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EXHIBIT 10.36
AGREEMENT
THIS AGREEMENT is effective as of July 1, 1996 (the "Effective Date") by and
between International Communication Technologies Inc., a corporation duly
organized and existing under the laws of the State of Delaware ("ICT') and
World Access, Inc., a corporation duly organized under the laws of the State of
Delaware ('World"). World and ICT are each a "Party" and, collectively, the
"Parties."
Eagle Telephonics, Inc., a New York corporation ("Eagle") is a signatory to
this Agreement in both acknowledging ICT's power and right to enter into this
Agreement and to the extent this Agreement creates any duties, obligations, or
rights with respect to Eagle.
WITNESSETH
WHEREAS, Eagle has developed a microprocessor based digital central office
switch ("Eagle DSCO"), and other telephone technology, Eagle Technology and
Eagle Products (as hereinafter defined); and
WHEREAS, Eagle and ICT have entered into an agreement dated as of February 22,
1995 (the "ICT/Eagle Agreement") in which Eagle granted to ICT the exclusive
rights to distribute, sell, license, and otherwise provide Eagle Technology
and Eagle Products to third parties throughout the United States and the rest
of the world and has granted a license to ICT under its trademarks and other
proprietary rights; and
WHEREAS, World desires to manufacture Eagle Products and have certain
distribution
and sales rights; and
WHEREAS, World, Eagle, and ICT entered into that certain Memorandum of
Understanding dated March 21, 1996 (the "Memorandum") which set forth the basis
for this Agreement; and
WHEREAS, ICT is willing to grant to World the right to manufacture, distribute,
and sell Eagle Products to third parties in the Territory and under the terms
and conditions contained in this Agreement:
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto agree as
follows:
ARTICLE 1 - DEFINITIONS
For the purposes of this Agreement, the following phrases shall have the
following
meanings:
1.1 "Consideration" shall mean, $700,000 to be paid by World to Eagle in such
arrangement of cash, credit and allocations to accounts payable as set forth in
the Memorandum in addition to other valuable consideration including but not
limited to value engineering of the Eagle DSCO.
1.2 "Eagle Technology" shall mean all patented, unpatented and unpatentable
technical information, software, including source code, formats and executable
code, trade secrets, devices, models, protocols, things, management procedures,
data, know-how, methods, documents, materials, products, documentation,
copyrights, works of authorship, trademarks and all confidential information
and any other existing rights including disputed rights related to making,
using, selling, marketing, and compliance with regulatory requirements for
standard switches and related telecommunications equipment, including, without
limitation, Eagle DSCO switch technology, and all new technology designed
relating to standard switches and related telecommunications equipment,
developed or used by, for or on behalf of Eagle, its directors, employees or
agents which World uses in the manufacture of Eagle Products and distributes in
the Territory.
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1.3 "Eagle Products" shall mean any product designed by Eagle for use as
standard telephone switches and related telecommunications equipment and which
includes Eagle Technology or whose structure or operation falls within the
scope of one or more claims of any Licensed Patent and which World manufactures
and distributes in the Territory under the terms of this Agreement. Standard
telephone switches and related telecommunications equipment are those products
designed by Eagle which rely solely on established US and International
protocols (CCITT) including country specific modifications of these established
protocols mandated by the appropriate governmental authority and does not
include Custom Products which include proprietary technology from third parties.
1.4 "Eagle Proprietary Components" shall mean custom components developed or
designed by Eagle which are used in Eagle Products and manufacturing and
customer documentation necessary or used to make or have made, market, and
deliver Eagle Products.
1.5 "ICT Company" shall mean any parent of ICT, any direct or indirect
subsidiary of ICT, and any commonly controlled company majority owned BY ICT
or any parent of ICT including, without limitation, at the present time,
International Communication Technologies, Inc. and International Manufacturing
and Licensing, Inc.
1.6 "Licensed Patents" shall mean all patents, utility models and design
patents now issued or which shall issue on applications now on file or
which shall hereafter be filed, including all reissues, reexaminations and
extensions in the United States or anywhere in the world, owned or invented by
Eagle, its officers or employees, directed to or related in any way to the
Eagle Technology. All such Licensed Patents now issued or on file are
identified in Schedule A - Licensed Patents.
1.7 "Licensed Rights" shall mean all Eagle Technology, Licensed Patents, and
Technology Rights, ICT and Eagle Trademarks as such terms are defined herein
which collectively shall, for the purposes of this Agreement constitute
"intellectual property", as such term is defined in 11 U.S.C. Section 101(35A)
of the United States Code, and incorporated into 11 U.S.C. Section 365(n) of
the United States Code.
1.8 "OEM Integrated Products" shall mean telecommunication network systems in
which Eagle Products are sold as an integrated part of such systems and
not as a stand-alone product and in which the Eagle Products do not comprise
more than 40% of the sales price of such system and are marketed under the OEM
brand name.
1.9 "Prospective Customers" shall mean potential purchasers of Eagle Products
from World with whom World has had significant and direct contact within the
previous 12 months with regard to the purchase of Eagle Products. As used
herein 'significant' shall mean the direct expenditure by World of at least
$50,000 not including the salaries of World employees for each Prospective
Customer in furtherance of their purchase of Eagle Products.
1.10 "Prototype" shall mean a model or sample representative of any item or
Eagle Product, the sale of which is within the scope of this Agreement.
1.11 "Royalty" shall mean a fee charged by ICT for the use of the Licensed
Rights by World. This Royalty shall be set for each new Eagle product by ICT
and shall apply to all Licensees. The Royalty for the Eagle DSCO (the "DSCO
Royalty") is set at $20.00 a port.
