or is made publicly
available by HITEL without restrictions;

          (b) rightfully received by DISTRIBUTOR from third parties without
accompanying secrecy obligations;

          (c) already in DISTRIBUTOR’s possession and was lawfully received from
sources other than HITEL;

13

          (d) independently developed by DISTRIBUTOR and can be so shown by
written evidence; or

          (e) approved in writing by HITEL for release.

          The secrecy of the Confidential Information and know-how shall be
maintained for a period of seven (7) years from the day of disclosure thereof.
Upon request of HITEL, any written information subject to these provisions shall
be returned to HITEL.

24.     INDEMNIFICATION BY DISTRIBUTOR

          DISTRIBUTOR agrees to indemnify, defend and save harmless HITEL and
its officers, directors, agents, employees, shareholders, legal representatives,
successors and assigns, suppliers, and each of them, from any and all claims,
actions and suits, whether groundless or otherwise, and from and against any and
all liabilities, judgments, losses, damages, costs, charges, attorneys’ fees,
and other expenses of every nature and character by reason of DISTRIBUTOR’S
business and/or actions with respect to the PRODUCTS including any claims,
actions or suits not covered under HITEL’s warranty as set forth in Section 14
hereof. DISTRIBUTOR further agrees that the provisions contained in this Section
24 shall survive the termination or expiration of this Agreement.

25.     LIMITATIONS

          NEITHER HITEL NOR ITS SUPPLIERS WILL BE LIABLE FOR ANY SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES, EVEN IF INFORMED OF THE POSSIBILITY THEREOF
IN ADVANCE. THESE LIMITATIONS APPLY TO ALL CAUSES OF ACTION IN THE AGGREGATE,
INCLUDING WITHOUT LIMITATION CAUSES OF ACTION ARISING OUT OF TERMINATION OF THIS
AGREEMENT, BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY,
MISREPRESENTATION AND OTHER TORTS.  NO ACTION MAY BE BROUGHT BY DISTRIBUTOR AT
ANY TIME MORE THAN TWELVE (12) MONTHS AFTER THE CAUSE OF ACTION ARISES. IN NO
EVENT SHALL HITEL’S OR ITS SUPPLIERS’ LIABILITY IN CONNECTION WITH PRODUCTS OR
THIS AGREEMENT EXCEED AMOUNTS PAID TO HITEL BY DISTRIBUTOR HEREUNDER.

26.     TERMINATION

26.1   This Agreement will terminate:

          (a)        On the thirtieth (30th) day after either party gives the
other notice of a material breach by the other of any term or condition of this
Agreement, or of any agreement between HITEL and DISTRIBUTOR relating to the
PRODUCTS, unless the breach is cured before that day; or

14

          (b)        When DISTRIBUTOR experiences any significant change in the
ownership, control, organization, legal form of doing business, key personnel,
merger or consolidation which HITEL, in its discretion, believes will have an
adverse effect on future sales or service.

          (c)        Either party may terminate this Agreement on ten (10) days
written notice if the other party is insolvent, files a petition of bankruptcy,
or has made any assignment by operation of law or otherwise of this Agreement or
of any of its rights hereunder for the benefit of creditors.

          (d)         As provided elsewhere in this Agreement.

26.2   After termination:

          (a)        DISTRIBUTOR may continue to sell the PRODUCTS in its
possession for which it has fully paid HITEL, and to market those PRODUCTS in
its customary manner in the ordinary course of business.

          (b)        DISTRIBUTOR’s payment and indemnification obligations
arising prior to termination and the obligations of each party to keep the
other’s Confidential Information confidential, will remain in force.

          (c)        The due date for all invoices for PRODUCTS or Spare Parts
shall automatically be accelerated so that they shall immediately become due and
payable on the effective date of termination, even if longer terms had been
provided previously. This Subsection (c) does not apply to termination due to
expiration of the term of the Agreement as provided for in Section 4.

          (d)        In the event of termination of this Agreement due to
DISTRIBUTOR’s material breach, HITEL’s obligation to provide Spare Parts,
Software, third level Technical Support and repair support under this Agreement
will terminate at that same time.

          (e)        DISTRIBUTOR shall immediately cease to hold itself out as
an Authorized DISTRIBUTOR of PRODUCTS and shall cease to exercise any rights
granted in accordance with this Agreement, and remove all signs, telephone
directory listings, advertisements, logotypes, names, insignia and/or all other
promotional materials identifying it in any way as an authorized HITEL
DISTRIBUTOR. DISTRIBUTOR shall return to HITEL all copies of HITEL furnished
proprietary information except information specifically required to operate and
maintain installed PRODUCTS.

26.3   Liability and Other Remedies. Neither party will be liable for damages of
any kind as a result of exercising its right to terminate this Agreement, and
termination will not affect any other right or remedy available in law or in
equity of either party.

27.     EXPORT CONTROL PROVISIONS

          The obligations of DISTRIBUTOR under this paragraph shall survive any
termination of this Agreement.

15

          Neither party shall commit any act or request the other party to
commit any act which would violate either the letter or spirit of the export
control laws or regulations of the United States, or other export control laws,
rules or regulations, and neither party shall fail to take any action reasonably
within its capacity to assure compliance with such laws, rules or regulations.

          DISTRIBUTOR represents and warrants that it shall not, directly or
indirectly, export, re­-export or transship PRODUCTS and/or technical data (“the
Commodities”) in violation of any applicable export control laws promulgated and
administered by the government of any country having jurisdiction over the
parties or the transaction(s) contemplated herein.

