Sample Business Contracts

Manufacturing Services Agreement - Compania Dominicana de Telefonos C por A and Executone Information Systems Inc.

Sponsored Links



This Manufacturing  Services Agreement is entered into this 10th day of January,
Republic company, with principal offices at Ave. Abraham Lincoln No. 1101, Santo
Domingo,  Dominican Republic and EXECUTONE Information Systems, Inc., a Virginia
Corporation with principal office at 478 Wheelers Farms Road,  Milford, CT 06460
U.S.A. ("Buyer').

Whereas,  Buyer desires to have CODETEL  manufacture units of a specific product
or products  designed by Buyer and sell such  product(s)  to Buyer in accordance
with the provisions of this Agreement, and

Whereas,  CODETEL is willing to manufacture and sell such product units to Buyer
in accordance with the provisions of this Agreement.

Now therefore,  in consideration of the mutual  representations,  warranties and
covenants set forth herein, Buyer and CODETEL hereby agree as follows:

1 Definition of Terms.

     1.1 Throughout this Agreement, except as the context may otherwise require:

          (a)  "Agreement"  means this agreement for the manufacture and sale of
the Product or Products specified in Schedule A, to be attached hereto.

          (b) "Bill of  Material"  means the list of  components  and  materials
required by CODETEL in order to manufacture the Products,  together with a price
list of such items, specified in Schedule E to be attached hereto.

          (c)  "Change  Order"  means a  written  order  from  Buyer to  CODETEL
requesting any changes to the Products which Buyer may desire to make, including
changes in the drawings,  designs,  specifications,  method of shipment,  and/or
packing of the Products.

          (d) "Consigned  Tooling" means the tooling,  software  programs and/or
equipment  specified  in Schedule D, to be  attached  hereto,  which Buyer shall
consign to CODETEL for purposes of the manufacture and testing of the Products.

          (e) "Price" means the Free On Board (F.O. B.) Port (Sea - Haina, Air -
Las Americas) price as set forth in Schedule B, to be attached hereto, or as may
be otherwise agreed to in writing by the parties.

          (f) "Product" or "Products" means the product(s) to be manufactured by
CODETEL as specified in Schedule A, to be attached hereto.

          (g) "Purchase  Order" means a written  purchase  order issued by Buyer
containing  information with respect to each purchase made under this Agreement,
including a description of the Products,  purchase  quantity,  purchase delivery
schedule, nominated carrier, routing instructions, destination, and confirmation
of price.

          (h) "Quality Plan" means the Product testing and inspection procedures
specified in Schedule C, to be attached hereto.


          (i)  "Q-TEL"  means  CODETEL'S  Quality  Telecommunications   Products
division,  a duty-free zone operation located in the ltabo Industrial Park, city
of Haina,  province  of San  Cristobal,  Dominican  Republic,  dedicated  to the
Manufacturing, Assembling and Rehabilitation of Telecommunications products.

2. The Products.

     2.1 Q-TEL  will  manufacture  and sell to Buyer  the  Product  or  Products
specified in Schedule A, to be attached hereto.

     2.2  Additional  items  may be added to  Schedule  A and B upon the  mutual
agreement of Buyer and Q-TEL.  In such event,  the  manufacture and sale of such
additional  items  shall  be made in  accordance  with  the  provisions  of this

     3. Purchase Orders.

     3.1 The  purchase  and  sale of  Products  shall be made  against  specific
written  Purchase  Orders  submitted by Buyer to Seller  during the term of this
Agreement.  All Purchase Orders for Products  submitted by Buyer shall state the
following:  (i) Buyer's name and  address;  (ii) a  description  of the Products
ordered;  (iii) the quantities of Products ordered;  (iv) the requested delivery
dates;  (v) the  destination  of the  Products  ordered;  (vi) the  price(s) for
Products  ordered,  and (vii) a specific  reference to this Agreement and to the
contract number (if any) assigned by Q-TEL to this Agreement.

     3.2 Buyer shall mail any Purchase  Orders to Q-TEL and shall, on the day of
dispatch of any such Purchase Order,  confirm by facsimile or telex the quantity
of the Products ordered and the Purchase Order number.  Q-TEL shall  acknowledge
by facsimile or telex,  the details of the Purchase Order  described in any such
telex  received from Buyer within (14) fourteen  calendar days of receiving such

     3.3 All Purchase Orders (and any amendments  thereto) issued by Buyer shall
provide a  minimum  lead  time of  one-hundred  and  twenty  (120)  days for the
delivery of any finished  units of the Products  (with a grace period of fifteen
15 days to complete the delivery of such Products). All Purchase Orders (and any
amendments thereto) are subject to acceptance by Q-TEL which acceptance shall be
indicated by return of a copy of Buyer's Purchase Order appropriately  signed by
Q-TEL so as to indicate  acceptance  of any such order of units of the Products.
For the purposes of this Agreement , acceptance may be understood in the form of
an acknowledgement document signed by the appropriate Q-TEL representative.