1.12 "Technology Rights" shall mean the rights to manufacture, distribute, and
sell Eagle Products to third parties throughout the Territory pursuant to the
terms of this Agreement.
1.13 "Territory" shall mean the "Regions", and a "Region" may be a country or
part of a country or combinations thereof, as set forth on Schedule F. Schedule
F will also set forth which regions are exclusive to World and which are
non-exclusive. A Region may at a subsequent date be converted from exclusive to
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non-exclusive or from non-exclusive to withdrawn from the Territory pursuant to
the terms of this Agreement.
ARTICLE 2 - LICENSE GRANT
2.1 ICT ("Licensor') hereby grants to World ("Licensee") the Licensed Rights
in connection with the manufacture and distribution of Eagle Products
throughout the Territory.
2.2 World shall not assign, sublicense, or otherwise transfer the Rights
granted herein without the prior written consent of Licensor. Any such
prohibited act shall be invalid and void and Licensor, at its option, shall
have the right to terminate this Agreement immediately.
2.3 The License granted herein is subject to and incorporates the provisions
of Articles VII, X and XII of the ICT/Eagle Agreement, provided, however, that
World shall have the right to change the name, color, and styling of any Eagle
Products manufactured and sold by World in the Exclusive Region, and further
providing that all such products shall be prominently and permanently marked
"Manufactured under License from ICT/Eagle." The change of name, color, and
styling shall not constitute a Custom Product under this Agreement.
2.4 The License granted herein is valid only for the exclusive and
non-exclusive Territory as defined in Schedule F hereof as modified from time
to time and specifically excludes Regions listed in Schedule C, ICT Reserved
Territory, provided however, ICT may not designate a Region as a Reserved
Territory if it has been granted to World on an exclusive basis and World is
not in breach of this Agreement and has met the minimum Royalty requirements to
maintain the Region as a part of its exclusive Territory. Notwithstanding the
foregoing, the Parties agree that OEM Integrated Products may be sold, leased,
or otherwise distributed by either Party and by other ICT licensees to OEMs
who shall have the right to distribute such OEM Integrated Products throughout
the world, including the Territory and ICT's Reserved Territory.
If ICT enters into a license, manufacturing, distribution, and/or
representation agreement which provides a party other than World with exclusive
rights with regard to the manufacture, distribution, or sale of Eagle
Technology and/or Eagle Products in a Region or Regions which are designated
non-exclusive, If World, pursuant to this paragraph, wishes to retain rights
with current World customers or Prospective Customers in such Region or
Regions, within 10 days of such notice to World, World shall provide ICT with a
list of (i) World customers within the designated non-exclusive area which had
purchased Eagle Products within the 12 months prior to World's receipt of such
notice together with evidence of the actual shipments made to such World
customers during the such 12 month period and (ii) World's Prospective
Customers. World may continue to supply all such listed World customers and
Prospective Customers in the withdrawn Region, and only such listed World
customers and Prospective Customers during the 24 months following such notice.
Thirty (30) days after such ICT notice that Region and/or Regions shall
be deemed withdrawn from the Territory and World shall have no further right to
exploit the Licensed Rights in such Region and/or Regions, including, without
limitation, making any sales, leases or transfers to customers,
representatives, and/or distributors in such Regions or for retransfer to such
Regions regardless of where the Eagle Products are manufactured except as
otherwise provided for in this Section.
2.5 Regardless of where the Eagle Products are manufactured by World, World
may not sell, lease or otherwise transfer them and/or Eagle Technology
to customers outside of the Territory and is responsible for ensuring that
World's customers do not sell, lease or otherwise transfer Eagle Products
and/or Eagle Technology outside of the Territory. World agrees it shall not,
in the exclusive Territory, sell or otherwise distribute or promote any
products which are directly competitive with, or act as a substitute for Eagle
Product. For the purposes of this Agreement the terms "directly competitive"
or "act as a substitute" do not
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include switches which are larger than Eagle's largest switch configuration or
which use required protocols or interfaces which Eagle does not provide.
ARTICLE 3 - ROYALTIES AND PROPRIETARY COMPONENTS
3.1 ICT will make available and sell Eagle Proprietary Components to World.
World shall obtain Eagle Proprietary Components from ICT and shall incorporate
such Eagle Proprietary Components in all Eagle Products.
3.2 The price of the Eagle Proprietary Components shall be set annually on
the basis of ICT/Eagle's actual cost for the Eagle Proprietary Components (if
there is more than one type of Eagle Proprietary Component, the price will be
calculated based on the particular type ordered by World) plus a Net DSCO
Royalty as herein defined for each Eagle Product manufactured, payable at the
time of purchase of Eagle Proprietary Components.
3.3 World shall not procure Eagle Proprietary Components from any source other
than ICT. World shall not attempt to produce Eagle Proprietary Components
whether through development or reverse engineering or any other manner except
under the circumstances set forth in Article 10.
3.4 It is ICT's intention to purchase or direct its customers to purchase
Eagle Products from World. Upon the written request of ICT or ICT customers,
World shall manufacture Eagle Products, which ICT may use or transfer in ICT's
sole discretion, ICT or its customers holding sole title to such Eagle Products
upon payment. World shall charge ICT for such Eagle Products ordered by ICT or
its customers (i) the lowest price such Eagle Product has been sold by World,
during the year of such sale, or (ii) the sum of (a) one hundred fifty percent
(150%) of the actual material cost of components of such Eagle Product other
than Eagle Proprietary Components and (b) the price of such Eagle Proprietary
Components, whichever is less. In the event ICT directs its customers purchase
and pay World directly for Eagle Products, World shall promptly, upon receipt
of payment or partial payment, pay to ICT any difference between the amount
received from ICT customers and the amount to be charged to ICT pursuant to the
formula set forth in this paragraph.
