EXHIBIT 10.1
STRATEGIC ALLIANCE AGREEMENT
AMONG
ARRAY TELECOM CORPORATION,
EPHONE TELECOM, INC.
AND
COMDIAL CORPORATION
This Strategic Alliance Agreement (the "Agreement") is made as of March
31, 2000, between ARRAY TELECOM CORPORATION, a corporation incorporated under
the laws of the State of Delaware and having its principal office at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Array"), ePHONE TELECOM, INC., a
corporation incorporated under the laws of the State of Florida and having its
principal office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("ePHONE"), and COMDIAL CORPORATION, a corporation incorporated
under the laws of the State of Delaware and having its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Comdial").
RECITALS
WHEREAS, ePHONE is in the business of providing certain
telecommunications services, including international long distance services that
allow users to perform phone-to-phone one step dialing via Voice over Internet
Protocol;
WHEREAS, Array has developed certain software products, including
VoipGate, Array Version 2 and the Array 3000 family of products, and owns
certain related assets;
WHEREAS, Comdial owns all of the outstanding capital stock of Array;
and
WHEREAS, Array has agreed to sell, and ePHONE has agreed to purchase,
all of Array's physical assets, and Array has agreed to grant to ePHONE a
license in the form of Exhibit B to this Agreement to, among other things,
VoipGate, Array Version 2 and the Array 3000 family of products.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants, agreements and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE 1.
SALE AND PURCHASE OF ASSETS
Section 1.1 Sale and Purchase of Assets. Subject to the terms and
conditions of this Agreement, on the Closing Date (hereinafter defined) Array
shall sell, transfer, convey and deliver to ePHONE, and on the Closing Date
ePHONE shall purchase and acquire from Array, the fixed assets of Array used in
its business and listed in Schedule 1 (the "Purchased Assets"). The transfer and
conveyance of the Purchased Assets shall be made by a ▇▇▇▇ of sale (the "▇▇▇▇ of
Sale") in substantially the form attached hereto as Exhibit A.
Section 1.2 Excluded Assets. The Purchased Assets to be sold and
purchased hereunder do not include cash, accounts receivable, intangible assets,
patents or patent applications, know-how, trade secrets or any other asset of
Array that is not listed in Schedule 1.
Section 1.3 No Assumption of Liabilities. ePHONE shall not assume or be
otherwise liable for any liabilities or obligations of Array related to the
Purchased Assets or otherwise, except for obligations arising after the Closing
Date under the Lease (as defined in Section 7.7).
ARTICLE 2.
LICENSE OF TECHNOLOGY
Section 2.1 License. Array shall grant to ePHONE a license to the
Intellectual Property (as such term is defined in the License Agreement) (the
"Licensed Assets") pursuant to the License Agreement in substantially the form
attached hereto as Exhibit B.
ARTICLE 3.
CONSIDERATION FOR AGREEMENT
Section 3.1 Consideration for Agreement. In partial consideration for
this Agreement and the transactions contemplated hereby, ePHONE shall pay to
Array at the Closing in cash the amount of $2,650,000.
Section 3.2 Royalty Payments. ePHONE shall make royalty payments to
Comdial pursuant to the terms of the License Agreement.
ARTICLE 4.
REPRESENTATIONS BY ARRAY
Section 4.1 Organization; Qualification. Array is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power and authority to own its assets
and carry on its business as it is presently being conducted. Array is duly
qualified and in good standing to do business in each jurisdiction in which its
business makes such qualification necessary, except in those jurisdictions where
failure to be duly qualified and in good standing does not and cannot reasonably
be expected to have, in the aggregate, a material adverse effect on the
Purchased Assets, the Licensed Assets or its business. Array has heretofore
delivered to ePHONE complete and correct copies of its Certificate of
Incorporation and Bylaws currently in effect.
Section 4.2 Authority Relative to this Agreement. Array has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery by Array of this Agreement, and the consummation by it of the
transactions contemplated hereby, have been duly authorized by the Board of
Directors of Array and no other corporate proceedings on the part of Array are
necessary with respect thereto. This Agreement has been duly executed and
delivered by Array and constitutes, and the other agreements referred to herein
to which Array is a party (collectively, the "Array Related Agreements"), when
executed and delivered by Array, will constitute, valid and binding obligations
of Array enforceable against Array in accordance with their terms, except as
their terms may be limited by (i) bankruptcy, insolvency or similar laws
affecting creditors' rights generally or (ii) general principles of equity,
whether considered in a proceeding in equity or at law.
Section 4.3 No Violation. The execution and delivery by Array of this
Agreement and the Array Related Agreements does not, and the consummation of the
transactions contemplated hereby and thereby, will not (i) violate or result in
a breach of any provision of the Certificate of Incorporation or bylaws of
Array, (ii) result in a default, or give rise to any right of termination,
modification or acceleration, or the imposition of a mortgage, lien, pledge,
security interest, charge, claim, restriction or other encumbrance or other
defects in title (each an "Encumbrance") on any of the Purchased Assets or the
Licensed Assets, under the terms or provisions of any agreement or other
instrument or obligation to which Array is a party or by which Array, any of the
Purchased Assets, the Licensed Assets or its business may be bound, or (iii)
violate any law or regulation, or any judgment, order or decree of any court,
governmental body, commission, agency or arbitrator applicable to Array, any of
the Purchased Assets, the Licensed Assets or its business (other than applicable
"bulk sales" laws), excluding from the foregoing clauses (ii) and (iii) such
defaults and violations which do not and cannot reasonably be expected to have a
material adverse effect on the Purchased Assets or the Licensed Assets, or Array
or its other properties or its business.
Section 4.4 Litigation. There are no actions, suits, claims,
investigations or proceedings pending or, to the knowledge of Array, threatened
against Array, before any court, governmental body, commission, agency or
arbitrator, which have or can reasonably be expected to have a material adverse
effect on the Purchased Assets or the Licensed Assets or Array or its business,
or which seek to limit, in any manner, the right of ePHONE to control and use
the Purchased Assets and the Licensed Assets after the consummation of the
transactions contemplated in this Agreement. Furthermore, there are no
judgments, orders or decrees of any such court, governmental body, commission,
agency or arbitrator which have or can reasonably be expected to have any such
effect.
Section 4.5 Titles to Assets; Leases. Array holds good and marketable
title to all of the Purchased Assets and the Licensed Assets, free and clear of
any Encumbrances, and has the right to sell, transfer and assign the Purchased
Assets to ePHONE and license the Licensed Assets to ePHONE. All properties held
under lease by Array are held under valid, enforceable and assignable leases.
Section 4.6 Consents and Approvals. Except to the extent that failure
to obtain such consent or approval would not have material adverse effect on the
Purchased Assets or the Licensed Assets or Array's business, and except for the
consent of Bank of America under the Credit Agreement between Bank of America
and Comdial dated as of October 22, 1998, which consent has been obtained, there
is no requirement applicable to Array to make any filing with, or to obtain the
consent or approval of, any individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
any government or political subdivision, agency or instrumentality thereof (each
a "Person") as a condition to the consummation of the transactions contemplated
by this Agreement (other than as may be required by applicable "bulk sales"
laws).
