Unassociated Document


    
      CONFIDENTIAL

    

     

    Exhibit
10.42

    


    DISTRIBUTION
AGREEMENT

    


    THIS
AGREEMENT (the “Agreement”), made effective this 26th day
of August, 2009 (“Effective Date”) by and between Elliptical Mobile Solutions,
LLC, a limited liability company duly organized under the laws of Arizona,
(hereinafter “EMS”), and Dot VN, Inc., a corporation duly organized under the
laws of the State of Delaware (hereinafter “DOT VN”).

    


    WHEREAS, EMS manufactures and markets
certain products and desires to increase the sales of such
products;

    


    WHEREAS, DOT VN desires to promote
and sell such product; and

    


    WHEREAS, EMS is willing to appoint DOT
VN and DOT VN is willing to accept such appointment as distributor of EMS’
products in the territory defined herein;

    


    NOW, THEREFORE, in light of the mutual
promises and covenants hereinafter set forth and for consideration the
sufficiency and receipt of which is hereby acknowledged, the parties agree to as
follows:

    


    ARTICLE
1

    DEFINITIONS

    


    For purposes of this Agreement, the
following words, terms and phrases where written with an initial capital letter,
shall have the meanings assigned to them in this Article 1 unless the context
otherwise requires:

    


    1.1 Products.  “Products”
shall mean those products described in Exhibit A attached
hereto and incorporated herein, as amended by EMS from time to
time.  EMS shall give DOT VN thirty (30) days written notice of such
Amendment.

    


    1.2 Territory.  “Territory” shall
mean a non-exclusive right to distribute in Asia and an exclusive right to
distribute in Vietnam. DOT VN has exclusive rights only to Vietnam subject
to the requirements of Article 2.1.

    


    1.3 Dot VN List
Price.  “Dot VN List Price” shall mean the prices then
being quoted from time to time by EMS for sales of Products to DOT VN. Dot
VN List Price does not include transportation, customs duties, tariffs, taxes,
fees or other charges which may be imposed on the importation, handling,
transportation, purchase, use or sale of Products. The current DotVN List Price
can be found in Exhibit
A.

    


    1.4 DOT VN
Information. “DOT VN
Information” shall mean all information, other than information in published
form or expressly designated by DOT VN as non-confidential, which is directly or
indirectly disclosed to EMS, regardless of the form in which it is disclosed,
relating in any way to DOT VN’s markets, customers, products, patents,
inventions, procedures, methods, designs, strategies, plans, assets,
liabilities, costs, revenues, profits, organization, employees, agents, or
business in general.

    


    1.5 EMS Information. “EMS
Information” shall mean all information, other than information in published
form or expressly designated by EMS as non-confidential, which is directly or
indirectly disclosed to DOT VN or embodied in Products provided hereunder,
regardless of the form in which it is disclosed, relating in any way to EMS’
markets, customers, products, patents, inventions, procedures, methods, designs,
strategies, plans, assets, liabilities, costs, revenues, profits, organization,
employees, agents, or business in general.

     

    
      
        
        

      

      
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    1.6 Brand(s). “Brands”
shall mean all names, logotypes and trademarks held by EMS licensed
to DOT VN exclusively for the purpose of selling and promoting the
Products.

    


    ARTICLE
2

    APPOINTMENT

    


    2.1 Scope.  EMS
hereby appoints DOT VN, and DOT VN hereby accepts appointment, as EMS’
distributor during the term of this Agreement with the right to sell or
otherwise distribute Products in the Territory, under EMS’ name, logotypes and
trademarks, or such other name as may be agreed to in writing by the Parties,
subject to all the terms and conditions of this Agreement. Subject to the
provisions of paragraph 2.2, such  right to distribution shall be
exclusive as to Vietnam (only) (“Exclusivity Right”), and shall be effective for
a period of eighteen months (18) months from the Effective Date, provided,
however that the sales quotas (the “Quotas”) set forth in Exhibit B are met by DOT
VN.  Upon the satisfaction of the Quotas, the Exclusivity Right shall
be extended in accordance with the schedule attached hereto as Exhibit B.  EMS
shall not appoint any person or entity other than DOT VN as its distributor,
representative or agent for Products in Vietnam. EMS shall not sell, transfer,
license or otherwise make available Product to any person or entity other than
DOT VN in Vietnam. The Quotas shall be subject to a good faith review by
both parties every year. If the Quotas are not met in any particular year, the
Exclusivity Right shall terminate and EMS shall have the right to appoint other
distribution agents in and/or market and sell the Products directly
into Vietnam.

    


    2.2 Equipment Licensure.   It
is acknowledged that Products cannot be sold in Vietnam until the requisite
equipment licenses are granted.   Therefore, the applicable time
periods governing the Exclusivity Rights and Quotas during the initial year of
this Agreement shall be tolled up to and including the date the requisite
licenses are granted by Vietnam’s Ministry of Information and Communications or
such other government agencies as applicable, but in no event shall the time
periods be tolled for a period greater than 12 months.   DOT VN
shall dilligently apply for the requisite
licenses.    