     3.4 If any conflict  arises  between the terms stated in any Purchase Order
and the terms and conditions of this Agreement, the provisions of this Agreement
shall  prevail.  None of the preprinted  terms and conditions  stated on Buyer's
Purchase  Order form or on any related  documents  delivered or  transmitted  to
Q-TEL shall be of any force or effect.

     3.5 This  Agreement  is entered into by Buyer for the benefit of itself and
its  parent,  subsidiary  and  affiliated  companies.  Buyer's  parent  company,
subsidiaries, and/or affiliated companies, wherever located, will be entitled to
place  Purchase  Orders with Q-TEL  subject to the terms and  conditions  herein
contained; provided, however, Q-TEL may refuse to accept any such Purchase Order
unless placed directly by Buyer.



     4.  Agreement Period.

     4.1 This Agreement  shall commence on December 23, 1994 and,  unless sooner
terminated in accordance with the provisions of this Agreement,  shall remain in
full  force  and  effect  for an  initial  period  of  thirty-six  (36)  months.
Expiration date is December 22, 1997.

     4.2 Upon the  expiration of the initial  thirty-six  (36) month term,  this
Agreement  shall be  automatically  renewed and shall continue in full force and
effect until  terminated  by either party for any reason by giving not less than
three (3) months  written  notice to the other party.  In the event either party
provides such notice of termination,  this Agreement shall terminate immediately
upon the expiration of the required notice period.

     5. Firm Orders and Order Forecasts.

     5.1 Concurrent  with the execution of this  Agreement,  Buyer shall provide
Q-TEL with its initial schedule of purchases of the Products, specified by model
number,  for the seven (7) month period  commencing  with the  expiration of the
minimum lead time requirement specified in Subsection 3.3 above. Buyers schedule
of  purchases  of the  Products  for this period will be only  estimates  of its
orders of the Products during such period (the "Forecasted Orders").

     5.2 On or before the  fifteenth day of each  calendar  month  following the
execution of this  Agreement,  Buyer shall provide  Q-TEL,  with:  (i) a written
Purchase  Order  updating and amending  its Firm Order  commitment;  and (ii) an
updated  forecast of its  Forecasted  Orders  during the seven (7) month  period
subsequent to the last delivery scheduled in the updated Purchase Order provided
pursuant to clause (i) of this Subsection.

     5.3 On the fifteenth day of each calendar month  following the execution of
this  Agreement,  orders  forecasted  for the first month of the Forecast  Order
period will be deemed to be zero unless  confirmed  by Buyer  issuing a Purchase
Order with respect to such month.  Prior to any Forecasted Order becoming a Firm
Order, Buyer may increase, decrease or cancel any such Forecasted Order.

     5.4 Q-TEL shall be entitled to purchase long lead  components  for all Firm
Orders issued by Buyer.  Q-TEL's purchase of long lead time components  required
to satisfy Buyer's forecasted orders shall require Buyer's prior approval.

     6. Pricing.

     6.1 The applicable  Price for any units of the Products  ordered  hereunder
has been set forth in Schedule B, to be attached hereto.

     6.2 The prices  specified in Schedule B include all costs of packaging  and
packing,   export   documentation,   and  Dominican  Republic  government  taxes
applicable to the sale and export of the  Products.  Prices for the Products are
exclusive of any other federal,  state, or local sales,  use,  excise,  or other
similar  taxes or duties,  which  Q-TEL may be  required  to collect or pay as a
consequence  of the sale or delivery of any units of the Products to Buyer,  and
Buyer shall be responsible for the payment or  reimbursement  of any such taxes,
fees, or other charges. No taxes have been allocated as part of Q-TEL's price to
Buyer on Products.  No tax  requirement is expected to duly-free zone operations
within the Dominican Republic,



however,  unexpected  changes in the law may  signify in a price  adjustment  if

     6.3 The Prices  specified  in Schedule B are in United  States  Dollars and
shall  remain  fixed,  except for any price  increases  due to specific  Product
changes (as described in Section 10) Q-TEL in  manufacturing  and delivering the
Products to Buyer  because of any event or  circumstance  beyond Q-TEL  control.
Q-TEL will conduct  quarterly price reviews  internally and will inform Buyer of
results: Price reductions,  maintaining price or price increases. In any case of
price  variation,  it will only be effective  after  expressly  approved by both

     6.4 Any increase in the Price  payable for any of the Products  pursuant to
Subsection 6.3,  immediately  above, shall be agreed between the parties and any
such price  increase  will only  become  effective  thirty  (30) days after such
agreement.  In the absence of agreement between the parties  concerning any such
price  increase,  either  party shall be entitled to terminate  this  Agreement,
subject to the provisions of Subsection 12.3, below.

     6.5 In the case where Price  changes  are  resulting  from  Change  Orders,
special  requirements  from Buyer,  special freight costs and/or  temporary cost
increase  on parts and raw  material in general,  such  changes in Prices,  once
approved by Buyer,  must be effective to the date the situation or  circumstance
originating the change started or to the change implementation date.