ARTICLE 5.
REPRESENTATIONS BY COMDIAL
Section 5.1 Organization and Qualification. Comdial is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all necessary corporate power and authority to own its
assets and carry on its business as it is presently being conducted. Comdial is
duly qualified and in good standing to do business in each jurisdiction in which
its business makes such qualification necessary, except in those jurisdictions
where failure to be duly qualified and in good standing does not and cannot
reasonably be expected to have, in the aggregate, a material adverse effect on
its business.
Section 5.2 Authority Relative to Agreement. Comdial has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
Comdial of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by the Board of Directors of
Comdial and no other corporate proceedings on the part of Comdial are necessary
with respect thereto. This Agreement has been duly executed and delivered by
Comdial, and constitutes the valid and binding obligation of Comdial enforceable
against Comdial in accordance with its terms except as its terms may be limited
by (i) bankruptcy, insolvency or similar laws affecting creditors' rights
generally or (ii) general principles of equity, whether considered in a
proceeding in equity or at law.
Section 5.3 No Violation. The execution and delivery by Comdial of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, (i) violate or result in a breach of any provision of the Certificate
of Incorporation or bylaws of Comdial, or (ii) violate any law or regulation, or
any judgment, order or decree of any court, governmental body, commission,
agency or arbitrator applicable to Comdial or its business excluding such
defaults and violations which do not and cannot reasonably be expected to have a
material adverse effect on its properties or its business.
ARTICLE 6.
REPRESENTATIONS BY EPHONE
Section 6.1 Organization and Qualification. ePHONE is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida and has all necessary corporate power and authority to own its
assets and carry on its business as it is presently being conducted. ePHONE is
duly qualified and in good standing to do business in each jurisdiction in which
its business makes such qualification necessary, except in those jurisdictions
where failure to be duly qualified and in good standing does not and cannot
reasonably be expected to have, in the aggregate, a material adverse effect on
its properties or its business. ePHONE has heretofore delivered to Comdial
complete and correct copies of its Articles of Incorporation and Bylaws
currently in effect.
Section 6.2 Authority Relative to Agreement. ePHONE has all necessary
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery by
ePHONE of this Agreement, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by the Board of Directors of
ePHONE and no other corporate proceedings on the part of ePHONE are necessary
with respect thereto. This Agreement has been duly executed and delivered by
ePHONE and constitutes, and the Related Agreements to which ePHONE is a party,
when executed and delivered by ePHONE, will constitute, valid and binding
obligations of ePHONE enforceable against ePHONE in accordance with their terms
except as their terms may be limited by (i) bankruptcy, insolvency or similar
laws affecting creditors' rights generally or (ii) general principles of equity,
whether considered in a proceeding in equity or at law.
Section 6.3 No Violation. The execution and delivery by ePHONE of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, (i) violate or result in a breach of any provision of the Articles of
Incorporation or bylaws of ePHONE, or (ii) violate any law or regulation, or any
judgment, order or decree of any court, governmental body, commission, agency or
arbitrator applicable to ePHONE or its business as presently conducted or as
contemplated to be conducted in the Business Plan of ePHONE, excluding such
defaults and violations which do not and cannot reasonably be expected to have a
material adverse effect on its properties or its business.
Section 6.4 Consents and Approvals. Except to the extent that failure
to obtain such consent or approval would not have material adverse effect on its
properties or its business, there is no requirement applicable to ePHONE to make
any filing with, or to obtain the consent or approval of, any Person as a
condition to the consummation of the transactions contemplated by this
Agreement.
Section 6.5 Financial Statements. ePHONE has previously furnished
Comdial with true and complete copies of (i) the audited financial statements of
ePHONE for the periods ending June 30, 1999 and December 31, 1998 and 1997,
including the notes thereto (the "Annual Financial Statements"), together with
the reports on such statements of ePHONE's independent auditors, and (ii)
unaudited interim financial statements for the eleven month period ending
November 30, 1999 (the "Interim Financial Statements"). Such financial
statements present fairly the financial position of ePHONE as of such dates and
the results of its operations and changes in its financial position for such
periods and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis.
Section 6.6 No Undisclosed Liabilities. Since November 30, 1999, and
except as previously disclosed in writing to Comdial, there has not been any
change, or development involving a prospective change, including, without
limitation, any damage, destruction or loss (whether or not covered by
insurance), which affects or can reasonably be expected to affect, the
properties or business of ePHONE, and ePHONE has not entered into any contract
which can reasonably be expected to have any such effect.
Section 6.7 Absence of Certain Changes. Except as previously disclosed
in writing to Comdial, ePHONE has not incurred any liabilities which are not
reflected in the Interim Financial Statements other than those which were
incurred subsequent to such date in the ordinary course of business and which
have not and cannot reasonably be expected to have a material adverse effect on
the properties or business of ePHONE.
Section 6.8 Absence of Litigation. There are no actions, suits, claims,
investigations or proceedings pending or, to the knowledge of ePHONE, threatened
against ePHONE, before any court, governmental body, commission, agency or
arbitrator, which have or can reasonably be expected to have a material adverse
effect or its business or which seek to limit, in any manner, the right of
ePHONE to control the Purchased Assets and the Licensed Assets after the
consummation of the transactions contemplated in this Agreement. Furthermore,
there are no judgments, orders or decrees of any such court, governmental body,
commission, agency or arbitrator which have or can reasonably be expected to
have any such effect.
Section 6.9 Business Plan. Attached hereto as Exhibit C is the current
Business Plan of ePHONE with respect to the Purchased Assets and the Licensed
Assets.
ARTICLE 7.
OTHER AGREEMENTS
Section 7.1 Support for Imbedded Base. The parties hereto acknowledge
that Array's imbedded base of customers will be supported and serviced by ePHONE
following the Closing. ePHONE agrees that it will use commercially reasonable
efforts to support such imbedded base from and after the Closing Date.
Section 7.2 Investigation of Business. From the date hereof until the
Closing, each of the parties hereto will afford the other parties hereto and
their respective representatives, including attorneys and accountants, full
access at all reasonable times to its officers, employees, properties, contracts
and books and records to enable such other party to make a full investigation of
its business. Each party will also furnish each other party with such financial,
operating and other information as such party may reasonably request in making
such investigation.
Section 7.3 Confidentiality. The information which any party acquires
about any other party prior to consummation of the transactions contemplated by
this Agreement as a result of the investigations permitted hereby is termed
"Evaluation Material." Each party agrees that neither it, nor any of its
representatives, will (i) use any such material for any purpose not related to
the transactions contemplated by this Agreement nor (ii) disclose any such
material to anyone except its representatives who may need such information to
perform their respective duties and have been informed of its confidential
nature. If the transactions contemplated by this Agreement are not consummated,
each party agrees that it will return any written Evaluation Material in its
possession, or will destroy and will not retain any such material, any copies
thereof or any notes or memoranda made using such material.