          HITEL shall have the right to refuse to accept DISTRIBUTOR orders for
PRODUCTS, or to deliver PRODUCTS to fulfill any previously accepted DISTRIBUTOR
order if HITEL determines, in good faith, that such proposed sale or other
disposition of the PRODUCTS poses an unreasonable risk of a violation of any
applicable export control law or regulation.

          DISTRIBUTOR acknowledges that various countries’ laws and regulations
regulate the export of computer products and technology, and may prohibit use,
sale, or re-export of same. If DISTRIBUTOR knows, becomes aware of, or has
reason to know that the PRODUCTS and any technology in conjunction therewith are
for use in connection with the design, development, production, stockpiling, or
use of nuclear, chemical, or biological weapons or missiles, or if DISTRIBUTOR
sells or transfers its title and/or right to use all and/or any part of the
PRODUCTS, and/or other products or materials supplied by HITEL to a third party
or itself exports the PRODUCTS, DISTRIBUTOR shall ensure that all current export
restrictions are observed.

          In the event HITEL refuses to deliver PRODUCTS to fulfill previously
accepted DISTRIBUTOR orders as set forth in the paragraph immediately preceding,
or the necessary export or re-export authorizations are not obtained within a
reasonable period of time, HITEL, at its option, may cancel the order or this
Agreement, without penalty.

28.     RELATIONSHIP OF PARTIES

          The relationship created between the parties hereto is that of vendor
and vendee, and neither party nor any of its employees, customers or agents
shall be deemed to be the representative, agent or employee of the other party
for any purpose whatsoever, nor shall any of them have any right or authority to
assume or create an obligation of any kind or nature, expressed or implied, on
behalf of the other, nor to accept service of any legal process addressed to or
intended for the other.

29.     NOTICES

          DISTRIBUTOR shall provide HITEL immediate written notice of any of the
following events: (i) any material change in DISTRIBUTOR’S business or financial
situation; (ii) any significant sale, bequest, or other transfer of the
ownership (or any portion thereof) of DISTRIBUTOR’S business; (iii) a change in
DISTRIBUTOR’S service management; and (iv) a change in the location of
DISTRIBUTOR’S senior sales or service facilities or personnel.

          All notices to be given pursuant to this Agreement shall be in writing
and sent by registered or certified mail, return receipt requested, postage
pre-paid, to the address of the respective party first set forth above or to
such other address as such party may hereafter designate by notice in accordance
with this paragraph.

16

30.     NONASSIGNMENT

          DISTRIBUTOR shall not voluntarily or by operation of law, assign this
Agreement or any right accruing to it hereunder or delegate any duty owed by it,
without the prior written consent of HITEL. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their respective permitted
successor in interest and permitted assigns.

31.     ARBITRATION CLAUSE

          Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach thereof (“Dispute”), shall be settled by binding
arbitration, conducted on a confidential basis, under the then current
Commercial Arbitration Rules of the American Arbitration Association (“the
Association”) strictly in accordance with the terms of this Agreement and the
substantive law of the State of New York. The arbitration shall be held at a
mutually agreeable location in New York, NY and conducted by one arbitrator
chosen from a list of attorneys who are members of the Association’s commercial
arbitration panel, from a neutral geographic location, who is knowledgeable
about telecommunications systems and private branch exchange systems and who has
been engaged in the practice of law for a period of at least ten (10) years. If
the parties cannot promptly, within 30 days, agree on the selection of the
arbitrator, the arbitrator will be chosen pursuant to Rule 13 of the Commercial
Arbitration Rules of the Association. The costs of the arbitration, including
fees to be paid to the arbitrator, shall be shared equally by the parties to the
Dispute. Each party shall bear the cost of preparing and presenting its case to
the arbitrator. The parties to the Dispute shall be limited to taking no more
than three (3) depositions each. The length of each deposition shall be limited
to one (1) day. No interrogatories shall be permitted. The scope of document
production shall be governed by the Commercial Arbitration Rules of the
Association and the decision of the arbitrator with respect thereto.

          The arbitration shall be completed within six (6) months from the date
of the selection of the arbitrator. The arbitrator shall issue his/her award and
a brief description of the basis for the award in writing. The judgment upon the
award rendered by the arbitrator may be entered and enforced in any court of
competent jurisdiction. Neither party shall be precluded hereby from seeking
provisional remedies in the courts of any jurisdiction including, but not
limited to, temporary restraining orders and preliminary injunctions, to protect
its rights and interests, but such shall not be sought as a means to avoid or
stay arbitration. The parties agree that they have voluntarily agreed to
arbitrate their disputes in accordance with the foregoing.

32.     WAIVER

          No claim or right arising out of a breach of this Agreement shall be
discharged in whole or in part by a waiver or renunciation of the claim or right
unless the waiver or renunciation is in writing signed by the aggrieved party.
The failure of DISTRIBUTOR or HITEL to enforce at any time or for any period of
time any of the provisions hereof shall not be construed to be a waiver of such
provisions nor the right of DISTRIBUTOR or HITEL thereafter to enforce each and
every such provision.

17

33.     MISCELLANEOUS

          (a)        Each party hereto warrants and represents to the other that
it is legally free to enter into this Agreement, that the execution hereof has
been duly authorized, and that the terms and conditions of this Agreement, and
each party’s obligations hereunder, do not conflict with or violate any terms or
conditions of any other agreement or commitment by which such party is bound.