3.5 The Licensed Rights are granted for the Consideration contained herein.
If the Consideration is not fully paid or performed, the grant of Licensed
Rights and License in Article 2 may be terminated by ICT.
3.6 ICT and Eagle acknowledge that World has been of great assistance to
Eagle and ICT. This assistance has come by way of extension of liberal credit
terms, an investment in Eagle, and assistance in value engineering of the Eagle
DSCO at a very important time in the development of Eagle Technology. For
these reasons, ICT and Eagle have agreed to grant World a discount of $11.00 a
port on the DSCO Royalty. The "Net DSCO Royalty" shall be $9 a port.
ARTICLE 4 - REPORTS AND RECORDS
4.1 World will make and deliver written reports to ICT quarterly within
thirty (30) days after the last day of each calendar quarter, during the term
of this Agreement, and as of such dates, stating in each such report the number
and description of Eagle Products sold during the preceding calendar quarter
with specific statement as to the number of ports or units contained in such
Eagle Products. The first such report, which shall be due thirty days after
the quarter in which the first sale occurs, shall include all Eagle Products
sold between the Effective Date of this Agreement and the date of such report.
Reports shall include a special report which provides the name of OEM customers
and sales of all OEM Integrated Products, including the detail called for above
plus the countries into which such OEM Products are sold or shipped.
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4.2 World shall keep full, true and accurate books of account containing all
particulars that may be necessary to calculate the amounts payable to
ICT hereunder and to support the charges (in an itemized fashion), if any,
charged to ICT for the manufacture of Eagle Products for ICT by World, pursuant
to paragraph 3.4. Such books of account shall be maintained for six (6) years
following the end of the calendar year to which they pertain and during the
pendency of any action brought for enforcement of proprietary rights in the
Eagle Technology, whichever last concludes.
World will permit such books of account to be examined from time to time to the
extent necessary to verify the reports provided for in paragraph 4.1, the
charges for manufacture of Eagle Products for ICT by World, and for the
enforcement of such proprietary rights. Upon termination of this Agreement,
ICT shall have the right to have a final audit conducted in accordance herewith.
ARTICLE 5 - MINIMUM SALES
5.1 On Schedule F, next to each exclusive Region is a minimum Net DSCO
Royalty to be paid by World during 1997, 1998, and 1999 for that exclusive
Region in order for World to maintain exclusivity for such Region (there are no
minimums for 1996). After 1999, the minimum DSCO Royalties for each exclusive
Region increases by 10% per year until 2005, at which point it remains
constant. If World does not pay the minimum Net DSCO Royalties for a
particular exclusive Region, ICT shall have the right on thirty (30) days
notice to World to convert such Region from exclusive to non-exclusive.
Notwithstanding the foregoing, World shall be obligated to pay such
minimum Net DSCO Royalties for the exclusive Regions for the year 1997 only if
Eagle has demonstrated to World that its 1024 line switch functions in
accordance with Eagle's specifications manual (as contemplated in the
Memorandum) by September 30, 1996. If Eagle has not demonstrated to World that
its 1024 line switch functions in accordance with Eagle's specifications manual
by September 30, 1996 and such delay is not the result of World's failure to
complete its manufacturing tasks, the Parties hereto agree that the minimum Net
DSCO Royalties hereunder for the exclusive Regions for 1997 shall be reduced by
20%. If Eagle has not demonstrated to World that its 1024 line switch
functions in accordance with Eagle's specifications manual by December 31, 1996
and such delay is not the result of World's failure to complete its
manufacturing tasks, the Parties hereto agree that the minimum Net DSCO
Royalties hereunder for the exclusive Regions for 1997 shall be reduced by
100%, 1998 minimum Net DSCO royalties for the exclusive Regions shall be those
now shown for 1997, and 1999 minimum Net DSCO Royalties shall be those now
shown for the exclusive Regions for 1998 and 2000 minimum Net DSCO Royalties
shall be those now shown for the exclusive Regions for 1999.
5.2 On Schedule F, next to the non-exclusive Regions is an aggregate minimum
Net DSCO Royalty payment to be paid by World during 1997, 1998, and
1999 for the non-exclusive Regions in order for World to maintain its right to
market Eagle Products in such Regions (there are no minimums for 1996). After
1999, the minimum Net DSCO Royalties increases by 5% per year until 2005, at
which point it remains constant. If World does not meet this minimum
requirement for the non-exclusive Regions, ICT shall have the right on thirty
(30) days notice to World to withdraw such non-exclusive Regions from the
Territory.
If Eagle has not demonstrated to World that its 1024 line switch functions in
accordance with Eagle's specifications manual by September 30, 1996 and such
delay is not the result of World's failure to complete its manufacturing tasks,
the Parties hereto agree that the minimum Net DSCO Royalties hereunder for the
non-exclusive Regions for 1997 shall be reduced by 20%. If Eagle has not
demonstrated to World that its 1024 line switch functions in accordance with
Eagle's specifications manual by December 31, 1996 and such delay is not the
result of World's failure to complete its manufacturing tasks, the Parties
hereto agree that the minimum Net DSCO Royalties hereunder for the
non-exclusive Regions for 1997 shall be reduced by 100%, 1998 minimum Net DSCO
royalties for the non-exclusive Regions shall be those now shown for 1997, and
1999 minimum Net DSCO Royalties for
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the non-exclusive Regions shall be those now shown for 1998 and 2000
minimum Net DSCO Royalties for the non-exclusive Regions shall be those now
shown for 1999.
5.3 In the event World elects to manufacture and sell Eagle Products in
addition to the DSCO, the Parties shall, in good faith, negotiate minimum
royalty payments to retain territorial rights.