    


    2.3   Test
Unit.   When requested, EMS shall loan DOT VN units of the
Products for testing or marketing in Vietnam for such time as is reasonably
required to demonstrate the unit for sale.   DOT VN
will  pay all reasonably costs associated with testing the unit,
including transportation, insurance, test personnel and
installation.

    


    2.4 Inquiries. Any
inquiry or order received directly or indirectly by EMS concerning
potential sales of Product to be deployed in Vietnam shall be promptly referred
to DOT VN. DOT VN may not market, resell or distribute Products outside the
Territory, and shall promptly contact EMS regarding all inquiries and
referrals received by DOT VN regarding potential sales of Products outside the
Territory.

     

    2.5 Discontinuation.  EMS,
in its sole discretion, shall have the right to discontinue the marketing,
production, distribution of any or all of a Product Line at any time during the
term of this Agreement, provided that EMS gives thirty (30) days prior
written notice to DOT VN.  EMS shall be under no obligation to
continue the production of any Products, except as per orders accepted and
confirmed by EMS.  EMS may modify, replace, and improve Products,
at EMS’ discretion, without prior notice and/or liability to DOT VN, but shall
give thirty (30) days prior written notice to DOT VN of a price adjustment
resulting from any such modication, replacement, improvement or
otherwise.   

     

    
      
        
        

      

      
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    ARTICLE
3

    GENERAL OBLIGATION OF
DOT
VN

    


    3.1 Legal
Requirements. DOT VN shall take all reasonable steps to accomplish
all national and local legal requirements applicable to the importation and sale
of the Product as well as any other activity associated with the importation and
sale of the Product, including registration, certification and licensing of
Product in Territory, as necessary, and shall provide such related
documents to EMS upon request.  EMS retains all such rights, title,
and interest in and concerning such rights after Product is so registered.
DOT VN will keep EMS updated as to the process and timing. DOT VN is liable
for all irregularities and fines attributable to DOT VN’s importation and/or
sale of the Product. DOT VN agrees to comply with all intellectual property
requirements as set forth in Section 9 of this agreement.

    


    3.2. Assignment or
Abandonment.  DOT VN may not abandon its obligations or
transfer /assign to third party the rights and obligations originated from this
Agreement, without prior written authorization of
EMS.   Notwithstanding, nothing herein shall be construed to
restrict DOT VN’s right to employ or utilize subcontractors in connection with
Product installation or customer service.  DOT VN remains fully liable
under this Agreement for any third party engaged by DOT VN to commercially or
technically support the sale and distribution of the Product.

    


    3.3. Competition.  DOT
VN will not promote trade, represent or distribute, directly or indirectly,
in its own name or through third parties other goods that compete directly with
the Products supplied by EMS during the term of the Agreement.

    


    3.4 Costs.  DOT
VN shall be responsible for all costs and expenses incurred directly or
indirectly, from the activities of DOT VN and may not seek from EMS any
type of reimbursement or payment for its activities except in situations of
gross negligence or malfeasance by EMS. In addition to Dot VN List Price, the
amount of any present or future duty, tariff, tax, fee or charge applicable to
the importation, handling, transportation, purchase, use or sale of Products
shall be paid by DOT VN except where law otherwise provides, in which event the
amount of such duties, tariffs, taxes, fees or charges shall be added to the
then current Dot VN List Price.

    


    3.5  Local
Presence.  DOT VN must maintain an office in the Territory
and comply with all applicable national and local legal requirements for
maintaining such office.

    


    3.6 Marketing.  DOT
VN agrees to use best efforts to solicit, market and distribute Products in
order to meet the Quotas.DOT VN agrees to advertise Products and to distribute
literature and catalogues and to do such other tasks as are
reasonably  necessary to maintain the goodwill of customers within the
Territory, and to maintain at all times sufficiently trained sales and technical
personnel to enable DOT VN to perform its obligations under this
Agreement. EMS agrees to provide DOT VN with all formally
released content, sales, marketing and training material written in the English
languge, including software versions for DOT VN to translate, at its expense,
into materials for the local market. EMS will continually under the term of
this agreement provide DOT VN with updates to such marketing material within
three (3) days of publication. DOT VN agrees to promote the Product at key
marketing events in territory. 

    


    3.7 Compliance.  DOT
VN agrees (i) not to make nor permit any of its employees, agents, sales
representatives or subcontractors to make any representation or warranty with
respect to or otherwise describe any Products distributed and sold hereunder
except in strict accordance with literature relating thereto and written
descriptions thereof; (ii) that compliance with all applicable laws and
regulations and the accurate translation of any descriptive or operational
literature, including the expense thereof, shall be DOT VN’s sole
responsibility; (iii) not to do anything in violation of the U.S. Import and
Export Administration statutes and regulations, or similar laws and regulations
within the Territory; (iv) to comply with all laws applicable to the performance
of the Agreement, including the Foreign Corrupt Practices Act (15 USC 78 et
seq.); and (v) to immediately bring to the attention of EMS any improper or
wrongful use in the Territory of EMS’ patents, trademarks, copyrights, emblems,
designs, models or similar industrial or commercial rights which come to DOT
VN’s notice.