          (b)        This Agreement, including all Exhibits hereto, is intended
to be the sole and complete statement of the obligations of the parties relating
to the subject mailer hereof, and supersedes all previous understandings,
agreements, negotiations and proposals as to this Agreement. Any pre-printed or
other terms and conditions on DISTRIBUTOR’s order form or HITEL’s confirmation
or acknowledgement form shall be of no force or effect. Except as otherwise
provided herein, no provisions of this Agreement shall be deemed waived, amended
or modified by any party unless such waiver, amendment or modification shall be
in writing and duly signed by both parties hereto. The paragraph headings are
for purposes of convenience only.

          (c)        This Agreement may be executed in several counterparts,
each of which shall be deemed the original, but all of which shall constitute
one and the same instrument.

34.     APPLICABLE LAW

          This Agreement and the relationship created hereby shall be governed
and construed in all respects in accordance with the law of the State of
Georgia, United States of America.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

HITACHI TELECOM (USA), INC.

 

XETA TECHNOLOGIES

 

By:

/s/T. SHIMIZU

 

By:

/s/L. N. PATTERSON

 

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

 

 

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

Title:

President

 

Title:

Exec. Director

18

EXHIBITS

for

HCX5000IHCX50001®

AUTHORIZED DISTRIBUTOR

AGREEMENT for 2004

by and between

HITACHI TELECOM (USA), INC.

and

XETA TECHNOLOGIES

EXHIBIT A

PRODUCT DEFINITION

          The term “PRODUCT” as used in this Agreement means the digital HCX5100
and HCX5000i PBX systems, and all related software.  The HCX systems above
referred include both hardware and software required to enable the systems to
function according to their respective specifications. All PRODUCT software is
licensed to DISTRIBUTOR pursuant to the terms and conditions of this Agreement,
including this Exhibit A, and shall not be deemed to be sold to or purchased by
DISTRIBUTOR.

ALL OF THE SOFTWARE PROVIDED PURSUANT TO THIS AGREEMENT INCLUDING EACH OF THE
APPLICATION PRODUCTS IS PROVIDED FOR THE LIMITED PURPOSES CONTEMPLATED IN THIS
AGREEMENT. DISTRIBUTOR SHALL ONLY BE AUTHORIZED TO USE, SUBLICENSE OR THE LIKE
ANY OF THE SOFTWARE PROVIDED BY HITEL OR ITS SUPPLIERS WITH THE SPECIFIC HCX5000
OR HCX5000i THAT INCORPORATES SUCH SOFTWARE OR FOR WHICH SUCH SOFTWARE IS
EXPRESSLY PROVIDED AND IN CONJUNCTION WITH LEGITIMATE EFFORTS BY DISTRIBUTOR TO
RESELL THE DIGITAL HCX5000 OR HCX5000i COVERED BY THIS AGREEMENT. IN ADDITION,
DISTRIBUTOR AND ITS CUSTOMERS SHALL BE BOUND BY THE TERMS AND CONDITIONS OF USE
OF THE SOFTWARE CONTAINED IN THE SHRINK-WRAP LICENSES PACKAGED WITH EACH
RESPECTIVE SOFTWARE PACKAGE, A COPY OF HITEL’S SHRINK-WRAP LICENSE IS ATTACHED
TO THIS EXHIBIT A.

THE TERM “PRODUCT” NOT ONLY INCLUDES THE ABOVE SYSTEMS AND PARTS, BUT ALSO
UPGRADES, SUBCOMPONENTS AND REPAIRED ITEMS TO THESE SYSTEMS THAT ARE OFFERED FOR
SALE BY HITEL OR ITS SUPPLIERS. UPGRADES FROM THESE SYSTEMS TO OTHER HCX5000
SYSTEMS THAT ARE NOT LISTED ARE NOT INCLUDED IN THE TERM “PRODUCTS”.

SHRINK-WRAP LICENSE AGREEMENT

READ THE TERMS AND CONDITIONS OF THIS LICENSE AGREEMENT CAREFULLY BEFORE OPENING
THE PACKAGE CONTAINING THE PROGRAM DISKETTES, THE SOFTWARE THEREIN, AND
ACCOMPANYING DOCUMENTATION (THE “PROGRAM”). THE PROGRAM IS COPYRIGHTED AND
LICENSED (NOT SOLD). BY OPENING THE PACKAGE CONTAINING THE PROGRAM, YOU ARE
ACCEPTING AND AGREEING TO THE TERMS OF THIS LICENSE AGREEMENT. IF YOU ARE NOT
WILLING TO BE BOUND BY THE TERMS OF THIS LICENSE AGREEMENT, YOU SHOULD PROMPTLY
RETURN THE PACKAGE IN UNOPENED FORM.

Hitachi Telecom (USA), Inc. (“Licensor”) hereby grants to you, and you hereby
accept the non-exclusive right to use the Program Diskettes and the computer
programs contained therein in machine-readable, object code form only
(collectively referred to as the “Software”), and the accompanying documentation
only as authorized in this License Agreement. The Software may be used only on a
single computer which is owned, leased, or otherwise controlled by you solely
for the purpose of your own internal business operation. You may NOT distribute
copies of the Software or related documentation to others. You shall use any
documentation provided by Licensor only in conjunction with your business use of
the Software. This License is restricted to use within the United States and
Canada and is not transferable except as expressly provided herein.
You may NOT transfer the Software and License to another person or company
unless:
1. you receive the prior written consent of Licensor, and
2. the person or company to whom you are transferring it agrees to accept the
terms and conditions of this License and does so in a writing signed by that
party. If you transfer the Software, you must at the same time either transfer
all copies, whether in printed or machine readable form, to the same party or
destroy any copies not transferred. This includes all portions of the Software
contained or merged into other programs.
You agree to reproduce and include the copyright notice on any copy,
modification or portion merged into another program.
You acknowledge and agree that the Software is a proprietary, unpublished
product of Licensor, protected under U.S. copyright law and trade secret laws of
general applicability. You further acknowledge and agree that all right, title
and interest in and to the Software is and shall remain with Licensor. This
License does not convey to you an interest in or to the Software but only a
limited right of use revocable in accordance with the terms of this License. You
hereby agree that Licensor may hold you liable or responsible for any violation
of this License.