ARTICLE 6 - TECHNOLOGY TRANSFER
6.1 ICT and Eagle agree to provide, within a reasonable time after World's
reasonable written request, technology transfer information, technical
documentation and technical training regarding Eagle Technology to World
sufficient to enable World to effectively manufacture, test, install, maintain
and service Eagle Products (hereinafter Technical Cooperation). It is expressly
agreed that such Technical Cooperation and any other obligation, requirement,
right or provision of this Agreement shall not constitute a marketing plan or
system prescribed in part by ICT or undertaken by World.
6.2 World may not subcontract its right to manufacture Eagle Products without
the prior express written permission of ICT which ICT may grant or withhold in
ICT's sole discretion. ICT shall have the right to specify and/or approve
standards of workmanship and quality control and other standards concerning the
manufacture of Eagle Products by World.
6.3 ICT shall have the right to inspect or designate another party to inspect
World's facilities during normal business hours and upon reasonable notice to
ascertain that World's workmanship standards meet ICT's minimum requirements.
6.4 It is hereby understood and agreed that (i) this Agreement is not an
employment agreement, (ii) that World and its employees or designees shall at
no time and under no circumstances be deemed an employee or agent of ICT or
Eagle, and (iii) that World is an independent contractor and ICT and Eagle
shall exercise no immediate control over World. ICT and Eagle shall not
be liable for any injury (including death) to employees or designees of World,
or for workmen's compensation, employer's liability, social security,
withholding tax, or other taxes of similar nature for or on behalf of World or
any other person, persons, firms or corporations consulted by World in carrying
out this Agreement.
6.5 It is specifically understood that World shall at no time be an agent of
ICT or Eagle and shall not have the authority to accept legal service of
process or have power to bind or commit ICT or Eagle to any contractual
obligations.
6.6 It is hereby understood and agreed that (i) this Agreement is not an
employment agreement, (ii) that ICT and its employees or designees shall at no
time and under no circumstances be deemed an employee or agent of World, and
(iii) that ICT and Eagle are each an independent contractor and World shall
exercise no immediate control over ICT or Eagle. World shall not be liable for
any injury (including death) to employees or designees of ICT or Eagle, or for
workmen's compensation, employer's liability, social security, withholding tax,
or other taxes of similar nature for or on behalf of ICT or Eagle or any other
person, persons, firms or corporations consulted by ICT or Eagle in carrying
out this Agreement.
ARTICLE 7- SUBLICENSE AGREEMENTS, TRADEMARKS, QUALITY CONTROL
AND MARKING
7.1 World shall make available to ICT, throughout the term of this Agreement,
Prototypes of all items of Eagle Products which Licensee intends to market
under any xxxx set forth in Schedule B - Trademarks prior to distributing such
Eagle Products under such xxxx. World may market any Eagle Products under the
name ICT/Eagle. Each such available Prototype of Eagle Product shall be deemed
accepted and approved by ICT unless ICT provides Licensee with written notice
of its objections thereto within forty-five (45) business days after receipt
of notice of availability of such Prototypes.
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Eagle and Licensee shall consult and cooperate with each other for
purposes of modifying the Prototype and resolving such objections as
expeditiously as possible. Licensee shall then re-notice the availability of
the modified Prototype and the above forty-five (45) days acceptance period
shall again be applicable.
The above approval process shall be repeated until such time as the
Prototype has been approved by ICT or the Parties agree that the Prototype
shall not be marketed as an Eagle Product under any xxxx set forth in Schedule
B. Except as set forth in this Agreement, Licensee shall not manufacture, use
or sell any Eagle Products under any xxxx set forth in Schedule B without the
Prototype being approved or deemed approved pursuant to this paragraph 7.1.
7.2 The Eagle Products manufactured and sold by Licensee shall be
substantially the same in materials, workmanship, designs, dimensions, and
quality to the Prototypes made available and approved by ICT. Licensee shall
have the right to change the name, color, and styling of any Eagle Products
manufactured and sold by World in the Exclusive Region, and further
providing that all such products shall be prominently and permanently marked
"Manufactured under License from ICT/Eagle." The change of name, color, and
styling shall not constitute a Custom Product under this Agreement.
7.3 Licensee will comply with all laws, rules, regulations and requirements
of any governmental body which may be applicable to the manufacture,
distribution, sale or promotion of the Eagle Products.
7.4 ICT and its duly authorized representatives shall have the right, during
normal business hours and upon reasonable notice, during the term of this
Agreement to inspect all facilities utilized by Licensee (and its contractors
and suppliers to the extent Licensee may employ the same) in connection with
its manufacture, sale, storage or distribution of the Eagle Products in the
process of manufacture and when offered for sale.
7.5 All Eagle Products sold in the United States shall be marked with all
applicable United States Patent numbers in a manner consistent with 35
U.S.C. Section 287. Any Eagle Products shipped to or sold in other countries
shall be marked in such a manner as to conform with the patent laws and
practice of the country of manufacture or sale.
7.6 ICT and Eagle each covenant and agree that the grant of the Licensed
Rights to World hereunder shall be considered to be the transfer of
"Intellectual Property", as such term is defined in 11 U.S.C. Section 101
(35A) of the United States Code and incorporated into 11 U.S.C. Section 365(n)
of the United States Code, and, accordingly, neither the bankruptcy nor the
insolvency of ICT or Eagle shall result in a termination of this Agreement or
result in a revocation of the Licensed Rights granted to World hereunder.
ARTICLE 8- ENFORCEMENT
World and ICT shall promptly notify each other of any infringements or
suspected infringements of any proprietary aspect of the Eagle Technology by
third parties, or any act of unfair competition by third parties relating to
the Eagle Technology, whenever such infringement, suspected infringement or act
shall come to World's attention. After receipt of such notice from World or
otherwise learning of any such infringements or suspected infringements, ICT
shall notify Eagle of any such infringements or suspected infringements and
Eagle shall act in accordance with the terms of the Eagle Agreement.