     7. Delivery.

     7.1 All Products shall be delivered F.O.B., Port as indicated in 1.1 (a).Q-
TEL shall deliver the Products at its own expense on the scheduled delivery date
set forth in any effective Purchase Order to Buyer's nominated carrier as may be
specified in such Purchase  Order.  The Products  shall be packed and marked for
shipment at Buyers expense and in accordance with Buyer's instructions set forth
in such Purchase Order. In the absence of specific shipping instructions,  Q-TEL
shall   select  a  carrier  who  shall  be  deemed  to  act  as  Buyers   agent,
notwithstanding any payment by Q-TEL of freight charges made for Buyers account.
Q-TEL shall have no liability  for any events  occurring  during  shipment.  Any
claim for damages or loss must be filed with the nominated or selected carrier.

     7.2 Risk of loss or damage to any units of the Product  shall pass to Buyer
upon Q-TEL  delivery  of such  units of the  Product  to the  nominated  carrier
specified by Buyer,  or, in the absence of such  instruction,  to the  qualified
carrier selected by Q-TEL. Title to any units of the Product shall pass to Buyer
upon Q-TEL receipt of payment in full for such units of the Product.

     7.3 Buyer will be  entitled  to reject any units of the  Product  delivered
more than thirty (30) days in advance of the scheduled  delivery date  specified
in any effective Purchase Order (see 7.5 below), and to return such units of the
Products  to Q-TEL,  at Q-TEL's  expense  for  subsequent  delivery  to Buyer in
conformity with the applicable Purchase Order.

     7.4 Subject to the exceptions  specified in Section 14. below, Q-TEL agrees
that in the event it shall  deliver any units of the Products  more than fifteen
(1 5)  working  days  after  the  ex  factory  delivery  date  specified  in any
corresponding  Purchase  Order (see 7.5)  issued by Buyer and  accepted by Q-TEL
hereunder.  Q- TEL  shall be  responsible  for the  difference  between  the sea
freight  charges  which would  ordinarily  be incurred by Buyer to deliver  such
units of the Products to Buyer's receiving  destination in the United States and
the reasonable air freight charges



necessarily  incurred to  expedite  delivery  of such  Product  units to Buyer's
receiving destination.

     7.5 Contract  delivery dates for Products  included on Purchase  Orders may
differ  from  dates  stated  on  such   Purchase   Orders.   In  such  case,  an
Acknowledgement  must be made by Q-TEL stating the new contract  delivery dates.
Delivery schedules  submitted by Q-TEL may also change Purchase Order's delivery
dates, becoming contract delivery dates, upon the approval of Buyer.

     7.6  Both  parties  agree  that   shipments   will  be  made  under  mutual
coordination, to fill a forty (40) foot sea freight container to at least 75% of
capacity,  and air containers as directed by Buyer. A twenty (20) foot container
will be used at the discretion of the Buyer. Buyer will only delay shipment of a
full container for reasons specified in Section 7.6 and 7.3 above.

     7.7 Delays in delivering  Products in accordance  with Purchase  Order's or
later agreed  dates,  resulting  from delays in receiving  parts and  components
purchased by Q-TEL from Buyer,  will not be under the  responsibility  of Q-TEL,
neither the associated  penalties or additional  costs. In such cases Buyer will
be notified and new contract delivery dates shall be agreed.

     8. Inspection and Acceptance.

     8.1 Q-TEL shall  manufacture and inspect the Product in accordance with the
Quality Plan  specified in Schedule C, to be attached  hereto.  Buyer shall have
the right to review the  Quality  Plan and Q-TEL  manufacturing  and  inspection
operations  at any  reasonable  time in order  to  verify  that  the  applicable
standards are being satisfied.

     8.2  Any  proposed  changes  to be  made  to  the  Quality  Plan  or to the
manufacturing  process  which may  affect the  Products  shall be  reviewed  and
approved by Buyer  before such  changes are  implemented;  Buyer agrees that any
such required  approval shall not be unreasonably  withheld.  If any changes are
implemented  without such prior approval,  Buyer shall be entitled to reject any
units of the Products  manufactured during the period such unauthorized  changes
were in place.

     8.3 Buyer may inspect and test the  Products  at all  reasonable  times and
places. If such inspection or testing is made on Q-TEL's  premises,  Q-TEL shall
provide  reasonable  facilities  for such  inspection  and testing.  Q-TEL shall
provide  adequate  space for the  storage of Buyer's  inspection  tools and test
equipment in accordance with the provisions of Section 17, below.

     8.4 Final inspection and acceptance of Buyer shall be conducted on delivery
of the Products at its receiving  destination,  unless  otherwise  agreed in any
applicable  Purchase Order.  Q-TEL will perform to an outgoing  quality level of
below 1%  defect  rate by using  one of the  following  MIL - STD 105D  sampling
plans:  (a) 0.4% AQL or equivalent on submitted  lots of 250 units or less;  or,
(b) 0.65% AQL or equivalent on submitted lots of 251 units or greater.