     

    
      
        
        

      

      
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    3.8.    Pricing.  DOT
VN shall have discretion to establish Product pricing within the
Territory.

    


    ARTICLE
4

    ORDERS FOR
PRODUCTS

    


    4.1 Purchase
Orders.  DOT VN shall submit purchase orders for the products
to EMS in writing or by facsimile which shall set forth at a
minimum:

    


    
      	
               
      

            	
              4.1.1

            	
              An
      identification of the Products ordered and intended
    customers,

            


    

    


    
      	
               
      

            	
              4.1.2

            	
              Quantity,

            


    

    


    
      	
               
      

            	
              4.1.3

            	
              Requested
      delivery dates, and

            


    

    


    
      	
               
      

            	
              4.1.4

            	
              Shipping
      instructions and shipping address.

            


    

    


    
      	
               
      

            	
              4.1.5

            	
              Payment
      and credit terms.

            


    

    


    Upon
receipt of a DOT VN purchase order, EMS shall respond in writing by either
accepting the order as received or modifing the terms of the purchase
order.  No purchase order shall be deemed accepted unless and until
each party has confirmed in writing their respective acceptance.  The
terms and conditions of this Agreement shall apply to and govern all orders for
Products submitted to EMS by DOT VN.  Nothing contained in any such
orders shall in any way modify such terms and conditions or add any additional
terms and conditions except as otherwise agreed to in writing by the parties
hereto.  In the event of any conflicting terms between any purchase
order and this Agreement, the terms and conditions set forth herein shall
control.

    


    4.2 Delivery
Terms.  Products will be delivered FOB common carrier at
EMS’ facility on the date specified on an accepted purchase order. EMS shall
inform DOT VN of any delay in shipment of Products under accepted purchase
orders. If such unexpected delays exceeding 30 days occur DOT VN shall have the
right to cancel such accepted but delayed purchase order.

    


    ARTICLE
5

    PRICES AND
PAYMENT

    


    5.1 Prices. The EMS
List Price and related discount to DOT VN for distribution of the Product is
expressed in Exhibit
A.

     

    
      
        
        

      

      
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    5.2  Price Changes. EMS
shall inform DOT VN of any price changes at least 30 days before such pricing
comes into effect. DOT VN shall during the term of this Agreement be eligible
for lowest pricing of the Product offered by EMS to any channel partner in Viet
Nam, subject to related volume and quota requirements to be elgible for such
lower price level.

     

    (a) Price
Increase. In the event EMS increases the price for any EMS Product, the increase
shall apply to: any order received by EMS after the effective date of the
increase; provided, however, that any order or portion thereof transmitted by
DOT VN prior to EMS’ announcement of the increase and affected thereby, may
be cancelled without penalty by DOT VN by written notice to EMS within ten
(10) days of such announcement.

    


    (c) Price Decrease. In the event that
EMS decreases the price for any EMS Product, the decrease shall apply to
all units of such product that remain unshipped and to future Products
ordered.

    


    5.3 Payment
Terms.  All payments hereunder shall be made on the terms
contained in each accepted purchase order in U.S. Dollars.

    


    5.4 Record-keeping.  DOT
VN agrees to keep accurate records of sales, revenues received, discounts
provided, and resale customers related to and from the distribution of Products
during the term of this Agreement and for a period of twelve (12) months
thereafter (the “Reporting Period”).  During the Reporting Period, DOT
VN agrees to provide a copy of such report monthly to EMS.

    


    


    ARTICLE
6

    REPRESENTATIONS AND
WARRANTIES

    


    6.1 Representations and
Warranties by EMS.

    


    6.1.1 Organization.  EMS
is a limited liability company duly organized, validly existing and in good
standing under the laws of the state of Arizona.

    


    6.1.2 Authority; Consents and
Approvals; No Violations. EMS has the full corporate power and authority
and legal right to execute and deliver this Agreement, and otherwise to perform
its obligations hereunder. This Agreement has been validly executed and
delivered by EMS and will constitute a valid and binding obligation of EMS
enforceable in accordance with its terms, except to the extent such
enforceability may be limited by the effects of bankruptcy, insolvency,
reorganization, moratorium or other similar laws  affecting creditors'
rights generally, and by the effect of general principles of equitable law,
regardless of whether such enforceability is considered in a proceeding in
equity or at law. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not violate
any provision of EMS’ Articles of Organization or Operating Agreement or
violate, conflict with, result in a breach of or constitute (with or without due
notice, lapse of time or both) a default under any agreement, license, contract,
franchise, permit, indenture, lease, or other instrument to which EMS is a
party, or by which it or any of its assets are bound.

    


    6.1.3 Intellectual
Property. EMS warrants and represents that the exercise of any
rights by DOT VN in accordance with this Agreement will not infringe upon the
any right of any third party.

     

    
      
        
        

      

      
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    EMS
further represents and warrants that:

    


    
      	
               
      

            	
              (1)

            	
              To
      the best of EMS’ knowledge, all intellectual property that EMS uses and
      provides to DOT VN does not infringe any patent, trademark, trade name,
      copyright or title.