A-2

YOU MAY NOT USE, COPY, SUBLICENSE, ASSIGN OR TRANSFER THE LICENSE OR THE
SOFTWARE IN WHOLE OR IN PART, EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS LICENSE. 
YOU MAY NOT MODIFY, TRANSLATE, ADAPT, REVERSE ENGINEER, DECOMPILE, DISASSEMBLE,
OR CREATE DERIVATIVE WORKS BASED ON THE SOFTWARE OR RELATED DOCUMENTATION. IF
YOU TRANSFER POSSESSION OF ANY COPY, MODIFICATION OR MERGED PORTION OF THE
SOFTWARE TO ANOTHER PARTY WITHOUT PRIOR WRITTEN CONSENT OF LICENSOR, YOUR
LICENSE IS AUTOMATICALLY TERMINATED.
Any attempt to sublicense, assign or transfer any of the rights under this
License, except as expressly provided for in this License, will void any of
Licensor’s duties or obligations hereunder.

TERM
The License is effective until terminated by either party. You may terminate it
at any time by destroying the Software together with all copies, modifications,
and merged portions in any form. The License will also terminate upon the
conditions set forth elsewhere in the Agreement or if you fail to comply with
any term or condition of the Agreement. You agree that upon termination, you
will destroy the Software together with all copies, modifications and merged
portions in any form.

LIMITED WARRANTY
THE SOFTWARE IS PROVIDED “AS IS” WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE ENTIRE RISK AS TO THE
QUALITY AND PERFORMANCE OF THE SOFTWARE IS WITH YOU. SHOULD THE SOFTWARE PROVE
DEFECTIVE, YOU (AND NOT LICENSOR) ASSUME THE ENTIRE COST OF ALL NECESSARY
SERVICING, REPAIR OR CORRECTION. SOME STATES DO NOT ALLOW THE EXCLUSION OF
IMPLIED WARRANTIES, SO THE ABOVE EXCLUSION MAY NOT APPLY TO YOU. THIS WARRANTY
GIVES YOU SPECIFIC LEGAL RIGHTS AND YOU MAY ALSO HAVE OTHER RIGHTS, WHICH VARY,
FROM STATE TO STATE.
Licensor does not warrant that the functions contained in the Software will meet
your requirements or that the operation of the Software will be uninterrupted or
error free.

LIMITATIONS OF REMEDIES
Licensor’s entire liability to you or any other party for any loss or damages
resulting from any claim, demands, or actions arising out of or relating to this
License and your exclusive remedy shall be:
1. the replacement of any media which is returned to Licensor, or
2. if Licensor is unable to deliver a replacement media free from defects in
materials and workmanship, you may terminate this License by returning any
copies of the Software.

IN NO EVENT SHALL LICENSOR OR ITS SUPPLIER(S) BE LIABLE FOR ANY DAMAGES,
INCLUDING ANY LOST PROFITS, LOST SAVINGS, OR OTHER INCIDENTAL, INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE SUCH
SOFTWARE EVEN IF LICENSOR OR ITS SUPPLIER(S) HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, OR FOR ANY CLAIM BY ANY OTHER PARTY.

A-3

SOME STATES DO NOT ALLOW LIMITATIONS OR EXCLUSION OF LIABILITY FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES, SO THE ABOVE LIMITATIONS MAY NOT APPLY TO YOU.

UPDATES
ALL UPDATES, MODIFICATIONS, AND ENHANCEMENTS PROVIDED TO YOU SHALL BECOME PART
OF THE MATERIALS GOVERNED BY THE TERMS OF THIS LICENSE.  IF THE REGISTRATION
CARD IS NOT RECEIVED BY LICENSOR, LICENSOR IS UNDER NO OBLIGATION TO MAKE
AVAILABLE TO YOU ANY UPDATES EVEN THOUGH YOU HAVE MADE PAYMENT OF THE APPLICABLE
UPDATE FEE.

GENERAL
This License Agreement shall be governed by the laws of the state of Georgia and
shall inure to the benefit of Licensor, its successors, administrators, heirs,
and assigns. Should you have any questions concerning this Agreement, you may
contact Licensor by writing to Hitachi Telecom (USA), Inc., 3617 Parkway Lane,
Norcross, GA 30092.

BY USING THE SOFTWARE, YOU ACKNOWLEDGE THAT YOU HAVE READ THIS AGREEMENT,
UNDERSTAND IT, AND AGREE TO BE BOUND BY ITS TERMS AND CONDITIONS. YOU FURTHER
AGREE THAT IT IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
US WHICH SUPERSEDES ANY PROPOSAL OR PRIOR AGREEMENT, ORAL OR WRITTEN, AND ANY
OTHER COMMUNICATIONS BETWEEN US RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT.

COPY RETENTION
The Software media may not be copy protected in all cases. You may make backup
copies for your own use, if available, but this does not mean that you can make
unlimited copies. The Software is protected by copyright law. IT IS ILLEGAL TO
GIVE A COPY OF THE SOFTWARE TO ANOTHER PERSON OR COMPANY.