     8.5 Products which fail to conform to the applicable  specifications and/or
description  contained in this  Agreement  may be rejected by Buyer by providing
written  notice  thereof  to Q-TEL  within  thirty  (30) days of receipt of such
Products at Buyer's  receiving  destination.  In such event,  the  provisions of
Subsection 9.4 below, shall apply with respect to any such rejected Products. If
Buyer fails to properly



reject any units of the  Products  within  such  thirty  (30) day  period,  such
Product units shall be deemed accepted and may not be subsequently rejected.

     9. Warranty.

     9.1 Q-TEL  warrants  solely for the benefit of Buyer,  that for a period of
three (3) months  from the date of  acceptance  of any units of the  Products by
Buyer,  the  portions  of the  Products  which  Q-TEL has agreed to produce  and
manufacture  (hereinafter   "Manufacturer   Assemblies")  will  conform  to  the
specifications  incorporated in Schedule C, to be attached  hereto,  and will be
free from defects in materials and workmanship under normal use and service.

     9.2 As used  herein,  the term  "Manufacturer  Assemblies"  shall mean only
those   portions  of  the  Products  for  which   component   materials   and/or
subassemblies are purchased by Q-TEL and which are actually  manufactured and/or
assembled  by Q-TEL;  Manufacturer  Assemblies  shall  not  include  any  kitted
inventory of component  materials,  or any  subassemblies  or finished  products
(eg., keyboards,  power supplies,  disk drive mechanisms,  or computer software)
that are produced by separate manufacturers and consigned to Q-TEL by Buyer (all
such items are collectively referred to hereinafter as "Non-Q-TEL Assemblies").

     9.3 Q-TEL'S express warranty with respect to Manufacturer  Assemblies shall
not apply to any expendable  components (eg.,  fuses,  bulbs,  etc.), nor to any
Manufacturer Assemblies damaged as a result of any accident,  negligence, use in
any  application  for which the  Manufacturer  Assemblies  were not  designed or
intended, modification without the prior consent of Q-TEL, any cause external to
the Manufacturer Assemblies (eg., power failure or air condition failure), or by
any other causes unrelated to defective materials or workmanship.

     9.4 Any Products  determined to be defective in materials or workmanship or
not to conform to the applicable  specification  within the warranty period will
be repaired or replaced, at Q-TEL's option, through one or more of the following
methods:  (I) by Q-TEL,  at its expense,  upon return of any  defective  Product
units to Q-TEL;  (ii) by Q-TEL's  appointment  of a third  party  contractor  to
correct any such discovered  defects at Q-TEL's  expense;  or (iii) by Buyer, at
its respective facilities, at a mutually agreed price to be paid by Q-TEL.

          (a) No return of Products will be accepted  without a return  material
authorization  number  (an  "RMA#")  which  will be  promptly  issued  by Q-TEL,
together with a statement of Q-TEL's election pursuant to this Subsection 9.4 as
to the manner in which such  allegedly  defective  Products  will be repaired or
replaced,  within five (5) working days after Q-TEL's  receipt of Buyers written
request for any such RMA#.

          (b) Any Products  returned must be in their original  shipping cartons
and  must be  complete  with  all  packing  materials.  A  complete  description
regarding  the nature of any alleged  defect must be included  with all returned
Product units.

          (c) If any Products  returned under Q-TEL's  warranty policy are found
to conform to the  warranties  set forth herein,  then the party  returning such
items shall promptly  reimburse  Q-TEL for its reasonable  expenses  incurred in
handling  and  processing  any such  warranty  claim,  and such  items  shall be
returned at the risk and expense of such party.

          (d) Q-TEL will perform an incoming inspection on all



components  required  for the  manufacture  of Buyer's  products and accepts all
responsibility  for material  defects found in Buyers  product.  Q-TEL agrees to
reimburse  Buyer,  upon written  notification to Q-TEL, for all reasonable costs
associated  with  correcting   product  failures   resulting  from  material  or
workmanship defects within the warranty period,  including,  without limitation,
all additional labor costs, freight and manufacturing expense.

concerning the operation or  performance of custom  equipment or with respect to
any Products  produced to any  specifications  or drawings not originating  with
Q-TEL. Q-TEL neither assumes nor authorizes any other person or entity to assume
for Q-TEL any other liability in connection with the manufacture and/or sales of
Products in furtherance of this Agreement.  The exclusive remedy  concerning the
repair or  replacement  of  Products  set  forth in  Subsection  9.4,  above and
reimbursement  pursuant to section 9.4 (d),  is  expressly  in lieu of all other
remedies which may be available to Buyer at law or in equity.