ARTICLE 9 - TERMINATION
Either World or ICT may initiate termination of this Agreement by giving notice
in writing to the other Party in the event the other Party is in material
breach of this Agreement and shall have failed to act to diligently cure such
breach within thirty (30) days of receipt of written notice thereof from the
first Party.
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ARTICLE 10 - DEPOSIT MATERIALS
10.1 Pursuant to the terms of the ICT/Eagle Agreement, Eagle is to deliver
Deposit Materials (as that term is defined in the ICT/Eagle Agreement)
and Additional Deposit Materials (as that term is defined in the ICT/Eagle
Agreement) to a Holder (as that term is defined in the ICT/Eagle Agreement).
Under the circumstances and according to the procedures set forth in the
ICT/Eagle Agreement, the Deposit Materials and Additional Deposit Materials may
be released to ICT if Eagle is unable or unwilling to provide ICT with Eagle
Proprietary Components, if Eagle has failed to support the Eagle Products, or
if ICT has been unable to immediately procure from Eagle suppliers whatever ICT
requires to make or have made the Eagle Products provided there is no order by
any executive, legislative, or judicial person, body, or forum prohibiting the
release of the Deposit Materials and the Additional Deposit Materials.
Except (i) if Eagle Proprietary Components have not been fully
developed and tested and are ready for sale, (ii) for reasonable manufacturing
lead times, (iii) reasonable debugging and testing time for changes and
improvements, and (iv) subject to World accepting suppliers payment terms, if
ICT and Eagle are unable or unwilling to provide Eagle Proprietary Components
to World for a time period in excess of ninety (90) days World may request the
Holder to release the Deposit Materials and additional Deposit Materials to
World provided there is no order by any executive, legislative, or judicial
person, body, or forum prohibiting the release of the Deposit Materials and
the Additional Deposit Materials. World may obtain the release of the Deposit
Materials and Additional Deposit Materials by the Holder pursuant to the
following procedure: Holder must receive from World (i) written notification
(the "Notice") setting forth the reason for World's request for such release
and stating that World is entitled to use and access such Deposit Materials and
Additional Deposit Materials, (ii) a written undertaking from World that the
Deposit Materials and Additional Deposit Materials being supplied to World will
be used only as permitted under the terms of this Agreement, and (iii)
specific instructions from World for this delivery. Upon receipt of such
Notice from World, Holder shall notify ICT of World's Notice to Holder,
enclosing therein a copy of such request which sets forth ICT's or Eagle's
failure to supply ("Holder's Original Notice").
If ICT or Eagle, as the case may be, does not commence delivery of the
Eagle Proprietary Components or resume ICT's or Eagle's support of World's
development and manufacture of the Eagle Products within thirty (30) days of
the receipt of Holder's Original Notice to ICT or Eagle, Holder will
immediately commence delivery of the Deposit Materials and Additional Deposit
Materials to World as provided in the Notice. Holder shall have no specific
obligation to ICT or Eagle. ICT's and Eagle's sole remedy for any improper
handling or release of Deposit Materials and Additional Deposit Materials shall
be exclusively against World.
Eagle hereby agrees that World shall have the right to enforce against
Eagle the provisions of Article XI of the ICT/Eagle Agreement relating to the
deposit and maintenance of the Deposit Materials and Additional Deposit
Materials as if World had been assigned ICT's rights under such article of the
ICT/Eagle Agreement.
10.2 If ICT is able to provide World with Eagle Proprietary Components within
eighteen (18) months after World has received the Deposit Materials and
Additional Deposit Materials, World shall purchase all such Eagle Proprietary
Components from ICT on an ongoing basis and shall redeposit the Deposit
Materials and Additional Deposit Materials with Holder when ICT has provided
Eagle Proprietary Components to World for a period of ninety days.
10.3 World, ICT, and Eagle shall, jointly and severally, indemnify and hold
harmless Holder and each of its directors, officers, member, partners, agents,
employees and stockholders ("Holder lndemnitees") absolutely and forever, from
and against any and all claims, actions, damages, suits, liabilities,
obligations, costs, fees, charges, and any other expenses whatsoever, including
reasonable attorneys' fees and costs, that may be asserted against any Holder
Indemnitee in connection with this Agreement or the performance of Holder or
any Holder Indemnitee hereunder.
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10.4 Subject to the terms of 10.2 hereof, the Deposit Materials may only be
used by World to manufacture Eagle Proprietary Components to be incorporated in
Eagle products manufactured by World and only so long as the Proprietary
Components are not supplied by ICT. The Deposit Materials may not be used for
research and development purposes and all Deposit Materials are subject to the
confidentiality provisions of this Agreement.
10.5 In the event that the Deposit Materials are released to World and World
makes or has made Eagle Proprietary Components, ICT shall be paid the cost of
such components only to the extent ICT has costs relating to such Eagle
Proprietary Components. However, ICT shall receive an amount equal to the
Royalty under Article 3.
ARTICLE 11 - CONFIDENTIALITY
11.1 ICT and World may from time to time provide Confidential Information (as
hereinafter defined) to each other. Each of ICT and World agrees that
they shall not at any time use or disclose, nor permit the use or disclosure
of, directly or indirectly, any Confidential Information for any Unauthorized
(as hereinafter defined) purpose. Nothing contained herein prohibits the
disclosure of Confidential Information pursuant to judicial or regulatory
order. World and ICT hereby agree that they shall not use, disclose,
reproduce, summarize or distribute Confidential Information except in
connection with their business relationship or as otherwise provided for in
this Agreement.