Section 7.4 Public Announcements. Prior to the Closing Date, the
parties will consult with each other before issuing any press releases or making
any public statements with respect to this Agreement or the transactions
contemplated hereby and will not issue any such press release or make any such
public statement without the prior consent of the other, except to the extent
required by law.
Section 7.5 Employee Matters; Customer Solicitation. Comdial and Array
will not object to or interfere with any efforts by ePHONE to employ the current
employees of Array. During the term of the License Agreement, neither Array nor
Comdial shall directly or indirectly induce or attempt to persuade any employee
of ePHONE to terminate his or her employment with ePHONE. During the term of the
License Agreement, neither Array nor Comdial nor any Person affiliated with
either shall directly or indirectly sell or attempt to sell (by means of
solicitation or otherwise) to any customer to which ePHONE is providing or has
provided Products and Services (as such terms are defined in the License
Agreement) any product or service which is competitive with the Products and
Services.
Section 7.6 Access to Comdial Dealer Network and Direct Sales
Organization. During the term of the License Agreement, Comdial (i) shall use
commercially reasonable efforts to assist ePHONE in distributing products and
services provided by ePHONE through its direct sales organization and (ii) shall
use commercially reasonable efforts to enable ePHONE to distribute products and
services through its network of independent telecommunications equipment
dealers.
Section 7.7 Assignment of Lease. As soon as practicable following the
Closing Date, Array shall assign to ePHONE its interests as lessee under the
lease to Array's business facility located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, from W9/LWS Real Estate Limited Partnership, as lessor, dated February
23, 1999 ("Lease"), and ePHONE shall, from and after the Closing Date, assume
and discharge the obligations of Array arising after the Closing Date under the
Lease. Such assignment of lease shall be made by an assignment (the "Lease
Assignment") in substantially the form of Lease Assignment attached hereto as
Exhibit D. ePHONE shall use commercially reasonable efforts to have Comdial
released from its obligations under the lease as soon as practicable following
the Closing Date.
ARTICLE 8.
CLOSING OF TRANSACTIONS
Section 8.1 Time and Place of Closing. The closing ("Closing") shall
take place at ▇▇▇▇▇▇ & ▇▇▇▇▇▇ at 4:00 p.m. local time on (i) ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇▇) such other date as may be agreed upon by the parties (either of which dates
is referred to in this Agreement as the "Closing Date"). If the Closing takes
place, the Closing and all of the transactions contemplated by this Agreement
shall be deemed to have occurred simultaneously and become effective at the same
time on the Closing Date.
Section 8.2 Deliveries by Array. At the Closing, Array shall deliver to
ePHONE the following:
(a) ▇▇▇▇ of Sale substantially in the form of Exhibit A
attached hereto, duly executed, transferring to ePHONE title to the
Purchased Assets;
(b) License Agreement substantially in the form of Exhibit B
attached hereto;
(c) Certified copies of the resolutions duly adopted by Array
constituting all necessary corporate authorization for the consummation
by Array of the transactions contemplated by this Agreement;
(d) A certificate dated as of a recent date from the Delaware
Secretary of State as to the good standing of Array; and
(e) Such other documents, instruments, certificates and
writings as reasonably may be requested by ePHONE at least three
business days prior to Closing.
Section 8.3 Deliveries by ePHONE. At the Closing, ePHONE shall deliver
to Array or Comdial the following:
(a) Immediately available funds in the amount of $2,650,000,
by wire transfer to an account designated by Array;
(b) License Agreement substantially in the form of Exhibit B
hereto;
(c) Certified copies of the resolutions duly adopted by ePHONE
constituting all necessary corporate authorization for the consummation
by ePHONE of the transactions contemplated by this Agreement;
(d) A certificate dated as of a recent date from the Florida
Secretary of State as to the good standing of ePHONE; and
(e) Such other documents, instruments, certificates and
writings as reasonably may be requested by Array at least three
business days prior to Closing.
Section 8.4 Deliveries by Comdial. At the Closing, Comdial shall
deliver to ePHONE the following:
(f) License Agreement substantially in the form of Exhibit B
attached hereto;
(g) Certified copies of the resolutions duly adopted by
Comdial constituting all necessary corporate authorization for the
consummation by Comdial of the transactions contemplated by this
Agreement;
(h) A certificate dated as of a recent date from the Delaware
Secretary of State as to the good standing of Comdial; and
(i) Such other documents, instruments, certificates and
writings as reasonably may be requested by ePHONE at least three
business days prior to Closing.
ARTICLE 9.
MISCELLANEOUS PROVISIONS
Section 9.1 Obligations of Comdial. Comdial hereby guarantees the
complete and timely performance of the obligations of Array under this
Agreement. Comdial agrees that if Array defaults in any of its obligations under
this Agreement, ePHONE may exercise any remedies available to it to require
Comdial to satisfy such Array obligations without first being required to seek
performance of such obligations from Array.
Section 9.2 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
confirmation of receipt of facsimile; (ii) one (1) business day following the
date sent when sent by overnight delivery; or (iii) five (5) business days
following the date mailed when mailed by registered or certified mail return
receipt requested and postage prepaid to the following address:
If to Array or Comdial:
Comdial Corporation
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Court Square Building
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
Post Office Box 1288
Charlottesville, Virginia 22902-1288
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
If to ePHONE:
ePHONE Telecom, Inc.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: paul ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Section 9.3 Arbitration
(a) Any dispute, controversy or claim arising under, out of or
relating to the Agreement or the License Agreement (any "Dispute"),
shall be solely, finally and conclusively settled by arbitration in
accordance with the Commercial Arbitration Rules (the "Rules") of the
American Arbitration Association (the "AAA") in force when such
arbitration is commenced. The arbitration shall take place in
Washington, D.C. The Dispute shall be decided in accordance with the
laws of the Commonwealth of Virginia. In the event that more than one
Dispute is pending at the same time, such Disputes shall be
consolidated in a single arbitral proceeding.
(b) In any dispute between the parties hereto, the number of
arbitrators shall be three. If the parties are unable to agree on the
arbitrators, the arbitrators shall be selected in accordance with the
Rules.
(c) The parties hereto intend that the provisions to arbitrate
set forth herein be valid, enforceable and irrevocable. The
arbitrator's award shall be final and binding upon the parties. The
parties shall carry out the final order on the award without delay and
waive their right to assert any form of recourse against, or objection
or defense to such order or its enforcement insofar as such waiver can
validly be made. Judgment upon the award may be entered by any court
having jurisdiction thereof or having jurisdiction over the parties or
their assets or application may be made for judicial acceptance of the
award and an order of enforcement, as the case may be.