 

DISTRIBUTOR shall be given access to certain software downloads only upon the
terms and conditions of this Agreement, including the Software Download
Agreement below.

SOFTWARE UPDATE DOWNLOAD AGREEMENT

This Software Update Download Agreement is provided by Hitachi Telecom (USA),
Inc. (“Hitel”) only to its Authorized Distributors, in good standing, subject to
the terms and conditions of the Authorized Distributor Agreement, including all
licensing terms contained or referred to in Exhibit A thereto, and the
following. You are not an Authorized Distributor unless

A-4

you are a party to a current HCX5000/HCX5000i Authorized Distributor Agreement
with Hitel. By downloading each software update, you represent and warrant that:
you are a Hitel HCX5000/HCX5000i Authorized Distributor in good standing under a
current Authorized Distributor Agreement; and, you have read, understood and
will comply with all of the terms and conditions hereof.

1.     You shall provide written notice to Hitel of each and every site to which
you apply each software update and the Update Level for that site that is
provided by this download, within twenty-four (24) hours of your application of
this software update to the respective site(s).

2.     You shall comply in all material respects with any and all instructions
provided by Hitel relating to the application of this software update.

3.     You shall download this software update in its entirety at each site to
which you apply this software update. Partial downloads are prohibited.

4.     After completely applying this software update to a system, you shall
IMMEDIATELY perform a system reload.

5.     You shall NOT distribute or copy this software update in any form,
including electronic and/or printed copies.

6.     You shall comply with whatever instructions Hitel may give, should Hitel
determine this software update needs to be replaced, including all Hitel
instructions relating to obtaining and applying replacement software.

7.     You have agreed in writing that this Software Update Download Agreement
is an Addendum to and incorporated in the Authorized Distributor Agreement
between you and Hitel.

8.     It is the responsibility of the Distributor to keep their sites at the
current Software Update Level.

9.     You are required to comply with the terms and conditions of the EXPORT
CONTROL PROVISIONS as included in Section 15 of this Agreement.

Signed:

/s/ L. N. PATTERSON

 

Date:

Feb 26, 2004

 

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

 

 

 

A-5

EXHIBIT B

DISTRIBUTOR REQUIREMENTS

1.       GEOGRAPHICAL COVERAGE

          HITEL appoints DISTRIBUTOR as a nonexclusive distributor for PRODUCTS
as described in Exhibit A. DISTRIBUTOR’S appointment covers the sale and service
of PRODUCTS in DISTRIBUTOR’S REGIONS shown on the schedule below. DISTRIBUTOR
may close any marketing location and relocate it within DISTRIBUTOR’S
geographical area of coverage. HITEL reserves the right to appoint additional
PRODUCT sales distributors anywhere in the United States including any or all of
the marketing locations shown below. DISTRIBUTOR shall maintain an adequate and
aggressive sales organization at all times during the term of this Agreement in
order to assure maximum distribution of PRODUCTS.

          REGION

               US

2.        REQUIRED SUPPORT CAPABILITIES

          (a)        Technical Assistance Center

          DISTRIBUTOR is required to maintain a Technical Assistance Center
(TAC) to provide second level remote maintenance support of all geographical
areas covered in (1). DISTRIBUTOR agrees to provide TACs as described above
located as follows:

 

XETA TECHNOLOGIES

 

 

1814 W. Tacoma

 

 

Broken Arrow, OK

 

 

                                      74012-1406

 

          DISTRIBUTOR will inform HITEL which systems will be handled by each
TAC.

          (b)        Spare Parts. DISTRIBUTOR is required to maintain an
adequate supply of spare parts (as defined in Exhibit G) in each geographical
region covered in (1) to support troubleshooting of system or PRODUCT problems
and normal system or PRODUCT maintenance.

          (c)        DISTRIBUTOR is required to maintain or provide access to a
minimum of two (2) HITEL Certified Technicians per geographical region served.
National Distributors (REGION is Continental U.S.) are required to maintain a
minimum of 15 HITEL Certified Technicians.

          (d)        DISTRIBUTOR is required to furnish to HITEL as part of this
Agreement, a list of HITEL certified technicians. DISTRIBUTOR is also required
to furnish to HITEL a technical support authorization, in writing, designating
the certified technicians authorized by DISTRIBUTOR to call HITEL for third
level support, and authorized by DISTRIBUTOR to issue purchase orders to HITEL
during non-business hours and in emergency situations. Such list must include
technician’s name and certification number.

          (e)        Immediately upon termination or separation from
DISTRIBUTOR’s employ of any such listed certified technician, DISTRIBUTOR is
required to notify HITEL in writing of such termination or separation, Until
such written notice is received, HITEL may provide such technician with the
services for which they were previously authorized and HITEL will in no way be
responsible for the actions of such terminated technician. Upon receipt of such
written notice, HITEL will remove said technician’s name from its approved list
until such time as said technician has been employed and re-registered with
HITEL by the same or another Authorized Distributor. The charge by HITEL to
Authorized Distributors for re-registration of certified technicians shall be
One Hundred Twenty Five ($125.00) Dollars per individual re-registered.

B-2

EXHIBIT B DISTRIBUTOR REQUIREMENTS (cont)

HITACHI CERTIFIED TECHNICIANS

Distributor:

             Xeta Technologies

Date:

                       Feb 1, 2004

 

 

 

 

Contract Year:

Jan-Dec 2004

 

 

Technician Name

 

City, State

 

HCX ID #

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See Attached   

 

 

 

 

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          List all employees who have received a Technician Certification
Number.  DISTRIBUTOR is responsible for notifying HITEL when a technician leaves
the employ of the DISTRIBUTOR.