     9.6  Q-TEL's  liability  hereunder  is  expressly  limited to refund of the
purchase  price then paid to Q-TEL for any  defective  units of the  Product and
reimbursement  of costs pursuant to Section 9.4(d),  whether  Q-TEL's  liability
arises from any breach of Q-TEL's  express  warranty,  breach of any  obligation
arising from breach of warranty,  or otherwise  with respect to the  manufacture
and  sale of any  units of the  Product  hereunder,  and  whether  liability  is
asserted in contract or tort, including negligence and strict product liability.
Except as  provided  in Section 7.5 and Section 9.4 (d), in no event shall Q-TEL
be liable for costs of procurement of substitute  goods by Buyer or for any loss
of profits or loss of use, or for any  incidental,  consequential,  special,  or
other  damages  however  caused,  whether  or not Q-TEL has been  advised of the
possibility of such loss or damage.

     10. Product Changes.

     10.1 Buyer may, by written  Change  Order,  make  changes in the  drawings,
designs,  specifications,  or packaging  requirements  concerning  the Products,
and/or request additional or diminished services from Q-TEL.

     10.2  Q-TEL may  recommend  to Buyer at any time  proposed  changes  in the
drawings,  designs,  specifications,  process  changes,  or packaging or packing
requirements that are expected to result in improved Product reliability or cost
reduction.  Implementation  of Q-TEL'S  recommendations  shall only be made upon
receipt of authorization by Buyer in the form of Buyer's written Change Order.

     10.3 Upon Q-TEL'S  receipt of Buyer's Change Order,  Q-TEL shall  determine
any cost  modifications  and within thirty (30) days of Q-TEL's  receipt of such
Change Order,  Q-TEL shall provide Buyer with and appropriate  statement setting
forth any result cost modifications to be incurred.

     10.4 After Q-TEL's statement  setting out any resulting cost  modifications
has been accepted by Buyer, the new price shall apply to any subsequent Purchase
Order with respect to which the change is effective; Schedule B, to be attached



hereto, shall be amended accordingly.

     10.5 If any changes  recommended by Q-TEL result in a decrease in the Price
of any Products,  Buyer and Q-TEL shall share equally the decrease in the Price.
If any  changes  implemented  by Buyer  result in an increase or decrease in the
Price of the Products,  Buyer shall be liable for one hundred  percent (100%) of
any cost  increase  and  shall  enjoy  one  hundred  percent  (100%) of any cost

     10.6 Buyer shall reimburse Q-TEL for any authorized  materials purchased by
Q-TEL which are no longer  required  for the  manufacture  of the  Products as a
result of any implemented changes.

11. Payment and Invoices.

     11.1 Buyer  agrees that it shall pay for any and all units of the  Products
within sixty (60) days from the date of Buyer's receipt of Q-TEL's corresponding
complete  statement of account for any such units of the  Products.  Any payment
due to Q-TEL  shall be sent by wire  transfer  to such bank  account as shall be
designated  by  Q-TEL.  All due  invoices  will  be  reconciled,  accepted,  and
reflected  on a statement of account and will be subject of a penalty of 1 % per
month, after the above referred sixty (60) day period.

     11.2  When  partial  shipments  are  made,  payment  shall  become  due  in
accordance with the provisions of the agreement establishing.

     11.3 The  payment  of Q-TEL's  invoices  concerning  units of the  Products
manufactured  for the benefit of the Buyer and delivered to the carrier designed
by Buyer,  or, in the absence of such  instructions,  to the carrier selected by
Q-TEL, shall not constitute acceptance of such Product by Buyer.

     11.4 Both parties  agree that  invoicing  will be made based on actual ship
(On Board) dates as specified on carrier's Bill of Lading.

12. Termination.

     12.1 Either party may terminate  this Agreement if the other party violates
any material  provision of this  Agreement and fails to correct or cure any such
violation  within  thirty  (30) days after  receipt  of  written  notice of such
violation. Unless corrected or cured within such period, the termination of this
Agreement shall be effective thirty (30) days after delivery of such notice.

     12.2 Should either party be  adjudicated  to be bankrupt or  insolvent,  or
should a receiver or  liquidator  be appointed  for its  business or assets,  or
should an  assignment  be made for the  benefit of such  party's  creditors,  or
should  such party file or have filed  against it a petition  for winding up its
affairs, or should such party file or have filed against it a petition under any
applicable  bankruptcy  statutes or regulation,  or should such party attempt to
assign this Agreement without the written consent of the other party being first
obtained,  then the other party shall be entitled to  terminate  this  Agreement
effective  immediately  upon  delivery  of notice of such  election to the other