(d) Each party to the arbitration proceeding shall pay the
fees and expenses of such party's attorney's and witnesses. The fees
and expenses of the arbitrator and all other expenses shall be borne by
the party that loses the arbitration. The parties agree that if it
becomes necessary for any party to enforce an arbitral award by a legal
action or additional arbitration or judicial methods, the party against
whom enforcement is sought shall pay all reasonable costs and
attorneys' fees incurred by the party seeking to enforce the award.
Section 9.4 Governing Law. This Agreement shall be governed in all
respects, and it and the transactions contemplated hereby shall be construed and
interpreted, by the laws of the Commonwealth of Virginia without regard to its
choice of law rules.
Section 9.5 Entire Agreement. This Agreement, including the Schedules,
the Business Plan of ePHONE and the Array Related Agreements attached hereto,
constitutes the entire agreement between the parties with respect to the subject
matter hereof, and supersedes all other prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof.
Section 9.6 Counterpart Copies. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 9.7 No Third Party Beneficiaries This Agreement shall not
confer any rights or remedies upon any person or entity other than the parties
and their respective successors and permitted assigns.
Section 9.8 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Any of the parties hereto shall be permitted
to assign this Agreement to a successor in interest of all or substantially all
of its assets, or to an affiliated entity.
Section 9.9 Amendments. No amendment of any provision of this Agreement
shall be valid unless the amendment shall be in writing and signed by all
parties hereto.
Section 9.10 Waivers. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, regardless of
whether intentional, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
Section 9.11 Severability. Any term or condition of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
Section 9.12 Construction. The parties have participated mutually in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted mutually by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
Section 9.13 Headings. The Article and Section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES ARE ON THE NEXT PAGE]
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement by its duly authorized officer as of the date first set forth above.
ARRAY TELECOM CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chairman
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ePHONE TELECOM, INC.
By: /s/ JG
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Title: Director, Executive Vice President
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COMDIAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President/CEO
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EXHIBIT A
FORM OF ▇▇▇▇ OF SALE
This ▇▇▇▇ Of Sale And Assignment ("▇▇▇▇ of Sale") is made as of March
31, 2000, by ARRAY TELECOM CORPORATION, a corporation incorporated under the
laws of the State of Delaware and having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller"), in favor of ePHONE TELECOM, INC., a
corporation incorporated under the laws of the State of Florida and having its
principal office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("Buyer").
INTRODUCTION
A. Seller and Buyer are parties to a Strategic Alliance Agreement (the
"Agreement") dated as of March 31, 2000 among Seller, Buyer, and Comdial
Corporation, a Delaware corporation, pursuant to which Buyer has agreed to
purchase certain listed assets of the Seller. Terms which are defined in the
Agreement and used in this ▇▇▇▇ of Sale have the same meanings in this ▇▇▇▇ of
Sale as they have in the Agreement.
B. The Agreement provides, among other things, that for the
considerations provided therein, Seller will sell to Buyer, and Buyer will
purchase from Seller, the fixed assets of Seller used in its business (the
"Purchased Assets").
C. The purpose of this ▇▇▇▇ of Sale is to effect the transfer to Buyer
of the Purchased Assets.
TRANSFER OF ASSETS
NOW, THEREFORE, for the considerations set forth in the Agreement, the
receipt and sufficiency of which is hereby acknowledged:
1. Seller hereby sells, transfers, conveys, assigns and delivers to
Buyer the Purchased Assets used in the conduct of the business of Seller, listed
in Schedule 1 to this ▇▇▇▇ of Sale, and all of which comprise the Purchased
Assets.
2. Seller hereby authorizes Buyer, as its assignee, to demand and
receive any and all of the Purchased Assets transferred by this ▇▇▇▇ of Sale, to
give receipts and releases for and in respect of the same, or any part thereof,
and to institute and prosecute any proceedings which Buyer may deem necessary
for the collection, or reduction to possession, of any of the Purchased Assets,
or for the enforcement of any claim or right of any kind, transferred by this
▇▇▇▇ of Sale.
3. Seller hereby agrees that, from time to time after the delivery of
this ▇▇▇▇ of Sale, it will, at the request of Buyer and without further
consideration, promptly take such further action and execute and deliver such
additional assignments, bills of sale, consents or other similar instruments as
may be necessary to complete the transfer of the title or possession of the
Purchased Assets to, or to vest title to them in, Buyer.
4. The provisions of this ▇▇▇▇ of Sale are for the benefit of Buyer,
its successors and assigns, and all rights hereby granted Buyer may be exercised
by Buyer, its successors or assigns.
IN WITNESS WHEREOF, Seller has executed this ▇▇▇▇ of Sale to by its
duly authorized officere as of the date first set forth above.
ARRAY TELECOM CORPORATION
By : /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Title: Chairman
------------------------------
\\COR\21329.2
EXHIBIT B
FORM OF LICENSE AGREEMENT
AMONG
ARRAY TELECOM CORPORATION,
ePHONE TELECOM, INC.
AND
COMDIAL CORPORATION
This License Agreement (this "Agreement") is made as of March 31, 2000,
by and among ARRAY TELECOM CORPORATION, a corporation incorporated under the
laws of the State of Delaware and having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Array"), ePHONE TELECOM, INC., a corporation
incorporated under the laws of the State of Florida and having its principal
office at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ("ePHONE"), and COMDIAL CORPORATION, a corporation incorporated under
the laws of the State of Delaware and having its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Comdial").
RECITALS
A. This Agreement is executed in conjunction with the Strategic
Alliance Agreement dated March 31, 2000, by and among Array, ePHONE, and Comdial
(the "Strategic Alliance Agreement"), pursuant to which, among other things,
ePHONE purchased certain of the assets of Array, excluding intellectual property
assets.
B. Array is willing to grant ePHONE a license to Array's Intellectual
Property, as hereinafter defined, on the terms and conditions set forth herein.
C. Array is a wholly owned subsidiary of Comdial. Comdial is willing to
assist ePHONE with marketing the Products and Services, as hereinafter defined,
through Comdial's existing distribution channels, which include over 2000
independent telecommunications equipment dealers.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants, agreements, and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement:
Section 1.1 "Copyrights" means any work containing copyrightable
subject matter that Array owns or has the right to license to others relating to
Products and Services, including without limitation works registered with the
United States Copyright Office or works for which an application to register the
work with the United States Copyright Office has been filed.
Section 1.2 "Intellectual Property" means the entire right, title, and
interest in and to all proprietary rights encompassed within the categories of
Copyrights, Know-How, and Patents, and the ▇▇▇▇.
Section 1.3 "Know-How" means unpatented technology, inventions,
designs, drawings, processes, recipes, formulae, data, technical information,
and other industrial, commercial property that: (i) are known to Array as of the
Effective Date; (ii) are secret, in the sense that they are not generally known
or easily accessible to others; and (iii) relate to the Products and Services. A
list of Know-How licensed hereunder is attached to this Agreement as Schedule 2
and incorporated by reference herein.