            


    

    


    
      	
               
      

            	
              (2)

            	
              EMS
      has taken all reasonable steps to secure such licenses and/or
      patents,  trademarks, trade name or copyright related to the
      production, sale and operation of the Products, except thosed required to
      be obtained by DOT VN.

            


    

    


    
      	
               
      

            	
              (3)

            	
              Unless
      otherwise expressly provided in writing prior to delivery of the Prodcuts,
      EMS is the sole owner of all Products provided to DOT VN, and no rights
      have been granted, or will be granted in the Products that are
      inconsistent with the rights granted in this
  Agreement.

            


    

    


    
      	
               
      

            	
              (4)

            	
              EMS
      grants and assigns to DOT VN, to the extent allowed by law or contract,
      the benefit of all warranties and representations made for EMS’ benefit by
      any third party with respect to the
Products.

            


    

    


    
      	
               
      

            	
              (5)

            	
              That
      there are no liens, encumbrances and/or obligations in connection with the
      Products, the technology upon which the Products are based or any of the
      intellectual property of EMS that will have a materially adverse
      effect on the consummation of the transactions contemplated
      hereby.

            


    

    


    6.2 Representations and
Warranties by DOT VN.

    


    6.2.1 Organization.  DOT
VN is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware.

    


    6.2.2 Authority; Consents and Approvals; No
Violations.  DOT VN has the full corporate power and authority
and legal right to execute and deliver this Agreement, and otherwise to perform
its obligations hereunder. This Agreement has been validly executed and
delivered by DOT VN and will constitute a valid and binding obligation of DOT VN
enforceable in accordance with its terms, except to the extent such
enforceability may be limited by the effects of bankruptcy, insolvency,
reorganization, moratorium or other similar laws  affecting creditors'
rights generally, and by the effect of general principles of equitable law,
regardless of whether such enforceability is considered in a proceeding in
equity or at law. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby do not and will not violate
any provision of DOT VN's Certificate of Incorporation or Bylaws or violate,
conflict with, result in a breach of or constitute (with or without due notice,
lapse of time or both) a default under any agreement, license, contract,
franchise, permit, indenture, lease, or other instrument to which DOT VN is a
party, or by which it or any of its assets are bound.

    


    6.2.3 Authority in Viet Nam and the
Territory.  DOT VN, or a wholly owned subsidiary thereof have
the power, authority and legal right to conduct business in the Territory and
are and shall remain in good standing in all jurisdictions in which they conduct
business.

    


    6.2.4 Incorporation of Article
3.  The terms and provisions of Articles 3.1 through 3.7 are
incorporated herein as representations and warranties.

    


    ARTICLE 7

    ACCEPTANCE AND
WARRANTY

    


    7.1 Acceptance of
Products.  In the event of any shortage or discrepancy in or to
a shipment of Products, DOT VN shall promptly report the same to EMS and furnish
such written evidence or other documentation.  Upon notice of such
shortage or discrepancy, EMS shall promptly investigate the same and to the
extent the shortage or discrepancy is due to EMS’ negligence, EMS shall promptly
deliver additional or substitute Products to DOT VN in accordance with the
delivery procedures set forth herein and bear all costs associated with such
remedy.

     

    
      
        
        

      

      
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    7.2 Product
Warranty.  EMS warrants for a period of one (1) year after the
date of receipt in accordance with Article 4.2 hereof that the Products shall be
free from defects in material and workmanship per EMS’ standard warranty, as set
forth in Exhibit
D, EMS shall, in
the event of breach and at no charge to DOT VN either repair the Product or
provide conforming replacement or substitute Products. The Warranty will be
provided in accordance to EMS’ standard terms and conditions in effect at a
given time

    


    7.3 Technical Support and
Training.  DOT VN shall be responsible for level 1 and level
2 support, and EMS shall be responsible for level three support according
to Exhibit
C.
 EMS will train the DOT VN staff to provide level 1 and 2 service per Exhibit C. Such training can
be scheduled at the DOT VN site in San Diego or in Vietnam as needed but with 15
days notice by DOT VN to EMS. EMS shall provide training to DOT VN Trainers and
other personnel at site in Territory upon first delivery of trial equipment and
second, upon shipment of first commercial purchase order or as otherwise agreed
with DOT VN.

    


    7.4 EMS Additional
Obligations.  In addition to any other obligations contained in
this Agreement, EMS agrees that it shall: a) promptly respond to all inquires
concerning specifications and other engineering or technical questions about EMS
Products; b) advise DOT VN of current production times and schedules; c)
promptly review and either accept or reject orders submitted by DOT VN with an
explanation for any rejections; d) provide DOT VN with a 30 day notice of
changes to the EMS List Prices; and e) provide or cause to be provided personnel
and parts to honor the EMS warranty.