     12.3 Any  payment  obligations  of Buyer owed to Q-TEL  shall  survive  the
expiration or termination  of this  Agreement for any reason.  In the event this
Agreement  is  terminated  by  either  of the  parties  in  accordance  with the
provisions  of  Subsection  6.4  above,  the  Buyer  shall  nevertheless  remain
obligated  to pay Q- TEL the  contract  price  for  all  finished  units  of the
Products which have been



manufactured by Q-TEL against the Firm Orders issued by the Buyer,  whether such
units have been delivered to the Buyer,  or are in transit to the Buyer,  or are
in Q- TEL's inventory  ready for shipment to the Buyer.  In addition,  the Buyer
shall remain  liable to pay Q-TEL for all work in process and for all  component
materials in Q- TEL's  inventory as of the effective date of  termination  which
work in  process  has been  undertaken  and/or  component  materials  have  been
purchased by Q-TEL in order to fulfill the Firm Orders issued by the Buyer.  The
Buyer  acknowledges  and agrees that the reasonable value of the work in process
shall be determined on the basis of the cost of materials plus ten percent (10%)
and that the reasonable value of such component materials shall be determined on
the basis of the cost of such items plus five percent (5%).  Any and all payment
obligations  owed to Q-TEL in accordance  with the  provisions of this Agreement
shall be resolved and paid within thirty (30) days after the  effective  date of

13. Cancellation.

     13.1 Buyer may not cancel any Purchase  Order (or any part  thereof  within
thirty (30) days prior to the scheduled Product delivery date as specified in Q-
Tel's Acknowledgement.

     13.2 If Buyer cancels any Purchase Order between  thirty-one (31) and sixty
(60) days prior to the  scheduled  Product  delivery  date as  specified  in the
relevant Acknowledgement,  Buyer shall pay Q-TEL as liquidated damages an amount
equal to eighty  percent  (80%) of the  price of the  canceled  portion  of such
Purchase Order. If Buyer cancels any Purchase Orders between  sixty-one (61) and
ninety (90) days prior to the  scheduled  Product  delivery date as specified in
the relevant Purchase Order,  Buyer shall pay to Q-TEL as liquidated  damages an
amount equal to sixty-five percent (65%) of the price of the canceled portion of
such Purchase Order. The liquidated damages paid by Buyer to Q-TEL in accordance
with the provisions of this  Subsection 13.2 shall be Q-TEL's sole and exclusive
remedy with respect to any such canceled Purchase Order.

     13.3 Buyer shall not be liable for  cancellation of any Purchase Order more
than ninety (90) days prior to the scheduled  Product delivery date as specified
in the relevant Acknowledgement,  provided, however, Buyer shall nevertheless be
liable to reimburse Q-TEL for any long lead time  components  purchased by Q-TEL
with the approval of Buyer.

     13.4  Cancellation  of any Purchase Order shall be effective as of the date
on which written notice of cancellation is received by Q-TEL.

14. Force Majeure.

     Neither party to this Agreement  shall be liable for its failure to perform
any of  its  obligations  hereunder  or  under  any  Purchase  Order  issued  in
furtherance of this Agreement, or for its failure to cure any default under this
Agreement  or any  related  Purchase  Order,  during  any  period in which  such
performance or cure is delayed or prevented by any fire,  flood,  war,  embargo,
strike,  riot,  or  intervention  of any  governmental  authority,  or any other
circumstances  (whether or not of a similar  nature)  beyond the control of such
party;  provided,  however,  that the party  suffering  such  delay  immediately
notifies the other party in writing (by telex,  or  telegraphic  means),  of the
reasons for the delay and, if possible, the duration of such delay.

15. Confidentiality and Intellectual Property.



     15.1 In order to  enable  Q-TEL to  manufacture  the  Products  under  this
Agreement,  Buyer shall  disclose to Q-TEL certain  information  relating to the
design and manufacture of the Products, which information is understood by Q-TEL
to be information  of a  confidential  nature,  including,  without  limitation,
Buyer's engineering drawings, designs,  specifications,  schematics, and bill of
materials (collectively referred to hereinafter as the "Subject Information").

     15.2 Q-TEL  acknowledges  that  certain of the Subject  information  may be
considered proprietary and confidential to Buyer. Buyer shall advise Q-TEL if it
considers any particular  information  or related  materials to be trade secrets
and/or confidential. Q-TEL agrees to receive and use its reasonable best efforts
to maintain  the  confidentiality  of all trade  secrets and other  confidential
information  disclosed  to it by Buyer for a period  of five (5) years  from the
date of receipt thereof, or two (2) years after the completion of this Agreement
(including any extension hereof,  or the earlier  termination of this Agreement,
whichever occurs later,  and not to use the Subject  Information for any purpose
except as required by this Agreement.

     15.3 Q-TEL's  obligation to hold Buyers  Subject  Information in confidence
shall not apply to any information  which:  (i) is known by Q-TEL at the time of
receiving  any such  disclosure  from Buyer;  (II) becomes  known to the general
public  without  breach  of the  non-disclosure  obligations  set  forth in this
Agreement;  (iii) is disclosed by Buyer to third parties without  restriction on
disclosure;   (iv)  is  obtained  from  a  third  party  without   breach  of  a
non-disclosure  obligation;  (v) is  independently  developed by employee(s) who
have not had access to the proprietary information at issue; or (vi) is required
to be disclosed in connection with any suit, action, or other dispute related to
this Agreement

     15.4 Upon the completion of this Agreement or its earlier  termination,  Q-
TEL  shall  return  all  Subject  Information,  including  copies of any of such
information,  to (F.O.B.  Port as  specified  in 1.1 (e)),  or, if  requested by
Buyer, Q-TEL shall destroy all Subject  information  remaining in its possession
and certify the destruction of all such documents and related materials.