Section 1.4 "▇▇▇▇" means the common law trademark and service ▇▇▇▇
"ARRAY".
Section 1.5 "Patents" means the United States patents and design
patents that had been issued as of the Effective Date as well as United States
patent applications filed as of the Effective Date. A list of Patents licensed
hereunder is attached to this Agreement as Schedule 1 and incorporated by
reference herein.
Section 1.6 "Products and Services" means: (i) VoipGate, Array Version
2, Array Series 3000, and any products developed from the foregoing; and (ii)
international long distance telecommunications services that allow users to
perform phone-to-phone dialing via Voice Over Internet Protocol, and related
services.
Section 1.7 Any capitalized term contained in this Agreement that is
not expressly defined herein shall be deemed to have the meaning ascribed to it
by the Strategic Alliance Agreement.
ARTICLE 2
EFFECTIVE DATE AND TERM
Section 2.1 Effective Date. This Agreement shall be effective as of the
date first set forth above (the "Effective Date").
Section 2.2 Term. This Agreement and the licenses granted herein shall
become effective as of the Effective Date and shall remain in effect for an
initial term of five (5) years.
Section 2.3 ePHONE's Option to Renew the Agreement or to Purchase the
Intellectual Property. Upon the conclusion of the initial term of this
Agreement, ePHONE, in its sole discretion, may elect: (i) to allow the Agreement
to expire; (ii) to renew the Agreement under the identical terms and conditions
set forth hereunder for an additional term of five (5) years; or (iii) to
terminate the Agreement by purchasing the Intellectual Property.
(a) In order to exercise its option to purchase the
Intellectual Property, ePHONE must give Array and Comdial notice of its
election to exercise such option within six (6) months prior to the end
of the initial term of this Agreement. In the event ePHONE elects to
exercise its option to purchase the Intellectual Property, ePHONE shall
be entitled to purchase the Intellectual Property for the fair market
value of the Intellectual Property, determined at the time ePHONE
exercises its option to purchase the Intellectual Property. For this
purpose, the fair market value of the Intellectual Property shall be
determined by two investment bankers, one selected by Array or Comdial
and the other selected by ePHONE. If the two investment bankers are not
able to agree upon the fair market value of the Intellectual Property,
the investment bankers shall choose a third investment banker and the
average of the values asserted by the two investment bankers who assert
the two amounts closest in value shall be deemed the fair market value
of the Intellectual Property.
(b) In the event ePHONE exercises its option to purchase the
Intellectual Property, ePHONE agrees to grant Comdial and Array, and
their successors and affiliates, a nonexclusive, irrevocable, royalty
free license to the Intellectual Property.
ARTICLE 3
LICENSE TO INTELLECTUAL PROPERTY
Section 3.1 Grant of Patent License. Subject to the terms and
conditions of this Agreement, Array grants to ePHONE, and ePHONE accepts, an
exclusive right and license to the Patents to make, have made, use, and sell the
Products and Services, on a worldwide basis. ePHONE shall be entitled to
sublicense, assign, or transfer the rights granted herein without the prior
written consent of Array. The license granted herein shall terminate upon the
expiration or termination of this Agreement.
(a) Patent License Territory. ePHONE acknowledges that the
Patents cover only the United States; practicing the technology covered
by the Patents outside of the United States will be at ePHONE's sole
risk and discretion.
(b) Patent License Term. Notwithstanding anything to the
contrary provided herein, the license to the Patents granted herein
shall terminate upon the conclusion of the term of the relevant Patent,
unless sooner terminated pursuant to the terms of this Agreement.
(c) Notice. When utilizing the Patents, ePHONE agrees that
where reasonable and practical, any patented designs, devices, objects
of manufacture, or any other patented items shall bear the appropriate
patent notice.
(d) Prosecution of Patent Applications. ePHONE shall make all
reasonable efforts to assist Array or Comdial with the prosecution of
any patent applications encompassed within the definition of the
Patents licensed hereunder, including executing any necessary documents
and providing such evidence and expert assistance as ePHONE may have
within its control.
Section 3.2 Grant of Know-How License. Subject to the terms and
conditions of this Agreement, Array grants to ePHONE, and ePHONE accepts, an
exclusive right and license to the Know-How to make, have made, use, and sell
the Products and Services, on a worldwide basis. ePHONE shall be entitled to
sublicense, assign, or transfer the rights granted herein without the prior
written consent of Array. The license granted herein shall terminate upon the
expiration or termination of this Agreement.
Section 3.3 Grant of Copyright License. Subject to the terms and
conditions of this Agreement, Array hereby grants ePHONE an exclusive right and
license to the Copyrights for use in connection with selling, manufacturing,
marketing or rendering of Products and Services, on a worldwide basis. ePHONE
shall be entitled to sublicense, assign or transfer the rights granted herein
without the prior written consent of Array. The license granted herein shall
terminate upon the expiration or termination of this Agreement.
(a) Notice. When using the Copyrights, ePHONE agrees that
where reasonable and practicable, use of the Copyrights shall be
accompanied by the symbol (C), the date of copyright, and the name of
the copyright owner.
Section 3.4 Grant of ▇▇▇▇ License. Subject to the terms and conditions
of this Agreement, Array grants to ePHONE, and ePHONE accepts, an exclusive
right and license to the ▇▇▇▇ as necessary to produce, promote, and sell
Products and Services, on a worldwide basis. ePHONE acknowledges and agrees that
its use of the ▇▇▇▇ shall inure to Array's benefit. ePHONE shall be entitled to
sublicense, assign, or transfer the rights granted herein without the prior
written consent of Array. The license granted herein shall terminate upon the
expiration or termination of this Agreement.
(a) Quality Control. ePHONE agrees that all Products to which
the ▇▇▇▇ is affixed shall be formulated, manufactured, promoted, and
sold or provided in a first rate manner and all Services with which the
▇▇▇▇ is associated shall be rendered in a first rate manner. ePHONE
understands and agrees that Array has the right to and will monitor the
quality of Products and Services provided under the ▇▇▇▇. Upon written
request from Array or Comdial, ePHONE shall provide to Array and
Comdial either: (i) a reasonable number of samples of the Products to
which the ▇▇▇▇ is affixed, or (ii) a reasonable written description of
the Services that ePHONE provides under the ▇▇▇▇ and the manner in
which the ▇▇▇▇ is used in connection with such Services, so that Array
and Comdial may monitor the quality of such Products or Services and
otherwise protect and maintain Array's rights in the ▇▇▇▇. Upon written
notice to ePHONE, representatives of Array or Comdial may visit and
inspect ePHONE's facilities in order to monitor the quality of the
Products and Services.