World and ICT each agree that they shall take any and all lawful
measures to prevent the Unauthorized use and disclosure of Confidential
Information, to prevent Unauthorized persons or entities from obtaining or
using such information and to refrain from directly or indirectly taking any
action which would constitute or facilitate the Unauthorized use or disclosure
of such information.
World and ICT each may disclose Confidential Information to their
officers and employees to the extent necessary to enable performance of the
activities contemplated hereunder; provided, that such officers and employees
have entered into an appropriate confidentiality agreement for secrecy and
non-use of Confidential Information substantially consistent herewith which by
its terms shall be enforceable by injunctive relief at the insistence of World
or ICT. World and ICT shall each be liable to the other for any unauthorized
use and disclosure of Confidential Information by its own officers and
employees.
11.2 As used in this Agreement, the term "Confidential Information"
shall mean trade secrets, confidential or proprietary information, and all
other knowledge, information, documents or materials, owned, developed or
possessed by the disclosing party, whether in tangible or intangible form,
which the disclosing party makes reasonable efforts to keep confidential and
which pertains, in any manner, to the Eagle Technology or Eagle Products,
improvements thereto, research operations, Customers (including identities of
Customers and prospective Customers, identities of individual contacts at
Customers, preferences, business or habits), business relationships, products
(including prices, costs, sales or content and including released or unreleased
products), financial information or measures, marketing or promotion
information, business methods, future business plans, databases, computer
programs, designs, models and operating procedures.
Notwithstanding the foregoing, Confidential Information shall not
include knowledge, information, documents or materials which the receiving
party can conclusively establish: (i) have entered the public domain without
breach of any obligation owed to the disclosing party; (ii) have become known
to the receiving party prior to the disclosing party's disclosure of such
information to the receiving party; (iii) are permitted to be disclosed by
prior written consent of the disclosing party; or (iv) have become known to the
receiving party from a source other than the disclosing party or its affiliates
other than by breach of an obligation of confidentiality.
11.3 As used in this Agreement, the term "Unauthorized" shall mean
inconsistent with the commercial operation of the Parties and: (i) in
contravention of disclosing party's policies or procedures in place or
10
which are issued from time to time; (ii) otherwise inconsistent with disclosing
party's measures to protect its interests in its Confidential Information;
(iii) in contravention of any lawful instruction or directive, whether written
or oral, of disclosing party or any of its employees empowered to issue such
instruction or directive; (iv) in contravention of any duty existing under law
or contract; or (v) to the detriment of World or ICT in a manner inconsistent
with this Agreement.
11.4 The receiving party shall notify the disclosing party immediately upon
discovery of any Unauthorized use of disclosure of Confidential Information, or
any other breach of this Agreement by the receiving party and shall fully
cooperate with the disclosing party to help regain possession of Confidential
Information and prevent the further Unauthorized use or disclosure of
Confidential Information.
11.5 The provisions of paragraphs 1 1.1 through 11.4 shall survive the
expiration or termination of this Agreement.
ARTICLE 12 - REPRESENTATIONS AND WARRANTIES OF WORLD
Except as set forth on the Schedule D - Exceptions to Representations and
Warranties attached hereto, World hereby represents and warrants to ICT as
follows as of Effective Date (unless otherwise set forth below):
12.1 All corporate action on the part of World, its directors and stockholders
necessary for the authorization, execution, delivery and performance by
World of this Agreement and the consummation of the transactions contemplated
herein has been or will be taken prior to the Effective Date.
12.2 This Agreement will be a valid and binding obligation of World,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally and to general
equitable principles. The execution, delivery and performance by World of this
Agreement and its compliance herewith will not result in any violation of and
will not conflict with, or result in a breach of any of the terms of, or
constitute a default under, the Charter or By-Laws of World.
The execution, delivery and performance by World of this Agreement and
compliance herewith will not result in any violation of and will not conflict
with, or result in a breach of any of the terms of, or constitute a default
under, any mortgage, indenture, agreement, instrument, judgment, decree, order,
rule or regulation or other restriction to which World is a party or by which
it is bound or any provision of state or Federal law to which World is subject,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
of any kind whatsoever upon any of the properties or assets of World pursuant
to any such term or result in the suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, authorization or approval
applicable and material to World's operations or any of its assets or
properties.
12.3 There is neither pending nor, to World's knowledge, threatened any
action, suit, proceeding, claim or investigation, or any basis therefor or
threat thereof, whether or not purportedly on behalf of World, to which World
is or may be named as a party or its property is or may be subject or to
World's knowledge, after due inquiry, to which any founder, officer, key
employee or principal stockholder of World is subject.
12.4 World has not admitted in writing its inability to pay its debts generally
as they become due, filed or consented to the filing against it of a petition
in bankruptcy or a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the appointment of a
receiver for itself or for the whole or any substantial part of its property,
or had a petition in bankruptcy filed against it, been adjudicated a bankrupt,
or filed a petition or answer seeking reorganization or arrangement under the
Federal bankruptcy laws or any other' similar law or statute of the United
States of America or any other jurisdiction.
11
12.5 No consent, approval, qualification, order or authorization of, or filing
with, any other entity or governmental authority, including, without
limitation, the Secretary of State of the State of Delaware or the United
States Securities and Exchange Commission, is required in connection with
World's valid execution, delivery or performance of this Agreement or the
consummation of any other transaction contemplated on the part of World hereby.
ARTICLE 13 - REPRESENTATIONS AND WARRANTIES OF ICT
Except as set forth on the Schedule E - Exceptions to Representations and
Warranties attached hereto, ICT hereby represents and warrants to World as
follows as of the Effective Date (unless otherwise set forth below):
13.1 All corporate action on the part of ICT, its directors and stockholders
necessary for the authorization, execution, delivery and performance by
ICT of this Agreement and the consummation of the transactions contemplated
herein has been or will be taken prior to the Effective Date.