B-3

Xeta Technologies
Hitachi Certified Employees

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

*

 

 

 

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

 

* The asterisk (*) indicates that material has been omitted pursuant to a
request for confidential treatment.  The omitted material has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the rules to the Securities and Exchange Act of 1934, as amended.

B-4

EXHIBIT C

SYSTEM QUANTITIES AND DISCOUNTS

          HITEL periodically issues list price information in written or
“Configurator” form for new systems, upgrade orders, parts, sub-components and
HITACHI PRODUCTS Return Material Authorization (RMA). This information is
referred to in this Agreement as HITEL Price Guides. The current new system
Configurator or upgrade and Unit Parts Price Guide represent the only definition
of PRODUCTS list prices except where superseded in specific instances by other
written quotations issued by HITEL. Discounts in this Exhibit apply to list
prices of hardware (or other items defined as discountable in HITEL Price
Guides, except for items for which other specific discounts are specified in
such Price Guides).

          1. DISTRIBUTOR agrees to purchase and pay for a minimum $       
*                 in total net to Hitel, from Hitel during this contract year.
These purchases will receive a discount as defined above of    *      %.

Table 1

 

Commitment ($)

 

Discount

 

 

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

 

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

 

 

*

 

*

 

2.

SPECIAL CONSIDERATION. HITEL will review DISTRIBUTOR sales versus commitment
quarterly. If DISTRIBUTOR does not order, accept delivery and pay for at least
the amount of prorated PRODUCT committed, HITEL has the option, upon sixty (60)
days written notice, to change the discount schedule

 

 

 

OTHER DISCOUNTS. The following discounts to list prices also apply:

- UpGrade Orders. Upgrade orders are quoted at a net price. No discount may be
applied.

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

* The asterisk (*) indicates that material has been omitted pursuant to a
request for confidential treatment.  The omitted material has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the rules to the Securities and Exchange Act of 1934, as amended.

- Parts Orders:

          (a)        A volume order of more than $ * net price, covered by one
(1) purchase order, shipped as a unit (except for back order items) to one (1)
address with a minimum delivery schedule of thirty (30) days, shall receive the
discount shown above off list price. NOTE: The $ *  amount must be met after the
discount is applied.

          (b)        Less than $ *  net cost per order shall receive a discount
of * % off list price.

          (c)        All expedited orders shall be charged the then current
expedite fees.

- Sub-component orders

0%

 

 

- Material Return Authorization Repair and Return

0%

 

 

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

* The asterisk (*) indicates that material has been omitted pursuant to a
request for confidential treatment.  The omitted material has been filed
separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of
the rules to the Securities and Exchange Act of 1934, as amended.

C-2

Confidential

30 / 60 / 90 / 120+ Days Distributor Sales and Shipping Projection.

 

 

 

 

 

Authorized Distributor Agreement – EXHIBIT D

 

          Distributor_____________

                          Date________________

 

  New

                     Customer Information

    System Information

Probability to Ship Within

  Const.

 

Customer Name

City

St

System

S/W

Lines

Dollars

C

L

Comments

This Mo.

31-60

61-90

91-120

121+Days

Y or N

 

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

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

  1

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  2

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  3

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  4

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  5

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  6

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  7

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  8

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

  9

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

10

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

11

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

12

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

13

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

14

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

15

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

16

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

17

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

18

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

19

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

20

 

 

 

 

 

 

 

 

 

 

0%

0%

0%

0%

0%

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C – Have Contract Signed

Is This Site New Construction

Please use the codes & percentages as shown in the color coded boxes.

 

L – Lease (Financing) Completed

Yes (Y) or No (N)

Include all available

HCX5100  =

5100

 

XX% - Proposed, waiting for customer reaction

 

Hitel Products

HCX5000i  =

5000i

 

50% - Working, positive reaction from customer

 

 

Software Upgrades  =

Upg

 

55% - Distributor has verbal agreement from customer

 

 

System Add On     

Add

 

60% - Customer has contract for signature

 

 

coaXmedia  =

Coax

 

70% - Distributor has signed contract

 

 

Paradyne  =

Par

 

80% - distributor has contract, leasing is secure or downpayment issued

 

 

Call@Vantage  =

Call

 

90% - Distributor has contract / leasing is secured or downpayment issued, site
is ready for install

 

 

Digital Speech     

Dig

 

95% - Order is in house at Hitachi & scheduled for shipment

 

 

Innovations     

Inn

 

100% - System has shipped

 

 

SciTec     

Sci

 

LOST – Proposed system lost to (List system name & distributor in comment
section)

 

Confidential

Suite Speed     

SS

 

 

 

C-3

EXHIBIT E

HITEL PRODUCTS RETURN MATERIAL AUTHORIZATION POLICY

          Attached is HITEL’s current HITACHI PRODUCTS Return Material
Authorization Policy. This policy is subject to change by HITEL upon written
notice. (All repair and return of Supplier PRODUCTS is handled directly between
DISTRIBUTOR and Supplier.)

EXHIBIT E

RETURN MATERIAL AUTHORIZATION PROCEDURE

FOR HITEL PRODUCT ONLY

I.

GENERAL

 

 

1.

The Return Material Authorization (RMA)program as per contracted agreement
referenced herein is offered only to authorized Hitachi Telecom (USA), Inc.
(HITEL) Distributors.