In the event Array or Comdial reasonably determines that
the Products sold or Services provided by ePHONE under the ▇▇▇▇ are not
of a sufficiently high quality, Array or Comdial shall so notify ePHONE
in writing and ePHONE shall have thirty (30) days in which to (i)
reassure Array and Comdial that the quality of the Products or Services
is in fact commensurate with the specified standard or (ii) take steps
to improve the quality of the Products or Services to meet such
standard. If, at the end of such thirty (30) day period, Array or
Comdial is not reasonably satisfied that the quality of the Products
sold or Services provided by ePHONE under the ▇▇▇▇ meets the specified
standard, Array or Comdial may terminate this Agreement upon thirty
(30) days' written notice to ePHONE.
(b) Trademark and Service ▇▇▇▇ Notices. When affixing the ▇▇▇▇
to Products, ePHONE agrees that where reasonable and practicable, the
▇▇▇▇ shall be accompanied by the symbol (TM) on labels, packaging, and
advertising and promotional materials. When using the ▇▇▇▇ in
connection with Services, ePHONE agrees that where reasonable and
practicable, the ▇▇▇▇ shall be accompanied by the symbol (sm) on
advertising and promotional materials.
Section 3.5 Retention of Ownership Rights and Right to License or
Assign. Nothing in this Agreement or in ePHONE's use of the Intellectual
Property shall grant ePHONE any rights in or to the Intellectual Property other
than the rights expressly licensed hereunder. The licenses granted herein are
exclusive as between Array and unrelated third parties. Nonetheless, Array shall
retain all rights in and to the Intellectual Property, including the right to
license or assign the Intellectual Property, in whole or in part, to Comdial, to
any majority owned subsidiary of Comdial, or to any successor to Comdial's
business, provided that such license or assignment shall have no detrimental
effect on ePHONE's rights and obligations hereunder. Notwithstanding the
foregoing or anything to the contrary contained herein, neither Array nor
Comdial, nor any successor or affiliate thereof, shall be entitled to use the
▇▇▇▇ in connection with products or services that are marketed in direct
competition with the Products and Services.
ARTICLE 4
ROYALTIES
Section 4.1 Royalty Payments. In partial consideration for the licenses
to Intellectual Property granted herein and for the transactions contemplated
under the Strategic Alliance Agreement, ePHONE shall pay Array, or such other
entity as Array may designate, a royalty equal to two percent (2%) (the "Royalty
Rate") of ePHONE's Consolidated Gross Sales, as hereinafter defined.
(a) The royalty amounts set forth herein shall accrue upon the
recognition by ePHONE of revenues for transactions that would be
included in Consolidated Gross Sales and shall be paid by ePHONE on a
calendar quarterly basis. For each of the first three (3) quarters of
each calendar year, such quarterly royalty amount shall be calculated
at the Royalty Rate applied to Consolidated Gross Sales during such
quarter, and shall be paid not later than forty-five (45) days after
the end of such quarter. For the fourth quarter of each calendar year,
such quarterly royalty amount shall be an amount equal to the Royalty
Rate applied to Consolidated Gross Sales for the calendar year, less
the quarterly royalty payment amounts made for the prior three (3)
quarters of that year, and shall be paid not later than ninety (90)
days after the end of such calendar year.
(b) For purposes of determining the royalty to be paid by
ePHONE, the term "Consolidated Gross Sales" shall mean all sales
resulting from ePHONE's business activities, as reflected in ePHONE's
Business Plan.
(c) Each royalty payment hereunder shall be accompanied by a
written report describing the calculation of such payment. Furthermore,
ePHONE agrees to maintain complete and accurate records sufficient to
substantiate the calculation of payments made hereunder. Array or its
designee may, from time to time, inspect such records to verify the
accuracy of payments made hereunder; provided, however, that ePHONE
shall receive at least thirty (30) days written notice of such
inspections and such inspections shall take place at ePHONE's offices
during ePHONE's regular business hours. Array or its designee shall
bear all costs of such inspections, unless an inspection reveals a
discrepancy of more than three percent (3%) in ePHONE's favor between
the royalty actually paid and the royalty that should have been paid,
based on ePHONE's Consolidated Gross Sales, in which case ePHONE shall
bear all costs of the inspection that revealed the discrepancy.
(d) Notwithstanding the foregoing, ePHONE shall pay to Array
or its designee the following minimum royalty amounts:
(i) During the first year of the term of this
Agreement, ePHONE shall pay a minimum annual royalty amount of
$180,000 (the "First Year Minimum Royalty"). In the event
Consolidated Gross Sales for the first year are less than
$9,000,000, ePHONE shall pay such additional royalty amounts
as shall be necessary to cause the total royalty amount paid
for such year to be at least equal to the First Year Minimum
Royalty. Such amounts shall be paid not later than the due
date for the first quarterly royalty payment due after the
close of the first year.
(ii) For each calendar quarter after the first year
of the term of this Agreement, ePHONE shall pay a minimum
quarterly royalty amount of $125,000 (the "Quarterly Minimum
Royalty"). In the event Consolidated Gross Sales during any
quarter are less than $6,250,000, ePHONE shall pay such
additional royalty amounts as shall be necessary to cause the
total royalty amount paid for such quarter to be at least
equal to the Quarterly Minimum Royalty. In the event any
calendar quarter shall be less than three (3) months, the
Quarterly Minimum Royalty for such quarter shall be prorated
on a daily or other appropriate basis.
Section 4.2 Non-Payment of Royalty Amounts. In the event ePHONE is
unable, after exhausting all of its consolidated cash and cash equivalent
assets, to pay Array or its designee the full amount of any royalty payment at
the time the payment is due, the following provisions shall be applicable.
(a) ePHONE shall give Array or its designee notice of ePHONE's
inability to pay any portion of any royalty payment, which notice shall
be accompanied by a written statement by ePHONE's principal lenders and
credit facilities confirming ePHONE's inability to make such payment
and the fact that ePHONE has exhausted all of its consolidated cash and
cash equivalent assets.
(b) The total unpaid amount of any royalty payment (the
"Delinquent Payment") shall accrue interest at the annual rate of ten
percent (10%) during the first year after the Delinquent Payment was
due. For each three (3) month period thereafter, for so long as any
portion of the Delinquent Payment remains unpaid, the interest rate
applicable to the Delinquent Payment will increase by one (1)
percentage point for each such three (3) month period.