13.2 This Agreement will be a valid and binding obligation of ICT, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws including, without limitation 11 U.S.C.
Section 365(n) of the United States Code, and other laws of general
application affecting enforcement of creditors' rights generally and to general
equitable principles. The execution, delivery and performance by ICT of this
Agreement and its compliance herewith will not result in any violation of and
will not conflict with, or result in a breach of any of the terms of, or
constitute a default under, the Charter or By-Laws of ICT.
The execution, delivery and performance by ICT of this Agreement and
compliance herewith will not result in any violation of and will not conflict
with, or result in a breach of any of the terms of, or constitute a default
under, any mortgage, indenture, agreement, instrument, judgment, decree, order,
rule or regulation or other restriction to which ICT is a party or by which it
is bound or any provision of state or Federal law to which ICT is subject, or
result in the creation of any mortgage, pledge, lien, encumbrance or charge of
any kind whatsoever upon any of the properties or assets of ICT pursuant to any
such term or result in the suspension, revocation, impairment, forfeiture or
non-renewal of any permit, license, authorization or approval applicable and
material to ICT's operations or any of its assets or properties.
13.3 No consent, approval, qualification, order or authorization of, or filing
with, any other entity or governmental authority, including, without
limitation, the Secretary of State of the State of Delaware, is required in
connection with ICT's valid execution, delivery or performance of this
Agreement or the consummation of any other transaction contemplated on the part
of ICT hereby.
ARTICLE 14 - INDEMNIFICATION
14.1 ICT agrees to defend, indemnify, and hold harmless World and World's
principals, directors, officers, employees, and/or agents from and against any
and all liabilities, penalties, claims, demands, suits, and causes of action of
any nature whatsoever, whether groundless or otherwise, and any and all
damages, costs, and expenses sustained or incurred (including cost of defense,
settlement, and reasonable attorneys' fees), asserted by or on behalf of any
person or entity arising out of any breach of representation or warranty made
herein or the breach of confidentiality under Article 11 by an ICT employee.
14.2 World agrees to defend, indemnify, and hold harmless ICT and ICT's
principals, directors, officers, employees, and/or agents from and against any
and all liabilities, penalties, claims, demands, suits, and causes of action of
any nature whatsoever, whether groundless or otherwise, and any and all cost
of defense, settlement, and reasonable attorneys' fees), asserted by or on
behalf of any person or entity arising out of any breach of representation or
warranty made herein, the manufacture, promotion, distribution, and/or sale of
Eagle Products by World or any breach of confidentiality under Article 11 by
an employee of World.
12
ARTICLE 15 - NOTICES AND OTHER COMMUNICATIONS
Any notice or other communication pursuant to this Agreement may be personally
served, sent by certified mail postage prepaid, or by an overnight delivery
service which has a tracking system. Notice will be deemed given on the
earlier of the date received or the date personally served, or three business
days after deposit with the United States Postal Service if by certified mail
or one business day after deposit with an overnight carrier if by overnight
delivery, provided that such notice is addressed to the receiving Party at its
address below or as it shall designate by written notice given to the other
Party:
In the case of ICT:
International Communication Technologies, Inc.
00000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Phone: (000) 000-0000
Facsimile: (000)000-0000
In the case of World:
World Access, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: President and Chief Operating Officer
Phone: (000) 000 000-0000
Facsimile: (000) 000-0000
ARTICLE 16 - MISCELLANEOUS PROVISIONS
16.1 Any provision of this Agreement may be amended or waived if, and only if,
such amendment or waiver is in writing and signed, in the case of an
amendment, by ICT and World, or in the case of a waiver, by the Party against
whom the waiver is to be effective. No failure or delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
16.2 This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the Parties hereto. World may not assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement
(individually and collectively, to "Assign") without the written consent of ICT.
16.3 All representations and warranties made in this Agreement shall survive
the execution and delivery hereof and the consummation of the transactions
contemplated hereby without regard to any investigation made by World or ICT or
their representatives or employees or any other party hereto.
16.4 The Parties hereto agree that all of the provisions of this Agreement and
any questions concerning its interpretation and enforcement shall be governed
by the internal laws of the State of New York, United States of America without
regard to any applicable principles of conflicts of law and, subject to the
provisions of paragraph 16.5, the offer, acceptance, execution and delivery of
this Agreement shall be
13
deemed to be a transaction of business within the State of California, United
States of America for purposes of conferring jurisdiction upon courts located
within the State of California, United States of America and for the purposes
of conferring the Technology Rights. In addition, the Parties hereto agree
that the terms of this Agreement will be governed by, construed and enforced in
accordance with the terms of 11 U.S.C. Section 365(n) of the United States Code.
Subject to the provisions of paragraph 16.5, each of the Parties
irrevocably and unconditionally (i) agrees that any suit, action or legal
proceeding arising out of or relating to this Agreement may be brought in the
District Court of the United States for the Central District of California or
in any California State court in Los Angeles County; (ii) consents to the
exclusive jurisdiction of such court in any suit, action or proceeding relating
to this Agreement; (iii) waives any objection which it may have to the laying
of venue of any such suit, action or proceeding in such court; and (iv) agrees
that service of any court paper may be effected on such Party by mail, as
provided in this Agreement, or in such other manner as may be provided under
applicable laws or court rules in said state.