    


    7.5 Disclaimer.  IT IS EXPRESSLY AGREED THAT THE WARRANTY SET FORTH HEREIN
AND ON EXHIBIT D
SHALL BE THE SOLE AND
EXCLUSIVE REMEDY OF
DOT VN, ITS CUSTOMERS AND END USERS.  UNDER NO CIRCUMSTANCES SHALL
EMS BE LIABLE FOR ANY COSTS, LOSS,
EXPENSE, DAMAGES, SPECIAL DAMAGES, INCIDENTAL DAMAGES OR CONSEQUENTIAL DAMAGES ARISING DIRECTLY
OR INDIRECTLY FROM THE DESIGN, MANUFACTURE, SALE, USE OR REPAIR  OF
PRODUCTS, WHETHER BASED UPON WARRANTY, CONTRACT, NEGLIGENCE OR STRICT
LIABILITY.  IN NO EVENT WILL LIABILITY EXCEED THE DOT VN LIST PRICE OF
THE APPLICABLE PRODUCT. EXCEPT AS EXPRESSLY SET
FORTH HEREIN, THE PRODUCTS ARE PROVIDED ON AN “AS IS” BASIS.  THE WARRANTY AND
LIMITS OF LIABILITY CONTAINED HEREIN ARE IN LIEU OF ALL OTHER WARRANTIES AND
LIABILITIES, EXPRESSED OR IMPLIED ARISING BY LAW, CUSTOM, BY ORAL OR WRITTEN
STATEMENTS.  ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT, AND WARRANTIES ARISING FROM COURSE OF
DEALING, USAGE OR TRADE PRACTICE, AND ANY DUTIES OF LACK OF NEGLIGENCE OR
WORKMANLIKE EFFORT ARE HEREBY DISCLAIMED BY EMS, ITS LICENSORS AND
REPRESENTATIVES.

    


    ARTICLE 8

    CONFIDENTIALITY

    


    8.1   Acknowledgment.  Both
Parties acknowledge and agree that both the DOT VN Information and the EMS
Information (collectively the “Information”) is confidential and
proprietary.  The Parties agree not to use the Information during the
term of this Agreement for any purpose other than as permitted or required for
the performance by each Party hereunder.  The Parties further agree
not to disclose or provide any such Information to any third party and to take
all necessary measures to prevent any such disclosure by its employees, agents,
contractors, or consultants during the term hereof.  Nothing contained
herein shall prevent either Party from using disclosing or authorizing the
disclosure of any Information which (i) was in the public domain at the time it
was disclosed or has entered the public domain through no fault of the receiving
party; (ii) was independently developed by the receiving party without any use
of the Information; or (iii) became known to the receiving party, without
restriction, from a source other than the disclosing party, without breach of
this Agreement by the receiving party and otherwise  not in violation
of the disclosing party's rights.  In addition, the receiving party
may disclose the other party’s Information as required under applicable law or
regulation, including rules of any applicable securities exchange, or pursuant
to the order or requirement of a court, administrative agency, or other
governmental body; provided, however, that the receiving party will provide
prompt prior notice of such disclosure to the disclosing party to enable the
disclosing party to seek a protective order or otherwise restrict such
disclosure.

     

    
      
        
        

      

      
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    ARTICLE 9

    INTELLECTUAL
PROPERTY

    


    9.1 Use of
Trademarks.  EMS hereby grants to DOT VN a non-exclusive, and
royalty-free right and license to use the EMS trademarks specified in Exhibit E attached
hereto, as such Exhibit may be modified by EMS from time to time during the term
of this Agreement, in connection with the sale or other distribution, promotion,
advertising and maintenance of the Products in the Territory.  EMS
does further grant DOT VN the right to allow resellers, sub-distributors or
agents of DOT VN (colletively “Agents”) to use EMS trademarks in
furtherance of marketing, promotion and sale of EMS Products in the Territory so
long as such Agents agree in writing to the terms of Articles 3.7, 9.1, 9.3 and
9.4.

    


    9.2 Registration and IP
Protection. EMS shall
use best efforts to register the EMS Intellectual Property specified in
Exhibit E, as
such Exhibit may be modified during the term of this Agreement, in such
jurisdictions in which EMS determines that registration is necessary or useful
to the successful distribution of Products.  In addition, in the event
EMS believes that it is advisable to effect any filing or obtain any
governmental approval or sanction for the use by DOT VN of any of EMS’
trademarks pursuant to this Agreement, the parties shall fully cooperate to do
so. All expenses relating to the registration of EMS’ trademarks in the
Territory as well as the making of any filing or obtaining any governmental
approvals for the use by DOT VN of EMS’ trademarks shall be borne by
EMS.

    


    9.3 Termination of
Use. DOT VN acknowledges EMS’ proprietary rights in and to EMS’
trademarks and trade names and DOT VN hereby waives all rights to any
trademarks, trade names, and logotypes now or hereafter solely originated or
licensed by EMS.