(c) In its sole discretion, Array or its designee may elect to
accept ePHONE stock in lieu of the Delinquent Payment and accrued
interest thereon. If Array or its designee exercises this option, Array
or its designee shall be entitled to receive an amount of ePHONE stock
equivalent in value to the Delinquent Payment, calculated at a twenty
percent (20%) discount from the average of the closing prices of such
stock on the five (5) trading days prior to the date on which Array or
its designee elects to exercise this option. The equivalent value so
determined may be paid to Array or its designee either in ePHONE common
stock or in warrants for the purchase of ePHONE common stock, the terms
of which are reasonably satisfactory to Array or its designee, and
which provide for an exercise price of not more than one cent ($0.01)
per share. ePHONE agrees to provide Array or its designee demand and
piggy back registration rights for registration on an established stock
exchange or on the Nasdaq national market for its shares, or for the
warrants and the warrant shares to be issued upon exercise of the
warrants, and to assist in the registration process. Array shall have
at least two (2) demand registration rights for each year so long as
any of such shares, or such warrants or warrant shares, remain
unregistered. Within sixty (60) days after the Closing Date, as defined
in the Strategic Alliance Agreement, the parties agree to negotiate in
good faith to execute a registration rights agreement with terms and
conditions that are consistent with the terms of this Agreement and
that are customary and usual with respect to such agreements.
(d) Notwithstanding any of the provisions of this Agreement,
in the event any royalty payment or portion thereof remains unpaid for
one (1) year, or Array or its designee accept warrants for such payment
and the warrants are not registered within such year, then ePHONE's
license to the Intellectual Property shall no longer be exclusive and
Array shall be entitled to license the Intellectual Property to third
parties other than ePHONE.
ARTICLE 5
OWNERSHIP AND PROTECTION OF INTELLECTUAL PROPERTY
Section 5.1 Ownership. Nothing in this Agreement or in ePHONE's use of
the Intellectual Property shall grant ePHONE any rights in or to the
Intellectual Property other than the rights expressly licensed hereunder. ePHONE
acknowledges Array's rights in the Intellectual Property. ePHONE shall not
commit, or cause any third party to commit, any act challenging, contesting, or
in any way impairing or attempting to impair Array's rights in and to the
Intellectual Property.
Section 5.2 Infringement by Third Parties. If ePHONE learns of any
activity by a third party that might constitute infringement of Array's rights
in any of the Intellectual Property, or if any third party asserts that ePHONE's
use of the Intellectual Property constitutes unauthorized use or infringement,
ePHONE shall so notify Array. Any action or litigation resulting from any claim
of infringement arising hereunder shall be handled by Array or Comdial. ePHONE
shall make all reasonable efforts to assist Array or Comdial with any such
action or litigation, including providing such evidence and expert assistance as
ePHONE may have within its control.
Section 5.3 Rights in Improvements, Developments, Enhancements,
Modifications, and Inventions.
(a) CTVoice Release 2A. Within thirty (30) days following the
Effective Date, ePHONE shall deliver to Array the source code for the
product CTVoice Release 2A, which product shall have the same
functionality and all of the capabilities of the product Array Series
3000. Array, or such other entity as Array may designate, shall own all
rights in such source code, including without limitation all
intellectual property rights. The source code shall be included within
the definition of Intellectual Property for purposes of this Agreement,
and it shall be licensed to ePHONE pursuant to the terms and conditions
hereunder.
(i) Until the first anniversary of the Effective
Date, ePHONE shall provide to Array or its designee any
improvements, developments, enhancements, modifications, or
inventions that resolve any functional problems or other
technological difficulties with the CTVoice Release 2A product
("Bug Fixes"). ePHONE shall own all rights in the Bug Fixes,
including without limitation all intellectual property rights.
Nonetheless, by providing Array or its designee with the Bug
Fixes, ePHONE shall be deemed to have granted Array or its
designee, and such parties' successors and affiliates, a
nonexclusive, irrevocable, royalty free license to the Bug
Fixes.
(ii) After the first anniversary of the Effective
Date, ePHONE and Array or its designee agree to negotiate in
good faith regarding the terms and conditions under which any
Bug Fixes developed, invented, or created by employees or
agents of ePHONE after the first anniversary of the Effective
Date may be licensed to Array or its designee. ePHONE shall
charge Array or its designee rates at least as low as the
lowest rates charged to third parties not affiliated with
ePHONE for such licenses.
(b) Improvements, Developments, Enhancements, Modifications,
and Inventions other than CTVoice Release 2A.
(i) If any of the employees or agents of ePHONE
improves, develops, enhances, modifies, or invents technology,
works, or other intangible property, related to or arising
from the Intellectual Property licensed hereunder, ePHONE
shall own all rights in such technology, works, or other
intangible property, including without limitation all
intellectual property rights.
(ii) If any of the employees or agents of Array or
Comdial improves, develops, enhances, modifies, or invents
technology, works, or other intangible property, related to or
arising from the Intellectual Property licensed hereunder,
Array or Comdial, as appropriate, shall own all rights in such
technology, works, or other intangible property, including
without limitation all intellectual property rights.
(iii) The parties agree to negotiate in good faith
regarding the terms and conditions under which any
improvements, developments, enhancements, modifications, or
inventions encompassed by this Section 5.3(b) may be licensed
to the other parties. The parties shall charge rates at least
as low as the lowest rates charged by the parties to
unaffiliated third parties for such licenses.
ARTICLE 6
WARRANTIES, DISCLAIMERS, INDEMNIFICATION,
AND LIMITATION OF LIABILITY
Section 6.1 Warranties. ePHONE represents and warrants that it shall
use the Intellectual Property only in accordance with the terms and conditions
of this Agreement.
Section 6.2 Representations and Disclaimers.
(a) Array and Comdial each represent and warrant that the
Patents set forth on Schedule 1 and the Know-How set forth on Schedule
2 accurately list all of the Intellectual Property owned by Array that
has been duly registered with, filed in, or issued by, as the case may
be, the United States Patent and Trademark Office. Array owns the
entire right, title, and interest in and to the Patents and the
Know-How, including without limitation the exclusive right to use and
license the same. To the knowledge of Array, no Person, as defined in
the Strategic Alliance Agreement, is infringing upon any of the Patents
or the Know-How.
(b) The Intellectual Property constitutes all of the
intellectual property necessary to conduct the business and operations
of Array as conducted as of the Effective Date. To the knowledge of
Array, there is no basis for any claim of infringement by any Person,
as defined in the Strategic Alliance Agreement, with regard to any of
the Intellectual Property.
(c) Notwithstanding the foregoing, neither Array nor Comdial
represents or warrants that: (i) the Intellectual Property is suitable
for use in connection with Products or Services; (ii) use of the
Intellectual Property will enable ePHONE to obtain specific results;
(iii) the Intellectual Property does not infringe the rights of third
parties; or (iv) use of the Intellectual Property will not cause any
loss, damage, or injury. ePHONE will use the Intellectual Property at
its own risk and neither Array nor Comdial shall be responsible for any
Products or Services provided through the use of the Intellectual
Property or for any other exploitation of the Intellectual Property.
Section 6.3 Indemnification.
(a) ePHONE agrees to be solely responsible for, and to defend,
indemnify, and hold Array and Comdial, and any of their successors or
affiliates, harmless against any and all claims, actions, suits,
liabilities, demands, expenses (including reasonable attorneys' fees
and disbursements), losses, costs, or damages asserted against or
incurred by Array, Comdial, or any of their successors or affiliates,
arising out of or in connection with (i) Products produced or Services
rendered by ePHONE, (ii) the use of the Intellectual Property by
ePHONE, or (iii) any breach of ePHONE's obligations hereunder.