16. Assignment and Subcontracting.

     16.1 Neither  party shall be entitled to assign or otherwise  transfer this
Agreement,  or to assign any of its  respective  rights or  delegate  any of its
obligations hereunder, without the prior written consent of the other party, and
any attempted or purported assignment by either party without such consent shall
be null and void.

     16.2 Q-TEL shall not subcontract  the  manufacture of the Products,  or any
part thereof, without first obtaining the written consent of the Buyer.

     16.3 Q-TEL shall not sublet Buyers Consigned Tooling,  or any part thereof,
without first obtaining the written consent of the Buyer.

17. Consigned Tooling.

     17.1  Buyer  agrees  that it shall  consign  to Q-TEL  the  tooling  and/or
equipment  specified in Schedule D, to be attached hereto.  Q-TEL shall use such
tooling and equipment only in the  performance of its obligations in furtherance
of this Agreement or as may be otherwise authorized by Buyer.

     17.2 Q-TEL  agrees not to remove  Buyer's  name as marked on any  Consigned
Tooling,  and to store the Consigned Tooling on its premises separately from its
own goods or those of any other person or entity and in a manner which



makes the Consigned Tooling readily identifiable as the goods of Buyer.

     17.3 Any  Consigned  Tooling  delivered  to Q-TEL shall be used and handled
only by  employees of Q-TEL who are trained in the use of such  tooling.  Q- TEL
agrees to maintain the Consigned Tooling in good condition, normal wear and tear
expected.  Buyer  acknowledges  that  it  will  contract  with  the  appropriate
equipment suppliers for maintenance of any Consigned Tooling delivered to Q-TEL.

     17.4 Buyer shall perform an inspection of components from each piece of the
Consigned Tooling to verify that such tooling confirms with Buyer(s) engineering
drawings and specifications.  Prior to manufacture of the Products,  Q- TEL must
have received prior written approval from Buyer to use the Consigned  Tooling in
the manufacturing process.

     17.5 Upon completion of this Agreement (including any extension hereof), or
the earlier  termination  of this  Agreement,  Q-TEL shall return the  Consigned
Tooling in  accordance  with the Buyer's  instructions  and at Buyer's  risk and

     17.6 Q-TEL shall  construct,  subcontract to have  constructed,  or procure
from third parties,  certain  tooling,  equipment  and/or  software  programs as
specified in Schedule F, to be attached hereto,  which items shall be authorized
by separate  Purchase  Order(s)  issued by Buyer.  Any such tooling,  equipment,
and/or  software  programs  once  completed  and  approved by Buyer shall become
Consigned Tooling subject to the provisions of this Subsection 17.

18. Buyer's Warranty and Indemnity.

     18.1 Buyer represents and warrants that:

          (a) It is the rightful owner of all rights, title and interests in and
to  the  Products,   including  without  limitation,  any  patents,   copyright,
trademarks and other intellectual property rights with respect thereto;

          (b) It is under no restraints arising from contractual or confidential
relationships with any third party which may adversely affect or be inconsistent
in any manner with the parties' respective rights and obligations thereunder;

          (c) The  manufacture  and sale of the  Products  to Buyer does not and
will not infringe upon any patents,  copyrights, or any other proprietary rights
of any third party; and

          (d) It has neither  granted any rights or  licenses,  nor entered into
any transaction with any third party which is/are  inconsistent  with any of the
rights, licenses,  and/or obligations of Q-TEL under this Agreement or under any
Purchase Order issued by Buyer in furtherance of this Agreement.

     18.2 Buyer agrees to  indemnify,  defend and hold Q-TEL  harmless  from and
against any and all claims,  losses,  liabilities,  damages, costs and expenses,
including reasonable legal costs and attorneys' fees, resulting from a breach or
alleged breach of any of the warranties set forth in Subsection 18.1,  above, or
arising  out of any bodily  injury  (including  death) or  property  damage,  by
whomsoever  such  claim  is made,  which  is based in whole or in part  upon the
manufacture,  sale,  or use of any of the  Products  manufactured  by  Q-TEL  in
conformance  with the  drawings,  specifications,  or designs  furnished  and/or
approved by Buyer hereunder, unless due to the negligence of Q-TEL in performing
the duties and/or providing the



manufacturing services required of it hereunder.

19. Notices.

     19.1 All notices, consents and communications hereunder shall be in writing
(unless  otherwise stated) and in the English language signed by or on behalf of
the relevant party, and may be given by cable,  telex, or facsimile,  subject to
confirmation by letter.