 

 

2.

Distributors are required to have Hitachi certified technicians and to stock
spare parts sufficient to handle normal maintenance and most emergencies as
defined in Appendix A. In order for Distributors to obtain parts and repair of
parts from HITEL, Distributors must follow the procedures set forth herein.

 

 

3.

This Return Material Authorization procedure specifies the terms and conditions
for returning parts to HITEL.

 

 

4.

HITEL will use reasonable efforts to repair or replace warranted defective parts
within thirty (30) days from the date of receipt of said defective parts by
HITEL as specified herein. HITEL in its sole discretion may replace defective
equipment with either used or new equipment, as it deems appropriate.

 

 

5.

Warranty coverage on new HCX5000 systems and parts is defined in the
Distributorship Agreement.

 

 

6.

Warranty coverage on repaired parts shall be identical to the warranty set forth
in the Authorized Distributorship Agreement for new HCX5000 systems and parts
with the exception that the warranty covering repaired parts will be effective
for three (3) months from shipment date of the repaired item or the remainder of
the original warranty, whichever is longer.

 

 

7.

Any parts returned without a bar code label will be considered out of warranty.

 

 

8.

HITEL will only provide advance replacement parts in limited situations
described herein under RMA DEFINTIONS.

 

 

II.

RMA DEFINITIONS

 

 

1.

RMA Repair and Return. All parts returned to HITEL pursuant to this RMA
statement will be treated as RMA Repair and Return, except for cases of RMA
Special Approval and RMA DOA as defined herein. All RMA Repair and Return will
be considered as either in-warranty or out-of-warranty.

2.

In-Warranty. Parts which are covered by a HITEL warranty that has not expired
and is otherwise in effect and which are not subject to any exceptions,
exclusions or the like (including but not limited to exceptions listed in the
Authorized Distributor Agreement) will be treated as in-warranty according to
the warranty provisions set out in the Distributor Agreement.

 

 

3.

Out-of-Warranty. Parts which are not covered by a HITEL warranty for whatever
reason will be treated as out-of-warranty.

 

 

4.

RMA DOA. Parts will be treated as Dead on Arrival (DOA) only when they meet the
following criteria:

 

 

 

a.

New system and parts found to be defective due to poor material or workmanship
within sixty (60) days of the date of shipment must be reported to HITEL Sales
Administration Department within sixty (60) days of the date of shipment.

 

 

 

 

b.

RMA DOA may be issued under the following conditions only:

 

 

 

 

 

1.

Adequate spares are available on site to troubleshoot the system.

 

 

2.

A Distributor’s HITEL certified technician is troubleshooting the system on
site; and HITEL’s PBX Technical Support personnel, working with the
Distributor’s certified technician, declare the part to be DOA.

 

 

3.

Adequate time is available to troubleshoot the system.

 

 

 

 

5.

RMA Special Approval. The following cases will be treated as RMA Special
Approval. No system or parts will be treated as RMA Special Approval without
written approval and an RMA number issued by HITEL’s Sales Administration
Department prior to return shipment to HITEL. RMA Special Approval may be issued
only under the following conditions:

 

 

 

 

 

a.

Shipment by HITEL of systems or parts that were not ordered.

 

 

 

 

 

b.

The return of loaned equipment.

 

 

 

 

 

c.

Return of Distributor’s Sales Demonstration Equipment for Refurbishment or
Upgrade.

 

 

 

 

6.

DOA Advance Replacement Parts. DOA advance replacement parts are available only
under RMA DOA conditions. This allows a Distributor to order replacement parts
and when the RMA DOA parts are returned, HITEL will issue a credit against the
parts order upon receipt and inspection of the parts. Credit will be issued only
if the Distributor has contacted Hitachi Telecom (USA), Inc.’s PBX Technical
Support Department who has verified that parts are defective as described in
Section 4 above. Parts to be returned must match with the same quantity, serial
numbers and bar code labels as the parts originally shipped.

E-2

7.

Rejection. HITEL in its sole discretion may reject any equipment or parts that
are returned if HITEL determines one of the following conditions exists:

 

 

 

a.

Equipment damaged by other that defective components or workmanship.

 

 

 

 

b.

Equipment with missing parts.

 

 

 

 

c.

Improperly packaged equipment. (Refer to Procedure for All Return Material
Authorizations, paragraph 8.)

 

 

 

 

d.

Packages containing returned equipment that do not display appropriate RMA
numbers.

 

 

 

 

e.

Equipment modified by other than certified Hitel personnel.

 

 

 

8.

Non-Returnable Parts. The following parts are not repairable and shall not be
returned to HITEL unless HITEL so requests.

 

 

 

a.

Any parts which are defective or damaged due to causes other than defective
parts or workmanship (including but not limited to lightning strikes, power
surge, water damage, etc.)

 

 

 

 

b.

Consumable and non-returnable items shown in the HCX5000 Technician’s Manual
CG-50-3090. Labels, fuses, mounting hardware, cables, etc.

 

 

 

 

c.

Manual, drawings, faceplates and floppy diskettes.

 

 

 

 

 

NOTE: To order replacement or additional consumable parts, the Distributor may
contact HITEL’s Sales Administration Department.

 

 

 

III.

PROCEDURE FOR ALL RETURN MATERIAL AUTHORIZATIONS

 

 

1.

Distributor must notify HITEL in written form as to which employees of the
Distributor are authorized to issue purchase orders to HITEL.

 

 

2.

Distributor must obtain an RMA number for RMA Repair and Returns and RMA DOAs
from HITEL’s Sales Administration Department.