(b) Array and Comdial, jointly and severally, agree to be
solely responsible for, and to defend, indemnify, and hold ePHONE, and
any of its successors or affiliates, harmless against any and all
claims, actions, suits, liabilities, demands, expenses (including
reasonable attorneys' fees and disbursements), losses, costs, or
damages asserted against or incurred by ePHONE, or any of its
successors or affiliates, arising out of or in connection with (i) any
failure of the representations and warranties set forth in Section 6.2
of this Agreement to be true and correct or (ii) any breach of Array's
or Comdial's obligations hereunder.
Section 6.4 Limitation of Liability. No party to this Agreement shall
under any circumstances be liable for any special, incidental, consequential,
indirect, or punitive damages arising from breach of warranty, breach of
contract, negligence, or any other legal theory arising from or related to this
Agreement, even if such party or its agents or employees have been advised of
the possibility of such damages.
ARTICLE 7
DEFAULT AND TERMINATION
Section 7.1 Events of Default. Any one of the following shall
constitute an Event of Default by ePHONE:
(a) ePHONE defaulting in the performance of any covenant,
agreement, term, or provision under this Agreement, and such default
continuing for a period of thirty (30) days after written notice
thereof by Array or Comdial to ePHONE;
(b) ePHONE filing a voluntary petition for bankruptcy,
reorganization, or an arrangement under any bankruptcy or insolvency
law, or an involuntary petition under any such law being filed against
ePHONE and not dismissed within ninety (90) days; or
(c) ePHONE making an assignment for the benefit of its
creditors.
Section 7.2 Remedies. Without limiting other remedies available to
Array or Comdial at law or equity, upon the occurrence of an Event of Default by
ePHONE, either Array or Comdial may, at their option, terminate this Agreement
by giving written notice to ePHONE.
Section 7.3 Discontinuation of Use. Following the expiration or
termination of this Agreement, for any reason other than ePHONE's election of
its option to purchase the Intellectual Property pursuant to Section 2.3, ePHONE
shall immediately cease use of the Intellectual Property licensed under this
Agreement.
ARTICLE 8
CONFIDENTIALITY
Section 8.1 ePHONE's Confidentiality Obligations. The parties
acknowledge that, during the ordinary course of business, ePHONE will be
required to disclose confidential and proprietary information to its customers
and other parties. During the term of this Agreement and thereafter, ePHONE
agrees that it will enter into confidentiality agreements or nondisclosure
agreements with usual and customary terms and conditions prior to disclosing the
Know-How and all other technology, inventions, software, hardware, designs,
drawings, processes, recipes, formulae, data, technical information and the
like, which are disclosed by Array or Comdial to ePHONE or received by ePHONE's
personnel under this Agreement.
Section 8.2 Array's and Comdial's Confidentiality Obligations. The
parties acknowledge that, during the ordinary course of business, Array and
Comdial will be required to disclose confidential and proprietary information to
its customers and other parties. During the term of this Agreement and
thereafter, Array and Comdial agree that they, jointly or individually, will
enter into confidentiality agreements or nondisclosure agreements with usual and
customary terms and conditions prior to disclosing all technology, inventions,
software, hardware, designs, drawings, processes, recipes, formulae, data,
technical information and the like, which are disclosed by ePHONE to Array or
Comdial or received by Array or Comdial's personnel under this Agreement.
Section 8.3 Exceptions to Confidentiality Obligations. The
confidentiality obligations set forth in this Article 8 shall not apply to any
information that: (i) is or becomes generally available to the public other than
as a result of disclosure by one of the parties or the parties' agents,
employees, representatives, or advisors; (ii) is rightfully disclosed to either
of the parties by a third party without any breach of the confidentiality
obligations hereunder. Any of the parties may disclose the other parties'
confidential information to its personnel and independent contractors,
including, without limitation, lawyers, accountants, and consultants, when the
course of their employment necessitates such disclosure; provided, however, that
the disclosing party shall take appropriate measures to maintain the
confidentiality of all confidential information disclosed to or obtained by such
party's personnel or independent contractors.
Section 8.4 Return of Confidential Information. Upon the expiration or
termination of this Agreement, for any reason other than ePHONE's election of
its option to purchase the Intellectual Property pursuant to Section 2.3, each
party hereto shall return to the other parties, as applicable, all materials or
items that contain, embody, or relate to any confidential information belonging
to the other parties, including, without limitation, documents, drawings,
software, hardware, databases, electronic information, storage media, samples,
and models. Each party shall return all such materials to the other parties
within fifteen (15) days of the date of expiration or termination.
ARTICLE 9
TECHNICAL ASSISTANCE
Section 9.1 Technical Assistance Services. ePHONE shall use
commercially reasonable efforts to make its employees and agents available to
Array and Comdial to provide technical assistance with the Intellectual
Property, any improvements, developments, enhancements, modifications, or
inventions related thereto, or any other technical matters related to ePHONE's
business. ePHONE shall charge Array and Comdial rates at least as low as the
lowest rates charged to third parties not affiliated with ePHONE for such
technical assistance services.
ARTICLE 10
GENERAL PROVISIONS
Section 11.1 No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any person or entity other than the parties
and their respective successors and permitted assigns.
Section 11.2 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Any of the parties hereto shall be permitted
to assign this Agreement and its rights and obligations hereunder to a successor
in interest of all or substantially all of its assets, or to an affiliated
entity.
Section 11.3 Amendments. No amendment of any provision of this
Agreement shall be valid unless the amendment shall be in writing and signed by
all parties hereto.
Section 11.4 Waivers. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, regardless of
whether intentional, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
Section 11.5 Severability. Any term or condition of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
Section 11.6 Construction. The parties have participated mutually in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted mutually by the parties and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
Section 11.7 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) upon
confirmation of receipt of facsimile or electronic mail; (ii) one (1) business
day following the date sent when sent by overnight delivery; or (iii) five (5)
business days following the date mailed when mailed by registered or certified
mail return receipt requested and postage prepaid to the following address:
If to Array or Comdial:
Comdial Corporation
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E-mail: ▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
If to ePHONE:
ePHONE Telecom, Inc.
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Copy to:
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Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: paul ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Section 11.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 11.9 Headings. The Article and Section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 11.10 Entire Agreement. The Strategic Alliance Agreement, this
Agreement, and the other Agreements referred to and incorporated by reference in
the Strategic Alliance Agreement shall constitute the entire agreement between
the parties and supersede any prior understandings, agreements, covenants,
warranties, or representations by or between the parties, written or oral.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
ARRAY TELECOM, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chairman
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ePHONE TELECOM, INC.
By: /s/ JG
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Director, Executive Vice President
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COMDIAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: President/CEO
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