     19.2 Written  notices by post shall be sent by registered mail or certified
mail,  postage prepaid,  return receipt  requested.  Any  telegraphic,  telex or
facsimile  notice must be confirmed within three (3) days by written notice sent
by post signed by an authorized agent of such party.

     19.3 Notices sent by prepaid post shall be addressed to the recipient party
at its  address as set forth in the  preamble of this  Agreement,  or such other
address as may be  specified by one party from time to time in  accordance  with
the provisions of this  Subsection 19, and shall be deemed to have been received
seven (7) working days after the date of posting.

     19.4 For the purpose of this Agreement,  reasonable  parties to receive any
and all correspondence associated to it, are defined below:


478 Wheelers Farms Road, Milford, CT 06460
Attention:     Randall G. Lovin, Director - Materials
Telephone: (203) 876-7600
FAX (203) 882-2869


Regular Mail: C/O GTE International
8350 N.W. 52nd Terrace, Suite 102
Miami, FL 33166
P.O. Box 527505
Miami, FL 33152
Overnight mail: Q-TEL
Ave. Independencia, Centro El Cacique
Santo Domingo, Republica Dominicana
Attention: Carlos M. Pellerano, Manager - Sales, Marketing and
Customer Support
Telephones:  1-800-451-4778 / (809) 220-7308
FAX:    (809) 220-7347

20. Miscellaneous.

     20.1 In performing  their  respective  obligations  hereunder,  each of the
parties shall operate as and have the status of an  independent  contractor  and
shall not act as or be joint  venturers,  or an agent or  employee  of the other
party.  Neither  party shall have any right or authority to assume or create any
obligations of any kind or to make any  representations  or warranties on behalf
of the other party,  whether expressed or implied, or to bind the other party in
any respect whatsoever.



     20.2  Any  mutually  agreed  terms  which  may  be  specified   during  the
continuance of this Agreement,  or any extension  hereof,  shall be incorporated
into this Agreement in the form of an addendum hereto.

     20.3 No failure or delay by either party in exercising any right, power, or
remedy under this Agreement shall operate as a waiver of any such right,  power,
or remedy.  No waiver of any  provision  of this  Agreement  shall be  effective
unless  in  writing  and  signed  by the  party  against  whom  such  waiver  or
modification  is  sought  to be  enforced.  The  express  waiver of any right or
default  hereunder  shall be effective  only in the instance given and shall not
operate as or imply a waiver of any similar  right or default on any  subsequent

     20.4 Should any  provision  of this  agreement  be  determined  to be void,
invalid  or  otherwise  unenforceable  by any  court or  tribunal  of  competent
jurisdiction,  such  determination  shall not  affect the  remaining  provisions
hereof which shall remain in full force and effect.

     20.5 This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Virginia.

     20.6 In the event of any  controversy  under this  Agreement,  the  parties
shall  attempt  in good  faith  to  resolve  such  controversy  by  negotiation,
mediation, or other informal and inexpensive methods of dispute resolution.  Any
controversy  not  successfully  resolved  in such a manner  shall be  settled by
binding  arbitration in accordance with the Commercial  Arbitration Rules of the
American Arbitration  Association by a panel of three (3) arbitrators.  Any such
arbitration  shall  be held in  Richmond,  Virginia.  Judgment  upon  the  award
rendered  by the  Arbitrators  may be entered in any court  having  jurisdiction
thereof.   The  parties  agree  to  and  do  hereby  submit  themselves  to  the
jurisdiction  of the courts of the  Commonwealth  of Virginia  and of the United
States of  America  located  in  Alexandria  or  Richmond,  for the  purpose  of
enforcing any award rendered by the Arbitrators.

     20.7 In no event  shall  either  party be liable to the other party for any
incidental,  consequential,  special,  or punitive damages arising in any manner
out of this Agreement.

     20.8 The headings to the Sections of this Agreement are for the convenience
of the parties only and have no legal effect.

     20.9 This  Agreement  constitutes  the entire  agreement by and between the
parties with respect to the subject matter hereof,  and supersedes all prior and
contemporaneous  agreements,  negotiations and  understandings,  whether oral or
written.  The parties  acknowledge  and agree that the Agreement  dated December
23,1991  between the Compania  Dominicana de Telefonos,  C. por A. (CODETEL) and
Buyer is superseded by this Agreement and is hereby terminated.

     20.10 All signed copies shall be deemed to be originals of this Agreement.

     20.11 The  persons  executing  this  Agreement  on behalf of  Licensee  and
Licensor  represent  and  warrant  that they each have the  requisite  corporate
authority to do so and that their  execution of this Agreement is not subject to
any further ratification or approval whatsoever.

In witness  whereof,  the parties have executed this Agreement as of the day and
year first written above.



SYSTEMS, INC.                          TELEFONOS, C. POR A.

Name_______________________            Name_______________________

Title______________________            Title________________________