Exhibit 10.1
STRATEGIC ALLIANCE AGREEMENT
AMONG
ARRAY TELECOM CORPORATION,
EPHONE TELECOM, INC.
AND
COMDIAL CORPORATIO
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
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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.
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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
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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
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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 state
ments 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
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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
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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.
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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:
(a) License Agreement substantially in the form of Exhibit B
attached hereto;
(b) 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;
(c) A certificate dated as of a recent date from the Delaware
Secretary of State as to the good standing of Comdial; and
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(d) 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 ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
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If to ePHONE:
ePHONE Telecom, Inc.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇_▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
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.
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(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.
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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]
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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: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
ePHONE TELECOM, INC.
By: /s/ JG
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director. Executive Vice President
COMDIAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President/CEO
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.
Page 1
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 offcere as of the date first set forth above.
ARRAY TELECOM CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
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:
-1-
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.
-2-
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.
-3-
(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.
-4-
(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
? 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 ? 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.
-5-
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
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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
-7-
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
-8-
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.
-9-
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.
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(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.
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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.
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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 10.1 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 10.2 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 10.3 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 10.4 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 10.5 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 10.6 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.
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Section 10.7 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
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Copy to:
McGuire, Woods, Battle & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
P. O. ▇▇▇ ▇▇▇▇
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
If to ePHONE:
ePHONE Telecom, Inc.
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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Copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esquire
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇_▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Section 10.8 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 10.9 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 10.10 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURES ARE ON THE NEXT PAGE]
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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/ ▇▇▇▇▇▇▇ ▇. Mustain__
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
ePHONE TELECOM, INC.
By: __/s/ JG
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director, Executive Vice President
COMDIAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. Mustain__
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President/CEO
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