16.5 Notwithstanding the provision of paragraph 16.4, any controversy or claim
arising out of or relating to this Agreement, including, but not limited to,
any controversy or claim as to the arbitrability of any controversy or claim,
shall be settled by arbitration in Los Angeles County, California in accordance
with the then rules of the American Arbitration Association ("AAA");
provided, however, that the AAA shall be directed by the Parties to appoint or
designate a single arbitrator, who shall apply the laws of the State of New
York as set forth in Article 16 hereof.
The award of such arbitrator may be confirmed or enforced in any court of
competent jurisdiction consistent with the provisions of paragraph 16.4. With
respect to any such arbitration proceeding, the Parties shall have all rights
of discovery available pursuant to the California Code of Civil Procedure, and
they hereby incorporate the provisions of California Code of Civil Procedure
Section 1283.05 into this Agreement. Either Party may request the arbitrator
to prepare findings of fact and conclusions of law, and if either Party does so
request, the arbitrator shall prepare such findings and conclusions.
The decision of the arbitrator shall be final and not appealable by either
party, absent a clear error of law which may be appealed to any court of
competent jurisdiction. Nothing contained herein shall be construed to limit
or preclude a Party from bringing an action in court, under the provisions of
paragraph 16.4, for injunctive or other provisional relief to compel another
Party hereto to comply with its obligations under this Agreement.
16.6 Neither ICT nor World shall be held responsible for any failure of
performance hereunder or for damages caused by any delay or default due
to any contingency beyond its control preventing performance hereunder,
including, without limitation, war, governmental regulations, embargoes,
export, shipping or remittance restrictions, strikes, lockouts, accidents,
fires, delays or defaults caused by carriers, floods or governmental seizure,
control or rationing.
16.7 This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
16.8 This Agreement and the Schedules hereto constitute the entire agreement
between the Parties with respect to the subject matter hereof and supersede all
other prior agreements, understandings and negotiations, both written and oral,
between the Parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either Party hereto.
16.9 The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
14
16.10 This Agreement shall be deemed severable; the invalidity of
unenforceability of any term or provision of this Agreement shall not effect
the validity or enforceability of this Agreement or of any other term hereof.
The provisions of this Agreement were negotiated BY World and ICT and this
Agreement shall be deemed to have been jointly drafted BY World and ICT. In
reaching this Agreement, each of World and ICT have relied upon its own
knowledge and judgment and upon the advice of attorneys or other counselors of
its own free choice.
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
Effective Date.
International Communication World Access, Inc.
Technologies, Inc.
By: /s/ Xxxxxx X. Block By: /s/ Xxxxxxx X. Xxxx
-------------------- -------------------
Xxxxxx X. Block, Chairman & CEO Xxxxxxx X. Xxxx, President
For purposes of acknowledging ICT's power and right to enter into the foregoing
Agreement and agreeing to abide by all terms and provisions affecting or
imposing obligations on Eagle.
Eagle Telephonics, Inc.
By: /s/ X.Xxxxxxxxx
---------------
X. Xxxxxxxxx, President
15
SCHEDULE A
LICENSED PATENTS
None (based on Eagle's representation in the ICT/Eagle Agreement)
16
SCHEDULE B
TRADEMARKS, TRADENAMES, & SERVICE MARKS
EAGLE
ICT/EAGLE
DSCO
DIGILINK
WORLDPHONE
SUPERCABLE
TOTALCOMM
COMMUNICATION SUPERHIGHWAY
17
SCHEDULE C
ICT RESERVED TERRITORY RIGHTS
The following Regions are specifically excluded from the non-exclusive
Territory:
Xxxxxx Xxxxxx Xxxxxx Xxxxxx
Xxxxxxx
Bangladesh
Belarus
Bhutan
Czech Republic
Ethiopia
Hungary
India
Indonesia
Kazakstan
Laos
Malaysia
Maldives
Myanmar
Nepal
Pakistan
Philippines
Poland
Russia
Slovakia
Sri Lanka
Thailand
Ukraine
Uzbekistan
Viet Nam
Yemen
18
SCHEDULE D
EXCEPTIONS TO WORLD'S REPRESENTATIONS AND WARRANTIES
None
19
SCHEDULE E
EXCEPTIONS TO ICT'S REPRESENTATIONS AND WARRANTIES
None
20
SCHEDULE F
WORLD EXCLUSIVE TERRITORY AND ROYALTY MINIMUMS
EXCLUSIVE 1997 1998 1999
TERRITORY MINIMUM MINIMUM MINIMUM
NET DSCO NET DSCO NET DSCO
ROYALTY ROYALTY ROYALTY
Columbia $ 90,000 $225,000 $360,000
Dominican Republic $ 45,000 $135,000 $225,000
Mexico $180,000 $450,000 $675,000
Honduras $ 45,000 $135,000 $225,000
Guyana $ 45,000 $135,000 $225,000
Equador $ 45,000 $135,000 $225,000
Venezuela $ 90,000 $225,000 $360,000
El Salvador $ 27,000 $ 90,000 $180,000
Guatemala $ 27,000 $ 90,000 $180,000
Bolivia $ 45,000 $135,000 $225,000
Pursuant to the terms of this Agreement, all the areas of the world that are
not exclusive Regions are non-exclusive Regions except for any reserved Regions
set forth on Schedule C hereof or any Regions which are withdrawn from the
non-exclusive Regions by ICT pursuant to the terms of the Agreement. Subject
to Section 5.1 hereof, to retain its exclusive and non-exclusive Territory
rights, World must make the minimum Royalty payments shown on this Schedule F:
NON-EXCLUSIVE 1997 1998 1999
TERRITORY MINIMUM MINIMUM MINIMUM
NET DSCO NET DSCO NET DSCO
ROYALTY ROYALTY ROYALTY
Aggregate Minimum Royalty $750,000 $1,350,000 $2,000,000