    


    9.4 Ownership.  DOT
VN agrees not to modify, adapt, prepare derivative works from, decompile, or
disassemble the Products.  DOT VN further agrees not to, at any time,
remove, obscure, or alter EMS’ copyright notice, logos, trademarks, or other
proprietary rights notices affixed to or contained within the Products, subject
to agreement by the Parties to rebrand the Products in the
Territories.  Other than as permitted herein, DOT VN will not display
or otherwise use, remove, obscure, alter or permit any person or entity under
its control to display or otherwise use remove, obscure, alter any of the
trademarks, service marks, trade names, copyrights or other proprietary
designations, or any DOT VNiations or combinations thereof, owned by EMS,
without the prior express written consent of EMS.   DOT VN will
send for appropriate approval, prior to the use of any trademark, service mark,
trade name, copyright or proprietary designation, or any DOT VNiation or
combination thereof, a sample of each letterhead, invoice, price list, label,
packaging material, sign, brochure, and all other advertising, promotional,
printed or other material displaying or otherwise using the trademark, trade
name, service mark, copyright or other proprietary designation, or combination
or DOT VNiation thereof, and will display or otherwise use only such material as
EMS appropriately consents in writing to be displayed or otherwise
used.  Any such approval shall not grant to DOT VN, by implication or
otherwise, any ownership or other intellectual property right in or to such
trademarks, service marks, trade names or other intellectual property rights
owned or controlled by EMS.

     

    
      
        
        

      

      
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    ARTICLE 10

    INDEMNIFICATION

    


    10.1 EMS’
Obligations.  EMS shall, at its own expense, defend any suit
instituted against DOT VN which is based on any allegation that any Products
manufactured by EMS and sold to DOT VN hereunder injure or cause harm to a
consumer of EMS’ Products due to product defect unless caused by DOT
VN.  EMS shall further defend DOT VN against any suit instituted
against DOT VN which is based on any allegation that any Products manufactured
by EMS and sold to DOT VN hereunder constitute an infringement of any
patent unless such Products are modified by DOT VN or its customers,
agents, subdistributors or resellers.  EMS shall indemnify DOT VN
against any award of damage and costs made against DOT VN by a final judgment of
a court of last resort due to the breach of any representation, warranty or
covenant in this Agreement by EMS, or if it is determined that any injury or
patent infringement has resulted from the action or omission of action by EMS,
unless caused by the gross negligence or intentional misconduct of DOT
VN.

    


    10.2 Dot VN’s
Obligations.  DOT VN shall, at its own expense, defend any suit
instituted against EMS which is based on any allegation that any Products sold
by DOT VN hereunder injure or cause harm to a consumer of EMS’ Products due to
action or omission of action by DOT VN.  DOT VN shall further defend
EMS against any suit instituted against EMS which is based on any
allegation that any Products manufactured by EMS and sold to DOT VN hereunder
constitute an infringement of any trade mark, trade name, logotype or brand name
originated by DOT VN.  DOT VN shall indemnify EMS against any award of
damage and costs made against EMS by a final judgment of a court of last resort
due to the breach of any representation, warranty or covenant in this Agreement
by DOT VN, or if it is determined that any injury or trademark infringement has
resulted from the action or omission of action by DOT VN, unless caused by the
gross negligence of intentional misconduct of EMS.

    


    ARTICLE 11

    TERM AND
TERMINATION

    


    11.1 Term.  This
Agreement shall take effect  in Territory as of the Effective Date and
shall continue for a period of five (5) years.  Thereafter, this
Agreement shall be renewed  anually, one year at a time, provided that
Parties have given each other mutual renewal notice. Such notice of renewal
shall be presented and confirmed in writing or facsimile  no later
than   sixty  (60) days prior to the end of the term of this
Agreement, as long as next year’s quota in Vietnam is mutually agreed to EMS at
such time of renewal.

    


    11.2 Termination.
Notwithstanding the provisions of Article 11.1 above, this Agreement may be
terminated in accordance with the following provisions:

    


    11.2.1  Either party hereto
may terminate this Agreement at anytime by giving notice in writing to the other
party, which shall be effective upon dispatch, should the other party file a
petition of any type as to its bankruptcy, be declared bankrupt, become
insolvent, make an assignment for the benefit of its creditors, go into
liquidation or receivership; or otherwise lose legal control of its business or
should the other party or a substantial part of its business come under the
control of a third party

     

    
      
        
        

      

      
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    11.2.2  Either party may
terminate this Agreement by giving notice in writing to the other party should
an event of Force Majeure continue for more than six (6) months as provided in
Article 12.2 below;

    


    11.2.3  Either party may
terminate this Agreement by giving notice in writing to the other party in the
event the other party is in material breach of this Agreement  and
shall have failed to cure such breach within thirty (30) days of receipt of
written notice thereof from the non-breaching party;

    


    11.2.4  Either party may
terminate this Agreement on sixty (60) days prior written notice, provided that,
upon termination all obligations pursuant to an issued and accepted PO shall
remain in full force and effect.

    


    11.3 Rights and Obligations upon
Termination.  In the event of termination of this Agreement for
any reason, the parties shall have the following rights and
obligation:

    


    11.3.1 Termination of the Agreement
shall not release either party from the obligation to make payment on all
amounts due as of the date of Termination or due with respect to delivered or
pending orders, but shall release DOT VN of any further obligation to purchase
Products.  Termination shall not release EMS from fulfilling accepted
and confirmed purchase orders;

    


    11.3.2 EMS shall have the right, at
its option, to repurchase any part or all of DOT VN’s inventory of Products, not
committed or sold to a customer, in DOT VN’S possession as of the termination
date at EMS’ invoiced price, less any amount for excessive wear and tear, plus
freight to the original port of origin.