 

 

3.

Distributor must issue a purchase order to HITEL to order the RMA parts and work
requested.

 

 

4.

Distributor must return equipment with an appropriate Defect Tag attached to
each machine and part returned. Distributor must include a packing list which
lists all RMA parts contained in one box. Boxes must be clearly marked with the
HITEL assigned RMA numbers. (Example: RMA #19209R3)

E-3

5.

RMA DOA must be returned within thirty (30) days of the issue date of the
appropriate RMA DOA number. The RMA DOA number must be written on the attached
Defect Tag. (See Appendix B)

 

 

 

NOTE:

In all instances, Distributor must enclose, for each returned part, a detailed
report stating the problem with that part.

 

 

 

6.

RMA DOA parts not returned to HITEL within thirty (30) days of the issue date of
the RMA number for the part(s) in question, will be treated as RMA Repair and
Return following contact and confirmation with the Distributor. RMA DOA parts
that do not match the serial numbers and bar code labels recorded for that RMA
DOA authorization will be treated as RMA Repair and Returns. All RMA systems and
parts shall be shipped freight pre-paid by Distributors to the following
address:

 

 

 

 

Hitachi Telecom (USA), Inc.

 

 

Return Material Authorization #_____________

 

 

3617 Parkway Lane

 

 

Norcross, GA 30092

 

 

 

 

NOTE:

Those items hand carried are to be delivered to the receiving department at the
Warehouse. These items must follow Packing Returns as stated in item 8 below.

 

 

 

7.

RMA Repair and Return — HITEL will use reasonable efforts to ship repaired parts
to the Distributor within thirty (30) days of receipt of the defective part.
Exceptions to this thirty (30) day period are SelecSets and “out-of-warranty
parts” which will normally be returned within sixty (60)days of receipt of the
defective part.  When a part cannot be repaired within the standard time period,
Hitel will notify Distributor so that Distributor may elect to continue or
suspend repair.  In the case of disposal of suspended repair items, the
Distributor must supply HITEL with a written disposal authorization.

 

 

 

RMA DOA — when HITEL receives DOA parts within thirty (30) days of the date that
HITEL issues the RMA number, HITEL will issue credit against the replacement
part(s) order, if the part(s) being returned qualify for DOA.

 

 

 

When DOA parts are received after thirty (30) days of the RMA Authorization
date, or if the wrong parts are returned to HITEL, the RMA request will be
treated as an RMA Repair and Return following contact and confirmation with
Distributor. All equipment must be returned to HITEL.

 

 

RMA PROCEDURE - DEC 2002.doc

 

8.

Packing Returns. Returned materials must be properly packed when returned to
HITEL. Printed circuit boards must be placed in an anti-static bag and then
placed individually in cartons in accordance with commercially acceptable
standards. If the material is returned without the anti-static bag and/or proper
packing, the returned material will be rejected by HITEL. For this reason, it is
suggested that a quantity of the original anti-static bags and shipping cartons
be kept in storage for reuse.

E-4

9.

Charge for RMA Services. Repair fees or charges for each case are shown in
Appendix C and D.

 

 

10.

All in-warranty repaired equipment will be returned freight pre-paid by HITEL.

 

 

 

NOTE:

Items received with missing external parts (doors, cables, cords handsets, etc)
will be returned complete and all replaced external parts will be billed over
and above the repair price.

 

 

 

IV.

FUNCTIONS

 

 

1.

Issue RMA. HITEL Sales Administration Department will issue a numbered RMA form
upon request of the Distributor. Distributor will issue a Purchase Order
detailing the RMA equipment and work requested. The maximum number of items on
one RMA form is ten (10). If additional equipment is requested subsequent RMA
forms will be issued. All boxes must be marked with appropriate RMA number(s).
Distributor must also indicate the appropriate Reason Code.

 

 

 

HITEL Sales Administration Department will issue the RMA form with the following
filled in:

 

-RMA number

-Repair Price

 

-Salesman

-Unit price

 

-Issue date

-Ship to

 

-Distributor

-Bill to

 

-Purchase Order Number

-Terms

 

-Quantity

-Comments

 

-Description

-Insurance

 

-Sub Description

-Freight carrier

 

(New and Used part number)
-Serial number if applicable

-RMA Type

2.

RMA Inspection. Upon receipt of equipment by HITEL, the contents of each box
will be visually checked and matched to items listed on the RMA form(s).

 

 

 

Should any problems or discrepancies with equipment received or between customer
Packing List(s) and the RMA forms, HITEL’s Sales Administration Department will
contact Distributor to clarify. A tracer on delivery may be required or parts
may need to be returned if Distributor requests.

 

 

 

For rejected parts, the RMA form will note rejection reason and the part(s) will
be rejected on final approval by HITEL’s Sales Administration Department. The
rejection notice will include:

E-5

 

 

-Issue date

 

 

-Parts received date

 

 

-Description

 

 

-RMA number

 

 

-Part code

 

 

-Detailed reason

 

 

-Comments

 

 

-Approval

 

 

-Shipment or disposal instructions

 

 

 

3.

RMA Testing and Repair.  RMA parts will be tested per HITEL’s Internal Test
Procedures Manual, using hardware Test Procedures of system software and
hardware.

 

 

4.

RMA Invoicing.

 

 

 

a.

After testing, repaired and returned items will be invoiced for the appropriate
amount following shipment of the equipment.

 

 

 

 

h.

DOA and Special Approval items will be credited by issuing a credit memo
provided they meet the RMA Special Approval and DOA requirements.

E-6