    


    11.3.3 DOT VN’S obligations pursuant
to Article 8 hereof, as well as the Representations and Warranties given by each
party, shall survive the termination of this agreement;

     

    11.3.4
Upon termination of this Agreement, DOT VN will cease to display or otherwise
use all trademarks, service marks, trade names, copyrights, other proprietary
designations, and DOT VNiations and combinations thereof, for which consent to
display or otherwise use was granted, and will deliver to EMS or destroy them,
at EMS’ sole discretion, free of any charge, all materials of any type or kind
displaying or otherwise using the same which are in DOT VN’s
control.

    


    ARTICLE 12

    FORCE
MAJEURE

    


    12.1 Definition.  Force
Majeure shall mean any event or condition, not existing as of the date of
signature of this Agreement, not reasonably foreseeable as of such date and not
reasonably within the control of either party, which prevents in whole or in
material part, the performance by one of the parties of its obligations
hereunder or which renders such obligations so difficult or costly as to make
such performance commercially unreasonable.  Without limiting the
foregoing, the following shall constitute events or conditions of Force Majeure:
acts of State or governmental action, riots, disturbance, war, strikes,
terrorism, lockouts, slowdowns, prolongs shortage of energy supplies, epidemics,
fire, flood, hurricane, typhoon, earthquake, lightning and
explosion.  It is in particular expressly agreed that any refusal or
failure of any governmental authority to grant any export license legally
required for the fulfillment by EMS of its obligations hereunder shall
constitute an event of Force Majeure.

    


    12.2 Notice.  Upon
giving notice to the other party, a party affected by an event of Force Majeure
shall be released without any liability on its part from the performance of
obligations under this Agreement, except for the obligation to pay any amounts
due and owing hereunder, but only to the extent and only for the period that its
performance of such obligations is prevented by the event of Force
Majeure.  Such notice shall include a description of the event of
Force Majeure, and its cause and possible consequences.  The party
claim Force Majeure shall promptly notify the other party of the termination of
such event.

     

    
      
        
        

      

      
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    12.3 Suspension of
Performance.  During the period that the performance by one of
the parties of its obligations under this Agreement has been suspended by reason
of an event of Force Majeure, the other party may likewise suspend the
performance of all or part of its obligations hereunder to the extent that such
suspension is commercially reasonable.

    


    12.4 Termination.  Should
the period of Force Majeure continue for more than six (6) consecutive months,
either party may terminate this Agreement without liability to the other party
except for payments due to such date, upon giving written notice to the other
party.

    


    ARTICLE
13

    FUTURE
ENDEAVORS.

    


    13.1 EMS
will allow DOT VN the right to bid/negotiate for manufacturing, service and
repair rights on a good faith basis and with respect to opportunities to
manufacture the Products outside the United States.

    


    ARTICLE 14

    MISCELLANEOUS

    


    14.1 Relationship.  This
Agreement does not make either party the employee, agent or legal representative
of the other for any purpose whatsoever.  Neither party is granted any
right or authority to assume or to create any obligation or responsibility,
express or implied, on behalf of or in the name of the other
party.  In fulfilling its obligations pursuant to this Agreement each
party shall be acting as an independent contractor. Any place or places of
business maintained by DOT VN in connection with the performance of this
Agreement shall be maintained at DOT VN’s own name.  DOT VN agrees to
indemnify, defend and hold EMS harmless from any and all claims against EMS from
DOT VN’s acts or failure to act when required to do so.

    


    14.2 Assignment.  Neither
party shall have the right to assign or to otherwise transfer its rights and
obligations under this Agreement except with the prior written consent of the
other party.  Further any successor in interest by merger, operation
of law, assignment, purchase or otherwise of the entire party shall acquire all
rights and obligations of such party hereunder.  Any prohibited
assignment shall be null and void. If such other party consents as stated
above,any potential assignee must agree to abide by the terms and conditions of
this Agreement. "Assignment" shall be deemed to include the transfer of
substantially all the assets of, or majority interest in the voting stock of,
either party, or the merger of either party with one or more third
parties.

     

    
      
        
        

      

      
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    14.3
Disputes.   In
the event of any dispute, the parties respective decision makers agree to meet
within ten (10) business days and in good faith seek an informal resolution of
the disputed issue.   If no resolution is reached, the parties
agree to submit any claim, dispute or controversy (“Claim”) against the other,
or against the employees, agents or assigns of the other, arising from or
relating in any way to this Agreement, including Claims regarding the
applicability of this arbitration clause or the validity of the entire
Agreement, to binding arbitration to be administered by the American Arbitration
Association, unless the parties otherwise agree.   The sole
arbitrator shall have the power to determine issues of arbitrability, and shall
apply the laws of the State of Arizona, except for, and limited only to claims
or issues where Arizona law is preempted by federal statute.  All
other issues shall be governed by applicable Arizona law, excluding the
Convention on Contracts for the International Sale of Goods and that body of law
known as conflicts of laws.    If the parties cannot agree
on a single arbitrator, a panel of 3 arbitrators shall be employed, the parties
each selecting one arbitrator, and the two arbitrators so selected shall choose
a third “independent” arbitrator.   All arbitrators must either
be licensed attorneys or retired judges.   The parties shall have
right to full discovery to the extent permitted by the Arizona Rules of Civil
Procedure and Arizona Rules of Court applicable to judicial
arbitrations.  The arbitrator(s) shall be empowered to appoint experts
and/or consultants, resolve discovery disputes grant equitable relief,
compensatory and punitive damages, and grant any relief a party could obtain in
an action initiated in the an Arizona Superior Court, proceed ex-parte should
one party fail to appear, and grant any other type of relief appropriate to the
particular circumstances.  The arbitrator shall have the power to
award the prevailing party its litigation expenses including reasonable
attorneys fees and costs, and expert witness fees.   The hearing
shall take place within 6 months of submission to
arbitration.   No pre-hearing motions may be filed, other than
with respect to requests for injunctive relief and discovery
disputes.   The  arbitration hearing will be held in
Phoenix, Arizona.  Judgment may be entered in any court of competent
jurisdiction.   The parties agree that all proceedings are
confidential until 30 days after the award is made.  In the event the
losing party fully complies with all aspects of any adverse decision, including
payment of all amounts awarded to the other party, the matter shall be sealed
and remain confidential in perpetuity.

    


    14.4 Amendment.  This
Agreement may not be modified or amended except by an instrument in writing
signed by each of the parties hereto, or their respective permitted successors
in interest. Exhibits may be updated continuously after agreement and signature
by both parties.

     

    14.5 Waiver.  No
term or condition of this Agreement shall be deemed to have been waived, nor any
estoppel against the enforcement of any provision of this Agreement, except by
written instrument of the party charged with such waiver or
estoppel.  In addition, no such written waiver or estoppel that is in
effect shall be deemed to be a continuing waiver unless specifically stated
therein, shall operate only as to the specific term or condition waived and
shall not constitute a waiver as to any act other than that specifically waived
or as to any term, condition or obligation that comes into effect subsequent to
the written waiver.

     

    14.6 Agreement in
Counterparts.  This Agreement may be executed in counterparts,
each of which thus executed shall be deemed an original, but all of which, taken
together, shall constitute one and the same agreement, binding upon the parties
hereto, their administrators, successors and permitted assigns.

     

    14.7 Severability.  If
any provision of this Agreement, or the application thereof, shall be determined
by a court of competent jurisdiction to be invalid or unenforceable, then this
Agreement shall remain in full force and effect between the parties to the
greatest extent permitted by law unless the invalidity or unenforceability of
such provision or provisions destroys or materially impairs the basis of
the bargain between the parties as contained in this Agreement.

     

    14.8 Captions;
References.  Article and paragraph headings in this Agreement
are for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.  Whenever the terms "hereof",
"hereby", "herein" or words of similar import are used in this Agreement they
shall be construed as referring to this Agreement in its entirety rather than to
a particular paragraph or provision, unless the context specifically indicates
to the contrary.  Any reference to a particular or "Paragraph" or
“Article” shall be construed as referring to the indicated paragraph or section
of this Agreement unless the context specifically indicates to the
contrary.

     

    
      
        
        

      

      
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    14.9
Notices. Any notice, direction or
other instrument required or permitted to be given under or in connection with
this Agreement shall be effective when either delivered personally, mailed by
certified mail, return receipt requested (with postage prepaid), to the
addresses listed below, or deposited with Federal Express or other reputable
courier (with fee prepaid) for overnight delivery to the addresses listed
below:

     

    If to DOT VN:

    


    DOT VN,
INC.

    Attn:
Legal Department

    9449
Balboa Avenue, Suite 114

    San
Diego, CA 92123

     

     

    If to EMS:

     

    Elliptical
Mobile Solutions, LLC

    465 East Chilton Drive

    Chandler, AZ 85225

     

    Any party may change its address for
service from time to time by notice given in accordance with the foregoing and
any subsequent notice shall be sent to the party at its new address, as so
noticed.

     

    14.10 Entire
Agreement.  The parties have read this Agreement and agree to
be bound by its terms, and further agree that it and the Exhibits attached
hereto and incorporated herein constitute the complete and entire Agreement of
the parties and supersedes all previous and contemporaneous communications,
oral, implied or written, and all other communications between them relating to
the subject matter thereof.  No representations or statements of any
kind in relation to the subject matter hereof made by either party, which are
not expressly stated herein, shall be binding on such party.

    


    IN WITNESS WHEREOF, the
parties hereto have signed this Agreement, thereunto duly authorized on the day
and year above written.

     

     

    
      
        	ELLIPTICAL MOBILE SOLUTIONS,
      LLC	 	 	DOT VN, INC.	 
	 	 	 	 	 
	 	 	 	 	 
	
                /s/ Bill
      Stockwell  

              	 	 	
                /s/ Lee
      Johnson

              	 
	
                By:
      Bill Stockwell

              	 	 	
                By:
      Lee Johnson

              	 
	
                Its:
      Chief Executive Officer

              	 	 	
                Its:
      President

              	 


      

       

      
        
          
          

        

        
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